Mercosur s Dispute Resolution System: The Brasilia Protocol s cases and the new cases solved by the Permanent Revision Court.

Transcription

1 Mercosur s Dispute Resolution System: The Brasilia Protocol s cases and the new cases solved by the Permanent Revision Court UFL Conference Profs. Dra. Nadia de Araujo PUC-Rio Importance of transnational commerce The development of transnational commerce under a set of uniform rules has helped the maintenance of peace among nations after world war II. Global Multilateral system: GATT World Trade Organization features (WTO): New rules for multilateral commerce. System of dispute resolution. 14/4/ Profa. Nadia de Araujo 2 DCI - Profs. Nadia de Araujo e Otto Licks 1

2 Principles applied to International Commerce and accepted by all nations Good faith States must respect treaty obligations in good faith. Pacta sunt servanda States must comply with treaty obligations. Due process States must respect common procedural rules of international trade. 14/4/ Profa. Nadia de Araujo 3 Principles of International Commercial Law General principles Free trade There is a violation of free trade when a state imposes unilateral measures that impairs the flow of free trade. Ex: Unilateral barriers, non-tariffs barriers against free circulation of goods. etc. Fair competition Prohibition of unfair trade practices and predatory competition Exclusion of discriminatory rules that do not guarantee equal treatment for all partners. 14/4/ Profa. Nadia de Araujo 4 DCI - Profs. Nadia de Araujo e Otto Licks 2

3 Dispute settlements If there is an act by a state against the principles of free trade, guaranted by multilateral or bilateral treaty rules, what can be done? More than one solution. 14/4/ Profa. Nadia de Araujo 5 The systems of dispute resolution for international trade Internal judicial system. Local judiciary. Private Dispute resolution. Arbitration, ad hoc or from an institution. Supranational system. For example, the European Union Court of Justice. System of International Organizations. Multilateral: WTO. Regional: Nafta, Mercosur. 14/4/ Profa. Nadia de Araujo 6 DCI - Profs. Nadia de Araujo e Otto Licks 3

4 Mercosur characteristic Intergovernmental organization, established by the Treaty of Assuncion. Members: Argentina, Brazil, Uruguai and Paraguai Associates: Chile and Bolivia. Common Institutions have been created by the Treaty of Assuncion. Contractual type arrangements without supranational authority. Produce rules that will become mandatory for member states through the classic system of negotiation of treaties and their ratification afterwards. 14/4/ Profa. Nadia de Araujo 7 Mercosur s Institutions two collegiate organs: the Common Market Council (CMC) and the Common Market Group (CMG). Administrative Secretariat Trade Commission (MTC), Joint Parliamentary Commission (JPC) Economic and Social Consultative Forum (ESCF). Permanent Revision Tribunal. Created by Protocol of Olivos. 14/4/ Profa. Nadia de Araujo 8 DCI - Profs. Nadia de Araujo e Otto Licks 4

5 Mercosur s principles Treaty of Assuncion has rules for barriers within the region (as no barriers are allowed). At this point, there is in Mercosur: Free trade on the integration zone. Customs Union (in progress). Common Market is a future step. 14/4/ Profa. Nadia de Araujo 9 MERCOSUL Treaty of Assuncion has established: Commercial Liberalization program, with the progressive reduction of tariffs and a common list of exceptions for sensitve products in the transitional period (that has finished). Coordination of macroeconomic policies, that will gradually help the methods of macroeconomic policies to converge with the liberalization program and the elimination of non-tariff barriers. Common external tariff, a single external tariff for third countries, that will help to promote competition among the internal market of Mercosur; Commun regime for the origin of goods System of dispute resolution and special measures rules. 14/4/ Profa. Nadia de Araujo 10 DCI - Profs. Nadia de Araujo e Otto Licks 5

6 Rules for dispute resolutions at WTO and Mercosur Preference for negotiated solutions. Parties must exercise good faith. Mandatory compliance with decision. Possibility of unilateral measures when there is no compliance. 14/4/ Profa. Nadia de Araujo 11 Options in Mercosur s dispute settlement Disputes arise over the interpretation and application of the Treaty of Assuncion and others Mercosur s Protocols. Dispute settlement in MERCOSUR includes three alternative procedures 14/4/ Profa. Nadia de Araujo 12 DCI - Profs. Nadia de Araujo e Otto Licks 6

