2010 International Law Update, Volume 16, Number 8 (August)
Legal Analyses published by Mike Meier,
Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com.
HUMAN RIGHTS
In litigation brought by mother of British soldier who
died from hyperthermia while stationed in Iraq, U.K. Supreme Court upholds
jurisdiction of lower court to consider liability of government under special
circumstances of this case
Respondent’s son had died of hyperthermia while serving as a
member of the British army in Iraq. She brought proceedings seeking an order
quashing a coroner’s inquisition into his death. Her chief point was that that
the inquest improperly failed to satisfy the procedural requirements of art. 2
of the 1950 European Convention for the Protection of Human Rights and
Fundamental Freedoms (312 U.N.T.S. 221; E.T.S. 5) (ECHR).
The U.K. secretary of state (Petitioner) conceded that the
Respondent was entitled to such an inquest.
Nevertheless, the Court felt required to explore and determine the
jurisdiction and inquest issues as matters of general importance. The
Petitioner argued that jurisdiction under ECHR art.1 was primarily territorial.
Thus, soldiers only fall within the jurisdiction of the U.K. courts when a
viable claim arose while they were within territory under the effective control
of the U.K. Art. 2 criteria applied to the death of Respondent’s son only
because it had taken place at his base.
On the other hand, Respondent submitted that her son was
subject to the jurisdiction of the U.K. as a matter of domestic and
international law based on his status as a member of the U.K. armed forces. She
argued that soldiers were in the same legal position as other state agents such
as diplomats and consular agents. Thus, when exercising state powers outside
state territory of the state, soldiers remain subject to the jurisdiction of
the state. In relation to the inquest issue, Respondent contended that the
government must hold an Art. 2 investigation whenever a member of the armed
forces dies on active service overseas.
The Petitioner sought review of the ruling by the Court of
Appeal ([2009] EWCA Civ 441, [2009] 3 W.L.R. 1099) that a British soldier on
military service abroad was subject to the jurisdiction of the U.K. within the
meaning of Art. 1 of the 1950 ECHR so as to benefit from the rights guaranteed
by the U.K. Human Rights Act 1998.
Thus the inquest into the death of the Respondent’s son
ought to have satisfied the requirements of Art. 2 of the ECHR. It provides
that “[e]veryone’s right to life shall be protected by law. No one shall be
deprived of his life intentionally save in the execution of a sentence of a
court following his conviction of a crime for which this penalty is provided by
law.”
In a six to three vote, however, the U.K. Supreme Court
allowed the Appeal in part (Lady Hale, Lord Mance and Lord Kerr dissenting on
the jurisdiction issue). Unless they were on a U.K. military base at the time
of a compensable happening, the courts have usually held that British troops on
active service overseas did not to lie within the jurisdiction of the U.K. for
the purposes of ECHR Art.1 and the Human Rights Act 1998. Bankovic v Belgium
(Admissibility) (52207/99) 11 B.H.R.C. 435 held that jurisdiction under Art.1
was essentially territorial in nature. It extended only in exceptional
circumstances requiring special justification to other bases of jurisdiction,
such as when a state had taken effective control of part of foreign territory.
The instant case did not fall within any of the exceptions
that the ECHR at Strasbourg has thus far recognized. As a result, the English
courts should not read Art.1 as reaching any further than the existing ECHR
jurisprudence showed it to reach, Bankovic and R. (on the application of Al‑Skeini)
v. Secretary of State for Defence, [2007] UKHL 26, [2008] 1 A.C. 153 applies.
There was no basis in principle—or in the ECHR’s case
law—that the limited jurisdiction which states have over their armed forces
abroad both in national law and international law meant that they were within
their jurisdiction for Art.1 purposes. Respondent’s proposed analogy between
diplomatic and consular officials and members of the armed forces is not compelling.
The English courts should not rest Jurisdiction simply on
the basis that the U.K. armed forces abroad were under the “authority and
control” of the U.K, or that there was a “jurisdictional link” between the U.K.
and those armed forces.
