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OEA/Ser.L/V/II.98
REPORT Nº 47/97
TABACALERA BOQUERÓN S.A.
PARAGUAY
October 16, 1997 I.
BACKGROUND Petitioners 1.
The case was presented on behalf of Tabacalera Boquerón S. A., and its
owners, the shareholders Julio Domínguez Dibb (Paraguayan), Karen Wilson Smith
(English), Diana Domínguez de Rolón (Paraguayan), Astrid Domínguez de Scavone
(Paraguayan), and Alejandro Domínguez (Paraguayan) who own all the voting
shares. According to the lawyer of the petitioners, the company is a family
business, husband, wife and children, and the case alleges an "aggression
against their assets." II.
FACTS 2.
Tabacalera Boquerón S. A., was founded in 1985, and is today the
undisputed leader in tobacco sales in Paraguay, with a production of 1,500 packs
of cigarettes a day, and with sales of approximately 30,000 cartons a month.
The company has registered certain brandnames in Paraguay in accordance
with existing legislation. On
August 6, 1992, the company registered the cigarette brandname "RICH."
It must be pointed out that until that time there were no cigarettes with
that or any other similar name. 3.
The Ritz Hotel Limited, an English company, registered their brandname
"Ritz" for certain hotel goods and merchandise and requested the
inclusion of the brandname "RITZ" for articles classified in class 34
(unprocessed or manufactured tobacco, smoking related articles, matches, etc.),
and although they sold cigarettes with the "RITZ" brandname as
souvenirs, they were never involved in the production of cigarettes since the
registration of the brandname on July 27, 1988 (Concession 129.329).
4. On
August 18, 1993, the company Tabacalera Boquerón S. A. registered their
brandname "Ritz Boquerón," for the production of cigarettes, and
proceeded with the stipulated publication in the newspaper "Correo
Comercial." After that date
one could challenge the brandname for 60 days.
5. On
September 20, 1993, Mr. Hugo T. Berkmeyer, in his role as agent of Souza Cruz
S.A. (in accordance with a power of attorney dated May 18, 1993), requested the
registration in the Directorate of Industrial Property and the transfer of the
"Ritz" brandname. The
owner of the brandname, Ritz Hotel Limited, sold and transferred said brandname
to Souza Cruz S.A, headquartered in Rio de Janeiro, Brazil, for a nominal value
of US$ 10.00
6. The
Brazilian company Souza Cruz S.A. registered the brandname in Paraguay on
September 24, 1993. The petitioners
point out that said registration was invalidated due to serious irregularities,
since,
- The power of attorney
given by Souza Cruz S.A. to Dr. Hugo T. Berkemeyer lacks certain formalities set
forth in Paraguayan law, such as failing to inform in the certifications if the
issuers had the authority to represent the firm as well as to give powers to
third parties.
- On the other hand, the
petitioners point out that the document for transferring the brandname, presents
peculiar characteristics, since although the firm, The Ritz Hotel Limited,
headquartered in 17 Waterloo Place in London, appears as principal, in the
version presented for registration, the signature of Mr. Frank J. Klein appears,
as Chairman of the aforementioned firm, fully empowered to carry out the
transfer of the brandname. Nevertheless,
next to his signature and at the bottom of the document is a seal that says, The
Ritz Hotel Limited (Paris), and an address, 15 Place Vendome in Paris, (France),
from which the petitioners infer that it is not the same company that initially
registered the brandname.
- According to Paraguayan
law, the change of address of someone who has registered a brandname must be
communicated to ensure its validity vis-a-vis third parties.
- Another irregularity
pointed out by the petitioners is that the signature of the purchaser or agent
is nowhere in the document.
- Finally, it is pointed out
that the price of US$ 10.00 is a ridiculous sum for a brandname of that nature.
- It is also pointed out
that the cession was carried out through private documents, failing to observe
the formalities stipulated by Paraguayan law for transfers of this nature to be
carried out in Paraguay, which must be effected through public documents.
- The petitioners add that
Paraguayan law stipulates that every transfer of brandnames after registry, to
ensure their effectiveness vis-a-vis third parties, must be published for two
consecutive days in a large circulation newspaper in the capital of the country
and once in the Industrial Property magazine.
In this regard, the two publications stipulated by law had been carried
out in the "Informaciones" newspaper, which, according to the
petitioners, has a circulation of 40.
