The EU has announced that it and 15 other WTO Members have "decided on an arrangement that will allow them to bring appeals and solve trade disputes among them despite the current paralysis of the WTO Appellate Body." It explains that "[t]he Multiparty Interim Appeal Arbitration Arrangement mirrors the usual WTO appeal rules and can be used between any members of the Organisation willing to join, as long as the WTO Appellate Body is not fully functional." The EU expects "the Multiparty Interim Appeal Arbitration Arrangement to be officially notified to the WTO in the coming weeks, once the respective WTO Members complete their internal procedures, after which it will become operational."
The participating Members are: Australia; Brazil; Canada; China; Chile; Colombia; Costa Rica; the European Union; Guatemala; Hong Kong, China; Mexico; New Zealand; Norway; Singapore; Switzerland; and Uruguay.
The full text of the MPIA (as it is referred to in the text) is here. Here are a few highlights.
In broad terms, this is what's happening:
1. The participating Members indicate their intention to resort to arbitration under Article 25 of the DSU as an interim appeal arbitration procedure (hereafter the "appeal arbitration procedure"), as long as the Appellate Body is not able to hear appeals of panel reports in disputes among them due to an insufficient number of Appellate Body members.
2. In such circumstances, the participating Members will not pursue appeals under Articles 16.4 and 17 of the DSU.
3. The appeal arbitration procedure will be based on the substantive and procedural aspects of Appellate Review pursuant to Article 17 of the DSU, in order to keep its core features, including independence and impartiality, while enhancing the procedural efficiency of appeal proceedings. ...
With regard to the arbitrators, there will be a standing pool of 10:
4. In particular, the participating Members envisage that, under the appeal arbitration procedure, appeals will be heard by three appeal arbitrators selected from the pool of 10 standing appeal arbitrators composed by the participating Members in accordance with Annex 2 (hereafter the “pool of arbitrators”).1 ...
...
1 Should a need arise to select arbitrators to serve on a specific dispute while the pool of arbitrators has not yet been composed, the parties to that dispute will agree on the selection procedures applicable to that dispute. This footnote will cease to apply six months after the date of the multi-party communication, unless all the participating Members agree to extend it.
As set out in Annex 2, composition of the standing pool of 10 arbitrators will take place as follows:
After the notification of the present communication to the DSB, the participating Members will promptly commence the composition process. The following will apply:
1. Each participating Member may nominate one candidate, by notifying the other participating Members12
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2. The deadline for nominations will expire 30 days after the date of this communication....
4. The participating Members will compose the pool of arbitrators by consensus. The participating Members will endeavour to compose the pool of arbitrators within three months following the date of this communication. They will notify the pool of arbitrators to the DSB, as addendum to this communication. The composition of the pool of arbitrators will ensure an appropriate overall balance.
5. The composition of the pool of arbitrators may be modified by agreement of all participating Members at any time. The participating Members underscore the interim nature of this arrangement. Should the conditions laid down in paragraph 15 of the communication remain for a longer period of time, the participating Members will, periodically, partially re-compose the pool of arbitrators, starting two years after composition, in line with the procedures established in this Annex....
12 For greater certainty, current or former Appellate Body members may be nominated as candidates. If nominated as candidates, they will not undergo the pre-selection process set out in paragraph 3 of this Annex.
There are 16 participating WTO Members looking to fill 10 slots. I think they will be able to fill the slots without too much acrimony, but nevertheless this process is going to be interesting. Current or former Appellate Body members "may be nominated," but will they be? If they are, they won't have to "undergo the pre-selection process," so it seems like there could be some incentive for Members to propose them.
There will be some "collegiality":
5. Members of the pool of arbitrators will stay abreast of WTO dispute settlement activities and will receive all documents relating to appeal arbitration proceedings under the MPIA. In order to promote consistency and coherence in decision-making, the members of the pool of arbitrators will discuss amongst themselves matters of interpretation, practice and procedure, to the extent practicable.
