Enhancing the Efficiency of the Panel Process at the WTO? A Progress Report on Informal Consultations –Chapter 2

 

Introduction

Good afternoon everyone. I am very pleased to have this opportunity to speak once again here at the Graduate Institute.  This is my last official speaking engagement as Deputy Director-General of the WTO so I am especially grateful to Joost and the Institute for giving me this opportunity to share some parting thoughts on a subject that is not only important to the WTO and its Membership, but is also interesting  to the wider legal and trade community.  Many of you were here in March last year when I presented my first progress report.  For the benefit of those who were not here, as well as for the record, let me briefly explain what this process is all about and recap last year’s conclusions.

 

The Process: 2010 — 2012

In 2010, the then Director-General, Pascal Lamy, became concerned about the growing costs of dispute settlement and the sentiment of some, especially those whose businesses had been affected by a WTO-inconsistent measure, that the system was too slow.  So he requested me to find out why this was happening and to suggest actions that the Secretariat and/or Panels could undertake to gain in efficiency and reduce costs, provided that they could be implemented without any amendment to the Dispute Settlement Understanding (DSU) — this is the responsibility of Members — and further provided it would in no way undermine the excellent reputation and high quality of the system. 

And so I embarked on what has turned out to be a fascinating and enlightening informal consultations process.

I consulted with delegations, practitioners, secretariat colleagues, the ACWL, the Appellate Body, former panelists and academics, trying to cover every angle and all the different types of players interested in WTO dispute settlement proceedings. The response was excellent.  I should also clarify that I never met with two or more delegations at the same time. By personal experience, I know that the minute you meet with two or more delegates of different countries, you get a negotiation going on, and we know what can then happen.  I also underline the informal nature. More than having official positions I was after the wisdom that comes from personal experience and common sense. For example, it would not be surprising that two officials from the same country holds slightly different views. 

After listening to many views and ideas, I focused on those where I saw there was a common view and went into a second round to determine the degree of acceptability and the impact in terms of efficiency gains.  Many ideas were eliminated (including some of my own) but some survived.   My role was that of a simple facilitator collecting ideas and testing them; to connect supply and demand.  In this sense this process belongs to everyone. I am aware that because of lack of imagination of some this became known as the “Jara Process”, which is an unfortunate association because it implies that this exercise is a personal venture that ceases with my departure.   I hope the denomination will be discontinued but the practice maintained and improved.  

My conclusions of March 2012 were aimed at:  (i)  making the first substantive panel meeting more effective  by means of the double-briefing and early indicative questions provided to parties before the hearings of the panel with the parties; (ii) improving the efficiency, in terms of length and cost of the process, i.e. time limits on oral statements and an agenda to guide the conduct of panel meeting; and (iii) improving the presentation of panel reports and the reduction of the costs in their production and translation, which included page limits for executive summaries and reduction in the number of annexes.

Most, but not all such ideas have been tried out and some are on the way to become standard practice in panel proceeding as those of you who have been involved in recent dispute settlement proceedings might have noticed. For example, in a number of recent disputes, panels have sent questions to the parties in advance of the substantive meetings. I have been told that these early questions have helped parties to better prepare themselves for oral exchanges during the substantive meetings, as they have an idea of what will be expected from them during the meetings. They also provide parties with an indication of areas that a panel is particularly interested in or where the panel would like more information.  I understand that early questions have also helped to avoid repetitive oral statements and have fostered a more dynamic interaction between the panel and the parties during their meetings.

In recent disputes, panels have decided to set time limits for parties’ and third parties’ oral statements. These vary depending on the length and complexity of each case, but they allow parties to focus their opening remarks and avoid merely repeating large sections of their written submissions.  It also allows more time for interaction between the panel and the parties during the substantive meeting itself.  Parties and panelists can be sure that their time to travel to and attend meetings is properly rewarded and used efficiently, and reinforces the need for panelists to fully engage in the dispute from the very beginning.

Finally, though certainly not unimportantly in these days of cost cutting and budget restraints, the implementation of some ideas has led to a reduction in the costs of translation and printing panel reports. Although my March 2012 report relayed publicly the various ideas and suggestions that had been shared with me during my consultations, it was clear that our search for improvement was not over.  Especially so as people approached me and urged me to continue this successful informal process. There were a number of areas of panel practice that we had not had a chance to confer about with Members, private practitioners, academics, and others.  One delegate even told me that this had been a very educational exercise that had allowed people to think and reflect on panel practices that they would not have done otherwise. So, “my arm was twisted” into undertaking the second phase of this informal consultations process. I was pleased and keen to proceed.

 

The Second Phase: 2012-2013

During this second phase, I was asked to consult on two new issues and continued consulting on one old issue.

The two new issues I sought feedback and continue to seek feedback on are ideas aimed at improving (i) the proceedings in which panels seek advice from individual experts and (ii) the way panels deal with preliminary rulings.  Also, I continued consulting on the double-briefing proposal.

