The final award in Bridgestone v. Panama (dated 14 August 2020) is the latest instalment in a line of cases where corporate actors have challenged intellectual property measures and court decisions affecting intellectual property rights before investment tribunals. Bridgestone involved the latter i.e. a court decision involving intellectual property rights.
The facts of the case are somewhat complex but it essentially involves a trademark dispute between two rival tire companies and their subsidiaries i.e. the Japanese owned Bridgestone (BSJ) Group and the Chinese owned Luque Group concerning the registration of the ‘Riverstone’ trademark by one of the subsidiaries of the latter in Panama.
In 2005, a member of the Luque Group i.e. Muresa applied to register the Riverstone trademark in Panama. This application was opposed by the claimants (BSJ and BSLS) but this opposition claim was denied. BSJ and BSLS filed an appeal against the denial of their opposition but they subsequently withdrew this appeal. Muresa then initiated proceedings against BSJ and BSLS in Panamanian courts claiming that the opposition proceedings had been wrongful and had caused them to stop selling Riverstone tires out of fear that their tires would be seized if they lost the opposition proceedings. Muresa also claimed that the opposition proceedings caused them to sustain losses amounting to over US$ 5 million. Muresa lost at both the court of first instance and at the Panamanian Court of Appeal. However, Muresa won at the Panamanian Supreme Court and this court ordered BSJ and BSLS to pay Muresa US$ 5 million plus attorney fees of US$ 431,000. It is the judgement of the Panamanian Supreme Court that formed the basis of the claims before the investment tribunal.
The kernel of Bridgestone’s claim before the tribunal was that the decision of the Panamanian Supreme Court amounted to a denial of justice and thus a violation of the fair and equitable treatment standard contained in Article 10.5 of the US-Panama Trade Promotion Agreement. Among other things, Bridgestone claimed that the judgement penalised it for taking steps to protect its investment. According to Bridgestone, ‘the Judgment constituted a denial of justice in as much as the defects in the Supreme Court Judgment were so egregious that they lead inexorably to the conclusion that the Supreme Court was either incompetent or corrupt.’ In support of this claim, they made several allegations including allegations of errors with regard to the appraisal of evidence and corruption. The question for the tribunal was therefore whether, taken as a whole, the decision of the Panamanian Supreme Court amounted to a denial of justice under international law.
After examining the decision of the Panamanian Supreme Court as a whole, the tribunal came to the following conclusion:
“A judgment that had held BSJ and BSLS liable in damages simply for exercising their procedural right to file an objection to an application to register the RIVERSTONE trademark would have been startling indeed. This was not such a case, however. After the detailed analysis that this Arbitration has involved, the Tribunal understands the reasoning that led the Majority of the Supreme Court to reach its decision. It has identified defects in that reasoning, but these are no more than errors of judgment. They fall far short of demonstrating that the judgment was the product of incompetence or corruption. For these reasons, the claims of BSAM and BSLS must be dismissed.” [para 547]
Thus, despite finding some errors in the decision of the Pananmian Supreme Court, this was not enough for the tribunal to conclude that there had been a denial of justice. The tribunal’s approach in this case is consistent with the approach of other tribunals that have held that an erroneous judgment does not amount to a denial of justice (see, here , here, and here). The tribunal’s decision is also in line with the view that investment tribunals are not courts of appeal (see, here, here, and here).
Crucially, the job of an investment tribunal is to decide whether there has been a violation of an investment treaty. It is not for tribunals to play the role of an international appeal court. The threshold of liability should thus remain high in claims concerning denial of justice (i.e. the ELSI standard). This will contribute towards preventing the abuse/misuse of the investor-state dispute settlement system and avoid a situation where national courts are treated with condescension.