New Zealand Steel Limited v Minister of Commerce and Consumer Affairs
[2021] NZHC 966
•4 May 2021
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2019-485-553
CIV-2019-485-552 [2020] NZHC 966
UNDER THE Judicial Review Procedure Act 2016 IN THE MATTER OF
The exercise of powers under the Trade (Anti-dumping and Countervailing Duties) Act 1988
BETWEEN
NEW ZEALAND STEEL LIMITED
Applicant
AND
MINISTER OF COMMERCE AND CONSUMER AFFAIRS
Respondent
Hearing: 15–19 June 2020 (further submissions received 3 July 2020) Counsel:
J Hodder QC, D Kalderimis and M Lister for Applicant D Laurenson QC, N Butler, K Gaskell and A Piaggi for Respondent
Judgment:
4 May 2021
JUDGMENT OF GRICE J
Table of contents
1.Introduction [1]
2.International Framework [12]
3.New Zealand’s Trade Legislation [19]
a.Dumping and Countervailing Duties Act 1988 (DCD Act) [20]
b.The Trade (Anti-Dumping and Countervailing Duties) Act 1988 (the Trade Act)
[27]
4. High Court Galv Coil #1 Judgment [35]
5. The Grounds of Review [43]
6. The New Zealand Approach [72]
7. The Statutory Purpose [85]
8. International Instruments and Disputes Processes [97]
NZ STEEL LTD v MINISTER OF COMMERCE AND CONSUMER AFFAIRS [2020] NZHC 966 [4 May 2021]
9.Admissiblity of Expert Evidence: Mr Gospage [108]
a. Conclusions on Expert Evidence Admissibility [131]
10.MBIE’s Reporting on Overseas Investigations [133]
12.Key Issues [140]
13.The Galv Coil #2[145]
a.Assessment of Information [152]
b.Information from Original Investigation [158]
c.Further Information in Reconsideration Investigation [162]
d.Key issue: Whether SOCBs and SIEs are Public Bodies [166]
e.Primary Information [172]
i.The GOC Response [172]
ii.MBIE Research [174]
iii.Steel Industry Plans and Directives [178]
iv.Information on Manufacturers [179]
f.Secondary Information [182]
i.The Overseas Investigation Reports [183]
ii.NZ Steel Submissions (relying on Professor Lardy and Mr Gospage) [212]
g.Other matters related to whether SOCBs and SIEs are Public Bodies [228]
i.International Consensus Comments [228]
ii.MBIE’s conclusions on SOCBs as Public Bodies [240]
iii.Particular Issues in relation to MBIE’s Investigation on SOCBs [248]
h.Conclusion in relation to Key Issue – that SOCBs are not Public Bodies [278]
i.Key Issue: Land Use Rights at LTAR [289]
j.Conclusion on Land Use Rights at LTAR [311]
k.Key Issue: Inputs at LTAR [316]
l.Conclusion on the Galv Coil #2 Reconsideration Report [360]
14. Hollow Steel Sections (HSS or Hollows) Report [363]
a.Assessment of Information [379]
b.Key Issues [386]
c.Key Issue: Whether there was a Financial Contribution by the Government
or any Public Body in relation to Particular Programmes [387]
i. Are Chinese Banks (Policy Banks and SOCBs) "Public bodies" [397]
ii. Use of Benchmark Interest Rates [411]
d.Key issue: Whether State-invested Enterprises (SIEs) and State Owned Enterprises (SOEs) provided Inputs as "Public bodies"? [420]
e.Key Issue: Provision of Land Use Rights at LTAR [438]
f. Electricity at LTAR [455]
g.Hollows Conclusions on Subsidy Programmes [459]
15. Grounds for Review [465]
16. Table of Errors [516]
17. Conclusion [515]
18. Costs [518]
Attachment 1 – AC/CVD Investigation Process
Attachment 2 - Acronyms and Overseas and Appellate Body Reports
Introduction
[1] NZ Steel Ltd (NZ Steel) is New Zealand’s only primary steel manufacturer. It has long been of the view that the government of China (GOC) is subsidising the
manufacture of various steel products imported into New Zealand. It applied to the Secretary/Chief Executive of Ministry of Business Innovation and Employment (MBIE) to start investigations under the relevant legislation to determine the existence and effect of the alleged subsidisation of imported steel products and whether countervailing duties should be imposed.1
[2] These proceedings relate to two decisions of the Minister based on MBIE’s investigations, reports and advice relating to whether those imported products were subsidised and causing material injury to the New Zealand domestic steel industry.
[3] Following the investigations by MBIE, the Minister determined the goods were being subsidised to de minimis levels only. Therefore, they were not causing material injury and so no countervailing duties should be imposed on Galvanised Steel Coil (Galv Coil reconsideration decision)2 or Hollow Steel Sections (Hollows decision)3 imported from China to New Zealand. The investigations were terminated. The two decisions are now the subject of the applications for judicial review.
[4] The Galv Coil reconsideration decision followed a successful judicial review, concerning MBIE’s first Galvanised Steel Coil investigation report (Galv Coil #1 Report), by the High Court on the application of NZ Steel in 2018 (High Court’s Galv Coil #1 judgment).4 NZ Steel says that the lessons from that successful judicial review
1 Dumping and Countervailing Duties Act 1988 [“DCD Act”] and the Trade (Anti-Dumping and Countervailing Duties) Act 1988 [“Trade Act”]. The Chief Executive of MBIE (also called the Secretary under the DCD Act) has statutory responsibility for undertaking the investigation, being satisfied on the evidence in various respects, making determinations and reporting to the Minister. The investigations and reports were carried out with the assistance of trade experts and staff in the trade investigation team at MBIE. For convenience, I refer to MBIE as the investigator and advisor to the Minister.
2 The Galv Steel decision was made on 8 July 2019: “Final Determination: Reconsideration of Subsidy Investigation—Galvanised Steel Coil from China” (8 July 2019) New Zealand Gazette 2019-go3195 [“the Reconsideration decision” or “Galv Coil #2 decision”]. The decision was based on the recommendations in Galvanised Steel Coil from China – Reconsideration: Final Report (Hīkina Whakatutuki | Ministry of Business, Innovation and Employment, June 2019) [“Galv Coil #2 report” or the “Reconsideration Final Report”]. The decision was made under the DCD Act.
3 The Hollows decision was made by the Minister on 1 April 2019: “Determinations Relating to Subsidy Investigation: Hollow Steel Sections From China” (1 April 2019) 2019-go1481 [“the Hollows decision”]. The decision was based on the recommendations in Hollow Steel Sections from China (Hīkina Whakatutuki | Ministry of Business, Innovation and Employment, March 2019) [“Hollows report”]. The decision was made under the Trade Act, which replaced the DCD Act.
4 New Zealand Steel Ltd v Minister of Commerce and Consumer Affairs [2018] NZHC 2454, [2019] 2 NZLR 525 [“High Court Galv Coil #1 judgment”].
were not heeded. It says MBIE’s investigation processes, its report on the reconsideration of the Galv Coil decision (Galv Coil #2 Report) and the resulting decision of the Minister remain flawed. It says the Hollows decision suffered from similar flaws.5
[5] The Galv Coil investigations (#1 and #2) were made under the Dumping and Countervailing Duties Act 1988 (the DCD Act). The Hollows investigation was under the Trade (Anti-Dumping and Countervailing Duties) Act 1988 (the Trade Act), which replaced the DCD Act. The differences between the two pieces of legislation are not material for the purposes of these proceedings. These Acts enabled New Zealand to meet its obligations as a member of the World Trade Organisation (WTO) in relation to international trade. In particular for the investigation of subsidies and imposition of duties on goods imported from other WTO member states. 6 China is a WTO member state and signatory to the WTO Agreement.
[6] NZ Steel says both decisions were based on MBIE’s investigations and reports that were marred by numerous reasoning errors and were insufficiently robust to properly determine whether the GOC was subsidising galvanised steel coil or hollow steel sections.
[7]In particular, NZ Steel says the MBIE investigations:
(a)were predisposed to light-handed efforts (not a hard look);
(b)were not designed to test fully the responses to New Zealand industries’ concerns; and
(c)did not achieve robust satisfaction that there was a “level playing field”.
[8] NZ Steel says it has been suffering serious financial detriment as a result of the unfair subsidisation by the GOC of the imported goods. At the heart of NZ Steel’s
5 The applications for judicial review in relation to Galv Coil #2 is CIV-2019-485-552 and for Hollows is CIV-2019-485-553.
6 New Zealand has been a Member of the WTO and signatory to the WTO Agreement since 1994. China acceded to the WTO in 2001.
case is its claim that the recommendations put by MBIE as the investigating authority to the Minister were flawed as it had relied on information from Chinese sources uncorroborated by evidence sufficiently independent of the GOC’s influence.7 It placed considerable emphasis on its contention that China’s economy and in particular the steel market was distorted by the GOC’s influence and subsidisation of the sector.
[9] NZ Steel says MBIE was too ready to accept the GOC’s responses and its various laws, rules, regulations and plans as reliable information as to what was actually happening in China. It says MBIE did not inquire into the implementation in practice of the GOC plans, directives and laws upon which it relied. Nor did it critically question the information provided by the GOC.
[10] The Minister says MBIE acted in accordance with its obligations under the relevant annex to the WTO Agreement. That is the Agreement on Subsidies and Countervailing Measures (SCM Agreement). This provides guidelines or directions to assist Members in their investigations, reports and in the evaluation of evidence and information. The provisions of the SCM Agreement are incorporated in general terms in the New Zealand legislation.8
[11] The Minister says MBIE undertook a thorough and detailed evaluation. It took into account the guidance provided in the High Court’s Galv Coil #1 judgment. He says he reviewed and tested the investigation reports that he received and properly relied on them to terminate the investigations in accordance with MBIE’s advice. The Minister says MBIE made no errors, applied the correct legal test and provided fair, accurate and adequate advice about all “obviously material” matters. Therefore, he had taken into account all relevant considerations. The Minister says the weighing of the considerations was for MBIE and the Minister and are not matters susceptible to judicial review.
7 MBIE was responsible for the investigations, reports and recommendations upon which the Minister relied.
International Framework
[12] Attached as Annexure 2 is a list of acronyms and abbreviations and the citations for foreign investigation reports and reports of the WTO Appellate Body, referred to in the MBIE reports and in this judgment.9
[13] Mallon J in the High Court’s Galv Coil #1 judgment, provided a description of the international framework within which New Zealand operates. She said:10
[8] The WTO Agreement is premised on the desirability of free trade. It was the result of international negotiations formally signed in 1994.11 The WTO Agreement built upon the General Agreement on Tariffs and Trade (GATT 1947). GATT 1947 arose out of the conclusion of the Second World War and the recognition that protectionist trade policies needed to be overhauled with a new system premised on free trade to ensure the efficient use of each nation’s and the world’s resources.
