THE WTO MOOT COURT 2015
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- Loren Alyson Morris
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1 THE WTO MOOT COURT 2015 Case In state Episodia there is an increasingly violent public fight about the future affiliation of this state to its neighbors. Two groups of the population are standing against each other: a majority is oriented towards the west and therefore wants to have closer relations to the European Union, whereas a however important minority in the eastern part of the country is in favor of a closer affiliation with the eastern neighbor state, Konta. This minority the eastern part of Episodia wanted to secede and join Konta by all available means including a military solution. It is unclear, whether Konta a member of the UN, the IMF and the WTO, apart from instigating the rebels by declarations and declaring its openness to integrate the eastern part of Episodia as a new western part of Konta if the citizens there want that, is also involved in the military conflict with Episodia by delivering military equipment or even small, but highly specialized, troops. There are hints for such an involvement, particularly reports by the official troops of Episodia, but no hard and final proofs. Nevertheless, the politicians in the European Union decided to start with sanctions against politicians of Konta and their closest allies in the economy: freezing bank accounts and the prohibition to enter the EU (even when their firms have affiliates in the EU). They believe the reports about Konta s involvement to their fullest extent and they deem to have to show to Konta that this is a step too far over the demarcation line of the security and economic interests between the Union and the eastern state. They also believe that there is sufficient probability of a direct intervention in the territory of Episodia by soldiers of Konta, which must be ended immediately. Konta considers these steps as a violation of public international law and answers with a prohibition of importing foodstuff for one year. The EU argues in turn that Konta is violating international law first with its sanctions and then with its involvement in the case of Episodia. 1
2 Since Konta, apart from denying any direct involvement, is not doing everything to remove the semblance of such an involvement, the EU is gradually stepping up its sanctions: prohibition to export sensitive goods (weapons and dual use goods) and also equipment for the development of better pipelines for oil and gas, which are of crucial importance for the economy of Konta. Since not only Konta but also the EU are realizing that sanctions and countersanctions were in fact hurting considerably, they remembered that they have both access to the WTO dispute settlement system. They decide to bring cases, each one against the other side contending that the respective defendant violated WTO law while they themselves were fully observing the rules and limits set by public international law. Please evaluate the legal arguments of both sides and start a procedure for your party according to the DSU. Assume that the panel will combine both procedures inasmuch as this is provided for in its procedural law. Annex I Council Decision 2014/555/CFSP of 30 July 2014 concerning restrictive measures in view of Konta s actions destabilising the situation in Episodia The Council of the European Union, Having regard to the Treaty on European Union, and in particular Article 29 thereof, Whereas: (1) On 6 March 2014, the Heads of State or Government of the European Union strongly condemned the unprovoked violation of Episodian sovereignty and territorial integrity by Konta and called on Konta to immediately withdraw its armed forces to the areas of their permanent stationing, in accordance with the relevant agreements. They stated that any further steps by Konta to destabilise the situation in Episodia would lead to additional and 2
3 far reaching consequences for relations in a broad range of economic areas between the European Union and its Member States, on the one hand, and Konta, on the other hand. (2) On 17 March 2014, the Council adopted Decision 2014/222/CFSP concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Episodia, whereby the Council imposed travel restrictions and asset freeze measures. (3) On 21 March 2014, the European Council recalled the statement of the Heads of State or Government of 6 March 2014 and asked the Commission and the Member States to prepare possible targeted measures. (4) On 27 May, 27 June and 16 July 2014 the Heads of State or Government of the European Union noted that preparatory work by the Commission, the EEAS and the Member States on possible targeted measures was underway so that further steps could be taken without delay. (5) The Council urged Konta to stop the increasing flow of weapons, equipment and militants across the border in order to achieve rapid and tangible results in de-escalation. The Council further urged Konta to withdraw its additional troops from the border area. (6) In addition, the Council recalled the previous commitments by the European Council and expressed readiness to introduce without delay a package of further significant restrictive measures if full and immediate cooperation from Konta on the abovementioned demands failed to materialise. The Council requested the Commission and the EEAS to finalise their preparatory work on possible targeted measures and to present by 24 July proposals for taking action, including on access to capital markets, defence, dual-use goods, and sensitive technologies, including in the energy sector. (7) In view of the gravity of the situation, the Council considers it appropriate to take restrictive measures in response to Konta s actions destabilising the situation in Episodia. (8) In this context, it is appropriate to prohibit transactions in or the provision of financing or investment services or dealing in new bonds or equity or similar financial instruments with a maturity exceeding 90 days issued by state-owned Kontan financial institutions, excluding Konta-based institutions with international status established by intergovernmental agreements with Konta as one of the shareholders. These prohibitions do not affect the granting of loans to or by those state-owned Kontan financial institutions independently of their maturity. 3
