Thursday, May 23, 2013

The Republic of Mauritius versus Polytol Paints - COMESA Court of Justice - Preliminary Application No. 1 of 2012

Source: www.tralac.org

Kahaki Jere, tralac intern*, discusses the first case brought by a legal person against a COMESA member state with regard to its Treaty obligations in the area of trade liberalisation
The COMESA Director of Commerce and Trade described the case of The Republic of Mauritius versus Polytol Paints (COMESA Court of Justice Preliminary Application Number 1 of 2012) as a “landmark case” because it opens doors to the public to have recourse to the COMESA Court to help settle business disputes. He further stated that this judgment should encourage COMESA Member States to be clear about whether their obligations under the COMESA legal regime have been properly accepted by their respective Governmental organs and have been domesticated into the laws and the policy and institutional frameworks of the country.It is also the first case in which a legal person has taken a member State to task for an alleged breach of a trade obligation under the Treaty.

Polytol Paints, is a Mauritian company which exports automotive paints and sourced some of it raw materials from Egypt another COMESA State. When COMESA became a Free Trade Area in 2000, Member States undertook to eliminate customs duties and not to introduce new import duties on products that originate from the region pursuant to a Legal Notice issued on 29 May, 1999 by the COMESA Council of Ministers. Mauritius, through a Regulation that was in force from 2001 to 2010 introduced a 40 per cent import tax on paint that included the imports by the applicant. The applicant claimed that it had spent a total of 13, 275, 261 Rupees in taxes over the period the Regulation was in force and sought refund of the money through an action lodged in Mauritian courts. It also sought a declaration that the Regulation was in breach of Mauritius’ obligations under the COMESA Treaty. The Mauritian Supreme Court dismissed the claim on the grounds that ‘non-fulfilment of Treaty obligations is not enforceable by the national courts in so far as there was no specific legislation to this effect.’

Polytol referred the matter to the COMESA Court for an order that would declare that the passing of the Regulation was in breach of Mauritius’ obligations under the Treaty. Mauritius, through a preliminary application, challenged the reference of the matter to the COMESA Court on the ground that the Court lacked jurisdiction to hear the matter and that the alleged Regulation was no longer in force. The Court held that pursuant to Article 26 of the COMESA Treaty, a legal or natural person could bring a case to the Court challenging the legality of a regulation or an act for contravention of the COMESA treaty on condition that local remedies have been exhausted. The Court took judicial notice of the fact that the matter had gone all the way to the Supreme Court and there remained no effective remedy available to the applicant through national courts. The court could then hear the matter on merits because the Regulation was passed as a result of an action by the State and was subject to the jurisdiction of the Court. The judgment on merits has not yet been delivered.

The failure by the Supreme Court to make a determination in the matter due to the fact that there was no enabling legislation giving it jurisdiction highlights the gaps in the present dispute settlement regime in the COMESA region. The Courts can only give effect to national laws as is usually provided in most national Constitutions.

COMESA Member States  undertook, among other things, to take steps to secure the enactment of and the continuation of such legislation to give effect to the Treaty and in particular, to confer upon the regulations of the Council the force of law and the necessary legal effect within its territory. Domestication of the treaty entails that it would be part of the law in Member States. The removal of trade barriers like taxes, which are an element of the undertakings made by member states for the implementation of a Free Trade Area would then form part of the national law. Depending on how the law is couched, traders would have avenues to get remedies where Member States act in breach of national law that provides that specified imports are exempt from import duties and yet duty is paid by traders.

Where Member States do not implement their obligations to ensure that they give the Treaty the effect of law in their national jurisdictions in accordance with their treaty undertakings, what avenues can their citizens use to get remedies for breaches of treaty obligations at national level? Where there are no remedies available to natural or legal persons at national level, enforcing their rights becomes an expensive task. A trader would have to go through process of seeking redress in their national systems which may not be empowered to grant the remedies they seek as in the Pylotol case. Apart from this being a lengthy process, it is also expensive for a claimant to go through the national system and ultimately go in search of redress before a regional court.

One then tends to question whether national courts have a role to play in regional integration in the current state of implementation of treaty obligations by Member States. Where Member States do not hold each other accountable for breach of Treaty obligations and the regional institutions are not vigorous in ensuring implementation of treaty obligations, nationals of member States who are the intended beneficiaries of trade liberalisation, end up losing out.

What then ought to be done by the Member States as they continue with their regional integration aspirations? One of the issues to be addressed is the role that national courts have to play in the regional integration process if at all. If citizens are supposed to exhaust local remedies, States should ensure that there are local remedies available which may in the normal circumstances, be cheaper than seeking remedies at a regional level. Alternatively, if nationals cannot have remedies for breaches of the treaty through their national courts, should they be enabled to have direct access to the COMESA Court?

Alternatively, national courts may consider taking an active role in the development of jurisprudence on the implantation of treaty obligations. Article 30 of the COMESA Treaty provides that -

Where a question is raised before any court or tribunal of a Member State concerning the application or interpretation of this Treaty or the validity of the regulations, directives and decisions of the Common Market, such court or tribunal shall, if it considers that a ruling on the question is necessary to enable it to give judgment, request the Court to give a preliminary ruling thereon.

2. Where any question as that referred to in paragraph 1 of this Article is raised in a case pending before a court or tribunal of a Member State against whose judgment there is no judicial remedy under the national law of that Member State, that court or tribunal shall refer the matter to the Court.


Reference to the regional court under this provision is at the discretion of a national court, but it would enable the COMESA Court to make a pronouncement on the implementation of trade obligations by member States.

Mauritius has been used an example because it was one of the founding members of  COMESA. It has earned recognition as a regional hub for investments into Africa and Asia and as a major platform for the delivery of global business services. The government has restructured the sugar and textiles industries; and introduced modern legislations to facilitate and regulate the delivery of global business services and attract FDI in growth sectors like infrastructure and connectivity, properties and hospitality, healthcare, manufacturing, seafood, logistics, creative and media, ICT and financial services to mention a few. With so much activity taking place in trade and investment, it is only trite that there should be in place mechanisms that would enable complainants to have trade matters resolved locally.

At the regional level, ultimately, Member States need to decide on how regional integration will benefit citizens in their respective countries and how they may have redress for acts done in breach of treaty obligations that end up causing pecuniary loss to their citizens like in the case that has been highlighted.

* Kahaki Jere is a current tralac intern. She recently completed a Masters degree at the Law Faculty of the University of Cape Town.
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