[9] The WTO Agreement does not prohibit tariffs. They are permitted as the most acceptable form of protection on the ground they are objective and open to scrutiny.12 The aim is to reduce tariffs progressively through negotiations. The WTO Agreement also permits duties as part of creating a trading system that is transparent and fair. The Anti-Dumping and SCM Agreements form a crucial part of this. They allow Member states to impose measures to offset the distorted and unfair competition created in their domestic markets by the dumping or specific subsidisation of goods by other Members and foreign firms.
[10] The SCM Agreement concerns subsidies. Unlike dumping activities, subsidies inherently involve the participation of Member states. A Member state concerned about subsidised goods entering its domestic markets can use the WTO dispute settlement procedures to seek withdrawal of the subsidy or it can act unilaterally to remove its adverse effects in accordance with the procedural and substantive requirements in the SCM Agreement.13
9 This is based on a similar list in Annexure 1 in High Court Galv Coil #1 judgment, above n 4.
10 High Court Galv Coil #1 judgment, above n 4, at [8]–[10].
11 The Uruguay Round of negotiations formally signed at Marrakesh, Morocco on 15 April 1994. The WTO Agreement came into force on 1 January 1995.
12 G D Triggs International Law: Contemporary Principles and Practices (LexisNexis Butterworths, Australia, 2006) at 719.
13 Article 10 provides that Member states are to impose countervailing measures in accordance with the SCM Agreement. It further provides that investigations are to be initiated and conducted in accordance with the SCM Agreement.
[14]“Subsidy” is defined in the SCM Agreement as follows:
Article 1
Definition of a Subsidy
1.1For the purpose of this Agreement, a subsidy shall be deemed to exist if:
(a)(1) there is a financial contribution by a government or any public body within the territory of a Member (referred to in this Agreement as “government”), i.e. where:
(i)a government practice involves a direct transfer of funds (e.g. grants, loans, and equity infusion), potential direct transfers of funds or liabilities (e.g. loan guarantees);
(ii)government revenue that is otherwise due is foregone or not collected (e.g. fiscal incentives such as tax credits);
(iii)a government provides goods or services other than general infrastructure, or purchases goods;
(iv)a government makes payments to a funding mechanism, or entrusts or directs a private body to carry out one or more of the type of functions illustrated in (i) to (iii) above which would normally be vested in the government and the practice, in no real sense, differs from practices normally followed by governments;
… and
(b) a benefit is thereby conferred.
[15] Mallon J in the High Court Galv Coil #1 judgment described the further requirements as follows:14
[12] To impose countervailing measures, a subsidy must also be specific to an enterprise, industry, or group of enterprises or industries within the jurisdiction of the authority granting the subsidy. Article 2 provides certain principles by which specificity is to be determined. It also requires that specificity be determined on the basis of positive evidence.
[13] Some subsidies are automatically prohibited. Other subsidies are actionable if they cause “adverse effects” to the interests of a Member state. Adverse effects are defined as including where the subsidy causes “injury to
14 High Court Galv Coil #1 judgment, above n 4.
the domestic industry of another Member”. Article 7 provides a process for consultation when a Member state believes a subsidy has been granted or maintained by another Member state. It also provides for a Member to refer the matter to a WTO panel for review. A WTO panel report on the matter can in turn be appealed to the Appellate Body
[14] Article 11 sets out the requirements for initiating and conducting an investigation. An investigation is initiated by a written application from or on behalf of a domestic industry. The application is to include sufficient evidence of: the existence of a subsidy (including, if possible, its amount); injury; and a causal link between the subsidised imports and the alleged injury. The relevant authority must review the accuracy and adequacy of the evidence provided in the application to determine whether the evidence is sufficient to justify initiating an investigation. An application only proceeds if there is sufficient evidence of either subsidisation or of injury to justify proceeding. An investigation must be terminated if the amount of a subsidy is de minimis or if the volume of subsidised imports (actual or potential) or the injury is negligible. The de minimis level for developed countries is less than one per cent. For developing countries an investigation must be terminated if the overall subsidy does not exceed two per cent. …
[16] Interested Members (the People’s Republic of China (PRC) in this case) and interested parties must be given notice of the information the authority requires and an opportunity to give evidence.15 An interested party includes an exporter or foreign producer of a product subject to investigation.16
[17] The investigating authority must be satisfied about the accuracy of the information supplied by interested members and parties. In the event of non-cooperation by them the determination may proceed based on “facts available”. The SCM Agreement provides:
12.5 … the authorities shall during the course of an investigation satisfy themselves as to the accuracy of the information supplied by interested Members or interested parties upon which their findings are based.
…
12.7In cases in which any interested Member or interested party refuses access to, or otherwise does not provide, necessary information within a reasonable period or significantly impedes the investigation, preliminary and final determinations, affirmative or negative, may be made on the basis of the facts available.
12.8The authorities shall, before a final determination is made, inform all interested Members and interested parties of the essential facts under
15 SCM Agreement, art 12.1.
16 Article 12.9.
consideration which form the basis for the decision whether to apply definitive measures. Such disclosure should take place in sufficient time for the parties to defend their interests.
[Emphasis added]
[18] Article 14 of the SCM Agreement requires Members to specify in their national legislation the method that will be used for calculating the benefit conferred by a subsidy and says that the method must be consistent with the following relevant guidelines:17
…
(b)a loan by a government shall not be considered as conferring a benefit, unless there is a difference between the amount that the firm receiving the loan pays on the government loan and the amount the firm would pay on a comparable commercial loan which the firm could actually obtain on the market. In this case the benefit shall be the difference between those two amounts;
…
(d) the provision of goods or services or purchase of goods by a government shall not be considered as conferring a benefit unless the provision is made for less than adequate remuneration, or the purchase is made for more than adequate remuneration. The adequacy of remuneration shall be determined in relation to prevailing market conditions for the good or service in question in the country of provision or purchase (including price, quality, availability, marketability, transportation and other conditions of purchase or sale).
[Emphasis added]
New Zealand’s Trade Legislation
[19] The Minister’s Galv Coil reconsideration decision was made under s 13 of the DCD Act and the Hollows decision, under s 10D of the Trade Act. Both Acts contain the key elements of the SCM Agreement permitting the imposition of countervailing duties in circumstances where a foreign government (which includes “a person,
17 Article 14(b) and (d) of the SCM Agreement.
agency or institution acting for, or on behalf of, a government”) provides a financial or other commercial benefit, directly or indirectly:18
(a)that is specific to an enterprise or industry or a group of enterprises or industries, within the jurisdiction of a foreign government;19
(b)that provides or confers a benefit in at least one of the ways set out in s 7 of the DCD Act or the Trade Act;20 and
(c)material injury to an industry has been or is being caused or is threatened.21
Dumping and Countervailing Duties Act 1988 (DCD Act)
[20]The DCD Act defined “foreign government” and “subsidy” in s 3 as follows:
foreign Government means—
(a)the Government of a foreign country:
(b)a provincial, State, municipal, local, or regional Government or authority of a foreign country:
(c)a body that exercises authority for an association of foreign countries:
(d)a person, agency, or institution acting for, or on behalf of, a Government or body referred to in paragraph (a) or paragraph (b) or paragraph (c)
…
specific subsidy means a subsidy that is specific to an enterprise or industry, or a group of enterprises or industries, within the jurisdiction of a foreign Government
subsidised goods means goods in respect of the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export, or import of which a specific subsidy has been or will be paid, granted, authorised, or otherwise provided, directly or indirectly, by a foreign Government
18 DCD Act, s 3 and Trade Act, s 3: definition of “foreign government”, “subsidised goods” and “subsidy”.
19 DCD Act, s 3 and Trade Act, s 3: definition of “specific subsidy”.
20 DCD Act, s 7 and Trade Act, s 7.
21 DCD Act, s 8 and Trade Act, s 8.
subsidy includes any financial or other commercial benefit that has accrued or will accrue, directly or indirectly, to persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export, or import of goods, as a result of any scheme, programme, practice, or thing done, provided, or implemented by a foreign Government; …
[21]The amount of a subsidy is defined under s 7:
7 Amount of subsidy
(1)In this Act, the expression amount of the subsidy, in relation to any subsidised goods, means the amount determined by the Secretary as being the benefit conferred on the recipient of the subsidy.
(2)For the purposes of subsection (1),—
(a)the provision of equity capital by a foreign Government shall not be regarded as conferring a benefit, unless the investment decision in relation to the provision of that equity capital can be regarded as inconsistent with the usual investment practice (including for the provision of risk capital) of private investors in the territory of the exporting country:
(b)the provision of a loan by a foreign Government shall not be considered as conferring a benefit, unless the amount that the recipient of the loans pays under the loan is less than the amount the recipient would pay under a comparable commercial loan that the recipient could obtain on the market, in which case, the benefit to the recipient shall be deemed to be the difference between those amounts:
…
(d)the provision of goods or services, or the purchase of goods, by a foreign Government shall not be regarded as conferring a benefit, unless the goods or services are provided for less than adequate remuneration within the meaning of subsection (4), or the goods are purchased for more than adequate remuneration, as the case may be.
…
(4)For the purposes of subsection (2)(d), adequate remuneration shall be determined in relation to prevailing market conditions in the country concerned for the goods or services, taking into account price, quality, availability, marketability, transportation, and other conditions of the provision or purchase.
(5)Where the Secretary is satisfied that sufficient information has not been furnished or is not available to enable the amount of the subsidy to be ascertained for the purposes of this Act, the amount of the subsidy shall be such amount as is determined by the Secretary having regard to all available information that the Secretary considers to be reliable.
[22] Section 10 provided that before initiating an investigation the Secretary must notify in writing the government of the relevant country of export of the goods and give it a reasonable opportunity to negotiate a solution.22
[23] Section 11 provided for the Minister to terminate an investigation prior to a final determination if the Minister was satisfied there was insufficient evidence of subsidisation to justify proceeding. Insufficient evidence was deemed to exist if the amount of the subsidy was less than one per cent of the value of the goods being imported or if the volume of goods imported was negligible. A further investigation could be initiated if the termination had been based on incorrect facts or non-disclosure of relevant facts.23
[24] Under s 11(1)(c) the Minister was required to terminate a subsidisation investigation if satisfied that the imposition of a countervailing duty would be inconsistent with New Zealand’s obligations under the WTO Agreement.24
[25] Once the Minister had made a final determination as to whether goods were being subsidised and there was material injury, notice was required to be given.25 Section 14 provided for the Minister to impose a countervailing duty on goods found to be subsidised,26 however no duty could be imposed if it was inconsistent with New Zealand’s WTO obligations nor could it exceed the amount of the subsidy. The Minister was required to have regard to the desirability of ensuring that the duty was not greater than necessary to prevent injury to the domestic industry.
[26] Section 16 provided for the Minister to impose provisional measures if there was reasonable cause to believe subsidised goods were causing material injury and provisional measures were necessary to prevent material injury during the period of the investigation.27
22 DCD Act, s10(9).
23 Section 11(3)(a).
24 A two per cent minimum threshold for developing countries is provided for in the SCM Agreement.
25 Section 13(1) and (2) of the DCD Act.
26 Section 14. The imposition of countervailing duties was discretionary.
27 Section 17 of the DCD Act provides the determination of the date from which duty is payable.
The Trade (Anti-Dumping and Countervailing Duties) Act 1988 (the Trade Act)
[27] The Trade (Anti-Dumping and Countervailing Duties) Amendment Act 2017 changed the name of the relevant legislation. It came into force on 30 November 2017.
