------an analysis of the dsu in positivism
by
chengwei, liu
foreword
this book is a systematically selected compilation of reports issued by various panels and the standing appellate body, then adopted by the dsb under the wto jurisdiction by the end of may 2002, in category of subjects such as causes of action, initiation of panel proceedings, function of panels, rules of evidence and special rules governing anti-dumping disputes, etc., which are in most cases ruled as “preliminary issues” or “procedural objections”. however, this book is not intended to be exhaustive. it deals only with issues in dispute settlement proceedings under the wto jurisprudence that the author considers the more important, where such rules are mainly concerned as art. xxiii of the gatt 1994; arts. 3, 4, 6, 7, 10, 11, 13, 21.5, 23, 26 of the dsu; arts. 17.4, 17.5, 17.6 of the ad agreement and arts. 31, 32 of the vienna convention and so on.
moreover, this book is intended to be descriptive and positive rather than prescriptive and theoretical. most of the author’s analysis benefits much from the precise and logically organized reports by panels and the appellate body, administered by the dsb under the wto jurisdiction. it must be made clear that these reports do not constitute binding “subsequent practice” referred to in article 31 of the vienna convention on the law of treaties, nor do they operate as stare decisis, panels and the appellate body are therefore not bound by past reports. nevertheless, it does be the case demonstrated by the dsb practice that, relevant reasoning in a particular case has been cited or followed frequently by another panel or confirmed by the appellate body in subsequent cases.
as ruled by the appellate body in japan-taxes on alcoholic beverages (ds44), “[a]dopted panel reports are an important part of the gatt acquis. they are often considered by subsequent panels. they create legitimate expectations among wto members, and, therefore, should be taken into account where they are relevant to any dispute”. furthermore, a panel could nevertheless find useful guidance in the reasoning of an unadopted panel report when it considers relevant. more importantly, as stated in the letter with which the appellate body conveyed in the february of 1996 its working procedures for appellate review to the dsb for information, “… it is also important to ensure consistency and coherence in our decision-making, which is to the advantage of every wto member and the overall multilateral trading system we all share”.
there is no doubt that, in line with the pragmatic evolution of the gatt dispute settlement system, the progressive clarification of a number of issues that are not precisely regulated in the dsu and the further development of the wto dispute settlement procedures, will gradually evolve after having been tested and progressively clarified and improved in
considering all of this, the author complete this book with serious-minded exploring examination and great diligence, bearing in mind that it is therefore practical and of great significance for wto members to be informed of the valuable rulings in those reports issued by panels and the appellate body in particular cases.
list of abbreviations
atc agreement on textile and clothing
bisd basic instruments and selected documents (published by gatt)
dsu understanding on rules and procedures governing
the settlement of disputes
dsb dispute settlement body
ec the european communities
gats general agreement on trade in services
gatt general agreement on tariffs and trade
imf international monetary fund
pge permanent group of experts (in the scm agreement)
scm subsidies and countervailing measures
sg agreement on safeguards
sps sanitary and phytosanitary measures
tbt technical barriers to trade
tmb textiles monitoring body
trims trade-related investment measures
trips trade-related aspects of intellectual property rights
tsb textiles surveillance body
wipo world intellectual property organization
wto world trade organization
table of contents
chapter i trend towards “judicialization”:
a rule-oriented dispute settlement system
chapter ii causes of action before the dsb:
art. xxiii of the gatt 1994
section one right to pursue a proceeding under the wto
i the concept of nullification or impairment
ii the standing issue before the dsb
iii lack of possible compensation
iv summary and conclusions
section two causes of action before the dsb in general
i the presumption in violation complaints
（i）introduction
（ii）practice under the gatt jurisprudence
（iii）rulings under the wto jurisprudence
（iv）a summary
ii an overview of non-violation complaints
（i）related texts
（ii）relationship between arts. xxiii:1(a) and xxiii:1(b)
（iii）underlying purpose of art. xxiii:1(b)
（iv）non-violation claims in the context of principles of customary international law
（v）appropriate attitudes as to non-violation remedy
iii presupposed situation complaints
section three establishment of non-violation complaints
i introduction
ii application of a measure: scope of measures covered by art. xxiii:1(b)
（i）measures short of legally binding obligations
（ii）measures falling under other provisions of the gatt 1994
