Friday, April 12, 2013

PUBLIC INTEREST LITIGATION



Public-Interest Litigation is a creation of Judiciary. It is a Litigation for the protection of the public interest. In the words of some learned people we can say that public interest litigation in a litigation which can be file in any court of law by any public spirited person for the protection of “public interest.” Now a question comes in the mind that “what is public interest?” So answer is ‘any act for the benefit of public is public interest.’ And those act are such as pollution, terrorism, road-safety, constructional hazards etc. in all these activities we can clearly see the public interest.
The Indian PIL is the improved version of PIL of U.S.A.  Public Interest Litigation is not defined in any Statute or in any Act. It has been only interpreted by judges to consider the intent of public at large. A Public Interest Litigation can be filed only in a case where "Public Interest" at large is affected. Merely because, only one person is affected is not a ground for Public Interest Litigation.
Public Interest Litigation was started to protect the fundamental rights of people who are poor, ignorant or in socially/economically disadvantaged position. It is different from ordinary litigation, in that it is not filed by one private person against another for the enforcement of a personal right. The presence of 'public interest' is important to file a PIL.

DEFINITION OF PUBLIC INTEREST LITIGATION:

Public Interest Litigation is not defined in any statute or in any act. It has been interpreted by judges to consider the intent of public at large. "Public interest Litigation", in simple words, means, litigation filed in a court of law, for the protection of "Public Interest", such as pollution, Terrorism, Road safety, constructional hazards etc.

According to Black's Law Dictionary, "Public Interest Litigation means a legal action initiated in a court of law for the enforcement of public interest or general interest in which the public or class of the community have pecuniary interest or some interest by which their legal rights or liabilities are affected."

Advanced Law Lexicon has defined `Public Interest Litigation' as the same way as defined by the Black's Law Dictionary.

Public Interest Litigation, in Indian law, means litigation for the protection of public interest. It is litigation introduced in a court of law, not by the aggrieved party but by the court itself or by any other private party. It is not necessary, for the exercise of the court's jurisdiction, that the person who is the victim of the violation of his or her right should personally approach the court. Public Interest Litigation is the power given to the public by courts through judicial activism.

The Supreme Court in People's Union for Democratic Rights & Others v. Union of India & Others[1] defined ‘Public Interest Litigation’ and observed that the “Public Interest Litigation is a cooperative or collaborative effort by the petitioner, the State of public authority and the judiciary to secure observance of constitutional or basic human rights, benefits and privileges upon poor, downtrodden and vulnerable sections of the society”.

ORIGIN OF PUBLIC INTEREST LITIGATION:

Historically, the development of Public Interest Litigation is often attributed to the case of Brown v. Board of Education[2], in which the US Supreme Court found that a state’s segregation of public school students by race was unconstitutional. The Indian judiciary has been particularly creative in entertaining PILs and developing them into a legal tool for the poor and the public at large.[3]
In 1976, the Harward Law student coined the term “Public Interest Litigation”. He defined PIL as ‘it will precipitate social change through court ordered decree’ & it serves as a source of liberation as well as transformation for marginalized group. Prof. Upendra Baxi coined the term ‘Social Interest Litigation’ instead of ‘Public Interest Litigation’
Prior to the 1980s, only an aggrieved party had standing (locus standi) to file a case. As a result, justice could rarely be delivered to the vast majority of citizens. These days, even the court itself can initiate legal action ‘on its own motion’ (suo motu) following the receipt of letters or public interest issues being raised in the media. PILs have also allowed the judiciary to elaborate on certain principles of international environmental law, such as sustainable development, the polluter pays principle and the precautionary principle.
In J. M. Desai v. Roshan Kumar & Others[4], there is no way talk about the PIL. But in this case Justice Krishna Iyer said, “Strict adherence to adversarial procedure sometimes leads to injustice particularly where the parties are not well balanced socially and economically.” In this case the concept of locas standi was little diluted.
The first reported case of PIL in 1979 focused on the inhuman conditions of prisons and under trial prisoners. In Hussainara Khatoon v. State of Bihar[5], the PIL was filed by an advocate on the basis of the news item published in the Indian Express, highlighting the plight of thousands of under trial prisoners languishing in various jails in Bihar. Right to speedy justice emerged as a basic fundamental right which had been denied to these prisoners.
A new era of the PIL movement was heralded by Justice P.N. Bhagawati in the case of S.P. Gupta v. Union of India[6]. In this case it was held that “any member of the public or social action group acting bonafide” can invoke the Writ Jurisdiction of the High Courts or the Supreme Court seeking redressal against violation of a legal or constitutional right of persons who due to social or economic or any other disability cannot approach the Court. By this judgment PIL became a potent weapon for the enforcement of “public duties” where executed in action or misdeed resulted in public injury.


