Discussions

The COMESA Court of Justice clarifies important Jurisdictional Issues

The COMESA Court of Justice clarifies important Jurisdictional Issues

16 Nov 2017

Gerhard Erasmus, tralac Associate, discusses dispute settlement in the regional economic communities (RECs) and the role of private parties

Africa’s trade and integration endeavours are anchored in international legal instruments. This suggests that certain practical benefits should follow: Legal certainty about compliance with obligations and the availability of legal remedies to state and private parties (firms, investors, traders, service providers) should be basic features of intra-African trade and integration.

This is not the case. Rules-based trade governance (in the form of legal certainty and effective remedies) is not a feature of intra-African trade regimes. The Courts and Tribunals forming part of the Regional Economic Communities (RECs) do not hear inter-state disputes. Private parties do bring applications (in the context of the rules allowing them standing) but these do not involve trade-related issues. National courts cannot hear inter-state disputes but they too must be able to decide disputes about the lawfulness of trade measures with domestic effect; such as anti-dumping and countervailing measures and safeguards. With a few exceptions,[1] this dimension is also lacking.

What is the explanation for this state of affairs? What are the consequences? Are there signs that matters might be improving?

Trade-related disputes are, in the traditional sense, of an inter-state nature. States are the parties to such agreements. However, African governments do not litigate against each other when trade obligations are violated. (Despite being WTO members and subscribing to the justiciability of multilateral trade agreements.) This reluctance is not based on any legal doctrine. It is said that differences will be resolved through consultations; to declare a formal dispute against another African government is a sign of disrespect for sovereignty. The real reasons probably lie at home; the implementation of African trade policies is frequently ad hoc and inspired by the protection of specific industries.[2] These governments claim “policy space” and flexibility to adjust domestic measures as they see fit. They do not want binding precedents which will limit the scope and nature of their domestic actions. The result is that trade and investment are often very uncertain ventures.

The absence of judicial clarification of the RECs’ legal regimes results in uncertainty about basic obligations and legal remedies. This undermines business confidence and the very basis of intra-African trade and integration. Trade and integration involve unique legal disciplines; their effective implementation requires binding pronouncements about the nature and scope of the commitments undertaken by state parties. When this is not the case, unpredictability and unfettered executive discretions become the “norm”.

Can this vacuum be addressed through litigation by private parties? What does the evidence show? SADC, ECOWAS, COMESA and the EAC have established courts and tribunals but their trade-related jurisprudence is in its infancy. In SADC, the picture is particularly bleak.

The SADC Tribunal was launched in 2005. It heard several applications by private parties. (There were no inter-state disputes.) These fell into two categories: unfair dismissal disputes involving officials from the SADC Secretariat and private party applications to review and set aside national measures affecting individuals. One of the latter involved the well-known Campbell Case.[3] When the SADC Tribunal ruled against Zimbabwe and declared the expropriation (without compensation) of Campbell’s private land to be a violation of the SADC Treaty,[4] the Tribunal was disbanded. A new Protocol has been adopted but the standing of private parties to bring applications to the new Tribunal has been terminated. It is unlikely that the new SADC Tribunal will hear (once its Protocol has entered into force) disputes about the violation of the SADC Protocol on Trade or other such instruments. It is also unlikely that all the SADC member states will accept the jurisdiction of this forum.

In the COMESA Court of Justice there has been a different trend. It has, amongst other cases, delivered two important judgments about trade related disputes in applications brought by private parties. Both judgments clarified basic principles about the nature of the obligations accepted by the state parties, the standing of and remedies available to private parties, and the jurisdiction of the Court. In the Polytol Case[5] it was decided that member states may not impose new tariffs on goods unless sanctioned by the relevant legal instruments. In this case the private applicant succeeded in having the contested tariffs set aside.[6]

A recent decision of the COMESA Court clarifies important jurisdictional issues. In  Malawi Mobile Ltd Versus Government of the Republic of Malawi and the Malawi Communications Regulatory Authority (MACRA)[7] the Court had to decide an appeal by the Government of Malawi against an earlier ruling by the First Division of this Court that it had jurisdiction to entertain a claim for compensation brought by a private cell phone company (Malawi Mobile Ltd). The claim for compensation arose from the alleged wrongful termination of a contract (concluded under Malawian law) to provide cell phone services. The respondent claimed that the termination of the contract amounted to an infringement of Article 6 of the COMESA Treaty,[8] and that, therefore, the COMESA Court of Justice (CCJ) had jurisdiction over the matter. The appellant (the Government of Malawi) argued that breaches of municipal law do not fall under the jurisdiction of the COMESA Court and, in addition, that local remedies in Malawi had not been exhausted.