（iii）measures concerning the protection of human health
（iv）measures continuingly applied
iii existence of a benefit: protection of legitimate expectations
（i）protection of legitimate expectations（ple）
（ii）non-foreseeability of measures at issue
（iii）benefits in the negotiations
（iv）benefits under successive rounds
iv nullification or impairment of benefit: causality
v summary and conclusions
chapter iii initiation of panel procedures
section one role o
i the importance of consultations
ii issues concerning the “adequacy” of consultations
section two establishment of panels: art. 6.2
i introduction
ii indication of consultations process
iii identification of “the specific measures at issue”
iv provision of “a brief summary of the legal basis of the complaint”
v concluding remarks
section three terms of reference of panels: art. 7
i introduction
ii effect of consultations on terms of reference of panels
iii the “matter referred to the dsb”
section four the mandate of compliance panels: art. 21.5
i introduction
ii clarification of “measures taken to comply”
iii perspective of review under art.21.5
iv examination of the new measure in its totality and in its application
section five third party rights : art. 10
i introduction
ii generic third party rights: interpretation of art. 10.3
iii extended third party rights: exercise of panels’ discretion
iv summary and conclusions
chapter iv function of panels: art. 11 of the dsu
i introduction
ii application of art. 11 as a general standard of review
iii review in “neither de novo nor total defence”
iv allegation against panels’ standard of review
v exercise of judicial economy
chapter v guidelines for interpretation of the wto covered agreements
i introduction
ii application of arts. 31, 32 of the vienna convention
iii wto rules on conflicts: effective interpretation
iv the status of legitimate expectations in interpretation
chapter vi general rules of evidence under the wto jurisprudence
i burden of proof under the wto jurisprudence
(i) general rules well established in violation complaints
(ii) burden of proof in case of invoking an exception
(iii) special rules concerning non-violation claims
(iv) summary and conclusions
ii admissibility of certain evidences
(i) evidence obtained from prior consultations
(a) procedural concern: confidentiality of consultations
(b) substantial concern: necessity or relevance of evidence
(ii) arguments before domestic investigative authorities
(iii) arguments submitted after the first substantive meeting
(a) there is a significant difference between the claims and the arguments supporting those claims.
(b)there is no provision establishing precise deadlines for the presentation of evidence.
iii panel’s right to seek information
(i) a grant of discretionary authority
(ii) the admissibility of non-requested information
(iii) summary and conclusions
iv adverse inferences from party’s refusal to provide information requested
(i) the authority of a panel to request information from a party to the dispute
(ii) the duty of a member to comply with the request of a panel to provide information
(iii) the drawing of adverse inferences from the refusal of a party to provide information requested by the panel
v concluding remarks
chapter vii
section one recourse of anti-dumping disputes to the dsb
i introduction
ii sufficiency of panel request under the ad agreement
(i) art. 6.2 of the dsu and article 17.4 of the ad agreement
(ii) art. 6.2 of the dsu and article 17.5(i) of the ad agreement
(iii) a summary guiding
iii general legal basis for claims against legislation as such
iv special rules for claims against anti-dumping legislation as such
(i) introduction
(ii)general legal basis under art. 17 of the ad agreement
(iii) understanding of art. 17.4 of the ad agreement
(iv) extensive basis in context
(v) a summary
section two ad hoc standard of review for anti-dumping disputes
i introduction
ii special standard of review under the ad agreement: in general
(i) ad hoc approaches to domestic determination: art. 17.6
(ii) relationship between art. 11 of the dsu and art. 17.6 of the ad agreement
(iii) a summary guiding
iii scope of review of fact-findings: art. 17.5(ii) of the ad agreement
(i)overview of the gatt practice
(ii)concerned rulings in reports issued by wto panels
(iii)tentative remarks: guidance from the appellate body
chapter viii strengthening of the multilateral system
chapter i
trend towards “judicialization”:
a rule-oriented dispute settlement system
over decades of years past, many countries have come to recognize the crucial role that dispute settlement mechanism plays for any treaty system. this is particularly the case for a treaty system designed to address the myriad of complex economic questions of international relations today and to facilitate the cooperation among nations that is essential to the peaceful and welfare-enhancing role of those relations. dispute settlement procedure assists in making rules effective, thereby adding an essential measure of predictability and effectiveness for the operation of a rule-oriented system in the otherwise relatively weak realm of international norms.
