Top EU Court Says Regulation On Footwear Partially Invalid

Top EU Court Says Regulation On Footwear Partially Invalid

Law360, New York (February 4, 2016, 7:13 PM ET) — The European Union’s highest court found Thursday that a regulation imposing an anti-dumping duty on leather footwear imported into the EU from China and Vietnam is partially invalid, saying market conditions in the countries weren’t properly considered when adopting the regulation.

The European Court of Justice said that two EU lawmaking institutions failed to comply with procedural rules when adopting a 2006 regulation that imposed an anti-dumping duty of 16.5 percent on footwear originating in China and a 10 percent rate on footwear originating in Vietnam. The ruling came out of two joined cases: one brought by C. & J. Clark International Ltd. in the U.K. and the other by sports goods company Puma SE in Germany.

Specifically, Europe’s high court said in a preliminary ruling that the Council of the European Union and the European Commission did not adjudicate on claims for market economy treatment or individual treatment submitted by Chinese and Vietnamese exporting producers not sampled in the anti-dumping investigation, rendering the regulation invalid in those regards.

Clarks and Puma each claimed the regulation was invalid a few years after it was imposed, seeking refunds on anti-dumping duties they had paid. Clarks sought a refund on about €60 million ($67.2 million) from Commissioners for Her Majesty’s Revenue & Customs, while Puma sought about €5.1 million in repayment from the Principal Customs Office in Nuremberg.

When their claims were rejected, the companies filed appeals that led to the First-tier Tribunal and the Finance Court in Munich questioning the regulation’s validity. Both courts then sought a ruling from the Court of Justice.

On Thursday, the Luxembourg-based court said that the EU institutions had an obligation to analyze whether market-economy conditions apply to the Chinese and Vietnamese producers in question because the countries are nonmarket-economy members of the World Trade Organization. That obligation allows the producers to be treated in a manner consistent with their individual situation, as opposed to the overall situation of the country, the court said.

The high court also said that while the commission can limit an anti-dumping investigation to a sampling when there are larger numbers of producers involved, the commission and council must also rule on any claim for market economy treatment submitted to them.

Additionally, the Court of Justice said the council and commission have a responsibility to set an anti-dumping duty rate for every exporting producer, unless individual treatment would be unachievable.

While there are limitations to that requirement with respect to nonmarket economies like China and Vietnam, the institutions do have to calculate individual anti-dumping duties for producers who show they meet the criteria for individual treatment, the court said.

Because the commission and council fell through on their obligations to rule on claims for market economy and individual treatment requested by Chinese and Vietnamese producers not included in the investigation’s sampling, the regulation is partially invalid in those respects, the high court said.

Representatives for the parties could not be reached for comment Thursday.

Counsel information for the parties was not available.

The cases are C. & J. Clark International Ltd. v. The Commissioners for Her Majesty’s Revenue and Customs, and Puma SE v. Hauptzollamt Nürnberg, case numbers C-659/13 and C-34/14, in the Court of Justice for the European Union.

–By Christine Powell
–Editing by Katherine Rautenberg.