Article 26 of the COMESA Treaty provides as follows: Any person who is resident in a Member State may refer for determination the legality of any act, regulation, directive, or decision of the Council or of a Member State on the grounds that such act, directive, decision or regulation is unlawful or an infringement of the provisions of this Treaty. (Local remedies must first be exhausted.)

The Malawi Mobile judgment clarified basic jurisdictional issues regarding “the interpretation and application of the provisions in the Treaty relating to the jurisdiction of the CCJ.”[9] The jurisprudence of this Court can now be said to be based on clear first-generation principles:

  • Article 26 enables the Court to review the legality of the acts adopted by the Council or a Member State. However, this action may not be brought before the CCJ unless its subject is “unlawful or an infringement of the provisions of this Treaty.”[10]

  • The CCJ has no jurisdiction to entertain a reference by a resident person under Article 26 of the COMESA Treaty which is grounded solely on an infringement of national law…. The CCJ cannot be considered as a general supranational court with a task to control the legality of every national legal act unrelated to the Treaty.[11]

  • The application by Malawi Mobile contained a fundamental flaw: No relationship between the alleged breach of contract and tort of inducement, the subject matter of the reference, and alleged unlawfulness under the Treaty, has been established.[12]

  • In conclusion, we are unable to agree with the submission by Counsel for the Respondent that the word “unlawful” in Article 26 means any unlawful act. It would be an absurd interpretation because it would in effect mean that any alleged unlawful act of a Member State, even if it is unrelated to the Treaty, would be amenable to review by the CCJ on a reference by a resident in a Member State.[13]

These are valuable and necessary contributions to the development of the jurisprudence of an important regional court. What do they mean for the settlement of trade-related disputes through private applications? Such disputes can only be decided if brought in terms of factual and legal arguments which demonstrate that REC legal instruments have been violated. Vague assertions about the violation of the rule of law will not suffice. The immediate challenge is for lawyers to advise clients appropriately and to base Article 26 claims on factual and legal grounds which demonstrate that a government has violated a trade related REC obligation. This will require a proper understanding and a more active utilization of the legal instruments of the RECs. That would be a necessary first step in the development of sound case law on intra-African trade and regional integration.

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[1] Only South Africa and Egypt have active national trade remedy systems in place.

[2] Trade in sugar is an example. Kenya has for years now protected its sugar industry is protected via special safeguards; which are in actual fact derogations from regional obligations. Zimbabwe’s surcharges on imported goods cannot be justified under any of the provisions in the SADC Protocol on Trade.

[3] Mike Campbell (Pvt) Ltd and Others v Republic of Zimbabwe (2/2007) [2008] SADCT 2 (28 November 2008).

[4] On the basis that Articles 4 and 6 (providing for democracy and the rule of law) were violated and that basic human rights had been infringed.

[5] Polytol Paints & Adhesives Manufacturers Co. Ltd (Applicant) versus The Republic of Mauritius (Respondent) Case No 1 of 2012.

[6] For a discussion see https://www.tralac.org/publications/article/7604-the-polytol-judgment-of-the-comesa-court-of-justice-implications-for-rules-based-regional-integration.html; https://www.tralac.org/discussions/article/8588-steady-progress-of-community-law-in-comesa-malawi-mobile-ltd-v-government-of-malawi-and-macra.html

[7] Appeal 1 of 2016.

[8] Article 6 lists COMESA’s Fundamental Principles. They include the protection of human and peoples’ rights in accordance with the provisions of the African Charter on Human and Peoples’ Rights; accountability, economic justice and popular participation in development; and the recognition and observance of the rule of law.

[9] Par 36.

[10] Par 43.

[11] Par 47.

[12] Par 50.

[13] Par 52.