- It is alleged that 60 days
were not observed to oppose registration, a time frame that would be applied by
analogy according to the petitioners.
7. The
granting of the "Ritz" brandname was registered on behalf of Souza
Cruz S.A. on December 24, 1993, giving complete rights to that company, through
a marginal entry to the deed of title, although, as it is pointed out, the
transfer would be only for tobacco, cigarettes and derived products and not all
the brand rights registered on behalf of The Ritz Hotel Limited.
8. The
petitioners point out that the aforementioned situation left them in a situation
doubly defenseless since, first, given the lack of compliance with the
obligation to publish, they were not able to oppose the transfer on time and,
second, their brandname "Rich" was endangered, since once the transfer
of the brandname "Ritz" was registered, the new owner contested the
brandname "Rich," owned by the petitioners.
9. On
December 27, 1993, Tabacalera Boquerón S.A. submitted a note to the Ministry of
Industry and Commerce requesting the nullification of said transfer.
10. The next
day, December 28, 1993, the Legal Advisor of the Ministry, Dr. Juan Jesus
Bibolini, submitted a note pointing out that in his opinion the requested
nullification was proper, since it was an imperfect transfer that lacked the
necessary and essential signature of the buyer.
11. On the
basis of the report of his legal advisor, the Ministry of Industry and Commerce
promulgated Resolution No. 6 on December 24, 1994, stipulating the cancellation
of the registration of the transfer in the Directorate of Industrial Property
that was listed in the marginal entry 129.329 on June 27, 1988, of the
"Ritz" brandname class 34 in favor of Souza Cruz S.A.
12. On
January 26, 1994, Souza Cruz S.A., through his lawyer Luis A. Salmodi, submitted
a note to the Ministry of Industry and Commerce, filing a "writ of
revocation" against Resolution No. 6, alleging that since no transfer had
been given of the presentation made by Tabacalera Boquerón S.A., it had been
left defenseless, and, therefore, this was a violation of the Paraguayan
Constitution as regards due process. He
also alleged the nullification of the Resolution since the appropriate remedy
against the registration of the "Ritz" brand was the "writ of
appeal and nullification" and it denied that the registration could be
annulled administratively, since the procedure employed to promulgate the
Resolution was invalid. He requested its abrogation since it was contrary to
authority and to roll back the procedure so as to be able to grant the transfer
of the note impugning the resolution.
13. The
petitioners point out that from the moment that the Ministry found for the
appellant, it assumed a jurisdictional function which it does not have.
According to Chapter VII of Title I of Law No. 751/79, once the
administrative procedure has been finalized and once a well-founded resolution
of the Ministry of Industry and Commerce has been issued, pursuant to an opinion
of the legal advisor, one can only present an administrative law petition
against the final resolution during the following 10 days, submitting it to the
Auditing Office.
14. Faced
with this new petition, the Legal Advisor of the Ministry realized that it was
necessary to submit a copy of the document to Souza Cruz S.A., to avoid the
aforementioned situation of defenselessness (Article 17 of the Paraguayan
Constitution), so that on January 27, 1994, Resolution No. 7 was enacted in
which the Minister of Industry and Commerce personally revoked aforementioned
Resolution No. 6.
15. To said
Resolution Tabacalera Boquerón S.A. filed a writ for Revocation and Annulment,
since Resolution No. 6 of the Ministry had a definitive character and,
therefore, the only proper course was to follow a contentious administrative
process. In response, the Ministry enacted Resolution No. 12 on
February 4, 1994, confirming Resolution No. 7.
16. On March
24, 1994, the Minister issued Resolution No. 32 (final), in which, based on
article 38 of Law 751/79, the Minister understood that the transfer of the brand
“Ritz” does have as its purpose or result to confuse the public as to its
nature, origin, etc., and added that Souza Cruz S.A. had been manufacturing
“Ritz” cigarettes for years, (the petitioner claims that it is in Brazil
where they have registered the brand) and is the legitimate owner of the
“Ritz” brand in Paraguay. Thus, the Minister accepted a statement made
through a private instrument, apparently made September 15, 1993 by the Board of
Souza Cruz S.A., accepting the transfer of the “Ritz” brand.
17. Tabacalera
Boquerón S.A. filed an administrative law suit against Resolution No. 32, which
was submitted to the Auditing Office, Court No. 1.
Said suit was dismissed because the plaintiff did not have standing,
pursuant to Judgment No. 126 on December 29, 1994.
