25 April 2007 - Contract law and the peace process

It’s exam season at law school, and I thought I’d use the opportunity to reflect on how contract law can shed light on the Israeli-Palestinian peace process. Peace negotiations really are grounded in principles of contract; though they potentially govern so many other areas, such as international law, human rights law, property law, environmental law, etc., they are first and foremost deals between the parties.

There is an old English case, Kingston v. Preston, King’s Bench [1773], that explored the three kinds of covenants that can be created in a contract. First, there are covenants that are “mutual and independent.” These are binding on each party whether or not the other parties fulfill their obligations: “[I]t is no excuse for the defendant, to allege a breach of the covenants on the part of the plaintiff.”

Second, there are covenants that are “conditions and dependent,” such that one party’s duty to fulfill its promises depends on the prior obligations of the other parties to fulfill theirs. Third, there are covenants that are “mutual conditions to be performed at the same time,” where if one party is ready to perform its obligations and the others do not, the first party has a cause of legal action against the others.

In the debates over the failure of the Oslo peace process, which have subsided somewhat in recent years but are still relevant, there was disagreement about who was more at fault. Palestinians blamed the Israelis for the continued expansion of the settlements in the occupied territories; Israelis blamed the Palestinians for the continuation of violence and the failure to clamp down on terror and incitement.

Factually, these claims were both correct—although Israel pointed out that it had not undertaken to stop construction in the settlements in the Oslo agreement. (Indeed, that was why critics like Edward Said opposed it.) Palestinians countered that settlement construction was a violation of the good faith necessary to the fulfillment of the accords and the negotiation of future final status agreements.

The Israeli response to this was that continued violence by Palestinian groups and incitement in official Palestinian media was not only a violation of good faith but of the letter of the agreement itself. The Palestinian counter-argument to this claim was that it was in fact making a good faith effort to stop violence, and that Israeli interventions and military responses just made it harder for them to do so.

Admittedly, I’ve simplified things a bit to make the debate fit the contract law framework. However, looking at the Oslo process this way leads to some interesting ways of understanding its flaws. Each side claimed that the obligations of the other were of the second type described in Kingston—that is, conditions and dependent—or, alternatively, of the third type—that is, mutual and simultaneous.

But what if the obligations of the Oslo accords were of the first type—mutual and independent? That would mean that neither side could blame the other for its own failure to fulfill its obligations. The Palestinian commitment to stop terror and incitement, and the Israeli commitment to freeze settlement construction, would then be considered binding and worthy of fulfillment in and of themselves.

However, these two commitments are not equal. First of all, the Palestinian commitment to stop terror was explicit, and the Israeli commitment to stop settlement was not. Second, and more important, settlement in occupied territory, even if (for the sake of argument) illegal according to international law, does not lead inevitably to war, while armed attacks against civilians may certainly do so.

Terror and incitement not only offend notions of good faith but also violate what might be referred to as an implied condition of the Oslo agreement itself: the condition that both parties seek peace. Unlike a covenant within an agreement—which, if broken, may release the parties from other duties—an implied condition can govern the validity of the agreement as a whole. Break it, and the deal is off.

This contract law analysis has implications for future agreements. If Hamas continues to attempt abductions of Israeli soldiers, even while talking about terms for prisoner exchanges, how can it be trusted to negotiate in good faith? And if the Palestinian unity government can find money for rockets but cannot pay its own employees’ salaries, how can it be expected to enforce peace agreements?

The lack of will and capacity on the Palestinian side is one of the most important reasons for Israelis to maintain a policy of unilateral withdrawal behind the security barrier as its BATNA, or Best Alternative To a Negotiated Agreement—and to defend that BATNA against Palestinian attempts to undermine it with rocket fire and kidnappings. Otherwise, the only other alternative will be war.