Gerhard Erasmus, tralac Associate, discusses the need for legal certainty regarding dispute resolution in regional trade arrangements

In a judgment delivered on 8 July 2016 the High Court of Namibia ruled, on a technical point, that an application by South African poultry producers seeking a court order to review and set aside Namibian restrictions on the importation of poultry products, will not be heard.[1] The Court decided that an unreasonable period of time had elapsed before the application had been launched.

Do private litigants involved in disputes such as these enjoy “rights” under the SACU or SADC legal instruments and where do they file for orders to protect them? Are national administrations under a duty to consider the applicable international agreements when adopting measures involving trade restrictions?

The SACU Agreement and SADC Protocol on Trade are international agreements concluded between states, but deal with economic integration. In terms of traditional approaches private parties do not derive directly enforceable rights from inter-state agreements. In regional trade arrangements a different logic applies when integration and cross-border commerce depend on the active participation of private parties; as traders, importers/exporters, service providers and investors. Their rights require recognition. Unless regional structures deliberately pursue rules-based integration and establish suitable fora and mechanisms to generate “community law” and appropriate remedies, private parties will not enjoy the security of the rule of law. They will have to rely on their governments of original nationality to act on their behalf. This is unlikely to happen in our part of the world. In any case, African governments do not litigate against each other over trade issues.

Both SACU and SADC lack procedures and structures to generate “community law”. The SADC Tribunal (where private parties did enjoy standing) was disbanded after a ruling in 2010 that Zimbabwe’s expropriation, without compensation, of private land violated the SADC Treaty. The Tribunal foreseen in the 2002 SACU Agreement never got off the ground; and was apparently designed for inter-state disputes only.

The result is that private parties engaging in intra-SACU and SADC trade and commerce have no choice but to approach domestic courts when their rights are violated in other member states. However, remedies are not guaranteed. This state of affairs amounts to a rather serious deficit which undermines the development of regional legal regimes. One of the obvious benefits of a rules-based system; that disputes about the interpretation and application of commercial contracts and agreements can be determined by an independent forum (which will provide remedies, clarify the applicable rules, and allow all parties subsequently to proceed with their commercial activities), is then forfeited. In COMESA and in the EAC private parties can approach regional courts for appropriate relief, and often succeed.[2]

The other preliminary point in the Namibian case, that the applicants lacked the necessary standing before the Courts of Namibia, was not decided. What the respondents seem to have had in mind by raising this issue is the fact that, since the complainants are South African companies (or have originally been founded as South African companies), they should not be allowed to bring their claims in a Namibian Court. If this argument is accepted intra-SACU commerce will suffer. These and other companies are not only engaged in lawful business and are protected by the laws of the land,[3] they constitute the fabric of trans-boundary commerce. If they are denied the right to have their rights protected in the courts of other member states all other such enterprises (including service providers such as banks, telecommunication companies and transporters) will face the same serious dilemma. The disruption of trade, commerce and investment could be serious, with business across borders becoming more costly, uncertain and cumbersome.

SACU is a well-integrated commercial space which allows for the freedom of movement of goods, payments,[4] services and people. The Namibian poultry case shows that the availability of dispute settlement procedures for private parties belongs logically to the reality on the ground. The domestic application to set aside national trade restricting measures (on the grounds of non-compliance with procedural fairness requirements and international legal instruments) serves, once again, as a reminder that commerce in regional markets require certainty and predictability; including procedures to resolve legal disputes. The absence of dispute settlement procedures points to a serious institutional deficit in SACU and SADC.

The first step towards the adoption of a dispute settlement regime suitable for SADC and SACU is a political one. Member states must show the will to improve the functioning of their regional trade arrangements, to respect the agreed rules, and to trust the judicial organs which they set up as part of such endeavours. Uncertainty is the enemy of successful economic integration.

Tell us what you think.

---