International Economic Law and Policy Blog

A WTO DS Workaround for Appeals Into the Void

Where the party complained against in a WTO dispute appeals into the void and thereby blocks an adverse panel report from having legal effect, can the complaining party just treat the panel report as the final word and move forward with retaliation? The EU has set up a process for doing so, and may now give it a try for the first time. In a sense, the EU is declaring that "appeals into the void" are void.

The European Commission announced on Friday that it "has launched a public consultation on the possible use of the Enforcement Regulation in its dispute settlement case on Indonesian nickel export restrictions." It explained that "[t]his step was taken after Indonesia appealed the World Trade Organization (WTO) Panel Report on the matter – which was favourable to the EU – to a non-functional Appellate Body, thus effectively blocking the final and binding resolution of the dispute through the WTO." The Commission emphasized that it "will continue efforts to reach a mutually agreed solution to the nickel ore dispute, including continuing to invite Indonesia to join the Multi-Party Interim Appeal Arrangement (MPIA)."

The EU's public consultation notice is here, with a deadline of August 11 to submit comments. The notice explains the Enforcement Regulation as follows:

Regulation (EU) No 654/2014 of 15 May 2014 concerning the exercise of the EU's rights for the application and enforcement of international trade rules as amended by Regulation (EU) No 2021/167 provides the legal basis to address blockages in the WTO dispute settlement system and to prepare the EU for such situations where important economic interests in the effective enforcement of rules would be undermined.

Where action is necessary to safeguard the EU's interests in such cases, the EU may take appropriate commercial policy measures in response, on the basis of objective criteria.

And it estimates the amount of nullification or impairment -- which provides the basis for any countermeasures under the Enforcement Regulation -- in the Indonesian nickel case as follows:

The Commission has estimated the direct effect of the nullification and impairment to be around €350 million, while the indirect impact would be up to four times higher. The Commission has at this stage identified steel and stainless steel products as possible products for countermeasures.

Is the EU regulation consistent with WTO rules? Is appealing into the void consistent with those rules? Whatever the answer to those questions, what many people are looking for right now is a practical way forward in resolving trade disputes while the Appellate Body crisis continues. The EU approach is not ideal in terms of the rule of law (and I'm sure they would agree with this), but it may be the best option under the circumstances.

Some other questions I have are:

- How will Indonesia react to this? As I understand it, there are a number of EU-Indonesia trade issues in play right now, so the resolution of this dispute could end up being part of a broader package.

- How would people in the U.S. react to the EU taking this approach in some future dispute involving an EU complaint against the U.S.? (When I say "people in the U.S.," I'm thinking specifically of USTR, the White House, and members of Congress.) And what impact would such an EU action have on the current U.S. approach to WTO DS?

In other WTO appeal news, China and the EU have agreed to use DSU Article 25 in the event of an appeal in the DS610 and DS611 disputes. Both China and the EU are parties to the MPIA.

China and Japan Agree To Use MPIA for DS601 Dispute

In a post last month after Japan joined the MPIA, I said:

Why is Japan making this announcement right now? Hard to say for sure, and there could be a number of things going on, but as Dmitry Grozoubinski pointed out to me, the ongoing panel hearing Japan's complaint in China - AD Measures on Stainless Steel (DS601) has said that it "expects to issue its final report to the parties by the first quarter of 2023." It's definitely worth keeping an eye on developments in that case. No doubt Japan would like to avoid China appealing into the void if it loses, and joining the MPIA now could be a way to prevent that.

Following up on that, earlier this week Japan and China notified the DSB that they have agreed to Procedures for Arbitration under Article 25 in the DS601 dispute to handle any appeal. The panel in DS601 recently updated its schedule to say that it "now expects to issue its final report to the parties in May 2023." It seems like we are headed towards a panel report being issued soon and an MPIA appeal coming after that, although a settlement is always a possibility.

Japan Joins the MPIA

There seems to be a bit of momentum with the MPIA these days. There was the recently issued Colombia - Frozen Fries award, which MPIA Arbitrator Joost Pauwelyn told us about. And now Japan is joining the arrangement, as METI just announced:

On March 10, the Japanese Cabinet approved Japan’s participation in the Multi-Party Interim Appeal Arbitration Arrangement pursuant to Article 25 of the Understanding on Rules and Procedures Governing the Settlement of Disputes.

Today, Japan will notify the WTO Dispute Settlement Body of its intent to join the MPIA.

 

...

More than three years have passed since the Appellate Body ceased functioning, and the annual number of WTO dispute settlement cases has dropped to less than half of what it was before the current situation began. In addition, two of the dispute cases that Japan has filed with the WTO have already been “appealed into the void,” and those cases have been virtually left in limbo. In the future, further panel reports will be issued on the other two dispute cases that Japan has filed with the WTO.

As an interim measure until the dispute settlement function is restored, the Japanese government decided to join the MPIA. The Japanese government will notify the WTO Dispute Settlement Body of its intent to join the MPIA pursuant to the Cabinet Approval as of today. 

Japan will continue to work actively toward the earliest possible restoration of the WTO dispute settlement function and will also contribute to maintaining a rules-based international economic order through the utilization of the MPIA.

Why is Japan making this announcement right now? Hard to say for sure, and there could be a number of things going on, but as Dmitry Grozoubinski pointed out to me, the ongoing panel hearing Japan's complaint in China - AD Measures on Stainless Steel (DS601) has said that it "expects to issue its final report to the parties by the first quarter of 2023." It's definitely worth keeping an eye on developments in that case. No doubt Japan would like to avoid China appealing into the void if it loses, and joining the MPIA now could be a way to prevent that.

(METI's announcement refers to further panel reports being issued on "the other two dispute cases that Japan has filed with the WTO." The second one is DS584, which is against India, but unlike China, India is not a party to the MPIA). 

The MPIA: What’s New? (Part I)

On 21 December 2022, more than two and a half years after its creation, the World Trade Organization’s (WTO’s) Multi-Party Interim Appeal Arbitration Arrangement (MPIA) finally produced its first appellate award.[1]

The inaugural MPIA award was issued in a dispute filed by the EU in November 2019 against anti-dumping duties imposed by Colombia on frozen fries from Belgium, Germany and The Netherlands. The three MPIA appeal arbitrators reversed one panel finding of violation, and confirmed three other panel findings that were appealed by Colombia.[2] 

In this series of three posts, the first post explains what the MPIA is; a second post will ask whether the MPIA worked; a third and final post will describe some of the novelties that can be found in the first MPIA procedure.

Part I: What is the MPIA?

The MPIA was created in April 2020, by a sub-set of WTO Members, originally 19, today 25, out of a total of 136 (counting the EU and its 27 member states as one).[3] The MPIA was set up as an interim response to the demise of the WTO’s Appellate Body in December 2019, brought about by a US block on appointments to the Appellate Body.

Pending negotiations to fix the situation relating to the Appellate Body, MPIA participants wanted, above all, to preserve the functioning of WTO dispute settlement. More specifically, the main goal was to prevent “appeals into the void”, that is, blocking of the dispute resolution process by appealing a panel report to an Appellate Body that no longer functions. Instead, MPIA participants committed ex ante “not [to] pursue appeals under Articles 16.4 and 17 of the DSU [Dispute Settlement Understanding]”[4] and to use the alternative of (appeal) arbitration, explicitly foreseen in Article 25 of the DSU, to complete possible appeals in disputes between MPIA participants.[5]

The MPIA’s primary objective is, therefore, to preserve the system’s “binding character and two levels of adjudication”[6]: a panel stage, which remains the same as before (pre-2019), and an appellate stage, now conducted through Article 25 arbitration instead of the old Appellate Body.

Importantly, as the MPIA is, in effect, a form of arbitration implemented within a regular WTO dispute, albeit only at the appeal stage (see Part II), the MPIA is not a plurilateral agreement. It is nested within the multilateral WTO and explicitly foreseen and allowed for under DSU Article 25 (entitled “Arbitration”).  Illustrating the multilateral character of the MPIA, MPIA arbitrators hearing an appeal are paid out of the regular WTO dispute settlement budget and assisted by regular Secretariat staff.  

The second post in this series will examine whether the MPIA, in its first dispute, has achieved the goal of preserving the functioning of WTO dispute settlement.

A secondary goal of the MPIA was to test the waters with possible innovations to enhance “the procedural efficiency of appeal proceedings”.[7] This includes a mandate for MPIA appeal arbitrators to “take appropriate organizational measures to streamline the proceedings” including “decisions on page limits, time limits and deadlines as well as on the length and number of hearings required”.[8] MPIA participants also allowed arbitrators to “propose substantive measures to the parties, such as an exclusion of claims based on the alleged lack of an objective assessment of the facts pursuant to Article 11 of the DSU”[9] and explicitly limited the scope of appellate review to “only address those issues that are necessary for the resolution of the dispute” and “only those issues that have been raised by the parties”.[10]

The third post in this series will describe to what extent the first MPIA award brought about any such innovations.

 

(*) Full disclosure: the author was one of the three arbitrators in the first MPIA appeal. This contribution is written in the author’s personal capacity, conveys only publicly available information, and is limited to providing factual information about (not a critical or substantive assessment of) the MPIA and its process in order to enrich the public debate about WTO dispute settlement, its state-of-play and reform process.

[1] One earlier appeal arbitration award was issued under DSU Article 25, in a dispute between the EU and Türkiye, but this was not formally under the MPIA (as Türkiye is not an MPIA participant) but as a result of an ad hoc appeal arbitration agreement between the parties which incorporated some but not all elements of the MPIA. See Turkey — Certain Measures concerning the Production, Importation and Marketing of Pharmaceutical Products, Arbitration under Article 25 of the DSU, Award of the Arbitrators, WT/DS583/ARB25, 25 July 2022.

[2] Colombia – Anti-Dumping Duties on Frozen Fries From Belgium, Germany and The Netherlands, Arbitration under Article 25 of the DSU, Award of the Arbitrators, WT/DS591/ARB25, 21 December 2022.

[3] For updated information on MPIA participants and cases, see https://wtoplurilaterals.info/plural_initiative/the-mpia/.

[4] MPIA Pursuant to Article 25 of the DSU, 30 April 2020, JOB/DSB/1/Add.12 (hereafter “MPIA”), para. 2.

[5] DSU Article 25 provides, in crucial parts, as follows:

1. Expeditious arbitration within the WTO as an alternative means of dispute settlement can facilitate the solution of certain disputes that concern issues that are clearly defined by both parties.
2. Except as otherwise provided in this Understanding, resort to arbitration shall be subject to mutual agreement of the parties which shall agree on the procedures to be followed …
3. … The parties to the proceeding shall agree to abide by the arbitration award.  Arbitration awards shall be notified to the DSB … where any Member may raise any point relating thereto.
4. Articles 21 and 22 of this Understanding [on implementation and enforcement of WTO panel/Appellate Body rulings] shall applymutatis mutandis to arbitration awards.

