In this piece, we analyse the WTO’s recent decision in Saudi Arabia – Measures concerning the Protection of Intellectual Property Rights. We also analyse the implications of WTO’s rejection of the invocation of the essential security exception by Saudi Arabia.
Context
The dispute between Qatar and Saudi Arabia at the World Trade Organization (WTO) has its genesis in the blockade imposed by Saudi Arabia, United Arab Emirates, Bahrain and Egypt against Qatar in 2017 (hereafter, the 2017 Blockade). These countries in the Middle East and North Africa (MENA) region decided to cut diplomatic and trade ties with Qatar, and imposed a sea, land and air blockade, claiming that Qatar was supporting terrorism and helping Iran.[1] As a consequence of the 2017 Blockade, many Qatari companies faced disruptions and were blocked from Saudi Arabia’s market.
beIn Media Group LLC (beIN), a Qatari global sports and entertainment company, had obtained licenses to broadcast major sports content including the European football leagues, the US open Tennis Championships, the Federation Internationale de Football Association (FIFA) World Cup, among others.[2] beIN also held exclusive rights to broadcast this content in Saudi Arabia. Following the 2017 Blockade, Saudi Arabia blocked access to beIN’s website in the territory of Saudia Arabia.[3] Thereafter, in August 2017, beoutQ, an entity based in Saudi Arabia, started unauthorised distribution and streaming of media content created/licensed by beIN.[4] beoutQ not only streamed pirated content, it also started distributing beoutQ-branded set-top boxes (STBs) throughout Saudi Arabia and other countries.[5] Through these STBs, beoutQ started satellite broadcast of pirated sports content owned by beIN, and started making revenue on these sales.[6] The ‘anti-sympathy measures’ imposed by Saudi Arabia as a part of the 2017 Blockade, barred lawyers in Saudi Arabia from providing assistance to Qatar and Qatari nationals. As a result, beIN could not secure legal representation against the infringement of its copyright or sue beoutQ in Saudi Arabia.[7] Consequently, in 2018, Qatar filed a WTO complaint against Saudi Arabia for violations of its obligations under the Trade-Related Intellectual Property Rights (TRIPS) Agreement.
Analysing the WTO Panel Report
Qatar’s claims under the TRIPS Agreement
The following claims were made by Qatar under the TRIPS agreement:
- Violation of obligation under Article 41.1 of the TRIPS Agreement: This provision obligates Members to ensure that domestic enforcement procedures are available under their law “so as to permit effective action against any act of infringement of intellectual property rights covered by this Agreement, including expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements. These procedures shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse.” Qatar claimed that Saudi Arabia violated this provision as it failed to make available to Qatari nationals enforcement procedures provided under the TRIPS Agreement.[8]
- Violation of obligation under Article 42 of the TRIPS Agreement: This provision obligates Members to “make available to right holders civil judicial procedures concerning the enforcement of any intellectual property right covered by this Agreement…” Qatar claimed that Saudi Arabia violated this provision as it failed to make available civil jurisdiction procedures due to the ‘anti-sympathy measures’ imposed by Saudi Arabia as a part of the 2017 Blockade.[9]
- Violation of Article 61 of the TRIPS Agreement: this provision obligates Members to provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale. Qatar claimed that Saudi Arabia violated this provision as it failed to apply criminal procedures and penalties against beoutQ due to the copyright piracy of beIN’s content on a commercial scale.[10]
The Panel concluded, after going through various technical expert reports, that beoutQ was streaming unauthorised content owned by beIN through the frequencies of Arabsat, headquartered in Saudi Arabia, and was being operated by Saudi nationals. In addition, the Panel concluded that there was enough evidence, along with an absence of refutation from Saudi Arabia, to show that Saudi Arabia had openly promoted public gatherings with screenings of beoutQ’s unauthorised broadcasts.[11] Consequently, the Panel concluded that beoutQ was liable under Saudi Arabia’s criminal procedures. Therefore, Saudi Arabia violated its obligations under Articles 41.1, 42 and 61 of the TRIPS agreement, by not providing civil enforcement and criminal procedures for copyright piracy against beIN’s content.
