S14TB012014 Mwanza Polytol Paints v Mauritius - Evidence...

Polytol Paints v Mauritius: Evidence of

the existence and direct effect of

community law in COMESA?

by William Mwanza

tralac Trade Brief

No. S14TB01/2014

January 2014

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This publication should be cited as: Mwanza, W. 2014. Polytol Paints v Mauritius:

Evidence of the existence and direct effect of community law in COMESA?

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Polytol Paints v Mauritius: Evidence of the existence and direct effect of


tralac Trade Brief | S14TB01/2014 | Author: William Mwanza

3



by William Mwanza

1. Introduction

In a landmark case involving Polytol Paints and Mauritius, the Common Market for Eastern and

Southern Africa (COMESA) Court of Justice First Instance Division made a ruling that suggests that

regional integration within COMESA is pursued within a framework of community law, and that this

system is fairly effective. It is understood that a notice of appeal has since been filed by the Mauritius

Government. As consideration of this case continues, the current ruling of the COMESA Court brings

to the fore a number of issues that are worth discussing.

This paper reviews the concept of community law and the extent to which COMESA is indeed a form

of it, based on the aforementioned case. The origins of the concept of community law are first

explored, followed by the background of the Polytol Paints v Mauritius case and the ruling of the

COMESA Court. The existence of community law and its legal effect in COMESA are then explored,

before the paper is concluded.

2. Origins of community law

Community law has its origins in the European integration process. It is that part of the law that can be

invoked by natural legal persons in the domestic courts of member countries and in the European

Court of Justice (Arnull et al., 2000). It is seen as the ‘part of the European Union which comprises

the law of the European Communities (EC) … [including] the law of the single market, of social

policy, and of competition policy’ (Ibid.) and has continued to be developed over the years.

Due to the fact that it governs interstate relations, community law is a form of international law.

However, because of its ability to confer rights of individuals that can be claimed in national courts or

in the judicial organs of regional arrangements, community law is seen as a special form of

international law or, in other words, a sui generis regime of law (see Erasmus, 2013).




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The consolidation of single markets is an ongoing initiative in Africa, where regional integration

agendas are pursued within the framework of Regional Economic Communities (RECs).1 The

designation of these regional groupings as ‘economic communities’ serves as an initial suggestion that

they are blocs of community law. As per the definition above, however, this concept of community

law itself remains relatively new to the continent, but is now receiving increasing focus, and rightly

so. The extent to which the different RECs are effective community law processes is vital as it

determines the extent to which the benefits from the regional integration process actually accrue to

various stakeholders, particularly to private actors in the process. It is worth looking closely therefore

at the ruling of the COMESA Court in this regard.

3. The Polytol Paints v Mauritius case

3.1 Background to the case

The case involves Polytol Paints and Adhesives Manufacturers Co. Ltd, a company incorporated in

Mauritius, as the applicant, and the Mauritius Government as the respondent.

Mauritius ratified the COMESA Treaty on 8 December 1994. Under Article 46(1) of the Treaty,

member states were required to eliminate customs duties and other charges of similar effect on goods

that qualified for COMESA treatment by the year 2000, pursuant to the creation of a Free Trade Area

(FTA). Under Article 46(3), they were also barred from imposing any new duties or increasing

existing duties with respect to products traded within the Common Market. In complying with Article

46, Mauritius eliminated customs duties on products originating in COMESA member states on 1

November 2000. However, in November 2001, it amended its Customs Tariff Regulation of 2000 to

introduce a 40% customs duty on certain products imported from Egypt, including the products in

question, Kapci paint products. Polytol Paints viewed this as an infringement of the COMESA Treaty

and sought redress within Mauritius’ national courts to no avail. In throwing out the case as had been

brought before it, the Supreme Court of Mauritius ruled that it ‘[could] only consider the validity of

the regulations against the backdrop of the Customs Tariff Act and [the Mauritius] Constitution. In the

absence of any such legislation to that effect, nonfulfillment by Mauritius of its obligations, if any,

under the COMESA Treaty is not enforceable by the national courts’ (COMESA, 2013).

In view of this and faced with no other possible legal remedies within Mauritius’ national courts,

Polytol Paints brought the issue to the COMESA Court of Justice. In a preliminary ruling of

1 See full list of Regional Economic Communities in Africa on the African Union website at www.au.int.




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December 2012, the court ruled that it had jurisdiction over the matter. In this merits stage of the case,

the applicant purported that Mauritius breached the COMESA Treaty based on a number of claims

which were grouped into two by the court. First were those that relate to the alleged failure by

Mauritius to take the steps necessary to implement the Treaty within its domestic legislation and to

give the Treaty the necessary force of law within its territory. Second were those based on the

imposition of customs duties on the Kapci products, and further doing so in a discriminatory manner,

which was viewed as affecting the rights of the applicant.