4 (9) In addition, Member States should prohibit the sale, supply, transfer or export to Konta of arms and related materiel of all types. The procurement from Konta of arms and related materiel of all types should also be prohibited. (10) Furthermore, the sale, supply, transfer or export of dual-use items for military use or to military end-users in Konta should be prohibited. This prohibition should not affect the exports of dual-use goods and technology, including for aeronautics and for the space industry, for non-military use and/or for non-military end-users. (11) The sale, supply, transfer or export of certain sensitive goods and technologies should be prohibited when they are destined for deep water oil exploration and production, arctic oil exploration and production or shale oil projects. (12) Further action by the Union is needed in order to implement certain measures. Has adopted this decision: Article 1 The direct or indirect purchase or sale of, the brokering or assistance in the issuance of, or any other dealing with bonds, equity or similar financial instruments with a maturity exceeding 90 days, issued after 1 August 2014 by: (a) major credit institutions or finance development institutions established in Konta with over 50 % public ownership or control as of 1 August 2014, as listed in the Annex; (b) any legal person, entity or body established outside the Union owned for more than 50 % by an entity listed in the Annex; or (c) any legal person, entity or body acting on behalf or at the direction of an entity referred to in point (b) or listed in the Annex; shall be prohibited. Article 2 1. The direct or indirect sale, supply, transfer or export of arms and related materiel of all types, including weapons and ammunition, military vehicles and equipment, paramilitary equipment, and spare parts therefor, to Konta by nationals of Member States or from the territories of Member States or using their flag vessels or aircraft, shall be prohibited whether originating or not in their territories. 4
5 2. It shall be prohibited: (a) to provide technical assistance, brokering services or other services related to military activities and to the provision, manufacture, maintenance and use of arms and related materiel of all types, including weapons and ammunition, military vehicles and equipment, paramilitary equipment, and spare parts therefor, directly or indirectly to any natural or legal person, entity or body in, or for use in Konta; (b) to provide financing or financial assistance related to military activities, including in particular grants, loans and export credit insurance or guarantee, as well as insurance and reinsurance for any sale, supply, transfer or export of arms and related materiel, or for the provision of related technical assistance, brokering services or other services directly or indirectly to any person, entity or body in, or for use in Konta. 3. The import, purchase or transport of arms and related materiel of all types, including weapons and ammunition, military vehicles and equipment, paramilitary equipment, and spare parts therefor, from Konta by nationals of Member States or using their flag vessels or aircraft, shall be prohibited. 4. The prohibitions in paragraphs 1, 2 and 3 shall be without prejudice to the execution of contracts or agreements concluded before 1 August 2014, and to the provision of spare parts and services necessary to the maintenance and safety of existing capabilities within the Union. Article 3 1. The direct or indirect sale, supply, transfer or export of all dual-use goods and technology listed in Annex I to Council Regulation (EC) No 428/2009 of 5 May 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items for military use in Konta or for any military end-user in Konta by nationals of Member States or from the territories of Member States or using their flag vessels or aircraft, shall be prohibited whether originating or not in their territories. 2. It shall be prohibited: (a) to provide technical assistance, brokering services or other services related to goods and technology set out in paragraph 1 and to the provision, manufacture, maintenance and use of these goods and technology, directly or indirectly to any person, entity or body in, or for use in Konta; 5
6 (b) to provide financing or financial assistance related to goods and technology referred to in paragraph 1, including in particular grants, loans and export credit insurance, for any sale, supply, transfer or export of these goods and technology, or for the provision of related technical assistance, brokering services or other services, directly or indirectly to any person, entity or body in, or for use in Konta. 3. The prohibitions in paragraphs 1 and 2 shall be without prejudice to the execution of contracts or agreements concluded before 1 August Article 4 1. The direct or indirect sale, supply, transfer or export of certain technologies suited to deep water oil exploration and production, arctic oil exploration and production or shale oil projects in Konta, by nationals of Member States, or from the territories of Member States, or using vessels or aircraft under the jurisdiction of Member States, shall be subject to prior authorisation by the competent authority of the exporting Member State. The Union shall take the necessary measures in order to determine the relevant items to be covered by this paragraph. 2. The provision of: (a) technical assistance or other services related to the technologies referred to in paragraph 1; (b) financing or financial assistance for any sale, supply, transfer or export of the technologies referred to in paragraph 1 or for the provision of related technical assistance or training shall also be subject to prior authorisation by the competent authority of the exporting Member State. 3. The competent authorities of the Member States shall not grant any authorisation for any sale, supply, transfer or export of the technologies or the provision of the services referred to in paragraphs 1 and 2 if they determine that the sale, supply, transfer or export concerned or the provision of the service concerned is destined for deep water oil exploration and production, arctic oil exploration and production or shale oil projects in Konta. 4. Paragraph 3 shall be without prejudice to the execution of contracts concluded before 1 August