CONCEPT OF PUBLIC INTEREST LITIGATION:
According to the jurisprudence of Article 32 of the Constitution of India, “The right to move the Supreme Court by appropriate proceedings for the enforcement of the rights conferred by this part is guaranteed”. Ordinarily, only the aggrieved party has the right to seek redress under Article 32.
For the existence of Public Interest Litigation, four conditions are necessary:
a)      some action, inaction or state of affairs;
b)      which causes the deprivation of a right of a large number of people; or causes a large number of people to suffer a similar wrong;
c)      the right is sought to be enforced or the wrong redressed, through a petition to the appropriate courts;
d)     by a public-spirited person or an association of persona acting on behalf of those injured.

In 1981 Justice P. N. Bhagwati in S. P. Gupta v. Union of India, articulated the concept of PIL as follows, “Where a legal wrong or a legal injury is caused to a person or to a determinate class of persons by reason of violation of any constitutional or legal right or any burden is imposed in contravention of any constitutional or legal provision or without authority of law or any such legal wrong or legal injury or illegal burden is threatened and such person or determinate class of persons by reasons of poverty, helplessness or disability or socially or economically disadvantaged position unable to approach the court for relief, any member of public can maintain an application for an appropriate direction, order or writ in the High Court under Article 226 and in case any breach of fundamental rights of such persons or determinate class of persons, in this court under Article 32 seeking judicial redress for the legal wrong or legal injury caused to such person or determinate class of persons.”

A Public Interest Litigation can be filed before the Supreme Court under Article 32 of the Constitution or before the High Court of a State under Article 226 of the Constitution under their respective Writ Jurisdictions.

AREAS WHERE PUBLIC INTEREST LITIGATION CAN BE FILED:

These are some of the possible areas where a Public Interest Litigation can be filed:

Ø  Where a factory / industrial unit is causing  pollution, and people nearly are getting affected:

In the case of M.C Mehta V. Union of India[7], a Public Interest Litigation filed by M.C.Mehta against Ganga water pollution so as to prevent any further pollution of Ganga water. Supreme Court held that petitioner although not a riparian owner but he is entitled to move the court for the enforcement of statutory provisions, as he is the person interested in protecting the lives of the people who make use of Ganga water.

In Shri Ram Food and Fertilizer Case[8], the Supreme Court directed the company, manufacturing hazardous and lethal chemicals and gases posing danger to health and life of workmen and people living in its neighborhood, to take all necessary safety measures before reopening the plant.

Ø  For directing the police / Jail authorities to take appropriate decisions in regards to jail reforms, such as segregation of convicts, delay in trial, production of under trial before the court on remand dates:

In Sunil Batra vs. Delhi Administration[9], a prisoner wrote a letter to Sunil Batra. This letter was treated as a PIL by the court against the inhuman conditions & atrocities committed in the jail. In this Justice V.R. Krishna Iyer said, “Convicts are not by mere reason of the conviction denuded of all the fundamental rights which they otherwise possess.”

In D. K. Basu v. Union of India[10] a PIL was filed for the protection of rights of under trial prisoners. It was held by the Court that the right to life cannot be denied to convicts, under trials, detenus and other prisoners in custody except according to procedure established by law.

Ø  For abolishing child labor, and bonded labor:

In Bandhua Mukti Morcha v. Union of India[11], This writ petition under Article 32 of the Constitution has been filed by way of public interest litigation seeking issue of a writ of mandamus directing the Government to take steps to stop employment of children in Carpet Industry in the State of Utter Pradesh. Supreme Court ordered for the release of bonded laborers.

In Laborers Working on Salal Hydro Project v. State of Jammu & Kashmir & Other[12] on the basis of a news item in the Indian Express regarding condition of the construction workers, Court took notice and observed that the construction work is a hazardous employment and no child below the age of 14 years can therefore be allowed to be employed in construction work.


Ø  Where rights of working women are affected by sexual harassment:

In a landmark judgment of Delhi Domestic Working Women’s Forum v. Union of India & Others[13], the Public Interest Litigation invokes the benign provision of Article 32 of the Constitution of India, at the instance of the petitioner Delhi Domestic Working Women’s Forum to espouse the pathetic plight of four domestic servants who were subject to indecent sexual assault by seven army personnel. Supreme Court issued guidelines for rehabilitation and compensation for the rape on working women.

In Vishaka v. State of Rajasthan[14], Supreme Court has laid down exhaustive guidelines for preventing sexual harassment of working women in place of their work.

Ø  For keeping a check on corruption and crime involving holders of high political officer:

In Vineet Narayan v. Union of India[15] a journalist filed a PIL against the CBI & Revenue Authorities that these authorities are not working properly and these have become corrupt and incompetent.

Ø  Where, in an area / street there are no street lights, causing inconvenience to commuters.
Ø  Where some "Banquet Hall" plays a loud music, in night causing noise pollution.
Ø  Where some construction company is cutting down trees, causing environmental pollution.
Ø  Where poor people, are affected, because of state government's arbitrary decision to impose heavy "tax".
Ø  For removal of Big Hoarding and signboard from the busy road to avoid traffic problem.
Ø  For maintaining Roads, Sewer etc in good conditions or any other area of public interest.