Para. 8 of Annex I elaborates on this:
8. In order to give effect to paragraph 5 of communication JOB/DSB/1/Add.12 in this dispute, the arbitrators may discuss their decisions relating to the appeal with all of the other members of the pool of arbitrators, without prejudice to the exclusive responsibility and freedom of the arbitrators with respect to such decisions and their quality. All members of the pool of arbitrators shall receive any document relating to the appeal.
With regard to Secretariat-style assistance, there is this:
7. The participating Members envisage that appeal arbitrators will be provided with appropriate administrative and legal support, which will offer the necessary guarantees of quality and independence, given the nature of the responsibilities involved. The participating Members envisage that the support structure will be entirely separate from the WTO Secretariat staff and its divisions supporting the panels and be answerable, regarding the substance of their work, only to appeal arbitrators. The participating Members request the WTO Director General to ensure the availability of a support structure meeting these criteria.
I'm not completely sure I follow this. It sounds like there will be a new and perhaps permanent group formed by the WTO DG, but what does "entirely separate from the WTO Secretariat staff and its divisions supporting the panels" mean? Will there be a new Secretariat division formed? Or will this be outside the Secretariat completely? And where is the money to pay these folks coming from?
The MPIA applies to the following disputes:
9. The MPIA applies to any future dispute between any two or more participating Members, including the compliance stage of such disputes, as well as to any such dispute pending on the date of this communication, except if the interim panel report, in the relevant stage of that dispute, has already been issued on that date.
So what are the ongoing disputes the MPIA may actually apply to? There is Canada - Sale of Wine (complaint by Australia), but the interim report is scheduled to be issued on April 2 (WT/DS537/11/Add.3), so that might not be covered. There is Costa Rica - Avocados (complaint by Mexico), where the Panel expects to issue its final report to the parties by the second half of 2020 (WT/DS524/4). Those are the only ongoing panels I see where this procedure could apply. (There are also two panels currently suspended under DSU Article 12.12 where it could apply). But perhaps other Members will decide to make use of it if they get frustrated by the inability to resolve a particular dispute.
The mechanics of the appeal are set out in para. 5 of Annex I:
5. The arbitration shall be initiated by filing of a Notice of Appeal with the WTO Secretariat no later than 20 days after the suspension of the panel proceedings referred to in paragraph 4 has taken effect. The Notice of Appeal shall include the final panel report in the working languages of the WTO. The Notice of Appeal shall be simultaneously notified to the other party or parties and to the third parties in the panel proceedings. Rules 20-23 of the Working Procedures for Appellate Review shall apply mutatis mutandis.
The time-frame for these appeals is sort of similar to existing time-frames:
12. The parties request the arbitrators to issue the award within 90 days following the filing of the Notice of Appeal. To that end, the arbitrators may take appropriate organizational measures to streamline the proceedings, without prejudice to the procedural rights and obligations of the parties and due process. Such measures may include decisions on page limits, time limits and deadlines as well as on the length and number of hearings required.
13. If necessary in order to issue the award within the 90 day time-period, the arbitrators may also propose substantive measures to the parties, such as an exclusion of claims based on the alleged lack of an objective assessment of the facts pursuant to Article 11 of the DSU.914. On a proposal from the arbitrators, the parties may agree to extend the 90 day time-period for the issuance of the award.
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9 For greater certainty, the proposal of the arbitrators is not legally binding and it will be up to the party concerned to agree with the proposed substantive measures. The fact that the party concerned does not agree with the proposed substantive measures shall not prejudice the consideration of the case or the rights of the parties.
It will be interesting to see how para. 13 plays out. Will arbitrators propose excluding this kind of DSU Article 11 claim? Will the parties accept that proposal?
And finally, there is this:
15. The parties agree to abide by the arbitration award, which shall be final. Pursuant to Article 25.3 of the DSU, the award shall be notified to, but not adopted by, the DSB and to the Council or Committee of any relevant agreement.
This means we will now have a separate category of appellate reports that are not adopted, with some uncertain value in terms of their persuasive authority on future WTO disputes. That's going to confusing, but definitely interesting.
