• Inter-American Society Game Technology Ltda. (IASGT) is a Colombian company dedicated to provide services of renting or exploiting slot machines, games for casinos and game rooms. It is part of the Program of Liberalization of Trade in Services of the Andean Community. According to article 80 c) of the Cartagena Agreement, this society is authorized to operate directly and by the opening of locals in any of the member states under non-discriminatory conditions and without restricting its access to the services market.
• The Republic of Ecuador issued three Decrees (Decree 3400, 1186, and 355), which, according to IASGT, go against the Services Liberalization Program and unduly regulate substantial aspects related to the delivery of gambling services.
• IASGT argues that the Decrees violate Andean legislation because: they establish a barrier to the entrance of gambling services and slot machines; the limitations are disproportionate because they do not guarantee public morality or prevent gambling problems; they are privileging suppliers of the service in game rooms (mechanical bingo) and going against the suppliers of the service in electronic slot machines rooms.
• IASGT argues that taking into consideration the rules from the WTO regarding the similarity of the services, it is evident that the activities of casinos and game rooms are direct competitors; therefore the services should be treated equally, without discrimination. Otherwise, they would be violating Andean legislation and the multilateral norm from the WTO.
• Ecuador argues that it is not violating Andean legislation; that the measures adopted are not restricting the access to the gambling services market; that the measures adopted are equally applied to nationals and foreigners, therefore IASGT is not being discriminated.
• One of Ecuador’s main arguments is that the measures adopted regarding slot machines are aimed at protecting morality; preserve public order, life and health of people, and Andean legislation authorizes the member states to legislate with those aims. Given the damages that gambling can cause, each State can decide how to regulate and restrict gambling activities, especially slot machines.

Issues:

• Specific Issues for Attention

• The decision taken by the Court is specifically founded on the argument that Ecuador is protecting the health and public order of its population through the measures adopted, which the claimant argued are restricting the trade of services against the legislation of the Andean Community.

• Procedural Practice Issues

Jurisdiction: Court of Justice of the Andean Community

Standing: According to article 25 of the Treaty Creating the Court of Justice of the Andean Community, natural and legal persons affected in their rights have standing before the Court. The Court recognized that IASGT has standing before the court. IASGT started the preliminary procedure before the General Secretariat of the Andean Community requiring its pronouncement on the issue. The General Secretariat issued a non-compliance opinion with which IASGT was enabled to go to the Court. According to the Andean Legislation, if a party has a ruling from the General Secretariat on an issue it can start an Action for Non-compliance before the Court of Justice of the Andean Community. (Articles 23, 24 and 25 of the Treaty Creating the Court of Justice of the Andean Community)

Evidence:
• Expert opinion was offered regarding problem gambling, its characteristics, factors that triggers the disease, the risks of slot machines, among others.
• It concluded that because it is the fact and the environment that surrounds it what triggers the disease, it is not necessary to differentiate between a casino, a bingo and a game room, all represent the same risk. This means that it is necessary to adopt measures to protect the mental health of the community. The less the places and possibilities for gambling, the more protected people and society can be.

• Decision:

• The court decided to overrule the demand.

• Reason:

• To determine if the measures adopted by Ecuador against the operation of slot machines are violating Andean legislation, the Court evaluated:
o If the measures adopted impact the basic principles of trade in services.
o If the measures adopted fit the exceptions authorized within the Andean Community.
• In order to do this the Court determined:
o What is gambling (as a disease) and the differences between bingo rooms and slot machines as trigger of gambling: to this issue, the Court reasoned that regarding the type of game and its impact upon gambling, countries can adopt measures for its control like different regulations and warnings.
o If the measures adopted meet with the necessity and proportionality criteria to be considered among the second group of exceptions to the liberalization of the trade of services: to this issue, the Court concluded the measures are necessary to protect health and public order (supplemented with other regulations). The Court recognized that Ecuador is not absolutely prohibiting slot machines, but restricting their operation to casinos in hotels, as a measure to control its access to minors. The Court argues that these measures are commensurate with the aims pursued.
• The Court, considering the evidence presented, arrive to the conclusion that gambling can bring serious individual and social consequences for the public order and health, therefore, it is justified that country members adopt measures for their protection. It is valid to adopt a differential treatment to slot machines.
• The Court found no evidence that proved the measures are aimed at protecting national operators or that they are a protectionist mechanism.
• The Court found that the measures adopted by the Republic of Ecuador are subject to the legislation that the Andean Community allows the country members to issue regarding liberalization of services, having in mind that one of the main objectives of the Cartagena Agreement is to improve the standard of living of the Community’s population. Therefore, the Court dismissed the complaint.

• Performance:

• There is no further proceeding regarding the case at hand.
• The defendant required extension and explanation of the judgment but the Court overruled the request.