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WTO ANALYTICAL INDEX: DISPUTE SETTLEMENT UNDERSTANDING Understanding on Rules and Procedures Governing the Settlement of Disputes |
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> Article 1 |
Article 7: Terms of Reference of Panels 1. Panels shall have the following terms of reference unless the parties to the dispute agree otherwise within 20 days from the establishment of the panel:
"To examine, in the light of the relevant provisions in (name of the covered agreement(s) cited by the parties to the dispute), the matter referred to the DSB by (name of party) in document ... and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in that/those agreement(s)."
2. Panels shall address the relevant provisions in any covered agreement or agreements cited by the parties to the dispute.
3. In establishing a panel, the DSB may authorize its Chairman to draw up the terms of reference of the panel in consultation with the parties to the dispute, subject to the provisions of paragraph 1. The terms of reference thus drawn up shall be circulated to all Members. If other than standard terms of reference are agreed upon, any Member may raise any point relating thereto in the DSB.
185. The Appellate Body in Brazil - Desiccated Coconut explained the importance of the terms of reference in the following terms: "A panel's terms of reference are important for two reasons. First, terms of reference fulfil an important due process objective - they give the parties and third parties sufficient information concerning the claims at issue in the dispute in order to allow them an opportunity to respond to the complainant's case. Second, they establish the jurisdiction of the panel by defining the precise claims at issue in the dispute."(259) (a) "the matter referred to the DSB" 186. In Guatemala - Cement I, the Appellate Body addressed the term "matter" and held that "[t]he 'matter referred to the DSB' ... consists of two elements: the specific measures at issue and the legal basis of the complaint (or the claims).: "The word 'matter' appears in Article 7 of the DSU, which provides the standard terms of reference for panels....when that provision is read together with Article 6.2 of the DSU, the precise meaning of the term 'matter' becomes clear. Article 6.2 specifies the requirements under which a complaining Member may refer a 'matter' to the DSB: in order to establish a panel to hear its complaint, a Member must make, in writing, a 'request for the establishment of a panel' (a 'panel request'). In addition to being the document which enables the DSB to establish a panel, the panel request is also usually identified in the panel's terms of reference as the document setting out 'the matter referred to the DSB'. Thus, 'the matter referred to the DSB' for the purposes of Article 7 of the DSU and Article 17.4 of the Anti-Dumping Agreement must be the 'matter' identified in the request for the establishment of a panel under Article 6.2 of the DSU. That provision requires the complaining Member, in a panel request, to 'identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly.' (emphasis added) The 'matter referred to the DSB', therefore, consists of two elements: the specific measures at issue and the legal basis of the complaint (or the claims)."(260) 187. In Brazil - Desiccated Coconut, Brazil argued that the issue of consistency of its countervailing duty measures with Articles I and II of GATT 994 was not within the special terms of reference of the Panel, and, therefore, should not have been addressed by the Panel. The Appellate Body ultimately found that Articles I and II of GATT 994 did not apply to the dispute before it, and as a result declined to make a finding on whether claims relating to these provisions were included in the Panel's terms of reference. However, the Appellate Body made the following general statement concerning this issue: "We agree, furthermore, with the conclusions expressed by previous panels under the GATT 947, as well as under the Tokyo Round SCM Code and the Tokyo Round Anti-dumping Code, that the 'matter' referred to a panel for consideration consists of the specific claims stated by the parties to the dispute in the relevant documents specified in the terms of reference. We agree with the approach taken in previous adopted panel reports that a matter, which includes the claims composing that matter, does not fall within a panel's terms of reference unless the claims are identified in the documents referred to or contained in the terms of reference."(261) (ii) Specific measures at issue 188. In Indonesia - Autos, the Panel, in a preliminary ruling, considered that the measure at issue was not sufficiently identified in the request for establishment of the Panel: "We note that this Panel has standard terms of reference. Therefore, in determining whether a measure is before us, we must examine the United States' request for establishment of a panel, which is found in document WT/DS59/6. Consistent with the findings of the Appellate Body in Bananas III, we have carefully examined that request to ensure its compliance with both the letter and spirit of Article 6.2 of the Dispute Settlement Understanding. We conclude that the $690 million loan was not "identified as a specific measure" in that document as required by Article 6.2 of the DSU. Indeed the United States states that the loan was not identified in the U.S. request, because it had not yet been made. Rather, the United States suggests that the loan is properly before the Panel because it is one aspect of the National Car Programme, which the United States considers to be the subject of its request. In our view, however, the United States in its request has clearly identified the measures to be considered by the Panel, and those measures do not include this loan. Accordingly, we conclude that the loan in question is not within the terms of reference of this Panel."(262) 189. In Australia - Automotive Leather II (Article 21.5 - US), Australia argued that a certain loan granted by the Australian Government to a domestic enterprise (the "1999 loan") was not within the scope of the panel's terms of reference. Australia argued that the 1999 loan was not part of the implementation of the DSB's ruling and recommendation in the original case. With respect to the concept of "measures taken to comply" see paragraphs 460-0 below and the Chapter on the SCM Agreement, Section V.B.6. The Panel stated: "A 'matter' before a panel consists of the 'measure(s)' at issue, and the claims relating to those measures, as set out in the request for establishment. In this case, the United States' request for establishment clearly identifies both the repayment by Howe and the 1999 loan as the measures at issue. For us to rule, as suggested by Australia, that we are precluded from considering the 1999 loan, would allow Australia to establish the scope of our terms of reference by choosing what measure or measures it will notify, or not notify, to the DSB in connection with its implementation of the DSB's ruling.
