Case C-631/16, Timberland Europe – puts its boot into retroactive anti-dumping Regs

Your footwear may have started out life in China or Vietnam. Consequently, companies may have paid EU anti-dumping duties on them. Unsurprisingly, international capital wants to put the boot into this EU law. Surprisingly though, there may be some legal justification for this – the EU Commission appears to ignore EU law. Early last year, the CJEU held aspects of the EU’s anti-dumping footwear Regulations to be illegal and invalid. The Commission then announced a plan for new laws. But the plan’s legality was promptly queried in a German court and a preliminary reference quickly made (C-256/16, Deichmann). Undeterred, the Commission promulgated its new Regulations. Now Dutch judges are anticipating the illegality of those very Regulations and are asking the CJEU how to calculate the compensation (C-631/16, Timberland Europe). A great deal of money is at stake because even luxury branded leather boots, shoes and trainers may either have been made in China or be the fruit of Chinese-outsourced work and parts coming from Vietnam.

Background
For more than a decade, the EU has taxed imports of cheaply-produced footwear with leather-uppers from China and Vietnam. What began in 2005 as interim anti-dumping duties persisted to become a permanent feature of EU law by dint of a 2009 EU Regulation. Yet despite this EU legislative fervour, shiploads of the stuff still arrive in the EU.

In 2011, several consignments of Chinese-Vietnamese footwear with leather-uppers arrived in Holland. Dutch customs and excise duly taxed them in accordance with the 2009 EU Regulation, and the EU companies paid up.

However, the companies thought they had paid between 10 and 15 euro too much. When they did not get a refund from the tax office, the companies hot-footed it off to the local Dutch court. Now though, the companies were also attacking the very legality of the EU Regulations that underpinned the tax. Consequently, the Dutch court had no choice but to make a preliminary reference to the CJEU. That was back in 2014.

Yet the Dutch court’s request for a preliminary reference was suspended. The CJEU was already considering similar but multi-million euro disputes from the German and English courts.

In 2016, the CJEU handed down its long-awaited ‘Clarks and Puma’ judgment (Cases C-659/13 and C-34/14, C & J Clark International Ltd and Puma SE, ECLI:EU:C:2016:74)). In a nutshell, the CJEU invalidated aspects of the anti-dumping Regulations applicable to footwear with leather uppers from China or Vietnam.

As a result of Clarks and Puma, the Dutch court withdrew its 2014 request for a preliminary reference. Nevertheless, the dispute in the Dutch court was still ‘live’. Consequently, the Dutch judges asked the parties for their response to both the CJEU’s judgment and the Commission’s new replacement laws, Regulations 2016/1647 and 2016/1731. The companies planted the word ‘Illegality!’ in the ears of the Dutch judges so a new preliminary reference has had to be made to the ECJ.

The 2016 Dutch preliminary reference
The Dutch reference is really an extension to a recent preliminary reference originating in Germany. That is to say, after the CJEU had invalidated aspects of the EU Regulations, the Commission announced its plan to reform them. However, a German shoe seller thought this plan was illegal because it had retroactive effect so German judges have had to make a preliminary reference to the CJEU (C-256/16, Deichmann).

With that German reference in mind, and given the possibility that the Commission’s new replacement laws might also be tainted with retroactive effect, Judge van Dongen and two others at the Noord-Holland District Court have also had no choice but to make a preliminary reference to the CJEU. However, their preliminary reference goes a little further than the German one for if indeed the enacted Regulations are illegal, then the Dutch judges would also like to know how to calculate the interest on what the companies are owed – be it simple or compound, at a commercial or basic rate, and the applicable reference period.

Questions Referred
The gist of the questions asked by the District Court in Noord-Holland is:

1. Is the Implementing Regulation (EU) 2016/1647 […] valid in respect of the Vietnamese footwear made by [Company A] and Joined Cases C-659/13 and C-34/14, Clark and Puma?

2. Is the Implementing Regulation (EU) 2016/1731 […] valid in respect of the footwear of Vietnamese and Chinese origin made by [Company I Ltd (China)] and Joined Cases C-659/13 and C-34/14, Clark and Puma?

3. If the answer to either question is no, then should the duty be repaid with interest?

4. And if so, how should it be calculated?

Comment
Shoe lawyers may have a busy 2017 from other preliminary references originating in the Dutch courts. The CJEU is already deciding whether shoe-soles can be protected by EU trade mark law; see further, Case C-163/16, Louboutin – shoe soles, signs solely comprising a shape, and judicial cobblers.

