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					                                                                  10C


IN THE PERMANENT REVIEW COURT OF THE CUSTOMS UNION OF

                     SOUTHERN MANZANIA




THE DISPUTE CONCERNING VETUSTIAN MEASURES AFFECTING

      IMPORTS OF PRIMARY BATTERIES FROM LAVIÑA



       Parliamentary Republic of Laviña v. Republic of Vetustia




          WRITTEN SUBMISSION FOR THE CLAIMENT

                                2008
                                                         TABLE OF CONTENTS




TABLE OF CONTENTS ........................................................................................................................... I

INDEX OF AUTHORITIES .................................................................................................................... II

LIST OF ABREVIATIONS .................................................................................................................... IV

STATEMENT OF FACTS ....................................................................................................................... V

IDENTIFICATION OF MEASURES AND ISSUES PRESENTED .................................................. VI

SUMMARY OF PLEADINGS .................................................................................................................. 1

PLEADINGS ............................................................................................................................................... 2

I-DECREE 29/2007 VIOLATES THE ARBITRATION AWARD OF 10 JANUARY 2005 ............... 2

    A. THE 10 JANUARY 2005 DECISION HAS RES JUDICATA NATURE AND IPSO FACTO CANNOT BE REOPENED

    ................................................................................................................................................................. 2

    B. ALTERNATIVELY, VETUSTIA IS IN CONTINUED NON-COMPLIANCE ....................................................... 3

II- IN ANY CASE, VETUSTIA IS IN VIOLATION OF THE MOST-FAVORED NATION

CLAUSE ...................................................................................................................................................... 4

    A. VETUSTIA IS IN VIOLATION OF THE MOST-FAVORED-NATION CLAUSE .................................................. 4

    B. DECREE 29/2007 IS NOT JUSTIFIABLE UNDER THE GENERAL EXCEPTIONS IN ARTICLE 20 ..................... 5

        1. Decree 29/2007 cannot be justified under paragraph (b) ............................................................... 5

        2. Decree 29/2007 cannot be justified under paragraph (g) ............................................................... 6

        3. Decree 29/2007 cannot be justified under paragraph (d) ............................................................... 7

        4. Decree 29/2007 cannot be justified under the Chapeau of Article 20 ............................................ 8




                                                                                  i
                                 INDEX OF AUTHORITIES


CASES

Annex 2 to the Treaty of Gedis, 2 March 2004, Art. 26 --------------------------------------- 2

Bosnia and Herzegovina v. Serbia and Montenegro – Bosnian Genocide Case [2007],

  ICJ/case 91 ---------------------------------------------------------------------------------------- 2

European Communities – Measures Affecting Asbestos and Asbestos-Containing

  Products, WT/DS135/AB/R, adopted 5 April 2001, DSR 2001:VII, 3243 ------------- 5

Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef,

  WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001, DSR 2001:I, 5 ------- 7

Laudo nº 1/2005 – Laudo Del Tribunal Permanente de Revisión Constituído para

  entender en el Recurso de Revisión presentado por La República Oriental Del

  Uruguay contra el Lauda Arbitral Del Tribunal Arbitral Ad Hoc de Fecha 25 de

  Octubre de 2005 em La Controvérsia “Prohibición de Importación de Neumáticos

  Remoldeados procedentes del Uruguay”, 22 Dezember 2005----------------------------- 3

Mexico – Tax Measures on Soft Drinks and Other Beverages, WT/DS308/AB/R,

  adopted 24 March 2006 ------------------------------------------------------------------------- 7

Thailand-Restrictions on Importation of and Internal Taxes on Cigarettes, DS10/R

  (Nov. 7, 1990), GATT B.I.S.D. (37th Supp.) 200. (1990). -------------------------------- 5

United States – Import Prohibition of Certain Shrimp and Shrimp Products,

  WT/DS58/AB/R, adopted 6 November 1998, DSR 1998:VII, 2755 --------------------- 8

United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R,

  adopted 20 May 1996, DSR 1996:I, 3 ------------------------------------------------------ 6, 9


BOOKS, TREATISES AND OTHERS




                                                  ii
Burns H. Weston; Richard A. Falk; Hilary Charlesworth. International Law and World

  Order – A Problem-Oriented Coursebook, Third Edition (St. Paul, MINN, West

  Group, 1997); ------------------------------------------------------------------------------------- 9