7 The first option Consultations offer a mechanism to solve disputes through direct negotiations subject to pre-determined procedures and terms. The mechanism enables member states to exchange information through the request of explanations and clarifications, and to manage trade frictions that do not warrant launching a claim or judiciary procedures. Consultations can be initiated by member states on behalf of central and local administrations or the private sector. 14/4/ Profa. Nadia de Araujo 13 The second option Claims are a sort of pre-judiciary mechanism to settle trade disputes. Its procedures were defined in an annex to the OPP. Claims on behalf of member states, legal or physical persons must be initiated by a national section and they must refer to trade-related matters falling under the authority of the Trade Commission (chart 2). If a claim is not settled in the MTC, it must be turned to a technical committee that must reach a conclusion in thirty days. The report of the committee is not binding and it may include more than one recommendation. If MTC fails to reach consensus the claim can be taken to the CMG, that has thirty additional days to settle the dispute. If the claim fails to be settled the complaining member state can directly activate the arbitral procedure of the BPDS. 14/4/ Profa. Nadia de Araujo 14 DCI - Profs. Nadia de Araujo e Otto Licks 7

8 The third option Brasilia Protocol s arbitration (now under Protocol of Olivos rules) Controversies among member states and among a member state and a private party. Member states can open a dispute over matters of interpretation, implementation or violation of rules established by the ToA and any other legal instrument (such as protocols, agreements, decisions, resolutions and directives). Formal procedures contemplate three stages: direct negotiations, intervention by the CMG judiciary mechanism, each subject to (relatively flexible) time limits. All disputes need to go through the first two stages (direct negotiations and intervention by the CMG) before the judiciary mechanism can be triggered (except when the issue was already subject to a claim). The judiciary procedure is undertaken by an ad-hoc tribunal of three members that makes mandatory and definitive determinations. 14/4/ Profa. Nadia de Araujo 15 Rules for dispute resolutions at WTO and Mercosur Preference for negotiated solutions. Parties must exercise good faith. Mandatory compliance with decision. Possibility of unilateral measures when there is no compliance. 14/4/ Profa. Nadia de Araujo 16 DCI - Profs. Nadia de Araujo e Otto Licks 8

9 Protocol of Brasilia and Protocol of Olivos Protocolo de Brasília Ad hoc Arbitral tribunals It has heard 12 cases since Protocol of Olivos has derogated the 1991 Protocol of Brasilia for the Settlement of Disputes. Choice between Mercosul or WTO system: Apart from the dispute settlement system available pursuant to the current Protocol, a complaining party may submit its dispute to the Dispute Settlement System of the World Trade Organization, or of another regional trade agreement, provided that all the parties to the dispute are also the members of the latter. 14/4/ Profa. Nadia de Araujo 17 MERCOSUR Protocol of Olivos System of dispute Resolution Created the Permanent Tribunal of Revision Revision court for ad hoc decisions by arbitration (only in matters of law) or as single court for new arbitrations, when chosen by states parties. Its mandates includes answers to consultations, asked by arbitral ad hoc courts, state parties and national courts to interpret Mercosur s rules, known as advisory opinions. The Court has five members. It will hear cases in chambers consisting of three or five arbitrators, depending on whether the dispute involves two or more MERCOSUR Member States 14/4/ Profa. Nadia de Araujo 18 DCI - Profs. Nadia de Araujo e Otto Licks 9