[6] MPIA, 4^th preambular paragraph.

[7] Ibid., Annex 1, para. 12.

[8] Ibid.

[9] Ibid., Annex 1, para. 13.

[10] Ibid., Annex 1, para. 10.

U.S. Views on MPIA Arbitrators' Consideration of AD Agreement Legal Standard of Review

At last Friday's DSB meeting, the U.S. had some positive things to say about how the MPIA arbitrators in the Colombia - Frozen Fries dispute handled the issue of the AD Agreement Article 17.6(ii) legal standard of review:

- The United States intervenes to comment on the Arbitrator’s findings with respect to Article 17.6(ii) of the Anti-Dumping Agreement (“AD Agreement”).

- Article 17.6(ii) was key to the acceptance of the other provisions of the AD Agreement. The existence of such a provision confirms that Members were aware that the text of the AD Agreement could pose particular interpretive challenges, at least in part because it was drafted to cover varying and complex anti-dumping regimes and long-standing differences concerning methodology. WTO Members agreed, therefore, that it would be a legal error not to respect a permissible interpretation of the AD Agreement.

- The question under Article 17.6(ii) is whether an investigating authority’s interpretation of the AD Agreement is a permissible interpretation. As the United States has explained for years, “permissible” means just that: a meaning that could be reached under the Vienna Convention.1

- Article 17.6(ii) itself confirms that provisions of the AD Agreement may “admit[] of more than one permissible interpretation.”

- Where that is the case, and where the investigating authority has relied upon one such interpretation, a panel must find the measure to be in conformity with the AD Agreement. As one panel report stated, “[I]n accordance with Article 17.6(ii) of the AD Agreement, if an interpretation is ‘permissible’, then we are compelled to accept it.”2

- The Arbitrator seriously engaged with the text of Article 17.6(ii). The Arbitrator appropriately 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.”3

- The Arbitrator undertook its textual analysis in a manner that gave effect to the terms of the provision.

- The analysis addressed directly the nature of treaty interpretation under the Vienna Convention. The Arbitrator explained that its “approach assumes, as the second sentence does, that different treaty interpreters applying the same tools of the Vienna Convention may, in good faith and with solid arguments in support, reach different conclusions on the ‘correct’ interpretation of a treaty provision.”4

- The Arbitrator went on to note favorably the observation that the Vienna Convention rules “are facilitative not disciplinary and do not ‘instruct the treaty interpreter to find a single meaning of the treaty’ as a former Appellate Body member has written.”5

- We agree with this observation and find the Arbitrator’s analysis of Article 17.6(ii) to be persuasive.

- The Arbitrator’s analysis differs from – and implicitly rejects – the past reports of the Appellate Body that expressed disregard for the meaning and importance of Article 17.6(ii).

- In no WTO dispute did the Appellate Body ever find that there was a permissible interpretation of the AD Agreement other than the interpretation favored by the Appellate Body. Instead, the Appellate Body simply asserted “the rules and principles of the Vienna Convention cannot contemplate interpretations with mutually contradictory results”6

- That assertion was unsupported. The ordinary meaning of “permissible” is “allowable” or “permitted” – that is, an interpretation that could be reached under customary rules of interpretation.

- We welcome the Arbitrator’s willingness to adopt an interpretation that is consistent with the text agreed by Members, even and especially if the interpretation differs from the Appellate Body’s erroneous views.7

- We recall that some Members appear to promote “security and predictability” as an independent goal for dispute settlement, and from that derive that appellate interpretations must simply be followed. But this Arbitrator has developed an interpretation that is more consistent with the text agreed by Members. Adherence to the texts as negotiated and agreed by Members – rather than consistency for consistency’s sake – assists in providing security and predictability to the multilateral trading system – per the precise words of Article 3.2 of the DSU.

- We look forward to engaging further with Members on the important issues raised in the Arbitrator’s Award.

This U.S. statement raises a few questions for me related to some of the big systemic questions hovering out there on WTO dispute settlement.

First, does the MPIA arbitrators' finding here make the U.S. more sympathetic to the MPIA, and would it considering using the MPIA, or DSU Article 25 on an ad hoc basis, as an appeals mechanism in the future?

Second, 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?

Third, how do other governments view the MPIA arbitrators' findings here? Were they persuaded by the reasoning, so there is now a consensus around this approach? Or do some of them prefer the Appellate Body's approach? (If anyone knows if other governments spoke on this issue at the DSB meeting or elsewhere, feel free to mention it in the comments).

The First MPIA Award and DSU Article 11

This is from the Colombia - Frozen Fries MPIA Award issued today:

4.2. The Arbitrators take due note of paragraph 12 of the Agreed Procedures, which mandates that the Award in this Arbitration be issued within 90 days of the filing of the Notice of Appeal, and which permits the Arbitrators to "take appropriate organizational measures to streamline the proceedings". Paragraph 13 of the Agreed Procedures further provides that "the arbitrators may also propose substantive measures to the parties, such as an exclusion of claims based on the alleged lack of an objective assessment of the facts pursuant to Article 11 of the DSU". In a pre-appeal letter sent to the parties on 19 September 2022, we provided guidelines on, inter alia, the length of written submissions and hearings and the language of proceedings, and the parties were encouraged to be selective in the number of claims they submitted on appeal and to refrain from making claims under Article 11 of the DSU.27 During these proceedings, Colombia agreed to conduct proceedings in English and explained to us that it had deliberately limited the claims on appeal and brought no claims under Article 11 of the DSU. The Arbitrators wish to acknowledge Colombia's efforts in this Arbitration in a manner facilitating the issuance of the Award in a timely manner.

The surest way to discourage DSU Article 11 appeals would be to amend the DSU so as to impose some limits, but there are obvious hurdles to getting to that outcome, one of which is that governments might not agree on the limits. In the meantime, the MPIA rules seem to pursue this objective a bit more tentatively, through Arbitrator pressure. As the passage above illustrates, this approach may be having some success. Is there a developing norm against DSU Article 11 appeals? Will they be seen more negatively by Members? It might be better to codify all this, but perhaps a norm is the best that can be done at the moment.

ADDED:

The Pre-Arbitration Letter sent by the Arbitrators to the parties, which is included in Annex 2 in the addendum to the report, says:

3. Claims Based on the Alleged Lack of an Objective Assessment of the Facts Pursuant to Article 11 of the DSU

Paragraph 13 of the Agreed Procedures provides that "[i]f necessary in order to issue the award within the 90 day time-period, the arbitrators may … propose substantive measures to the parties". One such measure explicitly suggested is "an exclusion of claims based on the alleged lack of an objective assessment of the facts pursuant to Article 11 of the DSU." Footnote 6 clarifies that such proposal of the arbitrators "is not legally binding and it will be up to the party concerned to agree with the proposed substantive measures. The fact that the party concerned does not agree with the proposed substantive measures shall not prejudice the consideration of the case or the rights of the parties".

Taking into account paragraph 13 of the Agreed Procedures and in order to enhance procedural efficiency and facilitate meeting the 90 day time-period, the parties in this dispute are invited to consider refraining from making claims based on the alleged lack of an objective assessment of the facts pursuant to Article 11 of the DSU.

In this light, any Party considering making such claims is encouraged to:

(i) appraise how any such Article 11 claim would affect the 90 day time-period for the issuance of the award as referred to in paragraphs 12 and 13 of the Agreed Procedures; and

(ii) evaluate, in the light of paragraph 10 of the Agreed Procedures which requires arbitrators to address only "those issues that are necessary for the resolution of the dispute" and Article 3.7 of the DSU which calls on each WTO Member to "exercise its judgement as to whether action under these procedures would be fruitful", whether such Article 11 claim has the potential to impact the substantive outcome of the dispute and whether and how it is "necessary for the resolution of the dispute."

Any such Party is also urged to consider whether the substance of any possible Article 11 claim could be brought under one of the substantive treaty provisions at issue in the dispute, for example as an allegation of panel error in the application of that provision to the facts of the case (rather than an allegation of error in the assessment of facts under Article 11 of the DSU).

In the event a Party nonetheless decides to bring an Article 11 claim related to the Panel's assessment of the facts, and without prejudice to the question of whether (and, if so, under what conditions) such claims fall within the appeal mandate set out in Article 17.6 of the DSU and/or paragraph 9 of the Agreed Procedures, the Party is requested to set forth succinctly in its Notice of Appeal or Appellant/Other Appellant Submission:

(i) whether and how the alleged panel error was raised before the Panel, in particular during the interim review stage, thereby providing the Panel an opportunity to address the alleged error, taking into account that paragraph 9 of the Agreed Procedures limits appeals to "issues of law covered in the panel report and legal interpretations developed by the panel" (underlining added);

(ii) in what way the Article 11 claim is an issue "necessary for the resolution of the dispute" in the sense of paragraph 10 of the Agreed Procedures and a matter that cannot be brought under one of the substantive treaty provisions at issue in the dispute; and

(iii) in what way the alleged panel error is not simply an appreciation of a factual issue (within the exclusive domain of panels) and amounts to an "issue of law" covered in the Panel Report or "legal interpretation" developed by the Panel, and thereby falls within the mandate of appellate review under paragraph 9 of the Agreed Procedures.

The First MPIA Award Is Out, and It Discusses AD Agreement Article 17.6(ii) "Permissible" Interpretations

The first MPIA Award, in the Colombia - Frozen Fries disputes, was circulated today. In a previous blog post on this dispute, I had some uncertainty about whether the arbitrators would say anything about the AD Agreement Article 17.6(ii) legal standard of review, but it turns out they did:

4.11. The Panel stated that whether a provision admits of more than one "permissible" interpretation (under the second sentence) depends on whether more than one such interpretation emerges after the Panel has examined the relevant provision under customary rules of interpretation of public international law (under the first sentence). Accordingly, the Panel stated that the "starting point" of its interpretative analysis required an interpretation of the relevant provision under treaty interpretation rules, including Articles 31 and 32 of the Vienna Convention on the Law of Treaties (Vienna Convention).41

4.12. Our approach to the interpretation claims in this appeal differs. We do not begin the interpretative exercise by focusing solely on the first sentence of Article 17.6(ii), as this in our view pays insufficient regard to the immediate context of this sentence, namely Article 17.6(i) and the second sentence of Article 17.6(ii). Each of these provisions must be understood in a manner granting special deference to investigating authorities under the Anti-Dumping Agreement.42 The second sentence of Article 17.6(ii) mandates panels to defer to and accept an authority's measure as soon as it "rests upon" a "permissible" interpretation. As we have noted, Article 17.6(i) prevents a panel from conducting a de novo assessment of the facts on record; an authority's establishment and evaluation of facts must be allowed to stand so long as it is "proper" and "unbiased and objective", and this is the case "even though the panel might have reached a different conclusion".