Saudi Arabia’s defence under the essential security exception under the TRIPS Agreement
In its defence, Saudi Arabia invoked the security exceptions under Article 73(b)(iii) of the TRIPS Agreement. Article 73(b)(iii) allows Members to take any action which it considers necessary for the protection of its “essential security interests” “taken in the time of war or other emergency in international relations.” In its analysis, the Panel noted that the following had to be assessed: (i) whether there was an existence of a “war or other emergency in international relations”; (ii) whether the actions were “taken in time of” that war or other emergency; (iii) whether the Member has articulated its relevant “essential security interests” to assess whether there is any link between those actions and the protection of its essential security interests; and (iv) whether actions are so remote to the “emergency in international relations” so as to make it implausible that those actions are necessary to protect the Member’s essential security interests.[12]
- In its analysis of the first step, the Panel cited Russia – Traffic in Transit,[13] which had interpreted the corresponding GATT security exceptions provision. In this case, the Panel had concluded that the term “emergency in international relations” refers generally “to a situation of armed conflict, or of latent armed conflict, or of heightened tension or crisis, or of general instability engulfing or surrounding a state.”[14] The Panel concluded that the crisis in the MENA region and the resultant 2017 Blockade are sufficient to meet the threshold of “emergency in international relations”.
- For the second step, the Panel in Russia – Traffic in Transit interpreted “taken in time” as the action taken during war or other emergency in international relations.[15] The Panel noted that the anti-sympathy measures, and non-application of criminal procedures and penalties were in operation since the 2017 Blockade, and were taken during the emergency in international relations.
- With respect to the third step, the Panel, citing Russia – Traffic in Transit, noted that “essential security interests” refers to those interests relating to the quintessential functions of the state “namely, the protection of its territory and its population from external threats, and the maintenance of law and public order internally.”[16] The Panel noted that Saudi Arabia expressly articulated its “essential security interests” as protection from terrorism and extremism. These interests met the threshold of “essential security interests” as they relate to the quintessential functions of the state set out above.[17] Therefore, the Panel concluded that Saudi Arabia’s articulation of its “essential security interests” was sufficient to assess if there was a link between its actions and the protection of its “essential security interests”.[18]
- With respect to the final step, the Panel assessed whether the anti-sympathy measures; and the non-application of criminal procedures and penalties to beoutQ, were plausible measures to protect the Saudi Arabia’s essential security interests. With respect to the anti-sympathy measures, the Panel concluded that since Saudi Arabia had imposed a travel ban on all Qatari nationals from entering its territory, it was plausible that Saudi Arabia took measures to prevent Qatari nationals from accessing its courts and tribunals.[19] Therefore, the anti-sympathy measures were justified under the essential security exception. However, importantly, the Panel held that the non-application of criminal procedures and penalties to beoutQ was not a plausible measure to protect Saudi Arabia’s essential security interests. In fact, the application of criminal procedures to beoutQ did not require any entity in Saudi Arabia to engage with beIN or other Qatari nationals.[20] The Panel also noted that such a non-application of criminal procedures for copyright piracy on a commercial scale also affected various third party rights holders. Therefore, the Panel held that such a measure is so remote from, or unrelated to, the “emergency in international relations” that it could be justified as a measure for the protection of its “essential security interests”.[21]
Consequently, the Panel held that Saudi Arabia violated Article 41.1 and 42 of the TRIPS Agreement, but they were justified under the essential security exception. However, Saudi Arabia’s violation of Article 61 of the TRIPS agreement was not be justified under the essential security exception.
