In its early years, NAFTA Chapter 20 state to state dispute settlement functioned as expected. There were complaints, a couple panels were set up, they issued reports, and compliance was sometimes achieved. However, as I understand it (and I confess I'm fuzzy on the details), in a case involving sugar, the United States blocked the composition of a panel. I don't know if Chapter 20 dispute settlement is permanently broken (there have been complaints since then, but no panels composed), but it seems to be in a bad state, and the NAFTA renegotiation should look at this.
Where should negotiators look for guidance? Maybe the TPP. In the TPP, panel composition rules were elaborated in more detail, and at first glance, it seemed to me that perhaps the new rules would ensure that a complainant could get a panel.
However, David Gantz expressed concern that the TPP rules may be insufficient, so I took another look. Upon further reflection, I worry that he may be right, at least to some extent. As long as all the parties are acting in good faith, the panel composition process should work. However, if any party decides that it wants to stand in the way of panel composition, it just might have the ability do so. To illustrate this, let's run through the panel composition process in the TPP dispute settlement chapter.
A TPP dispute panel consists of three panelists: one appointed by each side, and a chair. Starting with the party appointments, under Art. 28.9.2 (a), the complaining Party and the responding party can each select a candidate:
(a) Within a period of 20 days after the date of delivery of the request for the establishment of a panel under Article 28.7.1 (Establishment of a Panel), the complaining Party or Parties, on the one hand, and the responding Party, on the other, shall each appoint a panellist and notify each other of those appointments.
Starting with the complainant's panelist, there is nothing to block the complaining party from appointing a panelist, so panelist number one is all set.
Panelist number two is more complicated. What if the respondent decides not to cooperate and does not appoint anyone? Subparagraph (c) of the same Article addresses this, as it gives the complainant several options to get this panelist appointed. First, it can select the second panelist from a list created by the responding party, as stipulated by Art. 28.9.2 (c)(i):
(c) If the responding Party fails to appoint a panellist within the period specified in subparagraph (a), the complaining Party or Parties shall select the panellist not yet appointed:
(i) from the responding Party’s list established under Article 28.11.9 (Roster of Panel Chairs and Party Specific Lists); or
Article 28.11.9 says:
Article 28.11: Roster of Panel Chairs and Party Specific Lists
...
Party Specific Indicative List
9. At any time after the date of entry into force of this Agreement, a Party may establish a list of individuals who are willing and able to serve as panellists.
Unfortunately, because a party may establish a list, but does not have to, Art. 28.11.9 may not be sufficient here, as the responding party may simply refrain from creating a list.
There is another option, though, as Art. 28.9.2 (c)(ii) says that the complainant can then appoint from “the roster of panel chairs established under Article 28.11”:
(c) If the responding Party fails to appoint a panellist within the period specified in subparagraph (a), the complaining Party or Parties shall select the panellist not yet appointed: ...
(ii) if the responding Party has not established a list under Article 28.11.9 (Roster of Panel Chairs and Party Specific Lists), from the roster of panel chairs established under Article 28.11 (Roster of Panel Chairs and Party Specific Lists); or
Again, though, this may be insufficient. There is no guarantee of getting a roster because the responding party could block its establishment. Here's the relevant provision:
Article 28.11: Roster of Panel Chairs and Party Specific Lists
Roster of Panel Chair
1. No later than 120 days after the date of entry into force of this Agreement, those Parties for which this Agreement has come into force under Article 30.5 (Entry into Force) shall establish a roster to be used for the selection of panel chairs.…
2. If the Parties are unable to establish a roster within the time period specified in paragraph 1, the Commission shall immediately convene to appoint individuals to the roster. Taking into account the nominations made under paragraph 4 and the qualifications set out in Article 28.10 (Qualifications of Panellists), the Commission shall establish the roster no later than 180 days after the date of entry into force of this Agreement.
There are two, sequential obligations here: The parties shall establish a roster, and if they do not, the Commission shall do so. However, while these provisions do use "shall," it is not clear how such an obligation could be enforced, that is, how a party could be forced to agree to the establishment of a roster.
Now, it may be the case that once the initial roster has been established, which presumably it will be if and when the TPP comes into force, the complainant will, in practice, be able to choose a panelist from the roster. It would take quite a lot of bad faith for a TPP party to prevent a roster from being established. This is true, and could make blocking a panel in a particular future dispute difficult. On the other hand, people will not stay on the roster forever (para. 7 notes that: "The Parties may appoint a replacement at any time if a roster member is no longer willing or available to serve.") Because any new appointments have to be made by consensus (para. 5), there will be opportunities down the road for a party who is not happy with the dispute process to get in the way of appointments.
In the end, though, panelist number two will be appointed, because Art. 28.9.2 (c)(iii) allows for the complainant to select on its own:
(c) If the responding Party fails to appoint a panellist within the period specified in subparagraph (a), the complaining Party or Parties shall select the panellist not yet appointed: ...
(iii) if the responding Party has not established a list under Article 28.11.9 (Roster of Panel Chairs and Party Specific Lists) and no roster of panel chairs has been established under Article 28.11 (Roster of Panel Chairs and Party Specific Lists), by random selection from a list of three candidates nominated by the complaining Party or Parties.
Importantly, the complainant is given the ability to do the selection, so there is no way for the respondent to block. In this way, panelist number two is also guaranteed.
Now we're on to the third panelist, who will serve as the chair. Art. 28.9.2 (d)(i) calls for both of the disputing parties to “endeavour to agree on the appointment”:
(d) For appointment of the third panellist, who shall serve as chair:
(i) the disputing Parties shall endeavour to agree on the appointment of a chair;
The problem here is that the responding party can simply disagree on the appointment, and in this way block panel composition.