(i)   Proposals aimed at improving proceedings in which panels seek advice from individual experts

I will start with the proposals aimed at improving those proceedings in which panels have decided to seek advice from individual experts.

As you know, Article 13.2 of the DSU allows panels to seek advice from experts. This is particularly important in cases where the facts involve technical and scientific issues, such as in cases related to sanitary and phytosanitary measures. In this type of case, panels sometimes find it useful to call upon experts to help them understand the science underlying the legal matters at issue.

In the EC — Hormones dispute, the Panel elected to seek advice from individual experts, rather than establish an expert review group pursuant to Appendix 4 of the DSU, so as to leave open the possibility of receiving a range of opinions from the experts in their individual capacity. The Appellate Body confirmed that the panel had the discretion to consult with individual scientific experts and to establish ad hoc rules for such consultations. Subsequently, it became the norm to seek advice from individual experts rather than from an expert review group, and the ad hoc procedural rules adopted in the EC — Hormones dispute became the practice for the cases involving experts.

My consultations have revealed that the procedures adopted in 1997 for the EC — Hormones dispute should change and that our practices could usefully evolve in the light of panel practice and accumulated experience over the past 15 years. There is a general perception that cases involving experts just take too long, at times twice the time of a normal case. Such cases are usually fact-intensive and the facts laid out in scientific language that require translation by experts.

There are two areas where efficiency gains could be made: (a) the selection of experts; and (b) the drafting of questions to be posed to experts.

On the selection of experts, the current practice is that panels select a group of experts and consult on their names with the parties, who can and often do reject numerous experts before parties agree on the names. Evidently, there is an incentive to reject names for dilatory or tactical reasons, rather than for substantive reasons. This can and does lead to serious delays in the process, as well as the rejection of suitable experts. It is understandable that parties be cautious about whom the experts will be, but they do not make findings of fact or law nor do they adjudicate. They simply help the panel understand.  The panel with the assistance of the Secretariat has presumably checked the background of experts for possible conflicts of interest. As many of those consulted reminded me, the right to seek information and advice from experts remains the prerogative of the concerned panel, as spelled out in Article 13 of the DSU, so parties do not have a right to veto experts. Consequently, it is clear that ultimately it is the Panel’s responsibility to decide whom they appoint as experts.  However, it is entirely possible that they may have missed or overlooked something.  So, it would seem prudent to not only notify the parties the names of the individuals but to also provide for brief period of time -10 working days for example- for the parties to react should they have a “compelling reason” to object to an expert selected by the panel.

“Compelling Reasons” is a familiar terminology because the DSU Article 8.6 provides the “The parties to the dispute shall not oppose nominations [for the panel] except for compelling reasons“ — The practice however has been that parties provide reasons for rejecting nominations for the panel that hardly qualify as compelling no matter how broadly you might interpret that term. On the selection of experts, panels would have to make it very clear that in the absence of compelling reasons spelled out by a party, they can go ahead with the selection.  In addition, it’s perhaps useful to say that what is compelling is a matter for the panel to determine.  The colour or absence of the hair would probably not qualify as a compelling reason! 

One additional observation made recently to me:  that panels diversify the expertise, meaning, for example, to avoid having several experts with the same affiliation such as an international organization.

With regards to the questions to experts, the current practice is that panels draft questions to be posed to experts and then seek the parties’ concurrence on them, which leads to several rounds of comments and comments on comments, until both parties agree on every single word of each question. This, too, can be used as a time-delaying tactic, creating an incentive to persist in giving feedback so as to delay the process.  Of course, parties will also try to influence the content of the questions so that they will favour their own positions.

The suggestion more often made in this regard is that panels should be able to draft their own questions without seeking approval thereon from the parties. After all, as a delegate said, it is the panel who is trying to understand something and they should know, better that anyone else, what it is they need to know or understand from the experts  Of course, for reasons of transparency, at the same time the panel sends the questions to the experts, it should provide a copy to the parties as well.

Some also suggested that the parties should be given  an opportunity to pose their own questions to the experts. However, other views held that a cross-examination of experts is not appropriate. Those that hold this view consider that the experts are assisting the panel and are not witnesses in a trial who testify with regards to the true facts. Some people told me that experts are often subject to leading or even intrusive questions that are not relevant and that are posed only to seek to undermine the experts’ credibility.  They feel that we have lost sight of the true purpose of seeking expert advice, which is to help the panel understand specialized facts — not the law! — so that they can have confidence that in carrying out their adjudicatory functions, they will have all the “tools” they need.

Be that as it may, certainly the parties will receive the replies of the experts and have an opportunity to comment.

 (ii)   Proposals aimed at improving the way panels deal with preliminary rulings

Now let me move to preliminary rulings.  There are no rules in the DSU covering requests for preliminary rulings. Therefore, panels have had to decide on a case-by-case basis how to deal with such requests, which now seem to come as a matter of course.