4.13. Reading these provisions together, we aim to integrate the elements of interpretation under Article 17.6(ii). As a result, we will begin by asking ourselves whether Colombia's proposed interpretation of the phrase "where appropriate" in Article 5.2(iii) – reflected in MINCIT's decision to initiate its investigation, in part, on the basis of third-country sales prices – is a "permissible" one. As a yardstick for "permissibility", the first sentence of Article 17.6(ii) refers us to the customary rules of treaty interpretation. However, we will not engage in our own, de novo interpretation of the terms "where appropriate" so as to arrive at what we consider to be the "final" or "correct" application of Articles 31 and 32 of the Vienna Convention. Instead, we will ask whether a treaty interpreter, using the method for treaty interpretation set out in the Vienna Convention – that is, an interpretation "in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose" and, where appropriate, "supplementary means of interpretation" – could have reached Colombia's interpretation. And this even though we, as de novo treaty interpreters, might have reached a different conclusion.

4.14. Our approach assumes, as the second sentence does, that different treaty interpreters applying the same tools of the Vienna Convention may, in good faith and with solid arguments in support, reach different conclusions on the "correct" interpretation of a treaty provision.43 This may be particularly true for the Anti-Dumping Agreement, which was drafted with the understanding that investigating authorities employ different methodologies and approaches. Treaty interpretation is not an exact science and applying the Vienna Convention's method does not magically and inevitably lead to a single result. In most cases, treaty interpretation involves weighing, balancing, and choice.

4.15. Thus, the ultimate question for us when testing a proposed interpretation is to draw a line beyond which an interpretation is no longer "permissible" under the Vienna Convention method for treaty interpretation. Dictionary meanings support the idea that the search for "permissible" interpretations differs from an attempt to find one's own – "final" and "correct" – interpretation.44 Rather, the question is whether someone else's interpretation is "permitted", "allowable", "acceptable", or "admissible" as an outcome resulting from a proper application of the interpretative process called for under the Vienna Convention. Obviously, not just any interpretation put forward by an authority can be accepted as "permissible". The interpretative process under the Vienna Convention sets out an outer range beyond which meanings cannot be accepted. Just as permissible interpretations cannot be limited to a single "final" and "correct" answer as determined by a given tribunal, not all interpretations have the required degree of solidness or analytical support for them to be given deference as "permissible" within the bounds of the Vienna Convention method for treaty interpretation.

At first glance, I like this approach in the abstract. It seems like a clear and reasonable articulation of a legal provision that many people have found confusing. It will take a few instances of application to get a better sense of how it will work in practice though. (The Arbitrators in this dispute rejected the two arguments by Colombia that the interpretations by its investigating authorities were permissible).

Of course, what I think is not as important here as what governments think. In this regard, I wonder if this approach is one that the U.S. would support in the context of its objections to Appellate Body overreach.

The Frozen Fries Appeal: Permissible Interpretations under AD Agreement Article 17.6(ii)

When the Colombia - Frozen Fries MPIA appeal started up, I noted that "most of the issues are pretty basic anti-dumping ones, but there is a possibility of an important systemic issue coming up," as "[t]he panel report gets into the issue of the AD Agreement Article 17.6(ii) legal standard of review a bit."

Recall that the Article 17.6(ii) legal standard of review states:

the panel shall interpret the relevant provisions of the Agreement in accordance with customary rules of interpretation of public international law. Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities' measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.

My sense is that many people find the "more than one permissible interpretation" language in the second sentence to be confusing. It clearly suggests that there may be multiple permissible interpretations, but when exactly are there multiple permissible interpretations? Treaty language is often unclear, and parties put forward competing interpretations, but how do we determine if there are multiple permissible interpretations in a given interpretive exercise?

The EU has now posted its written submission and oral statement at the hearing in the Frozen Fries appeal. In its written submission, it offers the following argument about the application of 17.6(ii):

19. The European Union disagrees with Colombia’s suggestion that the application of the legal standard under Article 17.6(ii) of the Anti-Dumping Agreement requires a panel to determine whether there are two or more permissible interpretations of a legal provision. In most cases, the conscientious application of the rules of treaty interpretation in Articles 31 and 32 of the Vienna Convention yields a single interpretation of the provision in question. It is only in cases where the application of those rules leads to two or more interpretations of the same provision of the Anti-Dumping Agreement that the second sentence of Article 17.6(ii) applies.

20. In those cases where the application of the rules of treaty interpretation in Articles 31 and 32 lead to two or more interpretations of the same provision of the Anti-Dumping Agreement, however, the European Union considers that the application of the second sentence of Article 17.6(ii) should not require a panel to choose between mutually contradictory interpretations, as Colombia seems to assume. The permissible interpretations are only those falling within a range that fits harmoniously with the terms, context, and object and purpose of the treaty. As stressed by the Appellate Body:

“the second sentence [of Article 17.6(ii)] allows for the possibility that the application of the rules of the Vienna Convention may give rise to an interpretative range and, if it does, an interpretation falling within that range is permissible and must be given effect by holding the measure to be in conformity with the covered agreement. The function of the second sentence is thus to give effect to the interpretative range rather than to require the interpreter to pursue further the interpretative exercise to the point where only one interpretation within that range may prevail. […] the enterprise of interpretation is intended to ascertain the proper meaning of a provision; one that fits harmoniously with the terms, context, and object and purpose of the treaty. The purpose of such an exercise is therefore to narrow the range of interpretations, not to generate conflicting, competing interpretations.”

21. The Panel in this dispute correctly applied the legal standard under Article 17.6(ii), whose starting point is the requirement in the first sentence to interpret the relevant provisions of the Anti-Dumping Agreement in accordance with customary rules of interpretation of public international law. Contrary to Colombia’s contentions, the legal standard under Article 17.6(ii) does not consist primarily of applying the second sentence and examining whether the authority’s determination rests on a permissible interpretation.

It is not clear whether the MPIA arbitrators in this appeal will address the Article 17.6(ii) "permissible interpretation" standard. Note that the EU argues: "The European Union must stress that Colombia’s Notice of Appeal contains no reference whatsoever to a claim of error in the interpretation or application of Article 17.6(ii) of the Anti-Dumping Agreement. Therefore, it is clear that the issue of the Panel's interpretation or compliance with Article 17.6(ii) of the Anti-Dumping Agreement is not properly before the Arbitrators in this appeal." Thus, there appears to be a procedural way out of weighing in on this difficult issue if the arbitrators want to take it.

However, if they were to address this issue, one possible approach to Article 17.6(ii) would be the following. The EU doesn't set forth its view of the specific circumstances in which there may be more than one permissible interpretation, but its reference to Articles 31 and 32 of the Vienna Convention on the Law of Treaties is helpful. Recall that Article 32 of the Vienna Convention says:  

Article 32: Supplementary means of interpretation

Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31:

(a) leaves the meaning ambiguous or obscure; or

(b) leads to a result which is manifestly absurd or unreasonable.

Based on this provision, we know that there can be situations where the Article 31 treaty interpretation process "leaves the meaning ambiguous or obscure." Perhaps, then, adjudicators who are interpreting Article 17.6(ii) could use this language to inform the meaning of "permissible interpretation." In this regard, if the Article 31 interpretation process on its own "leaves the meaning ambiguous or obscure," there could be a presumption -- either rebuttable or irrebuttable -- that multiple permissible interpretations exist. In practice, what this could mean is that where there is a high enough degree of uncertainty about the meaning of a particular provision after going through the Article 31 interpretive process, the adjudicator could find that the meaning is "ambiguous or obscure," and that there are multiple permissible interpretations of the provisions within the meaning of Article 17.6(ii). It might take a few instances of applying this standard to get a sense of when the meaning of a term or phrase or provision is "ambiguous or obscure," but over time I think we would get some clarity. 

Let me make two quick additional points.

First, in theory the Article 32 interpretive process could resolve the ambiguity or obscurity, but based on what I've seen with recourse to Article 32, that is unlikely in practice.

And second, the "leads to a result which is manifestly absurd or unreasonable" language could also be used in the same way, but to me that standard seems a little harder to demonstrate.

The Colombia - Frozen Fries MPIA Appeal

The first MPIA appeal (and second DSU Article 25 arbitration appeal) is now underway as Colombia has appealed the Colombia - Frozen Fries (DS591) dispute. The WTO announced today that the following arbitrators will hear the case:

• Mr José Alfredo GRAÇA LIMA (Chairperson)
• Mr Alejandro JARA
• Mr Joost PAUWELYN

With regard to the substance of the appeal, my sense is that most of the issues are pretty basic anti-dumping ones, but there is a possibility of an important systemic issue coming up. The panel report gets into the issue of the AD Agreement Article 17.6(ii) legal standard of review a bit:

7.285. Colombia argues that MINCIT's interpretation of the term "dumped imports" as including de minimis margin imports is a "permissible" interpretation within the meaning of the second sentence of Article 17.6(ii) of the Anti-Dumping Agreement.529 The second sentence of Article 17.6(ii) concerns situations "[w]here the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation". The first sentence of Article 17.6(ii) requires that panels "shall interpret the relevant provisions of the Agreement in accordance with customary rules of interpretation of public international law".

7.286. The question of whether a relevant provision admits of more than one "permissible" interpretation – the situation contemplated under the second sentence – thus depends on whether more than one such interpretation emerges when the Panel examines the provision in accordance with the "customary rules of interpretation of public international law" – that is, when the Panel applies the first sentence of Article 17.6(ii). As the starting point of our interpretative analysis, we must therefore interpret the term "dumped imports" in Articles 3.1, 3.2, 3.4, and 3.5 in accordance with the customary rules of interpretation of public international law, as reflected in Articles 31 and 32 of the Vienna Convention.5

...

7.303. We therefore disagree with Colombia that an interpretation of the term "dumped imports" as including de minimis margin imports is "permissible" within the meaning of the second sentence of Article 17.6(ii) of the Anti-Dumping Agreement. ...

This legal standard is important for the level of deference WTO adjudicators show towards domestic anti-dumping authorities, an issue that has been of importance to many people in the U.S. in particular. I wondered if there was a possibility that the U.S. would use this case as an opportunity to push for a broad approach to what constitutes a "permissible" interpretation. However, in the U.S. responses to questions from the panel, it did not seem very sympathetic to Colombia's position here:

4.2 To the third parties: To what extent does Article 17.6(ii) of the Anti-Dumping Agreement inform the interpretation of the term “dumped imports” in Article 3? In particular, does the Article 3 term “dumped imports” admit “of more than one permissible interpretation” within the meaning of Article 17.6(ii)? And, if so, is the interpretation advanced by Colombia in paragraphs 13.16-13.28 of its first written submission one such “permissible interpretation”?