The 1999 loan is inextricably linked to the steps taken by Australia in response to the DSB's ruling in this dispute, in view of both its timing and its nature. In our view, the 1999 loan cannot be excluded from our consideration without severely limiting our ability to judge, on the basis of the United States' request, whether Australia has taken measures to comply with the DSB's ruling. In the absence of any compelling reason to do so, we decline to conclude that a measure specifically identified in the request for establishment is not within our terms of reference."(263) 190. In Australia - Salmon, the Appellate Body examined whether the Panel had interpreted correctly its terms of reference with respect to the measure and the product at issue in this dispute. Australia argued that the Panel had exceeded its terms of reference both in terms of products and in terms of the measure at issue. In its request for the establishment of a panel, Canada had identified the measure and the product at issue as follows: "The Australian Government's measures prohibiting the importation of fresh, chilled or frozen salmon ... and any amendments or modifications to it."(264) 191. The Panel stated that the product coverage of this dispute was limited, in accordance with the request for the establishment of a panel, to "fresh, chilled or frozen salmon" and held explicitly that the product coverage "does exclude heat-treated product"(265) and that "heat-treated product falls outside the product coverage of this dispute".(266) As a result, the Appellate Body rejected Australia's claim that the Panel had exceeded its terms of reference with respect to the product at issue.(267) However, the Appellate Body reversed the Panel's conclusions with respect to the measures at issue. One of the Australian measures at issue was an import prohibition on all salmon; another measure, however, allowed imports which had been subject to "heat treatment". The Panel interpreted this latter measure to mean that the heat treatment required applied not only to smoked salmon, but also to other categories of salmon, including fresh, chilled or frozen salmon; specifically, the Panel had held that the "heat treatment" requirement was merely the corollary ("two sides of a single coin") of the import prohibition contained in another measure. The Panel had concluded that imports of fresh, chilled or frozen salmon were prohibited under one measure, unless they received the required "heat treatment" provided for in another measure: "We recall that the Panel stated that the measure at issue in this dispute 'is QP86A as implemented or confirmed by the 1988 Conditions, the 1996 Requirements and the 1996 Decision, and this in so far as it prohibits the importation into Australia of fresh, chilled or frozen salmon'. As indicated above, the Panel interpreted its terms of reference to include the 1988 Conditions, by considering them to constitute a measure 'prohibiting the importation of fresh, chilled or frozen salmon' unless heat-treated as prescribed. We recall that in the context of its examination of whether Australia's measure was consistent with Article 5.1, the Panel treated the import prohibition and the heat-treatment requirement as 'two sides of a single coin'. It said that a consequence of Australia's sanitary requirement that salmon be heat-treated before it can be imported is that imports of fresh, chilled or frozen salmon are prohibited.
We do not share the Panel's position. In our view, the SPS measure at issue in this dispute can only be the measure which is actually applied to the product at issue. The product at issue is fresh, chilled or frozen salmon and the SPS measure applicable to fresh, chilled or frozen salmon is the import prohibition set forth in QP86A. The heat-treatment requirement provided for in the 1988 Conditions applies only to smoked salmon and salmon roe, not to fresh, chilled or frozen salmon."(268) 192. In Brazil - Aircraft (Article 21.5 - Canada II), Canada contended that a financing programme created by the Government of Brazil, PROEX, was a prohibited export subsidy since it appeared to be offered not only in the form of traditional PROEX payments, but also in conjunction with, or as part of, export financing packages provided by Brazil's development bank. Brazil responded that this was not within the terms of reference of this Panel. The Panel agreed with Brazil that such financing is not identified in Canada's request for establishment of a panel and was thus outside its terms of reference.(269) Terminated measures 193. The Panel on Japan - Film gave the following overview of the treatment of terminated measures in GATT/WTO dispute settlement practice: "GATT/WTO precedent in other areas, including in respect of virtually all panel cases under Article XXIII:1(a), confirms that it is not the practice of GATT/WTO panels to rule on measures which have expired or which have been repealed or withdrawn.(270) In only a very small number of cases, involving very particular situations, have panels proceeded to adjudicate claims involving measures which no longer exist or which are no longer being applied. In those cases, the measures typically had been applied in the very recent past(271)."(272) Before agreement on the Panel's terms of reference 194. The Panel on US - Gasoline, in a finding not addressed by the Appellate Body analysed the question of terminated measures with respect to the "agreement on the panel's terms of reference" and the point in time when the terms of reference had been established. The Panel addressed a particular aspect of the United States' measure at issue and noted that "the Panel's terms of reference were established after the 75 per cent rule had ceased to have any effect, and the rule had not been specifically mentioned in the terms of reference." The Panel also mentioned that the measure was not "likely to be renewed" and also found that its findings on the WTO-inconsistency of other aspects of the measure would in any case have made unnecessary the examination of that specific aspect of the measure: "The Panel observed that it had not been the usual practice of a panel established under the General Agreement to rule on measures that, at the time the panel's terms of reference were fixed, were not and would not become effective. In the 1978 Animal Feed Protein case, the Panel ruled on a discontinued measure, but one that had terminated after agreement on the panel's terms of reference.(273) In the 1980 Chile Apples case, the panel ruled on a measure terminated before agreement on the panel's terms of reference; however, the terms of reference in that case specifically included the terminated measure and, it being a seasonal measure, there remained the prospect of its reintroduction.