Rudisa Beverages & Juices N.v and Caribbean International Distributors Inc. v The State of Guyana

• Jurisdiction: Caribbean States
• Judge: Byron, P. CCJ.,Nelson, J. CCJ.,Saunders, J. CCJ.,Wit, J. CCJ.,Hayton, J. CCJ.
• Judgment Date: 08 May 2014
• Court: Caribbean Court of Justice
• Docket Number: CCJ Application No. OA 3 of 2013
• Date: 08 May 2014

Caribbean Court of Justice

Byron, P. CCJ.; Nelson, J. CCJ.; Saunders, J. CCJ.; Wit, J. CCJ.; Hayton, J. CCJ.

CCJ Application No. OA 3 of 2013

Rudisa Beverages & Juices N.V. and Caribbean International Distributors Inc.

and

The State of Guyana

Appearances:

The Claimants, by Mr. Hans Lim A Po, Attorney-at-law.

The Defendant, by Mr. Mohabir Anil Nandlall, MP and Ms. Annette Singh, Attorneys-at-law; and

Trinidad and Tobago, by Ms. Donna Prowell, Attorney-at-law.

International Law - Treaty — Interpretation — Revised Treaty of Chaguaramus (RTC) — Applications brought by private entities — Threshold met by private entities in order achieve standings before the Court — Special leave stage — Environmental levy or tax — Whether Section 7 A of the Customs Act which was discriminatory and inconsistent with the RTC could be excused where Guyana claimed that it had made a good faith effort to comply with treaty obligations but it had failed — Whether the environmental levy could be seen as an import duty — Consideration of Sociaal Fonds voor de Diamantarbeiders v S.A Ch. BRachfeld & Sons and Chougol Diamond Co Joined Cases 2/69 and 3/69 [1969] E.C.R. 211 — Entitlement to reliefs — Mandatory Orders — Whether the Court should compel Guyana to revoke and remove section 7 A of the Customs Act — Coercive order — Consideration of Trinidad Cement Limited v The Caribbean Community [2012] CCJ 4 (OJ) — Test to be met in order to justify an award of compensatory damages for breach of the RTC — Consideration of Trinidad Cement Limited and TCL Guyana Incorporated v The State of the Co-operative Republic of Guyana [2009] CCJ (OJ) — Whether the Claimants were entitled to be refunded where Guyana claimed that the tax had been passed to consumers but had not provided any evidence of such — Simple interest — Finding that Guyana should cease collection of environmental tax and refund the sums and interest of the amount paid by the Claimants — Articles 9, 65, 78, 79, 87, 211, 215 and 222 of the Revised Treaty of Chaguaramus — Caribbean Community Act, 2006 — Section 7 A of Customs Act

EXECUTIVE SUMMARY

[1] Rudisa Beverages, a co-claimant in this action, is a company based in Suriname which produces beverages packaged in non-returnable containers. These beverages are imported into Guyana and distributed through CIDI Distributor, the other co-claimant. By section 7 of the Customs Act of Guyana, an environmental levy is imposed on the importation of non-returnable beverage containers. The legislation does not contain any exemption in relation to CARICOM goods. This environmental tax which has been imposed on the claimant's goods has the effect of raising the cost price on each imported container by GUY$10. No similar tax is imposed on local producers of non-returnable beverage containers and, by the definition of “Import Duties” laid down in the Revised Treaty of Chaguaramas (RTC), the levy must be regarded as an import duty.

[2] The effect of the environmental tax was first raised with the Council on Economic Trade and Development (COTED) by the Government of Suriname in a series of meetings spanning the period 2001 – 2012. COTED concluded that in so far as it applied to CARICOM goods the levy was in breach of the RTC. Guyana, in turn, committed itself to take the necessary action to eliminate the discriminatory effect of the environmental tax. Thus in 2013, the Government brought legislation to the National Assembly to amend the Customs Act but the proposal was rejected.

[3] The claimants filed an application with the Court alleging that the imposition of the environmental tax is a breach of the RTC. In particular, they argue that the tax is inconsistent with CARICOM trade policy set out in Articles 78, 79, 87 and 90 of the RTC which provide for the free movement of goods and prohibitions on the imposition of import duties on CARICOM goods. They seek a declaration that the Customs Act violates either Article 87 or 90 of the RTC; an order compelling the State to amend or repeal the legislation to eliminate its discriminatory effect; an order restraining the imposition and collection of the tax and damages.