[28] In addition to the renumbering of some sections, and the change in title from Secretary to the Chief Executive of MBIE.28 the main changes were the:
(a)renaming of the Act and repeal of the long title;
(b)addition of a new purpose section;29 and
(c)addition of a second step in the investigation process following the Minister’s determinations of the rate or amount of the anti-dumping or countervailing duties and that the goods were subsidised and were causing or threatening to cause material injury to an industry.30
[29] That second step required the Minister to direct the Chief Executive to start a further investigation following a determination that goods were subsidised. The step was referred to in the legislation as: “Step 2: Public Interest”. The Chief Executive must investigate whether imposing the duty at the rate the Minister has determined is in the public interest.31 Imposing the duty will be in the public interest “unless the cost to downstream industries and consumers of imposing the duty is likely to materially outweigh the benefit to the domestic injury of imposing the duty”.32
[30] Before the final determination is made, the authority must inform all interested Members and interested parties of the essential facts under consideration in sufficient time for the parties to defend their interests.33
[31] The countervailing duty to be imposed must be less than the total amount of the subsidy if such lesser duty would be adequate to remove the injury to the domestic
28 Section 3 (Interpretations) of DCD and s 3 of Trade Act.
29 Trade Act, s 1A. See [89] below.
30 Section 10F.
31 Section 10F(1).
32 Trade Act, s 10F(2).
33 SCM Agreement, art 12.8.
industry. Procedures must be established so that due account is taken of representations by domestic interested parties whose interests might be adversely affected by the imposition of a countervailing duty.34
[32] The respondent provided a chart outlining the investigation processes that applied to the Galv Coil #1 and #2 investigations under the DCD Act and the effect of the 2017 amendments (under the Trade Act), which applied to the Hollows (HSS) investigation. A copy of the chart is attached as Annexure 1 (AD/CVD Investigation Process).
[33] The SCM Agreement requires all members with countervailing duty domestic legislation to maintain judicial (or similar) procedures for the purposes of the prompt review of administrative actions relating to local determinations.35 New Zealand, unlike some other jurisdictions, does not provide a merits based appeal from the Minister’s decisions.36
[34] A Member state may dispute another Member’s determination by way of a review through the separate WTO international dispute processes. This includes reference to WTO panels established by the Dispute Settlement Body which make findings, recommendations and rulings for disputes between members. Appeals are available to an Appellate Body, which is a standing body established by the Dispute Settlement Board. The appeals are dealt with on the papers. Subsequent panels are not bound by the details and reasoning of a previous panel or a report even if it is on the same subject matter. The reports are not binding precedents in other disputes between the same parties on other matters or different parties on the same matter.37 However, the reasoning by other panels and the Appellate body on the interpretation of a WTO rule is regarded as persuasive.
34 Article 19.2.
35 Article 23.
36 Compare Australia, for instance, the Customs Act 1901 (Cth), ss 269ZZA–269ZZM, which allows an interested party to seek a review of a Minister’s decision to an administrative review tribunal.
37 United States – Dynamic Random Access Memory Semiconductors (DRAMS) From Korea WT/DS 296/AB/R, 20 July 2005 (Report of the Appellate body) [“DS296”]; and DSR 2005:XVI at 8131/[186].
High Court Galv Coil #1 Judgment
[35] The High Court found that MBIE had made material errors in the first investigation. First, it had applied the wrong test for determining whether an entity was a public body. The second error was that MBIE’s report had inaccurately summarised some of the overseas investigation reports and had not placed proper reliance on them. The Minister had then relied on the incorrect summaries and advice in making his decision.
[36]The Judge noted:
[81] In summary, it is fair to say that there is an international consensus that Chinese steel products are subsidised by public bodies. It is also fair to say that the view about the level at which they are subsidised depends on a number of factors: the kind of steel products; the producers of those products; and the extent to which the investigating authority has been able to obtain direct information about those programmes. It is against this background I consider whether NZ Steel has established that MBIE made a reviewable error in providing its advice to the Minister.
[37] In the High Court, the Minister had submitted that when properly analysed there was no “international consensus” as the relevant overseas investigation reports were not on all fours with the Galv Coil #1 Report for various reasons. For instance, they were dated or based on information that MBIE considered was unreliable. In addition, they had reached different conclusions to each other on the various subsidy programmes.38
[38] The conclusion that a body or entity is a public body under the SCM Agreement is important because its actions are then considered to be the same as those of the government. There is no need to prove that such an entity is directed or entrusted by the government in order to show the existence of a financial contribution, as is required for a “private body”.39
[39] The Court said MBIE’s incorrect formulation of the “public body” test for establishing whether SOCBs and SIEs were public bodies was based on MBIE’s
38 High Court Galv Coil #1 judgment, above n 4, at [78].
39 Art 1.1(iv) of the SCM Agreement says a private body entrusted or directed by government to undertake the relevant function sis deemed to be a public body. See above at [14].
reliance on a test set out in the Australian Anti-Dumping Review Panel’s (or ADRP) investigation report in ADRP 2013 (Gal).40
[40] In that report, the ADRP had proposed the test for public bodies ostensibly based on WTO Appellate Body guidance provided in its report DS379 (2011).41 However, subsequent Appellate Body decisions had found that the ADRP had misinterpreted DS379 and as a result the Australian review panel had applied the wrong test.42 The Judge concluded that MBIE had taken the public body test of whether the GOC had “meaningful control” of SIEs to mean that evidence was required that the GOC through the State-owned Assets Supervision and Administration Committee (SASAC) had delegated its authority to entities (SIEs) to control participants in the iron and steel industry.43 The High Court set out the more nuanced test for “meaningful control” based on the correct interpretation of the guidelines in DS379.44 The test as to “meaningful control” could be met without the need for the delegation of authority.
[41] The second material error identified by the High Court was that MBIE had inaccurately summarised the basis for some of the overseas investigations and had allowed them no weight.45 The Minister did not, therefore, receive accurate advice. The High Court found this was material because MBIE, in its Galv Coil #1 Report, had had “such limited direct information from which to make its assessment”.46
[42] Mr Hodder QC for NZ Steel said the issues raised in these proceedings are more “subtle” than those which were before the Court in the High Court Galv Coil #1 judgment, where the “clear misses” had been dealt with. He indicated that the
40 At [86]; referring to Australian Anti-Dumping Review Panel Review of Decisions Regarding Dumping Duties and Countervailing Duties for: Zinc Coated (Galvanised) Steel and Aluminium Zinc Coated Steel Exported from the People’s Republic of China 15 November 2013 [“ADRP 2013 (Gal)”] at [100].
41 High Court Galv Coil #1 judgment, above n 4, at [87]; referring to United States – Definitive Anti- Dumping and Countervailing Duties on Certain Products from China WT/DS379/AB/R, 11 March 2011 (Report of the Appellate Body) [“DS379”].
42 High Court Galv Coil #1 judgment, above n 4, at [94].
43 At [121].
44 DS379, above n 41, at 123 and 133.45 High Court Galv Coil #1 judgment, above n 4, at [172]. I refer to this aspect in more detail below at [107].
46 At [173].
“international consensus”, referred to in the High Court Galv Coil #1 judgment,47 meant MBIE did not start with a clean sheet. It was required to explain why it had departed from the international consensus but it had not done so.
The Grounds of Review
[43]The grounds of review pleaded each of the Statements of Claim are as follows:
AFirst ground of review: unlawfulness in that MBIE asked the wrong question, and improperly elevated the standard of proof.
BSecond ground of review: error of law through misapplication of the proper legal test.
CThird ground of review: decision not based on fair, accurate and reliable report.
DFourth ground of review: failure to properly investigate in accordance with the Act.
EFifth ground of review: mistake of fact.
FSixth ground of review: unreasonableness.
[44] NZ Steel seeks declarations that MBIE’s final reports and the Minister’s decisions are inconsistent with the requirements of the Act and unlawful. It asks the Court to quash the Minister’s decisions and order reconsideration in accordance with any declarations made and that in reconsidering the Minister continues to consult with the NZ Steel before making any new decision.
[45] The present judicial review proceedings operate at two main levels. The first goes to whether MBIE provided a fair and adequate analysis in its investigation and report to the Minister, who subsequently relied upon that report to make his decisions. In that respect NZ Steel refers to Air Nelson Ltd v Minister of Transport48 requiring investigatory reports of the type in this case to be fair and accurate.
[46] The second level relates to legislative purpose. NZ Steel says part of the legislative purpose was to ensure there was a level playing field for New Zealand industry and to protect it from the import of goods subsidised by governments of
47 At [81].
48 Air Nelson Ltd v Minister of Transport [2008] NZCA 26, [2008] NZAR 139 (CA) [“Air Nelson”].
member states. The other part of the statutory purpose required New Zealand to apply anti-dumping and countervailing duty measures in accordance with its obligations as a party to the WTO Agreement. NZ Steel says it was the latter part of the purpose that was MBIE’s primary focus at the expense of a “level playing field”. NZ Steel says that MBIE failed to investigate sufficiently robustly as it was focussed on its obligations under the WTO Agreement to other member states. In doing so it “under egged” its investigations and reports to the Minister and neglected the purpose of the Act insofar as the legislation was intended to be protective of domestic industries.
[47] Further, NZ Steel said the Court should require of MBIE a “culture of justification” in contrast to a “culture of compliance”. In support of its preferred approach it pointed to the Canadian Supreme Court decision in Vavilov.49 Mr Hodder said legal academic writing in New Zealand had referred to the Canadian approach for some years so it was not a new concept.50 He also said the “culture of justification” approach was apparent in the United Kingdom Supreme Court decision concerning the proroguing of Parliament in Miller (II).51 In that case the Court had referred to the requirement that a prorogue was made with “reasonable justification”.52
[48] NZ Steel said this “justification” approach and refusal to accept “very conclusory findings” was apparent in the Court of Appeal’s decision in Ngāti Hurungaterangi v Ngāti Wahiao.53 That case involved the adequacy of reasons given by an arbitral tribunal chaired by a former Supreme Court judge in terms of the requirement to give reasons under the Arbitration Act 1996. The Court of Appeal noted the duty to give reasons was a function of due process,54 but there was no qualitative measure of “adequacy” of reasons.55
49 Canada (Minister of Citizenship and Immigration) v Vavilov 2019 SCC 65.
50 Michael Taggart “Reinventing Administrative Law” in Public Law and Multi-layered Constitution (Hart Publishing 2003); citing J Jowell “Beyond the Rule of Law: Towards Constitutional Judicial Review” (2001) 117 LQR 589 [“Taggart”] at 680–681.