John H. Jackson; William J. Davey; Alan O. Sykes, Jr. Legal Problems of International

  Economic Relations: Cases, Materials and Text on The National and International

  Regulation of Transnational Economic Relations, Fourth Edition (St. Paul, MINN,

  West Group, 2002). --------------------------------------------------------------------------- 4, 9


TREATIES

Annex 2 to the Treaty of Gedis, 2 March 2004, Art. 26 --------------------------------------- 2

Treaty of Gedis, 2 March 2004 Art. 4 ------------------------------------------------------------ 4

Vienna Convention on the Law of Treaties ----------------------------------------------------- 9




                                                 iii
                      LIST OF ABREVIATIONS


       ABBREVIATION                         MEANING


AB/R                   Appellate Body Report

Art.                   Article

BISD                   Basic Instrumentals and Selected Documents

CUSM                   Common Union of Southern Manzanian

DS                     Dispute Settlement

DSB                    Dispute Settlement Body

DSR                    Dispute Settlement Report

GATT                   General Agreement on Tariffs and Trades

Para.                  Paragraph

v.                     Versus

WT                     World Trade

WTO                    World Trade Organization




                                   iv
                              STATEMENT OF FACTS

The Parliamentary Republic of Laviña, a small developing country whose economy is

largely dependent on the members of the Customs Union of Southern Manzania

(CUSM), that was established on 02 March 2004 by the Treaty of Gedis and entered

into force on 17 July 2004. The Republic of Vetustia, an economically strong

developing country, is also a member of the CUSM. The other members are Goldina,

Simezia and Trindadi.

       On 16 June 2004, the Trade Minister of Vetustia issued the Decree 21/2004, that

created a prohibition to all imports of primary batteries. The Decree entered into force

on 16 August 2004. On 17 October 2004, the government of Laviña, who has only one

company which produces only primary batteries and whose production is 80% imported

by Vetustia, decided to challenge the prohibition imposed by the Decree, earlier

mentioned, for it violated Article 3(1) of the Treaty of Gedis. Concerning this allegation

the Arbitration Court found that Vetustia had, in fact, violated the Article 3(1), and had

to bring the measure into conformity of the Treaty. On 10 February 2005, the Trade

Minister of Vetustia issued Decree 02/2005 amending article 1 of the former decree,

excepting the members of the CUSM of the primary batteries import prohibition.

       Due to a decision of a WTO Panel, that considered the exception of the import

ban to CUSM members discriminatory, the Republic of Vetustia created a Recycling

Scheme with the members of the customs union, so that only those who entered this

scheme would be able to export primary batteries to Vetustia. So in March 2008, was

submitted to the CUSM dispute settlement system the Laviña's claim that the latest

Decree was inconsistent with Articles 26 and 27 of the Treaty of Gedis, violated Article

4, also of the same Treaty, and was unjustifiable under paragraphs (b),(d) or (g) of

Article XX.


                                            v
        IDENTIFICATION OF MEASURES AND ISSUES PRESENTED




1. Whether Article 1 of Decree 29/2007 is inconsistent with Articles 26 and 27 of

Annex 2 to the Treaty of Gedis, in violation of the Ad Hoc Arbitration Award of 10

January 2005.

2. Whether Article 1 of Decree 29/2007 violates Article 4 of the Treaty of Gedis,

3. Whether Decree 29/2007 is justifiable under paragraphs (b), (d), or (g) of Article 20.




                                           vi
                       SUMMARY OF PLEADINGS



I.     Decree 29/2007 violates the Arbitration Award of 10 January 2005, because

       this case constitutes res judicata. The measure under discussion is for all

       relevant purposes the same as the one from Decree 21/2004, being only

       brought to date by subsequent legislation. Moreover even if this Court

       understands that the previous arbitration was restricted to Decree 21/2004,

       Vetustia would be, nonetheless, in a situation of continued non-compliance

       with the findings of the Arbitration Award of 10 January 2005.

II.    Decree 29/2007 violates its Most-Favored-Nation Clause in regards to

       Laviña, because it does not grant immediately and unconditionally to the

       primary batteries of Laviña the same advantages it concedes to the like

       products from the countries of the Common Scheme.

III.   Decree 29/2007 does not fit the requirements inside the General Exceptions

       of Article 20 of the Treaty of Gedis. There are reasonably available measures

       less inconsistent to deal with any possible health risks, the measures are not

       primarily related to protection of exhaustible natural resources nor do they

       secure compliance with domestic norms not inconsistent with the Treaty of

       Gedis.




