Jordan held onto the West Bank from 1949 to 1967, and between 1967 and 1988 many people considered it "Israeli-occupied Jordan."
This is problematic for a number of reasons. The main reason is that the international community in general never recognized as legal Jordan's annexation of the territory to begin with. However, during that time period it cannot be considered "Palestinian" (in the sense of Palestinian Arab) either, because the Palestinian Arab leadership rejected the partition plan and never declared a state on that territory. It was essentially in limbo.
But for argument's sake, let's say that Jordan's annexation of the territory was legal.
In 1988, Jordan ceded that territory, no longer under its control, to the PLO, and stripped citizenship from West Bank Palestinians.
Is that cession legal?
According to International Law: a treatise, Volume 1, here are the laws of cession:
Cession of State territory is the transfer of sovereignty over State territory by the owner-State to another State. There is no doubt whatever that such cession is possible according to the Law of Nations, and history presents innumerable examples of such transfer of sovereignty. The Constitutional Law of the different States may or may not lay down special rules 1 for the transfer or acquisition of territory. Such rule can have no direct influence upon the rules of the Law of Nations concerning cession, since Municipal Law can neither abolish existing nor create new rules of International Law.” But if such municipal rules contain constitutional restrictions on the Government with regard to cession of territory, these restrictions are so far important that such treaties of cession concluded by heads of States or Governments as violate these restrictions are not binding.”
Since cession is a bilateral transaction, it has two subjects-namely, the ceding and the acquiring State. Both subjects must be States, and only those cessions in which both subjects are States concern the Law of Nations. ...
It seems very clear that one cannot legally cede territory to an entity that is not a state. I cannot see how Jordan's cession to the PLO has any legal validity.
For a territory to be occupied, it must belong to a state. While it seems clear that the humanitarian aspects of occupation must still be adhered to, but to consider it a legal occupation requires that the occupied territory be claimed by a state. (Again, this is for argument's sake; Israel did not consider itself an occupier even before 1988 and considers the territory disputed.)
In fact, Jordan's "cession" might be a case of legal dereliction:
Dereliction as a mode of losing territory corresponds to occupation as a mode of acquiring it. Dereliction frees a territory irom the sovereignty of the present owner-State. It is effected through the owner-State completely abandoning territory with the intention of withdrawing from it for ever, thus sovereignty over it. Just as occupation requires, first, the actual taking into possession (corpus) of territory, and, secondly, the intention (animus) of sovereignty over it, so dereliction requires, first, actual abandonment of a. territory, and, secondly, the intention of giving up sovereignty over it. Actual abandonment alone does not involve dereliction as long as it must be presumed that the owner has the will and ability to retake possession of the territory. Thus, for instance, if the rising of natives forces a State to withdraw from a territory, such territory is not derelict as long as the former possessor is able, and makes efforts, to retake possession. It is only when a territory is really derelict that any State may acquire it through occupation. History knows of several such cases. But very often, when such occupation of derelict territory occurs, the former owner protests, and tries to prevent the new occupier from acquiring it.
If Jordan's washing its hands of the West Bank is in fact a case of dereliction, then Israel's occupation is quite legal, at least since 1988 (again assuming that Jordan's annexation was considered legal to begin with - if it wasn't, then the territory has no state anyway.)
There may be one way that Jordan's action has some legal validity: if it was not a cession, but a secession by the Palestinian Arabs from Jordan. This is in fact how King Hussein phrased the topic when he announced Jordan's move in July 1988:
Arab unity between any two or more countries is an option of any Arab people. This is what we believe. Accordingly, we responded to the wish of the Palestinian people's representatives for unity with Jordan in 1950. From this premise, we respect the wish of the PLO, the sole and legitimate representative of the Palestinian people, to secede from us as an independent Palestinian state.But, as far as I can tell, there needs to be some sort of legal agreement between the two parties, the one that is seceding and the original state. I cannpt find any such document. The PLO's official declaration of statehood was not done at the time of this announcement but on November 15, 1988. Jordan's move was not bilateral but unilateral. Only three days prior, Jordan stopped a $1.3 billion development program in the West Bank; there is no indication that this was done in concert with the PLO.
So while Jordan uses the language of secession, in reality it appears - and seems to be regarded - as a case of cession instead, which, as we see, is problematic and might be closer to dereliction.
Once again, I stress that I am not a lawyer, and could be way off base here. But I can't find anyone who talks about the legality or legal consequences of Jordan's actions in 1988. And I cannot find any possible legal justification for calling the West Bank "Palestinian territory."
UPDATE: A well-known international law expert pointed that I have no idea what I am talking about. :)
In short:
Stripping away the issues of belligerent occupation, I’m not sure you have a coherent, let alone cogent, argument. The Palestinian claim to sovereignty is generally couched in terms of self-determination, not cession from the Jordanians. Even if it were phrased as based on cession from the Jordanians, the Palestinians would argue that it is possible to cede rights to a state in statu nascendi. In addition, if you accept the validity of Blum’s argument, you should understand that it works in both directions; the Palestinians do not have to claim a classic mode of acquisition in order to claim superior title. In other words, even if one asserts that the Jordanians had title and then abandoned it, with no ability to cede it to anyone, the Palestinians could still have superior title to Israel.
I can't say I understand it, but it is enough to make me realize I'm in way over my head!