Authored by Ayushi Sareen and Tresshaa Dutt, 5th year students B.A., LL.B. (Hons.) at National Law University, Jodhpur
The application of international trade law to territories with contested sovereignty has gained renewed attention in light of the ongoing Russian-Ukraine conflict over Crimea. In August 2023, the domestic industries of Crimea (as a part of Russia), initiated an anti-dumping investigation into imports from China under Article 5 of the Anti-dumping agreement. However, Crimea continues to be recognised as part of Ukraine, via the UN General Assembly (Resolution 68/262).
Similar issues arise in the WTO framework, where political sovereignty is disputed but customs autonomy exists, as is the case with Hong Kong and Taiwan. In February 2025, Hongkong filed a WTO complaint challenging the U.S. trade measures that allegedly violate WTO rules and ignore Hong Kong’s legally recognized status as a separate customs territory. In a similar vein, In April 2025, Taiwan and India jointly sought the establishment of a WTO panel (DS588), concerning India’s import tariffs on information and communications technology products. Taiwan’s continued engagement underscores the WTO’s pragmatic approach: it prioritizes autonomous trade function over formal statehood.
Disputes over territorial status also affect rules of origin. For instance, the European Union prohibits goods from Israeli settlements in the West Bank from being labeled as “Israeli.” In contrast, it allows products from other contested territories, such as Western Sahara (as Moroccan) and the Turkish Republic of Northern Cyprus (as Turkish), to be labeled according to the administering authority. These inconsistencies raise critical questions about how trade law accommodates contested sovereignty.
This article examines how WTO law applies to non-state entities and disputed territories. Drawing on recent WTO practice, it analyzes how such entities engage with WTO structures and contrasts this with the treatment of similar jurisdictional issues by other international legal bodies, including human rights tribunals, arbitral courts, and the International Criminal Court (ICC).
Scope of Application of International Trade Law on Non-state Entities
Article XII of the Marrakesh Agreement establishing the WTO, does not limit membership to sovereign states only. It allows separate customs territories to join, provided they enjoy full autonomy over their external commercial relations. Separate customs territories are distinct from states. The term refers to, for example, overseas territories of states, former colonies transitioning to independence or self-proclaimed states. Separate customs territories may possess some, but not all of the attributes of statehood under the Montevideo Convention, (population, defined territory, government and capacity for external relations).
The accession of Burma, Ceylon, and Southern Rhodesia to the GATT (the WTO’s predecessor) opened the door for post-colonial entities to become full contracting parties. A WTO ad-hoc subcommittee reviewed their capacity to manage trade independently and engage in commercial treaties. While the committee was apprehensive of the sovereign status of these newly politically and economically independent entities, the committee acknowledged the ability of these countries to determine and negotiate terms of trade independently without involvement of any other state, as well as the autonomy to independently enter into contractual relations on commercial matters with other states. The committee approved the accession of these entities to the multi-lateral trading system and their accession, made possible the integration of other separate customs territories into the WTO. Two prominent examples of these are Hongkong and Macao, which were under the mandate and international responsibility of the UK and Portugal respectively. Thus, there is no one-size fits all approach in recognising disputed territories as part of the WTO framework. Instead, the multilateral system embraces a pluralistic approach, allowing functional participation even amidst unresolved sovereignty disputes.
Can the WTO Rely on the de facto Control Approach to Trigger the Application of International Trade Law in Disputed Territories?
The ‘ de facto control,’ approach, has become increasingly relevant in doctrine and scholarship with the advent of modern day coups and secessionist states. Under this approach, de jure sovereignty is not essential; what matters is that the entity exercises real and independent control over its trade policy. This practical-trade approach finds expression in both the rules and practice of modern-day international trade law. The WTO, focused on regulating trade rather than resolving political disputes, has signaled support for this pragmatic stance, notably in its 2019 panel report in – Russia- Measures Concerning Traffic in Transit.
A low threshold for recognizing de facto control could yield inclusive benefits—expanding trade access for populations in occupied territories and promoting economic stability. Yet, it risks undermining international law. For instance, applying WTO law to illegally occupied regions could be seen as legitimizing violations of Article 2(4) of the UN Charter, which prohibits the use of force and forbids recognition of unlawful territorial acquisitions.
This non-recognition duty is codified in Articles 40 and 41 of the ILC Draft Articles on State Responsibility and reaffirmed by UNGA Resolution 68/262. The ICJ’s 2004 Advisory Opinion on the Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, reiterated the principle, although it stopped short of defining what constitutes recognition. The 1971 Namibia opinion, provides additional guidance: the ICJ held that states must refrain from applying treaties concluded by the occupying power, with exceptions only for general humanitarian conventions.
These precedents pose a dilemma for the WTO. Can it continue facilitating trade with entities exercising de facto control without violating broader obligations of non-recognition? And if so, under what legal safeguards? There are also practical risks. Engaging with illegally occupied territories may allow such entities to selectively comply with WTO obligations, manipulate tariff schedules, or exploit procedural gaps—thereby undermining the system’s legal integrity.
Can WTO Panels Exercise Jurisdiction over Disputed Territories?