Nor were there policy grounds for extending the scope of the
ECHR broadly to our armed forces abroad. The categories of exceptional
circumstances contemplated in Bankovic depended upon the exercise by State A
abroad of state power and authority over individuals—particularly nationals of
State A—by the consent, invitation or acquiescence of the foreign State B.
In Iraq, the U.K. was the only power exercising and having
under international law authority over its soldiers. In so far as there was any
civil administration in Iraq, it consented to this. In such circumstances,
where the U.K. was an occupying power recognized as such under international
law, there was an irresistible case for treating its jurisdiction over its
armed forces as extending to soldiers serving in Iraq for the purposes of
Art.1. To distinguish fundamentally between the existence of protective duties
on the part of the U.K. to its soldiers at home and abroad appears as
unrealistic under the ECHR as it was at common law.
Moreover, the death of a serviceman on active service,
assuming it did take place within the Art.1 jurisdiction of a state, did not
automatically give rise to an obligation to hold an Art. 2 investigation.
Soldiers are regularly exposed to the risk of death or injury as part of their
job. The death of a soldier in combat did not raise a prima facie case for
saying that the U.K. Army authorities had failed in their obligation to protect
him and that there had, in consequence, been a breach of his Art. 2 rights.
Nevertheless, the secretary of state had been correct to
concede that an Art. 2 investigation was necessary in the case of the heat‑related
death of Respondent’s son. It was at least possible that there had been a
failure in the health system that should have been in place to protect its
soldiers from the risk posed by the extreme Iraqi temperatures. As a result, it
was arguable that there may have been a breach of the state’s substantive
obligations under Art. 2. We reverse the judgment below in part.
Citation: R. v. Oxfordshire Assistant Deputy Coroner,
[2010] UKSC 29; [2011] 1 A.C. 1; [2010] 3 W.L.R. 223; [2010] 3 All E.R. 1067 (U.K. Sup.Ct. 30 June). (Official Abstract as
re‑styled by International Law Update). See generally: http://conventions.coe.int/treaty/en/treaties/html/005.htm.
STATUTES OF LIMITATION (FOREIGN ARBITRAL AWARDS)
Where Russian firm sought to enforce Russian arbitral
award against Alberta, Canada corporation, Supreme Court of Canada upheld lower
courts’ rulings that Alberta’s two year limitations period applied to Russian
company’s award and that company had
filed its enforcement case in Alberta courts after its expiration
The Appellant in the Supreme Court of Canada is Yugraneft
Corporation, a Russian company that operates oil fields in Russia. The
Respondent, Rexx Management Corporation (Rexx) is an Alberta, Canada
corporation. Following a contract
dispute, the Appellant filed proceedings
before the International Commercial Arbitration Court (ICAC) at the Chamber of
Commerce and Industry of the Russian Federation (Russian ICAC). On September 6,
2002, the tribunal ordered Rexx to pay the present Appellant US$952,614.43 in
damages.
On January 27, 2006, more than three years after the Russian
ICAC issued its award, Respondent applied to an Alberta Court for its recognition and enforcement.
Rexx resisted enforcement on two grounds. First, it argued that the Alberta
Limitations Act barred Appellant’s
application Second, it argued that the
Alberta court should stay enforcement proceedings pending resolution of an
ongoing criminal case in the United States. It claimed that the criminal case
would demonstrate that the award had
been obtained as a result of fraudulent activity. The present appeal deals only
with the limitations issues.
Relying on Alberta’s 2007 Limitations Act. the Court
dismissed the application as time barred by its two‑year limitations period.
[The Act creates two limitation periods, one for “remedial order[s]” (s. 3) and
one for the enforcement of “judgment[s] or order[s] for the payment of money”
(s. 11). Applications under s. 3 are subject to a two‑year limitation period,
while those under s. 11 are subject to a 10‑year time limit.] Appellant argued
that the court should consider foreign arbitral awards a “judgment” under s. 11 with its ten year
limitations. The judge disagreed, finding instead that the two‑year limitation
period in s. 3 of the Act applied. It therefore dismissed Appellant’s action.
The Alberta Court of Appeal unanimously upheld the above
ruling and dismissed the appeal. [It concluded that the court could not treat a
foreign arbitral award as a “judgment” pursuant to s. 11 because that term
encompassed only domestic judgments. Accordingly, it found that Yugraneft’s
application should be characterized as a claim for a remedial order under s. 3
of the Act and was therefore time‑barred.
