Some Interesting Provisions in the EU-Mercosur Interim Trade Agreement DS Chapter
We appear to be moving closer to a completed EU-Mercosur trade agreement, with the European Council announcing last week that it had "adopted two decisions authorising the signature of the EU-Mercosur Partnership Agreement (EMPA) and of the Interim Trade Agreement (iTA) between the EU and Mercosur." It also noted, however, that: "The agreements will require the consent of the European Parliament before they can be formally concluded by the Council. Ratification by all EU member states will also be required for the EMPA to enter into force." It's not clear to me how long all that will take.
In the meantime, though, the text of the Interim Trade Agreement is available, and there were a few provisions in the dispute settlement chapter (Chapter 21) that jumped out at me as interesting. While these provisions are not innovations that come out of nowhere, as all have some precedent, nonetheless they struck me as noteworthy in general and also in how they slightly modify previous approaches.
First up, there is a provision that addresses the issue of dispute settlement panels under the EU-Mercosur trade agreement taking into account WTO dispute settlement rulings:
Article 21.13: Applicable law and rules of interpretation
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2. In all disputes referred to in Article 21.4, the arbitration panel shall interpret the covered provisions in accordance with customary rules of interpretation of public international law. When interpreting an obligation under this Agreement which is identical to an obligation under the WTO Agreement, the arbitration panel shall take into consideration any relevant interpretation established in the rulings of the WTO Dispute Settlement Body.
On this issue, as I mentioned many years ago, the CETA deals with it in a slightly different manner. The CETA text states: "The arbitration panel shall also take into account relevant interpretations in reports of Panels and the Appellate Body adopted by the WTO Dispute Settlement Body." I assume that the change in language from CETA to the EU-Mercosur trade agreement – from "in reports of Panels and the Appellate Body adopted by the WTO Dispute Settlement Body" to "established in the rulings of the WTO Dispute Settlement Body" – is designed to bring in rulings of the MPIA. But are MPIA awards covered by "the rulings of the WTO Dispute Settlement Body" language? Under the MPIA rules, these awards are not adopted by the DSB, but nevertheless my instinct is that, yes, MPIA awards would be covered here (although I can imagine this issue being contested in the context of a specific dispute).
Another change here is the addition of "when interpreting an obligation under this Agreement which is identical to an obligation under the WTO Agreement." This appears to narrow the scope for applying this provision, perhaps to a considerable degree.
Second, there is a provision about dissents/separate opinions:
Article 21.14: Arbitral award
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11. The arbitration panel shall make every effort to take any decision by consensus. If, nevertheless, a decision cannot be reached by consensus, the matter at issue shall be decided by majority vote. The arbitrators shall not issue dissenting or separate opinions and shall maintain confidentiality as regards the voting.
The EU-Korea FTA, among other trade agreements, has similar language ("The arbitration panel shall make every effort to take any decision by consensus. Where, nevertheless, a decision cannot be arrived at by consensus, the matter at issue shall be decided by majority vote. In no case shall dissenting opinions of arbitrators be published.")
I take this language to mean that if there are dissenting views, they are to be settled by a vote, and after the vote has been taken, no separate reasoning is to be provided in the ruling, and perhaps not even a note indicating that there was a dissenting view on a particular issue. I'm not sure what the concern was here that resulted in a limit on dissenting or separate opinions and reasoning. I'm curious what people who have served as panelists, Appellate Body Members, and arbitrators think of this type of provision.
Finally, there is a provision under which parties can request clarifications of panel rulings:
Article 21.16: Request for clarification
No later than 10 (ten) days after the receipt of the arbitral award, a party may submit to the arbitration panel, with the other party and the Trade Committee in copy, a written request for clarification with regard to specific aspects of any finding or recommendation in the arbitral award that the requesting party considers ambiguous. The other party to the dispute may submit comments on that request to the arbitration panel no later than 5 (five) days after its receipt. The arbitration panel shall respond to the request for clarification of the arbitral award no later than 15 (fifteen) days after its receipt. Requests for clarification shall not be used as a means to review the arbitral award.
I see a similar provision in the DS chapter of the Pacific Alliance - Singapore FTA that was signed in 2022.
My instinct here is that this could be a good idea in theory, but I'm not sure what it would mean in practice. What kind of requests for clarification are we likely to see? How would panels respond? I'm intrigued but would like to see how this plays out in a few disputes. I can imagine it might help bring clarity to some interpretive areas where the jurisprudence has left us with uncertainty over the years. Even if it does not, though, I don't see any harm in it.