This is a guest post from former Appellate Body Member Giorgio Sacerdoti:
As we all realize, the WTO is heading towards the practical loss of the Appellate Body by 10 December 2019 due to the US blocking of the launching of the selection process to fill the vacancies. The “concerns” that have led the Trump Administration to this extreme step are well known. So are also the various proposals of reforms tabled by a number of WTO Members at the General Council in order to take into account these concerns with a view to improving, rather than hampering, the efficient operation of the Appellate Body.
The lack of engagement by the US has until now prevented any meaningful discussion in the merits. The issue of how procedurally any agreed change can be effected promptly has also been raised. I offer hereunder a proposal for a “Quick Fix”, addressing the main points raised by the US in a way that reflects also the thrust of the proposals tabled at the General Council (and by several academics). The key of my proposal is to resort to an authoritative (binding) interpretation of relevant provisions of the DSU under Article IX(2) of the WTO Agreement. The General Council should adopt this Decision by consensus, to come into effect as quid-pro-quo, and at the same time, of the launching of the selection process to fill the vacancies at the Appellate Body.
I have circulated this proposal to some key actors in past months without any reaction. It is now time that I offer it to all concerned, at least to show that a “Quick-Fix” is possible, if there is a will. As the say goes: “If there is a will, there is a way.”
Giorgio Sacerdoti, emeritus professor of international law, Bocconi University, Milan, Italy
Former chairman of the WTO Appellate Body
17 September 2019
Project of a
GENERAL COUNCIL’S “INTERPRETATION” OF CERTAIN DSU PROVISIONS UNDER ART.IX.2 OF THE WTO AGREEMENT
The GENERAL COUNCIL
- Mindful of its responsibilities under the Marrakesh Agreement Establishing the World Trade Organization [the WTO Agreement]
- Acknowledging the importance of the WTO dispute settlement system for the security and predictability of the multilateral trading system in the interest of all WTO Members
- Recognizing that after more than 20 years of successful operation reforms are necessary in order to enable the dispute settlement system to go on performing its functions in accordance with the provisions agreed in the Uruguay Round Agreement
- Noting the concerns expressed by some Members in this respect and the various proposals tabled by a number of WTO Members, individually and jointly, to address them
- Concerned that the protracted lack of consensus among WTO Members as to the filling of vacancies on the Appellate Body and the consequent looming inability of same to operate may deprive parties to a dispute of the right to appeal panel reports, paralyze the operation in accordance with the rules of the DSU of the dispute settlement function, prevent the prompt settlement of disputes, and compliance by WTO Members with recommendations or rulings of the DSB which is essential in order to ensure effective resolution of disputes to the benefit of all Members [Article 21(1) DSU]
- Determined to exercise its responsibilities and powers to resolve as a matter of urgency the above situation
- Being aware that under Article IV(2) and IX(2) of the WTO Agreement in the intervals between meetings of the Ministerial Conference it has the exclusive authority to adopt interpretations of the WTO Agreement and of the Multilateral Trade Agreements
- Considering that the adoption of an appropriate authoritative interpretation of the relevant provisions of the DSU is capable of resolving the most pressing difficulties that are currently and in the near future preventing the dispute settlement system from carrying out its functions, without prejudice for a more extensive review of relevant dispute settlement provisions of the DSU in conformity with the Decision on the Application and Review of the Understanding on Rules and Procedures Governing the Settlement of Disputes [DSU review]
- Mindful of the WTO practice and requirements for decision-making by consensus [Article IX(1) and footnote 3, Article X(3) of the WTO Agreement]
ADOPTS
by consensus the following authoritative interpretation of the DSU provisions referred to hereinafter, to enter into force and become applicable as soon as the DSB shall have filled all vacancies at the Appellate Body in accordance with Art. 17(1)(2) DSU
- Expiration of the term in office of AB members – Article 17(1) DSU
The provision of Article 17(2) DSU that Appellate Body members serve for a four-year term shall be interpreted as not preventing an Appellate Body member, whose term is expiring while serving on a case, from completing its service in that case until the issuing of the Appellate Body report in such case, provided that the hearing in that case is scheduled to take place before the date of the expiration of that Appellate Body member term in office.
- 90 days duration of appellate proceedings – Article 17(5) DSU. Confidentiality of Appellate Body proceedings – Article 17(10) DSU
In order to strive to meet the deadline of 90 days provided in the last sentence of Article 17(5) DSU, notwithstanding the increase in the number of the WTO Members and the number and complexity of panel reports being appealed as compared to the situation existing and envisaged at the time of the drafting of the DSU, Article 17 (10) DSU on confidentiality of appellate proceedings shall be interpreted as not preventing the time table of any appeal, to be drafted by the Appellate Body in consultation with the parties thereof, being made public through the Appellate Body Secretariat to the DSB.
When concomitant, partly simultaneous or successive appeals make it impossible for the Appellate Body to issue the relevant reports within 90 days, the time table of such appeals, to be drafted by the Appellate Body in consultation with the parties thereof, shall strive to minimize any unavoidable delay, and an appropriate explanation shall be provided to the DSB.
In such a situation, Article 17(5) DSU does not prevent the Appellate Body, in consultation with the parties to an appeal, to meet the 90-day deadline, when practicable, by issuing within that deadline its report to the parties in the language in which the proceedings were conducted, pending subsequent translation by the WTO Secretariat in the other official WTO languages for circulation of the report to Members.
- Authority of previous adopted reports – Articles 11 and 17(4) DSU
The statement in Article 2(3) DSU that “The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system” does not imply that reports of panels or of the Appellate Body, once adopted by the DSB, constitute binding precedents for future cases. Accordingly, the duty for a panel in accordance with Article 11 to “make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements” shall be interpreted as requiring a panel to do so also when previously adopted panel or Appellate Body reports have ruled upon the same matter or the interpretation of the same provisions of the covered agreements at issue in the case before it. Such obligation in Article 11 shall be interpreted as not precluding a panel from ruling otherwise if the panel concludes objectively that not following the ruling in previous adopted reports is legally justified “in accordance with customary rules of interpretation of public international law” referred to in Article 2(3) DSU, while duly taking into account the reference to stability and predictability in the same article.
Similarly, Art. 17(14) DSU, according to which “The Appellate Body may uphold, modify or reverse the legal finding and conclusion of the panel” whose report has been appealed, does not preclude the Appellate Body from deciding on the legal findings appealed differently than in previous reports if the Appellate Body considers that this is legally justified.
- Rulings not necessary to resolve a dispute – Article 17(12) DSU
The provision of Article 17(12) DSU that “The Appellate Body shall address each of the issues raised in accordance with paragraph 6 during the appellate process”, namely “issues of law covered in the panel report and legal interpretations developed by the panel” shall be interpreted as not obliging the Appellate Body to address issues raised in appeal, whose resolution in light of its findings on other issues raised is not necessary to resolve the dispute “and achieving a satisfactory settlement of the matter in accordance with the rights and obligations” of the parties under the DSU and the covered agreements [Article 3 (4) DSU]
- Domestic law issues before the Appellate Body- Article 17(6) DSU
“Issues of law” in Article 17(6) DSU (“An appeal shall be limited to issues of law covered in the panel report and legal interpretation developed by the panel”) shall be interpreted as excluding issues of interpretation of domestic law, to be considered as issues of fact not subject to appellate review.