(274) In the present case, the Panel's terms of reference were established after the 75 percent rule had ceased to have any effect, and the rule had not been specifically mentioned in the terms of reference. The Panel further noted that there was no indication by the parties that the 75 percent rule was a measure that, although currently not in force, was likely to be renewed. Finally, the Panel considered that its findings on treatment under the baseline establishment methods under Articles III:4 and XX (b), (d) and (g) would in any case have made unnecessary the examination of the 75 percent rule under Article I:1. The Panel did not therefore proceed to examine this aspect of the Gasoline Rule under Article I:1 of the General Agreement."(275) 195. In Argentina - Textiles and Apparel, one of the measures at issue was specific duties on footwear. These duties were included in the Panel's terms of reference, but were withdrawn by Argentina between the request for consultation and the establishment of the Panel. The Panel declined to make a preliminary determination on this matter and made the respective findings in its final Report.(276) In the final Report, the Panel decided not to examine these specific duties on footwear, reasoning: "Panels and their terms of reference are established by the DSB and panels are not authorized to amend unilaterally their mandate. On the other hand, panels have often been required to determine their jurisdiction over a matter (See for instance United States - Standards for Reformulated and Conventional Gasoline,(277) Japan - Taxes on Alcoholic Beverages,(278) Brazil - Measures Affecting Desiccated Coconut,(279) and EC - Regime for the Importation, Sale and Distribution of Bananas(280) ("Bananas III")). ...
On several occasions, panels have considered measures that were no longer in force.(281) It appears that in each of those cases, however, there was no objection raised by either party to the panel's consideration of the expired measure. ...
[T]he Argentine measure under consideration was revoked before the Panel was established and its terms of reference set, i.e. before the Panel started its adjudication process. The Gasoline panel report would argue in favour of not considering the Argentine specific duties on footwear. Moreover, as noted by the Appellate Body in the Shirts and Blouses(282) case, the aim of dispute settlement is not
'to encourage either panels or the Appellate Body to 'make law' by clarifying existing provisions of the WTO Agreement outside the context of resolving a particular dispute. A panel need only address those claims which must be addressed in order to resolve the matter in issue in the dispute'."(283) 196. The Panel on Argentina - Textiles and Apparel also held that it would not make a finding on the terminated Argentine measure solely because there might be a possibility of a re-introduction of the terminated measure: "[T]he United States claims that there is a serious threat of recurrence since Argentina could easily reintroduce the previous import measures, and the United States suggests that Argentina is likely to do so because there is only a weak justification for its safeguard measure on footwear. We cannot evaluate the justification or likely duration of that safeguard measure. Moreover, in the absence of clear evidence to the contrary, we cannot assume that Argentina will withdraw the safeguard measure and reintroduce the specific duties measure in an attempt to evade panel consideration of its measures. We must assume that WTO Members will perform their treaty obligations in good faith, as they are required to do by the WTO Agreement and by international law.(284) We consider, therefore, that there is no evidence that the minimum specific import duties on footwear will be reintroduced."(285) 197. While it ultimately decided that it would not examine the measure withdrawn by Argentina before the establishment of the Panel, the Panel on Argentina - Textiles and Apparel nevertheless reserved the right to "refer to some examples of transactions" under the terminated measure: "Consequently, we will not review the WTO compatibility of the specific duties which used to be imposed on footwear and which have, since the establishment of this Panel, been revoked. However, since these specific duties on footwear were in force for a long period until 14 February 1997, and for our understanding of the type of duties used by Argentina, we may, when reviewing the import regime applied to textiles and apparel, refer to some examples of transactions involving footwear because the type of duties used at the time by Argentina for textiles, apparel and footwear was the same."(286) 198. In EC - Poultry, Brazil claimed that the allocation by the European Communities of import licences on the basis of export performance was inconsistent with certain provisions of the Licensing Agreement. The European Communities responded, inter alia, that the alleged measure was no longer in place. The Panel, in a statement not addressed by the Appellate Body, noted that "Brazil claims that there are certain lingering effects. Therefore, we do not reject this claim on the grounds of mootness."(287) 199. In US - Certain EC Products, the Panel had ruled that the "increased bonding requirements as of 3 March on EC listed products", which was a measure no longer in existence, infringed WTO rules.(288) However, the Appellate Body considered that "there is an obvious inconsistency between the finding of the Panel that "the 3 March Measure is no longer in existence" and the subsequent recommendation of the Panel that the DSB request that the United States bring its 3 March Measure into conformity with its WTO obligations." The Appellate Body accordingly concluded that the Panel had erred in recommending that the DSB request the United States to bring into conformity with its WTO obligations, a measure that the Panel had found no longer existed.(289) After agreement on the Panel's terms of reference 200. In US - Wool Shirts and Blouses, the United States withdrew the measure at issue shortly before the Panel's final report was circulated, but well after the agreement on the Panel's term of reference. The Panel issued the report anyway and stated: "We note that the United States stated that the restraint, which is the object of the present dispute, was to be withdrawn "due to a steady decline in imports of woven wool shirts and blouses from India and the adjustment of the industry". ... In the absence of an agreement between the parties to terminate the proceedings, we think that it is appropriate to issue our final report regarding the matter set out in the terms of reference of this Panel in order to comply with our mandate, as referred to in paragraph 1.3 of this report, notwithstanding the withdrawal of the US restraint. A number of GATT panels have done so.