24. Colombia argues that the term “dumped imports” as it appears in Article 3, concerning the determination of injury, can be interpreted as encompassing “all imports originating from origins for which a margin of dumping above zero (a positive margin of dumping) has been calculated, which includes de minimis dumping margins.”39 Colombia also argues that Article 9.1 of the Agreement on Safeguards,40 Article 11.9 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement),41 and the negotiations of the Kennedy Round Antidumping Code,42 support its interpretation.

25. Article 17.6(ii) expressly acknowledges that the provisions of the Anti-Dumping Agreement may “admit[] of more than one permissible interpretation.”43 Article 17.6(ii) further requires that a panel find a measure “to be in conformity with the [Anti-Dumping] Agreement if it rests upon one of those permissible interpretations.”44

26. Colombia’s interpretation, however, would not appear to be supported by the text of Article 3. Article 3.1 refers to “the” dumped imports, which suggests something less than the total imports from the origins found to be dumping. Article 3.1 also speaks to the impact of “these imports,” referring back to “the” dumped imports and not to imports more generally. Article 3.3 also addresses the cumulative assessment of the effects of imports if “the margin of dumping … is more than de minimis,” not “the dumped imports” as defined by Colombia. Finally, Article 3.5 refers to injury caused by “the dumped imports … through the effects of dumping,” which cannot be said to include imports for which there is not sufficient evidence of dumping under Article 5.8.

27. Therefore, Colombia’s interpretation cannot be considered a permissible interpretation of the term “dumped imports” within the meaning of Article 17.6(ii) of the Anti-Dumping Agreement. 

Nevertheless, it's worth keeping an eye on this issue as the dispute is argued and when the award is issued.

DSU Article 25 Arbitration: A Long-Term Solution for the Appellate Body Crisis?

To date, proposals for the reform of WTO dispute settlement have focused on institutional improvements of the AB, as represented by the Walker proposal, or possible replacement of the two-tier adjudication with one-tier adjudication by a standing body of full-time panelists, as suggested by Hoekman and Marvroidis (“To AB or Not to AB: Dispute Settlement in WTO Reform” 23 JIEL 703 (2020)). But the successful use of Article 25 arbitration for appellate review in Turkey–Pharmaceutical Products has raised a third possibility: instead of serving merely as a stop-gap measure, Article 25 arbitration could be structured for WTO appellate review on a permanent basis. Significantly, this third possibility appears to have the explicit support of the United States. As reported in this Blog, the US said: “If a Member supports dispute settlement reform, then a bilateral arrangement presents a unique opportunity to explore alternative approaches.” This positive attitude of the US is in stark contrast with its general silence on other reform proposals.

Compared to the other two proposals, Article 25 arbitration has some potential advantages. First, it may bring WTO appellate review back closer to its original design. As is well known, the Uruguay Round negotiators established an appellate review mechanism to ensure that “fundamentally flawed” panel reports would not be adopted automatically under the negative consensus rule of the DSU. With this goal in mind, the negotiators did not expect that recourse to appellate review would be frequent. But subsequent WTO practice has proven otherwise. Because appeal is part of the compulsory adjudication, the losing party at the panel stage would be tempted to exhaust available remedies. The expectation that a panel decision would be subject to the scrutiny of the AB led to a tendency toward overlitigation, resulting in substantial delays in dispute settlement. In contrast with the compulsory adjudication by the AB, Article 25 arbitration is voluntary and consensual in nature. In a system of voluntary dispute settlement, parties respond to incentives different from those in a system of compulsory adjudication. They are more likely to settle differences through negotiation than litigating every issue before the tribunal. Consequently, under DSU Article 25, resort to appellate review may become less frequent and resolution of disputes more expeditious.

Second, Article 25 arbitration is inherently more flexible than a standing AB. Such institutional flexibility is needed to ensure that major legal errors be corrected rather than cemented into WTO jurisprudence. Judges are fallible humans and must be allowed to make mistakes. The key is for the system to have a mechanism to correct mistakes. Unfortunately, such a mechanism does not exist at the WTO. In theory, the Members may overrule the AB by adopting an authoritative interpretation of WTO provisions (per WTO Agreement IX:2). But in practice, this is unlikely ever to happen. As a result, the task of rectifying mistakes fell onto the AB itself. However, for whatever reason, the AB in its 25-year existence never acknowledged making any error, let alone providing self-correction. Instead, the AB insisted on treating its rulings as de facto precedent. Such insistence may have eroded the flexibility necessary to maintain a balance between law and political constituencies of the system. In contrast with the standing appellate body, Article 25 arbitration will be conducted by arbitrators on an ad hoc basis. The arbitrators will not have the same power and authority as the AB. Consequently, it would be possible for one panel of arbitrators to disagree with another on the same issue, or for a WTO panel in a subsequent case to disagree with the appeal arbitrators in a prior case. While such disagreement might create some inconsistencies in case law, over time the better reasoning could emerge and be accepted as the proper precedent.

Thirdly, compared to the other proposals, adopting Article 25 proceedings for appellate review would require fewer changes to the existing system. Substantively, all that would be required for amending the DSU would be to delete the single provision on the Appellate Body (Article 17), while the panel proceedings and the negative consensus rule on the adoption of panel reports would all be kept intact. Technically, it would be necessary also to delete all other references to the Appellate Body in the DSU, and to adjust Article 16.4 (the adoption of panel reports) so as to clarify that “appeal” would be available via Article 25. This adjustment could be made by adding a simple footnote to Article 16.4, so the provision would read as follows:

4. Within 60 days after the date of circulation of a panel report to the Members, the report shall be adopted at a DSB meeting unless a party to the dispute formally notifies the DSB of its decision to appeal* or the DSB decides by consensus not to adopt the report. If a party has notified its decision to appeal*, the report by the panel shall not be considered for adoption by the DSB until after completion of the appeal*. This adoption procedure is without prejudice to the right of Members to express their views on a panel report.

            * The appeal of a panel report may be made via arbitration under DSU Article 25.

With this amendment, it would not matter whether a particular Member, such as the United States, would choose ever to use Article 25 arbitration itself, since any panel report not submitted to appeal arbitration would be automatically adopted by the DSB. Given the minimum changes required to amend the DSU, it could be easier for the 164 Members to reach consensus, which is a legal requisite for any DSU amendment (per Article X:8 of the WTO Agreement).

On the whole, Article 25 arbitration seems a possible compromise between the reinstitution of the AB, which the US has resisted, and a new system of one-tier adjudication by permanent panelists, which may not satisfy many other Members. There are, however, major institutional issues to be addressed. One is the pool of potential arbitrators. In principle, the disputing parties have control over the selection of arbitrators. In Turkey-Pharmaceuticals, the parties decided that the three arbitrators should be picked through a random selection from a list of former AB members and ten MPIA arbitrators. If Article 25 appeal arbitration were to become “institutionalized”, how should the pool of arbitrators be determined? Another issue is the role of the WTO Secretariat. In Turkey­–Pharmaceuticals, the arbitrators were apparently assisted by the Secretariat, but presumably not by the same staff that had assisted the Panel in this case. Recall that the MPIA participants requested that the WTO provide separate secretarial support to the MPIA arbitrators so as to ensure the quality and independence of the proceedings, but the US opposed that request as it perceived the MPIA to be an attempt to create a substitute AB. Again, if Article 25 appeal arbitration were to become “institutionalized”, how should the arbitrators be assisted by the WTO Secretariat? In this regard, the analysis and suggestions by Joost and his coauthor in their recent AJIL article deserve special attention.

MPIA Update: Another Article 25 Arbitration Appeal Likely Coming Soon, New Dispute Sees Procedures Agreed

There are two new developments with the MPIA.

First, Australia and China have agreed "to enter into arbitration under Article 25 of the DSU to decide any appeal from any final panel report as issued to the parties in dispute Australia – Anti-Dumping and Countervailing Duty Measures on Certain Products from China (DS603)." That dispute is a long way from a panel report, though, with the panel just having been composed on September 5.

Second, it looks like another DSU Article 25 appeal arbitration might be coming soon. On September 16, the panel in Colombia - Anti-Dumping Duties on Frozen Fries from Belgium, Germany and the Netherlands (DS591) issued a communication in which it indicated that the final report had been issued to the parties on August 29. The panel said that on September 12, it received a communication from Colombia requesting the Panel to suspend its work in the dispute in accordance with Article 12.12 of the DSU, in order to facilitate arbitration under the Agreed Arbitration Procedures. Upon receipt of this request, on September 13 the Panel instructed the WTO's Dispute Settlement Registry to "transmit immediately the original English language version of the final Panel Report … to the pool of arbitrators." (The pool of arbitrators is here.) The Spanish and French translations were transmitted on September 16, and on that date the Panel granted the request to suspend the panel proceedings.

Under the Agreed Arbitration Procedures, "[t]he arbitration shall be initiated by filing of a Notice of Appeal with the WTO Secretariat no later than 20 days after the suspension of the panel proceedings referred to in paragraph 4 has taken effect." So, unless there is a settlement here, it seems as though we will see a notice of appeal filed in the coming weeks. And, of course, "the Notice of Appeal shall include the final panel report in the working languages of the WTO," which is when we in the general public get to see the report.

This dispute will be an interesting test of how DSU Article 25 arbitration appeals handle trade remedy disputes. Trade remedies are a sensitive area, and one of the main issues that led to U.S. objections to the Appellate Body. How much deference will the MPIA arbitrators give to the panel and to domestic anti-dumping authorities? That is something many people, including U.S. government officials, will be watching closely.

And the dispute will also be interesting because it's the first MPIA appeal. The Turkey - Pharmaceutical Products DSU Article 25 arbitration appeal was an ad hoc appeal arbitration because Turkey is not a party to the MPIA, but the Frozen Fries dispute will be a full-fledged MPIA case. The Agreed Procedures in the case say that selection of the MPIA arbitrators will take place as follows:

The selection from the pool of arbitrators will be done on the basis of the same principles and methods that apply to form a division of the Appellate Body under Article 17.1 of the DSU and Rule 6(2) of the Working Procedures for Appellate Review, including the principle of rotation.⁴

⁴ However, at the request of a party to a dispute, any member of the pool of arbitrators who is not a national of a participating Member shall be excluded from the selection process. Two nationals of the same Member shall not serve on the same case.

(As far as I can tell, neither element of the footnote applies here.)

