Dispute Prevention and Dispute Settlement in the Field of Intellectual Property Rights and Electronic Commerce, United States-Section 211 Omnibus Appropriations Act 1998 ('Havana Club')
DISPUTE PREVENTION AND DISPUTE SETTLEMENT IN THE TRANSATLANTIC PARTNERSHIP - CASE STUDIES, ANALYSES AND POLICY RECOMMENDATIONS, pp. 429-447, E.U. Petersmann and M. Pollack, eds., Oxford University Press, 2003
19 Pages Posted: 2 Sep 2011
Date Written: July 1, 2002
As a general conclusion this case-study suggests that the dispute between Pernod Ricard, a France-based multinational distiller and distributor, and Bacardi-Martini, a US-based multinational distiller and distributor, should have been resolved as a private commercial dispute and not as a systemic test of world trade system rules. In this regard, third party arbitration or mediation under the auspices of an alternative dispute settlement forum may have proven quite helpful.
Each private actor in the case entered into a commercial venture fully cognizant of ownership risks inherent in claims to intangible property that had been taken by the government of Cuba in the early 1960s. Both private parties sought the protection of their home government external commercial apparatus to ameliorate the consequences of the risks knowingly undertaken. Both the European Commission and the US Trade Representative (USTR) co-operated in converting the private commercial dispute into an international political dispute. By politicizing the dispute, both the EU and US found themselves arguing legal positions that are most likely contrary to their longer term commercial interests.
The major problem, however, is that a victory for the EU in WTO dispute settlement, which as a practical matter it did not achieve, would have entitled it to withdraw trade concessions from the US to enforce compliance. The withdrawal of such concessions would not directly benefit Pernod Ricard, and would likely harm US private operators other than Bacardi-Martini. In sum, the acts of the two private operators in knowingly taking risks in entering into legally tainted commercial relationships would result in harm to private operators that had not been a party to the risk-taking.
On the positive side in regard to WTO dispute settlement, the European Commission may have viewed this as the only practical way to diffuse internal political pressure being exerted by Pernod Ricard under the guise of 'Cuba policy'. Either outcome at the WTO level would allow the Commission to take the position that the EU had exhausted avenues of recourse against the US in this matter, and thereby diffuse the dispute. Similarly, if the WTO dispute settlement decision had been adverse to the US, this would have provided a means by which the USTR could have resisted further pressures to act on behalf of its private constituent.
Because the decision of the Appellate Body requires only an insubstantial modification to US law, it is doubtful that it will have a significant impact on internal or external US policy. It is difficult at this stage to say whether an alternative dispute settlement forum might have accomplished a similar end, or for that matter whether an end has been accomplished. The case remains open in terms of compliance by the US with the ruling of the Appellate Body.
Keywords: WTO, TRIPS Agreement, trademark, Havana Club, Appellate Body, national treatment
JEL Classification: K33, 034
Suggested Citation: Suggested Citation