                                       1
                                       PLEADINGS




I-DECREE 29/2007 VIOLATES THE ARBITRATION AWARD OF 10

JANUARY 2005


A. THE 10 JANUARY 2005 DECISION HAS RES JUDICATA NATURE AND IPSO FACTO CANNOT

BE REOPENED


           Arbitration Awards pursuing to annex 2 of the Treaty of Gedis have the nature

of res judicata.1 Res judicata is a general principle of law that means that judgments

are, for the purposes of a case and between the parties, to be taken as correct, and may

not be reopened on the basis of claims that doubt created by subsequent events. 2 The

rationale of this principle, both nationally and internationally, is to preserve the stability

of legal relations3 and thus it thwarts parties from reopening a decided matter even by

making different arguments.

           In the Ad Hoc Arbitration of 10 January 2005, Vetustia was found in breach of

the Treaty of Gedis by imposing import prohibition on primary batteries through Article

1 of Decree 21/2004. Nonetheless such measure remains in effect for practical purposes

as it was only brought up to date by the following Decrees. Such can be remarked in

the preamble of Decree 29/2007, which was enacted with the purpose of bringing the

previous into compliance with the WTO Dispute Settlement Body. The environmental



1
    Annex 2 to the Treaty of Gedis, 2 March 2004, Art. 26
2
    Bosnia and Herzegovina v. Serbia and Montenegro – Bosnian Genocide Case [2007],

ICJ/case 91
3
    Idem


                                              2
rationale now invoked by Vetustia cannot be taken into account because the issue is

already decided.


B. ALTERNATIVELY, VETUSTIA IS IN CONTINUED NON-COMPLIANCE

           The Permanent Revision Tribunal found in the case Uruguay v. Argentina

concerning the prohibition on the importation of retreated tires, referring the Justice

Tribunal Andean Community, that a member state is not only bound to comply with the

decision but is also prohibited from adopting any measure that is against its

pronouncement or that hinders its application.4 Hence a State may not by merely

derogating secondary provisions in its challenged legislation bring itself in compliance

with an arbitral award.5

           Even if this Court finds that the Ad Hoc Arbitration Court ruling of 10 January

has no force beyond Decree 21/2004, Vetustia by enacting Decree 29/2007, which has

the practical effect of suppressing the application and effects of that verdict, is therefore

in its clear breach.




4
    Laudo nº 1/2005 – Laudo Del Tribunal Permanente de Revisión Constituído para

entender en el Recurso de Revisión presentado por La República Oriental Del Uruguay

contra el Lauda Arbitral Del Tribunal Arbitral Ad Hoc de Fecha 25 de Octubre de 2005

em La Controvérsia “Prohibición de Importación de Neumáticos Remoldeados

procedentes del Uruguay”, 22 Dezember 2005
5
    Idem


                                              3
II- IN ANY CASE, VETUSTIA IS IN VIOLATION OF THE MOST-FAVORED

NATION CLAUSE


A. VETUSTIA IS IN VIOLATION OF THE MOST-FAVORED-NATION CLAUSE

         Even if this Court finds that res judicata does not apply to the present case,

Vetustia by enacting Decree 29/2007 is in violation of the dispositions of Article 4 of

the Gedis Treaty, which provides that any advantage with respect to customs rules shall

be extended immediately and unconditionally to products originating from all parties

within CUSM.6 The Most-Favored-Nation clause does not in its word unconditionally

pertain to the advantage being granted per se, but “to the obligation to accord to the like

product an advantage which has been granted to any product originating in any

country."7

         Through Decree 29/2007, Vetustia grants a permission to primary batteries from

Goldina, Simezia and Trindadi to enter its national market that will only be extended to

laviñan like products if, and only if, Laviña itself enters the Common Disposal and

Recycling Scheme.8 Such constitutes a clear custom advantage given to some products

which will only be extended conditionally to like products from Laviña, it is thus a

manifest violation of Article 4 of the Gedis Treaty.