OBJECT OF PUBLIC INTEREST LITIGATION:

The very object of Public Interest Litigation is to enforce a right and/or to redress a wrong which affects a large number of people. But who are too poor, illiterate, disadvantaged, unaware or unorganized to be able to enforce their rights.
For example, if a Government Department is not paying minimum wages to the laborers employed by it directly, or through a contractor, a Public Interest Litigation would lie, by any member of the public to force the Government to pay the statutorily determined minimum wages.

Public Interest Litigation also works against the denial of those rights or the causation of those wrongs, which are by their very nature diffuse, so that no individual is affected enough in his individual capacity, but all individuals are affected collectively. For example, if the Government proposes to allow the marketing of a drug in India which has been banned in many countries abroad due to its adverse side effects, the mechanism of Public Interest Litigation would be an effective way to way to stop the marketing of this drug.

The underlying object of all Public Interest Litigation is to ensure that rights (constitutional or statutory) are not denied to people, and that the State, either of its own volition, or due to its passivity and inaction, does not become an instrument of subverting the rights of the people.

Public Interest Litigation's explicit purpose is to alienate the suffering off all those who have borne the burnt of insensitive treatment at the hands of fellow human being. Transparency in public life & fair judicial action are the right answer to check increasing menace of violation of legal rights. Traditional rule was that the right to move the Supreme Court is only available to those whose fundamental rights are infringed.

WHO CAN FILE A PUBLIC INTEREST LITIGATION:

Earlier it was only a person whose interest was directly affected along with others, whereby his fundamental right is affected who used to file such litigation. Now, the trend has changed, and, any Public-spirited person can file a Public Interest Litigation on behalf of a group of person, whose rights are affected. It is not necessary, that person filing a case should have a direct interest in that Public Interest Litigation.

For e.g. a person in Bombay, can file a Public Interest Litigation for, some labor workers being exploited in Madhya Pradesh or as someone filed a Public Interest Litigation in Supreme Court for taking action against Cracker factory in Sivakasi Tamilnadu, for employing child labor or the case where a standing practicing lawyer filed a Public Interest Litigation challenged a government policy to transfer High Court judges and similarly a lawyer filed a Public Interest Litigation for release of 80 under trials in a jail, who had spent more number of years in jail, than the period prescribed as punishment for offence, for which they were tried.

In S. P. Gupta v. President of India[16] Supreme Court held that Public Interest Litigation can be filed by any member of public having sufficient interest for public injury arising from violation of legal rights so as to get judicial redress. This is absolutely necessary for maintaining Rule of law and accelerating the balance between law and justice.
It is a settled law that when a person approaches the court of equity in exercise of extraordinary jurisdiction, he should approach the court not only with clean hands but with clean mind, heart and with clean objectives.

AGAINST WHOM PUBLIC INTEREST LITIGATION CAN BE FILED:

A Public Interest Litigation can be filed only against a State/Central Govt., Municipal Authorities, and not any private party. The definition of State is the same as given under Article 12 of the Constitution and this includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India. In Electricity Board, Rajasthan v. Mohan Lal[17], the Supreme Court held that “other authorities would include all authorities created by the Constitution of India or Statute on whom powers are conferred by law”
However "Private party" can be included in the Public Interest Litigation as "Respondent", after making concerned state authority, a party.
For example- If there is a Private factory in Delhi, which is causing pollution, then people living nearly or any other person can file a Public Interest Litigation against:
·         Government of Delhi
·         State Pollution Control Board, and
·         Also against the private factory

HOW PUBLIC INTEREST LITIGATION CAN BE FILED:

A PIL may be filed like a write petition. However, in the past the SC has treated even letters addressed to the court as PIL. In People’s Democratic union v. Union of India[18], a letter addressed by the petitioner organization seeking a direction against the respondents for ensuring observance of the provisions of famous labor laws in relation to workmen employed in the construction work of projects connected with the Asian games was entertained as a PIL.

In a landmark judgment, in D. K. Basu v. State of West Bengal[19], the court acted upon a letter petition which drew attention to the repeated instances of custodial deaths in West Bengal. The court further mandated that a relative of the arrested must be promptly notified. It made clear that the failure to comply with this direction would be punishable as contempt of court. The early PILs had witnessed the award of compensation by the court to victims of human rights violations.

In the case of Upendra bakshi v. Union of India[20] a letter highlighting the pathetic condition of the young offenders was sent to S.C judge which was taken into consideration as a PIL.

In the case of Hindustan Times v. Central Pollution Board[21] a news paper cutting was taken as complaint by the court of law. In other case Kamalnath v. Union of India[22] Kamalnath had a lakeside hotel in Mussorie. The proprietors wanted to increase the area. They encroached the canal and built rooms there, thereby violating right to clean environment by taking pollution a grievous level. A news item of the same appeared and it was considered by the court.