We then move to subparagraph (ii), which foresees the two already selected panelists appointing a chair by agreement “from the roster established under Article 28.11”:
(ii) if the disputing Parties fail to appoint a chair under subparagraph (d)(i) by the time the second panellist is appointed or within a period of 35 days after the date of delivery of the request for the establishment of a panel under Article 28.7.1 (Establishment of a Panel), whichever is longer, the two panellists appointed shall, by agreement, appoint the chair from the roster established under Article 28.11 (Roster of Panel Chairs and Party Specific Lists);
One problem here is that the panelists might not agree, but let's assume that they do. We now have the problem mentioned earlier where a party might, at some point, impede the establishment of the roster.
This brings us to subparagraph (iii), which directs the panelists to appoint the chair “with the agreement of the disputing Parties”:
(iii) if the two panellists do not agree on the appointment of the chair under subparagraph (d)(ii) within a period of 43 days after the date of delivery of the request for the establishment of a panel under Article 28.7.1 (Establishment of a Panel), the two panellists shall appoint the chair with the agreement of the disputing Parties;
Here again, though, as agreement of the parties is required, the respondent may simply not agree.
That brings us to yet another option, subparagraph (iv), which directs the disputing Parties to “select the chair by random selection from the roster”:
(iv) if the two panellists fail to appoint the chair under subparagraph (d)(iii) within a period of 55 days after the date of delivery of the request for the establishment of the panel, the disputing Parties shall select the chair by random selection from the roster established under Article 28.11 (Roster of Panel Chairs and Party Specific Lists) within a period of 60 days after the date of delivery of the request for the establishment of the panel;
Here, there are two problems. First, it is the disputing parties who shall select the chair. But the responding party might simply opt not to participate in the selection process, thereby preventing it from happening. And second, there is the problem of establishing the roster, referred to earlier.
At this stage, the TPP text suggests the role of an outsider. Subparagraph (v) allows for a disputing Party to “have the chair appointed from the roster…by an independent third party.” Again, though, there is the problem of the roster never having been established, or having been subsequently undermined. In addition, subparagraph (B) further elaborates that “the request to the independent third party to appoint the chair shall be made jointly by the disputing Parties”:
(v) notwithstanding subparagraph (d)(iv), if the two panellists fail to appoint the chair under subparagraph (d)(iii) within a period of 55 days after the date of delivery of the request for the establishment of the panel, a disputing Party may elect to have the chair appointed from the roster established under Article 28.11(Roster of Panel Chairs and Party Specific Lists) by an independent third party, provided that the following conditions are met:…
(B) the request to the independent third party to appoint the chair shall be made jointly by the disputing Parties. ...
The problem here is that if the request is to be made jointly, the respondent may simply elect not to participate in the request.
Next up is subparagraph (vi):
(vi) if a roster has not been established under Article 28.11 (Roster of Panel Chairs and Party Specific Lists), and subparagraphs (d)(ii) through (v) cannot apply, the complaining Party or Parties, on the one hand, and the responding Party, on the other hand, may nominate three candidates. The chair shall be randomly selected from those candidates that are nominated within a period of 60 days after the date of delivery of the request for the establishment of a panel under Article 28.7.1 (Establishment of a Panel); and…
Subparagraph (vi) envisions the possibility that a roster may not have been established. In that event, the complainant “on the one hand, and the responding Party, on the other hand, may nominate three candidates. The chair shall be randomly selected from those candidates…” This provision might look like it resolves the issue. The complainant can nominate three candidates, so even if the respondent does not act, there will be three people to select from.
The problem comes in with the selection process. Whereas for panelist number two, the complainant does the selection, subparagraph (vi) does not indicate who is to do the selecting. It says that the chair "shall be ... selected," but does not indicate a selector. Some actual individual or entity will have to make the selection. In the absence of any specification in this regard in the text, the respondent will have an opportunity to object, and, if that were to happen, it is not clear how a complainant could force the selection process along.
The final option comes in subparagraph (vii), which allows for “a disputing Party,” i.e., either one of them, to “have the chair appointed from those candidates by an independent third party.” Subparagraph (vii)(B) says:
(vii) notwithstanding subparagraph (d)(vi), if a roster has not been established under Article 28.11 (Roster of Panel Chairs and Party Specific Lists), and subparagraphs (d)(i) through (v) cannot apply, a disputing Party may, following the nomination of candidates under subparagraph (d)(vi), elect to have the chair appointed from those candidates by an independent third party, provided that the following conditions are met:…
(B) the request to the independent third party to appoint the chair shall be made jointly by the disputing Parties. Any subsequent communication between a disputing Party and the independent third party shall be copied to the other disputing Party or Parties. No disputing Party shall attempt to influence the independent third party’s appointment process; and…
But of course, with a joint request required, the responding party can block. There is also subparagraph (C):
(C) if the independent third party is unable or unwilling to complete the appointment as requested within a period of 60 days after the date of delivery of the request for the establishment of the panel, then the chair shall be randomly selected within a further period of five days using the process set out in subparagraph (vi).
Again, though, we have the problem of arguments over who exactly is to do the selecting.
What to make of all this? The process for selecting panelist number two indicates that the parties knew how to guarantee the appointment of a panelist when they wanted to. Why not do the same thing for panelist number three?
Now, maybe none of this matters, because all parties will act in good faith to appoint panelists, even though there may be politically sensitive cases brought against them. Nevertheless, there may be just enough discretion to interfere with the panel composition process so as to leave a bit of uncertainty for TPP dispute settlement.
