The other day I mentioned the EU WTO complaint regarding "sequencing" of DSU Article 21.5 and 22 in the Clove Cigarettes case. The EU consultations request is here.
The EU is upset that Indonesia pursued the case by going directly to DSU Article 22.2 for suspension of concessions, instead of asking for a compliance panel first under DSU Article 21.5. By taking this route, compliance issues were dealt with in the Article 22.6 arbitration process.
Beyond any systemic concerns with this approach, the EU was specifically irritated that it was not allowed to participate in the Article 22.6 process as a third party:
By communication dated 18 December 2013 the compliance/arbitration panel informed the European Union of its decision, taking into account the views expressed by Indonesia, not to accord the European Union third party rights in the compliance/arbitration panel proceedings.
Now, you might say, and the EU argues, that the AB already decided the issue of sequencing in the Hormones suspension cases, when it stated the following in U.S. - Hormones Suspension (para. 374):
… before obtaining the DSB's authorization to suspend concessions, a Member must initiate a dispute settlement process in which it challenges the consistency with the covered agreements of a measure taken by another Member. The Member initiating the process will only be authorized to suspend concessions when the measure is found by the panel (and the Appellate Body, if appealed) to be inconsistent with the covered agreements and the Member taking the measure fails to implement the panel's (or Appellate Body's) findings within a reasonable period of time or, if it takes a measure to comply, that measure is found by the panel (and the Appellate Body) in compliance proceedings not to have brought the Member concerned into compliance. In other words, the Member will only be able to suspend concessions pursuant to the DSB's authorization after having had extensive recourse to, and abided by, the rules and procedures of the DSU, consistent with the requirements of Article 23.1.
But there's a key difference between that case and the Clove Cigarettes one. There, it was the parties arguing about the proper procedures. Here, by contrast, it is a third party in one dispute (DS406) bringing a new dispute (DS481), asserting that one of the parties' actions in the original dispute affected third party rights in that dispute. So, there is a question that goes beyond the substance of the "sequencing" issue: Can third parties have recourse to an adjudicator other than the panel/arbitrator in the dispute at hand? In its complaint, the EU blames Indonesia for its arguments to the arbitrator that the EU should be excluded, but ultimately it was the arbitrator that made the decision.
It seems to me that a practical solution would be to find a way to offer typical third party rights in Article 22.6 arbitrations. I can see how the DSU provisions might get in the way, but it's not clear to me what the policy objection to this is. Why shouldn't third parties have their say in Article 22.6 proceedings, especially ones that deal with compliance issues?
