European Union

• Author: International Law Group
• Pages: 5-8

Page 5

The American Plaintiffs before the EC Court of First Instance (CFI) were R. J. Reynolds Tobacco Holdings, Inc., RJR Acquisition Corp., R. J. Reynolds Tobacco Company, and R. J. Reynolds Tobacco International, Inc., Philip Morris International Inc. was also a party. The principal Defendants were the Commission of the European Communities, supported by the Council of the European Union. Principal Interveners were Spain, France, Italy, Portugal, Finland and the European Parliament.

By their appeal, the appellants ask the Court to set aside the judgment of the CFI of January 15, 2003 in Joined Cases T-377/00, T-379/00, T-380/00, T-260/01 and T272/01, Philip Morris and Others v Commission, 2003 ECR II-1. In these cases, the CFI had dismissed as inadmissible their applications for annulment of the decisions of the Commission of the European Communities of July 19, 2000 adopting the principle of a U.S. civil action against certain American cigarette manufacturers.

On November 3, 2000, the EC Commission filed a federal civil action (A-1) in the Eastern District of New York on behalf of the European Community (EC) against several U.S. manufacturers. In A-1, the Community alleged that the present Plaintiffs were actively smuggling cigarettes into EC territory and distributing them there. Specifi cally, the EC sought compensation for lost customs duties and value added tax (VAT) as well as injunctions to stop the alleged activities.

The Community relied on the Racketeer Infl uenced and Corrupt Organizations Act 1970 (RICO) as well as on common law fraud, public nuisance and unjust enrichment. Originally aimed at combating organized crime, RICO provides for treble damages. On July 16, 2001, the District Court dismissed the EC's claims.

On July 25, 2001, the Commission approved the principle of a second civil action in the U.S. federal courts, jointly by the Community and at least one Member State, against the A-1 defendants. On August 6, 2001, the Commission filed a second action in the District Court (A-2) against Philip Morris and Reynolds on behalf of the European Community and numerous Member States. In A-2, the Commission itself relied solely on the above common law doctrines. The Member States, however, also rested their claims on RICO plus on principles of public nuisance and unjust enrichment. The federal court also dismissed this suit.

The Commission and the above Member States filed a third action with the District Court against Japan Tobacco and other associated tobacco companies (A-3) in January 2002. On FebruaryPage 6 19, 2002, the District Court dismissed A-2 and A-3 based on the common law Revenue Rule. Under it, the U.S. Courts decline to enforce the fi scal legislation of other nations. On March 25, 2002, the Community and the 10 Member States noted an appeal before the Second Circuit.

On October 15, 2001, the above tobacco companies (Plaintiffs) filed actions in the CFI against the Commission's decision to bring the U.S. actions. The Commission raised an objection of inadmissibility on the ground that the contested decisions are not acts which may be the...