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JPEPA: The Romulo-Koumora exchange of notes

Philippine Star | Thursday, October 9, 2008

The Romulo-Koumora Exchange of Notes

By Prof. Merlin M. Magallona UP College of Law

In an Exchange of Notes dated August 22 and 29, 2008, Philippine Secretary of Foreign Affairs Alberto G. Romulo and Japanese Minister of Foreign Affairs Masahiko Koumora have formally expressed “the shared understanding ... on the interpretation of the Japan-Philippine Economic Partnership Agreement (JPEPA)”.

This “shared understanding” came about on the request of the Philippines purportedly to save (JPEPA) from rejection by the Senate, owing principally to its provisions on investments which are in derogation of the Philippine Constitution.

The Romulo-Koumora Exchange therefore appears as a response to the condition set by the Senate that it may not act in concurrence on JPEPA unless the issue of constitutionality is resolved. Apparently, authoritative Senate sources are of the view that JPEPA contains investment provisions in serious conflict with the citizenship requirements of the Constitution.

However, the Exchange of Notes reaffirms “the rights and obligations” of the Parties under . . . the provisions of the JPEPA and, in the overall result, JPEPA remains at war with the Constitution.

1. The entire Exchange of Notes is devoted to the interpretation of the Japan-Philippines Economic Partnership Agreement (JPEPA). It does not in any way seek to change the intent of the parties. Neither does it amend the text of JPEPA.

The essence of a treaty in international law is that it creates legal relations between the states parties, and the core of such relations consists of rights and obligations embodied in the meaning of the text of the treaty in question. For this reason, instead, the Exchange of Notes appears as a reaffirmation of the legal relations between Japan and the Philippines in JPEPA and has the effect of reinforcing their intent to adhere to the rights and obligations as provided in JPEPA. On this point, the Exchange of Notes is emphatic, thus:

4. The present exchange serves only to confirm the interpretation of, and does not modify the rights and duties of the Parties under, the provisions of the JPEPA (Emphasis added).

This paragraph is a component of what the Exchange of Notes describes as the “shared understanding of the Republic of the Philippines and Japan on the interpretation of the Japan-Philippines Economic Partnership Agreement (JPEPA)”. It stands to reason that it is their intention to interpret JPEPA in terms of the rights and obligations stipulated in JPEPA as its text stands now, without any modification - which are precisely in derogation of the Philippine Constitution.

2. In the international law of treaties, the task of interpretation, says Lord McNair in his Law of Treaties (1961, p. 365), is “the duty of giving effect to the expressed intention of the parties, that is, their intention as expressed in the words used by them in the light of the surrounding circumstances.” (Emphasis by McNair.)

The “shared understanding” in the Exchange of Notes must necessarily subserve the clear statement of rights and obligations as set forth in JPEPA. It cannot pretend to modify that statement, which the Exchange of Notes itself asserts.

3. In reference to provisions of the Constitution requiring citizenship requirements, which JPEPA intends to eliminate by parity treatment of Japanese investors, the “shared understanding” states that “Nothing in the JPEPA requires amendment of any of the existing provisions of the [Philippine] Constitution”.

It is true that JPEPA does not intend to directly amend the Constitution. With JPEPA, the Constitution will remain intact, but JPEPA will supersede or supplant it, in application and in settlement of disputes over JPEPA’s interpretation, JPEPA will prevail over the Constitution in the event that the Senate gives its imprimatur. In case of incompatibility between JPEPA and the Constitution as an issue to be decided by an arbitral tribunal that may be created by the parties pursuant to JPEPA, that tribunal will apply JPEPA over and above the Constitution pursuant to the fundamental principle of the pacta sunt servanda and in accordance with the basic norm of international law that a party to a treaty cannot invoke its internal law, including its Constitution, as a justification for failure to perform its obligation under the treaty.

The choice before the Senate is clear: JPEPA or the Philippine Constitution.

 source: PhilStar