The appeal was dismissed.]
Obtaining review by the Supreme Court of Canada, Appellant
argued that the Court should treat a foreign arbitral award as a “domestic
judgment” under section. 11 of the Act because the arbitration decided a legal dispute and as such constituted a money judgment. In the alternative,
it argued that the Court should look upon foreign arbitral awards as at least
equivalent to a foreign judgment entitled to a ten‑year limitations period
under the Act.
Finally, Appellant contended that the Act is ambiguous.
Since Canadian courts should read statutory limitation periods strictly in
favor of Plaintiffs, it should resolve this ambiguity by applying the Act’s 10‑year
limitation period.
Rexx responds that the Court should apply the two‑year
limitation. The legislature intended that the Limitations Act simplify the law
by imposing a single limitation period on most causes of action. Unless the
instant action falls under an exception
in the Act, the two‑year limitation period applied Since Appellant’s action was untimely
under s. 3, it is time‑barred.
In Alberta, the International Commercial Arbitration Act,
(ICAA) governs the recognition and enforcement of foreign arbitral awards. Its
laws incorporate both the New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (NYC) and the U. N. Commission on
International Trade Law (UNCITRAL) Model Law on International Commercial
Arbitration (ML).
UNCITRAL adopted the NYC in 1958. The NYC set out to improve
the cross‑border recognition and enforcement of arbitral awards by setting up a
single, uniform set of world‑wide rules. It requires each Contracting State to
recognize and enforce arbitral awards made in the territory of another State
(whether or not they are parties to the NYC), and to deny this relief only on
the limited grounds in NYC Art. V.
The NYC is currently in force, and over 140 nations have
ratified it. Most parties regard it as a great success. After each provincial
legislature had enacted the necessary implementing legislation, the Dominion of
Canada ratified the NYC on May 12, 1986.
Moreover, UNCITRAL had also completed the ML in 1985. Unlike
the NYC, a multinational treaty, the ML is not an international agreement that
needed ratification. Rather, it merely sought to ascertain and restate
international “best practices” and thus to serve as a model for its members’
domestic legislation.
Every jurisdiction in Canada has incorporated the ML subject
to minor modifications. Like Article V of the NYC, the ML recommends
limitations on the ability of national courts to interfere with international
arbitration proceedings. Its Article 36 would also limit the grounds on which a
member state should decline enforcement of an international arbitral award.
Since Canada adopted both the NYC and the ML in 1986 as part
of the ICAA, Alberta, subject to certain exceptions, has a duty to recognize
and enforce eligible foreign arbitral awards. The narrower question before the
present Court is what limitation period, if any, applies to the recognition and
enforcement of foreign arbitral awards under the laws of Alberta.
Three Alberta statutes are potentially relevant in this
connection: [1] the Limitations Act,[2] the Arbitration Act, and [3] the
Reciprocal Enforcement of Judgments Act, (REJA). The NYC does not impose
and the ML does not expressly recommend
a limitation period on recognition and enforcement. Thus, a threshold question
for the Court is whether any limitation period can apply.
Article III of the NYC, however, does require that
recognition and enforcement shall be “in accordance with the rules of procedure
of the territory where the award is relied upon”. Thus, the “rules of
procedure” of the enforcement jurisdiction will apply, insofar as they do not
conflict with the NYC’s Article V requirements.
Do limitation periods fall under the rubric of “rules of
procedure” as the NYC uses that term?
Those built on the common law tradition tend to classify them as
procedural matters, while those following the civil law tradition generally consider
them to be substantive. (Tolofson v. Jensen, [1994] 3 S.C.R. 1022 (S.C.C.), at
pp. 1068‑70).
Only those jurisdictions that treat limitation periods as
“procedural” under the NYC may lawfully deny recognition and enforcement of a
foreign arbitral award as time‑barred. The general consent of the present
parties does not, however, determine whether Alberta limitations law does
conform to the NYC.