51 Miller v The Prime Minister and Cherry [2019] UKSC 41 [“Miller II”].
52 At [50].
53 Ngāti Hurungaterangi v Ngāti Wahiao [2017] NZCA 429, [2017] 3 NZLR 770 [“Ngāti Hurungaterangi”].
54 At [62]; citing Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377 (CA) at 381.
55 Ngāti Hurungaterangi, above n 537, at [63].
[49] NZ Steel says the basis of the errors here was a flawed approach by MBIE in its investigations and reporting and inadequate justification for conclusions. It pointed to six areas that it said should have underpinned the approach to investigations and reporting to be consistent with the “culture of justification” approach as follows:
(a)Standard of proof: apply a standard of proof of no more than the balance of probabilities, based on the totality of the evidence before it. Anything higher is inconsistent with the legislation’s statutory purpose as it would not hold a fair balance between the complainant and the Member State, especially in light of the inherent information asymmetries.
(b)Standard of review: apply a hard-look and critical standard of review rather than simply accepting partial information at face value. If a Member State provided complete information that, after proper scrutiny, fully and convincingly answered the question, there was no need to look beyond this answer by relying on so-called “facts available”. However, as in Kim, the conclusion that a question has been answered completely and satisfactorily should not be lightly reached.
(c)Reception of evidence: accept as relevant considerations and properly rely on all apparently reliable evidence, including so-called general information available to it, and comparable overseas investigation reports, in order properly to verify the reliability of the “primary evidence”56 presented to it. NZ Steel says if, properly informed by general and secondary evidence,57 MBIE asks the right questions of the PRC government or relevant PRC manufacturers and receives convincing and supported answers, it can properly accept them. Otherwise MBIE is justified in making its decisions based on the general and secondary evidence alone as “facts available”.
56 Primary evidence included the information provided by the government of China and steel producing companies.
57 Secondary evidence included the overseas investigation reports (FIRS).
(d)Relevant/irrelevant considerations: NZ Steel also says MBIE was required to take into account relevant considerations but reject as irrelevant considerations about:
(i)New Zealand’s recognition of the PRC as a “market economy”
– which is relevant to technical58 dumping methodology only, and does not logically or empirically bear upon the critical questions arising in the subsidies investigations; and
(ii)the fact that overseas investigating authorities have conducted different investigations does not provide a legitimate point of distinction for MBIE findings, unless relevant concerns or differences with those investigations can be properly identified.
(e)Inferential reasoning: use inferential reasoning in an ordinary way to reach conclusions on the balance of probabilities. Failing to distinguish between punitive adverse inferences, which assume the worst in the absence of positive evidence, and ordinary inferences, which draw conclusions about Fact C from evidence indicating the truth of Facts A and B, is an important and valid part of any investigation and consistent with WTO reasoning. Without it, the investigation is inevitably skewed in favour of a non-cooperating or partially-cooperating Member State.
(f)Conflicting evidence: that any conflicting evidence needs to be addressed consistently and in a way that appropriately justifies conclusions and provides adequate reasons.
[50] NZ Steel undertook a detailed analysis of the reports. It set out, by reference to the pleaded grounds of review, tables listing what it referred to as “Errors Manifested” in relation to each investigation. The tables cross-referenced paragraphs in the MBIE reports to the alleged errors. NZ Steel described the respective tables as
58 United States – Countervailing Measures on Certain Hot-Rolled Carbon Steel Flat Products from India DS/436/RW, 15 November 2019 (Report of the Panel).
setting out a “taxonomy of errors” illustrating the lack of rigor with which MBIE had conducted the investigations.
[51] NZ Steel also pointed to Kim v Minister of Justice of New Zealand.59 The Court of Appeal there allowed an appeal from a High Court refusal to grant judicial review. The High Court had taken the view that the Court should not quash the decision as it had been made by a Minister who had relied upon diplomatic assurances from the PRC that the value of human rights and the rule of the law were recognised in the PRC.
[52] The Court of Appeal applied a standard of review of “anxious” or “heightened scrutiny” due to the fact fundamental human rights were at issue. It said this required the Court to “ensure the decision has been reached on sufficient evidence and has been fully justified …”.60 In that case the appellate court said the Minister had failed to properly explain how the fact that torture was against PRC law could be reconciled with the appearance that the human rights and fair trial abuses persisted.61 The Court commented that the advice in that case provided by officials to the Minister to enable her to make her decision was “obscure”.62
[53] NZ Steel argued that MBIE took information from various Chinese sources at face value. This information included: the GOC responses, information from and reports published by majority State-owned and Chinese based companies, Chinese official information and Chinese laws, statements and policies as well as information sourced from Chinese regulatory and public institutions.
[54] NZ Steel says anything that is sourced from China may be subject to influence by the GOC. That included not only the information from manufacturers and commercial banks but also the Chinese regulatory institutions such as the China Banking Regulatory Commission (CBRC). Information therefore provided by Chinese institutions to international organisations such as the World Bank was not
59 Kim v Minister of Justice [2019] NZCA 209, [2019] 3 NZLR 173 [“Kim v Minister of Justice
(CA)”].
At [45].
61 At [138].
62 At [76].
reliable. NZ Steel said that New Zealand was alone among its trading partners in its readiness to accept both what the GOC said and to rely on Chinese sources of information. It said that other investigatory bodies had refused to rely on that material alone.
[55] The Minister emphasised that this Court should not be concerned with the merits of the decision nor of the weight to be placed on particular evidence. It responded to the NZ Steel tables of “errors” by pointing to the evidence, which it said MBIE had taken into account in its report and recommendations. It noted judicial review was intended to be a relatively simple process of testing that public power was exercised after a fair process in a manner which was lawful and reasonable.63
[56] Ms Butler for the Minister submitted that in the case of fundamental human rights the Courts were still concerned with lawfulness, reasonableness and fairness of the exercise of the power rather than the merits or correctness of the resulting decision but nevertheless adopted a lower intervention threshold. She noted that in Kim v Minister of Justice,64 the Court of Appeal and the High Court had applied “anxious” or “heightened scrutiny” only because of the human rights and fair trial issues involved in the Minister’s decision to allow extradition of Mr Kim to China.65
[57] The Minister in Kim had decided, relying on the assurances given by the government of China, that the extradition should be allowed. The High Court had concluded that the New Zealand government (the Minister) was best placed to assess the strength of the relationship and that deference by the Court on that issue was appropriate despite the “heightened scrutiny” standard of judicial review applied by the Court.
63 Coromandel Watchdog of Hauraki (Inc) v Minister of Finance [2020] NZHC 1012 at [13] [“Coromandel Watchdog of Hauraki (Inc)”]; citing BNZ Investments Ltd v Commissioner of Inland Revenue HC Wellington CIV-2006-485-697, 7 December 2006 at [15] and Wellington International Airport Ltd v Commerce Commission CP151/02, High Court Wellington, 23 July 2002 [“Wellington International Airport”] at [44]–[45]. This related to the responsibility on judges dealing with judicial review to narrow the issues, and reduce the material placed before the Court to the necessary minimum.
64 Kim v Minister of Justice [2017] NZHC 2109 [“Kim v Minister of Justice (HC)”] at [17] and [19]; and Kim v Minister of Justice (CA), above n 594, at [45].
65 Kim v Minister of Justice (HC), above n 643, at [15]–[18]; confirmed in Kim v Minister of Justice
(CA), above n 594, at [47].
[58] The Court of Appeal disagreed with the High Court. It acknowledged that Parliament had entrusted the Minister (not the Courts) with the final decision as to whether or not the person should be surrendered, however, the fundamental principles and rights contained in the various international covenants ratified by New Zealand constrained the Minister’s decision-making powers by imposing mandatory and discretionary restrictions. The Court noted that all parties in that matter had proceeded on the basis that there were good grounds for concern “as to the observation and protection of human rights in the PRC”.66
[59] The Court of Appeal identified wide ranging concerns and was doubtful that the surrender of Mr Kim could be made in a manner that was compliant with New Zealand’s international obligations.
[60] NZ Steel said it did not suggest this case involved the equivalent of human rights abuses such as in Kim nor that this Court should apply a “anxious” or “heightened scrutiny” to the review of the decisions. However, it argued that applying an ordinary standard of review, MBIE had not taken a hard “look” at the evidence and instead had presented to the Minister, in reliance on MBIE’s understanding of the PRC laws in the absence of context, a “falsely reassuring picture”. Therefore it says the investigations (and so the advice to the Minister) must be regarded as flawed and the result of errors.
[61] The Minister responded saying evaluative decisions in international and domestic trade matters should be treated by the Courts with deference, particularly in a matter such as this involving the exercise of policy and discretion. He noted that the greater the policy content of the decision and the more remote the subject matter of a decision from ordinary judicial experience, the more hesitant the Court must necessarily be in holding a decision to be irrational. The Minister noted that in decisions of a policy laden, esoteric, or security based nature, even greater caution than normal should be shown.67 Where a decision followed a factual evaluative
66 At [272].
67 Wellington City Council v Woolworths New Zealand Ltd (No 2) [1996] 2 NZLR 537 (CA) at 546 and 552; Mihos v Attorney-General [2008] NZAR 177 (HC) at [107]; Thomson v Minister for Climate Change Issues [2017] NZHC 733, [2018] 2 NZLR 160 at [134]; and R v Ministry of Defence, ex parte Smith [1995] EWCA Civ 22, [1996] 1 All ER 257 at 264.
investigation and Parliament had entrusted a decision maker to make the assessment and judgment, it was not for the Court to substitute its own view.68
[62] Both parties relied on CREEDNZ Inc v Governor-General.69 In that case the Court of Appeal held that an error of law would arise where the information or material put before the Minister was so inaccurate that the Minister was led into mistake and failed to take into account the true facts.70 A decision will be flawed if a decision maker was misinformed on “established and material facts”71 or “matters [so] obviously material”72 that a direct consideration of them was required. The Minister must be apprised on “key aspects of the official’s findings”.73
[63] It was common ground that the Minister was entitled to rely on reports of his advisors to ascertain facts and was not required to investigate all matters or be across the finer details himself. He was entitled to rely on “collective knowledge” of a department, in this case MBIE. This was the practical reality of ministerial decision making.74 Nevertheless, the report must properly apprise him of matters, “at least in general terms” to enable him to consider them and if necessary request further information on them.75
[64] In Air Nelson, the Court of Appeal found that a report to the Minister prepared by officials relating to an increase in landing charges at Nelson Airport, had failed to provide the Minister with a “fair and accurate picture of the matters which Air Nelson had raised during the consultation that were relevant to the decision”.76 The Court of Appeal found that the report did not apprise the Minister of Air Nelson’s opposition, nor the reasons for its opposition to the increase in landing charges. In that case, the Minister’s decision was the second decision he had made on the issue as the first
68 Westfield (New Zealand) Ltd v North Shore City Council [2005] NZSC 17, [2005] 2 NZLR 597 [“Westfield”] at [96]; and Kim v Minister of Justice (CA), above n 594, at [45].
