Commercial Law International

By: Ainsley Brown

Canada now joins a score of other nations, including Brazil, Japan, Norway, India and Turkey, as third parties in a World Trade Organization (WTO) panel on China’s export restrictions on certain raw materials.

A WTO panel is the third step established under the Dispute Resolution Understanding (DSU) – the DSU being the lynchpin that transformed the General Agreement on Tariffs and Trade (GATT) in to the WTO – to settle disputes between member states. The first step being the complaint-consultation stage, where a member or members make a formal complaint to the WTO’s Dispute Settlement Body (DSB) and request consultations with another member state or member states that they believe have violated WTO rules or specific commitments.

The complaint-consultation stage allows members to attempt to reach a negotiated settlement while at the same time gearing up for the panel stage, if no settlement can be reached. Basically, in this stage of the dispute settlement both parties learn of the policy reasons and choices that underlie both the complaint and the alleged violation that lead to it.

The United States, the European Union and Mexico moved very rapidly out of the complaint-consultation stage to the next two phases of dispute resolution. Under the DSU once the  second stage complaint-consultation stage fails to resolve the dispute within 60 days the complaining party may move to the second stage by requesting the establishment of a panel. This request must specifically identify the measures complained of  or are so intimately connected with one or more measure as to sufficiently give notice to the other party or parties, otherwise it will be excluded from consideration by the panel.

The third stage is the actual establishment of a panel and this is where we find ourselves. The panel was establish on Dec 21, 2009 and at issue is China’s export restrictions (export quotas and duties) on particular raw materials, including zinc, magnesium, bauxite, manganese and coke. These export restrictions, it is alleged, distort world markets in these commodities and therefore not violate WTO export restrictions rules but China’s specific export duty commitments  on joining the WTO.

Canada for its party is not a party to the dispute but because some of the commodities in question are key Canadian exports it does have a interest in the outcome of the case in so far that it wishes to see the distortions in markets for these commodities eliminated. As a third party Canada’s rights in the case are very restricted. It has no right to any part of an award, if one is awarded and as a third party it only has the  right to make written  but  not oral submissions before the panel. The however has a duty to take Canada’s and other third party views into account its its report.

Finally, Canada, as a third party,  as no right of appeal before the Appellate Body (AB) – the AB being the WTO’s “court” of last resort –  however, it does have the right to make further written submissions before the AB if a party does appeal.

For a full out line of all the stages of the WTO dispute resolution process click here.

By: Ainsley Brown

Credit Suisse has agreed to settle allegations of insider trading in Brazil for R$19.2 million. The fine is the second largest, after the Banco Safra case of 2007, levied on a company by the Securities and Exchange Commission of Brazil – Commissão de Valores Mobiliários (CVM).

The offer to settle is substantially more than Credit Suisse’s original offer of R$150,000 last year rejected by CVM. The new offer, which was promptly accepted by CVM, is much closer to the values of the alleged illegal trades and better reflects the magnitude of the offence, according to the Financial Times. Well, that’s one way of putting it. I would have simply said that Credit Suisse got caught with its hand in the cookie jar – allegedly – and is simply paying the consequences.

The settlement stems from alleged insider deal of shares in Embraer, the Brazilian aircraft manufacturer between October 2005 and January 2006. At the time Embraer was preparing to undergo capital restructuring with its shares then being traded on the São Paulo Stock Exchange’s Novo Mercado section. By listing on the Novo Mercado a company voluntarily binds itself to higher corporate governance and transparency standards than that required by either Brazilian law or by the CVM. These features have proven to be very attractive to many investors both domestic and foreign.

According to the CVM, Sistel, a pension fund for employees of telecommunications companies and a controlling shareholder of Embraer commissioned Credit Suisse to analyze the capital restructuring plans. However, not long after it was engaged Credit Suisse, it is alleged, began buying shares of Embraer.

The positive news for Credit Suisse is that the settlement as now drawn a line under this issue and it can now move on to doing what it does best – connecting those with money with those in need of it.

By: Ainsley Brown

A new day dawns for the Brazilian rainforest?

The new plan by the Brazilian government, rolled out early this year, to combat deforestation shows great promise. However, it does also face great obstacles.

It is easy to dismiss this latest scheme as at best fool hardy and at worst as going to have the opposite effect by encouraging deforestation.  These are legitimate concerns given the failure of past schemes, this time however things seem to be very different.  One positive sign, unlike with other plans, is that the federal government has recognized the importance of working with instead of against the state governments.

The Co-operation and coordination between the federal and state governments cannot be understated. This development could go a long way to solve many of the issues that lead to the failure of past schemes. Firstly, in working together both governments will presumably sort out conflicts on jurisdiction and scope of responsibility. Secondly, there will be greater chances of proper enforcement through the simplification and streamlining of the patch work of conflicting and confusing laws on that govern land usage.

The scheme has the force of law by way of presidential decree and seeks to regularize the titles of 80% of the private land holdings in Amazonia over the next three years. Lands  of up to 100 hectare will be given to the people that occupying them already; those 100 to 2, 500 hectares will be sold via various pricing methods ; and those 2, 500 hectares, which ought to be owned by the government anyway, will be reclaimed by the government.

The plan it is hoped will incentivize the occupation of land by turning would be squatters in to land owners. The newly minted land owners, now having something to call their own, it is hoped will stay and improve their lands rather than  abandoning them and moving on to clear a fresh track of  forest.

Let’s hope at is works.