The applicant therefore sought necessary remedies including a declaration that Mauritius had

infringed the Treaty based on the above claims; an order directing that the respondent take all

necessary steps to domesticate the Treaty and give it the force of law over which national courts

would have jurisdiction; and an order that Mauritius refund the duty paid over the relevant period,

among others.

3.2 Ruling of the COMESA Court

In its consideration of the first set of claims, the Court rightly noted a number of provisions of the

COMESA Treaty, which all point to the fact that a legal or natural person resident in a COMESA

member state is only permitted to bring, for litigation in the Court, matters relating to acts or measures

viewed as infringing provisions of the Treaty by a member state (Article 26) but not on whether a

member state has fulfilled its obligations under the Treaty. This nonfulfillment of obligations under

the Treaty is rather a matter that can be challenged in the Court by other member states or the

COMESA Secretary General (Articles 24 and 25 respectively). Hence the Court found that the

applicant did not have locus standi to bring the matter before the Court, and decided that it did not

need to make a determination on whether Mauritius had indeed failed to implement the Treaty within

its domestic legal system and to give the Treaty the necessary force of law within its territory, or that

in effect it failed to give jurisdiction over such a matter to its national courts. This finding is important

as it ties in directly with the second set of claims considered by the Court as will now be discussed,

but also in the legal effect of the Treaty within the territories of member states, whether or not the

Treaty has been implemented, which will be discussed in the next section.

In considering the second set of claims, and particularly Mauritius’ defence that it reintroduced duties

on the concerned products due to an upsurge in imports from Egypt, the Court noted that Mauritius

was aware of the possibility of imposing safeguards under Article 61 of the COMESA Treaty to

remedy the situation but had chosen not to. It found that Mauritius had infringed Article 46 of the




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Treaty by reintroducing duties on products from Egypt, including Kapci paints, even though this was

done to protect its domestic industries. This was regardless of a bilateral agreement between Mauritius

and Egypt to this effect, which the Court viewed as contrary to the object and purpose of the

COMESA Treaty, i.e. to achieve free trade within the COMESA region. In reaching this conclusion,

the most critical point in the Court’s assessment, and perhaps in the case as a whole, is on whether

Article 46 gives natural or legal persons residing in member states an enforceable right. By reading

Article 46 (the obligation to eliminate customs duties by the year 2000 and the prohibition from

imposing any new duties or increase existing duties on products) in the light of Article 26 (the right of

natural and legal persons to challenge the illegality of an act or measure by a member state in the

Court), the Court rightly found that Article 46 creates an enforceable right for natural and legal

persons resident in COMESA member states, which can be claimed in the Court by such natural and

legal persons on the basis of Article 26. In this case, Mauritius had breached the Treaty by imposing

the said duties, and because the applicant would not have paid the duties if Mauritius’ regulations had

been in line with the Treaty, the applicant was negatively affected by the breach.

4. Community law in COMESA?

4.1 Community law sources

As alluded to at the outset and as is clear from the foregoing, the Court of Justice in its ruling gives

indication that COMESA is based on a system of community law. The source of this community law

in this case was the COMESA Treaty, which establishes rights (through Article 46 in this particular

case), the upholding of which private parties can claim in the COMESA Court where they have been

infringed by member states. The Treaty itself is, however, not the only source of community law in

COMESA. According to Article 10 of the COMESA Treaty, there are instruments originating from

the COMESA Council of Ministers that are secondary to the Treaty and which have varying effects as

follows:

• Regulations – binding on all member states in their entirety

• Directives – binding on each member state to which they are addressed in terms of what is to

be achieved but not the means of achieving the specified aim

• Decisions – binding on those that they address.




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These are seen as distinct from recommendations and opinions of the Council, which are not binding

on member states.

As these different legal instruments are utilised in the course of implementing various regional

integration activities, wherever dispute settlement is required, judgements of the Court are important

for the progressive development of this community law.

