By Simon Lester in IEL in Domestic Courts, Trade and Intellectual Property — 09 Aug 2007

WTO Law in Domestic Law: The Novartis Case

The status of WTO law in domestic law varies a bit from country to country, and is sometimes not very clear. The recent Indian court decision in the Novartis case was interesting, as the court basically said that any consideration of consistency of Indian law with the TRIPS Agreement should be done in WTO dispute settlement, not in Indian courts. Here's a link to the decision: http://judis.nic.in/chennai/qrydisp.asp?tfnm=11121 The key portion seems to be this part:

the Constitutional validity of section 3(d) alone is in challenge, both on the ground that it violates not only Article 14 of the Constitution of India but also on the ground that it is not in compliance to "TRIPS".

...

(a) Assuming that the amended section is in clear breach of Article 27 of "TRIPS" and thereby suffers the wise of irrationality and arbitrariness violating Article 14 of the Constitution of India, could the courts in India have jurisdiction to test the validity of the amended section in the back drop of such alleged violation of "TRIPS"?
OR
Even if the amended section cannot be struck down by this court for the reasons stated above, cannot this court grant a declaratory relief that the amended section is not in compliance of Article 27 of "TRIPS"?.

(b) If it is held that courts in India have jurisdiction to go into the above referred to issue, then, is the amended section compatible or non-compatible to Article 27 of "TRIPS"?

...

8. Even otherwise, we are of the considered view that in whichever manner one may name it namely, International Covenant, International Treaty, International Agreement and so on and so forth, yet, such documents are essentially in the nature of a contract. In Head Money cases namely, the judgment of the Supreme Court of the United States reported in 112 U.S. 580, it is held as follows:

"A treaty is primarily a compact between independent Nations, and depends for the enforcement of its provisions on the honor and the interest of the governments which are parties to it."

Therefore there cannot be any difficulty at all in examining such treaties on principles applied in examining contracts. Under these circumstances, when a dispute is brought before a court arising out of an International Treaty, courts would not be committing any error in deciding the said dispute on principles applicable to contracts. In other words, the court has to analyse the terms of such International Treaty; the enforceability of the same; by whom and against whom; and if there is violation, is there a mechanism for solving that dispute under the treaty itself? Based on such construction of the International Treaty namely, "TRIPS", it is argued very strenuously by the learned counsels appearing for the contesting parties that there is a settlement mechanism under the Treaty itself and therefore even assuming without conceding that the petitioner has the right to enforce the terms of the said Treaty, yet, he must go only before the Dispute Settlement Body provided under the "TRIPS" itself. Article 64 of "TRIPS" is pressed into service to sustain this point. It is contended by Mr.Anand Grover learned counsel that the settlement mechanism provided under Article 64 of "TRIPS" is governed by the procedure as understood by the World Trade Organisation. Mr.Anand Grover learned counsel took us through the said Dispute Settlement Understanding. Article 1 of the Dispute Settlement Understanding, defines the areas covered under that Rule. Article 1 declares that the agreements listed in Appendix 1 to the said Rule would be covered by the procedure. "TRIPS" is mentioned as one of the agreements in Appendix 1 (B) - Annexure 1C. We have been taken through the above referred to Rules and Procedures governing the settlement of disputes and we find that it contains comprehensive provisions for resolving the disputes arising out of any agreements enumerated in Appendix 1 to that Rules. Under the Rules there is a Dispute Settlement Body. The manner of it's constitution is also provided therein. Various steps to sort out the problem arising out of an agreement are provided therein. Article 17 of the Rules referred to above provides an appellate review against the order passed by the panel. Therefore we have no difficulty at all that Article 64 of "TRIPS" read with World Trade Organisation's understanding on Rules and Procedures governing the settlement of disputes provides a comprehensive settlement mechanism of any dispute arising under the agreement. Article 3 of the Rules declares that the dispute settlement system of the World Trade Organisation is to provide security and predictability to the multilateral trading system. When such a comprehensive dispute settlement mechanism is provided as indicated above and when it cannot be disputed that it is binding on the member States, we see no reason at all as to why the petitioner, which itself is a part of that member State, should not be directed to have the dispute resolved under the dispute settlement mechanism referred to above. Several nations in the world are parties to "TRIPS" as well as the "WTO" agreement. The agreements are discussed, finalised and entered into at the higher level of the nations participating in such meeting. Therefore it is binding on them. When such participating nations, having regard to the terms of the agreement and the complex problems that may arise out of the agreement between nation to nation, decide that every participating nation shall have a Common Dispute Settlement Mechanism, we see no reason at all as to why we must disregard it. As we began saying that any International Agreement possesses the basic nature of an ordinary contract and when courts respect the choice of jurisdiction fixed under such ordinary contract, we see no compelling reasons to deviate from such judicial approach when we consider the choice of forum arrived at in International Treaties. Since we have held that this court has no jurisdiction to decide the validity of the amended section, being in violation of Article 27 of "TRIPS", we are not going into the question whether any individual is conferred with an enforceable right under "TRIPS" or not. For the same reason, we also hold that we are not deciding issue No.(b) namely, whether the amended section is compatible to Article 27 of "TRIPS" or not.

(emphasis added)