Rule 6(2) of the Working Procedures for Appellate Review says:

The Members constituting a division shall be selected on the basis of rotation, while taking into account the principles of random selection, unpredictability and opportunity for all Members to serve regardless of their national origin.

Which 3 of the 10 arbitrators in the pool will make it through the random selection process? My understanding is that everyone in the pool has been working hard to prepare for the possibility of being put to work, and they should soon have an opportunity to show us what the MPIA can do.

Comments by WTO Members on the First Article 25 Arbitration Appeal (Plus Some U.S. Domestic Politics)

The Turkey - Pharmaceutical Products Article 25 arbitration award, which functioned as an alternative appellate review mechanism while Appellate Body appointments are still blocked, was discussed at the August 29 DSB meeting. Here's how the WTO web site summary of the meeting described comments from WTO Members on the systemic issues related to using Article 25 in this way:

The EU said it was particularly pleased with the appellate review proceedings, which demonstrated that there is a functional and efficient alternative to preserve the right of appeal for the parties, which is very similar to the Multi-Party Interim Appeal Arbitration Arrangement (MPIA). The EU said it expects that Türkiye will take the necessary steps to implement the arbitrators' findings promptly and stands ready to discuss and agree on a reasonable period of time for implementation.

The United States said it welcomed the agreement of the parties on a way forward in this dispute, which led to Türkiye’s announcement of its intention to comply with the panel’s and arbitrators' recommendations.  The aim of dispute settlement is to facilitate the prompt settlement of a dispute between members, the US said, and it does not object to members utilizing Article 25 of the DSU or other procedures to help resolve disputes.

Under a separate item, Japan said it welcomed members' use of the Article 25-based arbitration as a means of dispute settlement under the current situation. The arbitration has played a provisional complementary role to review the appealed findings of the panel report during the time of the Appellate Body dysfunction, Japan said. Moreover, the arbitration award was issued within the prescribed 90-day period, contributing to the prompt resolution of the dispute.

And here is the full reaction by the U.S. in its statement to the DSB:

The United States welcomes the agreement of the parties on a way forward in this dispute, which led to Türkiye’s announcement today with respect to implementation of the arbitrator Award.

The aim of dispute settlement is to facilitate the prompt settlement of a dispute between Members.

Members have a variety of means under the DSU through which they can achieve a resolution, including pursuant to Article 4, “Consultations”; Article 5, “Good Offices, Conciliation, and Mediation”; Article 6, “Establishment of Panels”; and Article 25, “Arbitration.”

The United States does not object to Members utilizing Article 25 or other procedures to help resolve disputes. If any Member considers that use of the arbitration provision may assist it in securing a positive solution, then the United States in principle supports such efforts.

In this instance, the parties entered into “Agreed Procedures for Arbitration under Article 25 of the DSU.” The agreement provided for an arbitration that incorporated many of the most troubling practices of appellate review under the Appellate Body.

The U.S. concerns with certain practices of the Appellate Body are well known. We encourage Members to consider different approaches to resolving a dispute, rather than furthering the Appellate Body’s problematic interpretations or conduct. If a Member supports dispute settlement reform, then a bilateral arrangement presents a unique opportunity to explore alternative approaches.

Nevertheless, we welcome the engagement between the parties to this dispute that led to the agreement.

We also want to draw attention to another issue of systemic importance. In accordance with the parties’ agreed procedures, and consistent with Article 25.3 of the DSU, the arbitration award has not been adopted by the DSB.

Accordingly, the arbitration award does not contain “adopted recommendations or rulings” within the meaning of the DSU.

The United States therefore takes note of Türkiye’s statement today with respect to implementation of the arbitrator award, although we do not consider such statement of intentions as required under Article 21.3 of the DSU. 

How should we take the U.S. statement? Does it mean that the U.S. is unlikely to use Article 25 arbitration appeals because they look too much like appellate review as practiced by the Appellate Body? Or does it mean the U.S. might consider using Article 25 arbitration appeals if they avoided certain practices of the Appellate Body? It's worth noting that the Article 25 arbitrators in this case did circulate the award within 90 days, so that addresses one of the U.S. concerns about the Appellate Body. What other process changes might the U.S. insist on in order to agree to use Article 25 arbitration as an appeals process for one of its disputes? I'm looking at the list of ongoing WTO disputes, and I'm not sure I see any disputes for which it is likely that another WTO Member will ask the U.S. to use Article 25, but you never know.

Just to be clear, while that last paragraph might have made it sound like I thought there was a decent chance the U.S. would use Article 25 arbitration some day, I don't really have high hopes for that. I just thought I'd put the idea out there and see if anyone picked it up. One reason (of many) for my skepticism is where U.S. politics is right now on the issue of the WTO and the Appellate Body. Take a look at this letter from Senators Cotton, Grassley and Rubio to Ambassador Tai. When I say "take a look," I don't mean read and consider the substance, because it will just irritate you. I could take it apart sentence by sentence, but I don't think it's worth the effort. The key point is a political one, which is that some Republicans are pushing Tai not to allow Appellate Body appointments to go through (not that we even saw many hints that she would do so). That means any U.S. compromise on these issues could get caught up in U.S. domestic politics, which is a mess right now. (Establishing whether a consensus exists for a particular Appellate Body nominee could be subject to court challenges, recounts, and calls for election integrity! That's a joke. I think).

It's one thing to hear this from Senators Cotton and Rubio, who are both fairly "nationalist" in some sense of that word, but Grassley has traditionally been a promoter of agriculture exports who supports trade agreements. If he loses interest in using trade agreements and enforcement of those agreements to promote exports, that's a real problem for the trading system in general and also for getting WTO dispute settlement fully operational again. To be fair, the letter does say this: "to the extent Members want to agree to truly binding dispute settlement, they have numerous options to do so – including, for example, an agreement not to appeal the results of a panel decision." That is certainly an option, but I think if someone is citing it in this way, they should advocate for it rather than just mentioning it as an aside. If agreements not to appeal panel reports are Grassley's solution, that's fine, but he should say this directly and clearly and flesh out the details. And what does he think about Article 25 arbitration appeals? The absence of any mention of this possibility is telling.

The Turkey - Pharmaceutical Products Article 25 (Appellate Review) Award

Meet the new appellate review, same as the old appellate review? That was my first thought as I read the Article 25 arbitration award in Turkey - Pharmaceutical Products, the first time Article 25 has been used for appellate review. But I have only just skimmed it quickly at this point, so don't hold me to that. After a more thorough read, differences between this award and Appellate Body reports may become more apparent. 

My sense at this point, though, is that this award falls within the range of different types of Appellate Body reports we saw over the Appellate Body's 20+ years. The Appellate Body was not totally uniform over that period, as the reports read a bit differently over time. But this one seems to fit within the general framework of what the Appellate Body was doing. If a WTO lawyer had been in a coma for the last few years, came out of it, and was handed this report with no label on it and no context provided for what had happened to the Appellate Body, I think that lawyer would believe this was a real Appellate Body report.

In terms of substance, I'm just going to mention one point here, and it relates to a discussion in the comments of this post (there may be another point in the award that supports this, but I'm going to have to give it more thought). If you look at the panel's findings under GATT Article XX(d), they are very brief (see paras. 7.215-218), and mostly just refer back to its findings under Article XX(b). It's understandable that panels do this sort of thing at times, because they have a lot on their plate in examining the facts of the case and the full range of claims. Panel proceedings already take too long, and without these kinds of shortcuts they would take even longer.

However, a failure to provide a full analysis of each issue does increase the risk of error. The Article 25 arbitrators may have had this in mind when they said: "In our view, it would have been more prudent had the Panel followed the order of the relevant analysis and articulated the applicable legal standard in assessing Türkiye's invocation of Article XX(d) of the GATT 1994." (See paras. 6.154-164) The arbitrators ultimately found that "the method of analysis followed by the Panel" did not constitute a legal error in this case. Nevertheless, it's good to have appellate review in these circumstances, to provide a second look at issues where the panel may not have had time to do a full analysis.

Arbitrators Selected in DSU Article 25 Arbitration Appeal

The WTO has announced that the Arbitrator in the DS583 arbitration appeal under DSU Article 25 was composed on April 28. 2022 "through a random selection from a list of candidates prepared and agreed upon by the parties." Here are the arbitrators in the case (with an indication of the basis for their inclusion in the selection process):

• Mr Seung Wha Chang (former Appellate Body Member)
• Mr Mateo Diego-Fernandez Andrade (MPIA list)
• Mr Guohua Yang (MPIA list)

Not that I think this will tell us much about how the arbitration appeal will be handled, but here's a little WTO adjudication history for each one.

Seung Wha Chang is a Korean academic who was on the Appellate Body for one term, from June 1, 2012 - May 31, 2016 (the U.S. objected to his reappointment to a second term). Copying and pasting from our WorldTradeLaw.net tables, here are the appeals he worked on (the dates are circulation and adoption):

India - Solar Cells (AB)	Sep 16, 2016	Oct 14, 2016	GATT	Van den Bossche, Chang, Graham
Argentina - Financial Services (AB)	Apr 14, 2016	May 09, 2016	GATS	Chang, Bhatia, Zhang
India - Agricultural Products (AB)	Jun 04, 2015	Jun 19, 2015	DSU, SPS	Zhang, Chang, Servansing
U.S. - COOL, Article 21.5 (AB)	May 18, 2015	May 29, 2015	GATT, TBT	Ramírez-Hernández, Chang, Van den Bossche
Argentina - Import Measures (AB)	Jan 15, 2015	Jan 26, 2015	DSU, GATT	Chang, Bhatia, Ramírez-Hernández
U.S. - Countervailing Measures (China) (AB)	Dec 18, 2014	Jan 16, 2015	DSU, SCM	Van den Bossche, Bhatia, Chang
China - Rare Earths (AB)	Aug 07, 2014	Aug 29, 2014	DSU, GATT, Accession	Chang, Ramírez-Hernández, Zhang
U.S. - Countervailing and Anti-Dumping Measures (China) (AB)	Jul 07, 2014	Jul 22, 2014	DSU, GATT	Bhatia, Chang, Zhang
EC - Seal Products (AB)	May 22, 2014	Jun 18, 2014	DSU, GATT, TBT	Graham, Chang, Zhang

Prior to his appointment to the Appellate Body, he served on the following WTO panels:

