Recent EU case-law
Annual WTO Conference, 2008
BIICL
Prof Piet Eeckhout, King’s College
London
Ms Elisabetta Righini, Legal
Service European Commission
Ms Anne Thies, University of
Reading
C-351/04 Ikea Wholesale, 27 Sep 2007
Facts
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EC imposes anti-dumping duties on bed linen
from Egypt, India and Pakistan (Regulation
2398/97, Nov 1997)
India wins WTO challenge to the Regulation
(Panel – AB – DSB confirmation March 2001)
Reports focus on ‘zeroing’ and other issues
(WT/DS141)
EC adopts Regulation 1515/2001 (July 2001)
Regulation 1515/2001
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“on measures ... following a report adopted by
the WTO DSB concerning anti-dumping and antisubsidy matters”
aim: to bring into conformity
Art 1: Council can repeal or amend disputed
measure
Art 2: Council can apply DSB legal
interpretations to non-disputed measure
Art 3: measures to take effect from entry into
force – no basis for reimbursement
Ikea Wholesale – Facts (ctd)
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EC adopts two Regulations on the basis of
1515/2001, effectively discontuining the
AD duties on bed linen (Aug 2001 & Jan
2002)
Ikea Wholesale (UK based) seeks
repayment of duties paid between March
2000 and Jan 2002
English High Court refers the case to the
Court of Justice
Ikea Wholesale - Questions
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Whether, in the light of the DSB findings,
Regulation 2398/97 is incompatible with
Community law as regards zeroing and
other issues?
Opinion Advocate General Léger
(April 2006)
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Validity Regulation must be assessed in
light of Anti-Dumping Agreement (see
earlier case-law)
Is the DSB’s interpretation of the ADA
binding on the ECJ? No!
Autonomy Community legal order would
be jeopardised
WTO and EU have different objectives,
which affect legal interpretation
Opinion (ctd)
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Opinion 1/91 on the original EEA Agreement
DSU does not provide for the creation of a body
in the nature of a court: “recommendation”; DSB
decisions do not constitute binding judicial acts
either as to form or as to substance
Emphasis in DSU on negotiation
AG nevertheless considers zeroing to be in
breach of the basic AD Regulation
Judgment ECJ
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Recalls case-law on lack of direct effect of WTO
law: it is only where the EC intended to
implement a particular WTO obligation that
review in the light of WTO rules is possible
(Nakajima)
Refers to Regulation 1515/2001, which was the
basis for the repeal/amendment of the AD duties
Recalls the provision in 1515/2001 which
excludes repayment
Judgment (ctd)
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Regulation 2398/97 cannot be reviewed in
light of ADA, as interpreted, since by
excluding repayment EC did not in any
way intend to give effect to a specific
WTO obligation
Zeroing is not allowed under the basic AD
Regulation: Regulation 2398/97 is invalid
Full repayment of duties
T-69/00, FIAMM et al., T-135/01, Fedon
et al. – Facts
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EC regime for the importation, distribution and
sale of bananas, introduced 1 July 1993 and
established by EEC Council Reg. 404/93
Ecuador, Guatemala, Honduras, Mexico and US
win challenge to the Regulation (WT/DS27,
DSB adoption September 1997)
Reports focus on discrimination of non-ACP
countries and other issues; GATT Arts. I, III,
X, XIII, GATS Arts. II, XVII
FIAMM and Fedon – Facts (ctd)
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Compliance proceedings, Art. 21.5 DSU
Ecuador wins WTO challenge of EC‘s
ongoing incompliance after expiry of
implementation period (DSB adoption May
1999)
US (US$191.4 million/year) and Ecuador
(US$201.6 million/year) authorised to
suspend concessions to the EC
FIAMM and Fedon – Facts (ctd)
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US include European traders, such as
batteries, bed linen, paper boxes and bath
products, on retaliation list
In 2000 and 2001, some of these
„retaliation victims“ bring compensation
actions before the CFI under Arts. 235,
288 (2) EC (Beamglow, Cartondruck,
FIAMM, Fedon, Fremaux)
FIAMM and Fedon – legal bases for
claimed right to compensation
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Breaches of WTO law
Breaches of general principles of
Community law
Principle of liability in the absence of
unlawfulness
Judgment CFI, 14/12/2005
Liability for WTO law breach? (-)
no direct effect = no „unlawful act“ = no liability
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no direct effect of (primary) WTO law
no impact of DSB rulings and expiry of
implementation period on liability
no Nakajima/Fediol situation (amending the
banana regime the Council “sought to
reconcile various divergent objectives”).