GROUNDS ON WHICH A PIL CAN BE REJECTED:

Ø  Infructuous Petition:
In case of Mohit v. District Magistrate[23] it was held that when a petition is filed under article 32 for writ of habeas corpus, but the detenu is released during the pendency of the case, the court dismissed it for being infrutuous.

Ø  Not Impleading The Necessary Parties:
In case of Krishna Swamy v. Union of India[24] the writ petition was concerned with the removal of a sitting Supreme Court Judge from office, but the Hon’ble Judge was not made a party to it. The petition was dismissed on this ground alone.

Ø  Misrepresentation or Suppression of Facts:
In case of K Welcome Hotel v. State of Andhra Pradesh[25] the petitioners have not shown that in their overall turnover they have since the promulgation of impugned orders suffered losses. And this situation never fructified because the 1978 Order was kept in suspended animation for a period of two years and when the latest order dated January 5, 1981 was promulgated, it was still-born at the hands of the Court because of the ex parte stay order obtained by the petitioners.

Ø  Res Judicata:
It means that once a case is disposed of by any competent court then there is no need to go to other court. The principle of res judicata is covered under Section 11 of the Code of Civil Procedure.
In Forward Construction Co. v. Prabhat Mandal[26], the Supreme Court, while dealing with the question of res judicata in a PIL, held that the principle would apply to a PIL but it must be proved that the previous litigation was a PIL and not one relating to a private grievance. It has to be a bonafide litigation in respect of a right which is common and is agitated in common with others. The court held that the onus of proving the want of bonafides in respect of the previous litigation, would be on the party seeking to avoid the decision

Ø  Delays on the Part of the Petitioner:
In Trilochand Motichand v. HP Munshi[27] the petition was filed too late and thus rejected.
But if the reasons given by the petitioner are reasonable in the eye of law then the Court may accept the petition with the delay also. In Gyan Singh v. High Court of Punjab and Haryana[28] the reasons given for delay was convincing and the petition was accepted by the Court.

Ø  Malicious Petition:
If the petition is malicious in nature it can be rejected by the court. In Kini v. Union of India[29] While dismissing the petition and the special leave petition as malicious and as designed to denigrate the management of the bank, it was found by the Court during the course of the hearing that the petitioners themselves were indulging in rash and feckless activities of the very nature of which they were complaining against the respondents.

MISUSE OF PUBLIC INTEREST LITIGATION:

Public interest litigation (PIL) was a revolutionary concept initiated with a laudable object. In the words of the Supreme Court of India, it was aimed at “fostering and developing the laudable concept of PIL and extending its long arm of sympathy to the poor, the ignorant, the oppressed and the needy whose fundamental rights are infringed and violated and whose grievances go unnoticed, un-represented and unheard”. This led to the dismantling of the traditional concept of locus standi. The courts could be approached by persons espousing the case of the underprivileged, who were by themselves not in a position to access the courts.

In the last few years, there have been serious concerns about the use and misuse of public interest litigations and these concerns have been expressed at various levels. The time has come for a serious re-examination of the misuse of public interest litigation. This misuse comes in various forms. The first is what Justice Pasayat in the case of Ashok Kumar Pandey v. State of W.B.[30] described as “busybodies, meddlesome interlopers, wayfarers or officious interveners who approach the court with extraneous motivation or for glare of publicity”.

In the case of S.P. Gupta v. Union of India[31], on the misuse of PILs by political interests Justice Bhagwati said; “…But we must be careful to see that the member of the public, who approaches the court in cases of this kind, is acting bona fide and not for personal gain or private profit or political motivation or other oblique consideration. The court must not allow its process to be abused by politicians and others to delay legitimate administrative action or to gain a political objective. Andre Rabie has warned that ‘political pressure groups who could not achieve their aims through the administrative processes and we might add, ‘through the political process, may try to use the courts to further their aims’. These are some of the dangers in public interest litigation which the court has to be careful to avoid.”