Some Members have expressed concerns about the increased number of preliminary ruling requests and the lack of uniformity on how they are dealt with. There is general agreement that we should develop a harmonized, transparent and consistent process by which panels should decide preliminary matters.

I have sought views on how best to deal with preliminary issues, particularly: (a) whether all issues brought as preliminary issues should be handled in the same way; (b) whether third parties should be given the opportunity to participate in the discussions of preliminary issues; and (c) whether preliminary rulings should be circulated to the WTO membership once they are issued, that is, before they are eventually circulated as part of the panel report.

So far we have found that the common view favours handling all issues brought as preliminary matters the same way. However, as we know in the legal profession, the rules cannot always foresee every possible situation and circumstance, there is need to preserve some flexibility.  Consequently, while there is value in affirming uniformity in how preliminary rulings are dealt with, panels are advised to exercise common sense and operate in a different manner should the imperatives of due process and efficiency so command.

There is also general agreement that third parties should be given the right to participate in and brief on the discussions of preliminary issues.  Finally, there appears to be common ground that preliminary rulings should be circulated to all members once they are issued to the parties, rather than only in the eventual panel report.  As several people consulted asked with regards to both third parties and circulation, “does it do any harm?”.  This, I would say is an expression of common sense, the least common of senses.

 

The Proposal on Double-Briefing

Finally, in this second phase of the consultations process, I continued exploring the acceptability of the double-briefing proposal.

As you may remember, the idea of double-briefing implies that the parties’ written submissions (first written submissions, rebuttals and submissions of third parties) would be filed before the first substantive meeting with the panel. This approach is used in and draws upon the experience of Article 21.5 compliance panels, where it was initially put in place because the DSU is silent on the procedures that compliance panels should use.

This double-briefing idea was suggested to me as a means to improve the quality of the first panel meeting by helping parties have more in-depth discussions since the real issues would be more apparent following completed briefing procedures.  It was also considered that this approach would reduce the exchanges during the written questions and answers phase, and perhaps eliminate altogether the need for a second substantive meeting. 

A few panels have suggested using the double-briefing approach to the parties and I understand that a few Members often suggest proceeding along this new way of exchanging written submissions. However, double-briefing has never been taken up.  I wanted to understand why and whether the Secretariat should continue exploring how this approach might be usefully pursued. The answers are clear. Apart from a few delegations, most people consulted maintain that such idea could improve the quality of first panel meetings, especially in cases where the core of the dispute depends on the defence, such as those involving a GATT Article XX defence.

Nonetheless, the informal consultations highlighted two important points. Initially, this suggestion involved two exchanges of written submissions before the first meeting and no second meeting. However, delegations consider that in some disputes, it is important to have two meetings and they are not willing, as a matter of principle, to give up the right to a second meeting, even if in practice in a specific dispute they may decide to do so. The other point is that it was made clear that that this double exchange of written submissions would work only if the rebuttal submissions take place consecutively and not simultaneously. This is so the defending party will have a basis for its rebuttal submission.  In the usual panel procedure, this basis comes from the exchanges at the first panel meeting and the written question and answer phase following it. Under double-briefing, these steps would no longer precede the rebuttal submissions.

Thus, prompted by those consulted, the double briefing approach will be adjusted to take into account these two important observations and thus encourage parties to test the idea very soon. 

There is an additional item that was not consulted upon in this cycle with all stakeholders, but I was prompted by one Member who is a frequent DSU flyer to at the very least pass on a message. Their concern is to expand the pool of talent from which to choose panellists. In some cases the number of third parties is such that it is not easy to find qualified panellists from other countries.  The point is not so much about procedures. Rather, it’s more by way of encouragement for Members to be flexible and be inclined to accept non-governmental nationals from third parties. 

 

Conclusion

Let me conclude with a few reflections.

This process has been very useful. If sustained over time, it may lead to having a permanent mechanism to changes and improvements in procedures, but carried out in such a way that ideas can be tested to see whether they work and are worthwhile before including them in treaty law, much harder to later amend.  This is very much in keeping with the traditions of the multilateral trading system.  Look at GATT Articles XII and XXIII.  About 40 lines of text.  Out of those words a dispute settlement system evolved over time. By 1979, the “customary practice” was described in an Understanding (see GATT document L/4907) Adopted on 28 November 1979) over 9 pages.  Step by step, trial and error. 

Two important considerations to be kept in mind for the future.  First, don’t be overly ambitious. Second, never step into the territory that is the subject of negotiations among Members.

I hope that others, like my successor, will continue with this process of consultations and improve it. And with that, I take my leave of you this afternoon.  But just before doing so, I would like to profusely thank Gabrielle Marceau, Chibole Wakoli, Tania Parcero Herrera and Valerie Hughes for assisting me with these consultations. And I would like to thank all of those — many of whom are here this afternoon — who so generously gave their time to meet with me and discuss ideas for improving the panel process. 

Thank you.