(290)"(291) 201. In Indonesia - Autos, the Panel noted that "in previous GATT/WTO cases, where a measure included in the terms of reference was otherwise terminated or amended after the commencement of the panel proceedings, panels have nevertheless made findings in respect of such a measure."(292) (293) Amended measures Measures amended before the establishment of the Panel 202. In Brazil - Aircraft, a question arose as to the identity of the measure since regulatory changes relevant to the measure were put in place after consultations were held, but before the panel was established. The Appellate Body determined that the regulatory changes "did not change the essence" of the measure: "We are confident that the specific measures at issue in this case are the Brazilian export subsidies for regional aircraft under PROEX. Consultations were held by the parties on these subsidies, and it is these same subsidies that were referred to the DSB for the establishment of a panel. We emphasize that the regulatory instruments that came into effect in 1997 and 1998 did not change the essence of the export subsidies for regional aircraft under PROEX."(294) Measures amended during the Panel proceedings 203. In Indonesia - Autos, the Panel considered that, according to GATT/WTO practice, in those cases where a measure was amended (or withdrawn) during the Panel proceedings, the Panel had nevertheless to continue its work. See paragraph 201 above. 204. The Panel on Argentina - Footwear (EC), in a finding subsequently not reviewed by the Appellate Body, had to address a situation whereby Argentina had imposed a safeguard measure on footwear and subsequently made several modifications to this measure after the request for establishment had been made. The Panel stated that "it is the provisional and definitive measures in their substance rather than the legal acts in their original or modified legal forms that are most relevant for our terms of reference". The Panel then linked the issue before it to Article 3.3 of the DSU and saw the risk that "Members could always keep one step ahead of any WTO dispute settlement proceeding because in such a situation, the complaining Member would indeed, challenge a 'moving target', and panel and Appellate Body's findings could already be overtaken by events when they are rendered and adopted by the DSB": "[A]n interpretation whereby these subsequent Resolutions are considered to be measures separate and independent from the definitive safeguard measure, and thus outside our terms of reference, could be contrary to Article 3.3 of the DSU. Such an interpretation could allow a situation where a matter brought to the DSB for prompt settlement is not resolved when the defendant changes the legal form of the measure through a separate but closely related instrument, while the measure in dispute remains essentially the same in substance. In this way, Members could always keep one step ahead of any WTO dispute settlement proceeding because in such a situation, the complaining Member would indeed, challenge a 'moving target', and panel and Appellate Body's findings could already be overtaken by events when they are rendered and adopted by the DSB."(295) 205. The Panel on Argentina - Footwear (EC) therefore found that the modifications in question did "not constitute entirely new safeguard measures in the sense that they were based on a different safeguard investigation, but are instead modifications of the legal form of the original definitive measure, which remains in force in substance and which is the subject of the complaint".(296) 206. The Appellate Body in Chile - Price Band System actually referred to the above finding by the Panel on Argentina - Footwear (EC) and indicated that "[a]lthough we were not asked to review that particular finding on appeal, we agree with that panel's approach, which is based on sound reasoning and is consistent with our reasoning here."(297) The Appellate Body considered that, as in Argentina - Footwear (EC), Chile's price band system remained "essentially" the same after the amendment and concluded that the measure before it in this appeal included the Law amending the system because "that law amends Chile's price band system without changing its essence".(298) The Appellate Body further referred to Articles 3.7 and 3.4 of the DSU as well as its decision in Australia - Salmon(299) as support for its conclusion and indicated that "[it] consider[ed] it appropriate ... to rule on the price band system as currently in force in Chile, ..., to "secure a positive solution to the dispute" and to make "sufficiently precise recommendations and rulings so as to allow for prompt compliance"."(300) 207. The Appellate Body in Chile - Price Band System however indicated that it was not condoning the practice of amending measures and turning them into "moving target[s]": "We emphasize that we do not mean to condone a practice of amending measures during dispute settlement proceedings if such changes are made with a view to shielding a measure from scrutiny by a panel or by us. We do not suggest that this occurred in this case. However, generally speaking, the demands of due process are such that a complaining party should not have to adjust its pleadings throughout dispute settlement proceedings in order to deal with a disputed measure as a "moving target". If the terms of reference in a dispute are broad enough to include amendments to a measure-as they are in this case-and if it is necessary to consider an amendment in order to secure a positive solution to the dispute-as it is here-then it is appropriate to consider the measure as amended in coming to a decision in a dispute."(301) Measures amended during the Appellate Body proceedings 208. In Argentina - Textiles and Apparel, one of the Argentine measures at issue, a statistical tax, was amended during the Appellate Body proceedings. The Appellate Body noted the amendment but proceeded on the basis of the tax as it existed at the time of the request for establishment of the panel.(302) Ambiguous, vague and unclear measures 209. The Panel on Turkey - Textiles, dismissed certain arguments that terms used to identify measures in the panel request were too vague, ambiguous or unclear to fall within a panel's terms of reference, indicating that its "terms of reference [were] sufficiently clear": "On 25 September 1998 the Panel issued the following ruling on this point:
'In assessing Turkey's claim that India's request for the establishment of a panel was not sufficiently precise, we consider that it is important that a panel request, which defines the terms of reference, meets this criterion so as to inform the defending party and potential third parties both of the measures at issue, including the products they cover, and of the legal basis of the complaint. This is necessary to ensure due process and the ability of the defendant to defend itself.'
