« World Bank watchdog and trade | Main | Shameless »
I have just been reading the Art 21.3(c) arbitral award in EC – Chicken Classification (WT/DS269/13, 20 February 2006), which, in its robust attitude to EC law, provides an interesting counterpoint to the AB’s more deferential attitude to NAFTA in Soft Drinks.
The EC argued that it could not comply with the ruling until a WCO HS classification decision had been taken. Until then, it was argued, the Commission could not act in contradiction of earlier (allegedly different) ECJ interpretations of the relevant HS headings. To my mind, it does not appear to have been particularly convincing for the EC to hold up the implementation process to a contingency that was not even guaranteed to provide an outcome, or the desired outcome. But while the arbitrator recognised this (para 55), the thrust of his reasoning went in a quite direction, along the way making points which (in my opinion) are both a little questionable, and potentially problematic for the EC.
First, the arbitrator made a comment about ‘domestic legal orders’ that seems to leave the EC at a bit of a loose end. For him the key issue was that implementation was said to depend upon a decision made outside of the legal order of the implementing Member. This differed, he said, from the ‘ordinary’ situation where, because the challenged measures originates within the Member’s domestic legal order, implementation can be achieved within the same legal order (para 51). Consequently, even though normally an implementing Member has a discretion in selecting its means of implementation, in unusual cases such as this the Member ‘bears the burden of establishing that this external element of its proposed implementation is necessary for, and therefore indispensable to, that Member’s full and effective compliance ….’ (para 52)
Why is this problematic? First, because for the EC, at least, the situation described by the arbitrator happens all the time, inasmuch as the EC is responsible under WTO law for measures adopted by the Member States. This is true not only for the areas of shared competence (TRIPS/GATS) but also for internal measures involving trade in goods. Second, the arbitrator’s reasoning seems a little dubious anyway. In determining the reasonable period of time for implementation, why should it be more difficult for an implementing party to claim that it needs to go through a non-domestic process? Surely the important issue – and the weak point of the EC's case – is the contingent nature of the outcome of this process? And what about other federal systems?
The other interesting feature of this award, one with a bearing on Soft Drinks, is that the arbitrator expressly analysed a question of EC ‘constitutional’ law: namely, whether under EC law the Commission was able to implement DSB rulings without recourse to the WCO. Moreover, he expressly did so by treating this as a question of fact, challenging the EC to 'prove' its argument: 'I cannot just take their word for it; the European Communities must establish that it is so' (para 56).
The arbitrator may have been tempted in this direction because the panel and AB made factual findings on the meaning of two ECJ judgments (Dinter and Gausepohl). Indeed, he relied on these findings in determining that these judgments were not inconsistent with the AB report. But these findings were made in the quite different context of ascertaining the ‘circumstances of the conclusion’ of the EC’s tariff bindings under Art 32 VCLT, which pointedly is a question of fact. It does not follow that the more profound question of EC constitutional law at issue - whether a WCO decision was required - should also have been treated as question of fact. At the very least, the arbitrator should have treated this as a mixed question of law (Commission powers to contradict ECJ judgment) and fact (meaning of the ECJ judgments at issue). The only alternative is to take the view that the EC, perhaps because it is a WTO Member, or perhaps because it insists on the 'sui generis' status of its legal order, has forfeited the right to have its legal system treated as international law.
But even if this is not the case, and some constitutional questions of EC law can be treated as questions of fact, would this still hold for all such questions? What about a question concerning the division of competences between the EC and its Member States (still WTO Members)? Would this square with the AB’s refusal in Soft Drinks to determine international rights and obligations outside the covered agreements? Would it square with the decision of MOX Plant Arbitral Tribunal, which suspended proceedings (on grounds of comity between international tribunals) until the issue of EC/MS competence could be decided by the ECJ (see www.pca-cpa.org/PDF/MOX%20Order%20no3.pdf, para 28)?
All in all, this serves to illustrate the very 'delicate' status of the EC within the WTO system.
Please enable JavaScript if you would like to comment on this blog.
RSS feed
More...