CCJ slams Govt’s handling of cement trade dispute

Barbados has once again ended up on the wrong side of a Caribbean Court of Justice (CCJ) judgment.

While the CCJ has on several occasions criticized the local judiciary for the long delays in expediting cases, it is today chiding Barbados for its handling of a trade transaction related to import taxes on extra-regionally-made cement.

The CCJ, this island’s final court of appeal, today upheld the decision of the Council for Trade and Economic Development (COTED) – the Caribbean Community’s (CARICOM) trade arm – to raise the tariff on “other hydraulic cement” imported into Barbados.

The regional court which sits in Port of Spain, Trinidad, declared, however, that Barbados, along with CARICOM, failed in their respective duties to consult beforehand with the importers, Rock Hard Cement Limited.

The Court’s decision was given in the original jurisdiction matter of Rock Hard Cement Limited versus the State of Barbados and CARICOM, with the St Lucy-based Arawak Cement Company Limited intervening.

On June 17 last year, COTED, the organ of CARICOM responsible for altering or suspending the Common External Tariff (CET), approved Barbados’ application to suspend the CET of five per cent on “other hydraulic” cement in order to replace it with a tax of 35 per cent.

The full seven-member tribunal presided over by Justice Adrian Saunders, said the suspension was authorized for a period of two years and not the five years requested.

Rock Hard imports cement into Barbados,manufactured in Turkey and categorised as “other hydraulic” cement.

“Rock Hard was not consulted or notified before the application to raise the tariff was made or granted although both Barbados and COTED were aware of the impact the COTED decision would likely have had on that company,” CCJ President Justice Saunders said in his judgment.

He said Rock Hard had claimed that the decision to raise the tariff should be annulled because it had a legitimate expectation that Barbados would keep the import tax steady at the CET rate of five per cent.

The CCJ head noted that the basis of this legitimate expectation was alleged representations made to Rock Hard by Barbadian officials in 2015 when Barbados reduced the tariff from 60 per cent, where it stood in 2015, to the CET rate of five per cent.

The Court held that, in order for Rock Hard to succeed in the Court’s “original jurisdiction”, the alleged representations that gave rise to its expectation must have come from CARICOM, but there was no claim or evidence that it was COTED which made the alleged representations to Rock Hard.

The Court held that subsequent knowledge by COTED of the alleged representations could not make COTED a party to them as those representations had not been made on COTED’s behalf. The CCJ also dismissed Rock Hard’s claims that the COTED decision was arbitrary or irrational.

The regional panel of judges stated that the rationale and justification presented to COTED by Barbados were supported by the factual circumstances and that in any event the grounds on which the request was approved clearly fell within a category which allows COTED a broad discretion and where the scope for the Court’s intervention is narrow.

On the other hand, the CCJ decided to declare that Barbados and CARICOM had failed to ensure that Rock Hard was consulted before the application for the suspension was approved.

Because the consultation required for an application of this type was limited to obtaining information regarding the impact of the proposed import tax increase, the Court decided that the effect of the failure to consult did not call for annulment of the decision.

The CCJ expressed dismay that CARICOM had failed to maintain an effective system of consultations at the national and regional level as required by Article 26 of the Revised Treaty of Chaguaramas (RTC).

The Court pointed out that the agreed procedures for the processing of requests to COTED, such as this one made by Barbados, had not yet been formally brought into force.

It found that this was a weakness in the system.

“It is a matter of Barbadian domestic policy whether that State wished to adopt measures to facilitate the importation of cement produced extra-regionally or encourage locally produced cement manufactured by Arawak Cement Company Limited,” the judges declared.

The CCJ stressed, however, that any such measures and the processes accompanying them must comply with the rule of law.

Executive Chairman of Rock Hard Cement Mark Maloney was delighted at the outcome.

Expressing his joy, Maloney pointed to key aspects of the judgment in the case brought by his company against Barbados and CARICOM.

They included the CCJ’s declaration that Barbados and CARICOM failed in their respective duties to conduct proper consultation or follow due process in the suspension of the CET.

Of particular interest to the Rock Hard boss was the court’s specific reference to Barbados and CARICOMfailing to consult with his company before adjusting the CET rate.

Maloney also highlighted that part of the judgment where the regional tribunal said CARICOM failed to establish and maintain an efficient system of consultations at the national and regional levels.

Another key point which the prominent businessman was happy about was where the Justices ruled that measures taken by a member state in respect of managing domestic production and extra regional imports are a matter of domestic policy.

He noted that the CCJ however added, that the processes accompanying such measures must comply with the rule of law.

Maloney told Barbados TODAY his company now looks forward to an award of court costs in its favour.

“We are confident that in light of the above and taking into account the need for fair trade and a competitive environment, the Government of Barbados will consider what needs to be done with the duties on cement, especially in view of the importance of the construction sector to the economy and the financial pressures that everyone is already under at this time,” the Rock Hard Executive Chairman declared.

Barbados TODAY also tried to reach Attorney General Dale Marshall for a comment, without success.

Efforts to contact attorney for CARICOM Dr Corlita Babb-Schaefer also proved futile.
emmanueljoseph@barbadostoday.bb