We have examined India's request for establishment of the panel (WT/DS34/2). While not identified by place and date of publication, the measures are specified by type (i.e. quantitative restrictions), by effective date of entry into force (1 January 1996) and by product coverage (textiles and clothing, a well defined class of products in the WTO).(303) In our view the panel request meets the minimum requirements of specificity of Article 6.2 of the DSU as interpreted by the Appellate Body in Bananas III and LAN.(304) Even if we agree that India's request could have been more detailed, we conclude that Turkey is sufficiently informed of the measures at issue and the products they cover, and that our terms of reference are sufficiently clear. Consequently, we reject Turkey's claim that the Panel should refuse to accept India's request in limine litis for its failure to respect the basic requirements of Article 6.2 of the DSU."(305) 210. In Korea - Alcoholic Beverages, the Panel considered whether phrases used by the European Communities ("certain alcoholic beverages falling within HS heading 2208") and the US ("other distilled spirits such as whisky, brandy, vodka, gin and ad-mixtures") were specific enough "to satisfy the letter and spirit of Article 6.2." The Panel considered that the requirements of Article 6.2 were satisfied: "The question of whether a panel request satisfies the requirements of Article 6.2 is to be determined on a case by case basis with due regard to the wording of Article 6.2..., the question is whether Korea is put on sufficient notice as to the parameters of the case it is defending... ... Korea argues that each imported product must be specifically identified in order to be within the scope of the panel proceeding. The complainants argue that the appropriate imported product is all distilled beverages. They claim, in fact, that for purposes of Article III, there is only one category in issue. They claim to have identified specific examples of such distilled alcoholic beverages for purposes of illustration, not as limits to the category.
The issue of the appropriate categories of products to compare is important to this case. In our view, however, it is one that requires a weighing of evidence. As such it is not an issue appropriate for a preliminary ruling in this case. This is particularly so in light of the Appellate Body's opinion in Japan - Taxes on Alcoholic Beverages II,(306) that all imported distilled alcoholic beverages were discriminated against. That element of the decision is not controlling on the ultimate resolution of other cases involving other facts; however, it cannot be considered inappropriate for complainants to follow it in framing their request for a panel in a dispute involving distilled alcoholic beverages. While it is possible that in some cases, the complaint could be considered so vague and broad that a respondent would not have adequate notice of the actual nature of the alleged discrimination, it is difficult to argue that such notice was not provided here in light of the identified tariff heading and the Appellate Body decision in the Japan - Taxes on Alcoholic Beverages II. Furthermore, we note that the Appellate Body recently found that a panel request based on a broader grouping of products was sufficiently specific for purposes of Article 6.2.(307) We find therefore, that the complainants' requests for a panel satisfied the requirements of Article 6.2 of the DSU."(308) 211. In Canada - Aircraft, the Panel considered Canada's claim that certain provisions in Brazil's panel request were too vague. The Panel dismissed such arguments on the basis that whilst the measures may not have been described with sufficient clarity or precision, they had put Canada on notice that, at the very least, such provisions would be an issue in the dispute. The Panel relied on the Appellate Body's findings on "prejudice" in EC - Computer Equipment to justify such measures, indicating that the requirements of Article 6.2 had been met because Canada had not suffered any prejudice during the course of the panel proceedings. The Panel commented as follows when referring to the Appellate Body's decision in EC - Computer Equipment: "We consider it appropriate to apply a similar standard in determining whether Brazil's request for establishment meets the requirements of Article 6.2 of the DSU in the present case. In particular, we shall consider whether any alleged imprecision in Brazil's request for establishment affected Canada's due process rights of defence in the course of the Panel proceedings. Indeed, we understand Canada to advocate a similar interpretation of Article 6.2, since Canada asserts that Brazil's "lack of precision prejudices Canada's due process right to know the case against it. These claims are therefore inconsistent with Article 6.2 of the DSU."(309) (emphasis supplied). Thus, we understand Canada to argue that Brazil's request for establishment would not be inconsistent with Article 6.2 of the DSU if the alleged lack of precision did not prejudice Canada's due process right to know the case against it."(310) 212. In contrast, the Panel on Indonesia - Autos indicated that a loan that had not yet been made could not be covered by a panel's terms of reference: "At the first meeting of the Panel with the parties, on 3 December 1997, Indonesia raised a preliminary objection to the United States' claim with respect to a $US 690 million loan to PT TPN, on the basis that this loan was not within the Panel's terms of reference. The arguments of the parties can be found in paragraphs 4.36 to 4.50 of the Descriptive Part of this report. After hearing the arguments of the parties, the Chairman announced the following ruling on behalf of the Panel: ... We note that this Panel has standard terms of reference. Therefore, in determining whether a measure is before us, we must examine the United States' request for establishment of a panel,...Consistent with the findings of the Appellate Body in Bananas III, we have carefully examined that request to ensure its compliance with both the letter and spirit of Article 6.2 of the Dispute Settlement Understanding. We conclude that the $690 million loan was not "identified as a specific measure" in that document as required by Article 6.2 of the DSU. Indeed the United States states that the loan was not identified in the U.S. request, because it had not yet been made. Rather, the United States suggests that the loan is properly before the Panel because it is one aspect of the National Car Programme, which the United States considers to be the subject of its request. In our view, however, the United States in its request has clearly identified the measures to be considered by the Panel, and those measures do not include this loan. Accordingly, we conclude that the loan in question is not within the terms of reference of this Panel."