4.2 Community law’s effect within member states

The sources of community law in COMESA are different as highlighted above. It is therefore

important to note that the legal effect of the different instruments also differs, particularly concerning

the extent to which they enter into and are effective within national territories of the member states

and create rights that can be claimed by individuals in national courts there or indeed in the regional

court. Seen in this way, we note that there are two important concepts that characterise community

law in terms of its effect: these are the ‘direct applicability’ and the ‘direct effect’ of community law

instruments. These concepts have also emerged within community law in the European context. They

have proved to be concepts that are not too easy to work with and have sometimes been used

interchangeably, not least because they are somewhat closely associated. However, they are quite

distinct (see Edward, 2002) and are in their simplest form defined by Arnull et al. (2000) as follows:

• Direct effect: where a provision is ‘clear and unconditional’ and bestows on a natural or legal

person, a legal right that they can exercise against another natural or legal person or against

the government of a member state

• Direct applicability: the attribute of [a legal instrument] that allows it to access the national

legal order ‘in its entirety’ without the requirement of it to be specifically incorporated into

the national legal order.

In line with these definitions, there can be a tendency to view direct applicability as a precondition for

the direct effect of legal instruments, in the sense that if a legal instrument has not been incorporated

within a member state’s national legal order, it must necessarily have direct applicability status before

natural or legal persons can claim certain rights that the legal instrument bestows on them. This may

not necessarily seem to be the case, however, when one looks at the different legal instruments that

these concepts are associated with. Indeed, the original definition of direct applicability by Arnull et

al. (2000), upon which the definition above is based, makes specific reference to ‘regulations’ of the

European Union Council of Ministers. This attribute is explicitly provided to such regulations in the




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Treaty on the functioning of the European Union, which provides that a ‘regulation…shall be binding

in its entirety and directly applicable in all Member States’ (Article 288 (ex Art 249 TEC), Treaty on

the functioning of the European Union). This is an attribute that has not necessarily been bestowed on

all other legal instruments of community law in the EC. However, this does not mean that the other

legal instruments do not also have direct effect. Indeed, in the landmark case of Van Gend en Loos v

Nederlandse Administratie der Belastingen, the European Court of Justice ruled that the provision in

question in that case, Article 12 of the EEC Treaty2 (which makes it incumbent upon member states to

refrain from introducing new tariffs on imports or exports or increasing tariffs on existing trade) did

indeed produce direct effects and produced rights for natural or legal persons, which national courts

were supposed to uphold. This finding was in spite of the European Court not even considering

whether the EEC Treaty was directly applicable in the territories of member states of the European

Communities.

A somewhat similar scenario is prevalent in the Polytol Paints v Mauritius case in COMESA. What

was essentially in question in this case was whether the COMESA Treaty was directly applicable in

the territories of COMESA member states, and whether Article 46 of the Treaty produced direct

effects. This is evident from the two sets of claims. In considering the first set of claims, the Court

would have had to determine whether the COMESA Treaty had the necessary force of law in

Mauritius in spite of it not being incorporated into the national legal order, i.e. whether it was directly

applicable. On the second set of claims, it considered whether measures taken by Mauritius infringed

Article 46 of the Treaty and so affected the individual rights of Polytol Paints, i.e. whether the

provision had direct effect.

In its ruling, the COMESA Court found that the provision did in fact have direct effect, without

necessarily having to determine whether the COMESA Treaty was directly applicable in Mauritius or

not, thereby giving an indication that the direct applicability of the COMESA Treaty may not

necessarily be a precondition for its provisions to produce direct effect in the national territories of its

member states. In other words, where a provision of the COMESA Treaty is clear and without any

conditions, an infringement of such a provision can be challenged by natural or legal persons, whether

or not the COMESA Treaty has been incorporated into the respective member states.

2 Note that the provision in question in this case was in the Treaty establishing the European Economic Community (EEC

Treaty or Treaty of Rome) which was signed in 1958. Various modifications have been made to this and other related

Treaties as the scope of integration in the European Union has increased. The content of the EEC Treaty, and indeed that

of latter ones such as the Treaty establishing the European Communities (TEC), is part of the currently prevailing version

namely the Treaty on the functioning of the European Union or the Lisbon Treaty.