10 Protocol of Olivos The Protocol provides for a three-tier dispute settlement system. The first tier is a process of direct negotiations, with or without the intervention of the Common Market Group. In case the dispute is not resolved in this phase, the parties can recourse to an ad hoc arbitral tribunal consisting of three arbitrators. After the tribunal issues an award, except if the award is grounded on principles of ex aequo et bono, any party to the dispute may appeal for its revision to the Permanent Court of Review ("Court"). The appeal must be limited to the legal issues of the dispute in question, and to the legal interpretations construed in the tribunal's award. The Court's decisions, which are deemed to be final, may confirm, modify or revoke the legal grounds and decisions reached by ad hoc tribunals. 14/4/ Profa. Nadia de Araujo 19 Different types of controversies in Mercosul Mercosul Rules (that are internalized in the internal system of each country) Application of community law Actors: states v. states It Can be usedboth by Mercosur or In the local judicial system Multistate private cases a) Uses Rules of PIL b) Conventions 1. OEA/CIDIP 2. Mercosur s Protocols Actors: Private Parties Private cases Private Arbitration a) Internal rules b) International rules (CCI) c) Mercosurs rules All rules are simultaneous and not exclusive 14/4/ Profa. Nadia de Araujo 20 DCI - Profs. Nadia de Araujo e Otto Licks 10

11 Arbitral awards: Results from Brasilia Protocol s cases País Argentina Brasil Paraguai Uruguai plaintiff defendant Winner 2(4; 9) 1(3) 1(8) 3(5;6;7) Partial winner 2 (1.; 2) 2 (1,2) Agrement (10) Agrement (10) 14/4/ Profa. Nadia de Araujo 21 Awards subjects Award 1o. Ar/Br 2o. Ar/Br 3o. Br/Ar 4o. Br/Ar Subject Application by Brazil of restrictive measures to reciprocal trade with Argentina Subsidies on the production and export by Brazil of porc to Argentina. Application by Argentina of Safeguard Measures on textiles from Brazil. Antidumping measures applied by Argentina to frozen poultry from Brazil. 14/4/ Profa. Nadia de Araujo 22 DCI - Profs. Nadia de Araujo e Otto Licks 11

12 Awards subjects Award Subject 5o. Ur/Ar 6o. Ur/Br 7o. Ar/Br 8o. Pa/Ur Restrictions on access to the Argentine market of Bycicles imported from Uruguai Prohibition by Brazil on the import of remoulded Tires from Uruguai Barriers to entrance of Argentine Phytosanitary products into the Brazilian markets Application of specific internal tax of Uruguai on the sale of paraguayan cigarettes 14/4/ Profa. Nadia de Araujo 23 Awards subjects Award Subject 9o. Ar/Ur 10o.Ur/Br 11o Ar/Ur Subsidies on the production and export of wool from Uruguai into Argentina Controversy over unilateral measures applied by Brazil against tobaco coming from Uruguai Prohibition byargentina on import of remoulded tires from Uruguai. (Protocol of Olivos 1st case). 14/4/ Profa. Nadia de Araujo 24 DCI - Profs. Nadia de Araujo e Otto Licks 12

13 The use of general principles in the awards Good faith 1st award 7th award: Delay by a country in the implementation of mercosur s measures are against good faith. The compliance with the treaty rules and other international commitments are part of pacta sunt servanda, and good faith. The delay in the internal incorporation of a Mercosur rule by a State is against the principle of good faith that determine the relation among mercosur s members. 14/4/ Profa. Nadia de Araujo 25 The use of Trade Principles in Mercosur s awards. Principle of free trade 1st. Award: free trade is the basis of Mercosur. 3rd. Award: Ímposing non tariff barriers is against free trade. 5th. Award: The restriction imposed by Argentina in relation to norms of origin were considered against free circulation of goods, and therefore, against the principle of free trade. 6th. Award: Brazilian restrictive measures were considered against free trade. 8th. Award: There was infringement to the principle of free movement of goods. Thus the principle of equal treatment was violated as well as the principle of non discrimination. Both violations are against free trade principle established by the Treaty of Assuncion. 14/4/ Profa. Nadia de Araujo 26 DCI - Profs. Nadia de Araujo e Otto Licks 13

14 Some conclusions Mercosur s awards have used extensively principles of international trade in its decisions, even though all arbitrators to the cases were different. The methodology used by the awards to reach their decisions have used mostly the general principles stated in the Treaty of Assuncion and other Mercosur s Protocols, that can be defined as principles of Community Law and principles of International Commerce. There is always a very through confrontation of the facts of the case with the principles stated in the treaty and protocols, that favours the integration process. 14/4/ Profa. Nadia de Araujo 27 DCI - Profs. Nadia de Araujo e Otto Licks 14