If soles are indeed protectable, then lawyers will watch out for the ‘Synthon’ reference because it is all about how to get access to the business documents of companies that are potentially infringing intellectual property rights; see further, Case C-644/16, Synthon – resisting its impounded documents being inspected by a rival.

Shoe lawyers may also be interested in C-31/16, Visser Vastgoed which is about whether EU services law can change a local planning law that stops a shoe shop from being built on an industrial estate; see further, Case C-31/16, Visser Vastgoed – planning on EU services law and not a purely internal situation.

Update – 14 January 2017
There is an earlier preliminary reference which pre-dates the Dutch one, Case C-612/16,C & J Clark International.

Update – 18 January 2017
The issue of interest on wrongly-paid anti-dumping duty on Chinese/Vietnamese shoes was at issue in Case C‑365/15, Wortmann. Advocate General Campos Sánchez-Bordona handed down his Opinion in that case on 8 September 2016. The Third Chamber has handed down its judgment today.

Update – 6 February 2017
Today’s edition of the EU’s Official Journal (OJ [2017] C38) contains the official questions asked by the First-tier Tribunal (Tax Chamber) in Case C-612/16, C & J Clark International Ltd:

1. Does a statute of limitations apply to the collection of the anti-dumping duty imposed by Commission Implementing Regulation (EU) 2016/1395  […] of 18 August 2016 and Commission Implementing Regulation (EU) 2016/1647 […] of 13 September 2016 (together referred to as ‘Contested Regulations’’), and, if so, on the basis of which legal provision?
Are the Contested Regulations invalid because they lack a valid legal basis, and as such violate Articles 5(1) and 5(2) TEU?

2. Are the Contested Regulations invalid because they violate Article 266 TFEU by failing to take the necessary measures to comply with the judgment of the Court of Justice in joined cases C-659/13 and C-34/14 C&J Clark International?

3. Are the Contested Regulations invalid because they violate Article 10(1) of Regulation (EU) 2016/1036 […] or the principle of legal certainty (non-retroactivity) by imposing an anti-dumping duty on import of certain leather footwear originating in the People’s Republic of China and Vietnam which took place during the period of application of Council Regulation (EC) 1472/2006 […] and Council Regulation (EU) 1294/2009 […]?

4. Are the Contested Regulations invalid because they violate Article 21 of Regulation (EU) 2016/1036 by re-imposing an anti-dumping duty without conducting a fresh Union interest assessment?

For ease, the first Regulation mentioned in Question 1 is the Commission Implementing Regulation (EU) 2016/1395 which reimposed a definitive anti-dumping duty and collecting definitely the provisional duty imposed on imports of certain footwear with uppers of leather originating in the People’s Republic of China and produced by Buckinghan Shoe Mfg Co. Ltd, Buildyet Shoes Mfg., DongGuan Elegant Top Shoes Co. Ltd, Dongguan Stella Footwear Co. Ltd, Dongguan Taiway Sports Goods Limited, Foshan City Nanhai Qun Rui Footwear Co., Jianle Footwear Industrial, Sihui Kingo Rubber Shoes Factory, Synfort Shoes Co. Ltd, Taicang Kotoni Shoes Co. Ltd, Wei Hao Shoe Co. Ltd, Wei Hua Shoe Co. Ltd, Win Profile Industries Ltd, and implementing the judgment of the Court of Justice in joined cases C-659/13 and C-34/14.

Similarly, the second Regulation mentioned in Question 1 is Commission Implementing Regulation (EU) 2016/1647 of 13 September 2016 that re-imposed a definitive anti-dumping duty and collecting definitely the provisional duty imposed on imports of certain footwear with uppers of leather originating in Vietnam and produced by Best Royal Co. Ltd, Lac Cuong Footwear Co., Ltd, Lac Ty Co., Ltd, Saoviet Joint Stock Company (Megastar Joint Stock Company), VMC Royal Co Ltd, Freetrend Industrial Ltd and its related company Freetrend Industrial A (Vietnam) Co, Ltd, Fulgent Sun Footwear Co., Ltd, General Shoes Ltd, Golden Star Co, Ltd, Golden Top Company Co., Ltd, Kingmaker Footwear Co. Ltd, Tripos Enterprise Inc., Vietnam Shoe Majesty Co., Ltd, and implementing the judgment of the Court of Justice in joined cases C-659/13 and C-34/14.