(311) Measures in existence since before the entry into force of the WTO Agreements 213. As regards the applicability of the SPS and TBT Agreements to measures enacted before the entry into force of the Agreements, see paragraphs 6-7 of the Chapter on the SPS Agreement and paragraph 7 of the Chapter on the TBT Agreement. General 214. As regards the need to identify the claims in the request for establishment of a panel, see paragraphs 162-170 above. Claims not included in the terms of reference 215. In consideration of the United States' claim under Article 63 of the TRIPS Agreement which had not been included in the request for the establishment of the panel, the Appellate Body in India - Patents (US) stated: "The jurisdiction of a panel is established by that panel's terms of reference, which are governed by Article 7 of the DSU. A panel may consider only those claims that it has the authority to consider under its terms of reference. A panel cannot assume jurisdiction that it does not have. In this case, Article 63 was not within the Panel's jurisdiction, as defined by its terms of reference. Therefore, the Panel had no authority to consider the alternative claim by the United States under Article 63.
The United States argues that, in the consultations between the parties to this dispute in this case, India had not disclosed the existence of any administrative instructions' for the filing of mailbox applications for pharmaceutical and agricultural chemical products. Therefore the United States asserts that it had no way of knowing that India would rely on this argument before the Panel. The United States maintains that, for this reason, it had not included a claim under Article 63 in its request for the establishment of a panel. All that said, there is, nevertheless, no basis in the DSU for a complaining party to make an additional claim, outside of the scope of a panel's terms of reference, at the first substantive meeting of the panel with the parties. A panel is bound by its terms of reference."(312) 216. The Appellate Body in India - Patents (US) found the Panel's ruling that "all legal claims would be considered if they were made prior to the end of [the first substantive] meeting" inconsistent with the letter and spirit of the DSU. The Appellate Body stated: "Although panels enjoy some discretion in establishing their own working procedures, this discretion does not extend to modifying the substantive provisions of the DSU. To be sure, Article 12.1 of the DSU says: 'Panels shall follow the Working Procedures in Appendix 3 unless the panel decides otherwise after consulting the parties to the dispute'. Yet that is all that it says. Nothing in the DSU gives a panel the authority either to disregard or to modify other explicit provisions of the DSU. The jurisdiction of a panel is established by that panel's terms of reference, which are governed by Article 7 of the DSU. A panel may consider only those claims that it has the authority to consider under its terms of reference. A panel cannot assume jurisdiction that it does not have. ... A Panel is bound by its terms of reference."(313) 217. In India - Quantitative Restrictions, India raised before the Panel the issue of the extent to which the Panel should consider the provisions of Article XVIII:B and the 1994 Understanding on Balance-of-payments Provisions in its analysis of the US claims since the United States had not raised any claim regarding violations of those provisions. The Panel decided that although it would not address any claims of the United States based on those provisions, it considered that they were "part of the context of those provisions alleged by the United States to have been violated". The Panel also considered that India had referred to various provisions of Article XVIII:B in its defence. The Panel concluded that "[i]n our view, the defending party is not restricted in the provisions of the ..."WTO Agreement"... that it can invoke in its defence. In these circumstances, we find it relevant to consider the provisions of Article XVIII:B and the 1994 Understanding as part of the context in deciding on the claims of the United States and to examine them in relation to the defence raised by India."(314) Claims included in terms of reference Claims not elaborated in the parties' submissions 218. In EC - Bananas III, the Panel held that certain claims under GATS made by Guatemala, Honduras and Mexico were not to be included within the scope of the case. While these claims had been included in the panel request, the Panel decided not to address them because they had not been elaborated in the three parties' first written submission.(315) The Appellate Body in EC - Bananas III reversed the Panel's conclusion, holding that nothing in the DSU or GATT practice suggested that all claims be set out in a complaining party's first written submission: "There is no requirement in the DSU or in GATT practice for arguments on all claims relating to the matter referred to the DSB to be set out in a complaining party's first written submission to the panel. It is the panel's terms of reference, governed by Article 7 of the DSU, which set out the claims of the complaining parties relating to the matter referred to the DSB. ... We do not agree with the Panel's statement that a 'failure to make a claim in the first written submission cannot be remedied by later submissions or by incorporating the claims and arguments of other complainants'. Pursuant to Articles 6.2 and 7.1 of the DSU, the terms of reference of the Panel in this case were established in the request for the establishment of the panel, WT/DS27/6, in which the claims specified under the GATS were made by all five Complaining Parties jointly."(316) Abandoned claims 219. In US - Steel Plate, India indicated in its first written submission that it would not pursue several claims that had been set out in its request for establishment of the Panel. However, India changed its view later on and informed the Panel of its intention to pursue one of these claims during the first substantive meeting of the Panel with the parties and in its rebuttal submission. In spite of the lack of specific objection by the US which had noted that the claim was within the Panel's terms of reference, the Panel decided that it was not going to rule on India's abandoned and later recovered claim: "This situation is not explicitly addressed in either the DSU or any previous panel or Appellate Body report. We do note, however, the ruling of the Appellate Body in Bananas to the effect that a claim may not be raised for the first time in a first written submission, if it was not in the request for establishment.(317) One element of the Appellate Body's decision in that regard was the notice aspect of the request for establishment. The request for establishment is relied upon by Members in deciding whether to participate in the dispute as third parties. To allow a claim to be introduced in a first written submission would deprive Members who did not choose to participate as third parties from presenting their views with respect to such a new claim.