U.S. - FSC, Article 21.5 II (Panel)	108	European Communities	Sep 30, 2005	Mar 14, 2006	Agriculture, DSU, GATT, SCM	Denis, Chambovey, Seung Wha Chang
EC - Trademarks / GIs (Panel)(Australia)	290	Australia	Mar 15, 2005	Apr 20, 2005	GATT, TBT, TRIPS	Mendoza, Seung Wha Chang, Cheung
EC - Trademarks / GIs (Panel)(U.S.)	174	United States	Mar 15, 2005	Apr 20, 2005	GATT, TRIPS	Mendoza, Seung Wha Chang, Cheung
Canada - Aircraft II (Panel)	222	Brazil	Jan 28, 2002	Feb 19, 2002	SCM	Davey, Seung Wha Chang, Dwarka-Canabady
U.S. - FSC, Article 21.5 (Panel)	108	European Communities	Aug 20, 2001	Jan 29, 2002	Agriculture, GATT, SCM	C. Falconer, Chambovey, Seung Wha Chang
U.S. - FSC (Panel)	108	European Communities	Oct 08, 1999	Mar 20, 2000	Agriculture, SCM	C. Falconer, Chambovey, Seung Wha Chang

 

Mateo Diego-Fernandez Andrade is a Mexican government official who has served on the following WTO panels:

China - TRQs (Panel)	517	United States	Apr 18, 2019	May 28, 2019	Accession, GATT	Diego-Fernández, Jóhannesson, Conejos
Korea - Pneumatic Valves (Panel)	504	Japan	Apr 12, 2018	Sep 30, 2019	AD	Diego-Fernández, Blumberg, Francis
EU - Fatty Alcohols (Indonesia) (Panel)	442	Indonesia	Dec 16, 2016	Sep 29, 2017	AD	O'Connor, Tereposky, Diego-Fernandez
India - Additional Duties (Panel)	360	United States	Jun 09, 2008	Nov 17, 2008	GATT	Wasescha, Diego-Fernandez, B. McRae
EC - Customs Matters (Panel)	315	United States	Jun 16, 2006	Dec 11, 2006	GATT	Benjelloun-Touimi, Diego-Fernandez, Tschaeni
Argentina - Peach Safeguards (Panel)	238	Chile	Feb 14, 2003	Apr 15, 2003	GATT, Safeguards	Feldman, Castro Bernieri, Diego-Fernandez

 

Finally, according to his bio at the 2017 WTO public forum, Guohua Yang "is a professor at China Tsinghua University Law School. Prof. Yang participated in the negotiations on China WTO accession and drafting the Accession Protocol and Working Party Report; he led a group of experts checking Chinese laws and regulations against the WTO rules and China commitments; he was the first Director and later Deputy Director General for WTO Legal Affairs within the Ministry responsible for WTO cases related to China. Prof. Yang strongly advocated for the multilateral trading system represented by the WTO. He also has a rich background on trade policy making and international cooperation. He is Executive Vice Chairman, WTO Law Research Society of China Law Society; Member, Indicative List for dispute settlement panels, the WTO Secretariat; Associate Editor, Journal of World Trade. He was also IP attaché at Chinese Embassy in the United States, Washington, DC (2006.1-2008.9) and WTO Appellate Body member candidate (2016)." You can read his piece entitled "China in the WTO Dispute Settlement: A Memoir" here.

Follow-Up on the First DSU Article 25 Appeal

Following up on my last post, the panel report in DS595, EU - Steel Safeguards, was circulated on Friday, which, by the terms of the Article 25 Agreed Procedures in the dispute, means that the parties will not appeal, either through the normal method or the Article 25 alternative. That leaves us with just the one Article 25 appeal for now, in DS583, which I have the following questions about.

1. How will the arbitrator selection process go and who will be the first Article 25 arbitrators? 

The DS583 Article 25 agreed procedures say this:

The arbitrators shall be three persons randomly selected, in the physical presence of representatives of the parties, from a combined list of former Appellate Body Members and appeal arbitrators.4 The random selection will be conducted at the same time as the random selection in DS595 European Union — Safeguard Measures on Certain Steel Products, so as to ensure that one randomly selected appeal is heard by two former Appellate Body Members and one MPIA appeal arbitrator whilst the appeal in the other dispute is heard by one former Appellate Body Member and two MPIA appeal arbitrators. If there is only one appeal it will be heard by one former Appellate Body Member, one MPIA appeal arbitrator, and the third person shall be drawn at random from the remaining persons on the combined list. The random selection shall be made immediately after the filing of any notice of appeal and the arbitrators informed immediately.

DS595 was not appealed, so there is only one appeal here and the DS583 appeal "will be heard by one former Appellate Body Member, one MPIA appeal arbitrator, and the third person shall be drawn at random from the remaining persons on the combined list." The random selection is to be made "immediately after the filing of any notice of appeal." That means it should happen soon, if it hasn't happened already. The MPIA list is here; I'm not sure which of the former Appellate Body Members are available to work on this appeal. 

2. What kind of award will the arbitrators write?

Different people are likely to have different approaches to appellate review, and what this first group does will set a precedent -- with apologies to those who don't like that word -- and will shape everyone's views of this alternative approach to appeals. How much summarizing of parties' arguments and past cases will the arbitrators do? How extensive will their reasoning be? What will they do with the DSU Article 11 allegation? How will they handle the substantive issues, which deal with some core GATT principles?

Related to this is the issue of how long they will take. The agreed procedures say:

12. The parties request the arbitrators to issue the award within 90 days following the filing of the Notice of Appeal. To that end, the arbitrators may take appropriate organizational measures to streamline the proceedings, without prejudice to the procedural rights and obligations of the parties and due process. Such measures may include decisions on page limits, time limits and deadlines as well as on the length and number of hearings required.

13. If necessary in order to issue the award within the 90 day time-period, the arbitrators may also propose substantive measures to the parties, such as an exclusion of claims based on the alleged lack of an objective assessment of the facts pursuant to Article 11 of the DSU.⁵

14. On a proposal from the arbitrators, the parties may agree to extend the 90 day time-period for the issuance of the award.

------------------------

⁵ For greater certainty, the proposal of the arbitrators is not legally binding and it will be up to the party concerned to agree with the proposed substantive measures. The fact that the party concerned does not agree with the proposed substantive measures shall not prejudice the consideration of the case or the rights of the parties.

As a general matter, I think arbitrators can finish their reports in Article 25 appeals in 90 days. However, given the circumstances here (i.e., the first such appeal ever) it could be a challenge, and it will require taking a particular approach on the questions I raised above, and not everyone wants to take an approach that can support a 90 day period. What will this group of arbitrators do here?

3. What kind of assistance will the arbitrators receive?

In WTO dispute settlement, the panelists, arbitrators, and Appellate Body Members are assisted by lawyers (and others) from the Secretariat. In the context of the MPIA, during the Trump administration, the U.S. sent a letter objecting to some aspects of Secretariat assistance to the MPIA (e.g., the U.S. argued: "Article 25 provides no basis for the use of WTO resources to support functions that are not part of the arbitration, such as for a 'pool of arbitrators' to 'stay abreast of WTO dispute settlement activities' or to enable the arbitrators to 'discuss among themselves matters of interpretation, practice[,] and procedure.'"). But that was a different administration, and this case is not under the MPIA, so perhaps the U.S. will not have concerns with the Secretariat providing assistance related to this arbitration.

If the Secretariat is going to provide assistance, who exactly would do it? Having former Appellate Body Secretariat staff, who are now in other divisions, play a role could generate U.S. objections (the U.S. letter noted that "the [MPIA] proposal would expend WTO resources to seek to recreate the Appellate Body"), so maybe everyone will try to avoid that. And the Legal Affairs division -- I assume, given the subject matter of the dispute -- assisted on the panel report, so perhaps those folks will be excluded as well. But there are other people in the building with experience in these matters, so it should not be too much of a challenge to find good people. (Thanks to Geraldo Vidigal for conversations about this issue).

The First DSU Article 25 Appeal

Last week, I said this in a post:

In the DS583 case, Turkey - Pharmaceutical Products, a communication from the Panel indicates that the Panel had issued its final report to the parties on November 11, 2021, with circulation to the Members (and public) scheduled to take place "as soon as its translation into French and Spanish was finalized, and that translation was expected to be finalized in mid-January 2022."

In the DS595 case, EU - Certain Steel Products, a communication from the Panel says that the panel report "was scheduled to be circulated on 21 December 2021."

In late December 2021, however, both disputes were suspended under DSU Article 12.12.

Then, as noted, on March 22, 2022, Turkey and the EU notified Article 25 procedures in both disputes. Both sets of procedures include the following language:

5. The arbitration shall be initiated by filing of a Notice of Appeal with the WTO Secretariat no later than 30 days after the suspension of the panel proceedings referred to in paragraph 4 has taken effect. The Notice of Appeal shall include the final panel report in the working languages of the WTO. The Notice of Appeal shall be simultaneously notified to the other party or parties and to the third parties in the panel proceedings. Rules 20-23 of the Working Procedures for Appellate Review shall apply mutatis mutandis.

The parties agree that, because the present panel proceedings have already been suspended, the time limit for the filing of a Notice of Appeal shall be no later than 30 days from the date on which this agreement is notified to the DSB.

I'm not totally sure what's about to happen here, and we'll find out for certain 30 days from March 22, but my sense is that notices of appeal are not coming, and the disputes will remain in permanent suspension. But the specific details of the documents are difficult to parse, and it's possible I've misunderstood what the parties are doing here. We'll find out soon enough.

Looks like I was wrong about DS583 (at least)! Turkey's DSU Article 25 notice of appeal in DS583, with the panel report attached, was posted on the WTO website today and is here. It starts this way:

Pursuant to paragraph 5 of the Arbitration Agreement, Turkey hereby notifies the Dispute Settlement Body of its decision to initiate an arbitration under Article 25 of the DSU to decide an appeal with regard to certain issues of law and legal interpretation covered in the Panel Report in the dispute Turkey – Certain Measures concerning the Production, Importation and Marketing of Pharmaceutical Products.

Pursuant to paragraph 5 of the Arbitration Agreement and Rule 20 of the Working Procedures for Appellate Review, Turkey simultaneously files this Notice of Appeal and its Appellant Submission with the European Union and the third parties in the panel proceedings and with the WTO Secretariat. The Notice of Appeal includes the final report of the Panel in the working languages of the WTO.

The Article 25 procedures in the case are here.

This should be interesting. We are in uncharted territory.

Two Recent Developments in DSU Article 25 Arbitration Arrangements

Are we getting closer to the day when DSU Article 25 arbitration is used for WTO dispute settlement appeals, either through the MPIA or outside of it? I have a theory that a successful use of this alternative appeal mechanism could create the incentive for Appellate Body reform, but that's very speculative. And anyway, I'm not sure how close we are to actual Article 25 usage.

Nevertheless, there are two recent developments in this area worth noting.