After granting review, the Supreme Court of Canada decides:
[1] whether there is a legal basis in the NYC for applying the limitations law
of the Province of Alberta; [2] which one of Alberta’s several limitations
periods applies to Appellant’s award and [3] whether Appellant had timely filed
within the applicable period. In a
unanimous opinion dated May 20, 2010, the Court dismisses the appeal and
explains its reasoning. [The numbers below refer to paragraphs].
18. “Notwithstanding [NYC] art. V, which sets out an
otherwise exhaustive list of grounds on which recognition and enforcement may
be resisted, the courts of a Contracting State may refuse to recognize and
enforce a foreign arbitral award on the basis that such proceedings are time‑barred.
I reach this conclusion for three reasons.”
19 “First, as a treaty, the [NYC] must be interpreted ‘in
good faith in accordance with the ordinary meaning to be given to the terms of
the treaty in their context and in the light of its object and purpose’ Article
31(1) of the Vienna Convention on the Law of Treaties ;[VC],. In this case, the
[NYC’s] context and purpose provide indications as to how its terms, in
particular art. III, should be read. The [NYC’s] text was designed to be
applied ¼across
a multitude of legal systems. [Cites]”
20 ¼When the [NYC] was drafted, it was well known that ¼
States in the common law tradition generally treated [limitations] as being
procedural in nature. All else being equal, if the [NYC] were applied in a
common law State, the term ‘rules of procedure’ found in Art. III would prima
facie include any local limitation periods applicable to the recognition and
enforcement of foreign arbitral awards by virtue of local law.”
21. “The second reason ¼ is that this reflects the
practice of the Contracting States. In interpreting a treaty, courts must take
into account ‘any subsequent practice in the application of the treaty which
establishes the agreement of the parties regarding its interpretation’ VC art.
31(3). ¼[A]t least 53 [NYC]
Contracting States—including both common law and civil law States – subject the
recognition and enforcement of foreign arbitral awards to some kind of time
limit [Cites].
22. “Third, leading
scholars in the field appear to take it for granted that art. III permits the
application of local limitation periods to recognition and enforcement
proceedings [Cites] ¼This
suggests that the application of local time limits is not a controversial
matter.”
23 “Thus, the lack of any explicit restriction on a
Contracting State’s ability to impose a limitation period can be taken to mean
that, for the purposes of the [NYC], any limitation period that, under domestic
law, is applicable to the recognition and enforcement of a foreign arbitral
award is a ‘rule of procedure’ pursuant to [NYC] Art. III.”
27‑28 “The question
in this case is not whether Canadian law (as a general matter or in other
contexts) considers limitation periods to be ‘substantive’ or ‘procedural’ in
nature. Rather, the [narrower] question is whether local time limits intended
to apply to recognition and enforcement fall within the ambit of ‘rules of
procedure’ as that term is used in art. III of
the [NYC]. The answer to this must be yes.
29 ”The [Appellant’s]
contention is therefore misplaced. Even if this Court were to
characterize a given statutory limitation period, such as the one found in s. 3
of the Limitations Act, as ‘substantive’ in nature, that would not in and of
itself prevent the limitation period in question from being applicable to the
recognition and enforcement of foreign arbitral awards. Instead, the Court must
determine whether a potentially applicable limitation period was intended to
apply to the recognition and enforcement of foreign arbitral awards. If it was,
then it may properly be applied as a local ‘rule of procedure’ pursuant to art.
III.
33. “Moreover, [NYC] Art. III, in which the term ‘rules of
procedure’ is found, distinguishes between ‘Contracting States’, on the one
hand, and ‘the [constituent] territory where the award is relied upon’, on the
other. Read in conjunction with Art. XI, this indicates that, for the purposes
of [NYC] Art. III, the relevant unit is the enforcing jurisdiction within the
Contracting State (i.e. Alberta) and not the Contracting State in its entirety.
In order to comply with the [NYC], Alberta need only provide foreign awards
with treatment as generous as that provided to domestic awards rendered in
Alberta.”
34. “The conclusion must be that the [NYC] was intended to
allow Contracting States to impose local time limits on the recognition and
enforcement of foreign arbitral awards if they so wished. In the case of
federal states, such limitations are to be determined by the law of the
enforcing jurisdiction within the federal state.”
