The newly-established Multiparty Interim Appeal Arbitration Arrangement (“MPIA”) contains an interesting provision in para 18 of its “Agreed Procedures”:
“At any time during the arbitration, the appellant, or other appellant, may withdraw its appeal, or other appeal, by notifying the arbitrators. This notification shall also be notified to the panel and third parties, at the same time as the notification to the arbitrators. If no other appeal or appeal remains, the notification shall be deemed to constitute a joint request by the parties to resume panel proceedings under Article 12.12 of the DSU. If an other appeal or appeal remains at the time an appeal or other appeal is withdrawn, the arbitration shall continue.”
According to this provision, only “the appellant, or other appellant”, may “withdraw its appeal” “at any time during the arbitration”. I take this to mean even until the arbitration award is out, or at least the last minute before the award is out, when the parties already have some pretty good guess/idea about the result of arbitration.
In my view, this provision is rather problematic as it gives too much control to the party filing the appeal. Let me explain using this table, which simulates the situation where the Appellant files the appeal, but the other party doesn’t:
|
Result of arbitration |
Appellant’s action |
Appellee’s action |
Outcome |
|
Appellant Wins |
No withdrawal |
(Wishes to withdraw) but can’t |
MPIA panel decision stands |
|
Appellant Loses |
Withdraw |
(Wishes to continue) but can’t |
Original panel decision stands |
To summarize, if the MPIA arbitration panel rules for the Appellant, the Appellant will not withdraw from the arbitration but choose to continue. As it loses the arbitration, the most rational action for the Appellee is to withdraw from the arbitration, but it won’t be able to do so as such right is not provided under the MPIA. Thus, the process continues and the MPIA panel decision stands, which means the Appellant wins the arbitration.
On the other hand, if the MPIA arbitration panel rules against the Appellant, the most rational action for the Appellant is to withdraw from the arbitration. Now the Appellee would want to continue the arbitration but it won’t be able to do so, again as such right is not provided under the MPIA. It would not be able to file a separate appeal either as the 10 day time limit under para 4 has already expired. Thus, the arbitration is terminated and the original panel decision stands, which means the Appellant still wins!
In other words, if the other party does not file an appeal, we’d have a bizarre situation that the Appellant always wins!
Of course, as anyone familiar with the Socratic Method would know, the professor would not throw out a question unless he already has some answers ready. So here is my proposed solution: the other party shall also file an appeal. Again I’d illustrate my point in another table:
Appellant files the appeal, and the other party also appeals:
|
Result of arbitration |
Appellant’s action |
Appellee / Other appellant’s action |
Outcome |
|
Appellant Wins |
No withdrawal |
Withdraw |
MPIA panel decision stands |
|
Appellant Loses |
Withdraw |
Continue the other appeal |
MPIA panel decision stands |
To summarize, if the MPIA arbitration panel rules for the Appellant, the Appellant will not withdraw from the arbitration but choose to continue. As it loses the arbitration, the Appellee/Other appellant would withdraw from the arbitration, but this does not terminate the arbitration as the original appeal still remains. Thus, the process continues and the MPIA panel decision stands, which means the Appellant wins the arbitration. Same outcome as the first scenario.
On the other hand, if the MPIA arbitration panel rules against the Appellant, the most rational action for the Appellant is to withdraw from the arbitration. Now the Appellee/Other appellant would want to continue the arbitration and it will be able to do so this time, as “the other appeal” still remains open. Thus, the arbitration will continue and the MPIA panel decision stands, which means the Appellee/Other appellant wins this time!
Of course, I understand that in real WTO disputes, the issue of winning and losing is more complicated and it is not unusual for each party to win on some points but lose on others. But even in such cases, we can speak of the MPIA panel decision as being better/worse than the original panel decision and my argument still stands.
The most important thing is that I’ve identified a potential loophole in the procedure, especially for the party which doesn’t rush to file an appeal when the panel report is out, and the action that such party should take to remedy the situation.
Now you know what to do.