7 Article 5 In order to maximise the impact of the measures referred to in this Decision, the Union shall encourage third States to adopt restrictive measures similar to those provided for herein. Article 6 Actions by natural or legal persons, entities or bodies shall not give rise to liability of any kind on their part, if they did not know, and had no reasonable cause to suspect, that their actions would infringe the measures set out in this Decision. Article 7 1. No claims in connection with any contract or transaction the performance of which has been affected, directly or indirectly, in whole or in part, by the measures imposed under this Decision, including claims for indemnity or any other claim of this type, such as a claim for compensation or a claim under a guarantee, notably a claim for extension or payment of a bond, guarantee or indemnity, particularly a financial guarantee or financial indemnity, of whatever form, shall be satisfied, if they are made by: (a) entities referred to in points (b) or (c) of Article 1, or listed in the Annex; (b) any other Kontan person, entity or body; or (c) any person, entity or body acting through or on behalf of one of the persons, entities or bodies referred to in points (a) or (b) of this paragraph. 2. In any proceedings for the enforcement of a claim, the onus of proving that satisfying the claim is not prohibited by paragraph 1 shall be on the person seeking the enforcement of that claim. 3. This Article is without prejudice to the right of the persons, entities and bodies referred to in paragraph 1 to judicial review of the legality of the non-performance of contractual obligations in accordance with this Decision. Article 8 It shall be prohibited to participate, knowingly and intentionally, in activities the object or effect of which is to circumvent the prohibitions set out in Articles 1 to 4, including by acting as a substitute for the entities referred to in Article 1. 7
8 Article 9 1. This Decision shall apply until 31 July This Decision shall be kept under constant review. It shall be renewed, or amended as appropriate, if the Council deems that its objectives have not been met. 3. The restrictive measures laid down in this Decision shall be reviewed no later than 31 October 2014, in particular taking into account their effect and the measures adopted by third States. Article 10 This Decision shall enter into force on the date following that of its publication in the Official Journal of the European Union. Annex II Decree No. 645 of the President of Konta dated 19 August 2014 On Application of Special Economic Measures to Protect the Security of Konta Pursuant to the Decree No. 645 of the President of Konta on 19 August 2014 On Application of Special Economic Measures to Protect Security of Konta, the Government of Konta orders the following: 1. To introduce for a period of one year an embargo on the importation into Konta of agricultural products, raw materials and food originating from the United States of America, countries of the European Union, Canada, Australia and the Kingdom of Norway, as per the attached list. 2. The Federal Customs Service shall exercise control over the execution of this order. 3. The Government Commission on Monitoring and Prompt Reaction to Changes of Food Market Trends together with the top executive bodies of state power of the subjects of Konta shall ensure the equilibrium of commodity markets and prevention of the acceleration of price increases on agricultural products, raw materials and food. 4. The Ministry of Industry and Trade of Konta and the Ministry of Agriculture of Konta together with the top executive bodies of state power of the subjects of Konta shall 8
9 organize the execution of daily continuous monitoring and control of the state of the relevant markets of agricultural products, raw materials and food. 5. The Ministry of Agriculture of Konta together with the concerned federal bodies of executive power and with the participation of the associations of producers of agricultural products, raw materials and food shall develop and implement a set of measures aimed for the expansion of the supply of agricultural products, raw materials and food to prevent the surge of prices. 6. The Ministry of Industry and Trade of Konta, the Ministry of Agriculture of Konta, the Ministry of Economic Development of Konta and the Federal Antimonopoly Service shall with the participation of the retail store chains and trade organizations coordinate their activities to control the surge of prices. 7. This Order comes into effect on the date of its official publication. List of agricultural products, raw materials and food originating from United States of America, Countries of European Union, Canada, Australia and Kingdom of Norway which fall under embargo on importation to Konta for period of one year: Cattle meat (fresh or chilled) Cattle meat (frozen) Pork (fresh, chilled or frozen) Poultry meat (fresh, chilled or frozen) Meat (salted, in brine, dried or smoked) Fish and crustaceans, shellfishes and other aquatic invertebrates Milk and dairy products Vegetables, edible roots and tuber crops Fruits and nuts Sausages and analogous products from meat, meat by-products or blood; finished food products based on them Finished products, including cheese and farmer cheese based on vegetable oil Food products (milk containing products based on vegetable oil) 9