The situation here is, in our view, analogous. That is, to allow a party to resurrect a claim it had explicitly stated, in its first written submission, that it would not pursue would, in the absence of significant adjustments in the Panel's procedures, deprive other Members participating in the dispute settlement proceeding of their full opportunities to defend their interest with respect to that claim. Paragraphs 4 and 7 of Appendix 3 to the DSU provide that parties shall "present the facts of the case and their arguments" in the first written submission, and that written rebuttals shall be submitted prior to the second meeting. These procedures, in our view, envision that initial arguments regarding a claim should be presented for the first time in the first written submission, and not at the meeting of the panel with the parties or in rebuttal submissions.
With respect to the interests of third parties, the unfairness of allowing a claim to be argued for the first time at the meeting of the panel with the parties, or in rebuttal submissions, is even more pronounced. In such a circumstance, third parties would be entirely precluded from responding to arguments with respect to such a resurrected claim, as they would not have access to those arguments under the normal panel procedures set out in paragraph 6 of Appendix 3 to the DSU. Further, India has identified no extenuating circumstances to justify the reversal of its abandonment of this claim.(318) Thus, in our view, it would be inappropriate in these circumstances to allow India to resurrect its claim in this manner. Therefore, we will not rule on India's claim under AD Agreement Articles 6.6 and 6.8 and Annex II, paragraph 7 regarding failure to exercise special circumspection in using information supplied in the petition.(319)"(320) Whether a party has made a specific claim 220. In US - Certain EC Products, the United States asked the Appellate Body to reverse the Panel's finding under Article 23.2(a) on the basis that the Panel request of the European Communities was insufficient to "present the problem clearly" as required by Article 6.2 of the DSU and that the European Communities had never requested or argued for" findings under Article 23.2(a). The Appellate Body considered that the fact that a claim of inconsistency with a given provision may be within the Panel's terms of reference does not mean that the complainant has actually made such a claim. The Appellate Body further ruled that in the absence of a specific claim of inconsistency by the complainant, the burden to present a prima facie case of violation would not be met: "[A]s the request for the establishment of a panel of the European Communities included a claim of inconsistency with Article 23, a claim of inconsistency with Article 23.2(a) is within the Panel's terms of reference.
However, the fact that a claim of inconsistency with Article 23.2(a) of the DSU can be considered to be within the Panel's terms of reference does not mean that the European Communities actually made such a claim. An analysis of the Panel record shows that, with the exception of two instances during the Panel proceedings, the European Communities did not refer specifically to Article 23.2(a) of the DSU. Furthermore, in response to a request from the United States to clarify the scope of its claim under Article 23, the European Communities asserted only claims of violation of Articles 23.1 and 23.2(c) of the DSU; no mention was made of Article 23.2(a). Our reading of the Panel record shows us that, throughout the Panel proceedings in this case, the European Communities made arguments relating only to its claims that the United States acted inconsistently with Article 23.1 and Article 23.2(c) of the DSU. ... ... As the European Communities did not make a specific claim of inconsistency with Article 23.2(a), it did not adduce any evidence or arguments to demonstrate that the United States made a 'determination as to the effect that a violation has occurred' in breach of Article 23.2(a) of the DSU. And, as the European Communities did not adduce any evidence or arguments in support of a claim of violation of Article 23.2(a) of the DSU, the European Communities could not have established, and did not establish, a prima facie case of violation of Article 23.2(a) of the DSU.(321)"(322) 221. In Chile - Price Band System, Chile had asked the Appellate Body to reverse the Panel's finding on inconsistency of Chile's price band system with Article II:1(b) second sentence on the ground that Argentina had not actually made a claim under that second sentence. The Appellate Body concluded that, although Argentina's request for the establishment of a panel was phrased broadly enough to include a claim under both sentences of Article II:1(b) of the GATT 1994, a close examination of Argentina's submissions revealed that the only claim made by Argentina was under the first sentence of that Article.(323) The Appellate Body considered that, in this case, the Panel "had neither a "right" nor a "duty" to develop its own legal reasoning to support a claim under the second sentence" and stressed that "the Panel was not entitled to make a claim for Argentina, or to develop its own legal reasoning on a provision that was not at issue: "In EC - Hormones(324), and in US - Certain EC Products(325), we affirmed the capacity of panels to develop their own legal reasoning in a context in which it was clear that the complaining party had made a claim on the matter before the panel. It was also clear, in both those cases, that the complainant had advanced arguments in support of the finding made by the panel-even though the arguments in support of the claim were not the same as the interpretation eventually adopted by the Panel. The situation in this appeal is altogether different. No claim was properly made by Argentina under the second sentence of Article II:1(b). No legal arguments were advanced by Argentina under the second sentence of Article II:1(b). Therefore, those rulings have no relevance to the situation here.