69 CREEDNZ Inc v Governor-General [1981] 1 NZLR 172 (CA) at 183 per Cooke J [“CREEDNZ”].
70 Air Nelson, above n 482, at [4], [51] and [53]; citing Daganayasi v Minister of Immigration [1980] 2 NZLR 130 at 149 per Cooke J.
71 Air Nelson, above n 48, at [51]; citing CREEDNZ, above n 769, at 200 per Richardson J.
72 Air Nelson, above n 48, at [50]; citing CREEDNZ, above n 769, at 183 per Richardson J.
73 Air Nelson, above n 48, at [48].
74 State Housing Action Inc v Minister of Housing [2016] NZHC 2924, [2017] 2 NZLR 281 at [34] and [50]; Bushell v Secretary of State for the Home Department [1980] UKHL 1, [1980] 2 All ER 608 at 613.
75 Air Nelson, above n 48, at [54].
76 At [40].
decision had been based on a flawed process. The officials’ report before the Minister when he made the second decision had failed to provide an accurate account of the flaws in the process leading up to the first decision “which was such that the decision should not have been seen as a base from which to begin consideration for the second decision”.77
[65] The High Court in the judgment under appeal in Air Nelson had concluded that the objections by Air Nelson set in correspondence and discussions with the relevant officials were to be treated as if they had been communicated to the Minister. He was not required to personally acquaint himself with that information.78 The Court of Appeal disagreed. The Minister should have been given a “sense of the context in which the first decision was made, and the contents of the correspondence” as well as the basis for the recommended price increase.79 In summary:
[54] The Minister needed to be apprised of these matters by his officials, at least in general terms, so that he could consider them and, if he thought it necessary to do so, request further information about them. These matters were, in terms of CREEDNZ, “so obviously material” that their omission from the Minister’s direct consideration meant his decision was flawed.
[66] The Court of Appeal found the Minister’s decision had been taken based on the official’s report “without cognisance of significant matters”,80 therefore it did not take into account relevant considerations. The decision was quashed.81
[67] The Minister noted that Air Nelson did not apply where a decision-maker had all the information in some form before him. For instance, in New Zealand Pork Industry Board,82 the applicant relied on Air Nelson to argue that the relevant report could not be relied upon as it was defective. In that case the Chief Technical Officer in a report relied upon by the Director-General (the decision-maker) did not refer to the criticisms by an independent review panel of the officials’ earlier report. The High Court dismissed the claim on the basis that the Director-General had had the
77 At [40].
78 At [42].
79 At [53].
80 Air Nelson, above n 48, at [56].
81 At [76].
82 New Zealand Pork Industry Board v Director-General of the Ministry of Agriculture and Forestry
[2012] NZHC 888 [“New Zealand Pork Industry Board”] at [146]–[151].
independent review panel’s report before him and had confirmed in his affidavit he had read it.83 Therefore he was aware of the criticism, so it did not need to be spelt out in the report.
[68] The Minister here noted that mandatory relevant considerations had to be taken into account. These were the constraints on the exercise of the power that Parliament contemplated or must necessarily have intended when it granted the power. However, beyond that everything is left to the judgment of Parliament’s chosen decision maker. The respondent noted that the choices as to permissibly relevant considerations to be taken into account and what weight should be attached to them are for the decision maker. A reviewable error did not simply arise as a result of the applicant being “able to identify pieces of evidence filed which it can argue supports its view an issue, and claim it as a relevant consideration that was not taken into account …”.84
[69] The Minister said that the applicant was seeking to expand the orthodox requirement to have reasons for a decision into a wider concept described as a “culture of justification”. MBIE said that notion did not represent the law in New Zealand. While the phrase “culture of justification” had been used in academic writing in New Zealand concerning whether there had been unjustified discrimination under the New Zealand Bill of Rights Act 1990 (NZBORA),85 the phrase was primarily an academic concept that had attracted judicial comment particularly in Canada.86 The respondent noted Miller II87 and the New Zealand Court of Appeal decision in Ngāti Hurungaterangi were cases involving very different circumstances to those in this case. In this case a thorough and well-reasoned investigation report had been prepared for the Minister by MBIE.
[70] A further submission by the applicant was that the requirement here was that the decision-maker had to be “satisfied”, which imported a standard of proof. The
83 At [150].
84 Mary Moodie Family Trust Board (Inc) v Attorney-General [2015] NZHC 365, [2015] NZAR 379 at [147].
85 Andrew Butler and Petra Butler The New Zealand Bill of Rights Act: A Commentary (2nd ed, LexisNexis, Wellington, 2015) at [6.8.1].
86 Matthew Smith New Zealand Judicial Review Handbook (2nd ed, Thomson Reuters, Wellington, 2016) at [62.3.1] and [62.3.2].
87 Miller II, above n 51, at [60]–[61]; and Ngāti Hurungaterangi, above n 537.
respondent however responded that in evaluative assessments such as were required here a standard of proof test was generally inappropriate.
[71] The respondent cited Patel v Chief Executive of the Department of Immigration:88 a case where the applicants had been required to “conclusively prove” to the decision-maker that a solution to their humanitarian circumstances could not be found in the applicant’s own country. The Court of Appeal held that a standard of proof test was inappropriate for the task of evaluating documentation. It cited Cross on Evidence as follows:89
… the balance of probabilities test applies to the primary facts of a case and to inferences drawn from the primary facts but not to “evaluations”, which are not facts at all. No doubt the supporting documentation contemplated in the rule will contain matters of fact or matters of fact and opinion. At times it may contain statements of opinion only. While it may be permissible to require the facts to be proved to a certain standard of proof the evaluation of those facts which must follow and the evaluation of any opinion which is proffered is not readily susceptible to a standard of proof. The exercise of a judgment, for example, does not freely lend itself to conclusive proof.
The New Zealand Approach
[72] The “culture of justification” is not a concept that has been embraced in New Zealand. The Court in judicial review is concerned with the nature and extent of the power given to the decision maker and whether the decision maker has acted in accordance with that power and with any other limits or requirements imposed by law.
As Cooke J put it in Patterson v District Court Hutt Valley:90
[14] … At its heart judicial review involves the Court exercising a supervisory jurisdiction to ensure that powers are exercised in accordance with law. Usually those powers will be contained in statute or delegated legislation, where the limits of the power are identified as a matter of statutory interpretation. But the legal limits of discretionary powers may also arise from other sources, such as common law requirements. An example is the rules of natural justice, albeit in the present case such requirements are also to be found in the statute. Most judicial review involves the Court assessing whether a decision is made in accordance with the express and implied requirements of the empowering instrument, both in terms of the substantive decision and the procedures followed to reach it. …
88 Patel v Chief Executive of the Department of Immigration [1997] NZAR 264 (CA) [“Patel”].
89 At [271]; citing Cross on Evidence (New Zealand ed) at [5–12]/213.
90 Patterson v District Court Hutt Valley [2020] NZHC 259. (Footnotes omitted).
[15] … In ensuring that a decision is made lawfully there can be substantive as well as procedural requirements. The substantive requirements of the law can also be closely related to the ultimate outcome of a decision such that, as a matter of law, the decision-maker cannot make the decision, or was obliged to make a different decision. The extent of the decision-making freedom given by particular powers ultimately depends on how the statute, or other instrument bestows them. In some cases the legal limits can be quite restrictive, but in others they are not.
[16] Whilst some commentators, and some decisions refer to the intensity of judicial review, or variable standard review, these can also be misleading concepts. In every judicial review case the Court’s role is to review whether a decision is made in accordance with law. In all cases it does so in the same dispassionate way. The intensity with which it performs that task does not change. But the extent to which powers are substantively or procedurally controlled by legal limits varies considerably. It is the nature and extent of the legal controls that vary between cases, not the intensity with which the Court assesses compliance with them.
[73] Simon France J in Coromandel Watchdog of Hauraki (Inc) summarised the approach to be taken saying that it remained a valid proposition that judicial review was intended to be a comparatively simple process of “testing that public powers have been exercised after a fair process, and in a manner, which is both lawful and reasonable”.91
[74] In Secretary of State for Education and Science v Tameside Metropolitan Borough Council,92 Lord Denning in the Court of Appeal, noted that a decision maker falls into the public law error of being “unreasonably wrong” as opposed to being just wrong, when no reasonable person would take the view that the decision maker has taken. In that case, the question was whether it was apparent to the local authority that its proposal in all probability would not work and so acting on the proposal would have resulted in an unreasonable decision in public law terms. Lord Scarman put the test as “in the circumstances prevailing and on the expert advice available, no reasonable authority could have so acted”.93 His Lordship noted that a reviewable error may occur if the decision maker acted under a misunderstanding of or ignorance of an established and relevant fact.94 The House of Lords agreed with the Court of
91 Coromandel Watchdog of Hauraki (Inc), above n 632, at [13]; citing Ministry of Energy v Petrocorp Exploration Ltd [1989] 1 NZLR 348 (CA) at 353.
92 Secretary of State for Education and Science v Tameside Metropolitan Borough Council [1976 UKHL 6, [1977] AC 1014 [“Secretary of State for Education and Science”].
93 At 1032.
94 Secretary of State for Education and Science, above n 920, at 1030.
Appeal that the decision maker had not acted unreasonably. Lord Diplock elaborated on what might constitute unreasonableness saying:95
To fall within this expression [unreasonable] it must be conduct which no sensible authority acting with due appreciation of its responsibilities would have decided to adopt.
The very concept of administrative discretion involves a right to choose between more than one possible course of action upon which there is room for reasonable people to hold differing opinions as to which is to be preferred.
[75] The relevant and irrelevant considerations that must be taken into account or avoided by the decision-maker are generally to be found by interpreting the statute concerned.
[76] The Court of Appeal noted in Casata Ltd v General Distributors Ltd,96 which was considered in Ngāti Hurungaterangi,97 that even an expert tribunal is not required to provide the level of reasoned rebuttal that would be required of a Court. It said:
[90] … In particular we doubt that an expert tribunal is necessarily required to provide a “coherent reasoned rebuttal” of all aspects of the expert evidence in the same way that a non-expert judge may be required to do. After all the arbitrators are chosen for their expertise. We consider that Rogers CJ in Imperial Leatherware Co Pty Ltd v Macri & Marcellino Pty Ltd (1991) 22 NSWLR 653, 657 set out the correct principles:
Elaborate reasons finely expressed are not to be expected of an arbitrator. Further, the Court should not construe his reasons in an overly critical way. However, it is necessary that the arbitrator deal with the issues raised … and make all necessary findings of fact … The reasons must not be so economical that a party is deprived of having an issue of law dealt with by the Court.
