Tom Sebastian has published a note in Lloyd’s Maritime and Commercial Law Quarterly on the Commercial Court’s judgment in Reliance Industries Limited v The Union of India [2018] EWHC 822 (Comm). In that case the Commercial Court ruled that the doctrine of act of state applies in London-seated arbitrations. Tom argues that the Court reached the wrong result.

The full note can be accessed here: [2020] L.M.C.L.Q. 359 (subscription required).

We live in extraordinary times. But the decision of the government to ask Parliament to give it express powers to breach an international law agreement that that same government entered into (and not only described as a triumph but secured its endorsement in a general election) is still a shocking turn of events.

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After Brexit, the UK will operate its own system of trade remedies. The essential scheme of the new regime is that a new Trade Remedies Authority will act as the gatekeeper, investigator and first-line decision-maker, while the secretary of state will have general powers of supervision and the ability to block any proposal to impose a trade remedy on broad public interest grounds. Those who wish to challenge the TRA’s or the secretary of state’s decision must do so by way of judicial review application to the Upper Tribunal. The operation of the new trade remedies regime is going to provide significant challenges both for the TRA and for advisers to both UK companies seeking trade remedies and importers and foreign governments seeking to contest them.

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Under the WTO framework (within which the new UK regime will operate post-Brexit), there are broadly three types of trade remedies: anti-dumping duties (on exported products where the export price to the importing country is less than its normal value); ‘countervailing measures’ (to deal with subsidies); and ‘safeguarding measures’ (to deal, essentially, with sudden floods of exports). A subsidy against which countervailing measures could be imposed is a financial contribution (or income or price support) that confers a benefit, and would therefore extend to tax credits and, for example, a low rate of corporation tax confined to a particular region or sector. Trade remedy decisions are open to challenge by way of judicial review or where the exporting member state brings a dispute before the WTO’s dispute resolution mechanism (although the mechanism for doing so has run into serious difficulties in recent years).

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Please click here to read the article published by Prospect.

Please click here to read the article published by Lexxion.

The General Court’s decision in the Apple case (Cases T-778/16 and T-892/16) shows the difficulties the European Commission faces in proving selective tax advantages that may constitute unlawful state aid. As was established in Portugal v Commission, ‘the very existence of an advantage may be established only when compared with “normal” taxation.’ In Apple, the crux of the dispute concerned the application of Irish rules on the profits properly attributable to and taxable on the Irish branches. The Commission’s decision, that a selective advantage had been granted, was not based on the actual activities of the branches. The Commission wrongly adopted the ‘exclusion approach’, attributing to the branches what it considered was not attributable to the US head office.

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Britain faces a fateful decision. If it wants an FTA with the EU, says Carl Baudenbacher (Monckton Chambers/LSE), it will need to either sign up to EFTA/EEA institutions, or accept the Ukraine model – which will mean it is still under the jurisdiction of the ECJ.

Please click here to read the article published by the LSE Blog.

Undermining commercial reality?

The decision of the Upper Tribunal (UT) in HMRC v Royal Opera House Covent Garden Foundation [2020] UKUT 132 (TCC) will be a disappointment not just to the Royal Opera House (ROH), but the theatre industry more widely, particularly given the other problems which the sector is currently facing. However, even had the First-tier Tribunal (FTT) decision been upheld, HMRC might well have sought to confine the case to the unique circumstances of the ‘fully integrated’ operatic-cum-dining experience of a Covent Garden performance, and consequently have refused to allow theatres to attribute production costs to supplies of refreshments in their bars more generally.

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