First, the panel report in the Costa - Rica Avocados dispute (DS524) was circulated last week. On this dispute, let me first reiterate a point I've made before: This report is 474 pages long, which makes me wonder whether the SPS Agreement is the best way to adjudicate these disputes. Could we get to the same result more quickly using basic GATT provisions such as GATT Articles I, III, XI and XX? The issues would be the same, but with fewer legal provisions to parse, it might all go more quickly.

But turning back to DSU Article 25, Costa Rica and Mexico are both parties to the MPIA and had agreed to use the MPIA for appeals in this dispute. But under the procedures they agreed to, an appeal would have had to come prior to circulation of the panel report, so the normal circulation of the report indicates that the parties decided not to appeal. I think the next dispute to keep an eye on for a possible MPIA Article 25 appeal is Colombia - AD Duties on Frozen Fries (DS591).

The second development relates to the DS583 and DS595 disputes between the EU and Turkey. Turkey is not a party to the MPIA, but in both cases the EU and Turkey agreed on March 22, 2022 to Article 25 procedures for appeals (DS583 and DS595). I confess that I'm having a little trouble following what exactly the parties did here.

In the DS583 case, Turkey - Pharmaceutical Products, a communication from the Panel indicates that the Panel had issued its final report to the parties on November 11, 2021, with circulation to the Members (and public) scheduled to take place "as soon as its translation into French and Spanish was finalized, and that translation was expected to be finalized in mid-January 2022."

In the DS595 case, EU - Certain Steel Products, a communication from the Panel says that the panel report "was scheduled to be circulated on 21 December 2021."

In late December 2021, however, both disputes were suspended under DSU Article 12.12.

Then, as noted, on March 22, 2022, Turkey and the EU notified Article 25 procedures in both disputes. Both sets of procedures include the following language:

5. The arbitration shall be initiated by filing of a Notice of Appeal with the WTO Secretariat no later than 30 days after the suspension of the panel proceedings referred to in paragraph 4 has taken effect. The Notice of Appeal shall include the final panel report in the working languages of the WTO. The Notice of Appeal shall be simultaneously notified to the other party or parties and to the third parties in the panel proceedings. Rules 20-23 of the Working Procedures for Appellate Review shall apply mutatis mutandis.

The parties agree that, because the present panel proceedings have already been suspended, the time limit for the filing of a Notice of Appeal shall be no later than 30 days from the date on which this agreement is notified to the DSB.

I'm not totally sure what's about to happen here, and we'll find out for certain 30 days from March 22, but my sense is that notices of appeal are not coming, and the disputes will remain in permanent suspension. But the specific details of the documents are difficult to parse, and it's possible I've misunderstood what the parties are doing here. We'll find out soon enough.

A Seventh Agreement To Use the MPIA

As readers can probably tell, I'm using this blog to track all the WTO disputes for which there have been agreed procedures between the parties for using the Multi-Party Interim Appeal Arbitration Arrangement (MPIA). See this link for the whole list (along with other developments in this area). There is now a seventh dispute, China - Anti-Dumping and Countervailing Duty Measures on Wine from Australia (DS602), which is the third one involving China. The agreed procedures in the case are here. The panel was established on October 26, 2021, and has not yet been composed, so it could be a while until it is ready to be appealed.

Tweaking the MPIA Procedures

The Multi-Party Interim Appeal Arbitration Arrangement Pursuant To Article 25 of the DSU is here. Annex 1 contains a set of Agreed Procedures that can be used for these arbitrations. Interestingly, the procedures agreed to recently in specific WTO disputes are deviating from Annex 1 in one  specific area. Here's paragraph 4 of Annex I:

4. Following the issuance of the final panel report to the parties, but no later than 10 days prior to the anticipated date of circulation of the final panel report to the rest of the Membership, any party may request that the panel suspend the panel proceedings with a view to initiating the arbitration under these agreed procedures. Such request by any party is deemed to constitute a joint request by the parties for suspension of the panel proceedings for 12 months pursuant to Article 12.12 of the DSU.

The parties hereby jointly request the panel to provide for the following, before the suspension takes effect:

i. the lifting of confidentiality with respect of the final panel report under the Working Procedures of the panel;

ii. the transmission of the panel record to the arbitrators upon the filing of the Notice of Appeal: Rule 25 of the Working Procedures for Appellate Review shall apply mutatis mutandis;

iii. the transmission of the final panel report in the working languages of the WTO to the parties and to the third parties.

In the Costa Rica - Avocados case (DS524), however, while the original procedures reflect the language above, there is now a revised version that reads as follows:

4. Following the issuance of the final panel report to the parties, but no later than 10 days prior to the anticipated date of circulation of the final panel report to the rest of the membership, any party may request that the panel suspend the panel proceedings with a view to initiating the arbitration under these agreed procedures. Such request by any party is deemed to constitute a joint request by the parties for suspension of the panel proceedings for 12 months pursuant to Article 12.12 of the DSU.

The parties hereby jointly request the panel to provide for the following, before the suspension takes effect:

i. the immediate transmission of the final panel report, on a provisional basis, to the pool of arbitrators and the lifting of confidentiality for that sole purpose;

ii. the transmission of the panel record to the arbitrators upon the filing of the Notice of Appeal: Rule 25 of the Working Procedures for Appellate Review shall apply mutatis mutandis; and

iii. the lifting of confidentiality with respect to the final panel report, under the Working Procedures of the panel and the transmission of the final panel report, duly adjusted for translation, in the working languages of the WTO to the parties, to the third parties and to the pool of arbitrators.

A similar revision was made in the Colombia - Frozen Fries (DS591) case.

What this change appears to accomplish is to give the arbitrators more time to digest the panel report by getting it to them sooner, which should help them reach a decision within the required time-frame.

A Sixth Agreement To Use the MPIA

I previously noted the five WTO disputes where agreed procedures between the parties for using the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) have been circulated (as well as an agreement to use Article 25 arbitration outside the context of the MPIA). There is now a sixth dispute, China - Canola Seed from Canada (DS589), which is the second one involving China. The agreed procedures in the case are here. The panel was established on July 26, 2021, and has not yet been composed, so it would be a while until it is ready to be appealed.

We're not seeing any progress in resolving the Appellate Body crisis, which makes it more likely that the MPIA is used for appeals at some point.

A Possible Fifth MPIA Case

I previously noted the four WTO disputes where agreed procedures between the parties for using the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) have been circulated (as well as an agreement to use Article 25 arbitration outside the context of the MPIA). There is now a fifth dispute, China - AD/CVD Measures on Barley from Australia (DS598). The agreed procedures in the case are here. The panel was established on May 28, 2021, and has not yet been composed, so it would be a while until it is ready to be appealed.

Another Agreement To Use DSU Article 25 For Appeals

I have noted previously four agreements between parties in particular disputes to use the MPIA for appeals in the event there is no Appellate Body when the time comes for an appeal. Now we have a similar, albeit much less detailed, agreement to use DSU Article 25 for this purpose in a dispute between Australia and Indonesia. In the agreed procedures for DSU Articles 21 and 22 in DS529, the parties cite to Article 25, although not the MPIA (because Indonesia is not a party to the MPIA), as follows:

6. The Parties agree that if, on the date of the circulation of the panel report under Article 21.5 of the DSU, the Appellate Body is composed of fewer than three Members available to serve on a division in an appeal in these proceedings (hereinafter referred to as "non-functioning Appellate Body"), either Party may appeal the Article 21.5 panel report through resort to the arbitration mechanism outlined in Article 25 of the DSU. In these circumstances, the Parties will agree to Article 25 arbitration procedures to be used in the event of an appeal, before the Article 21.5 panel report is issued to the Parties (but noting the Parties would only resort to Article 25 arbitration if there was a non-functioning Appellate Body on the date of circulation of the Article 21.5 panel report). The Parties will notify all Members of their agreement to resort to arbitration sufficiently in advance of the actual commencement of the arbitration process. In the event of an appeal through resort to arbitration pursuant to Article 25 of the DSU, the Parties will cooperate to enable the arbitrators to notify the award to the DSB and the Council or Committee of any relevant agreement within no more than 90 days from the date of notification of the appeal to the DSB.

The momentum to use DSU Article 25 in these circumstances seems to be building a bit, although of course all eyes are on the U.S. election in November.

Ad Hoc Appeal Arbitration under DSU Article 25

This is from a communication from Qatar in the Saudi Arabia - IP Rights cases, which Saudi Arabia recently appealed into the void:

Subject: Proposal for an appeal-arbitration arrangement under Article 25 of the DSU in Saudi Arabia – Protection of Intellectual Property Rights (WT/DS567)

On 28 July 2020, Saudi Arabia notified the Dispute Settlement Body ("DSB") of the World Trade Organization ("WTO") of its decision to appeal the Report of the Panel in the aforementioned dispute (see document WT/DS567/7, "Saudi Arabia's Notice of Appeal").

Qatar has consistently conducted itself with a view to securing the prompt settlement of this dispute. Continuing in that effort, Qatar now proposes that the appeal in this dispute be submitted to resolution through arbitration under Article 25 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU").

As you are well aware, the Appellate Body of the WTO is currently unavailable to resolve appeals. Under these circumstances, arbitration under Article 25 of the DSU offers an alternative avenue to the resolution of appeals, which avoids frustration of a litigant's right to prompt settlement of disputes.

I request that you bring this proposal to the attention of Saudi Arabia and that this communication be circulated in the WT/DS567 document series. Qatar stands ready to make available representatives for the purpose of discussing the precise content of an agreement to refer the matter to Article 25 arbitration.

Qatar reserves its rights to take action consistent with international law to safeguard its interests, in the event this proposal does not result in an agreement to submit the appeal in this dispute to resolution through arbitration under Article 25.

Recognizing that, absent an agreement to refer the matter to Article 25 arbitration, it may be some time before Members become aware of Qatar's response to the matters raised in Saudi Arabia's Notice of Appeal, Qatar has made the Executive Summary of its Appellee's Submission in this dispute available at the following link:

https://geneva.mission.qa/en/media/news/detail/1442/02/12/executive-summary-of-qatar-sappellee-s-submission-(wt-ds567)

There's no mention of the MPIA procedures here. If Saudi Arabia agrees to an Article 25 arbitration, it will be interesting to see how closely the procedures track what the MPIA parties have developed.

Does Saudi Arabia have any incentive to agree to such an appeal? Well, Qatar hints that if Saudi Arabia does not do so, it might go ahead with retaliation, so agreeing to an appeal would at least delay that.

