At the June 29 DSB meeting, in the context of discussing the Australia - Plain Packaging AB report, the U.S. made the following comment on DSU Article 11 appeals:
As the United States has explained, and Members know well, Article 17.6 of the DSU limits an appeal “to issues of law covered in the panel report and legal interpretations developed by the panel.” Attempts by appellants to re-litigate unfavorable factual determinations by panels are not encompassed by the right of appeal set out in Article 17.6.9
Neither is appeal of unfavorable factual determinations supported by the text of Article 11 of the DSU. This provision does not impose an obligation on a panel. Rather, it recognizes that the “function of panels” is that a panel “should make an objective assessment” of the matter before it. By describing this function using “should”, rather than creating an obligation using “shall”, WTO Members further established in the DSU that an alleged failure to make an objective assessment would not be subject of an appeal.
Furthermore, Article 11 of the DSU does not include the term “due process”. Nevertheless, the complainants in this dispute brought numerous claims of error, including for “due process” violations, under Article 11.
Such erroneous and unfounded claims of error under Article 11 resulted in significant expenditures of time and resources. The parties and third parties met with the Division for two oral hearings in June and November 2019, spanning a total of eight days of hearings.
We disagree with the majority’s decision in the appellate report to entertain these claims and, remarkably, even accept a claim of error. Even aside from there not being a basis to appeal under DSU Article 11, the United States agrees with the separate opinion’s conclusion that it was not “necessary to examine in detail the appellants’ claims that the Panel erred” and that, in any event, the panel did not act inconsistently with the original, high standard an Appellate Body report set out for Article 11 of the DSU.10
This appeal presented a missed opportunity to reconsider the scope of appellate review permitted under the DSU. As we have explained in the USTR Report on the Appellate Body,11 the DSU lacks any textual basis for appellate review of factual findings, irrespective of the standard of review to be applied.
The Appellate Body’s decision to review the “objective assessment” of a panel has been seized by appellants to cover practically all factual determinations by a panel, as illustrated by this monstrous appeal.
Our extensive experience as a litigant shows that panels take seriously their task to make an objective assessment. In fact, many current or former WTO delegates serve as panelists, and no doubt take their responsibilities very seriously.
Here's the provision:
Article 11: Function of Panels
The function of panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements. Accordingly, a panel should 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, and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements. Panels should consult regularly with the parties to the dispute and give them adequate opportunity to develop a mutually satisfactory solution.
The second sentence sets out several things a panel "should" do: "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, and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements."
Thus, under this provision, there is the "objective assessment" generally, and there is also the "objective assessment" in the specific context of the facts of the case. When the U.S. talks about Article 11, it often seems to focus on appeals of factual issues. At one point in the passage quoted above, however, the U.S. seems to be saying that none of these instructions to the panel are things the Appellate Body should be reviewing on appeal:
By describing this function using “should”, rather than creating an obligation using “shall”, WTO Members further established in the DSU that an alleged failure to make an objective assessment would not be subject of an appeal.
Prior to this statement to the DSB, I was under the impression that the U.S. was narrowly focused on "appellate review of factual findings" in the context of Article 11 (maybe they said something broader and I missed it). Now, though, they appear to be saying there should be no appeals at all related to "objective assessment" under Article 11, although it's worth noting that even in this passage they spend a lot of time on factual issues.
If they do have in mind the elimination of Article 11 appeals, my suggestion is to make the case for why that should be. Clearly, many other Members see value in Article 11 appeals, given how often they make these appeals. They are going to need to be talked out of doing this. One argument, of course, is that the text does not provide for it and the drafters did not intend it. Beyond that, though, it's worth thinking through the policy arguments. Now that we have years of experience with Article 11 appeals, what are the costs and benefits?
