-denies claim for damages
The Caribbean Court of Justice (CCJ) yesterday ordered Guyana to re-impose the regional tariff on cement within 28 days saying that without a coercive order there would be grave consequences for the rule of law in the single market but it threw out a claim for damages after ruling that TCL Guyana Incorpo-rated (TGI) had not proven its case.
The CCJ declared that Guyana has been in breach of the provisions of Article 82 of the Revised Treaty of Chaguaramas (RTC) by failing to implement and maintain the Common External Tariff (CET) on cement since October 2006. It further ordered that Guyana maintain the CET without prejudice to its right to seek a waiver in the established manner.
Attorney General Charles Ramson is to address the matter today at a press conference. Previously, the administration had slammed the proceedings at the regional court questioning its decision to allow private entities to sue the state.
And yesterday Trinidad Cement Limited (TCL) and TGI, which had sued the government here, issued a statement saying that they are pleased with the court ruling.
The companies had challenged Guyana’s suspension of the CET, which decision was contained in a letter from the Minister of Finance to the Commissioner General of the GRA. The suspension had continued from year to year and remains even though Guyana had not made the relevant application. As a consequence cement was imported from non-Caricom sources free of CET and TCL and TGI moved to the court principally seeking a declaration that the RTC had been breached, a mandatory order that the CET be restored and damages.
The court in its ruling yesterday held the view that Trinidad Cement Limited and TGI are entitled to the benefit of having the CET maintained. But the CCJ judges declined the claim by both companies for consequential loss of income and profits, ruling that there was no substantial evidence to support it. However, Guyana was ordered to pay two-thirds of the claimants’ court costs.
TCL owns 80% of the Guyana-based TGI which imports cement in bulk from TCL and Arawak Cement Limited, a wholly owned subsidiary of TCL incorporated in Barbados.
“The Court does not doubt that TGI lost the opportunity of increasing its level of sales as a result of the illegal conduct of Guyana. It is a cardinal principle, however, that suffering loss is not enough to ground a case in damages against a Member State or the Community before this Court”, the judgment stated, adding “to be successful in its claim for damages in this Court TGI had first to demonstrate that its losses were incurred in circumstances that rendered them sufficiently proximate to the precise breach in question. A reduced flow of TCL cement into Guyana might result in financial loss to various enterprises concerned in one way or
another with the importation, marketing, sale and delivery of TCL cement in
Guyana, but such enterprises would not necessarily be able to sustain a claim
for damages against the Government of Guyana if the reduction in the flow
was due to an unauthorised suspension of the CET on cement..”
TCL and TGI had accused the Guyana government of breaching the RTC by unilaterally suspending the CET on cement imported from countries outside of Caricom and was later granted leave to sue the government here 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 CET on cement imported into Guyana from outside of Caricom. The CET is incorporated into the laws of Guyana.
But Guyana argued that both companies were guilty of abusing their dominant position in the market and the court needed to protect consumers within Caricom; and that throughout Caricom there were complaints about the inability of TCL to supply the Caribbean market and in the period between 2001 – 2007 CET waivers were sought and obtained from the Caricom Council for Trade and Economic Development (COTED) by Suriname, T&T, Jamaica and the member countries of the Organisation of Eastern Caribbean States (OECS).
Admission
When the court hearing began in Port-of-Spain, Guyana acknowledged from the outset that it had been in breach of the RTC but denied liability by citing Article 179 of the RTC (abuse of dominant position) and Article 184 (promotion of consumer interests in the community). In its decision the CCJ observed that Guyana had ignored and failed to entertain repeated requests by the claimants’ representatives to reconsider its position and to implement the CET; and that Guyana had also ignored the fact that COTED, as indicated in the Minutes of the Meeting of November 2007, had noted and recorded Guyana’s failure to regularise its position and implement the tariff.
“Notwithstanding the admission by Guyana to the Court at the hearing for Special Leave in these proceedings that it was in breach (of the RTC), that State had taken no steps to remedy the breach”, the ruling stated.
The court referred to testimony from local witnesses called on behalf of the state as “startling” and pointed that it had not been explained why Guyana persists in refusing to seek the sanction of COTED. According to the CCJ, none of the witnesses called by Guyana could explain the continued unwillingness or refusal by Guyana to honour its treaty obligations by seeking the prior approval of COTED. It referred to testimony from Neville Totaram, Technical Co-ordinator of the National Advisory Committee on External Negotiations who said in cross-examination that he did not know why the government had refused to reinstate the CET. He also could not say why no application was made for authorization to suspend the tariff.