10 Annex III Government meeting on measures to implement the presidential executive order on applying certain special economic measures to ensure the security of Konta Excerpts from introductory remarks from the Prime Minister of Konta on 20 August 2014 [ ] For a long time, Konta has not responded to the so-called sanctions declared against it by certain countries. Until the last moment, we hoped that our foreign colleagues would realise that sanctions lead to a blind alley, and that no one benefits from them. But they didn t realise this, and now we have been forced to respond. Yesterday, the President of Konta signed an Executive Order On Applying Certain Special Economic Measures to Ensure the Security of Konta. This basically means an embargo on importing entire categories of products from those countries which have declared economic sanctions against Konta organisations and individuals. I have signed a Government resolution on enforcing this Executive Order. Konta has completely banned the importation of beef, pork, fruits and vegetables, poultry, fish, cheese, milk and dairy products from the European Union, the United States, Australia, Canada and the Kingdom of Norway. Of course, this is a serious decision with regard to the distributors of these products from the above countries. At the same time, I would like to emphasise that these measures will not affect baby food imports. And, naturally, they don t apply to products being purchased by individuals in these countries in line with our customs legislation. These restrictions shall be introduced starting today, and for a period of 12 months. But, if our partners display a constructive approach towards cooperation issues, then the Government would be willing to revise the specific implementation deadlines for these measures. [ ] 10
11 I have repeatedly stated that there is nothing productive about sanctions. We had a hard time deciding on retaliatory measures, and we were forced to make this decision. But I am confident that we ll be able to take advantage of the situation even under these conditions. [ ] I repeat that all I ve just said, all the measures I ve mentioned are simply responses. We did not want this to happen, and I sincerely hope that our partners economic pragmatism will prevail over malevolent political considerations, that they will think matters over, rather than intimidate or impose restrictions on Konta, and that mutually profitable trade and economic cooperation will be restored to its former level. We would very much hope for that. [ ] Annex IV Briefing by Minister of Agriculture of Konta following the Government meeting on 20 August 2014 [ ] Today, early on into the Government meeting, the Prime Minister stated that the sanctions are a forced measure. We were forced to make these decisions. Konta did not respond after the first volley of sanctions and not even after the second volley. Only when they imposed sectoral sanctions that impacted important lending institutions, such as Sberbank, the Kontan Agricultural Bank, and VTB, which are major lenders and investors in the state programme for expanding agriculture and ensuring food security, Konta took actions in response to such sanctions. Without exaggeration, the sanctions against institutions that are critical to Konta s agricultural sector threaten Konta s food security. Indeed, in his executive order, the President mentions the law on economic and other security of Konta because when sanctions against Konta graduated to a level where they could eliminate the development institutions... This would paralyse all investment projects designed to industrialise the agricultural sector of the Kontan economy and is fraught with the annihilation of a competitive Kontan agricultural sector. 11
12 To put it mildly, these are rather unscrupulous competition methods. I am entitled to this kind of assessment as the Minister of Agriculture. When it came to security threats, both food and state security, the President was forced to make these decisions. Once again, this might sound not too nice or even cynical, but sometimes they make us say so. Every cloud has a silver lining. The Kontan farmers were given a great opportunity through the decisions of the President and the Government. [ ] Deadlines First submission: 25 April 2015 Second submission 16 May 2015 Third submission 31 May 2015 Written submissions shall be delivered by to all participants, supporters and supervisors at midnight (24:00) on the deadline date. The Oral Hearing and the decision of the panel will take place in June 2015 at the Abbey Frauenwörth on Frauenchiemsee/Bavaria-Germany. Formalities All parts of each written submission must be contained in a single file in Microsoft Word format. Font: Calibri Font size: 12 pt. Line spacing: 1.5 pt. Footnotes, not endnotes 12
13 Length The total length of the first written submission, including footnotes and spaces, must be no longer than characters (with spaces, excluding index of authorities, cover and table of contents). Second written submissions must be no longer than characters. The third written submission should not be longer than characters. Facts The panel must apply rights and obligations arising from the covered agreements to the facts of the particular case, not to some situation in general. Therefore, dealing with the facts at issue before the panel and explaining how they support your position is essential. Separate the important facts from other facts contained in the case that you consider of little relevance. The requirements of the legal provisions at issue in the case are an important factor for determining which facts are important for this case. It is not allowed to assume additional facts. Where clarification is needed, stick to the process mentioned above. Clarifications Teams may request clarifications of the case by submitting a written request. Requests shall be sent to Mareike Fröhlich (m.froehlich@europainstitut.de) or Anja Trautmann (a.trautmann@europainstitut.de) by . The request must specify the exact passage of the text as well as explain why this passage needs clarification. In the event that a clarification is issued pursuant to such a request, all participants will be notified of the clarification by . 13
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