Judgment CFI, 14/12/2005 (ctd)
Liability for breaches of general principles?(-)
The applicants‘ complaints “based on breach
of [Community law principles] all rest on the
premiss that the conduct of which the
defendant institutions are accused is
contrary to WTO rules” (FIAMM, para 146).
Judgment CFI, 14/12/2005 (ctd)
Liability in absence of unlawfulness? (-)
In principle yes, if there is
 Unusual damage: „exceeds the limits of the
economic risks inherent in operating in the
sector concerned“,
 Special damage: „affects a particular circle of
economic operators in a disproportionate
manner by comparison with other traders“,
and a
 Causal link between EC conduct and damage
Judgment CFI, 14/12/2005 (ctd)
Liability in absence of unlawfulness? (-)(ctd)
However, retaliatory measures under the
WTO system do not cause (compensable)
„unusual damage“ since “the risk of this
vicissitude [is inherent in international trade
and] has to be borne by every operator who
decides to sell his products on the market of
one of the WTO members” (FIAMM, para.
205).
C-120/06 FIAMM et al. and
C-121/06, Fedon et al. (pending) challenges brought by applicants
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CFI ruling is defective: fails totally to state
any grounds concerning the argument that
in the specific factual circumstances, the
appellants are entitled to rely on DSB
ruling to establish unlawful conduct when
claiming compensation
CFI assessment of „unusual“ nature of
damage under liability in absence of
unlawfulness is wrong
Opinion AG Maduro (February 2007)
- liability for unlawful conduct
Direct effect of WTO law is equally required
if the „political freedom“ would be affected
through the challenge of EC measures
 in actions aiming at the declaration of
invalidity and compensation actions
 before national and Community Courts
 in actions brought by individuals, Member
States and Community institutions
Opinion AG Maduro
- liability for unlawful conduct (ctd)
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Even after the expiry of the
implementation period granted by the DSB
WTO members have the „political
freedom“ to temporarily accept retaliation
Negotiated solutions to trade dispute must
remain possible; Courts cannot conclude
„unlawfulness“ in compensation action
since this would trigger institutions‘
obligation to withdraw legislation („scope
of manoeuvre“ argument)
Opinion AG Maduro liability in absence of unlawfulness
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Existence of the principle in Member
States/Community based on
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Principle of equal treatment (e.g. France)
Fundamental right to property (e.g. Germany,
Spain)
Gap of judicial protection in the context of
international trade disputes due to lack of
direct effect of WTO law
No restriction of „political freedom“
Opinion AG Maduro liability in absence of unlawfulness (ctd)
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Good governance; informed use of
discretionary powers (balancing
interests/costs)
Community judiciary rather than other
WTO members should decide who has
to bear the damage caused by WTO law
breach
Opinion AG Maduro liability in absence of unlawfulness (ctd)
Conditions
 Damage must be unusual: „exceeds the
limits of the economic risks inherent in
operating in the sector concerned“ and is
sufficiently severe („grave“)
 Damage must be special: „affects a
particular circle of economic operators in a
disproportionate manner by comparison
with other traders“
 Causal link
Opinion AG Maduro liability in absence of unlawfulness (ctd)
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CFI ‘s ruling is defective
not the same market sector was hit by
(cross-) retaliation, so damage is not „normal“
 damage was not reasonably foreseeable
 no insurance could have been obtained
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Conclusion
realised risk was not inherent in the business
 ECJ should send cases back to the CFI for
decision of whether occurred damage is
sufficiently severe to be considered „unusual“
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