35 “I now turn to the
issue of whether or not Alberta law subjects the recognition and enforcement of
foreign arbitral awards to a limitation period.
¼
Only the Limitations Act, however, applies in this case.”
36 “¼The
Act was intended to create a comprehensive and simplified limitations regime to
replace the previous Limitation of Actions Act ¼ [Cites]¼Thus,
the purpose of the Act was to streamline the law of limitations by limiting the
number of exceptions and providing a uniform limitation period for most
actions.”
37 “The
comprehensiveness of the Act is most clearly established by s. 2(1), which
provides that it applies in all cases where a claimant seeks a ‘remedial
order’. A remedial order is defined as ‘a judgment or an order made by a court
in a civil proceeding requiring a defendant to comply with a duty or to pay
damages for the violation of a right’. This is very broad language that
encompasses virtually every kind of order that a court may grant in civil
proceedings. ¼
Thus, by necessary implication, the recognition and enforcement of foreign
arbitral awards is subject to the Limitations Act.”
42 “The question at
this point is how to characterize an application for recognition and
enforcement of a foreign arbitral award under the Limitations Act. The Act
essentially creates three streams, each of which is subject to a different
limitation period: ten years, two years, or no limitation period. ¼”
43‑44. “[Appellant] concedes that what it seeks constitutes
a ‘remedial order’ under the Limitations Act. It contends, however, that an
arbitral award is akin to a judgment and that an application for recognition
and enforcement of that award is therefore a ‘claim based on a judgment or
order for the payment of money’ under s. 11 of the Act, which is subject to a
10‑year limitation period.
[Appellant’s] position must be rejected.”
47. “[Appellant] is
correct that ambiguity in a limitations statute will be construed in favour of
allowing the action to proceed. I do not agree, however, that the Act is ambiguous
in this case. The legislature has made it clear elsewhere that when it intends
the word ‘judgment’ to include a foreign arbitral award, it provides express
words to that effect. ¼ An application for recognition and enforcement of a
foreign arbitral award is an application for a remedial order within the
meaning of s. 3. ¼”
50. “¼ [T]here remains the question of whether or not the
application was time‑barred when it was filed on January 27, 2006. As noted above, the two‑year limitation
period set out in s. 3(1)(a) is subject to a discoverability rule. ¼”
54. “The Model Law provides that a party to an arbitration
has three months to apply to the local courts to have an award set aside,
beginning on the day it receives the award ¼ At least until that
deadline has passed, the arbitral award may not have the requisite degree of
finality to form the basis of an application for recognition and enforcement
under the [NYC].”
56 “¼.The award was issued on September 6, 2002, and
[Appellant] has provided no indication that it received the award at a later
date. ¼
[Appellant] had two years after December 6, 2002, to commence proceedings
against Rexx in Alberta, meaning that its action, which was brought on January
27, 2006, was clearly time‑barred.”
61. “Section 3(1)(a)(iii) therefore allows the courts to
consider aspects of an arbitral creditor’s circumstances that would lead a
reasonable person to conclude that there was no reason for the arbitral
creditor to know whether proceedings were warranted in Alberta. ¼ In
my view, recognition and enforcement proceedings would only be warranted in
Alberta once an arbitral creditor had learned, exercising reasonable diligence,
that the arbitral debtor possessed assets in that jurisdiction. ¼”
64‑65. “Thus, I have no difficulty concluding that—even
taking into account the discoverability rule in s. 3(1)(a) of the Limitations
Act—[Appellant’s] proceedings are time‑barred. I would dismiss the appeal, with
costs. All Justices concur.”
Citation: Yugraneft Corp v. Rexx Management Corp,
2010 CarswellA l949; 2010 SCC 19 (May, 2010).
RESTITUTION OF STOLEN ART
Fifth Circuit upholds summary judgment quieting title to
Kokoschka painting allegedly stolen in 1939 in Austria because current owner
has title under Louisiana law
Sarah Dunbar (Plaintiff) currently has physical possession
of the Oskar Kokoschka painting “Portrait of Youth” (1910). Claudia Seger‑Thomschitz
(Defendant) claims to be the rightful owner of the painting, however, on the
theory that the government had taken it from her family during the Nazi regime.
