| |
JUDGMENT
[1] On January 15, 2009 a Full Bench of this Court heard an application by
the applicant, Trinidad Cement Limited ("TCL") for special leave to commence
proceedings before this Court against the Caribbean Community ("the
Community") under Article 222 of the Revised Treaty of Chaguaramas ("the
Revised Treaty"). The Court received written submissions from the Community
and at the hearing heard the oral submissions of both the applicant and the
Community. At the conclusion of the hearing the Court granted special leave
to TCL as a private entity to commence proceedings against the Community.
The Court indicated then that it would give its reasons at a later date and
it does so now.
THE FACTUAL BACKGROUND
[2] TCL is a limited liability company incorporated in Trinidad and Tobago
and the applicant in these proceedings. TCL is the parent company of seven
companies incorporated in different parts of the Caribbean. TCL's main
business is the manufacture and sale of cement. The TCL Group's principal
market is the Common Market established by the Revised Treaty.
The market created by the Revised Treaty is protected in some cases by the
imposition of a common external tariff ("CET") against parallel imports from
third countries. The main purpose of the CET is to encourage trade and
production within the Community with a view to accelerating the process
towards international competitiveness. In relation to the cement industry
the CET on cement not qualifying for Community treatment was fixed at 15%.
Cement of Community origin is exempt from customs duties and charges having
equivalent effect.
[3] Part Two of Chapter Five (Trade Policy) of the Revised Treaty contains
the CET regime. It is clear that any rights or benefits conferred by the CET
are qualified, and not absolute, in that the regime may be altered or
suspended by the agency appointed by the Community to manage it. That agency
is an organ of the Community, the Council for Trade and Economic Development
(hereinafter referred to as "COTED"). For ease of comprehension the Court
sets out Articles 82 and 83:
" ARTICLE 82
Establishment of Common External Tariff
The Member States shall establish and maintain a common external tariff in
respect of all goods which do not qualify for Community treatment in
accordance with plans and schedules set out in relevant determinations of
COTED.
ARTICLE 83 Operation of the Common External Tariff
(1) Any alteration or suspension of the Common External Tariff on any item
shall be decided by COTED.
(2) Where:
(a) a product is being produced in the Community;
(b) the quantity of the product being produced in the Community does not
satisfy the demand of the Community; or
(c) the quality of the product being produced in the Community is below the
Community standard or a standard the use of which is authorized by COTED.
COTED may decide to authorize the reduction or suspension of the Common
External Tariff in respect of imports of that product subject to such terms
and conditions as it may decide, provided that in no case shall the product
imported from third States be accorded more favourable treatment than
similar products produced in the Member States.
(3) The authority referred to in paragraph 2 to suspend the Common External
Tariff may be exercised by the Secretary-General on behalf of COTED during
any period between meetings of COTED. Any exercise of such authority by the
Secretary-General shall be reported to the next meeting of COTED.
(4) Each Member State shall, for the purpose of administering the Common
External Tariff, appoint a competent authority which shall be notified to
COTED.
(5) COTED shall continuously revise the Common External Tariff, in whole or
part, to assess its impact on production and trade, as well as to secure its
uniform implementation throughout the Community, in particular, by reducing
the need for discretionary application in the day to day administration of
the Tariff."
[5] Although the CET is required to be established and maintained by the
individual Member State, the regional administration of the CET is assigned
to COTED (Article 82). The power to authorize the reduction or suspension of
the CET is vested in COTED by Article 83(2) and between meetings of COTED
may be exercised by the Secretary-General on behalf of COTED.
[6] The CET in relation to the Community was first agreed at a special
meeting of the Common Market Council in July 1990. In 1992 the Common Market
Secretariat, which later became the Caribbean Community Secretariat,
described in Article 23(1) of the Revised Treaty as the principal
administrative organ of the Community, published a booklet entitled "Administrative
Arrangements relating to - The Alteration or Suspension of Rates under the
Common External Tariff..." The Court shall refer to this booklet as the "CET
guidelines". The CET guidelines pre-date the Revised Treaty but are still
applied to the operation of the CET under the Revised Treaty.
[7] The CET guidelines require that applications for suspension of the CET
must be first made to the Trade Ministry of a Member State. An applicant for
suspension must state the reasons for his request and the name of the Member
State from which supplies were previously maintained as well as the efforts
made to source the product from within the Community. A Member State may
then take the matter to COTED.