9

This is indeed an important ruling with profound implications on the tenacity of provisions such as

Article 46 within the system of community law of COMESA. A look at the different constitutions of

the member countries of COMESA shows that international agreements are treated differently with

respect to their incorporation into the respective national legal orders, according to whether the

country follows a monist system (where international agreements become part of national law once

they are ratified) or a dualist system (where international agreements have to be transposed into

national law by specific legislation) (see Paust, 2013). There are indeed also some countries such as

Mauritius where the constitution is silent on the incorporation of international agreements. This

creates a difficult landscape whereby after making such a commitment to reduce tariffs and not to

increase them or to introduce new ones at a later stage, such commitment would then be effective and

claimable in some national territories and not effective in others, depending on whether the COMESA

Treaty has been incorporated into the national legal order in the respective countries or not. By ruling

that Article 46 has direct effect, the COMESA Court has shown that the community law system in

COMESA overcomes such a problem, and ensures that the tariff liberalisation commitments made

through that provision do indeed permeate to the national legal orders of all member states, regardless

of whether the Treaty has been incorporated or not, and establishes rights that can be claimed by

private parties, thereby endorsing the community law system in COMESA as not only existent, but

also as highly effective.

5. The role of different stakeholders in upholding the effective implementation

and integrity of COMESA community law

The ability of Article 46 of the COMESA Treaty to permeate to national territories and to have effect

at the national level in COMESA member states irrespective of whether the Treaty had been

incorporated into national law shows the strong legal effect that the system of community law in

COMESA has. Like any system of law, community law instruments in COMESA establish a system

of rights and obligations that need to be upheld by various parties. Where such rights and obligations

are not upheld, the effect of the community law instruments is only tentative at most, until these rights

and obligations are claimed in court by parties that are affected by them, and are duly upheld by the

court.

In most areas of international law, dispute settlement is normally an interstate affair, as it is only

member states that have access to institutions such as supranational courts to ensure the upholding of




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rights of their citizens and obligations of other member states in the international arena.3 As alluded to

earlier, the sui generis nature of community law, and in this particular case COMESA community law,

is that it establishes rights for natural and legal persons that can be claimed in court by these same

natural and legal persons where these rights have been infringed upon.

This makes the distinction drawn by the COMESA Court between ‘nonfulfillment of Treaty

obligations’ and ‘infringement of the Treaty’ important, not only for the legal effect of the respective

legal instruments, but also in terms of the role that different stakeholders have to play in ensuring that

instances of non-adherence are redressed, thereby ensuring completion in the legal effects of the

respective instruments, and thereby also preserving the integrity of the system.

When looked at closely, the two terms are quite similar, but also carry a subtle difference, as made

evident by the Court’s position on the matter in the present case. Firstly, nonfulfillment of obligations

in the Treaty are seen as occurring where a member state has made certain undertakings, such as the

undertaking to incorporate the Treaty into national law, but has not gone ahead to implement such an

undertaking. On the other hand, infringement of the Treaty is seen as a situation where a member state

may or may not have implemented certain obligations (such as the requirement to reduce tariffs to

zero), but goes on to implement measures that run contrary to provisions of the Treaty, in this case the

alleged increase of duties contrary to Article 46 of the Treaty.

As will be recalled, in making this distinction, the COMESA Court highlighted Articles 24, 25 and 26

of the COMESA Treaty. Article 26 provides that natural or legal persons may challenge, in the

COMESA court, acts or measures that are an infringement of the provisions of the Treaty. Looking at

the other two provisions, it can be noted that Articles 24 and 25 also grant member states and the

Secretary-General of COMESA the ability to challenge infringements of the Treaty. There have so far

been no instances of inter-State disputes in COMESA in spite of allegations of infringement of the

Treaty. The possibility for the private sector to challenge infringements of the Treaty that affect their

rights is therefore not only confirmation that COMESA is based on a system of community law, but

perhaps more importantly, makes clear the crucial role that the private sector has to play to ensure that

such instances of infringement are effectively addressed. Subject to weighing the technical and

financial costs and benefits of the process, as was probably the case for Polytol Paints, constant

scrutiny of measures being faced and pursuing legal remedies even in the regional court when such

measures infringe on their rights is a requirement if such private actors are to continue enjoying

3 For example, in the World Trade Organisation (WTO), it is only member states that can access the Dispute Settlement

Mechanism on behalf of private traders.




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optimal benefits from the regional integration processes that arrangements like COMESA provide.

Being the players that are actively engaged in trade and who in the course of such trade encounter

measures that are not in line with what has been agreed by member states, the onus is rather on them

to ensure such that such instances of infringement of the Treaty are duly rectified and that their rights

are restored.