Defendant is the sole heir of Raimund Reichel; in 1939, the government
allegedly forced his father to sell the painting in Vienna to a Nazi
collaborator. In 1946, Plaintiff’s mother had bought the painting from the
alleged collaborator in New York, and Plaintiff had inherited it in seven years
later.
Plaintiff filed a quiet title action against Defendant in a
Louisiana federal court. The court disagreed with Defendant’s argument that the
court should apply “federal common law” to advance the goals of the Holocaust
Victims Redress Act (HVRA), Pub.L. No. 105‑158, §202, 112 Stat. 15, 17‑18
(1998). The court gave summary judgment to the Plaintiff because, according to
Louisiana law, [1] Plaintiff had acquired good title to the painting and [2]
the applicable statute of limitations had run. Defendant duly noted her
appeal. The U.S. Court of Appeals for
the Fifth Circuit affirms the lower court.
Defendant unsuccessfully tried to argue for the first time
on appeal that U.S. foreign policy pre‑empts Louisiana’s prescriptive laws. She
relies most recently on the “Terezin Declaration.” This is a non‑binding
document issued at the Prague Holocaust Assets Conference of June 30,
2009. Defendant, however, has not presented
extraordinary circumstances to justify appellate consideration of this argument
which she had failed to raise before the district court.
“Even if we were to consider [Defendant’s] preemption
theory, it is untenable. [She] relies principally on American Insurance
Association v. Garamendi, 539 U.S. 396 ¼ (2003), to support the
argument that the Terezin Declaration should preempt the Louisiana prescriptive
periods.”
“In Garamendi, California [had] enacted the Holocaust Victim
Insurance Relief Act, which required any insurer that did business in
California and that sold insurance policies to Europe during the Holocaust era
to disclose certain information about those policies to the California State
Insurance Commissioner or risk losing its license. The Supreme Court held the
California law was preempted by the implied dormant foreign affairs power of
the President. ...”
“The opinion noted that ‘resolving Holocaust‑era insurance
claims that may be held by residents of this country is a matter well within
the Executive’s responsibility for foreign affairs.’ ... Federal preemption [thus] prevented the state
from pursuing a more aggressive policy than the President’s foreign policy, as
expressed by executive agreements with other nations and statements by high‑level
executive officials. ...”
“[Defendant] argues [here] that to apply Louisiana’s
prescriptive laws would unconstitutionally intrude on the President’s authority
to conduct foreign affairs. The policy represented by the Terezin Declaration
should preempt Louisiana prescription periods because it expresses a preference
to adjudicate claims for recovery of Nazi‑confiscated artworks on their facts
and merits. As additional support, [Defendant] cites statements by various
executive branch officials expressing concern that such claims were not being
adjudicated on the merits but were barred by statutes of limitations and other
defenses.”
“There are key distinctions, [however] between this case and
Garamendi. In Garamendi, California was essentially pursuing independent policy
objectives in favor of Holocaust victims. The existence of its law limited the
President’s ability to exercise his preeminent foreign affairs authority.”
“In this case, Louisiana has not pursued any policy specific
to Holocaust victims or Nazi confiscated artwork. The state’s prescription
periods apply generally to any challenge of ownership to movable property. La.
Civ. Code art. 3544 (1870); La. Civ. Code art. 3506 (1870). Louisiana’s laws
are well within the realm of traditional state responsibilities. In exercising
its strong interest in regulating the ownership of property within the state
through these prescriptive laws, Louisiana has not infringed on any exclusive
federal powers.”
“Indeed, the Terezin Declaration itself contains language
noting that ‘different legal traditions’ should be taken into account.