[8] In or about May 2005 at its 19th regular meeting COTED affirmed the
application throughout the Community of the 15% CET on cement. There was a
further agreement to implement a regime of tariff protection for TCL for a
period of 3 years in Trinidad and Tobago and Jamaica. COTED in September
2006 granted waivers of the 15% CET to several Member States including
Trinidad and Tobago and Suriname. In September 2006, Guyana unilaterally
suspended the CET for one year, a suspension which continues at present and
is the subject of separate proceedings before this Court. The current
proceedings arise out of two suspensions of the CET in relation to cement in
2008.
THE SUSPENSION IN RELATION TO JAMAICA
[9] In or about July 2008, Jamaica applied for a suspension of the CET in
relation to cement. By letter dated September 5, 2008 the Secretary-General
indicated that Barbados had the capacity to supply. Therefore suspension of
the CET could not be granted "at this time". However, a few days later
pursuant to Article 83(3) of the Revised Treaty the Secretary-General
granted authorizations for suspension of the CET to Jamaica in respect of
grey cement in the amount of 240,000 metric tonnes. The period of the
suspension of the CET was from September 10, 2008 to September 9, 2009. The
Secretary-General's directive was reported to the 26th Meeting of COTED at
Georgetown, Guyana on November 24 and 25, 2008. The meeting took note of the
Secretary-General's report.
[10] No reason was given for the Secretary-General's apparent volte face,
and TCL was not consulted or notified.
[11] The request for a suspension of the CET in relation to Jamaica was
seemingly made within one month of the TCL Jamaican subsidiary, Caribbean
Cement Company Limited, commissioning 40% additional capacity at a cost of
US$126 million.
[12] It further appears that COTED had available for its consideration at
its 26th Meeting in Georgetown an expert report intituled "Report on the
Audit of the Supply Capacity and Demand for Cement in the Region" (hereinafter
called "the Audit Report"). The Audit Report is dated October 10, 2008 and
was a working document at the 26th COTED meeting.
[13] Table 5 of the Audit Report shows that the TCL Group consistently
supplied between 79% and 93% of the region's demand for cement between 2001
- 2008. The forecast was that it would supply 100% of that demand in 2009
and 93% in 2010. The CET guidelines contemplate that the CET might be
suspended where production levels of goods are "insufficient to satisfy a
minimum of 75% of regional demand for those goods."
THE SUSPENSION IN RELATION TO SURINAME AND SIX OECS STATES
[14] In 2008 Antigua and Barbuda, Dominica, Grenada, St. Lucia, St. Kitts
and Nevis and St. Vincent ("the six OECS states") and Suriname sought from
COTED a suspension of the CET on grey cement for a period of two years.
[15] At the 26th Meeting of COTED held in Georgetown, Guyana on November 24
and 25, 2008, COTED considered and granted to the six OECS states and
Suriname a suspension of the CET for one year in certain specified amounts
subject to review at the end of that year. It is not clear what prompted
COTED's decision as no reasons were provided.
IMPACT OF SUSPENSIONS ON TCL
[16] TCL alleges that in June 2005 the TCL Group to the knowledge of COTED
entered into a US$105 million loan with the International Finance
Corporation ("IFC") for the purpose of upgrading and expanding its
production facilities in Jamaica and Trinidad. Before the loan was taken
COTED was aware that the IFC was considering financing the expansion of
TCL's production capacity. TCL entered into the loan in reliance on the fact
that COTED had affirmed the 15% CET on cement and an undertaking from the
Ministry of Trade in Jamaica that the CET regime on cement would remain in
place in Jamaica for at least three years. However, in September 2006 COTED
authorized the suspension of the CET in Suriname, Trinidad and Tobago and
the six OECS states without notifying TCL, and Guyana in the same month
unilaterally suspended the CET in relation to cement.
[17] As a result of those suspensions of the CET TCL alleges that it has had
to restructure its loans by borrowing a further US$25 million and extending
the term of the loan from 9 years to 12 and then 15 years.
[18] TCL estimates that as a result of the suspensions of 2008 it will
suffer financial loss in 2009 in the sum of some US$35 million: US$5 million
from an anticipated 25% reduction in its price and US$30 million calculated
by applying a weighted average contribution factor to the anticipated volume
of imported non-CARICOM cement.
[19] No detailed assessment of these allegations is necessary at this stage.
THE PROPOSED PROCEEDINGS
[20] By this application TCL , a private entity, seeks to obtain special
leave pursuant to Article 222 of the Revised Treaty to file an originating
application. TCL's proposed application seeks (1) declarations that the
COTED suspension and the Secretary-General's suspension are irrational or
unreasonable, illegal and null and void. (2) orders setting aside or
quashing these suspensions (3) a restraining order against the Community and
(4) a mandatory injunction against the Community to revoke the suspensions
and notify those affected.
