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“Peru v. Ecuador”

Decision of the Court of Justice of the Andean Community 29 June 2023 – Case No. 05-AI-2021

  • Decision • Restraints of Competition
  • Andean Community
  • Published:
IIC - International Review of Intellectual Property and Competition Law Aims and scope Submit manuscript
  1. 1.

    The international transportation of passengers and goods by road is a fundamental factor in making viable the free movement of goods and people, a characteristic of physical integration and the gradual formation of a common market. This service must be provided in the community area as smoothly, dynamically and freely as possible, so that trade in and movements of factors of production inside the Andean Community take place as if they were similar to those between regions within the territory of the Member Countries.

  2. 2.

    This aim is only achieved if the offer and provision of international transportation services (of passengers and goods) by road are based on the principles of freedom of operation, market access, national treatment, transparency, non-discrimination, equal treatment, free competition, and most-favoured nation.

  3. 3.

    For both types of economic operators (here: domestic carriers and carriers from other Member Countries) the requirements, expectations and conditions must be the same as regards:

    1. a)

      the regulation of transportation services (incl. both the authorisation to provide the service and the provision of the authorised service); and

    2. b)

      any other regulation that impacts upon the provision of the transportation service.

  4. 4.

    The costs and extra charges – resulting from regulations other than those that directly apply to the service of international transportation of passengers and goods by road – must be the same for both types of operators. Such includes the price for fuel.

  5. 5.

    The Ecuadorian regulation of the hydrocarbons sector which established differential pricing in the sale of fuel insofar as carriers with a foreign (e.g. Bolivian, Columbian or Peruvian) licence plate pay more than carriers with a domestic (Ecuadorian) licence plate breaches the principles of national treatment, equal legal treatment, non-discrimination and free competition, which in turn, breaches Arts. 3, 18 and 157 of Decision 398 and Arts. 3, 15 and 178 of Decision 837, and also infringes Art. 36 of Decision 608.

  6. 6.

    By their very nature, the principles of national treatment, non-discrimination, equal treatment and free competition may not be subject to defences and restrictions that distort the intended purpose, which is to ensure an environment of free and “equitable” competition in which domestic carriers and carriers from the other Member Countries compete on “equal” conditions.

  7. 7.

    Legislative or administrative (regulatory) steps intended to protect morality, public order or national security may be taken by Member Countries, but such measures must apply equally (equitably) to domestic carriers and carriers from other member Countries.

  8. 8.

    Article 11 of Decision 439 is not subsidiarily applicable, nor does it complement Arts. 3, 18 and 157 of Decision 398 and Arts. 3, 15 and 178 of Decision 837.

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Notes

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  10. Approving the replacement Regulation governing hydrocarbon derivatives prices, published in the Official Register No. 73 of 2 August 2005.

  11. Approving the Amendment to the replacement Regulation governing hydrocarbon derivatives prices, published in the Supplement to the Official Register No. 613 of 22 October 2015.

  12. Approving the Amendment to the Regulation for hydrocarbon derivatives prices issued through Executive Order 338, considering a new system of market prices for fuels: Diesel 2, Diesel Premium, Extra Gasoline and Extra Gasoline with Ethanol for the automotive sector; Extra Gasoline and Extra Gasoline with Ethanol for other fisheries; and Diesel 2 and Diesel Premium for the shrimping, tuna fishing and other fisheries sector, published in the Supplement to the Official Register No. 207 of 20 May 2020.

  13. Approving the Amendment to the Regulation governing petroleum derivatives prices issued through Executive Order 338, by adjusting the price band system to incorporate fluctuations of the international fuel markets: Diesel 2, Diesel Premium, Extra Gasoline and Extra Gasoline with Ethanol for the automotive sector; Extra Gasoline and Extra Gasoline with Ethanol for other fisheries; and Diesel 2 and Diesel Premium for the shrimping, tuna fishing and other fisheries sector, published in the Supplement to the Official Register No. 322 of 4 November 2020.

