Trinidad Cement Ltd v Caribbean Community

CourtCaribbean Court of Justice
Docket NumberAR 3 of 2008
Judgede la Bastide, P., Nelson, J., Polland, J., Saunders, J., Bernard, J., Wit, J., Hayton, J.
Judgment Date05 Feb 2009
JurisdictionCaribbean States

Caribbean Court of Justice

de la Bastide, P.; Nelson, J.; Polland, J.; Saunders, J.; Bernard, J.; Wit, J.; Hayton, J.

AR 3 of 2008

Trinidad Cement Limited
and
Caribbean Community
Appearances:

Dr C. Denbow, SC for the applicant.

Ms Safiya Ali, Attorney-at-Law for the respondent.

Civil practice and procedure - Leave to commence proceedings against Caribbean Community — Revised Treaty of Chaquaramas — Article 22 — Locus standi of private entities — Article 82 — Establishment of Common External Tariff — Whether suspension irrational, illegal, null and void — Interest of justice — Community law — Special leave to commence proceedings granted.

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.

3

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.

4

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 authorised by COTED.

    COTED may decide to authorise 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 authorise 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 authorisations 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 authorised the suspension of the CET in Suriname,...

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