the uruguay round result, including the agreement establishing the world trade organization (‘the wto agreement’), is one important effort to face up to some of the problems associated with interdependent international economic activity. central and vital to the wto institutional structure is the dispute settlement procedure derived from decades of experiment and practice in the gatt, but now elaborately set forth, as part of the wto agreement, in the new treaty text of the dispute settlement understanding (‘the dsu’).
the entry into force of the wto agreement on 1 january 1995, including the new dsu, creates an improved system of rules and procedures for settling international trade disputes. according to art. ii:2 of the wto agreement, the dsu in annex 2 to it is an “integral part of this agreement, binding on all members”. art. 23 of the dsu under the heading “strengthening of the multilateral system” emphasizes the leg
the new wto dispute settlement system is an integrated system with much broader jurisdiction and less scope for “rule shopping” or so-called forum shopping. while the traditional panel system of settling disputes within the gatt remains the central feature of this system, the new mechanism indicates a distinctive trend towards “judicialization” within a change from power-oriented diplomatic methods of dispute settlement to rule-oriented legal ones. henceforth, the emphasis of the dsu is upon “rule-orientated” rather than “power-orientated” interpretation and application of the wto dispute settlement procedures, with the move towards a more judicial form of process that allows for review of decisions through an appellate body and the enforcement of panel and appellate body decisions. the dsu is in turn a key element of the legalization of the world trade system agreed in the uruguay round through the establishment of the wto and the reinforcement of substantial rules of conduct.
besides “judicializing” or codifying former gatt practice, the dsu has an institutional dimension. the agreement establishes a dispute settlement body (‘dsb’) to administer the rules and procedures for panel proceedings, for appeal against panel decisions to the standing appellate body and for adopting panel and appellate body reports. art. 2 of the dsu provides that the dsb has the “authority to establish panels, adopt panel and appellate body reports, maintain surveillance and implementation of rulings and recommendations, and authorize suspension of concessions and other obligations under the covered agreements”. more importantly, the dsu provides an integrated dispute settlement mechanism applicable to disputes arising under any of the “covered agreements” (including the wto agreement, the agreements in annexes 1 and 2, as well as any plurilateral trade agreement in annex 4 where its committee of signatories has taken a decision to apply the dsu).
furthermore, the rule-oriented function and legal primacy of the wto dispute settlement system are emphasized in art. 3 of the dsu:
“ dispute settlement system of the wto is a central element in providing security and predictability to the multilateral trading system. the members recognize that it serves to preserve the rights and obligations of members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law. recommendations
…
solutions to matters formally raised under the consultation and dispute settlement provisions of the covered agreements, including arbitration awards, shall be consistent with those agreements and shall not nullify or impair benefits accruing to any member under those agreements, nor impede the attainment of any objective of those agreements.
ly agreed solutions to matters formally raised under the consultation and dispute settlement provisions of the covered agreements shall be notified to the dsb and the relevant councils and committees, where any member may raise any point relating thereto.
…”
hence, even dispute settlements through bilateral arbitration and mutually agreed arrangements must be transparent and consistent with wto law. the dsu provisions on mutually agreed arbitration “as an alternative means of dispute settlement” (art. 25), and on compulsory arbitration on the “reasonable period of time” for the implementation of dispute settlement rulings (art. 21.3) and on disputes over the suspension of concessions (arts. 22.6-7), reflect a further shift towards judicial methods of dispute settlement in the wto.
significantly, the quasi-automatic adoption of dispute settlement reports is a new crucial feature of the wto dispute settlement mechanism, another contribution to the “judicialization” of this mechanism. under the wto jurisprudence, reports issued by various panels and the appellate body shall be adopted by the dsb and “unconditionally accepted” by the parties to a dispute unless “the dsb decides by consensus not to adopt the report” (art. 16.4; art. 17.14). both panel reports and appellate body reports are thus deemed to be adopted unless there is a “negative consensus” not to adopt these reports or the panel report is appealed.