[Footnotes omitted]
[77] In Casata Ltd, the Court of Appeal rejected a submission that an expert’s evidence had not been dealt with in sufficient detail by the arbitral tribunal.98 This was in the context of the specific requirement in the Arbitration Act for the award to state the reasons upon which it is based.99 The Judge accepted that the arbitrators had considered all of the evidence, had assessed and determined which evidence was of
95 At [1064].
96 Casata Ltd v General Distributors Ltd [2005] 3 NZLR 156 (CA) [“Casata (CA)”].
97 Ngāti Hurungaterangi, above n 537, at [65] and [69].
98 The experts were giving evidence on retrial assessment in a rent review arbitration.
99 General Distributors Ltd v Casata Ltd [2004] 2 NZLR 824 (HC) at [106]–[107].
most assistance to them and the arbitrators had given some reasons for their overall approach. While the tribunal “could not merely state a preference between competing expert evidence without engaging with that evidence and explaining why the evidence of one side’s experts was preferred”,100 the preference for the evidence it relied on was explicable in the context of the decision as a whole.101
[78] Cross on Evidence102 notes that the terminology and techniques relating to burden of proof103 are not well suited to inquisitorial rather than adversarial processes. The Court of Appeal in Patel104 said that for the most part, the imposition of a standard of proof in administrative decision-making was inappropriate.105
[79] This accords with the Privy Council’s comments in Re Erebus Royal Commission106 that “the decision to make the finding must be based on some material that tends logically to show the existence of facts consistent with the finding and that the reason supportive of the finding, if it be disclosed, is not logically self-contradictory”.
[80] MBIE was not acting judicially. The exercise was inquisitorial not an adversarial contest between parties. The Secretary/Chief Executive who was the investigating authority to whom the enquiry was entrusted was not required to be legally qualified. The officials involved in the investigation and recommendations were experienced and had expertise in international trade matters.107 The Minister says he carefully considered the report and asked questions of the officials.108 It is not disputed that he was entitled to rely on the reports of his advisers and that the “collective knowledge” of MBIE was treated as part of his own knowledge.109 In an
100 Casata (CA), above n 139, at [107].
101 At [131].
102 Cross & Tapper on Evidence (13ed, Oxford University Press, United Kingdom 2018) at 122.
103 In the sense of the persuasive burden.
104 Patel, above n 88.
105 At [272].
106 Re Erebus Royal Commission, above n Error! Bookmark not defined., at [89].
107 Mr McPhail who was a New Zealand Trade Remedies Advisor and on the trade remedies team carrying out the relevant subsidy investigations, has had extensive experience in trade remedies at a New Zealand domestic level and an international level.
108 The Minister, in his affidavit, says that questions he has are either noted on the briefing paper or raised with officials in weekly meetings.
109 CREEDNZ, above n 69, at [200]–[201]. The Minister is not required to go over all the fine details or read all the sources of information: State Housing Action Inc, above n 74, at [34] and [50].
inquisitorial investigation of the nature that MBIE undertook, as long as the requirement for the Secretary/Chief Executive to be “satisfied” is not lost sight of, resort to onus of proof is of little value.110
[81] The SCM Agreement and legislation provided guidance as to approach in relation to the establishment of the underlying facts or primary information upon which the investigator could rely. Under the SCM Agreement it says that the investigating authority must satisfy itself as to the accuracy of the information from the Interested Member (the PRC) and interested parties (including the exporting manufacturers).111
[82] NZ Steel was an interested party having made the application precipitating the investigation and decisions in Hollows and Galv Coil #2. NZ Steel participated as an interested party by the provision of information and submissions, which were considered by MBIE. MBIE was required to comply with the legislative obligations and public law duties of fairness to take account of the information provided by NZ Steel.
[83] If the Secretary/Chief Executive was satisfied that sufficient information was not furnished by the member and the interested parties, the amount of the subsidy would be such an amount as determined by the Secretary/Chief Executive “having regard to all the available information that [they] consider to be reliable”.112 The evaluation and opinions formed by MBIE in reliance on that information is for it to decide. The experience and expertise of the investigating authority will be brought to bear in that process.
[84] I conclude that no standard of proof was imposed on MBIE beyond the requirement it be satisfied on the information it relied upon and acted consistently with the SCM Agreement and the domestic legislation.
110 Riverside Casino Ltd v Casino Central Authority CA113/00 19 December 2000 at [49].
111 SCM Agreement, art 12.5: see above at [17].
112 DCD Act, s 7 and the Trade Act, s 7: see above at [21].
The Statutory Purpose
[85] Related to the standard of proof argument NZ Steel says that the Minister did not properly take into account the purpose of the relevant legislation which in part was to protect New Zealand made products from unfair competition by allowing the import of subsidised products.
[86] Statutory powers are not to be exercised in a way that runs counter to the policy and objects of the relevant Act.113 They are to be exercised to promote the policy and objects of the empowering act in accordance with the provisions conferring with power.
[87] The Supreme Court in Commerce Commission v Fonterra put the approach to interpretation as follows:114
[22] It is necessary to bear in mind that s 5 of the Interpretation Act 1999 makes text and purpose the key drivers of statutory interpretation. The meaning of an enactment must be ascertained from its text and in the light of its purpose. Even if the meaning of the text may appear plain in isolation of purpose, that meaning should always be cross-checked against purpose in order to observe the dual requirements of s 5. In determining purpose the Court must obviously have regard to both the immediate and the general legislative context. Of relevance too may be the social, commercial or other objective of the enactment.
[88] The Supreme Court in Unison Networks Ltd v Commerce Commission reiterated that the exercise of statutory process must be in accordance with the relevant statute:115
[53] A statutory power is subject to limits even if it is conferred in unqualified terms. Parliament must have intended that a broadly framed discretion should always be exercised to promote the policy and objects of the Act. These are ascertained from reading the Act as a whole. The exercise of the power will be invalid if the decisionmaker “so uses his discretion as to thwart or run counter to the policy and objects of the Act”.116 A power granted for a particular purpose must be used for that purpose but the pursuit of other purposes does not necessarily invalidate the exercise of public power. There
113 Unison Networks Ltd v Commerce Commission [2007] NZSC 74, [2008] 1 NZLR 42 at [53]; citing Padfield v Minister of Agriculture, Fisheries and Food [1968] UKHL 1, [1968] AC 997 [“Padfield”] at 1030 per Lord Reid.
114 Commerce Commission v Fonterra Co-operative Group Ltd [2007] NZSC 36, [2007] 3 NZLR 767 (footnotes omitted).
115 Unison Networks Ltd v Commerce Commission, above n 113.
116 Padfield, above n 113, at 1030 per Lord Reid.
will not be invalidity if the statutory purpose is being pursued and the statutory policy is not compromised by the other purpose.117
[54] Ascertaining the purpose for which a power is given is an exercise in statutory interpretation which is not always straightforward. This is partly because legislative regimes differ in the specificity with which they grant powers. In this area the courts are concerned with identifying the legal limits of the power rather than assessing the merits of its exercise in any case. They must be careful to avoid crossing the line between those concepts.
[55] Often, as in this case, a public body, with expertise in the subject matter, is given a broadly expressed power that is designed to achieve economic objectives which are themselves expansively expressed. In such instances Parliament generally contemplates that wide policy considerations will be taken into account in the exercise of the expert body’s powers. The courts in those circumstances are unlikely to intervene unless the body exercising the power has acted in bad faith, has materially misapplied the law, or has exercised the power in a way which cannot rationally be regarded as coming within the statutory purpose.
[89]The purpose of the Trade Act is set out at s 1A, which provides:118
1A Purpose
The purpose of this Act is to enable New Zealand to apply anti-dumping and countervailing duties in accordance with its obligations as a party to the WTO Agreement. Anti-dumping and countervailing duties are intended to prevent material injury or the threat of material injury to an industry, or the establishment of an industry being materially retarded, due to dumped or subsidised goods being imported into New Zealand.
[90] The Minister says New Zealand’s obligations under the WTO Agreement require a broad reading so as to ensure consistency with New Zealand’s WTO obligations to other Member states. This purpose of the Act is a mandatory consideration.119
[91] The Minister submits that the proper discipline of subsidies serves to protect New Zealand’s interests as an exporting nation in dealing with large countries such as China and the United States of America. To protect its interests in the past New Zealand has taken WTO dispute settlement action to prevent the use of subsidies
117 Attorney-General v Ireland [2002] 2 NZLR 220 (CA) at [42] and [43]; and Poananga v State Services Commission [1985] 2 NZLR 385 (CA) at 393–394.
118 Section 1A of the Trade Act was added in the 2017 amendments but it was not suggested that this was a significant change from what would have been the implied purpose of the DCD Act: High Court Galv Coil #1 judgment, above n 4, at [40].
119 Trade Act, ss 1A (Purpose), 11(1)(c) and 13(3) referring to the requirement for determinations to be consistent with New Zealand’s obligations as a member.
that have adversely affect New Zealand exports120 and has argued against the imposition of subsidies in the agricultural sector. It noted that New Zealand also participates as a third party in WTO dispute settlement proceedings.121
[92] In support of a broad approach, the Minister points to the new public interest test inserted in the Trade Act which explicitly requires New Zealand’s consumer and downstream industries interests to be considered before imposing countervailing duties. Prior to the 2017 Amendment Act the imposition of countervailing duties was discretionary.122
[93] The purpose of the legislation enables New Zealand to apply relevant duties but only in accordance with its obligations as a party to the WTO Agreement.123 Duties must be applied consistently with New Zealand’s WTO obligations to other member states as a mandatory consideration.124 That is the primary purpose of the domestic legislation.125 The duties however can only be imposed to prevent material injury or retardation of a domestic industry. This is reflected, for instance, in the prohibition on initiating an investigation unless the Chief Executive is satisfied that it is justified on the evidence in the application that the goods are being subsidised and so are causing material injury to the industry.126 Similarly, the amount of the duty imposed, if
120 The resolution of disputes is in accordance with the Dispute Settlement Understanding Annexure 2 of the WTO Agreement: Art 23(2). The Understanding on Rules and Procedures Governing the World Trade Organisation Annex 2 1869 UNTS 40 (1994) adopted 15 April 1994 entered into force 1 January 1995 [“DSU”]. Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products WT\DS103\AB\R, 27 October 1999 (Report of the Appellate Body), which imposed safeguard measures harming New Zealand domestic industry. See also United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia, WT\DS177\AB\R, 16 May 2001 (Report of the Appellate Body); and United States – Definitive Safeguard Measures on Imports of Certain Steel Products WT\DS258\AB\R, 10 December 2003 (Report of the Appellate Body), which undertook subsidy investigations and imposed countervailing duties without challenge at the WTO.
121 DSU, art 23(2): see above n 119.
122 DCD Act (as at May 2017), s 14.
123 This is in reference to the 1994 agreement, which annexes the SCM Agreement. See also the Trade Act, s 3(1) (Interpretation of “WTO Agreement”). The Minister noted that the Supreme Court had pointed to the fact that reciprocity between WTO member was an important feature of international arrangements: New Zealand Pork Industry Board, above n 82, at [119].
124 Trade Act, s 1A. Relevant references are also made in other parts of the Act to the requirement for the consistency with the WTO Agreement. For instance, under s 11(1)(c) the Minister may terminate an investigation if the imposition of a countervailing duty would be inconsistent with New Zealand’s obligations as a party. Under s 11(1)(3), the Minister must not impose a countervailing duty if to do so is inconsistent with New Zealand’s obligations as a party to the WTO Agreement.
