Rock Hard Cement Ltd v The State of Barbados

JurisdictionCaribbean States
CourtCaribbean Court of Justice
JudgeA Saunders,J Wit,W Anderson,M Rajnauth-Lee,D Barrow,A Burgess,P Jamadar
Judgment Date10 Jun 2020
Docket NumberCCJ Application No BBOJ2019/001



composed of A Saunders, President and J Wit, W Anderson, M Rajnauth-Lee, D Barrow, A Burgess and P Jamadar, Judges

CCJ Application No BBOJ2019/001

Rock Hard Cement Limited
The State of Barbados
First Defendant


The Caribbean Community
Second Defendant


Arawak Cement Company Limited

Rock Hard Cement Limited, by Mr Allan Wood QC, appearing with Ms Symone Mayhew, Attorneys-at-Law

the State of Barbados, by Ms Gayl Scott, appearing with Mr Jared Richards, Attomeys-at-Law

the Caribbean Community, by Dr Corlita Babb-Schaefer, appearing with Mr O'Neil Francis, Attomeys-at-Law

Arawak Cement Company Limited, by Mr Eamon Courtenay SC, appearing with Mr Raphael Ajodhia, Attorneys-at-law

Derogation from the CET — substantial legitimate expectation — procedural legitimate expectation — legitimate expectation in international law — requirement for consultation — Article 26 of RTC — judicial review of Community decisions — Protocol to Amend Article 83 of the RTC — Revised Forms and Procedures for processing requests for suspension of the CET

issues on the 10 th day of June 2020, the following:

Having regard to the originating application filed at the Court on 11 November 2019, together with the annexures thereto, the defence of the State of Barbados filed on 26 November 2019 and the annexures thereto, the defence of the Caribbean Community filed on 25 November 2019 and the annexures thereto, the reply filed on 2 December 2019 and the annexures thereto, the rejoinder of the State of Barbados filed on 11 December 2019 and of the Caribbean Community filed on 6 December 2019, the statement of the Intervener filed on 6 February 2020 and the reply of Rock Hard Cement Limited thereto filed on 12 February 2020, the written submissions of Rock Hard Cement Limited filed on 21 January 2020, of the State of Barbados filed on 12 February 2020, of the Caribbean Community filed on 3 February 2020 and the reply of Rock Hard Cement Limited thereto filed on 10 February 2020, the written submissions of Arawak Cement Company Limited filed on 24 February 2020 and to the public hearing held on 3 March 2020

and after considering the notes and oral observations of:


The Court granted the Claimant, Rock Hard Cement Limited, special leave on 7 November 2019 to commence proceedings against the Defendants for judicial review of a decision of the Caribbean Community's Council for Trade and Economic Development (“COTED”). COTED is the organ of the Community (the Second Defendant) that is responsible for determining the Common External Tariff (“CET”) of all goods which do not qualify for Community treatment. On 17 June 2019, COTED granted the application by the State of Barbados (the First Defendant) to suspend the CET of 5% on ‘other hydraulic cement’ and to replace it with a tariff of 35%. The application sought a suspension for five years, but it was granted for two years. Rock Hard alleged that this decision was in breach of a legitimate expectation that Barbados would maintain the CET rate of 5% on other hydraulic cement, or that at least the CET rate would not be changed without prior consultation with Rock Hard. The Court also granted Arawak Cement Company Limited, the only domestic producer of cement in Barbados, leave to intervene in the proceedings.


On 12 June 2019 Barbados applied to COTED for the CET on other hydraulic cement to be suspended for five years, and for it to be replaced with a tariff of 35% for that period. The request was on the basis that there was - a critical shortfall in government revenue being experienced in Barbados, a need to support an industry in that country, and that the product was of strategic importance to the economic development of Barbados. The request was made pursuant to sub-paragraphs (d), (f) and (g) of Article 83(3) of the Revised Treaty of Chaguaramas (“RTC”), as amended by the Protocol to Amend Article 83 (“the Protocol”).


At the Eightieth Special Meeting of COTED, held on 17 June 2019, COTED authorised the suspension of the CET and application of a tariff of 35% on other hydraulic cement for a period of two years. There was no consultation with or even notice given to Rock Hard prior to the making of the request, even though, at the time of the granting of the request, both Defendants were involved with Rock Hard in proceedings before the Court concerning the correct classification of cement imported by Rock Hard (“Rock Hard Cement”). Those latter proceedings resulted in a Judgment delivered on 6 August 2019 1 (“the Classification Ruling”), in which the Court ruled that Rock Hard Cement was to be classified as other hydraulic cement for which the applicable CET range is 0–5%.