The CCJ listed Guyana’s failings as follows: it had ignored and failed to entertain repeated requests by the claimants to reconsider its position and implement the CET; it had ignored the fact that COTED at a meeting of November, 2007 had recorded Guyana’s failure to regularize its position; it was at all times aware that it was in breach of the treaty and notwithstanding its admission at the hearing for special leave earlier this year Guyana had made no attempt to repair the breach.
In these circumstances the court said it had no problem concluding that Guyana’s breach was sufficiently serious to attract the award of damages if the case could be proven.
“This flagrant breach has been persisted in throughout the pleadings down to the commencement of the hearing. Counsel [Keith Massiah S.C.] had no instructions from his client to give an undertaking that the breach would be brought to an end and the CET implemented and maintained in accordance with Articles 82 and 83 of the RTC. In those circumstances there would be grave consequences for the rule of law in the CARICOM Single Market if a coercive order were not made”, the CCJ judges observed. The court observed that it had held in the an earlier cement case TCL v The Caribbean Community that it was endowed with powers to make coercive orders against member states. That judgment had in part said “Given the Court’s duty to enforce the rule of law and to render
the 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. If the Court were restricted to the issuance of mere declarations, none of the enforcement mechanisms referred to in the previous paragraph would have been required. In the judgment of the Court, coercive remedies are therefore available to the Court.”
The judgment identified among the core issues in the case as being whether Guyana was liable in damages for its breach of the RTC; whether TGI was entitled to damages for such economic loss (loss of profits) as it has suffered as a result of Guyana’s unauthorised suspension of the CET from 2007 to date; and if so, what is the quantum of that loss.
The CCJ pointed out that TCL admitted that it had not itself suffered any direct loss as a result of Guyana’s suspension of the CET as it had sold all the cement it was able to produce during the relevant period. It stated that in the words of one of their witnesses, “Some was sold to St. Maarten, some to Haiti and elsewhere”.
Guyana, the court said, had conceded that it was wrong to breach the RTC by unilaterally suspending the CET and therefore transformed the character of the dispute- the issues in the case turned mainly on proof of the loss claimed by the claimants and its causal connection with the unilateral suspension of the CET without the approval of COTED or the Secretary-General.
In ruling on the issue of compensation as it relates to state liability for a breach of the RTC, the CCJ referred to European Community precedents. It observed that a similar principle applies in the region under the RTC and that the new Single Market based on the rule of law implies the remedy of compensation where rights which enure to individuals and private entities under the Treaty are infringed by a Member State.
Causal link
“But State liability in damages is not automatic. A party will have to demonstrate that the provision alleged to be breached was intended to benefit that person, that such breach is serious, that there is substantial loss and that there is a causal link between the breach by the State and the loss or damage to that person”, the court opined.
Further, the court said that the reason for laying down conditions as to liability in damages is to prevent States from being harassed by claims for technical breaches or minor procedural defects, adding that the range of potential breaches by a member state may extend from minor breaches to flagrant and contumacious abuses of State power. According to the court, the threshold for eligibility for damages is therefore a high one.
“It is not every infringement that would attract damages. The Court may not consider making a monetary award for minor breaches of the RTC. The breach must be sufficiently serious to warrant the award of damages”, it added.
In considering state liability for damages, the CCJ said it is at liberty to consider any excuses or justification advanced by the state but pointing to Totaram’s testimony it said it was not required to do so in this case.
The CCJ panel of judges presiding in the case comprised, President of the court, Justice Michael De La Bastide and Justices Rolston Nelson, Duke Pollard, Adrian Saunders, Desiree Bernard, Jacob Wit and David Hayton.
The claimants were represented by Dr Claude Denbow SC while Guyana was represented by Professor Keith Massiah SC and Kamal Ramkarran.
On August 10, 2009 the CCJ had dismissed a claim by Trinidad Cement Limited (TCL) against the Caribbean Community (CARICOM) for suspending the CET on cement imports, but it set criteria for the Secretary General to follow in future considerations on the issue having found a procedural flaw.
The CCJ said 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.