18. Against
said decision a Writ of Clarification was filed, which was overturned by
Judgment No. 1 on February 8, 1995. As
a result the petitioner filed a writ of Appeal and Nullification before the
Supreme Court.
19. On
December 27, 1995, the Supreme Court by Judgment No. 440, dated December 27,
1995, decided to declare the Nullification Remedy void, and to uphold Judgment
No. 126 dated December 29, 1994, enacted by the Auditing Office, First Court,
and of Judgment No. 1 of February 8, 1995, issued by the same tribunal.
The petitioner was notified of the decision of the Supreme Court on March
12, 1996, exactly 6 months prior to the presentation of the present complaint).
20. Finally,
Tabacalera Boquerón S.A., filed a petition of Unconstitutionality in the suit
“Tabacalera Boquerón S.A. v. Resolution No. 32 dated March 24, 1994, enacted
by the Ministry of Industry and Commerce,” which was rejected “in limine”
by a judgment issued March 27, 1996, of which the petitioner was notified on
April 11, 1996.
III. PROCEEDINGS
BEFORE THE COMMISSION
21. The
complaint was filed with the Inter-American Commission on September 11, 1996,
six months after a final sentence was handed down by the Paraguayan Supreme
Court in the suit Tabacalera Boquerón S.A., v. Resolution No. 32 dated March
24, 1994, of the Ministry of Industry and Commerce.
Alleged Violations
22. The
petitioners point out that they have been victims of a violation of their rights
as set forth in Articles 16 (Freedom of Association), 21 (2) (Right to
Property), 24 (Right to Equal Protection) and 8 (1) (Right to a Fair Trial), in
the American Convention on Human Rights. The
complaint is based on the alleged violation of the Right to Property,
specifically: "In the case that concerns us, Tabacalera Boquerón S.A. and
its shareholders were denied the legitimate use of the brandname, through the
illegitimate denial thereof by the Paraguayan authorities, in an act that
constitutes an illegal privation of property, which is clearly prohibited by
paragraph 2 of Article 21 of the above mentioned American Convention."
The petitioners seek compensation pursuant to Article 10 of the above
-mentioned Convention.
IV. ADMISSIBILITY
23. The
petition complies with the formal requisites of admissibility established in
Article 46 of the Convention:
(a) The
petitioner has exhausted internal legal remedies available under Paraguayan law.
(b) The
petition was presented within the time frame established by Article 46 (b) and
Article 38 of the Commission’s Regulations (the petitioner was notified of the
Supreme Court’s decision on March 12, 1996, and the petition was received by
the Commission September 11, 1996.)
(c) The
matter at hand is not pending before any other international procedure.
(d) In
the petition, all the formal requisites of Article 46 (c) have been complied
with insofar as name, nationality, profession, address and the signature of the
legal representative of the entity submitting the petition.
24. As far
as the standing of the petitioner to present a case before the Commission:
The Preamble of the American Convention on Human Rights as well as the
provisions of article 1 (2) resolve that "for the purposes of this
Convention, `person' means every human being," and that consequently the
system for the protection of human rights in this hemisphere is limited to the
protection of natural persons and does not include juridical persons.[1]
25. In this
case, the petition has been filed on behalf of Tabacalera Boquerón S.A., and
its shareholders. In this sense and
according to the aforementioned jurisprudence, the Commission has pointed out
that the protection afforded by the inter-American human rights system is
limited to natural persons, and excludes legal entities.
Therefore, Tabacalera Boquerón S.A., as a legal entity, cannot be a
"victim" of a human rights violation in the inter-American system,
since such bodies are not protected by the Convention.
It would, perhaps, be advisable to analyze the situation of individual
shareholders, in this case the owners of the company, who also claim to be
victims in this case.
26. In this
regard, the shareholders of Tabacalera Boquerón S.A. point out that they have
been victims of an attack against their right to property, which is protected by
the Convention in Article 21. In
this regard and after a more detailed analysis of the rights specifically
alleged, it must be pointed out that the Convention in the aforementioned
article limits the protection of the right to property to individual persons.