[462] Therefore, the level of subsidy provided to Chinese manufacturers of HSS exported to New Zealand was at de minimis levels. Therefore, no material injury to an industry could be attributed.569 The Minister considered the report and following discussions with officials, made the decision set out at [367] above to terminate the investigation.
[463] NZ Steel also prepared a table of “errors manifested” in relation to this investigation. I do not propose to go through that in detail. The errors alleged are similar in nature to those set out in the table in relation to the Galv Coil #2 investigation. May of the points taken cannot be considered alone but must be taken
566 Hollows Report, above n 3, at [210].
567 Hollows Report, above n 3, at [208].
568 At [218].
569 At [219].
in the context of the totality of the report. The criticisms include the weight MBIE placed on information particularly that provided by the manufacturers, the failure to put more weight on the findings of the overseas investigations; and the fact there was evidence supporting contrary findings including information concerning the influence of the GOC on the Chinese economy and resulting distortions in the market. It challenged MBIE’s failure to undertake a more wide ranging investigation and to obtain more information in the course of the verification visits. These are all matters which go to the weight of evidence and the merits of MBIE’s conclusions. For similar reasons to those set out in my conclusion on the Galv Coil #2 investigation I am of the view the matter raised by NZ Steel are outside the scope of this judicial review and go to the merits of MBIE’s advice of the Minister’s decision.570
[464] My comments on the nature of the investigation in my conclusions on the Galv Coil #2 report apply equally to this report.571 MBIE undertook the investigation in a manner consistent with the SCM Agreement, the domestic legislation following the guidelines provided by the Appellate Body. It has focused on the case before it and on the information relevant to the investigation. It had adequate information before it to reach the conclusions that it did and to provide the relevant advice to the Minister. It provided an accurate report to the Minister including summaries of the information and findings in the overseas investigations and reports. This included information relating to the findings that the GOC influenced the Chinese economy and particularly the Chinese steel and finance industry so to distort it. It provided a reasoned and adequate explanation to the extent required in such a report for its findings on the information before it.572 It made no material errors.
Conclusion — grounds for review
[465] I now consider the various grounds for review which were pleaded in relation to each of these investigations. The six grounds pleaded were common to both investigation claims.
[466]I first consider the Hollows claim.
570 See [282]–[288] and [351]–[361] above.
571 See [283]–[288] above.
572 As required by the Appellate Body. See [100] above.
[467] The first ground was: “unlawfulness in that MBIE asked the wrong question, and improperly elevated the standard of proof”.
[468] This ground was based on a claim that MBIE had asked the wrong question because it excluded or discounted the overseas investigation findings and should have reached its conclusions by applying a standard of proof of the balance of probabilities. As I set out above I am of the view that the nature of the investigation did not lend itself to an analysis in terms of a standard of proof. What was required was that the Chief Executive be satisfied on a number of matters.
[469] I have concluded that MBIE carried out its investigations consistently with its WTO obligations as it was required to do under the purpose and provisions of the legislation. This met the mandatory requirement set out in the purpose section of the Trade Act and implied in the DCD Act.
[470] MBIE took into account the “international consensus” and findings of the overseas investigations to the extent that it was required to do so. It was not required to “distinguish” every report. It would have been acting inconsistently with the SCM agreement if it had relied on those reports and the general literature on the “international consensus” to conclude that the GOC influence distorted the Chinese market without properly taking into account the primary information before it on the issues at hand.
[471] MBIE had sufficient information from the three cooperating manufacturers and other sources to reach the conclusions it did. It tested that information against other information as I have set out above. There was sufficient information for the Chief Executive to make his determinations. The report provided a reasoned and adequate explanation of how the evidence supported the findings.
[472] The second ground of review was: “error of law through misapplication of the proper legal test”.
[473] This largely goes to the “case by case” approach which MBIE applied to the investigation.
[474] NZ Steel says MBIE identified and set out the legal test for determining whether an entity was a public body, as interpreted by the High Court, but did not correctly apply this test to the facts. It says that the information from the manufacturers was not reliable. NZ Steel says MBIE disregarded information from the overseas investigations and unduly focused on formal indicia of control without considering whether the Government in China in fact exercised meaningful control over certain entities.
[475] MBIE applied the test for a “public body” in the investigation based on information available to it.
[476] MBIE in general terms accurately summarised the international reports and commented on them to the extent appropriate in an investigation report. It put the “international consensus” information clearly before the Minister. MBIE was not required to distinguish each of the overseas investigation reports.
[477] MBIE was entitled to put such weight on the information it had before it as it considered appropriate.
[478] MBIE had sufficient information to reach the conclusions that it did. It was acting consistently with the SCM agreement and Appellate Body guidance in taking into account all the information in the case before it including the information from the three cooperating manufacturers.
[479] The third ground of review was that the decision was: “not based on fair, accurate and reliable reports”.
[480] NZ Steel alleges that MBIE failed to appropriately consider: the similarities between the overseas investigation reports and the facts before it; the implications of the non-cooperation of the Government of China; and to provide fair and accurate advice to the Minister in respect of findings of the overseas investigations. It alleged that MBIE mischaracterised the EC 2017 (HRS) investigation by comparing those findings on iron ore, coke and coking coal inputs not being provided at LTAR with the
inputs in the investigation at hand.573 However MBIE had referred to that fact that the provision of the raw material inputs the subject of the EC report was found not to be at LTAR. It had other information as outlined above upon which it relied for its conclusions in relation to hot rolled steel.
[481] MBIE also pleaded that USDOC 2016 (CRS) was mischaracterised by MBIE referring to the use of “adverse facts available” reasoning in relation to SOEs/SIEs in that investigation when USDOC had in fact applied the findings of its US Public Body Memorandum in concluding that the relevant SOEs and SIEs were public bodies.574 MBIE did refer to the use of AFA by USDOC in that report as well as reliance by it on the general information provided in its “Public Body Memorandum” as it related to SOEs. MBIE was required only to summarise the overseas investigations in general terms. It provided sufficient information in the report for the Minister to gain a general view of the findings of USDOC in that decision.
[482] The fourth ground was: “failure to properly investigate in accordance with the Act”.
[483] This ground goes to the weight that MBIE placed on information it obtained in the investigation as well as the reliance by it on the responses of the cooperating manufacturers and its alleged failure to undertake a more wide-ranging investigation.
[484] MBIE undertook the investigation in accordance with the primary statutory purpose of acting in accordance with its WTO obligations including the Appellate Body guidance. It complied with the requirements of the Act. Its investigative approach was a matter for it as was the weight it put on the information.
[485]The fifth ground of review was: “mistake of fact”.
[486] This ground goes to the accuracy of the Report to the Minister. I have outlined the report and the information relied on. In general terms, MBIE provided an accurate
573 EC 2017 (HRS), above n 178.
574 Issues and Decision Memorandum for the Final Determination in the Countervailing Duty Investigation of Certain Corrosion-Resistant Steel Products from the People’s Republic of China (US DOC), C-570-027, 24 May 2016.
report and its advice was based on findings open to it. It was entitled to place such weight as it considered appropriate on the evidence and information to reach its conclusions.
[487] The Minister was provided with a report which was in general terms accurate and covered all relevant information to enable him to make his decision.
[488]The sixth ground of review was: “unreasonableness”.
[489] It is alleged that there was the overwhelming evidence that the Hollows Steel Sections from China were in fact subsidised. Again this ground goes to the weight which MBIE placed on the information it had. It had sufficient information including that obtained from the cooperating manufacturers and gave adequate reasons to support the findings upon which it based the recommendations to the Minister. The report when viewed as a whole provided a reasoned and adequate explanation of how the evidence supported its factual findings and how the findings supported its overall determination.575 It did not act unreasonably in public law terms.
[490]I now turn to the claims in relation to the Galv Coil #2 Reconsideration Report.
[491] In this investigation MBIE had information from one cooperating manufacturer and a full response and the cooperation from the GOC.
[492] The headings of the grounds are the same as the statement as claim is for Hollows.
[493] The first ground of review was: “that MBIE asked the wrong question, and improperly elevated the standard of proof”. I have dealt with this in relation to the Hollows pleading above.576
[494]
575 See [100] above.
576 See [468]–[470] above.
[495] MBIE had sufficient information form the cooperating Interested Member, the GOC, a cooperative manufacturer and other sources to reach the conclusions it did. It tested the information from the GOC and the manufacturer for accuracy as I have set out above.577 There was sufficient information for the Secretary to make his determinations.
[496] The second ground of review was: “error of law through misapplication of proper legal test”. This pleading provides the same detail as the Hollows pleading.
Again I have dealt with this above.578
[497] The third ground of review is that the decision was not based on “a fair, accurate and reliable report”.
[498]This is similar to the pleading in Hollows and has been dealt with above.579
[499] The pleading also specifically alleges that MBIE oversimplified the basis for the foreign jurisdictions “public bodies” findings by suggesting that these findings relied heavily on the circumstances of government ownership without considering whether an entity is in fact exercising governmental authority and functions.
[500] However the report set out in general terms an accurate summary of the overseas reports and the basis for the relevant findings. The overseas reports are difficult to summarise in some respects because they rely on information which is confidential. However, on the whole, MBIE summarised the reports fairly and accurately.
[501] The Galv Coil #2 Reconsideration Report comments on the fact that New Zealand’s recognises China as a market economy while other jurisdictions do not recognise China as a market economy. NZ Steel suggests the issue of “market” or “non-market” economies was not an appropriate reason for New Zealand to disregard or devalue the findings of the overseas investigations and was an irrelevant consideration.
577 See [468]–[470] above.
578 See [473]–[478] above.
579 See [480]–[481] above.
[502] MBIE did not rely on the fact China was regarded by New Zealand as a “market economy” in reaching its conclusion. Its description of the history and the approach of a number of jurisdictions to their investigations was by way of background. That information was not a “consideration” in the public law sense.
[503] The fourth ground of review was: “failure to properly investigate in accordance with the Act”.
[504] The allegations under this heading suggest that there was inadequate information upon which MBIE could reach its conclusions and it should have made further enquiries.
[505] MBIE looked at the totality of the evidence. It had the cooperation of one manufacturer and the full cooperation of the GOC. It was for the Chief Executive to be satisfied on the sufficiency of information.580 It checked the accuracy of the information from both of those sources in the manner it considered appropriate as required under the SCM Agreement.
[506] NZ Steel’s complaint was that all Chinese sources of information were unreliable as the GOC’s influence was pervasive.
[507] MBIE did take into account the “international consensus”. It was carrying out an investigation in a specialised area. It’s report could not be compared to that of a Court or a Tribunal. Detailed reasoning was not required as long as the relevant information was accurately summarised in general terms and there was information upon which MBIE could properly base its findings and recommendations. When viewed as a whole there was sufficient evidence set out in the report for MBIE to reach the conclusions that it did and to provide the relevant advice to the Minister.