Implications of the Panel’s rejection of the invocation of the essential security exception
Although there is limited WTO jurisprudence on the security exception, this is the first time where a WTO Panel has rejected the application of the essential security exception. In rejecting Saudi Arabia’s invocation of the essential security exception, the WTO Panel affirmed that countries cannot use this defence to violate their WTO obligations. Notably, many third party Members also participated in the dispute and gave their opinion on the application of Article 73(b)(iii), especially “emergency in international relations”. According to Brazil, Canada, European Union, Japan and Russia, the existence of an emergency in international relations is a factual circumstances requiring an objective determination by a panel.[22] Whereas, the United States and Bahrain were of the opinion that Article 73(b) is a self-judging provision because of the phrase “which it considers necessary” in the chapeau of Article 73.[23] Going forward, this divergence in Members’ views and the Panel’s decision has two important implications:
- The United States has always maintained the view that the security exception was self-judging and could not be assessed by a WTO dispute settlement body. In fact, in Russia – Traffic in Transit, the United States strongly supported Russia’s argument that it did not have to give any factual evidence in support of its invocation of the security exception for adopting trade-restrictive measures against Ukraine.[24] Given that the United States has already blocked reappointments to the Appellate Body of the WTO, which has paralyzed its functioning, the Panel’s decision rejecting Saudi Arabia’s invocation of the security exception may lead to a stronger reaction from the United States. It may decide to withdraw from the WTO citing a breach of countries’ sovereignty.
- Going forward, this may encourage future WTO Panels to observe greater scrutiny of measures for which the security exception is being invoked. This becomes especially important in the context of emerging trade-restrictive measures such as data localization. Countries like China have been arguing for the inclusion of a security exception in free trade agreements which contain a prohibition to data localization measures.[25] For instance, the Regional Comprehensive Economic Partnership (RCEP) already has such a security exception in place. Therefore, Members seeking to invoke the security exception to justify a data localization measure may have to provide sufficient evidentiary backing and meet all four steps set out by the Panel.[26] This may discourage countries from adopting trade-restrictive measures which they were seeking to justify under the security exception.
This piece has been authored by Kruthi Venkatesh, a consultant working with Ikigai Law, with inputs from Aman Taneja, Senior Associate at Ikigai Law.
For more on the topic, please reach out to us at contact@ikigailaw.com
[1] Qatar Blockade: Five things to know about the Gulf crisis, Aljazeera, 5th June 2020, available at, https://www.aljazeera.com/news/2019/06/qatar-blockade-gulf-crisis-190604220901644.html (last accessed on 3rd July, 2020).
[2] Panel Report, Saudi Arabia – Measures concerning the Protection of Intellectual Property Rights, WT/DS567/R at para 2.31 (16th June, 2020) (hereafter, Panel Report, Saudi Arabia – Measures concerning the Protection of Intellectual Property Rights).
[3] Id., at para 2.36.
[4] Id., at para 2.40.
[5] Id., at para 2.41
[6] Id., at para 2.41.
[7] Id., at para 2.47.
[8] Id., at para 3.1.
[9] Id., at para 3.1.
[10] Id., at para 3.1.
[11] Id., at para 7.159.
[12] Id., at para 7.242.
[13] Panel Report, Russia – Measures Concerning Traffic in Transit, WT/DS512/7 (26th Apr., 2019).
[14] Panel Report, Saudi Arabia – Measures concerning the Protection of Intellectual Property Rights, supra note 2, at para 7.245.
[15] Id., at para 7.247.
[16] Id., at para 7.249.
[17] Id., at para 7.280.
[18] Id., at para 7.281.
[19] Id., at para 7.286.
[20] Id., at para 7.289.
[21] Id., at para 7.293.
[22] Id., at para 7.238.
[23] Id., at para 7.238.
[24] Iryna Bogdanova, The WTO Panel Ruling on the National Security Exception: Has the Panel ‘Cut’ the Baby in Half?, EJIL: Talk!, 2th April, 2019, https://www.ejiltalk.org/the-wto-panel-ruling-on-the-national-security-exception-has-the-panel-cut-the-baby-in-half/ (last accessed on 3rd July, 2020).
[25] For instance, in the WTO plurilateral negotiations on electronic commerce, China’s proposal argues for a security exception for data related issues including data localization. For more context on the plurilateral e-commerce negotiations at the WTO, please see our pieces titled ‘E-commerce Related Discourse at the WTO: Brief History and Subsequent Developments’, here.
[26] For more discussion on the data localization debate and its justification under the WTO framework, please see our piece titled ‘The Data Localization Debate in International Trade Law’, here.
