-dismisses TCL suit
The Caribbean Court of Justice (CCJ) yesterday dismissed a claim by Trinidad Cement Limited (TCL) against the Caribbean Com-munity (CARICOM) for suspending the CET on cement imports, but it has set criteria for the Secretary General to follow in future considerations on the issue having found a procedural flaw in the just concluded case.
The CCJ declared yesterday that Secretary General Dr. Edwin Carrington was “wrong” to accept the “no objections” response from Trinidad and Tobago as a sufficient answer to his inquiry into a request for suspension by Jamaica, adding that this practice “must cease.” It ruled that the Secretary-General, before authorising a suspension, must satisfy himself that he has received specific answers that would allow him to determine whether the quantity of the product being produced in the Community can satisfy the demand of the requesting state. “Before the Secretary-General may exercise his discretion to authorise a suspension, the treaty provisions require that he must be satisfied as to the relationship between demand and supply with respect to the commodity concerned and not with whether a Member State objects or does not object to a request for suspension,” the CCJ said.
In its judgment, the CCJ suggested that the regional Secretariat have a form drawn up and provided to competent authorities for them to complete and submit to it. The form would require the authority to disclose, inter alia, what entities, if any, a competent authority has consulted and whether there is a local producer able and willing to satisfy the demand on a timely basis of the member state requesting permission to suspend. According to the court, this would greatly assist the Secretary-General in the discharge of his functions.
TCL challenged two decisions of the Community which had resulted in authorisation being granted to suspend the Common External Tariff (CET) on imports of grey cement into certain countries- in each case the authorisation granted was for suspension of the CET for one year. TCL, in its application heard in April this year, claimed that each of the two decisions was ultra vires and should be quashed by the Court.
The first of the two decisions was made by the Secretary-General on or about 23rd September, 2008. It authorised suspension by Jamaica from 10th September, 2008. The quantity of grey cement in respect of which that suspension was sought and granted was 240,000 MT. The second decision challenged was made by the CARICOM Council for Trade and Economic Development (COTED) at its 26th Meeting held in Guyana on 24th November, 2008. At that Meeting COTED authorised suspension of the CET on cement for one year for the Member States of Antigua and Barbuda, Dominica, Grenada, Saint Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines and Suriname.
Feedback
Prior to reaching a decision in Jamaica’s case Caricom’s Secretary General had sought feedback from countries in the region and received a “no objections” response from the Competent Authority in Trinidad and Tobago where TCL is headquartered. The authorization was then granted. But TCL complained however that it was not consulted before the decision was made.
TCL had not claimed damages in the action but was seeking relief to quash and revoke the decision of the Secretary-General. But the CCJ observed that while “the Secretary-General’s procedural flaw must attract an appropriate declaration it is not in these circumstances of a sufficiently serious nature to warrant the annulment of his decision.”
The court concluded that in the future when the Secretary-General takes a decision to authorise a suspension his authorisation should be supported by a brief statement of the reason or reasons for arriving at his decision. The CCJ also registered its concern that COTED too must be supplied with accurate, relevant and timely information when it meets to consider a suspension of the tariff, noting that in this regard appropriate forms must also be devised for both importers at the domestic level as well as for competent authorities. “The importer should provide evidence of unfulfilled orders; evidence of the response of the regional producer including transportation logistics (force majeure excepted) and information showing what efforts they have made to obtain regional supplies,” the judgment stated.
Ultra vires
However, the court noted that as it related to COTED’s authorisation, in all the circumstances, it found no basis for regarding the decision made as being ultra vires.
“This Court is unable to say that COTED in the exercise of its discretion to authorise the suspension could not rationally rely on its past supply experience and use that as a basis for being sceptical about the actual delivery of supplies of cement in a timely manner. The amount of cement in respect of which the suspensions were given and the fact that the suspensions were only for a one year duration, although suspension for two years was sought, indicates an observance of the principle of proportionality which must at all times be adhered to by COTED. As previously indicated, in reviewing COTED’s discretion this Court is not entitled to substitute its own judgment for that of COTED. If COTED’s decision is so wholly disproportionate as to be unconnected with the facts, the decision might be set aside and the application for the suspension remitted to COTED for fresh consideration. Moreover, as previously indicated (See: [27] above), COTED deliberations properly emphasised that their dealings in the market would follow the rule: “no matter what, we source first from within”. The Court wholly endorses this principle and considers that it should at all times be reflected in the actions of the Member States.”
It therefore, dismissed all the other claims by TCL for relief. However, it ordered that Community should bear one half of the costs of TCL.
CCJ judges comprising its President, Michael de la Bastide and Justices Rolston Nelson, Adrian Saunders, Desiree Bernard and Jacob Wit presiding in the case, observed that given the court’s duty to enforce the rule of law and to render the Revised Treaty of Chaguaramas (RTC) effective, competence to review the legality of acts adopted by Community institutions must perforce include competence to award appropriate relief to private entities that have suffered and established loss as a result of an illegal act or omission on the part of the Community.