The Commission stated: “Consequently, in the inter-American system, the
right to property is a personal right. The
Commission is empowered to vindicate the rights of an individual whose property
is confiscated, but is not empowered with jurisdiction over the rights of
judicial beings, such as corporations or as in this case, banking
institutions."[2]
27. Although
in this case we are not dealing with a banking institution, it is also true that
both are corporations, that is to say, legal entities, and in the case in
question, the party directly affected by the judicial decisions was always
Tabacalera Boquerón S.A. and it was also Tabacalera Boquerón S.A. which
suffered “damages to its assets.” During
domestic judicial proceedings, the shareholders were never mentioned as victims
of any violation, there were never any initiatives to protect their rights;
therefore, just as in the aforementioned case, what is at issue is not the
individual property rights of shareholders, but the commercial rights and
“assets” of Tabacalera Boquerón S.A., which are not protected by the
jurisdiction of the Inter-American Commission on Human Rights.
28. According
to Article 47 (b) of the Convention, the Commission will declare a petition
inadmissible when it does not state facts that tend to establish a violation of
the rights guaranteed by the Convention.
29. Regarding
the competence of the Commission in the matter at hand, the Commission is of the
view that this conflict involves proceedings of a commercial nature in which
human rights have not been violated. When
analyzing the merits of the petition, notwithstanding the nature of the parties,
all the accompanying documents lead to the conclusion that the petition is
within the framework of private international law and international commercial
transactions, especially trademark law where no violation of human rights of
natural persons has been established, for which reason the subject matter of
this complaint is not within the competence of the Commission, according to the
Convention and its Regulations.
30. Regarding
the basic allegation insofar as the right to property of the shareholders, the
legal meaning of word “property” refers to "the right to dispose of a
thing in any legal way, to possess it, to use it and to exclude everyone else
from interfering with it."[3]
Property has been defined as "that dominion or indefinite right of
user, control, and disposition which one may lawfully exercise over particular
things or objects."[4]
31. The
present petition, refers to a commercial matter, specifically one dealing with
brandnames, where two companies have disputed the use of the brandname
“Ritz,” and through different procedural steps in the Paraguayan legal
system, the Supreme Court in a final decision decided in favor of one of the
companies, dismissing the claim of the petitioners.
Once Tabacalera Boquerón S.A.'s attempt to obtain the use of the
brandname ended, by means of the Supreme Court's rejection of the writ of
unconstitutionality presented by the company, the judgment in favor of Compania
Souza Cruz S.A. was no longer appealable.
32. In the
case, after analyzing the concepts of property with regards to Article 21 (2) of
the Convention, "[N]o one shall be deprived of his property except upon
payment of just compensation, for reasons of public utility or social interest,
and in the cases and according to the forms established by law," it must be
pointed out that from the petition one does not derive that the petitioners, in
this case the shareholders of Tabacalera Boquerón S.A., (since the company
itself, as a legal entity, cannot be protected against human rights violations
in the inter-American system) were victims of a violation of their right to
property.
33. Therefore,
the Commission is of the view that the conflict regarding the right to property
regarding the brandname of cigarettes, between two companies with limited
liability of a commercial nature, does not constitute, prima facie, a
violation of Article 21 of the Convention, and consequently, there is no reason
to impute international responsibility to the State of Paraguay.
V.
CONCLUSIONS
34. The
Commission concludes that the petition fulfills the formal admissibility
requirements of Article 46 of the Convention.
35. Nevertheless,
from the analysis of the documents submitted and from the petition, the
Commission has declared the complaint presented against the Paraguayan State
inadmissible ratione personae given the lack of jurisdiction of the
Commission over the rights of legal entities and over operations or legal acts
of a commercial nature. Article 47
(b) of the American Convention stipulates:
The Commission shall consider inadmissible any petition or communication
submitted under Articles 44 or 45 if:
...
b. any
of the requirements indicated in article 46 has not been met;
36. With
regards to the Tabacalera Boquerón S.A. company, it cannot be a victim of a
violation of the Convention within the inter-American system for the protection
of human rights, given its legal nature. At
the same time, regarding the shareholders of the company, it must be pointed out
that all the legal actions undertaken with the aim of exhausting domestic
remedies were carried out by the legal entity Tabacalera Boquerón S.A., and in
the attached documents there are no indications that any legal actions were
taken in the paraguayan courts on behalf of the shareholders, thus not
exhausting internal remedies on their behalf. 37. Given the aforementioned considerations of fact and law, the Commission has decided that the case is inadmissible ratione personae in accordance with Article 47 (b) of the Convention and Articles 31 and 41 of the Regulations of the Inter-American Commission on Human Rights; and decides to publish the present report in its Annual Report to the General Assembly of the OAS. [
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