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REIMBURSEMENT OF BED LINEN: 12 MILLION REASONS TO BE CHEERFUL

The bed linen reimbursement case: a history

On 27 September 2007, we achieved one of the most important victories in our 30 year history. It was on that day that the European Court of Justice (ECJ) issued its judgment on Case C-352/04. It ruled that companies who had imported cotton bed linen from Egypt, India and Pakistan could reclaim anti-dumping duties paid. That may not sound like much but it is the concluding chapter in a long and involved story and one that will have significant consequences for our members.


The Regulation - one decade ago
On 28 November 1997, the European Commission imposed anti-dumping duties against imports from Egypt, India and Pakistan of cotton bed linen via Council Regulation 2398/97.

India disputed several aspects of the Regulation and on 3 August 1998 requested consultations with the European Communities under the WTO Dispute Settlement process. The same month, Pakistan also requested to be part of the consultations.


India appeal to WTO
These consultations, held on 18 September 1998 and 15 April 1999, failed to reach a mutually satisfactory resolution. Therefore, on 7 September 1999, India requested that the WTO Dispute Settlement Body (DSB) examine the matter. A panel was established on 27 October 1999. The FTA, having many members who were affected by the anti-dumping duties, submitted an amicus curiae in support of the complaint in May 2000.


The WTO decision
On 30 October 2000, the WTO ruling was released which although found against some of the claims by India, found in favour of others. Perhaps the most important of these was that the so-called "zeroing" method used by the European Commission to calculate the duties was invalid. Unsurprisingly, the EC appealed the ruling and on 24 January 2001 a hearing was held in Geneva with the Appellate Body of the WTO. Unfortunately for the EC, the Appellate body upheld the findings by the previous panel on "zeroing". On 12 March 2001, the findings of the Appellate Body were adopted and the WTO requested that the EC bring the measures into conformity. By mutual agreement by the EC and India agreed this should occur by 14 August 2001.


The European Commission's reaction
On 23 July 2001, EC Regulation 1515/2001 was adopted on measures that may be taken following a DSB ruling regarding anti-dumping. On the basis of that Regulation, Regulation 1644/2001 was adopted on 14 August 2001. It lowered the duties against India (from a maximum 24.7% to a maximum 9.8%), suspended them for six months and provided that the measures would expire after six months unless a review was initiated. Following a request by Eurocotton (representing the EU industry) the Commission initiated an interim review on 13 February 2002. Following a subsequent request by Eurocotton, an expiry review was initiated on 4 December 2002. (On 21 December 2003, Regulation 2239/2003 concluded the interim review and expiry review against India and the duties were terminated).

In the meantime, since the above Regulation did not address the other two countries involved in case, Egypt and Pakistan, Regulation 160/2002 terminated the measures against Pakistan as of 30 January 2002 and provided that the duties against Egypt would expire on 28 February unless a review was requested. Since no such request was submitted, the duties expired on that date. On 25 April 2002, Regulation 696/2002 confirmed the duties against India set via Regulation 1644/2001.


No reimbursement
Importantly, the Commission did not apply the findings that established the Regulations retroactively. In other words, it did not allow for the repayment of duties paid.


FTA's involvement
The FTA then spearheaded an action with several FTA members and non-members (such as Ikea) who were affected by the anti-dumping measures. Ikea, as a major importer of bed linen into the UK was chosen as a precedence case. On the basis of Articles 236 and 239 of the Community Customs Code, on 10 June 2002 Ikea contested the lawfulness of the Regulations and the "zeroing" method used to calculate the duty with the Commissioners of Customs and Excise in the UK and sought repayment of the duties it had paid. The plea was rejected on the grounds that the Regulation did not provide for retrospective repayment of duties.

We then appealed to the VAT and Duties Tribunal which upheld the previous decision on 8 September 2003.and on 31 October 2003 appealed to the High Court of Justice of England and Wales in London. It overturned the decision of the Tribunal and held that Ikea was able to contest the refusal to repay duties. Since it had some doubts as to the legality of Regulations 1644/2001, 160/2002 and 696/2002 on 22 July 2004 it referred a number of questions to the ECJ.


The FTA at the European Court of Justice
We submitted our observations to the ECJ on 24 November 2004 whilst the European Commission, the Council and the UK Government did likewise the following month. On 27 October 2005, a Hearing was held at the ECJ attended by Ikea, the European Commission, the Council and the FTA. Two essential questions were put to the Court regarding whether the Commission and the Council could decide not to give retroactive effect to the fact that no, or less, dumping took place and also whether WTO Panel decisions have retroactive effect.


Initial results look good
On 6 April 2006, the Opinion of the Advocate General at the ECJ was released which, in short, said that Article 1 of Regulation 2398/97, that imposed the duties, was invalid since the method used to calculate the duties ("zeroing") was itself invalid. Furthermore, that companies who paid duties under Regulation 2398/97 could claim for repayment.

This was good news for the FTA and the participating firms but the champagne corks were not popping yet; we still had to wait for the Judgment. However, in most cases, ECJ judgments tend to have the same conclusions as Opinions so we were quietly optimistic.


The outcome
Our optimism was confirmed and our perseverance rewarded when finally, 18 months later and more than five years since our encounter with the law courts of the UK, the ECJ Judgment came down in our favour confirming that Article 1 of Regulation 2398/97 was invalid and that companies are entitled to reimbursement of duties paid.

Of course, as ever, there are conditions; only those companies that opposed the collection of anti-dumping duties with their customs authority or with their national court are eligible and since the maximum period for the repayment of anti-dumping duties paid is three years, it is now too late to enter a claim.


12 million reasons to be cheerful
However, despite that, for companies such as Ikea, Metro, Carrefour and other FTA members, the total amount of reimbursement has been calculated to be more than €12 million so the consequences are indeed significant.


The future
Even if this judgment cannot be taken as a precedent for similar cases, the chances to get reimbursement for paid anti-dumping duties which were levied on an unlawful basis will be greater. So this judgment has a fundamental significance for anti-dumping cases in the future.