Exemplars vs. Precedents in WTO Law

As most of this blog's readers are aware, there has been controversy over the "permissible interpretation" language in the legal standard of review in AD Agreement Article 17.6(ii). The U.S. argued for years that this language should provide special deference to domestic investigating authorities, but the Appellate Body did not follow the approach the U.S. wanted, and this is one of the issues on which the U.S. criticized the Appellate Body. But of course, the Appellate Body is no longer functioning, and the award of the MPIA arbitrators in the Frozen Fries case, circulated in December 2022, seemed to steer the jurisprudence towards the U.S. view.

In the ongoing EU - Fatty Acids (DS622) case, the Article 17.6(ii) standard of review has been raised by the U.S. as a third party, and when the report is circulated we'll see what the panel did with it. If we get some good reasoning on this issue, I'll come back to it (although I can imagine that the panel might try to avoid weighing in on this). I think it could take a few more cases to get a sense of the possible approaches to the application of a more deferential version of this standard, and to sort out the precise contours of that application.

This post, however, is about another controversial issue in the Fatty Acids case, one that came up in conjunction with the standard of review: The role of precedent in WTO law. To what extent should panels or arbitrators be relying on the reasoning of prior dispute settlement reports, decisions, and awards? This is another issue for which the U.S. has been critical of the Appellate Body, complaining about an overreliance on past reasoning.

I will note here that I've had troubling figuring out exactly what role the U.S. sees for past reasoning. It has said it favors a "persuasive" role for past cases rather than having these cases be "binding on or precedential for subsequent panels and the Appellate Body," but I've always thought that treating past dispute settlement rulings as "persuasive" was a good way of describing what people were doing in practice in WTO dispute settlement. To me, the word "precedent" should be thought of as a matter of degree, rather than always meaning that prior rulings are considered binding. In the WTO dispute settlement system as it existed with the Appellate Body, it seemed to me that there was scope for persuading panels and the Appellate Body not to follow past reasoning, although exactly how much scope was difficult to articulate.

Getting back to the Fatty Acids case, we may now be seeing a little more detail on what the U.S. wants in terms of reliance on past cases. As noted, the Frozen Fries arbitrators handled the Article 17.6(ii) standard of review issue in a way that fits with the U.S. view. So how would the U.S. approach a prior ruling that it likes? In this regard, when the Frozen Fries award came out, I asked:

... how does the U.S. see the precedential value of this finding? Would the U.S. want to see this MPIA finding treated by future WTO panels as a precedent with some degree of persuasive value? In the U.S. view, to what extent should the issue be reargued in future disputes based on the agreement text?

Based on its third party submissions, it turns out that the U.S. does, in fact, want to point the Fatty Acids panelists in the direction of finding persuasive value in the Frozen Fries award. But it didn't want to use the word "precedent," because, as noted, it seems uncomfortable with the idea of past reasoning being "binding" or "precedential." So how to manage this issue?

In its third party oral statement in Fatty Acids, the U.S. came up with a new word, saying the Frozen Fries award's reasoning on the standard of review "provides an exemplar":

4. As the United States has explained for years, the ordinary meaning of “permissible” is “can or ought to be permitted” or “allowable.” A “permissible” interpretation thus is an interpretation that can be reached under customary rules of interpretation, as reflected in Articles 31 and 32 of the Vienna Convention on the Law of Treaties. Nothing in customary rules of interpretation says an interpretation is not “permissible” simply because another interpretation could also result from the application of those rules.

5. The award by the arbitrators in Colombia – Frozen Fries provides an exemplar. There, the arbitrators recognized that the subparagraphs of Article 17.6 “must be understood in a manner granting special deference to investigating authorities under the Anti-Dumping Agreement.” ...

(footnotes omitted)

Pulling up an online dictionary, an "exemplar" is "one that serves as a model or example." And then doing a search for "exemplar vs. precedent," I see a book called "Philosophical Foundations of Precedent" that has a chapter on "Precedent, Exemplarity, and Imitation," which says the following in the abstract for the chapter:

This chapter examines precedent in law from an exemplarist perspective. First, it develops an account of precedent as a specific kind of exemplar. More precisely, it claims that precedents as exemplars have a dual ontology as both typical and unique, embody a public, object-based, and critical kind of exemplarity, and have emotional, monumental, and aesthetic dimensions.   

That's all a bit over my head, but clearly there is a connection between "exemplar" and "precedent"!

With all this in mind, I'll repeat what I've said before on this issue: I'm not totally sure the differences in viewpoint on the role of precedent in WTO law are as great as they may seem. Everyone wants to cite past cases, and everyone agrees these cases should be persuasive to some degree. Nevertheless, there's a feeling out there that the differences are great, and that feeling needs to be dealt with.

Maybe the differences of opinion can be resolved through language. For example, the particular introductory language when relying on past cases could be important, with a statement by adjudicators that "we agree with the past reasoning of case X" being preferable to citing the past case in a way that seems to accept it without thinking through the issue. Similarly, if the word "exemplar" that the U.S. has just brought into the discussion is enough to bridge the gap and get us to a cultural understanding of the issue of precedent that everyone can accept, that seems like a possible solution to the problem.