TCL had contended that it was in a position to satisfy more than 75% of the regional demand for cement and that according to the applicable rules there was no basis for either the Secretary-General or COTED to authorise a suspension of the tariff.
But in its interpretation of Article 83, the court rejected the argument of TCL that the CET on cement may not or ought not to be suspended if a supplier was in a position to satisfy in excess of 75% of regional demand ruling that the RTC makes no such suggestion. According to the court, Article 83(2) (b) of the RTC gives as one of the criteria for triggering the exercise by COTED of its discretion to authorise a suspension of the CET the circumstance that “the quantity of the product being produced in the Community does not satisfy the demand of the Commun-ity.”
The judgment noted that this criterion does raise a question of interpretation. Offering the example of cement, the court asked whether COTED has the power to authorise a suspension of the 15% rate on cement under Article 83(2) (b) only if TCL’s actual production does not satisfy regional demand. “Or is it that quite apart from and without prejudice to that circumstance, COTED’s power to authorise a suspension of the rate also extends to situations where a particular Member State is not having its unique demand met by regional producers?” the court asked.
Sensible
It held that Article 83(2) (b) must be interpreted in a sensible manner. It pointed out that a suspension of a rate is intended to be a temporary measure and that authorisation to suspend is granted only to a particular member state or member states in response to a specific request from that or those member States. It said further that, COTED may authorise a suspension of a rate not only where the quantity of the product being produced in the Community does not satisfy the demand of the Community as a whole but also where the ongoing demand of a particular member state will not be met either on a timely basis or at all by the regional producers of the commodity.
“Chief among these consequences is that under the RTC, both at the domestic and the international level, a duty exists to ensure that all the processes involved in making and determining requests for the reduction or suspension of rates under the CET should be transparent and efficient,” it ruled.
The court said that COTED and the Secretary-General might consider whether under the RTC it is still necessary for the Secretary-General to make an inquiry of the competent authority of member states which clearly do not produce the relevant commodity since unanimity is no longer a guiding principle and the relevant articles of the RTC provide for criteria relating to the production and quality of the particular commodity. It added that in any event, the member states inquired of are required to respond and to give (and the Secretary-General should insist upon receiving at least from those member states known to be producers of the commodity in question) a specific answer to the question posed.
Further, the judgment pronounced on a letter dated September 22, 2008 which the Chief Executive Officer of the TCL Group wrote to the Secretary General expressing surprise that TCL had not been contacted with respect to its ability to supply the quantities of cement demanded by Jamaica. According to the court, the Secretary-General does not admit receiving the TCL letter before he issued his authorization. The letter was sent the day before he granted Jamaica’s request.
“On balance, the Court cannot make a finding that TCL’s letter of 22nd September 2008 was in fact received by the Secretary-General before he issued his authorisation. The Court, however, considers that while the Secretary-General has no duty to solicit the provision of information by private entities, if information comes to his attention from a private entity that contradicts or casts a different light on the submission received from a relevant Competent Authority then, as indicated above, the Secretary-General has a responsibility to ascertain from the relevant Competent Authority whether there has been the requisite level of consultation between the Competent Authority and all relevant producers of the commodity in question,” the court said. It added that there may be serious implications if there is a failure of the duty to consult.
Also, the court observed that a reversal of the commercial trade arrangements put in place by private sector bodies in Jamaica on the strength of the Secretary-General’s decision may take some time, perhaps months, to be realised in an orderly manner. It added that a decision to annul a decision of this nature without an adequate grace period being provided can cause serious disruption of commercial transactions already concluded. “Even though this case was accorded urgent treatment, it was not possible to hear and conclude it before the beginning of April 2009 by which time the suspension had only some months left to run,” it explained.
In a separate matter, the CCJ recently reserved judgment in the case of TCL and TCL Guyana Incorporated (TGI) against the Guyana Government over the application of the CET. Guyana has conceded that it was wrong for breaching the Revised Treaty of Chaguaramas by unilaterally suspending the CET on cement imported from countries outside of Caricom.
TCL and TGI which are seeking damages in the case against Guyana had accused the government here of breaching the Revised Treaty of Chaguaramas by unilaterally suspending the CET on cement imported from countries outside of Caricom and was later granted leave to sue the government after approaching the CCJ.
TCL and TGI alleged a breach by Guyana of the provisions of Article 82 of the revised treaty under which Guyana is obliged to establish and maintain a Common External Tariff on cement imported into Guyana from outside of Caricom. The CET is incorporated into the laws of Guyana.
But Guyana has argued that TCL and TGI were unable to meet the demands of local distributors, and that the company’s inability to do so has continued.