X v. OPEC. Judgment No. SV 1/2021 (SV 1/2021-23). ECLI:AT:VFGH:2022:SV1.2021.

The judgment of the Austrian Constitutional Court (Verfassungsgerichtshof; hereinafter Court) in X v. Organization of the Petroleum Exporting Countries (OPEC) ¹ constitutes the first time in which this Court has declared parts of a treaty to be unconstitutional, and one of a few cases in which a European court has granted a challenge based on the Waite and Kennedy doctrine. Developed by the European Court of Human Rights (ECtHR), the doctrine concerns the permissibility of restricting the right of access to a court in disputes concerning “civil rights” (as a part of the right to a fair trial under European Convention on Human Rights (ECHR) Article 6(1)) through granting jurisdictional immunities to international organizations.² In September 2022, the Court found that parts of the Headquarters Agreement between Austria and OPEC, which bar employees from suing OPEC before Austrian domestic courts, violated Article 6(1) of the ECHR and were thus unconstitutional. Should the judgment come into full effect, OPEC would lose its jurisdictional immunities and the inviolability of its headquarters seat within the Austrian domestic legal order. Importantly, the judgment illustrates the continued impact of Waite and Kennedy on international organizations.

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The case stems from an employment dispute between OPEC and a former employee, who sought a civil judgment that their termination was unlawful. The applicant was employed as an internal auditor at OPEC until 2017, when they were terminated by decision of the OPEC secretary general. The applicant's lawsuit before the Vienna Labor Court (Arbeits- und Sozialgericht Wien) was dismissed due to the jurisdictional immunity of OPEC.³ Likewise, a subsequent challenge with the Austrian Constitutional Court was unsuccessful for procedural reasons.⁴ In 2020, the applicant's second civil lawsuit before the Vienna Labor Court was dismissed due to OPEC's immunity. Simultaneously with their appeal against the 2020 decision of the Labor Court, the applicant petitioned the Court to declare certain provisions of the OPEC Headquarters Agreement (OPEC-HA) to be unconstitutional, as a violation of their rights under the ECHR,⁵ which has the status of constitutional law in Austria. The applicant argued that the jurisdictional immunities of OPEC and its property (OPEC-HA, Art. 9) interfered with their right of access to a court in light of the Waite and Kennedy doctrine. Given that there was no reasonable alternative means within the organization to pursue their rights, that interference was disproportionate and unlawful. In addition, the inviolability of the headquarters seat (OPEC-HA, Art. 5) would prevent an effective service of process, as OPEC could not be compelled by the court to receive any documents. The applicant further argued that, according to the case law of the ECtHR, enforcement proceedings were an integral part of the right to fair trial, making the immunity from execution of OPEC's property (OPEC-HA, Art. 10) also unconstitutional. Moreover, the power to make regulations applicable to the headquarters seat that supersede Austrian domestic law (OPEC-HA, Art. 4(1)) was the basis for OPEC Staff Regulations, which had denied them the aforementioned rights (Margin Numbers (MN) 7–16).

While OPEC did not participate in the proceedings (MN 21), the Austrian federal government submitted a statement requesting that the application should be dismissed or, alternatively, rejected. With regard to admissibility, the Austrian federal government argued that the application was construed too narrowly, as it failed to challenge a separate provision of the Headquarters Agreement that explicitly provided for the “extraterritoriality” of the headquarters seat (OPEC-HA Art. 3(1)⁶) and did not address the absolute immunity that OPEC enjoyed under customary international law, which had the same legal force as statutory legislation.

The Court rejected both arguments by the Austrian federal government. In the Court's view, the sole addressee of OPEC-HA Article 3(1) was the federal government and that the provision only contained “a declaratory reference to the inviolability of the headquarters seat provided for in Article 5 of the Headquarters Agreement” (MN 40). Further, the Court determined that the provision did not by itself preclude Austria from exercising jurisdiction (MN 39–40). The Court also rejected the Austrian federal government's argument regarding customary international law, holding that:

[i]t cannot be assumed that there exists a general practice accepted as law (cf. Article 38 paragraph 1 point b of the Statute of the International Court of Justice . . .) which obliges Austria to accord immunity to an international organization of which Austria is not a member even if no reasonable alternative remedy for settling employment disputes is available. (MN 42.)

