Guyana must comply with CCJ’s ruling on the “environmental” tax

On May 8, the Caribbean Court of Justice handed down a decision in a case against Guyana brought by a Surinamese manufacturing company Rudisa Beverages & Juices N.V. and its Guyana subsidiary Caribbean International Distributors Inc. In essence the two companies were claiming a refund of what is called under the Guyana’s Customs Act an environmental tax of $10 on the importation of non-returnable beverage containers. The two companies asked the regional court which is the protector of the Revised Treaty of Chagauramas (RTC) among other things, to order Guyana to refund to them the sum of US$6,047,244.47 paid by them to the GRA up to 24th October 2013 and any further amounts paid since that date.

After submissions and arguments which began in June last year, the Court:

A) Declared that the collection of the environmental tax in relation to goods of CARICOM origin is incompatible with the RTC; and

B) Ordered Guyana to:

i) Immediately cease the collection of environmental tax on imported non-returnable beverage containers;

ii) Pay to CIDI the sum of US$6,047,244.47 together with such further sums paid by them from 25th October 2013 to the date of this judgement;

iii) Pay interest on the sums payable by this judgement at the rate of 4% per annum from the date of the judgement; and

iv) Pay the costs of these proceedings to be taxed if not agreed.

Guyana’s representation
While the two Surinamese companies were represented by legal counsel with expertise in trade matters Guyana was represented by its Attorney General Anil Nandlall and a junior attorney to defend what under any circumstances would have been a very difficult case for us. Reading the decision it was obvious that the court was not at all impressed by the submission and performance of Mr. Nandlall who probably did more harm than good for the country. An attorney-at-law has a duty not only to his client, in this case the State, but also to the courts of which he is considered an officer. Mr. Nandlall should have advised his clients of the complete hopelessness of the case, rather than appear before the regional court and look completely lost.

After all, Guyana had admitted as long ago as May 2001 at a meeting of COTED – the regional trade organ of CARICOM – that the tax was a violation of the RTC. By unforgivable sloth and recklessness Guyana spent another twelve years during which it failed to provide COTED with requested information or act to remove the unlawful tax. In May 2009 COTED gave Guyana two weeks to indicate to it when it would make the necessary legislative changes and two years later to issue a warning that non-compliant countries would be responsible for the consequences of failure. In November 2011, regional countries were mandated to immediately remove the discriminatory effects of any environmental legislation and in March 2012 Guyana reported that the matter was engaging its Cabinet and discussions were to be completed within one month.

Against a background of serial failures of compliance, it would have required something of a miracle to overcome the formidable case presented by the Surinamese companies. Unfortunately, our case was so weakly represented that the Court had no difficulty in demolishing every one of Mr. Nandlall’s arguments and efforts. We argued for example that it was the political opposition that prevented the necessary legislative amendment to the Customs Act, ignoring the fact that the State is indivisible for the purposes of liability and had an overarching responsibility to honour treaty obligations, and ignoring too that Guyana had ten years to comply with the law but did not.

We argued too, dishonestly in my view, about the nobility of the tax, leading the court to believe that the tax was used for environmental purposes when all Guyana knows that the monies collected were put into the Consolidated Fund. While the Court politely took notice of the need to strike a balance between environmental protection and economic development, it noted that such a need could not create an exception to the trade policy spelt out in Chapter Five of the RTC which prohibits the imposition of import duties on regionally sourced products.

Who was enriched?
Guyana sought to argue that the companies were not entitled to any reimbursement because they must have already passed on the tax to the citizens of Guyana, and that to refund them would be a case of unjust enrichment. This was more than ironic since Mr. Nandlall must have realised that it was Guyana that was unjustly enriched from levying for more than a decade a tax that was patently unlawful.

There was more. Our team failed to recognise that it was for the Government to provide the evidence to support the passing-on allegation, assuming there was a case to be made. Instead, Mr. Lendl pursued a line of robust cross-examination of the witnesses for the companies, the line that in any case was bound to fail. The relevant authority on the matter, which was cited in the CCJ’s judgment, is the case Société Comateb v Directeur Général de Douanes et Droits Indirects which was based on a specific statutory provision – Article 352a of the French Customs Code which provides as follows: ‘we are a person as a domestic duties or charges, levied in accordance with the procedures laid down by this Code, when those charges were not due, that person may obtain reimbursement of such duties or charges, provided that they have not been passed on to the purchaser.’

It is instructive to note that the Opinion of the Advocate-General in the case stated ‘the fact that a charge levied in breach of Community Law has been passed on to third parties that have purchased the goods does not extinguish the right of the individual to reimbursement of the sums unduly levied by the authorities.’

The loud silence of the PSC
While on professional grounds I am prepared to make and accept criticisms of Mr. Nandlall’s handling of this case by the private sector, it is remarkable that not a single member or representative of the Private Sector Commission has made a single comment on the implications of this case for the country. Guyana could easily find itself having to refund several billion dollars to the Surinamese companies and to exporters from Trinidad whose government requested and was granted locus in a matter.

Two of Guyana’s major companies – Banks DIH Limited and DDL – have been the principal beneficiaries of this discriminatory tax which effectively amounted to a subsidy for those businesses. Did they pass the subsidy to their employees and customers or did they pay it to their shareholders? It is clear that it was not only the stubbornness of Jagdeo but also the lobbying and influence of these companies that allowed the illegal imposition of the tax to continue for such a long time and more recently for influencing the political opposition in blocking the amendments which COTED had been calling for.

For any person who has any doubt about the influence which companies exert over the politicians, I would recommend that the read of the debate in the National Assembly on the Bill last year that unsuccessfully sought to halve the tax and apply it to CARICOM companies exporting to Guyana as well as to Guyanese companies. I therefore find the criticisms of Mr. Nandlall ill-informed and hypocritical and the time may soon be approaching for the government to rethink its policy of appeasement with segments of the private sector.

Dangerous nonsense to be ignored
Indeed I have heard a leading representative of one of these companies suggest that Guyana should ignore the judgement. I think that is dangerous nonsense. That person and his ilk need to read Part IV Article XXVI, of the Agreement Establishing the Caribbean Court of Justice. The Article is entitled “Enforcement of Orders of the Court” which reads:

“(a) all authorities of a Contracting Party shall act in aid of the Court and that any judgement, decree, order or any sentence of the Court given in the exercise of its jurisdiction shall be enforced by all courts and authorities in any territory of the Contracting Party as if it were a judgement, decree order or sentence of superior court of that Contracting Party;

(b) the Court has the power to make any order for the purpose of securing the attendance of any person, the discovery or production of any document, or the investigation of punishment of any contempt of court that any superior court of a Contracting Party has power to make as respects the area within its jurisdiction.”

Guyana has incorporated the CCJ into our domestic municipal law (Caribbean Court of Justice Act Cap. 3:07) which means that at both Public international Law and Private International Law the judgment is enforceable.

In my view Guyana has no option but to comply with the orders of the CCJ. Section 4 of the CCJ Act provides with narrow exceptions for decisions of the Court to be final. If we were to flout the declaration and orders handed down by the Court, we would be exacerbating an already bad situation and potentially invite retaliatory measures from our CARICOM partners. Guyana is the home of the CARICOM headquarters. It must not allow itself to become a pariah in its own home.

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