This was reiterated by Justice Pandian in the case of Janata Dal v. H.S. Chowdhary & Others[32], as under: “It is thus clear that only a person acting bona fide and having sufficient interest in the proceeding of PIL will alone have a locus standi and can approach the court to wipe out the tears of the poor and needy, suffering from violation of their fundamental rights, but not a person for personal gain or private profit or political motive or any oblique consideration. Similarly, a vexatious petition under the color of PIL brought before the court for vindicating any personal grievance, deserves rejection at the threshold.”
In a series of judgments, Justice Pasayat has reiterated these principles. This principle was accepted and taken further in Rajiv Ranjan Singh v. Union of India[33], in which Justice Lakshmanan held that PILs were not meant to advance political gain and settle political scores under the guise of PIL.
Despite the clearest possible statement of law on the point, courts are nevertheless entertaining public interest litigations which are clearly political interest litigations.
Because of the misuse of the PIL for their own interest or filing of the fictitious PIL in plea of certain monetary compensation either for the authority or for their own benefits, Supreme Court started active harshly with those people. Supreme Court gave the guidelines that monetary compensation should be paid by those who misuse the PIL.
In BALCO Employees’ Union v. Union of India & Others[34], Supreme Court has limited standing in PIL to individuals “acting bonafide” and has sanctioned the imposition of “exemplary costs” as a deterrent against frivolous and vexatious Public Interest Litigation.
In Sanjeev Bhatnagar v. Union of India & Others[35], the Court went a step further by imposing a monetary penalty against an advocate for filing frivolous and vexatious Public Interest Litigation. The Court found that the petition was devoid of public interest. And the Court dismissed the petition with costs of Rs. 10,000/-.

PUBLIC  INTEREST LITIGATION AND ENVIRONMENTAL PROBLEMS:
The area in which PIL’s contribution has been significant is environmental law. M.C. Mehta, as a petitioner in person, was a pioneer in bringing a larger number of issues to the Court concerning environmental and eco-logical degradation. These included the issues arising out of the leak of oleum gas from a factory in Delhi, pollution in Delhi in case of M.C. Mehta v Union of India[36], the danger of the Taj Mahal from the Mathura refinery in Taj Trapezium Case[37], regulation of traffic in Delhi in case of M.C. Mehta v Union of India[38] and the degradation of the Ridge area in Delhi in M.C. Mehta v Union of India[39].
PIL had also played a great role in the protection of the fragile Coastal Regulation Zone in S. Jagannath v Union of India[40] and regulating the growth of shrimp farms dotting the coastline.

In Vellore Citizens' Welfare Forum vs. Union of India[41] the Supreme Court allowed standing to a public-spirited social organization for protecting the health of residents of Vellore. In Vellore, tanneries situated around a river were found discharging untreated effluents into the river, jeopardizing the health of the residents. Court pointed out that the leather industry had no right to destroy the ecology, degrade the environment and pose a health hazard. The Court asked the tanneries to close their business.
In Ganga Water Pollution Case[42], the petitioner sought the direction from the Supreme Court restraining the respondents from letting out trade effluents into the river Ganga till such time they put up necessary treatment plants for treating the trade effluents in order to arrest the   pollution of water in the said river.

CONCLUSION

So by the all discussion this is conclusion that Public Interest Litigation is a process to put any public problem in the eyes of law. It is working for the welfare of every section of society. It’s the sword of every one used only for taking the justice. The innovation of this legitimate instrument proved beneficial for the developing country like India. PIL has been used as a strategy to combat the atrocities prevailing in society. It’s an institutional initiative towards the welfare of the needy class of the society. However focus should be on ensuring that reasonable restriction is carried on with the execution of the representative processes to enhance the Fundamental & Legal rights of society’s valid interest.

But as it is said that nothing can be fully good so there are some good feature then some bad are also their as we have discussed about the misuse of PIL. In the misuse of PIL it can be possible that any person of society send PIL to tease any other person of the society in Indian law, means litigation for the protection of public interest. It is litigation introduced in a court of law, not by the aggrieved party but by the court itself or by any other private party. It is not necessary, for the exercise of the court's jurisdiction, that the person who is the victim of the violation of his or her right should personally approach the court. Public Interest Litigation is the power given to the public by courts through judicial activism.

It would be appropriate to conclude by quoting Cunningham, “Indian PIL might rather be a Phoenix: a whole new creative arising out of the ashes of the old order.” PIL represents the first attempt by a developing common law country to break away from legal imperialism perpetuated for centuries.

                                                                                       



Friday, February 1, 2013

PRINCIPLE OF NATIONAL TREATMENT

The National Treatment Principle along with the Most-Favored-Nations (MFN) Principle constitutes the two pillars of the non-discrimination principle that is widely seen as the foundation of the GATT/WTO multilateral trading regime. National Treatment is an integral part of many World Trade Organization agreements. It is found in all three of the main WTO agreements viz. GATT, GATS and TRIPS. It is a concept of international law that declares if a state provides certain rights and privileges to its own citizens; it also should provide equivalent rights and privileges to foreigners who are currently in the country. This concept of equality can be found in bilateral tax treaties and also in most World Trade Organization agreements.[1] Under National Treatment, if a state grants a particular right, benefit or privilege to its citizens, it must also grant those advantages to the citizens of other states.