Therefore, the Court considered that no customary international law existed that would affect the admissibility of the application. However, it dismissed the applicant's challenge of OPEC's regulatory power within the headquarters seat and of its immunity from execution as the matters were immaterial for deciding the underlying civil proceedings.

On the merits, the Court reaffirmed the relevance of the Waite and Kennedy doctrine. In particular, the Court affirmed that the right of access to a court applied to employment disputes with international organizations, such as OPEC. Their jurisdictional immunities in principle pursued a legitimate aim by ensuring the proper functioning of such organizations, free from unilateral interferences of the host state, such as Austria. When it comes to the proportionality of such a restriction, the ECtHR in particular takes account of whether the affected individual had “reasonable alternative means” other than domestic courts, to pursue their “civil rights.” While those means do not have to meet all the requirements of a fair trial, the restriction will become disproportionate if they are “manifestly deficient.” According to case law, such means may include internal court-like institutions, the ILO Administrative Tribunal, or arbitral proceedings. The Court found that the OPEC Statute provided for no such “reasonable alternative means” that protect the rights of (former) employees. Therefore, the granting of jurisdictional immunities to OPEC by Austria disproportionately restricted the applicant's right of access to a court in employment disputes, in violation of ECHR Article 6(1). While the Court did not provide reasoning concerning the lack of “reasonable alternative means,” the applicant considered that the only existing internal mechanism was lodging a complaint with the secretary general pursuant to Article 13.1 (“Complaints and Appeal”) of the OPEC Staff Regulations.⁷

The applicant argued that this procedure fell short of the requirements of ECHR Article 6 in several ways. First, the secretary general remained the sole deciding authority, as he was not obliged to refer a complaint to the Personnel Committee; second, he was also not bound by its report, as the Committee's power was limited to “observing and reporting”; third, the secretary general was neither an “independent” body, nor impartial in the present case, as he was responsible for the termination of the applicant's employment in the first place. Fourth, the procedure foresaw neither a right to be heard nor an obligation by the secretary general to give reasons for their decision. The Court itself found that no “reasonable alternative means” existed in the case of OPEC, without providing any explanation of why OPEC's internal mechanisms did not reach that threshold.

The Court further declared unconstitutional the provisions that provided for the inviolability of OPEC's premises (OPEC-HA, Art. 5(1)) and the impermissibility of the service of legal process within the headquarters seat (OPEC-HA, Art. 5(2)), which were “inextricably linked” with the question of jurisdictional immunities. Relying on its previous decision,⁸ the Court held that the service of legal process constituted sovereign acts, which were impossible without OPEC's consent. Thus, even though Section 11(2) of the Service of Documents Act (Zustellgesetz)⁹ foresaw that service should occur through the Ministry of Foreign Affairs as an intermediary, and the Ministry itself stated that such service regularly occurs in practice without any issues, the Court considered that OPEC-HA Article 5 prevented an effective pursuit of legal claims by the individual.¹⁰

With regard to the dispute giving rise to the application, these provisions will become inapplicable. However, beyond that case, the Court has declared that they will remain in effect until September 30, 2024, to allow the federal government to negotiate a new solution with OPEC.

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The judgment of the Court is noteworthy for four reasons.

First, it is the first time that the Court declared (parts of) a treaty unconstitutional, since it was granted the authority to do so in 1964.¹¹ Prior to this case, close to thirty such challenges were brought to the Court.¹² While some of these cases likewise concerned the immunity of international organizations (specifically of OPEC and the International Atomic Energy Agency) in light of the Waite and Kennedy doctrine, they all were dismissed on procedural grounds.

Second, the application of the Waite and Kennedy doctrine to the facts of the case involves a novel aspect, namely the emphasis the Court placed on ensuring an effective legal service. Neither the ECtHR itself, nor other domestic courts applying the doctrine appear to have conceptualized inviolability as a bar to the right of access to a court under ECHR Article 6.¹³ When it comes to the finding that no “reasonable alternative means” were available to the applicant—at the core of any analysis under the Waite and Kennedy doctrine—the judgment of the Court appears uncontroversial. The applicant had no possibility to request a review by a body other than the secretary general and the lack of any legal reasoning by the Court suggests that nothing close to a “reasonable alternative means” existed.