The second part of the distinction is that challenging the ‘nonfulfillment of Treaty obligations’ is only

within the remit of member states and the Secretary-General of COMESA as per Articles 24 and 25 of

the COMESA Treaty respectively. In the present case, it appears to be the case that fulfilment of

Treaty obligations such as incorporation of the COMESA Treaty into the national legal order may not

necessarily be a prerequisite for rights to be enjoyed by natural and legal persons within the respective

member states’ territories. This is, however, the case where the provision in question was seen to be

clear and unconditional. It does not necessarily follow that incorporation of the Treaty into national

law would assist various stakeholders in accessing certain rights that are provided by provisions that

are less clear. However, by the very fact that member states undertook to implement various

obligations under the Treaty, including incorporation of the Treaty into national law, they would have

to see such undertakings through. Such political will is required not only for the integrity of the

regional integration process, but also to ease any problems that national institutions may encounter in

implementing the Treaty whilst such incorporation into national law is absent. Indeed, this was the

case in Mauritius, where national courts held the position that their jurisdiction is only limited to cases

involving the national law of the country. There are, of course, some enforcement difficulties that may

still ensue where the COMESA court delivers a judgement which still has to be effected through the

same national courts. This is the situation that prevails in the Polytol Paints v Mauritius case and is an

issue that could come up in the appeal process that Mauritius intends to pursue. It is an aspect that is

important for the ultimate effectiveness of community law in COMESA and will be important to keep

in view.

The foregoing is on the need for member states to fulfil obligations undertaken within a regional

Treaty, such as transposition into national law, so that their own internal processes in the

implementation of regional commitments function effectively. There is also the need, however, for

member states to hold each other accountable in the fulfilment of their respective obligations,

especially where a country’s exporters face difficulties in the markets of partner members due to such

nonfulfillment, and to utilise the region’s institutions such as the COMESA court if need be. Such an

approach will not only ensure that the initial intentions of member states in concluding respective




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treaties are taken forward, but also that the required spirit of strict adherence to the rule of law by all

stakeholders is furthered throughout the region, thereby ensuring the effectiveness of the regional

integration process, and also continually reinforcing awareness of the benefits that the process

provides to private actors within the respective national territories.

6. Conclusion

As is evident from the foregoing, the regional integration process in COMESA is based on a system of

community law. This is particularly seen in the case of Polytol Paints v Mauritius where the

individual rights established by the COMESA Treaty are preserved. What is seen as most important in

the COMESA Court’s ruling in this case is the way in which it shows that the tariff liberalisation

commitments made by member states through Article 46 the COMESA Treaty permeate the national

territories of member states irrespective of whether member states have incorporated the COMESA

Treaty into national law or not. This shows the strong legal tenacity that characterises the community

law system in COMESA. It is a finding that upholds the integrity of the regional integration process

within the region, mostly as it ensures that once certain commitments are made by member states at

the regional level (such as the reduction of tariffs and prohibition of increases or introduction of new

duties in Article 46), such provisions create rights that are immediately available to natural and legal

persons within the respective member states and can be duly claimed by such natural and legal

persons where they are infringed. The ruling by the COMESA Court is an important first step in

defining the existence and characteristics of community law in COMESA. Through this ruling, the

prospective appeal process in this case and in other cases that would be considered by it in future, the

COMESA court has demonstrated the important role that it will continue to play in upholding rights

and obligations created by COMESA legal instruments and indeed in the progressive development of

community law within COMESA.




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References

Arnull, A.M., Dashwood, A.A., Ross, M.G. and Wyatt, D.A. 2000. European Union Law. London:

Sweet & Maxwell.

Edward, D. 2002. Direct Effect: Myth, Mess of Mystery? In Prinssen, J.M. and Schrauwen, A. 2002.

Direct effect: rethinking a classic of EC legal doctrine. Grongingen: Europa Law Publishing.

Erasmus, G. 2013. The COMESA Court of Justice: regional agreements do protect private parties.

[Online]. Available: http://www.tralac.org/files/2013/10/S13TB092013-Erasmus-COMESA-Court-of-

Justice-Legal-agreements-protect-private-parties-20131015-fin.pdf

Paust, J.J. 2013. Basic forms of international law and monist, dualist, and realist perspectives.

[Online]. Available: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2293188

Legal Texts

Treaty on the functioning of the European Union. [Online]. Available:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:0047:0200:en:PDF

COMESA Treaty. [Online]. Available:

http://www.comesa.int/attachments/article/28/COMESA_Treaty.pdf

Cases

Polytol Paints & Adhesives Manufacturers Co. Ltd v The Republic of Mauritius, COMESA Case Ref

No 1 of 2012, Judgement of Court of First Instance, 31 August 2013.

Van Gend en Loose v Nederlandse Administratie der Belastingen, European Court of Justice Case

26/62, Judgement, 5 February 1963.

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