The National Treatment principle has an ancient genesis in international trade law, arguably dating back to ancient Hebrew Law[2] and then appearing in agreements between Italian city states in the 11th Century[3], in commercial treaties concluded during the 12th Century between England and continental powers and cities, and in agreements among German city states constituting the Hanseatic league from the 12th Century onwards. The principle was also adopted in various shipping treaties entered into between European powers in the 17th and 18th centuries, and became commonplace in the trade treaties drawn up in large numbers in the latter part of the 19th century, as well as appearing in the Paris and Berne Conventions governing intellectual property rights entered into late in the 19th century[4].
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MEANING OF NATIONAL TREATMENT PRINCIPLE:

National treatment means Imported and locally-produced goods should be treated equally. This principle of “national treatment” (giving others the same treatment as one’s own nationals) is found in Article 3 of GATT. The principle of National Treatment as embodied in Article III of General Agreement on Tariffs and Trade (GATT) prohibits discrimination between domestic and foreign goods in the application of internal taxation and government regulations after the foreign goods satisfy customs measures at the border.

A good summary is found in Japan- Alcohol case, which states; “[a] national treatment obligation is a general prohibition on the use of internal taxes and other internal regulatory measures so as to afford protection to domestic production.”

National treatment only applies once a product, service or item of intellectual property has entered into the market. Therefore, charging customs duty on an import is not a violation of national treatment even if locally-produced products are not charged an equivalent tax. Under the National Treatment Rule, Members must not accord discriminatory appropriate treatment between imports and like domestic products.

OBJECTIVES OF NATIONAL TREATMENT PRINCIPLE:

The objective of national treatment is “to protect expectations of the contracting parties as to the competitive relationship between their products and those of other contracting parties. In other words the purpose of the national treatment rule is to eliminate “hidden” domestic barriers to trade by WTO Members through according imported products treatment no less favorable than that accorded to products of national origin. The adherence to this principle is important to maintain the balance of rights and obligations, and is essential for the maintenance of the multilateral trading system. 

NATIONAL TREATMENT PRINCIPLE UNDER GATT 1994:

Article III is constructed to be comprehensive in scope. Article III: 1 contains ‘general principles’ and informs and provides the context for the rest of the Article III. In addition, Article III: 1 defines the scope of the application of Article III to include:
1)      Internal taxes and charges
2)      laws, regulations and requirements affecting the sale, transportation, distribution or use of products; and
3)      Internal quantitative regulations requiring the mixture, processing or use of products in specified proportions.
The purposes of Article III are to assure that national domestic measures do not subvert the Article II tariff binding and limit national protective measures to border controls.[5] Article III secures ‘effective equality of opportunity for imported products’ to compete with domestic products.

Article III: 1 prohibits the application of internal taxes and other internal charges as well as the laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of products, and internal quantitative regulations requiring the mixture, processing or use of products in specified amounts or proportions, to imported or domestic products so as to afford protection to domestic production.

Article III: 2,  first sentence, prohibits the direct or indirect application of internal taxes or other internal charges of any kind to imported products in excess of those applied, directly or indirectly, to like domestic products.
It prohibits discrimination between imported and domestic ‘like’ products.

For the application of Article III: 2, first sentence two conditions must be satisfied:
Ø  Whether the taxed imported and domestic products are ‘like’.
Ø  Whether the taxes applied to the imported products are ‘in excess of’ those applied to the like domestic products.
ü  Like Product: The term ‘like product’ does not mean that products must be identical to be ‘like’. The term ‘like’ includes ‘similar products’. In determining the similarity of “like products,” GATT panel reports have relied on a number of criteria including tariff classifications, the product’s end uses in a given market, consumer tastes and habits, and the product’s properties, nature and quality. The same idea can be found in reports by WTO panels and the Appellate Body.

In EC – Asbestos case[6] the Appellate Body considered in its examination of the concept of ‘like products’ under Article III: 4 as ‘like products’ are products that share a number of identical or similar characteristics.

In Japan Alcohol case by applying the above-mentioned criteria for examination of the products at issue, the Panel concluded that vodka and shochu were like products because both vodka and shochu shared most physical characteristics and except for the media used for filtration there was virtual identity in the definition of two products.

ü  In Excess of: According to Appellate Body, “even the smallest amount of ‘excess’ is too much.

Article III: 2, second sentence, prohibits the application of internal taxes or other internal charges to imported or domestic products in a manner contrary to the principles set forth in paragraph 1 (Article III: 1).

The explanatory note added to Article III: 2 states that a tax conforming to the requirements of first sentence paragraph 2 would be considered to be inconsistent with the provision of the second sentence only in cases where competition was involved between, on the one hand, the taxed products and, on the other hand, directly competitive or substitutable products that were not similarly taxed.

For the application of Article III: 2, second sentence three conditions must be satisfied:
Ø  Whether the imported and domestic products are ‘directly competitive or substitutable products’.
Ø  The products are ‘not similarly taxed’.
Ø  The dissimilar taxation of the products is ‘applied ….so as to afford protection to domestic industry’.