Third, the judgment affects the legal relations between Austria and OPEC beyond this case. The repeated challenges before the Court have led to efforts to reshape OPEC's legal framework for processing employment disputes allowing Austria to comply with its international obligations under both the Headquarters Agreement and the ECHR. This includes ongoing negotiations on a protocol amending the Headquarters Agreement.¹⁴ Moreover, the OPEC Conference (of which Austria is not a party) revised the OPEC Statute in November 2020, which now foresees the establishment of “appropriate modes of settlement” for disputes “of a private law character” and employment disputes (Art. 6A).¹⁵ According to OPEC's Annual Report of 2019, such a “new Internal Dispute Resolution Mechanism was created and incorporated into the OPEC Staff Regulations, in line with the principles of the European Convention on Human Rights.”¹⁶ More recent Annual Reports likewise refer to the new Internal Dispute Resolution Mechanism and ongoing efforts to improve it.¹⁷ However, given that the OPEC Staff Regulations are not publicly available, it is not possible to evaluate who may avail themselves of this new Mechanism and whether it would qualify as “reasonable alternative means” for the purposes of the Waite and Kennedy doctrine.

The case may be seen in light of a trend in Austrian practice to bring its commitments to international organizations it hosts in line with its obligations under ECHR Article 6. The 2021 Austrian Headquarters Law for the first time provides that the federal government may grant immunities only “to the extent that this does not contradict Austria's obligations under international and human rights law” and that “particular attention shall be paid to the existence of effective legal protection mechanisms.”¹⁸ The year prior, the Headquarters Agreement between Austria and the OPEC Fund for International Development (a separate international organization) was amended through a protocol, inter alia, providing for arbitration in disputes with a private party, while employment disputes “shall be settled by an effective dispute resolution mechanism pursuant to [the Fund's] internal regulations which protects the rights of the employees.”¹⁹ According to legislative materials, this specifically serves to ensure compliance with the right to a fair trial enshrined in the ECHR as well as the Charter of Fundamental Rights of the European Union.²⁰ Similarly, other Headquarters Agreements concluded by Austria after the Waite and Kennedy judgment provide for an obligation of the international organization to establish “appropriate methods of settlement,”²¹ generally submitting to arbitration in disputes with a private party²² or excluding employment disputes from jurisdictional immunities.²³ The present case underscores the necessity of such efforts of the federal government and legislature, in light of the Court's power to review the constitutionality of Headquarters Agreements on the basis of the ECHR.

Fourth, the Court's reasoning is noteworthy with regard to its finding on whether OPEC would enjoy immunity under customary international law. From a domestic legal perspective, any finding that customary international law entitles such organizations to immunity not only would have led to the dismissal of the present case²⁴ but also would have shielded all other Headquarter Agreements from scrutiny by the Constitutional Court. This follows from the fact that, unlike for treaties, the Court still lacks the authority to review the constitutionality of customary legal norms. As discussed above, the Court found that no practice existed that would oblige Austria as a non-member to grant immunity to OPEC “even if no reasonable alternative remedy for settling employment disputes is available” (MN 42).

The Court's approach is peculiar in how it framed the pertinent norm to be established. The arguably most obvious approach would have been to assess whether international organizations enjoy immunity under customary international law in principle²⁵ and, if so, to then determine whether an exception existed in light of Waite and Kennedy. This was notably the approach of the International Court of Justice (ICJ) in Jurisdictional Immunities of the State, where it addressed an argument based on the Waite and Kennedy doctrine in the context of state immunity. In rejecting the plea, the ICJ took note of a lack of state practice that would establish such an exception, rather than the other way around.²⁶ However, the Constitutional Court did not take this general norm/exception approach. It rather assessed whether under customary international law international organizations were granted immunity in the specific scenario addressed by Waite and Kennedy. In doing so, it framed the norm to be established in an extremely narrow fashion as only state practice and opinio juris relating to that scenario became relevant for the assessment. That essentially shifted the burden of proof: instead of the applicant potentially having to provide support that an exception from jurisdictional immunities arose in customary law, it required the existence of state practice and opinio juris that immunity was granted also in the very specific sets of cases Waite and Kennedy concerns.²⁷