Solar glass anti-dumping case sent back to EU’s general court

A German glassmaker and the European Commission have succeeded in a bid to set aside a ruling by the General Court of the EU which favored the attempt by Chinese solar panel glass company Xinyi PV to avoid paying anti-dumping (AD) duties on its products in Europe.

A judgement by the European Court of Justice on Thursday rejected the first part of an appeal which was lodged by the Xinyi Solar-owned business against the AD duties in August 2014.

With Xinyi having responded to the permanent imposition of anti-dumping duties by the EU in May 2014 by making four legal pleas, the rejection of the Hong Kong-listed manufacturer’s initial objection will now be sent back to the EU General Court to consider the remaining three arguments.

The long-running case relates to the AD duties imposed provisionally by the EU on Xinyi and three other Chinese solar glass makers in November 2013, and on the right of Xinyi to be treated as if it were operating under market conditions, rather than receiving state-planned benefits.

The European Commission refused a request, made by Xinyi in May 2013, to be treated as operating under free market conditions on the basis it had benefited from two tax breaks which reduced the normal, 25% rate which would have applied to the business. One tax scheme offered full exemption for two years followed by three years at the half rate of 12.5%, and a second offered Xinyi a lower, 15% rate because it was deemed a high-technology business by the Chinese authorities. Xinyi’s attempt to argue both regimes were temporary was undermined by the Court of Justice pointing out the latter program could be extended on a rolling basis at Xinyi’s request.

In response to Xinyi’s appeal against its lack of market-economy status, the General Court of the EU in March 2016 annulled that decision by the European Commission, explaining the latter had wrongly interpreted the rules for determining the Chinese company’s status, as claimed by Xinyi in the initial part of the first plea of its four-pronged appeal.

That decision, by the General Court, was set aside by the European Court of Justice in February 2018, which said the other court had made legal errors in upholding the Xinyi argument and returned the case back to the General Court. The latter body responded by again annulling the commission’s denial of market-economy status for Xinyi, this time on the basis of the second part of the initial plea made by the manufacturer.

That prompted Austrian-owned German company GMB Glasmanufaktur Brandenburg GmbH and the commission to apply, two years ago, to have the General Court’s annulment set aside, leading to the decision made by the European Court of Justice on Thursday.

The verdict

The Court of Justice agreed with the European appellants that the General Court had wrongly placed the burden of proof for establishing Xinyi’s market-economy status with the European Commission’s investigators, rather than with the Chinese manufacturer. The Court of Justice also agreed that either benefits to a Chinese company’s general financial status or, specifically, to its production costs, would be sufficient to deny market-economy status. The General Court had agreed with Xinyi’s claim that both would have had to be proven, meaning tax breaks would fall short of the requirement as they could not be proven to have directly affected solar glass production costs.

The ball is now back with the General Court, with the Court of Justice delaying a final decision on who will pay for the case. Glasmanufaktur Brandenburg, which is part of the Liechtenstein-registered solar glassmaker Interfloat business owned by Austrian wood company HS Timber Group, had sought to have Xinyi pay the costs.