ü  Directly Competitive or Substitutable Products: According to the Appellate Body, if the imported and domestic products are not ‘like’ products for the purposes of Article III: 2, first sentence, then they are not subject to the strictures of Article III: 2. However, depending on their nature, and depending on the competitive conditions in the relevant market, those products may well be among the broader category of "directly competitive or substitutable products" that fall within the domain of Article III:2, second sentence.

The determination of the appropriate range of "directly competitive or substitutable products" under Article III: 2 second sentence must be made on a case-by-case basis, taking into account all the relevant facts.
The Appellate Body also agreed with the Panel's view that the decisive criterion in order to determine whether two products are directly competitive or substitutable is whether they have common end-uses, inter alia, as shown by elasticity of substitution in the relevant markets.[7]

ü  Not Similarly Taxed: The phrase ‘not similarly taxed’ does not mean the same thing as the phrase "in excess of" in Article III: 2, first sentence. It agreed with the Panel that the amount of differential taxation must be more than de minimis to be deemed "not similarly taxed"; and whether any particular differential amount of taxation is de minimis or not must be determined on a case-by-case basis. Thus, to be "not similarly taxed", the tax burden on imported products must be heavier than on ‘directly competitive or substitutable’ domestic products.

ü  So as to Afford Protection: In this respect, the Appellate Body found the approach followed in the 1987 Japan – Alcohol case in the examination of the issue of "so as to afford protection" persuasive and concluded that an examination of whether dissimilar taxation has been applied so as to afford protection requires a comprehensive and objective analysis of the structure and application of the measure in question as related to domestic as compared to imported products.

Article III: 4, The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favorable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use.

In Korea — Various Measures on Beef, the Appellate Body explained the three elements of a violation of Article III: 4:
Ø  The imported and domestic products at issue are ‘like products.
Ø  The measure at issue is a ‘law, regulation, or requirement affecting their internal sale, offering for sale, purchase, transportation, distribution, or use.
Ø  The imported products are accorded ‘less favorable’ treatment than that accorded to like domestic products.

CASES RELATED TO NATIONAL TREATMENT PRINCIPLE:

Japan Alcoholic Beverages Case[8] was the first significant case brought before the GATT. The issue in this case was an internal tax measure that classified alcoholic beverages into different categories, sub-categories and grades, based on alcohol content and other qualities, and set different tax rates on each category of alcoholic beverages. The European Communities complained that the Japanese liquor tax system violated the first sentence of Article III:2, by taxing imports at higher rates than ‘like’ domestic products, and the second sentence of Article III:2 by affording protection to ‘directly competitive or substitutable’ domestic products. Japan responded by arguing that each contracting party to the GATT was free to classify products for tax purposes as it chose and that the ‘likeness’ or ‘directly competitive or substitutable’ relationship of imported and domestic products were legally irrelevant to the interpretation of Article III if both of these products were taxed in a non-discriminatory manner, regardless of their origin.
The panel concluded, in view of their similar properties, end-uses and usually uniform classification in tariff nomenclatures, that imported and Japanese-made gin, vodka, whisky, grape brandy, other fruit brandy, certain classic liqueurs, unsweetened still wine and sparkling wines should be considered as ‘like’ products in terms of Article III:2 first sentence because such ‘likeness’ of these alcoholic beverages were recognized not only by governments for the purposes of tariff and statistical nomenclature, but also by consumers to constitute "each in its end-use a well defined and single product intended for drinking" and that minor differences in taste, color and other properties did not prevent products from qualifying as ‘like products’.

The Appellate Body concluded that Japanese ‘shochu’ and ‘vodka’ are like and that vodka was subject to taxes ‘in excess of’ those on shochu. ‘Even the smallest amount of excess was too much’ and this was a violation.

Dominican Republic Cigarettes Case[9], In this case Honduras requested consultations with the Dominican Republic concerning certain measures affecting the importation and internal sale of Cigarettes.
According to Honduras:
Ø  Dominican Republic accords condition of competition to imported Cigarettes that are less favorable than those accorded to domestic cigarette by requiring that stamp be affixed to Cigarettes packages in the territory of Dominican Republic.
Ø  Dominican Republic entails costs and administrative burdens hindering the importation of cigarettes by requiring importers of cigarettes to post a bond.
Ø  Dominican Republic does not publish the surveys conducted by the Central Bank that are to be used to determine the value of cigarettes for the purpose of applying the Selective Consumption Tax.

Summary of Panel/AB’s Findings:
ü  The Panel found that the stamp requirement, which required tax stamps to be affixed to cigarettes packets in the Dominican Republic accords less favorable treatment to imported cigarettes than the like domestic product is contrary to Article III: 4 of the GATT.
ü  Honduras did not demonstrate that the bond requirement imposed on cigarettes importers by the Dominican Republic violates either Article X: 1 or III: 4.
ü  Before the legislation was amended in January 2004, the Dominican Republic imposed its Selective Consumption Tax on imported cigarettes in a manner inconsistent with Article III: 2 and X of the GATT.