While WTO law as a treaty regime is lex specialis, it is still an integral part of Public International Law (PIL). Since the Marrakesh Agreement is a multi-lateral treaty, the provisions of the treaty must be interpreted using the customary rules of treaty interpretation which are embodied in Articles 31 and 32 of the Vienna Convention on the Law of Treaties. Such an understanding is affirmed by Article 3.2 of the Dispute Settlement Understanding (‘DSU’) that clarifies that existing provisions of the multi-lateral trading agreements must be interpreted in accordance with customary rules of interpretation of PIL, as well as the consistent jurisprudence of the WTO dispute settlement mechanism. In US-Gasoline, for example, the Appellate body noted that the GATT Agreement cannot be read in clinical isolation from PIL.
In light of this, the Panel would need to interpret WTO treaties in a way that does not contravene the UN Charter or any customary obligations in International law, including the duty of on-recognition. The WTO Appellate body was faced with this question in Mexico-Soft drinks, where it noted that there is no basis in the DSU for Panels and appellate body to adjudicate on non-WTO disputes, and therefore, adjudicatory bodies can decline to accept jurisdiction basis the question of territorial sovereignty.
Practice of Other International Tribunals on Exercising Jurisdiction over Disputed Territories
The issue of incidental jurisdiction has arisen before other international tribunals in the context of the law of the sea, human rights, and the International Criminal Court. In February 2020, an arbitral tribunal was constituted under Annex VII of the United Nations Convention on the Law of the Sea (‘UNCLOS’) in the disputes concerning the Coastal State rights, where the tribunal declined to accept jurisdiction because that would require deciding on the issue of sovereignty over Crimea. The tribunal categorically noted that disputes over territorial sovereignty do not constitute disputes concerning the interpretation or application of UNCLOS. The tribunal affirmed that disputes concerning the rights and obligations in a maritime area of national jurisdiction cannot be determined without answering a more fundamental question regarding which State has sovereignty over the territory. Therefore, the tribunal concluded that a dispute about territorial sovereignty is outside its jurisdiction.
The issues of disputes concerning sovereignty were also dealt with by arbitral tribunals in Mauritius v. United Kingdom, and Philippines v. China. In both these decisions, the tribunals affirmed that they lacked jurisdiction over claims that implicated a sovereignty dispute. In Ukraine v. Russia, the European Court of Human Rights noted that it had the right to choose to address the incidental questions of sovereignty without declining jurisdiction, which is in stark contrast to the approach adopted by the UNCLOS tribunal.
The issue of jurisdiction over incidental issues has arisen before the International Criminal Court (‘ICC’) numerous times. Pursuant to Article 12(2)(a) of the Rome Statute, the ICC can exercise jurisdiction basis that on the state on the territory of which the conduct in question has occurred, has accepted its jurisdiction. In the situation involving the Palestine occupied territories of West Bank and East Jerusalem, the ICC could exercise jurisdiction only if Palestine was considered as a ‘state’ for the purpose of Article 12(2)(a). For context, recognition of statehood under international law rests on two theories – constitutive and declaratory. Basis the constitutive theory, declarations of recognition by other states are decisive for the legal existence of an entity as a state. In contrast, the declarative theory suggests that only if an entity satasifes the objective criteria – a permanent population, living in a defined territory, and organising itself under an effective government, will it be considered a ‘state’.
The ICC in its decision in Palestine, relied on the constitutive theory to recognise Palestine as a state. The Court noted that collective recognition of Palestine by the international community has the effect of classifying the entity as a state even if does not satisfy the criteria under the Montevideo Convention. The Court also affirmed that there is no need for a separate assessment of Palestine’s statehood under international law. Such an understanding goes beyond the mandate of the ICC, which is to determine individual criminal responsibility and not resolve inter-state disputes.
Conclusion
This article has examined how WTO law prioritizes trade functionality over political legitimacy by relying on the doctrine of de facto control when engaging with territories of contested sovereignty. The 2023 Crimea anti-dumping action exemplifies how domestic industries can invoke WTO processes even when their territorial status is disputed under international law. GATT’s accession provisions (Article XXVI:5(c)), alongside scholarship emphasizing de‑facto control and ex post legitimization, validate that trade‑law authority stems from an entity’s ability to autonomously regulate imports and tariffs, rather than its diplomatic standing. Comparatively, other international tribunals tend to rely more heavily on formal statehood or self‑determination principles when addressing disputed territories.
The authors believe that the de facto control approach is fallible for many reasons. To begin with, it may allow the WTO to apply international trade law on illegally-occupied territories. Additonally, WTO panel may accept jurisdiction and decide on incidental non-WTO related issues, which are beyond the purview of its mandate. In any case, WTO panels have conclusively affirmed that there is no basis in the Dispute Settlement Understanding, for either the panels or the appellate body, to adjudicate on non-WTO issues. Ultimately, WTO law reinforces a trade-centric jurisdictional model where customs autonomy defines legal competence. While this doctrine promotes practical trade engagement for contested territories, it stops short of resolving broader issues of sovereignty or recognition.
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