[508] The fifth ground of review was: “mistake of fact” and sixth ground was “unreasonableness”. The details under these headings were the same as in relation to the Hollows fifth and sixth grounds of review. I have dealt with those above.
580 Section 7(4) of the DCD Act and the Trade Act.
[509]The claims fail.
Conclusion
[510] MBIE approached the investigation as it was required to do in terms of the New Zealand legislation and the SCM Agreement assisted by the guidance of the Appellate Body. MBIE had considerable discretion to define its investigating procedure.581 However, it was required to:
(1)carry out a case specific analysis of the relevant facts on the issues before it in the investigation.582
(2)make its findings on “positive evidence” supported by a “reasoned and adequate explanation”.583
(3)take into account the information from the Interested Member and Interested Party satisfying itself as to the accuracy of the information supplied by them.584
(4)in cases where the Chief Executive/Secretary is satisfied sufficient information has not been furnished, they must make the determination “having regard to all available information that the [Chief Executive/Secretary] considers to be relevant.”585
[511]It was also required to bear in mind:
(1)there is no statutory provision allowing MBIE to use “adverse facts” or presumptions based on non-specific information or general indicia of control by government, as there is in other jurisdictions.586
581 See above at [185] above.
582 See above at [104].
583 See above at [104].
584 See [106] above and art 12.5 of the SCM Agreement.
585 Section 7(5) of the Trade Act and the DCD Act.
586 Section 7(5) of the Trade Act and the DCD Act.
(2)use of general information from other findings or reports in the absence of information specific to the investigation is likely to be inconsistent with the SCM Agreement.587
[512] MBIE closely adhered to the guidance and the provisions of the SCM Agreement and domestic legislation.588
[513] The “international consensus” and the findings of the overseas jurisdictions were put squarely put before the Minister by MBIE. However it was for MBIE to assess the information it had on the issue at hand. It could not rely on general information on the influence of the GOC and distortions in the economy. It was for MBIE and the Minister to determine how the investigations were undertaken, and the weight to be placed on the information.
[514] The approach MBIE took was no doubt informed by New Zealand’s international trade policy. The factual and evaluative investigations involved have been entrusted to MBIE and the decision to the Minister. Those investigations, findings and resulting decision involve the application of experience and expertise that this Court does not have. It will not interfere with MBIE’s investigative approach in the absence of public law error.
[515] The Court is acting in its supervisory jurisdiction to review the process, the report, the MBIE recommendations and Minister’s decision for public law errors. Sometimes the lines between a merits review and a judicial review do appropriately blur. But here I consider that NZ Steel seeks to engage in a detailed merits review and in particular challenges the weight placed on various items of information by MBIE and the merits of the decision by the Minister.
[516] The claims, while formulated under different grounds of review, had an underlying theme that the Government of China is viewed by other countries as influencing the economy to such an extent as to distort all aspects of China’s economy and market. The claim is that this “international consensus” was not given sufficient
587 See [129] above.
588 See [236] above.
weight by MBIE in its reports or by the Minister because those matters were not put before him clearly enough.
[517]The applications for judicial review are dismissed.
Costs
[518] There appears no reason why costs should not follow the event. If counsel are unable to agree, the respondent should file a memorandum within 14 days of the date of the judgment, the applicant has a further 14 days to respond and any reply should be filed within a further seven days.
Grice J
Solicitors:
Chapman Tripp, Wellington for the Applicant. Crown Law Office, Wellington for the Respondent.
Annexure 1
Annexure 2 – Acronyms and Overseas Investigation Reports
Abbreviation Term ABC Agricultural Bank of China ADRP Australian Anti-Dumping Review Panel AFA Adverse facts available Angang Angang Steel Anti-Dumping
Agreement
WTO Agreement on Implementation of Article VI of the
General Agreement on Tariffs and Trade 1994
Baosteel Baoshan Iron and Steel Co Ltd BoC Bank of China Changshu Changshu Everbright Material Tech Limited China The People’s Republic of China CBRC China Banking Regulatory Commission CBSA Canada Border Services Agency CCP Chinese Communist Party CRS Corrosion resistant steel DCD The Dumping and Countervailing Duties Act 1988 DSU Dispute Settlement Understanding. Understanding on Rules and Procedures Governing the World Trade Organisation Annex 2 1869 UNTS 40 (1994) (adopted 15 April 1994
entered into force 1 January 1995) [DSU].
EC European Commission EFC Effective Facts and Conclusions Report: prepared and provided by MBI to interested parties setting out the essential facts and conclusions that would likely form the bases for any fuel determination. Parties were invited to provide comments on the EFC before the Final Report was
presented.
EU European Union EXIM Export Import Bank of China Galv Coil #1 Galvanised Steel Coil from China Investigation Final Report
(July 2017)
Galv Coil #2 Galvanised Steel Coil from China Reconsideration
Investigation Final Report (June 2019) report
FIR Foreign Investigation Reports Galv Galvanised steel GATT General Agreement on Tariffs and Trade GOC The Government of the People’s Republic of China GOI The Government of India Hollows or HSS Hollow steel sections investigation. Final report (March
2019)
Huangshi Huangshi Sunny Strip Aluminium and Zinc Coated Ltd Huijin Central Huijin Investment Ltd an organisation through
which GOA can act as shareholder in the major banks
HRS Hot rolled steel ICBC Industrial and Commercial Bank of China LTAR Lower than adequate remuneration
LIBOR London Interbank Offered Rate: a benchmark rate of which
global banks lend to one another in the international market for short-term loans published by the Intercontinental
Exchange.
MBIE Ministry of Business, Innovation and Employment Minister Minister of Commerce and Consumer Affairs NDRC National Development and Reform Commission NZ Steel New Zealand Steel Limited OCS Organic coated steel PBOC The People’s Bank of China PRC People’s Republic of China Reb/Rebar Reinforced bar RFI Request for information RMB Renminbi. The Chinese currency. SASAC State-owned Assets Supervision and Administration
Commission
SCM Agreement Annexure to the WTO Agreement on Subsidies and
Countervailing Measures
Shougang Shougang Jingtang United Iron and Steel Co SIE State-invested enterprise SOCB State-owned commercial bank SOE State-owned enterprise US United States of America USDOC United States Department of Commerce WTO World Trade Organisation WTO Agreement The Agreement establishing the World Trade Organisation
adopted at Marrakesh on 15 April 1994
Zong Cheng Jiangyin Zong Cheng Steel Co Ltd
Abbreviation Document Australia
ACBP 193 (Gal) Australian Customs and Border Protection Service
Alleged Subsidisation of Zinc Coated Steel and
Aluminium Zinc Coated Steel, Report No 193, 28 June 2013
ADRP 2013 (Gal) Australian Anti-Dumping Review Panel Review of Decisions Regarding Dumping Duties and
Countervailing Duties for Zinc Coated (Galvanised) Steel and Aluminium Zinc Coated Steel Exported from thePeople’s Republic of China, 15 November 2013.
AADC 237 (Sil) Australian Anti-Dumping Commission Alleged Subsidisation of Silicon Metal Exported from the People’s
Republic of China, Report No 237, 7 May 2015
AADC 322 (Reb) Australian Anti-Dumping Commission Alleged Subsidisation of Steel Reinforcing Bar Exported from the
People’s Republic of China Report No 322, 19 September 2016
ADRP 208 (Hol) Australian Anti-Dumping Review Panel Hollow Structural Sections Exported from the People’s Republic of China, Republic of Korea, Malaysia and Taiwan,
ADRP Report No 63, February 2018
Canada CBSA 2014 (Reb) Canada Border Services Agency Certain Concrete
Reinforcing Bar Originating in or Exported from the People’s Republic of China, 4218-39 CV/138,
23 December 2014
CBSA 2016 (CAS) Canada Border Services Agency Certain Carbon and Alloy Steel Line Pipe from China, NQ-2015-002,
10 March 2016
European Commission EC 2013 (OCS) Council implementing regulation (EU) No 2015/2013 Imposing a Countervailing Duty on Imports of Certain Organic Coated Steel Products Originating in the
People’s Republic of China OJ L 73/16, 15 March 2013
EC 2017 (HRS) Commission implementing regulation (EU) No 2017/969 Imposing Definitive Countervailing Duties on Imports of Certain Hot-Rolled Flat Products of Iron, Non-Alloy or other Alloy Steel Originating in the People’s Republic of
China, OJ L 146/17, 8 June 2017
EC Staff Working Document Commission (EU) Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the Purposes of Trade Defence Investigations, 19 December 2017. Reconsideration final report at [677] CBD tab 42. Council implementing regulation (EU) No 2015/2013 Imposing a
Countervailing Duty on Imports of Certain Organic Coated Steel Products Originating in the People’s Republic of China OJ L 73/16, 15 March 2013
United States USDOC 2016 (CRS) Issues and Decision Memorandum for the Final
Determination in the Countervailing Duty Investigation of Certain Corrosion-Resistant Steel Products from the People’s Republic of China (US DOC), C-570-027,
24 May 2016
USDOC 2017 (CAS) Issues and Decision Memorandum for the Final
Determination in the Countervailing Duty Investigation of Certain Carbon and Alloy Steel Cut-to-Length Plate from the People’s Republic of China (US Doc),
C-570-048, 17 January 2017
World Trade Organisation
DS296 US Countervailing Duty Investigation on DRAMS. DS 206: Appellate Body Report on Dynamic Random Access Memory Semi Conductors (DRAMs) from Korea. WT/DS 296/AB/R. Adopted 20/07/2005. DSR 2005: XVI p
8131 at [186].
DS95 Mexico – Definitive Anti-Dumping Measures on Beet and Rice – Complaint with Respect to Rice WT/DS295/AB/R;
29 November 2005 (Report of the Appellate Body)
DS299 European Communities – Countervailing Measures on Dynamic Random Access Memory Chips from Korea
WT/DS299, 17 June 2005 (Report of the Panel)
DS379 United States – Definitive Anti-Dumping and Countervailing Duties on Certain Products from China WT/DS379/AB/R, 11 March 2011 (Report of the
Appellate Body)
DS436 United States – Countervailing Measures on Certain Hot- rolled Carbon Steel Flat Products from India
WT/DS436/AB/R, 14 July 2014 (Report of the Panel)United States – Countervailing Measures on Certain Hot-rolled Carbon Steel Flat Products from India WT/DS436/AB/R, 8 December 2014 (Report of the
Appellate Body)
DS437
(Panel)
DS437
(Appellate Body AB)
DS437
(Panel Comp)United States – Countervailing Duty Measures on Certain products from China WT/DS437/R, 14 July 2014 (Report of the Panel)
United States – Countervailing Duty Measures on Certain products from China WT/DS437/AB/R, 18 December 2014 (Report of the Appellate Body)
United States – Countervailing Duty Measures on Certain Products from China WT/DS437/AB/R, 21 March 2018 (Panel Compliance Report)
DS437
(Appellate Body Compliance)
United States – Countervailing Duty Measures on Certain
Products from China 17 July 2019 (Report of the Appellate Body) AB/RW WT/DS 437 (Compliance Act 21.5)
4
0
1