[Defendant] presents no proof that U.S. policy on behalf of Holocaust victims
is committed to overriding generally applicable state property law. The type of
preemption established by Garamendi is thus inapplicable; Louisiana’s
prescriptive laws are not preempted by the Terezin Declaration, U.S. foreign
policy, or the President’s foreign affairs powers.” [Slip op. 6‑8]
The Court also points out some of the district court’s
considerations: [1] The HVRA did not create a federal common law cause of
action or private right of action; [2] Plaintiff had been known to possess the
painting for more than 10 years; [3] the Reichel family sought post‑War
compensation for lost art and property, but not for this particular painting;
[4] the Reichel family twice loaned the painting to the alleged Nazi
collaborator for exhibit and possible sale prior to the Nazi occupation of
Austria; and [5] those Reichel family members with direct knowledge of the
painting never sought its return.
Citation: Dunbar v. Seger‑Thomschitz, No. 09‑30717
(5th Cir. August 20, 2010).
WORLD TRADE ORGANIZATION
U.S. claims victory in WTO dispute with EU over high
technology products
On August 16, 2010, a Dispute Settlement Panel of the World
Trade Organization (WTO) circulated its report in U.S.‑EU Dispute over tariffs
on certain high‑tech products. The products at issue include flat panel
computer monitors, multifunction printers, and certain cable and satellite set‑top
boxes.
The dispute came before the WTO in May 2008 when the U.S.,
as well as various third parties such as Brazil and China (jointly U.S.), asked
for consultations with the European Communities and its member States (jointly
EU) about their tariff treatment of specified information technology products.
The U.S. claimed that the EU has been collecting duties as high as 14% while
there should be zero duties on such products.
The U.S. argued that EU tariffs for such technology products
disregard the commitments to provide duty‑free treatment under the Information
Technology Agreement (ITA). The EU allegedly imposes duties that are contrary
to the scheduled duty‑free tariff concessions of the ITA.
In particular, several EU customs classifications, alone or
in combination with Council Regulation (EEC) No. 2658/87 on the tariff and
statistical nomenclature and on the Common Customs Tariff, are allegedly
inconsistent with the EU obligations under Article II:1(a) and II:1(b) of the
GATT 1994 and the applicable Schedules. As a result, these customs
classifications nullify or impair benefits accruing to the U.S.
In September 2008, the WTO Dispute Settlement Body set up a
Panel to resolve the dispute. The Panel’s report of August 2010 finds that:
[1] As for FPDs (Flat‑Panel Display Devices) within the
scope of the CN code 8471 60 90: Because the concessions call for duty‑free
treatment of products falling within their scope, this dutiable treatment is
inconsistent with Article II:1(b) of the GATT 1994. The Panel notes, however,
that the duties are currently suspended for some of these FPDs. For FPDs not
subject to the duty suspension, the dutiable treatment is inconsistent with
Article II:1(b) of the GATT 1994. The European Communities fails to accord
treatment that is no less favorable.
[2] As for STBCs (set‑top boxes which have a communication
function), the rules require duty‑free treatment of such products. This dutiable
treatment is inconsistent with Article II:1(b) of the GATT 1994.
[3] The EU failed to publish CNEN 2008/C 112/03 promptly to
enable governments and traders to become acquainted with them. Thus, the EU
acted inconsistently with Article X:1 of the GATT 1994.
[4] The EU has also acted inconsistently with Article X:2 of
the GATT 1994 with respect to the April 2007 CNEN amendment by enforcing it
before its official publication as CNEN 2008/C 112/03 in the EU Official
Journal on 7 May 2008.
[5] As for MFMs (Multifunctional Digital Machines), with
respect to item 1 of the Annex to Commission Regulation No. 517/1999, the rules
call for duty‑free treatment of products falling within its scope. This dutiable
treatment is inconsistent with Article II:1(b) of the GATT 1994.
In October 2010, the EU informed the Dispute Settlement Body
that it intended to implement the recommendations and rulings, and would need a
reasonable period of time for that. The U.S. and the EU later agreed that a
reasonable period would be until June 30, 2011.
Citation: World Trade Organization (WTO), European
Communities and its Member States ‑ Tariff Treatment of Certain Information
Technology Products ‑ Reports of the Panel (WT/DS375/R, WT/DS376/R, WT/DS377/R)
(16 August 2010). The reports are available on the WTO website at www.wto.org;
Office of the United States Trade Representative, August 2010, “United States
Wins WTO Dispute with EU on High‑Tech Products.”
