This is another very helpful communication from Honduras on the functioning of the Appellate Body:
1 INTRODUCTION
1.1. In furtherance of the communication dated 23 July 2018 and reiterating the importance of the Dispute Settlement System within the broader WTO framework, Honduras would like to address the issue of precedent in WTO dispute settlement.
1.2. Concerns have been expressed regarding the alleged operation of a de facto system of stare decisis in WTO dispute settlement. Particularly, criticism has been raised regarding the Appellate Body's requirement that 'absent cogent reasons', panels must follow prior Appellate Body rulings regarding the same legal issue. However, others have suggested that the Appellate Body's approach is simply the result of the application of the rules on treaty interpretation and providing security and predictability to the system in that like cases should be treated alike.
1.3. In this paper we would like to discuss three possible approaches that could be considered to address the issue of precedent. These include:
• Maintaining the status quo with respect to reliance upon prior Appellate Body reports.
• Prohibiting panels and the Appellate Body from relying (explicitly) on prior reports as precedent.
• Introducing a hybrid mechanism for reliance on prior dispute settlement reports and for their incorporation into broader WTO law.
1.4. The approaches and options discussed here are not exhaustive, nor mutually exclusive, and they should not be read cumulatively. Furthermore, these options may be implemented through various means, to be discussed separately. Several other pertinent issues also need to be resolved to fully address the problems facing the Dispute Settlement System and the WTO.
2 PROPOSED OPTIONS
2.1 No change/status quo?
a. Could/should Members permit the prevailing practice regarding reference and reliance on prior dispute settlement reports to continue? Some have suggested that the obligation to decide a similar legal issue in the same manner is in line with the function of the dispute settlement system to provide 'security and predictability' to the multilateral trading system.
2.2 Prohibiting any doctrine of precedent?
a. Could/should Members rectify the prevailing practice of following prior reports 'absent cogent reasons' by expressly prohibiting the Appellate Body and Panels from relying on prior reports as a basis for their decision?
b. Could/should Members in the DSB/General Council consider, on a case by case basis, expunging from a report the reference to the notion of 'absent cogent reasons', where it is used to justify relying on previous reports? This could be done without prejudice to any future interpretations of the Appellate Body.
2.3 A Possible middle path?
a. Could/should Members consider a possible middle path between strict stare decisis and none at all? For example, could Members continue to adopt dispute settlement reports by negative consensus solely with respect to the outcome for the disputing parties, while the question of the legal interpretation in the report, and whether it can form precedent forming a part of WTO law, would become subject to positive consensus decision by Members?
b. Could/should Members consider an alternative approach where legal interpretations of the Appellate Body take the form of precedent only once they have been repeated a given number of times in similar contexts? This 'rule of reiteration', as it is called in certain civil law countries, may be operationalized in several different ways, for instance:
• a position of law that is resolved in the same way in a similar case more than a given number of times, e.g. (3) or (5) could automatically be considered as creating a precedent regarding that issue of law.1
• a position of law that is resolved in the same way in a similar case more than a given number of times e.g. (3) or (5) may then be subject to deliberations and discussions among Members regarding its status as precedent. Members could then decide (by positive or negative consensus) upon the correctness of the interpretation and whether it should be followed as precedent in subsequent cases.
c. Could/should the Appellate Body be instructed, in cases where all seven Appellate Body members endorse an interpretation in a specific report or on a thematic issue, to refer the relevant report/issue to the DSB for discussion as a precedent? The Appellate Body could then be obliged to take note of any substantial disagreement among Members on the correctness of the interpretation.
-------------------------
1 This would be in line with the Roman law principle of rerum perpetuo similiter iudicatarum auctoritas vim legis obtinere debet which loosely translates to 'the authority of court decisions in cases that are always solved in the same way must have the force of law'.
