Chiquita Brands International Inc, the world's largest banana producer, has had a €564 million damages claim against regulators dismissed by the European Union's second-highest court.
Chiquita argued that the European Commission, did not follow World Trade Organization rulings that found the bloc's banana-importing system illegal. But the Luxembourg-based European Court of First Instance ruled that Chiquita may not invoke an infringement of WTO law in claiming damages.
Under European court case law, companies haven't been able to rely on WTO rulings to sue the EU for damages. If the Chiquita decision were appealed and overturned at Europe's highest court, it would be the first time a company was awarded damages against the EU for its failure to follow a WTO ruling, lawyers said.
“This is a landmark case,'' Marco Bronckers, an international trade lawyer at Wilmer, Cutler, Pickering, Hale & Dorr LLP in Brussels, said before the ruling. No other nation in the 148-member WTO has a pending lawsuit on whether WTO rulings have a direct effect on national legislation, he said.
Cincinnati-based Chiquita said it suffered “substantial damages'' through lost EU market share during two years after changes to the EU's banana-import rules took effect in 1999, according to court documents.
The company had to “buy or lease the use of import licenses and to accept unfavorable contract conditions,'' it was added.
“In adopting the 1999 regime the community did not intend to implement a particular obligation assumed in the context of the WTO agreement,'' said the court today (Feb 3). “Therefore, the applicant is not in a position to plead infringement by the community of its obligation under the WTO agreements.''
Chiquita’s case is similar to another lawsuit against the EU's banana-import regime. Banana trader Leon van Parys NV, based in Antwerp, Belgium, complained that the EU's system for setting tariffs and quotas discriminated against bananas imported from Ecuador and didn't comply with WTO obligations.
On March 1, the European Court of Justice will rule whether the regime breaks international law because the EU didn't comply with WTO obligations and whether EU rules had to take WTO rulings into account when the bloc revised its banana-import regime. The decision could further clarify the circumstances for when WTO law can be invoked at European courts.
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