Precedent in trade law is a hot topic these days. Jeffrey Kucik, Lauren Peritz, and Sergio Puig have a new article out called "Legalization and Compliance: How Judicial Activity Undercuts the Global Trade Regime." This is the abstract:
The crisis facing the World Trade Organization illustrates the trade-off between legalization and compliance in international legal systems. Dispute bodies can sometimes “overreach” in their rulings, leading to resistance from member states. This article looks at one form of legal overreach: the extension of legal precedent. We argue that extending previous decisions can reduce the flexibility that states include deliberately in their agreements. We utilize original data on individual applications of precedent in the World Trade Organization's Appellate Body decisions from 1995 to 2015 and on policy responses to those decisions. We find strong evidence that extending precedent reduces on-time compliance. It also leads to longer delays before members comply. The results speak to the life cycles of international organizations, as well as questions of design and cooperation.
And this is from the intro:
We argue that ICs [International Courts] risk political resistance from governments when they rely too heavily on precedent. The backlash is particularly sharp when ICs extend precedent. Extensions constitute increases in legalization. Extensions occur when ICs apply prior decisions to areas of the law not implicated in the previous case, effectively widening the binding coverage of the ruling. In this way, extensions can expand countries' obligations and reduce the flexibility that governments prefer.
And here is part of the conclusion:
... there is a temptation to believe that the WTO's is a sui generis story driven by the United States. Given public testimony from other WTO members, the dissatisfaction with precedent is more general. Nevertheless, the United States has more to lose from the WTO's judges claiming the authority to “make law.” From the US point of view, this AB practice is especially harmful when a state needs flexibility to support industries affected by the trade practices of lower-cost producer states. US opposition has shone a spotlight on a legal regime whose judicial activities have crept beyond their mandate and, in doing so, incentivized countries to delay or avoid compliance, tacitly undercutting the regime. Our findings point to the need for reform to the WTO dispute settlement system—reforms that might institutionalize and reintroduce the flexibility that is lost through precedent extensions.
On the specific question they were examining, I can see how governments who felt like precedent was being stretched to reach a finding against them would be less likely to comply with the ruling.
But more generally on the issue of precedent, as I read the various critiques of how precedent has been used in WTO dispute settlement in recent years, I have trouble understanding how people expect and want precedent to work. Personally, I don't have strong feelings about the answer. I would say that precedent should mean that past cases have some degree of persuasiveness, but I could live with a range of degrees of persuasiveness here. Courts should probably be able to depart from past precedent if the reasoning of the prior case was very bad, especially if the prior case is from a long time ago, but I have a hard time spelling all this out precisely. Clarity would be nice, but it seems difficult to provide.
A good deal of the responsibility for establishing the right culture for the use of precedent probably lies with the governments who litigate these cases. In trying to win particular disputes, they sometimes push the boundaries of how past decisions apply to the case at hand. They look far and wide for past judicial reasoning that could help their cause in the current case, and in that way contribute to the "extending" that I think the authors have in mind above. Thus, possibilities for extending precedents are put in front of WTO adjudicators by the parties, when the adjudicators may not have come up with the extensions on their own.
If you didn't want extensions of precedent to happen, how would you write that up in a legal text? If you said, "don't apply prior decisions to areas of the law not implicated in the previous case," what would parties and adjudicators do in response? Would we then just get arguments about whether an area of law was "implicated" in the previous case? Maybe this has come up in domestic law, and there are some answers there, but I'm not aware of it.