[3] Guyana admits that the tax is inconsistent with their obligations under the RTC but notes that the Government has proposed legislation to rectify the discriminatory effect of the environmental tax but the proposed amendment was rejected by the National Assembly. The Government also submits that the aim of the legislation is environmental protection which is a fundamental right under the Constitution of Guyana.

[4] The Court noted Guyana's admission that the imposition of the tax amounted to a breach of the RTC. It further observed that the explanation provided by the State, namely their inability to pass the necessary legislative amendment to the Customs Act, did not absolve the State from liability for the breach. The State was indivisible for the purposes of liability and had an overarching responsibility to honour treaty obligations. The Court took notice of the need to strike a balance between environmental protection and economic development. However, it emphasised that Article 65 of the RTC does not create an exception to the trade policy spelt out in Chapter Five, the purpose of which is to create “a level playing field for all CSME products.” The Court found that Guyana was liable to the claimants.

[5] By way of relief, the Court declared that the tax was inconsistent with the RTC and ordered the State to take necessary action to ensure that it was not applied to goods of Community origin. The Court also ordered that the claimants were entitled to a repayment of the tax which had been paid by them and collected by Guyana. The Court's approach on the issue of re-imbursement was informed by Société Comateb v. Directeur Général de Douanes et Droits Indirects C192-218/95 [1997] ECR I-165, [1997] 2 C.M.L.R. 649, namely that where a tax has been improperly collected in breach of a treaty obligation, it must be repaid unless it can be shown that the tax was passed onto to the consumer or a third party. There was no evidence to suggest that the tax was passed on. The documentary evidence as well as the testimony of the claimants' witnesses demonstrated that the tax was absorbed by the claimants in order to maintain their competitive edge in the Guyana market. The Court therefore ordered that the claimants be repaid the sum of US$6,047,244.47 together with such further tax paid from 25th October 2013 to the date of the judgment.

[6] The Court required that if CIDI did not notify the Court that Guyana had complied with the orders of the Court by 30th October, 2014 the State of Guyana shall file with the Court on or before 15th November, 2014 a report on its compliance with those orders. Upon the filing of the said report the parties were granted liberty to apply in respect of any matter contained in the said report.

Having regard to the originating application filed at the Court on the 10th June 2013, the Defence filed on the 23rd August 2013 and amended on 15th November 2013, the amended reply to the Defence filed on 2nd December 2013, the case management conferences held on the 5th November, and the 11th November 2013 respectively, the order of the Court dated 11th November 2013 granting leave to Trinidad and Tobago to hold a watching brief, the pre-hearing review hearings held respectively on the 2nd December 2013 and the 31st January 2014, the written submissions of Trinidad and Tobago filed on 2nd January 2014, the written submissions of the claimants filed on 20th January 2014, the agreed statement of facts filed on 7th February 2014, the written submissions of the Defendant filed on 10th February 2014 and the public hearing held on 13th February 2014 at the Seat of the Court and after considering all the written submissions, the testimony at the trial and the oral observations of:

INTRODUCTION

1 The claimants, Rudisa Beverages and Juices N.V. (‘Rudisa Beverages’) and Caribbean International Distributors Inc. (‘CIDI,’), are CARICOM companies whose business activities involve the production, sale and distribution in Suriname and Guyana of beverages in non-returnable beverage containers. Rudisa Beverages, a Surinamese company, exports the beverages and CIDI, a Guyanese company, imports, sells and distributes them in Guyana. The claimants have been engaged in this activity for some time. They allege that the imposition, by Guyana, of an environmental levy or tax on all non-returnable beverage containers imported into that country, amounts to a violation of the Revised Treaty of Chaguaramas (the ‘RTC’). They further allege that they have sustained damages as a consequence of the violation and they claim consequential relief. The State of Guyana contends that the claimants are not entitled to the relief they claim. There is no dispute that, given the CARICOM membership of Suriname and Guyana, the containers in question qualify for Community area treatment within the scheme of the Caribbean Single Market and Economy (the ‘CSME’).

JURISDICTION

2 This dispute involves the interpretation and application of the RTC in respect of which, by virtue of Article 211, the Court's jurisdiction is both compulsory and exclusive. This jurisdiction extends to applications brought by private entities (or “persons”) such as the claimants. Such persons of a Contracting Party to the RTC may, with the special leave of the Court, appear as parties in proceedings before the Court once they fulfil the test set out in Article 222 of the RTC, namely that:

• (a) there is a right or benefit conferred by or under the RTC enuring directly to the benefit of the person concerned;

• (b) the person concerned has been prejudiced in the enjoyment of this right;

• (c) the Contracting Party entitled to espouse the claim has omitted or declined to do so or has expressly agreed that the person concerned may espouse the...