Guest Post: Appointing Appellate Body Members by Majority – A Draft Article IX:2 Interpretation

This is a guest post from law professor Geraldo Vidigal (see also my totally unscientific twitter poll related to this issue):

With the Biden administration having continued the previous administration’s stance of blocking all appointments to the Appellate Body, the issue of the appointment members by majority is back on the agenda. Even if negotiators are unlikely to fundamentally change the dynamics of the WTO by proceeding to decisions-making by majority, an interesting legal question arises: could the Ministerial Conference or the General Council appoint Appellate Body Members by majority even is this were politically feasible?

Henry Gao and I have discussed the matter in this blog in the past, and have now published comprehensive academic articles defending our respective positions.

I must say I have changed my mind slightly on the matter since first looking into the relevant provisions. While I still believe that, under the most logical interpretation of the WTO Agreements, the Ministerial Conference and the General Council should be bound by the same rules as the Dispute Settlement Body (DSB) when appointing persons to the Appellate Body (i.e., consensus), I have since concluded that there is scope for interpretation. In other words, there is scope for an arrangement that both fits the text of the Agreement Establishing the WTO (AEWTO) and the Dispute Settlement Understanding (DSU) and allows the Ministerial Conference and General Council to appoint persons to the Appellate Body by majority, exercising their authority under Article IV of the AEWTO.

This interpretation is due to the fact that the Ministerial Conference has “the authority to take decisions on all matters under any of the Multilateral Trade Agreements … in accordance with the specific requirements for decision-making in this Agreement and in the relevant Multilateral Trade Agreement”. Under Article 2.4 of the DSU, the DSB is required to make all of its decisions by consensus, including the appointment of persons to the Appellate Body under DSU Article 17.1. The DSU is a multilateral trade agreement. Therefore, the most logical interpretation of the relevant arrangement is that the Ministerial Conference and the General Council may make appointments to the Appellate Body but must respect the requirements for decision-making that apply to the DSB’s own decisions on the matter.

Upon considering the matter further, however, I now see scope for the following interpretation: “specific requirements” in Article IV:1 are requirements that apply specifically to the decision being made. Article 2.4 is a general requirement applicable to all decisions of the DSB under the DSU. Other previsions of the DSU specifically require certain decisions to be made by consensus (6.1, 16.4, 17.14, 22.6, 22.7). Article 17.1 does not set out any such specific requirement. As a result, the consensus requirement applies generally to decisions of the DSB, but there are no specific requirements applicable to decisions to appoint persons to the Appellate Body. As a consequence, the Ministerial Conference and the General Council would be able to appoint persons to the Appellate Body under their own authority under Article IV:1, subject solely to the requirements for decision-making under AEWTO Article IX:1, which allows majority decisions in case a decision cannot be made consensus.

Given the significance of this interpretation to the WTO’s institutional architecture and the likely dispute that there would be over it, I do not see how it should be adopted implicitly – would it then be legitimated by an Appellate Body whose very composition has its legality disputed? As a result, if WTO Members were willing to appoint persons to the Appellate Body by majority (which, I emphasize, I do not believe they ever will), I believe they could only do that by preceding the appointments with an interpretation explicitly adopted for this purpose, employing their “exclusive authority” to do so under AEWTO Article IX:2. While I would recommend Members to adopt this interpretation by consensus, especially in order to avoid disputes over the limitation in the final sentence of Article IX:2 (“This paragraph shall not be used in a manner that would undermine the amendment provisions in Article X.”), the interpretation I propose is a logical interpretation of the relevant legal provisions, not an amendment of these provisions. As a result, it could be adopted by a three-fourths majority, as Article IX:2 explicitly permits.

To make the intellectual exercise more interesting, I have drafted a possible Article IX:2 interpretation that would achieve this purpose. While I do not see that politically WTO Members would ever appoint persons to the Appellate Body by majority, as a matter of legal architecture the existence of this possibility may affect negotiation dynamics, giving future holdout Members the prospect – even if politically unlikely – of a majority decision. And this prospect may turn out to be necessary, now that all WTO Members know that all they need to do to dismantle the WTO dispute settlement system is to persistently object to the appointment of persons to the Appellate Body.

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Interpretation of Article IV:1 of the Agreement Establishing the World Trade Organization

1. We recognize the challenges the Dispute Settlement Body (DSB) has been facing, over the past five years, in reaching consensus over the appointment of persons to the Appellate Body. As a result of these challenges, the DSB has been unable to fulfil its obligation under Article 17.2 of the Dispute Settlement Understanding (DSU) to fill vacancies in the Appellate Body as they arise.
2. We reaffirm our commitment to preserving the principles and to furthering the objectives underlying the multilateral trading system, including the security and predictability of the multilateral trading system. We also reaffirm our commitment to the continuation of the practice of decision-making by consensus whenever a decision can be arrived at by consensus.
3. We recognize that there are divergent interpretations concerning the requirements applicable to decisions of the Ministerial Conference and the General Council, acting under Article IV of the Agreement Establishing the World Trade Organization.
4. Accordingly, we exercise the authority, conferred on us by Article IX:2 of the Agreement Establishing the World Trade Organization, to adopt interpretations of this Agreement and of the Multilateral Trade Agreements, and thus interpret Article IV:1 of the Agreement Establishing the World Trade Organization as follows:

1. 1. The expression “in accordance with the specific requirements for decision-making in this Agreement and in the relevant Multilateral Trade Agreement” in Article IV:1 of the Agreement Establishing the World Trade Organization refers to requirements that apply specifically to the adoption of the decision being made.
   2. Requirements that apply generally to all the decisions of an organ are not specific requirements for decision-making and do not affect the requirements for decision-making applicable to the Ministerial Conference and the General Council when making decisions under the authority conferred on them by Article IV:1 of the Agreement Establishing the World Trade Organization.
   3. For greater clarity, when appointing persons to the Appellate Body under Article 17.1 of the Dispute Settlement Understanding, the Dispute Settlement Body is bound by its general decision-making rules, including by Article 2.4 of the Dispute Settlement Understanding, which requires all decisions made by the Dispute Settlement Body provided for in the Dispute Settlement Understanding to be made by consensus.
   4. Contrary to other provisions of the Dispute Settlement Understanding, its Article 17.1 does not establish specific requirements for the appointment of persons to the Appellate Body.
   5. Pursuant to the interpretation adopted in paragraph (a) above, the Ministerial Conference and the General Council may therefore exercise their authority under Article IV of the Agreement Establishing the World Trade Organization to appoint persons to the Appellate Body of the World Trade Organization, subject solely to the requirements for decision-making applicable to their decisions under the Agreement Establishing the World Trade Organization, and in particular to the requirements set out in its Article IX.

5. We stress that the Ministerial Conference and the General Council should not lightly exercise their authority to make decisions primarily assigned to other organs of the World Trade Organization. Only where a decision cannot be arrived at by the relevant organ following genuine and prolonged good faith negotiations should the Ministerial Conference or the General Council exercise their authority under Article IV of the Agreement Establishing the World Trade Organization in matters primarily entrusted to decision-making by other organs of the World Trade Organization.