  14. Approving the Amendment to the Regulation governing petroleum derivatives prices issued through Executive Order 338, published in the Third Supplement to the Official Register No. 367 of 11 January 2021.

  15. Published in the Third Supplement to the Official Register No. 575 of 11 November 2021.

  16. Exceptional decree regarding fuel prices, published in the Third Supplement to the Official Register No. 577 of 15 November 2015.

  17. Issued by the Hydrocarbons Regulation and Control Agency, published in the Supplement to the Official Register No. 636 of 26 November 2015.

  18. Published in the Official Gazette of the Cartagena Agreement No. 243 of 27 January 1997.

  19. Published in the Official Gazette of the Cartagena Agreement No. 3601 of 29 April 2019.

  20. Decision 439 of the Commission of the Andean Community – “General Framework of Principles and Rules for Liberalising the Trade of Services in the Andean Community”, published in the Official Gazette of the Cartagena Agreement No. 347 of 17 June 1998.

  21. Of 26 April 2021, published in the Official Gazette of the Cartagena Agreement No. 4218 of the same date.

  22. See pages 5 to 7 of the judgment dated 11 March 2022 (Case 01-AI-2019) published in the Official Gazette of the Cartagena Agreement No. 4442 of 22 March 2022. Available at: https://www.comunidadandina.org/DocOficialesFiles/Gacetas/Gaceta%204442.pdf.

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  29. Codified through Decision 563 of the Commission of the Andean Community, published in the Official Gazette of the Cartagena Agreement No. 940 of 1 July 2003.

  30. The first paragraph of Art. 72 of the Cartagena Agreement establishes that “levies” are understood to mean the customs duties and any other charge with equivalent effect, whether fiscal or monetary in nature or related to foreign exchange, that may affect imports. Not included in this concept are analogous assessments and surcharges that correspond to the approximate cost of the services rendered.

    The second paragraph of Art. 72 of the Cartagena Agreement establishes that “restrictions of any kind” are understood to mean any administrative, financial, or foreign exchange measure, whereby a Member Country through a unilateral decision, obstructs or hinders imports. Not included in this concept are the adoption and enforcement of measures for:

    1. a)

      The protection of public morality;

    2. b)

      The application of laws and regulations related to security;

    3. c)

      The regulation of arms, ammunition, and other implements of war, and under exceptional circumstances, of all other military articles, as long as it does not interfere with what is provided in treaties in force between Member Countries relating to the freedom of transit;

    4. d)

      The protection of human, animal, and plant life and health;

    5. e)

      The import and export of metallic gold and silver;

    6. f)

      The protection of national treasures of artistic, historic, or archaeological value; and

    7. g)

      The exportation, use, or consumption of nuclear materials, radioactive products, or any other material that may be used in the development and use of nuclear energy.

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  44. Published in the Official Gazette of the Cartagena Agreement No. 4239 of 12 May 2021.

  45. Decision 398 of the Commission of the Cartagena Agreement – “International Transportation of Passengers by Road, replacing Decision 289” published in the Official Gazette of the Cartagena Agreement No. 243 of 27 January 1997.

  46. Decision 837 of the Commission of the Andean Community – “Replaces Decision 399 of the Commission of the Andean Community on the International Transportation of Goods by Road”, published in the Official Gazette of the Cartagena Agreement No. 3601 of 29 April 2019.

  47. […]

  48. Decision 398: “Art. 3: The offer and provision of the service of international transportation is based on the following fundamental principles: freedom of operation; market access; national treatment; transparency; non-discrimination; equal legal treatment; free competition and most-favoured nation.”

    Decision 837: “Art. 3: The offer and provision of the service of international transportation is based on the following fundamental principles: freedom of operation; market access; national treatment; transparency; non-discrimination; equal legal treatment; free competition and most-favoured nation.”

  49. For the purposes of this judgment, “regulation” is understood to mean the laws, regulations and administrative decisions.

