Letter of Appellate Body Chairman to the Dispute Settlement Body Chairman

Chairman of the Dispute Settlement Body
H. E. Mr. Celso Lafer
Ambassador
Permanent Mission of Brazil
Ancienne Route 17B
1218 Grand-Saconnex

“We have been keenly aware of the need to conclude our work in time for our Working Procedures for Appellate Review to be made available to the parties to any possible appeal arising from the first WTO panel report.

In fulfilment of that responsibility, the Appellate Body herewith conveys to you the attached Working Procedures for Appellate Review, and would appreciate your courtesy in transmitting them to the WTO Members at your earliest convenience.

In the course of drafting its Working Procedures for Appellate Review, the Appellate Body has had the occasion to consult fully with the outgoing and incoming Chairmen of the DSB and the Director-General on several occasions in December, 1995, and in January and February, 1996. Those consultations, carried out in accordance with Article 17(9) of the DSU, have been of the utmost importance in providing us with valuable guidance and advice on the objectives, issues and specific concerns of WTO Members in regard to dispute settlement in general, and the appellate procedures in particular, thus allowing us to reflect them in the Working Procedures for Appellate Review we have established.

We have, in framing these Working Procedures for Appellate Review, kept certain central concerns much in mind: the need for vigilance in protecting the basic rights of all parties in our proceedings; the need for rotation in the establishment of divisions along with the advantages of collegiality; the need for independence and impartiality in our decision-making; the need for strict adherence to the Rules of Conduct in our endeavours; and the need for constant and conscientious compliance with both the letter and the spirit of the DSU and the other covered agreements of the World Trade Organization in all our efforts to strengthen the multilateral trading system. We believe these Working Procedures for Appellate Review address each of these concerns.

The Appellate Body would like to draw your attention in particular to those parts of the Working Procedures for Appellate Review that bear on collegiality. This is a matter that has been emphasized from the very beginning in the consultations with the Appellate Body, and was addressed specifically in the informal meeting convened by you in accordance with the DSB Decision on "Establishment of the Appellate Body", WT/DSB/1, on February 1, 1996, about which you reported to us in detail on the same day. We have considered, in depth, all the matters raised at that meeting as well as additional written and oral comments from individual WTO Members conveyed by you to us. At your request, in response to the interest expressed by several delegations, we have extended our deliberations for several days longer than originally planned.

According to Article 17(1) of the DSU, the Appellate Body is composed of seven persons, only three of whom shall serve in any one case. That provision, like every other provision of the DSU, has to be respected fully. Thus, the decision in every appeal will be made only by the three who serve on the division for that case. At the same time, it is also important to ensure consistency and coherence in our decision-making, which is to the advantage of every WTO Member and the overall multilateral trading system we all share. We feel this can best be done by drawing, within the parameters of Article 17 of the DSU, on the individual and collective expertise of all the Members of the Appellate Body.

In order to attain these objectives, Rule 4(1) provides for meetings of the entire Appellate Body on a regular basis to discuss matters of policy, practice and procedure. Further, Rule 4(2) foresees that each Member of the Appellate Body shall receive all documents filed in an appeal, in order to allow what Rule 4(3) prescribes, namely that "the division responsible for deciding each appeal shall exchange views with the other Members before the division finalizes the appellate report..."

The Appellate Body believes that such a system is consistent with Article 17 of the DSU. To avoid any doubt, Rule 4(4) of our Working Procedures for Appellate Review states expressly, "Nothing in these Rules shall be interpreted as interfering with a division's full authority and freedom to hear and decide an appeal assigned to it in accordance with paragraph 1 of Article 17 of the DSU."

For the purpose of constituting a division of three Members of the Appellate Body to serve on any one case as required by Article 17(1) of the DSU, the Working Procedures for Appellate Review provide for rotation that takes into account the desirability for random selection of the three Members, unpredictability as to the composition of any division and opportunity for all Members of the Appellate Body to serve regardless of their national origin. The Appellate Body is of the view that to deal with the issue of nationality in any other way would be unnecessary and undesirable: unnecessary in view of the qualifications required for membership in the Appellate Body; undesirable as casting doubts on the capacity of members of the Appellate Body for independence and impartiality in decision-making. There are also some practical considerations that are highly relevant. Were the rules to be cast in a manner that required a Member of the Appellate Body to stand aside in an appeal involving his/her country of origin exclusively for reasons of nationality, this would be likely, in practice, to lead to distortions in the work of the Appellate Body Members. Moreover, appeals involving many parties could arise where it would be impossible to constitute a division. Rule 6 is framed accordingly.

We are also concerned about potential conflicts of interest. For that reason, we have adopted, on a provisional basis, those provisions of the draft Rules of Conduct applicable to the Appellate Body, which are currently under consideration by the DSB.

You will notice that the time limits set out in the Working Procedures for Appellate Review are short. This is the inevitable consequence of Article 17(5) of the DSU, which states that as a general rule, the proceedings shall not exceed 60 days, and in no case shall go beyond 90 days, from the date a party to the dispute formally notifies its decision to appeal to the date the Appellate Body circulates its report. It is our view that the timeframes we have established for the filing of submissions and an oral hearing with the parties are reasonable within the constraints imposed by the DSU and afford due process to all parties concerned while at the same time providing the Appellate Body with the time it requires for careful study, deliberation, decision-making, report-writing by the division and subsequent translation of the Appellate Report.

We have been especially mindful, throughout our development of these Working Procedures, of the necessity to provide all parties with the fundamental right to be heard, both in writing and orally, including the right to respond fully to the views of others.

Fully cognizant of the fact that many panel disputes involve multiple parties, we have provided for a special procedure whereby multiple appellants can be heard fully within the timeframe of the original appeal and by the same division. Because of the time limits provided by Article 17(5) of the DSU for the appeal proceedings, multiple appeals can only be grouped in one single procedure if they are brought within a few days after the initiation of the first appeal. Rule 23(1) of the Working Procedures for Appellate Review specifies this period. Additional appeals which are brought later may not be grouped with the first appeal. They shall, however, be examined by the same division which is responsible for the first appeal. We believe that this is also necessary to ensure maximum coherence and consistency in our decision-making. Finally, we have provided some flexibility for adjusting the timeframes in a particular appeal where rigid adherence to the rules would result in a manifest unfairness to the parties.

We intend to keep our Working Procedures under constant review; where we feel that a particular procedure could be improved in the light of our practical experience, we will not hesitate to make the required amendment. For this reason, we have provided, in Rule 32, for our ongoing oversight of these procedures by acknowledging that amendments may be made in accordance with the process set out in Article 17(9) of the DSU. Where, as a result of a review by the WTO Members, the DSU or the covered agreements are amended, the Appellate Body will be obliged to review its own Working Procedures to ensure their conformity with the agreements.

The Appellate Body agrees unanimously that our obligations as individual Members of the Appellate Body are not to individual WTO Members, but rather are to the dispute settlement system as a whole. Thus, in fulfilling our obligations, our overriding allegiance will be to the common commitment that each Member of the WTO has made to the integrity, the stability and the future of the multilateral trading system.

Finally, I should advise you that the Appellate Body has, following the adoption of its Working Procedures and by consensus, elected me as its Chairman. In accordance with 5(2), I shall hold that office for one year.

Yours sincerely,

Julio Lacarte-Muró

Chairman