Rock Hard was only notified of the suspension at a meeting with representatives of Barbados on 2 September 2019, where Barbados also indicated that the Statutory Instrument to implement the 35% tariff was being prepared. By letter dated 24 September 2019, Barbados confirmed that the new tariff was implemented on 9 September 2019 when the Customs Tariff (Amendment) Order 2019 was published in the Supplement to the Official Gazette No. 73.


In its Originating Application, Rock Hard sought judicial review to quash the grant of the suspension of the CET to Barbados by COTED, an order restraining Barbados from applying the tariff rate of 35% to the importation of other hydraulic cement, and a further order directing Barbados to apply instead the CET of 5%. Rock Hard argued that the suspension was unlawful, irrational, in breach of Rock Hard's legitimate expectation, and ultra vires. The Court considered the grounds argued by Rock Hard under the following headings: substantive legitimate expectation; consultation, which subsumed the claim to a procedural legitimate expectation; and judicial review for ultra vires on other grounds.


In 2015, the tariff on other hydraulic cement stood at 60% as a result of a derogation sought and obtained from COTED by Barbados in 2001. At Rock Hard's instance, Barbados unilaterally restored the tariff to the CET rate of 5% expressly to support Rock Hard's business, as confirmed by the Cabinet Note confirming the reduction. Rock Hard based its claim of a substantive legitimate expectation on its communications with Barbados that resulted in that reduction. Rock Hard claimed that it relied on those communications to invest US$5M to establish its business with the expectation that Barbados would not alter or seek an alteration of the CET of 5% on other hydraulic cement. Rock Hard also asserted that, during the previous proceedings before this Court involving the parties, COTED would have been made well aware of the position of Rock Hard as being the sole importer of other hydraulic cement into Barbados with a legitimate expectation that Barbados would always apply the CET of 5% on such imports.


Barbados denied that the communications in question gave rise to a legitimate expectation that it would permanently apply the CET of 5% on other hydraulic cement, or that a suspension of that rate would never be sought, as this would mean that successive Governments of Barbados would also be bound not to ever invoke the right afforded by Article 83 of the RTC to seek suspension or alteration of the CET. Barbados also argued that Rock Hard was aware of its intent to suspend the CET and increase the tariff since July 2018 and that, even if Rock Hard had any legitimate expectation as claimed, Barbados would have been entitled to disappoint it where overriding public interest considerations existed. The Community and the Intervener both agreed with Barbados, with the Intervener adding that Barbados was not competent to make any unqualified representation that would bind the Community and that COTED, the actual decision-maker, did not make any such representation.


The Court examined the doctrine of legitimate expectation generally and found that, as was stated by the International Court of Justice (‘ICJ’) in the case of Bolivia v Chile, 2 the doctrine has no place in general international law. The Court concluded, however, that principle and authority alike support the applicability of the doctrine of legitimate expectation in regional economic integration arrangements, such as the Caribbean Community and the European Union. As individuals also derive rights under Community treaty arrangements, in a case of this kind where the Community is the ultimate decision maker, the action of the Community (and of States acting on behalf of the Community) may create legitimate expectations in a person which Community law will protect.


In Trinidad Cement Limited v. The Community 3, this Court affirmed the applicability of legitimate expectations in Caribbean Community law in a context not very different from that in this case and emphasised that adherence to the rule of law required that the Community not disappoint legitimate expectations it had created unless an overriding public interest consideration so required, or the possibility of the adoption of a change in policy was reasonably foreseeable. The Court also noted that the prerequisites for invoking legitimate expectations were more fully spelt out in the EU cases, and referenced the case of Branco v Commission where the ECJ said that: 4

Three conditions must be satisfied in order to claim entitlement of the protection of the legitimate expectation. First, precise, unconditional and consistent assurances originating from authorized and reliable sources must have been given to the person concerned by the community authorities. Secondly, those assurances must be such as to give rise to a legitimate expectation on the part of the person to whom they are addressed. Third, the assurances given must comply with the applicable rules.


The Court also cited the subsequent case of Infinis...

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