  50. For the purposes of this judgment, “authorisation” is understood to mean any form of administrative approval, whether this is called an Original Permit for the Provision of Services, a Complementary Permit for the Provision of Services or a Certificate of Authorisation, amongst others.

  51. The international transportation service (of passengers and goods) by road.

  52. Art. 25 of Decision 837 mentions that driving licences for automotive vehicles granted by a Member Country used by drivers for international transportation will be recognised as valid in the other Member Countries through which they travel. Similarly, Art. 27 of Decision 398 indicates that driving licences for automotive vehicles granted by one Member Country as used by drivers in international transportation will be recognised as valid in the other Member Countries through which they travel.

  53. Decision 837: “Art. 15: In Member Countries, authorised carriers will enjoy treatment that is no less favourable than that afforded to authorised carriers from that country.”

  54. Decision 398: “Art. 18: Authorised carriers who have obtained a Complementary Service Provision Permit will enjoy in the Member Country that has granted that Permit no less favourable treatment than that afforded to authorised carriers from that country.”

  55. Decision 398: “Art. 157: Authorised carriers will offer international transportation services under conditions of free and fair competition. Likewise, they will freely offer their rates.”

  56. Decision 837: “Art. 178: Member Countries will make the necessary rules so that the service provision by the carriers takes place on a level playing field in the market.”

  57. Approving replacement Regulation governing hydrocarbon derivatives prices, published in the Official Register No. 73 of 2 August 2005.

  58. Approving the Amendment to the replacement Regulation governing hydrocarbon derivatives prices, published in the Official Register No. 613 of 22 October 2015.

  59. Approving the Amendment to the Regulation for petroleum derivatives prices issued through Executive Order 338, considering a new system of market prices for fuels: Diesel 2, Diesel Premium, Extra Gasoline and Extra Gasoline with Ethanol for the automotive sector; Extra Gasoline and Extra Gasoline with Ethanol for other fisheries; and Diesel 2 and Diesel Premium for the shrimping, tuna fishing and other fisheries sector, published in the Supplement to the Official Register No. 207 of 20 May 2020.

  60. Approving the Amendment to the Regulation governing petroleum derivatives prices issued through Executive Order 338, by adjusting the price band system to reflect fluctuations in international fuel markets: Diesel 2, Diesel Premium, Extra Gasoline and Extra Gasoline with Ethanol for the automotive sector; Extra Gasoline and Extra Gasoline with Ethanol for other fisheries; Diesel 2 and Diesel Premium for the shrimping, tuna fishing and other fisheries sector, published in the Supplement to the Official Register No. 322 of 4 November 2020.

  61. Approving the Amendment of the Regulation governing petroleum derivatives prices issued through Executive Order 338, published in the Third Supplement to the Official Register No. 367 of 11 January 2021.

  62. Published in the Third Supplement to the Official Register No. 575 of 11 November 2021.

  63. Exceptional decree regarding fuel prices, published in the Third Supplement to the Official Register No. 577 of 15 November 2021.

  64. Issued by the Hydrocarbons Regulation and Control Agency, published in the Supplement to the Official Register No. 636 of 26 November 2015.

  65. Decision 439 of the Commission of the Andean Community – “General Framework of Principles and Standards for Liberalising the Trade of Services in Andean Community”, published in the Official Gazette of the Cartagena Agreement No. 347 of 17 June 1998.

  66. Published in the Official Gazette of the Cartagena Agreement No. 347 of 17 June 1998.

  67. This clearly involves international transportation (of passengers and goods) by road.

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Republic of Peru v. Republic of Ecuador Decision 398, Arts. 3, 18, 157; Decision 439, Art. 11; Decision 608, Art. 36; Decision 837, Arts. 3, 15, 178

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Translated from the Spanish by Sarah Bowyer.

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Republic of Peru v. Republic of Ecuador Decision 398, Arts. 3, 18, 157; Decision 439, Art. 11; Decision 608, Art. 36; Decision 837, Arts. 3, 15, 178. “Peru v. Ecuador”. IIC (2024). https://doi.org/10.1007/s40319-024-01469-1

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