[21] At this stage it is only necessary to see whether TCL has satisfied the
conditions for special leave set out in Article 222 of the Revised Treaty.
LOCUS STANDI OF TCL
[22] Article 222 of the Revised Treaty provides:
" ARTICLE 222
Locus standi of Private Entities
Persons, natural or juridical, of a Contracting Party may, with the special
leave of the Court, be allowed to appear as parties in proceedings before
the Court where:
(a) the Court determined in any particular case that this Treaty intended
that a right or benefit conferred by or under this Treaty on a Contracting
Party shall enure to the benefit of such persons directly; and
(b) the persons concerned have established that such persons have been
prejudiced in respect of the enjoyment of the right or benefit mentioned in
paragraph (a) of this Article; and
(c) the Contracting Party entitled to espouse the claim in proceedings
before the Court has:
(i) omitted or declined to espouse the claim; or
(ii) expressly agreed that the persons concerned may espouse the claim
instead of the Contracting Party so entitled; and
(d) the Court has found that the interest of justice requires that the
persons be allowed to espouse the claim."
PERSONS, NATURAL OR JURIDICAL OF A CONTRACTING PARTY
[23] TCL has established satisfactorily that it is a limited liability
company incorporated in Trinidad and Tobago under the Companies Ordinance Ch.
31 No.1 of the Revised Laws of Trinidad and Tobago (1950) and that the
company was continued under the Companies Act Chap. 81:01. Its registered
office is in Trinidad and Tobago.
[24] Applying the decision of this Court in Trinidad Cement Limited v The
State of the Cooperative Republic of Guyana[FN1] at paragraph [35], TCL is a
"person, natural or juridical, of a Contracting Party". The Respondent
Community has not contended otherwise. The Community has full juridical
personality (see Article 228 (1) of the Revised Treaty) and can be sued for
the acts or omissions of COTED, an organ of the Community (see Article 10
(2) (b) of the Revised Treaty), and those of the Secretary-General acting on
behalf of COTED.
----------------------------------------------------------------------------------------------------------------
[FN1] [2009] CCJ 1 (OJ)
----------------------------------------------------------------------------------------------------------------
CONFERMENT OF A RIGHT OR BENEFIT
[25] This Court held in Trinidad Cement Limited v The State of the
Cooperative Republic of Guyana (supra) that Article 82 of the Revised Treaty
set out earlier in this judgment imposes an obligation on Member States to
establish and maintain a common external tariff and that such obligation on
Member States is of potential benefit to private entities in the Community
who trade in goods to which the CET is applied viz. in this case cement.
[26] Counsel for the Community, however, contended that the right or benefit
deriving from Article 82 is subject at all times to a power of alteration
and suspension. Accordingly no right or benefit could accrue directly and
automatically to TCL.
[27] Counsel for the Community further submitted that Article 222 dealt only
with a restricted category of cases in which rights or benefits of persons
under the Revised Treaty were prejudiced. She contended that TCL's case,
which was that an organ of the Community was acting ultra vires, did not
fall within that category. She urged upon the Court that Article 187 (Scope
of the Chapter) in relation to Disputes Settlement had to be read with
Article 211 (Jurisdiction of the Court in Contentious Proceedings). It would
then be apparent that 'allegations that an organ or body of the Community
has acted ultra vires" (see paragraph (c)
of Article 187) are only justiciable by the Court if made in a dispute
brought to the Court by a Member State.
[28] These arguments are misconceived. First, while it is true to say that a
right or benefit flowing from Article 82 can be suspended or altered at the
discretion of the body administering the CET, there are limitations on the
circumstances in which that discretion is exercisable and arguably on the
manner of its exercise. Such discretion comes into play only if the
conditions set out in Article 83(2) are fulfilled. The focus of the
submissions of both parties was that it had to be established that the
quantity of the product being produced in the Community did not satisfy the
demand of the Community. Whether that condition was established depends on
the material placed before or available to COTED whether acting by itself or
by its delegate, the Secretary-General.