contributing to a further “judicialization” of wto dispute settlement procedures, a most significant improvement upon the gatt dispute settlement mechanism, the appellate review introduced in the dsu is a new feature in the settlement of international trade disputes. appellate review is an integral part of the new comprehensive dispute settlements annexed to the wto agreement as an outcome of the uruguay round. the right of a party to a dispute to appeal is clearly spelled out and can be resorted to before the submission of the panel’s report to a dsb meeting. art. 16.4 of the dsu grants “right to appeal” without subjecting, as do in some domestic jurisdictions and international court procedures, this right to any filtering device.
appellate review under the wto jurisprudence is conducted by a standing appellate body, established as a balancing of factor in respect of the quasi-automatic adoption of panel reports. as noted above, the new wto dispute settlement system provides for quasi-automatic adoption of panel reports by the dsb, without previously ex
however, the primary purpose for introducing appeal has been that of avoiding mistakes in the legal finding by panels, although the improvement in the panels’ composition and independence and the possibility of seeking experts’ advice by them on technical issues should reduce this risk. appeals from panel cases, heard by the standing appellate body, are “limited to issues of law covered in the panel report and legal interpretation developed by the panel” (art. 17.6). and the appellate body “may uphold, modify or reverse the legal findings and conclusions of the panel” (art. 17.13). the appellate body consequently passes upon the legal merits of the case with full jurisdiction and may either confirm or replace in whole or in part the panel’s report with its decision. it may also confine itself to correcting the legal interpretation of the panel modifying its legal findings but leaving its overall conclusions and recommendations unaffected. therefore, a preliminary question as to the scope of appellate review is central to the appellate body’s disposition of the specific issues raised in the appeal. in addressing this issue, we think it helpful to recall the appellate body’s ruling in ec – hormones (ds26/ds48) that: 1
“under art. 17.6 of the dsu, appellate review is limited to appeals on questions of law covered in a panel report and legal interpretations developed by the panel. findings of fact, as distinguished from legal interpretations or legal conclusions, by a panel are, in principle, not subject to review by the appellate body. the determination of whether or not a certain event did occur in time and space is typically a question of fact; for example, the question of whether or not codex has adopted an international standard, guideline or recommendation on mga is a factual question. determination of the credibility and weight properly to be ascribed to (that is, the appreciation of) a given piece of evidence is part and parcel of the fact-finding process and is, in principle, left to the discretion of a panel a
the appellate body performs also a general function of guaranteeing the proper application and interpretation of the law in case of dispute within the organization in the interest of all its members. it is especially for the appellate body to carry out the general functions of the dispute settlement system as laid down in art. 3.2 of the dsu, that is “to preserve the rights and obligations of members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law”. as commented somewhere, “[t]he standing appellate body of the wto is to be considered in all respects as an international tribunal, set up within the organization for the impartial and final settlement of disputes between members concerning their respective obligations under the various agreements, in accordance with relevant provisions and within the framework of public international law. this conclusion is not contradicted by the fact that the name ‘tribunal’ has not been used, since formally, the appellate body, as is the case for the panels, issues reports which have to be formally, but automatically, adopted by the competent organ of the organization.” 2
to sum up, the court-like panel and appellate review procedures under the wto, and the quasi-automatic adoption of wto dispute settlement reports, eliminate possible risks of political blockages and contribute to a further “judicialization” of wto law. the legalization of the wto panel procedures and the quasi-judicial appellate review procedures is also likely to enhance the quality of the legal reasoning in wto dispute settlement reports. and what we will get down to in the following chapters is to scrutinize, to what extent and how various panels and the appellate body operate this significant mechanism in particular cases.
【note】:
1. see, in detail, wt/ds26/ab/r, ds48/ab/r/132.
2. see, giorgio sacerdoti, ‘appeal and judicial review in international arbitration and adjudication: the case of the wto appellate review’, international trade law and the gatt/wto dispute settlement system (petersmann ed.),: kluwer law international, london, 1997, p. 273.
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