In Korea – Beef Case[10], the Appellate Body considered whether Korea was infringing the national treatment obligation by maintaining a ‘dual retain system’ for marketing beef that confined sales of imported beef to specialized stores. In this case Korean Law created two distinct retail distribution systems for beef: one for domestic beef another for imported beef. A large retailer could sell both domestic and imported beef were required to display a sign reading “Specialized Imported Beef Store”.
The Appellate Body noted that the effect had been the reduction of retail outlets for imported beef. This ‘reduction of competitive opportunity’ was not consistent with the requirements of Article III: 4 of the GATT.

EXCEPTIONS TO GATT ARTICLE III (NATIONAL TREATMENT RULE):
Although national treatment is a basic principle under the GATT, the GATT provides for certain exceptions as follows:

a) Government Procurement
GATT Article III: 8(a) permits governments to purchase domestic products preferentially, making government procurement one of the exceptions to the national treatment rule. This exception is permitted because WTO Members recognize the role of government procurement in national policy. For example, there may be a security need to develop and purchase products domestically, or government procurement may, as is often the case, be used as a policy tool to promote smaller business, local industry or advanced technologies. While the GATT made government procurement an exception to the national treatment rule, the Agreement on Government Procurement resulting from the Uruguay Round mandates signatories to offer national treatment in their government procurement. However, WTO Members are under no obligation to join the Agreement on Government Procurement. In fact, it has mostly been developed countries that have joined the Agreement. Therefore, in the context of government procurement, the national treatment rule applies only between those who have acceded to the Agreement on Government Procurement, and for others, the traditional exception is still in force.

(b) Domestic Subsidies
GATT Article III:8 (b) allows for the payment of subsidies exclusively to domestic producers as an exception to the national treatment rule, under the condition that it is not in violation of other provisions in Article III and the Agreement on Subsidies and Countervailing Measures. The reason for this exception is that subsidies are recognized to be an effective policy tool, and is recognized to be basically within the latitude of domestic policy authorities. However, because subsidies may have a negative effect on trade, the Agreement on Subsidies and Countervailing Measures imposes strict disciplines on the use of subsidies.

(c) GATT Article XVIII: C
Members in the early stages of development can raise their standard of living by promoting the establishment of infant industries, but this may require government support and the goal may not be realistically attainable with measures that conform to the GATT. In such cases, countries can use the provisions of GATT Article XVIII: C to notify WTO Members and initiate consultations. After consultations are completed and under certain restrictions, these countries are then allowed to take measures that are inconsistent with GATT provisions excluding Articles I, II and XIII.

(d) Other Exceptions to National Treatment:

General Exceptions would also apply on the principle of national treatment. The provisions of GATT Article XX on general exceptions, Article XXI on security exceptions and WTO Article IX on waivers also apply to the national treatment rule.

CONCLUSION:
Naturally, we look to the purpose of the anti-discrimination provision to help us apply it, but moving from general purpose to a specific test is also problematic. By all accounts, the national treatment principle is designed to interdict "hidden protectionism" and to prohibit measures that are equivalent to tariff barriers, with the goal of protecting the commitments that WTO members have made to reduce tariff and other trade barriers and to insure equality of competitive conditions. This is to prevent countries from taking discriminatory measures on imports on the one hand, and to prevent countries from offsetting the effects of tariffs through non-tariff measures.
In operation national treatment serves to limit the exercise of sovereignty. It provides the basis on which trade liberalization proceeds or international markets are ‘opened up’. It allowed a margin for social and cultural differences between member countries. The foregoing analysis has shown that while national treatment remains a key principle in ensuring that municipal laws do not discriminate against the nationals of other Member States. In this regard, the role of the national treatment principle reflects the erosion and re-conceptualization of the traditional notion of national sovereignty.
So basically we can say that national treatment principle prevent the discrimination in the international market among the members country. There are some exceptions to the principle of national treatment as like government procurement, production subsidies and general exceptions. To understand the national treatment principle we need to understand the concept of like products mentioned under the provisions of GATT 1994.

                                                                                             ---Manisha Sahu---



[2] See William Smith Culbertson, International Economic Policies: A Survey of the Economics of Diplomacy (D.
Appleton Company, 1925), at page 24
[3] See Michael M. Hart, “The Mercantilist’s Lament: National Treatment and Modern Trade Negotiations” in Journal of World Trade Law, Vol. 21, No. 6, Dec. 1987, at page 38.
[4] See Article 2 of the Paris Convention for the Protection of Industrial Property of March 20, 1883; and Article 5 of Berne Convention for the Protection of Literary and Artistic Works of September 9, 1886.
[5] Italian Discrimination Against Imported Agricultural Machinery, 23 October 1958, GATT B.I.S.D. (7th Supp.) page 60 (1959)
[6] WT/DS135
[7] Japan- Alcoholic Beverages case [ WT/DS 58/AB/R]
[9] DS302
[10] WT/DS161/AB/R