[29] With respect to COTED's decision involving Suriname and the six OECS
states, the Audit Report and the CET guidelines appear to establish that the
TCL Group was meeting regional demand at above the benchmark of 75% of the
demand. In the absence of reasons it appears prima facie that the condition
required for the authorization of the suspension was not established. There
has been no evidence led nor suggestion made so far in these proceedings
that either of the decisions under challenge was based on the quality of the
cement produced in Trinidad and Jamaica by the TCL group. As regards the
Secretary-General's decision, the unexplained retraction of the refusal to
authorize the suspension coupled with the Audit Report and the new increased
installed capacity at Caribbean Cement Limited equally suggest that the
conditions of Article 83 had not been fulfilled.
[30] Further, Article 187 does not purport to present an exhaustive
statement of the types of dispute that may come before this Court. Moreover
Article 211 deals with the quite different matter of jurisdiction, and when
read with Article 222 gives the Court power, as a matter of procedure, to
enable private entities to appear before it in all manner of disputes
concerning the interpretation and application of the Revised Treaty
including allegations that a body or organ of the Community acted ultra
vires.
[31] There was a further contention that to admit a direct challenge by a
private party to the decision and process of the Community would greatly
hinder the functioning of the Community and constrain the exercise of state
sovereignty by Member States parties to the Revised Treaty. The Court does
not agree.
[32] By signing and ratifying the Revised Treaty and thereby conferring on
this Court ipso facto a compulsory and exclusive jurisdiction to hear and
determine disputes concerning the interpretation and application of the
Revised Treaty, the Member States transformed the erstwhile voluntary
arrangements in CARICOM into a rule-based system, thus creating and
accepting a regional system under the rule of law. A challenge by a private
party to decisions of the Community is therefore not only not precluded, but
is a manifestation of such a system. Therefore it is not correct to say that
by such challenge the functioning of the Community will be greatly hindered
or that the exercise of state sovereignty by Member States parties to the
Revised Treaty would be unduly constrained. The rule of law brings with it
legal certainty and protection of rights of states and individuals alike,
but at the same time of necessity it creates legal accountability. Even if
such accountability imposes some constraint upon the exercise of sovereign
rights of states, the very acceptance of such a constraint in a treaty is in
itself an act of sovereignty. In the words of The Permanent Court of
International Justice in the Case of the S.S. "Wimbledon"[FN2]:
"The Court declines to see in the conclusion of any Treaty by which a State
undertakes to perform or refrain from performing a particular act an
abandonment of its sovereignty. No doubt any convention creating an
obligation of this kind places a restriction upon the exercise of the
sovereign rights of the State, in the sense that it requires them to be
exercised in a certain way. But the right of entering into international
engagements is an attribute of State sovereignty."
----------------------------------------------------------------------------------------------------------------
[FN2] PCIJ Reports, Series A, No. 1, at page 25 (1923); and see also the
Separate Opinion of Judge Anzilotti in the Austro-German Customs Union Case,
PCIJ Reports, Series A/B No. 41 (1931) at pages 57-58.
----------------------------------------------------------------------------------------------------------------
FURTHER CONTENTION OF THE COMMUNITY
[33] It was further contended by counsel for the Community that since the
suspension of the CET was an act of the Member States, the proceedings
should have been brought against them. This argument fails because the
challenge of the applicant is to the authorization of the suspension by
COTED and the Secretary-General and therefore the Community, to which there
is attributable liability for the actions of COTED and the
Secretary-General, is the proper defendent.
Prejudice in the enjoyment of a right or benefit
[34] The Community argued that since the right or benefit under Article 82
was subject to alteration or suspension of the CET there was no direct or
automatic right or benefit conferred on TCL and hence no prejudice to such
right or benefit. There was, it was contended, only a qualified right or
benefit, so there could be no loss. As set out in [28] above, the premise on
which this argument is based, is misconceived. This Court held in the first
Trinidad Cement case[FN3] that failure by any particular Member State to
fulfil an obligation to establish and maintain the CET was of potential
prejudice to beneficiaries of the CET. By parity of reasoning the unlawful
or improper grant of a waiver of the CET in relation to cement is of
potential prejudice to a beneficiary of the CET such as TCL.
----------------------------------------------------------------------------------------------------------------
[FN3] Supra at [34] of that judgment.
----------------------------------------------------------------------------------------------------------------
[35] The Community also submitted that TCL had not actually established that
the suspension reduced the demand for or the price of its product. The
Community relied on a statement in the Audit Report that regional producers
of cement would not be able to supply 100% of the regional demand and that
"the CARICOM region will continue to rely on extra-regional imports to
satisfy part of its demand".