6
    Treaty of Gedis, 2 March 2004 Art. 4
7
    Mexico – Tax Measures on Soft Drinks and Other Beverages, WT/DS308/AB/R,

adopted 24 March 2006
8
    Factual and Procedural Background, para. 22


                                            4
B. DECREE 29/2007 IS NOT JUSTIFIABLE UNDER THE GENERAL EXCEPTIONS IN ARTICLE 20

         Article 20 of the treaty of Gedis provides a series of exceptions to its

dispositions which are equivalent to those exceptions in force in the Article XX of the

General Agreement on Tariffs and Trade9. Arguably, even if Decree 29/2007 is in

violation of the Most-Favored-Nation Clause, it is still justifiable under the exceptions

provided in Article 20.

         As this Court has upheld in the Laviña v. Goldina the burden of evidence to

demonstrate such exceptions lies with the invoking state10. This principle is widely

supported in the WTO DSB11. However, for the sake argument, one is not the case as

Decree 29/2007, in particular, and any import ban on primary batteries in general, fail to

meet the requirements to fit those exceptions as set forth by extensive jurisprudence

from the Dispute Settlement Body of the WTO and from International Regional Courts.


1. Decree 29/2007 cannot be justified under paragraph (b)

         A measure to fulfill Article 20 (b) has to pass through basically three main tests

to satisfy its requirements.12 First, there must be a health risk, then, one should then

scrutinize whether the measure in question is both designed and apt to achieve its


9
    Factual and Procedural Background .para. 15
10
     Factual and Procedural Background para. 15
11
     John H. Jackson; William J. Davey; Alan O. Sykes, Jr. Legal Problems of

International Economic Relations: Cases, Materials and Text on The National and

International Regulation of Transnational Economic Relations, Fourth Edition (St.

Paul, MINN, West Group, 2002).
12
     European Communities – Measures Affecting Asbestos and Asbestos-Containing

Products, WT/DS135/AB/R, adopted 5 April 2001, DSR 2001:VII, 3243


                                             5
objectives and, to conclude, analyze if there is any other measure reasonably available

less inconsistent with trade that the state invoking the exception may use to achieve

health protection.13

          Even if it is sufficiently established that there is a relevant health risk involved

with batteries, such a risk does not originate from the batteries per se but rather form

their careless disposal.14 Indeed, the health risk may exist by the incorrect disposal of

any type of batteries, both primary and secondary. Hence an importation ban to primary

batteries could neither be understood as designed nor apt to achieve health protection as

the health threat comes not from the characteristics of these batteries but rather from

their inadequate disposal. Furthermore for that same reason, Vetustia arguably could, as

reasonably available alternative to cope with those health problems, develop a national

policies designed to ensure the correct disposal of used batteries in general, both

primary and secondary, which would likely have a even greater result.


2. Decree 29/2007 cannot be justified under paragraph (g)

          A measure in order to fulfill Article 20 (g), it has to fulfill two conditions: first,

it must be primarily aimed at the preservation of the exhaustible resource and, second, it

has to be accompanied with restrictions on domestic production or consumption.15

          Decree 29/2007 is the last of a string of Decrees designed to bring compliance

with international decisions the measure of banning primary batteries, first enacted


13
     Thailand-Restrictions on Importation of and Internal Taxes on Cigarettes, DS10/R

(Nov. 7, 1990), GATT B.I.S.D. (37th Supp.) 200. (1990).
14
     Factual and Procedural background para. 4
15
     United States – Standards for Reformulated and Conventional Gasoline,

WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3


                                                6
through Decree 21/2004, which was justified before the Vetustian National Congress as

a protective measure for the national industry.16 Even though, the ministry of the

environment later announced that the rationale had been environmental,17 one can

hardly conclude from the Vetustian actions that the environmental aim was more than

collateral or secondary to the main aim, which was, admittedly, to protect the Vetustian

producers.

         Moreover, whereas incentives were given to local secondary batteries producers

and a used battery collection was installed, no restriction on the production or

consumption was enacted, as those measures were rather incentives than restrictions.


3. Decree 29/2007 cannot be justified under paragraph (d)

         A measure is justifiable under paragraph (d) when it is necessary to secure

compliance with internal norms and regulations which are not inconsistent with the

Treaty of Gedis themselves. The tests of this paragraph are, first, that internal law or

regulation that the measure in question is not inconsistent with the Treaty of Gedis and,

second, that the measure is in fact necessary to secure compliance with that norm.18

         Arguably, one could conclude that since Decree 29/2007 enforced an import ban

required by the Common Scheme, that pursuant to Article 51 of the Vetustian


16
     Factual and Procedural Background para. 9
17
     Factual and Procedural Background para. 13
18
      Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef,

WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001, DSR 2001:I, 5; Mexico

– Tax Measures on Soft Drinks and Other Beverages, WT/DS308/AB/R, adopted

24 March 2006




                                            7
Constitution, which could be understood as an internalized law. Such would not be the

case because the Common Scheme violates the provisions. Moreover the scheme could

not even be interpreted as a domestic law as it was only signed and not ratified, a

condition imposed by Article 51 for the aforementioned internal status.