Questions About the MPIA and Article 25 Appeal Arbitration

I have a short Cato paper out today on the Multi-Party Interim Appeal Arbitration Arrangement (MPIA). I am excited about the prospects for the MPIA, but I do have some questions, including the following:

What approach will the MPIA take regarding the interpretation of core WTO principles such as the nondiscrimination obligation and public policy exceptions? How often will the MPIA appeal process be used? What kind of legal culture will develop around it, including the approach of the arbitrators and of the litigants themselves? How much deference will the MPIA show toward politically sensitive domestic laws and regulations? How much deference will the MPIA show toward the findings and reasoning of WTO panels? Will the MPIA avoid novel and controversial issues that are put before it or take them on?

This happened too late to make it into the paper, but here's another question: Can the MPIA serve as a template for appeal arbitration beyond the MPIA parties? The EU has just appealed the DS494 panel report "into the void," but perhaps they have filled that void with the following:

In commencing this appeal, in accordance with Article 16(4) of the DSU and Rule 20(1) of the Working Procedures for Appellate Review, the European Union is aware that, as a matter of fact, temporarily, there are currently an insufficient number of Appellate Body Members to constitute a division due to the obstruction of appointments by the United States. In these circumstances, the European Union stands ready, as it will always stand ready, to move, together with the Russian Federation, to final resolution of the dispute in appeal proceedings pursuant to Article 25 of the DSU, on a reciprocal basis, based on the Multiparty Interim Arrangement (MPIA) and an arbitration agreement as set forth in the standard agreed default procedures contained in Annex 1 of the MPIA.

How will Russia (which is not a party to the MPIA) respond to this? As the complainant in the dispute, there is certainly an incentive to go ahead with the arbitration rather than just let the appealed panel report sit out there.

And finally on the subject of appeals, the last Appellate Body annual report (for now anyway) is available here.

The MPIA Pool of Arbitrators Has Been Announced

Here:

... the Multi-Party Interim Appeal Arbitration Arrangement pursuant to Article 25 of the DSU is composed of the following persons:

• Mr Mateo Diego-Fernández ANDRADE
• Mr Thomas COTTIER
• Ms Locknie HSU
• Ms Valerie HUGHES
• Mr Alejandro JARA
• Mr José Alfredo Graça LIMA
• Ms Claudia OROZCO
• Mr Joost PAUWELYN
• Ms Penelope RIDINGS
• Mr Guohua YANG

There is a lot of WTO dispute settlement experience among this group. Focusing on their work on WTO dispute settlement in an adjudication role (I don't mean to diminish their other dispute settlement experience!), here's what I see:

• Cottier (5 GATT panel reports, 8 WTO panel reports, 2 Article 22.6 decisions, 1 ongoing panel)
• Diego-Fernandez (6 WTO panel reports, 1 ongoing panel)
• Graça Lima (3 WTO panel reports, 1 ongoing panel)
• Hughes (former Director of the Appellate Body Secretariat and the Legal Affairs Division, 1 WTO panel report, 1 ongoing panel)
• Jara (2 GATT panel reports)
• Orozco (14 WTO panel reports, 1 Article 21.3(c) arbitration, 1 Article 22.6 decision, 1 ongoing panel)
• Pauwelyn (former legal affairs officer in the Legal Affairs Division and the Appellate Body Secretariat)
• Ridings (3 WTO panel reports)

A Possible Fourth MPIA Case

I previously noted the three WTO disputes where agreed procedures between the parties for using the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) have been circulated. There is now a fourth dispute, Colombia - AD Duties on French Fries (DS591). The agreed procedures in the case are here. The panel was established on June 29, 2020, and has not yet been composed, so it would be a while until it is ready to be appealed.

Additions to the MPIA

There have been two recent additions to the MPIA: One new party and one new arbitrator nomination.

The new party is Benin, which notified its decision to join on June 22.

The new arbitrator nomination is the great Thomas Cottier. The World Trade Institute had this announcement:

Switzerland has nominated Professor Emeritus Thomas Cottier as its candidate for the pool of 10 arbitrators for the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), a temporary solution for the paralysis of the WTO Appellate Body. Prof. Cottier is the former Managing Director of the World Trade Institute and Professor Emeritus of European and International Economic Law at the University of Bern.

The MPIA, comprised by 22 WTO members, permits participating members to have access to a 2-step dispute settlement system in the WTO, including the availability of an independent and impartial appeal stage. It is in effect since 30 April 2020 and will stay in place until the Appellate Body can reassume its function.

The WTI is delighted that Prof. Cottier has been chosen as candidate for Switzerland. He previously held several positions in the Swiss External Economic Affairs Department and was the Deputy Director General of the Swiss Intellectual Property Office. He also has a long-standing involvement in GATT/WTO activities. Prof. Cottier served on the Swiss negotiating team of the Uruguay Round from 1986 to 1993, first as Chief Negotiator on dispute settlement and subsidies for Switzerland and subsequently as Chief Negotiator on TRIPs. In addition, he has served as a member or chair of several GATT and WTO dispute settlement panels and currently assists on a high-level panel reviewing the International Health Regulations of the World Health Organization.

For the three nominations that have been made public so far, the proposed arbitrators all have extensive experience with WTO dispute settlement.

In other news, the Peterson Institute had a webinar with UK Secretary of State for International Trade Liz Truss yesterday. I asked whether the UK would be joining the MPIA, and she said they hadn't decided yet.

Who's Going To Pay For Supporting The MPIA?

Paragraph 7 of the Multi-Party Interim Appeal Arbitration Arrangement Pursuant to Article 25 of the DSU says:

The participating Members envisage that appeal arbitrators will be provided with appropriate administrative and legal support, which will offer the necessary guarantees of quality and independence, given the nature of the responsibilities involved. The participating Members envisage that the support structure will be entirely separate from the WTO Secretariat staff and its divisions supporting the panels and be answerable, regarding the substance of their work, only to appeal arbitrators. The participating Members request the WTO Director General to ensure the availability of a support structure meeting these criteria.

I'm not sure what that means exactly. The WTO DG is supposed to "ensure" that a "support structure" is available, but there are a range of possibilities within that general guidance. When the text says, "the support structure will be entirely separate from the WTO Secretariat staff and its divisions supporting the panels," does that mean separate only from the particular Secretariat staff that supports the panels, so that other Secretariat staff can help out with the MPIA? Or does it mean separate from the Secretariat staff and also separate from its divisions supporting the panels? I feel like it can't be the latter, because the Secretariat staff includes the divisions supporting the panels, so it would be redundant to say it that way.

Regardless, or perhaps as a result, the U.S. seems to have concerns. In a letter to the DG (posted on Inside US Trade here and by Bryce Baschuk here), the U.S. has now made clear what it does not want:

... the proposal would expend WTO resources to seek to recreate the Appellate Body, its erroneous practices, and the Appellate Body Secretariat through a plurilateral arrangement. Article 25 provides no basis for the use of WTO resources to support functions that are not part of the arbitration, such as for a "pool of arbitrators" to "stay abreast of WTO dispute settlement activities" or to enable the arbitrators to "discuss among themselves matters of interpretation, practice[,] and procedure." ...

Nor does Article 25 provide a basis for a Member to direct the WTO Director-General to provide WTO Secretariat support to an arbitrator, nor the terms of such support. ... The arrangement "envisages that the support structure will be entirely separate from the WTO Secretariat staff' and the WTO divisions that support panels. If Members desire a separate support staff for their dispute resolutions, those Members (and not the WTO membership as a whole) should finance it. Members should not be allowed to create their own support structure within the WTO that is separate from the WTO Secretariat and expect other Members to pay.

Accordingly, the United States opposes both the establishment of what appears to be a new WTO Division for the benefit of participants in the ... arrangement and the allocation of staff for the exclusive use of those participants. ....

Given the power of individual Members over the WTO budget, this means a special new WTO division for the MPIA is certainly out of the question.

What about just sending over WTO Secretariat staff (from divisions other than those who support panels) to work on MPIA cases as needed? Would the U.S. agree to that? 

How about hiring people on an ad hoc basis when disputes arise? It would be a short-term contract that was solely for the duration of a specific case.

If the U.S. objects to WTO Secretariat participation and funding in any of these ways, the MPIA parties may have to hire people out of their own funds. I don't know that it would be all that expensive. If you have arbitrators who have experience (and the two names we have heard so far do), they may not need that much support. And given the low number of disputes between the 21 current parties, there may not be too many cases to support.

The First MPIA Appeals?

The WTO has just posted three sets of agreed procedures for arbitration under DSU Article 25, that is to say, procedures for appeals through the Multi-Party Interim Appeal Arbitration Arrangement (MPIA). The cases involved are Canada - Sale of Wine (DS537), Costa Rica - Avocados (DS524), and Canada - Aircraft (DS522). The latest info I see is that in DS537, issuance of the final report to the parties is scheduled for June 4, 2020 (WT/DS537/11/Add.3); in DS524, the panel expects to issue its final report to the parties by the second half of 2020 (WT/DS524/4); and in DS522, the panel's work was suspended effective November 25, 2019 until November 4, 2020 under DSU Article 12.12 (WT/DS522/19).

Another MPIA Arbitrator Nomination

This is an announcement from New Zealand last week: 

The New Zealand Ministry of Foreign Affairs and Trade today announced Dr Penelope Ridings as New Zealand’s nomination for the pool of arbitrators established under the WTO interim appeals arrangement.

The Ministry welcomes the Cabinet decision to nominate Dr Ridings for the pool of arbitrators. Dr Ridings is a person of recognised standing in the international legal community, and brings with her extensive experience in trade law.

Dr Ridings was formerly the New Zealand Government’s Chief International Legal Adviser, and acted as Counsel in a range of disputes before panels and the Appellate Body at the WTO. Dr Ridings has also served as an independent first-stage panellist in a number of WTO disputes. She has also appeared as Counsel before the International Court of Justice and the International Tribunal for the Law of the Sea.

The deadline set by the MPIA in Annex 2, para. 2 for these nominations was yesterday. So far only two names are public. 

What happens next? Here's what the MPIA tells us:

3. The candidates will undergo a pre-selection process in order to ensure that the pool of arbitrators comprises only persons of recognised authority, with demonstrated expertise in law, international trade and the subject matter of the covered agreements generally.

The participating Members envisage that this pre-selection process will be carried out by a preselection committee composed of the WTO Director General, and the Chairperson of the DSB, the Chairpersons of the Goods, Services, TRIPS and General Councils. The pre-selection committee will, after appropriate consultations, recommend to the participating Members the candidates who meet the above criteria.

The participating Members envisage the completion of this pre-selection process within one month following the expiry of the deadline to nominate candidates.

4. The participating Members will compose the pool of arbitrators by consensus. The participating Members will endeavour to compose the pool of arbitrators within three months following the date of this communication. They will notify the pool of arbitrators to the DSB, as addendum to this communication. The composition of the pool of arbitrators will ensure an appropriate overall balance.