[36] The Court has already demonstrated that under the CET guidelines the
suspension of the CET was only triggered by a shortfall of the CET in excess
of 25% of the regional demand for cement. In any event, as indicated in
[13], closer reading of the Audit Report suggests that the authors
considered that TCL Group had the capacity to satisfy more than 75% of the
region's demand for cement.
[37] As regards the proof of prejudice the Court has set out the allegations
by TCL of projected financial loss arising out of the relevant suspensions.
Having regard to the lack of any challenge to these allegations, but without
making any final determination on them, the Court holds that TCL has
advanced an arguable case that it satisfies Article 222(b) as regards
prejudice.
ESPOUSAL OF THE CLAIM BY TRINIDAD AND TOBAGO
[38] Counsel for TCL contends that its instructing attorney's letter dated
December 2, 2008 inviting the Attorney-General of Trinidad and Tobago to
espouse its claim or give permission to TCL to do so, on or before December
8, 2008 was sufficient to satisfy Article 222(c). Any reservations one might
have had in this regard were dispelled by the Attorney-General's reply dated
December 8, 2008, which simply stated that receipt of the letter of December
2 was acknowledged and "its contents have been noted". There was no
suggestion that further time was needed, and indeed since the commencement
of these proceedings on December 11, 2008 the Attorney-General has
manifested no desire to espouse the claim advanced by TCL. For these reasons
the Court rejects the contention of the Community that a period of six days
was not enough to enable the Attorney-General to decide whether or not to
espouse the claim. The Court holds that Article 222(c) is satisfied.
THE INTERESTS OF JUSTICE
[39] Counsel for TCL argues forcefully that his client had entered into a
loan arrangement with the IFC on the faith that the CET on cement would be
properly administered over the period of 2005 to 2008. TCL has alleged that
it has been forced to obtain a further advance of US$25 million and to
restructure the current loan. In these circumstances and in the light of the
Court's preliminary conclusions as to fulfilment of the conditions of
Article 83(2) in respect of both decisions to authorize the suspension of
the CET, it is in the interests of justice that TCL should have an
opportunity to commence proceedings against the Community and to prove, if
possible, in what way it has been damnified, if at all.
THE APPLICABLE LAW
[40] Counsel for TCL submitted that this Court should review the decisions
of COTED and the Secretary-General on the grounds of illegality,
irrationality and procedural impropriety as laid down by Lord Diplock in
CCSU v Minister for the Civil Service[FN4]. It follows from the reasons
stated earlier in this judgment that it is not necessary to deal with these
submissions now. The Court, does however, wish to make the following
observations.
----------------------------------------------------------------------------------------------------------------
[FN4] [1985] AC 374, 410-11
----------------------------------------------------------------------------------------------------------------
[41] The search in the application and interpretation of the Revised Treaty
is to discover Community law. In this quest the Court has to apply such
rules of international law as may be applicable [Art 217 (1) of the Revised
Treaty]. Part of that law is the emerging customary international law on,
for example, the concept of ultra vires acts of organs of international
organizations.[FN5] The Court may also consider "the general principles of
law recognized by civilized nations". If one applies Article 217 of the
Revised Treaty the principles of law common to the principal legal systems
of the Community are a source of law for this Court, as it is for the
International Court of Justice: see Article 38(1)(c) of the Statute of the
International Court of Justice. This Court may take into account the
principles and concepts common to the laws of Member States. The search is
for general principles of law common to Member States. It is not necessary
for the principle to be expressed identically in all Member States. It is
sufficient if the general principle is widely accepted: see the opinion of
Advocate General Sir Gordon Slynn in AM & S Europe Ltd v Commission[FN6] and
of the ECJ[FN7]. If the general principle is widely accepted throughout the
Community and relevant it may become part of Community law. These are tests
that will have to be applied if this Court is asked to strike down the
decisions authorizing suspension of the CET on grounds that derive from the
domestic law applicable to judicial review in common law jurisdictions.
----------------------------------------------------------------------------------------------------------------
[FN5] See on this subject the International Law Commission, Report on the
work of its fifty-sixth session (3 May to 4 June and 5 July to 6 August
2004), General Assembly, Official Record, Fifty-ninth Session, Supplement
No. 10 (A/59/10), Chapter V.
[FN6] [1983] QB 878, 909, 910
[FN7] [1983] QB 878, 949
----------------------------------------------------------------------------------------------------------------
CONCLUSION
[42] For the reasons stated above the Court granted special leave to the
Applicant to commence proceedings before the Court as a private entity
pursuant to Article 222 of the Revised Treaty and reserved the issue of
costs to a later stage of the proceedings. |
|