          It could neither not be argued that Decree 09/2007 would be necessary to secure

compliance with the Appellate Body report of 12 of February 2007 as there would be a

clearly reasonable alternative, namely: extinguishing the import ban to all         WTO

members alike.


4. Decree 29/2007 cannot be justified under the Chapeau of Article 20

          Even if this Court finds that Decree 29/2007 would, in any case, fulfill any of

paragraphs of Article 20, it would still be in violation of requirements laid in its

Chapeau, as it the measure in question is applied in a manner that constitutes both

“arbitrary or unjustifiable discrimination” and a “disguised restriction to international

trade.”


a. Decree 29/2007 was imposed in a manner that constituted “arbitrary or unjustifiable

discrimination.”

          Arbitrary or unjustifiable discrimination exists when “when the application of

the measure at issue does not allow for any inquiry into the appropriateness of the

regulatory program for the conditions prevailing in those exporting countries.”19 In this

sense it is as well understood to be an arbitrary or unjustifiable discrimination when the

exporting members are faced “a single, rigid and unbending requirement” to adopt



19
     United States – Import Prohibition of Certain Shrimp and Shrimp Products,

WT/DS58/AB/R, adopted 6 November 1998, DSR 1998:VII, 2755


                                             8
essentially the same policies than the member that imposes the measure. 20 This is

further reinforced when the member in question pursues diplomatic efforts to reach

accommodations with some trade partners and not others.21

         Decree 29/2007 impose for the exportation of primary batteries the adherence by

Laviña of the Common Battery Recycling Scheme, which contains fixed, inflexible

rules that were created without any participation or consideration to Laviña and to the

specific circumstances prevailing in its territory. Such is especially grave considering

that Laviña is a small developing country with a economy largely dependant on exports

of a few industrial products, such as primary batteries which have incidentally 80% of

its production exported to Vetustia.

         After the unsuccessful attempt to introduce the battery topic in the CUSM,

Vetustia made bilateral negotiations with Goldina, Simezia and Trindadi to reach a

common accommodation whereas it undertook no efforts to do the same in regards to

Laviña. In doing so, Vetustia treated Laviña in an arbitrary and unjustifiably

discriminatory manner.


b. Decree 29/2007 is a “disguised restriction” to regional trade.

         The fundamental theme of the expression “disguised restriction” is the

illegitimate use or abuse of the provided exceptions in the article itself.22 The current

measure under analysis had been first enacted through Decree 21/2004, which was


20
     United States – Shrimp
21
     United States – Shrimp

22
      United States – Standards for Reformulated and Conventional Gasoline,

WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3




                                             9
confessed at the Vetustian Congress to be a measure intended to protect the national

industries of storage batteries. By evoking Article 20 exceptions to justify such a

measure, Vetustia abuses of its dispositions and makes an illegitimate use of them. Such

constitutes moreover in a breach of the general principle of good faith.23




23
     John H. Jackson; William J. Davey; Alan O. Sykes, Jr. Legal Problems of

International Economic Relations: Cases, Materials and Text on The National and

International Regulation of Transnational Economic Relations, Fourth Edition (St.

Paul, MINN, West Group, 2002); Burns H. Weston; Richard A. Falk; Hilary

Charlesworth. International Law and World Order – A Problem-Oriented Coursebook,

Third Edition (St. Paul, MINN, West Group, 1997); Vienna Convention on the Law of

Treaties




                                            10
                            REQUESTS FOR FINDINGS

May it please the Court:

(1)    Declare that Article 1 of Decree 29/2007 is inconsistent with Articles 26 and 27

of Annex 2 to the Treaty of Gedis in confrontation with the principle of res judicata;

(2)    Affirm that Article 1 of Decree 29/2007 violates the Most-Favored-Nation

Clause present on Article 4 of the Treaty of Gedis;

(3)    State that in this case the Decree 29/2007 is not justifiable under paragraphs (b),

(d) and (g).




                                           11

				
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