Contrary to what Argentina argues, given our finding that Argentina has not made a claim under the second sentence of Article II:1(b), the Panel in this case had neither a 'right' nor a 'duty' to develop its own legal reasoning to support a claim under the second sentence. The Panel was not entitled to make a claim for Argentina(326), or to develop its own legal reasoning on a provision that was not at issue.(327)"(328) 222. In Argentina - Footwear (EC), Argentina had claimed that the Panel had violated Article 7.2 of the DSU and exceeded its terms of reference, because it had relied on alleged violations of Article 3 of the Agreement on Safeguards even though the request for the establishment of a Panel only alleged violations of Articles 2 and 4 of the Agreement on Safeguards."(329) In this case, the Appellate Body did not consider that the Panel was not entitled to rule on Article 3 of the Agreement on Safeguards and stated that it "fail[ed] to see how any panel could be expected to make an 'objective assessment of the matter', as required by Article 11 of the DSU, if it could only refer in its reasoning to the specific provisions cited by the parties in their claims": "We note that the very terms of Article 4.2(c) of the Agreement on Safeguards expressly incorporate the provisions of Article 3. Thus, we find it difficult to see how a panel could examine whether a Member had complied with Article 4.2(c) without also referring to the provisions of Article 3 of the Agreement on Safeguards. More particularly, given the express language of Article 4.2(c), we do not see how a panel could ignore the publication requirement set out in Article 3.1 when examining the publication requirement in Article 4.2(c) of the Agreement on Safeguards. And, generally, we fail to see how the Panel could have interpreted the requirements of Article 4.2(c) without taking into account in some way the provisions of Article 3. What is more, we fail to see how any panel could be expected to make an 'objective assessment of the matter', as required by Article 11 of the DSU, if it could only refer in its reasoning to the specific provisions cited by the parties in their claims."(330) 223. In Mexico - Corn Syrup (Article 21.5 - US), the Appellate Body defined the two instances where a panel is obliged to address issues that affect its own jurisdiction: "We believe that a panel comes under a duty to address issues in at least two instances. First, as a matter of due process, and the proper exercise of the judicial function, panels are required to address issues that are put before them by the parties to a dispute. Second, panels have to address and dispose of certain issues of a fundamental nature, even if the parties to the dispute remain silent on those issues. In this regard, we have previously observed that "[t]he vesting of jurisdiction in a panel is a fundamental prerequisite for lawful panel proceedings."(331) For this reason, panels cannot simply ignore issues which go to the root of their jurisdiction - that is, to their authority to deal with and dispose of matters. Rather, panels must deal with such issues - if necessary, on their own motion - in order to satisfy themselves that they have authority to proceed."(332) 224. For information concerning the consideration by the Panel of provisions not included as violations in the terms of reference but referred by the defendant in its defence, see paragraph 217 above. For judicial economy, see Section XI.B.6 of this Chapter. Concerning the consideration by the Panel of provisions not included in the complainant's claims, see paragraphs 243-245 below. (a) Special terms of reference 225. In Brazil - Desiccated Coconut, upon a request from Brazil for consultations on the terms of reference, the DSB authorized the DSB Chairman to "draw up terms of reference in consultation with the parties, in accordance with Article 7.3 of the DSU". The Philippines and Brazil had agreed on the following special terms of reference: "To examine, in the light of the relevant provisions in GATT 1994 and the Agreement on Agriculture, the matter referred to the DSB by the Philippines in document WT/DS22/5, taking into account the submission made by Brazil in document WT/DS22/3 and the record of discussions at the meeting of the DSB on 21 February 1996, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements."(333)
VIII. Article 8 back to top Article 8: Composition of Panels 1. Panels shall be composed of well-qualified governmental and/or non-governmental individuals, including persons who have served on or presented a case to a panel, served as a representative of a Member or of a contracting party to GATT 947 or as a representative to the Council or Committee of any covered agreement or its predecessor agreement, or in the Secretariat, taught or published on international trade law or policy, or served as a senior trade policy official of a Member.
2. Panel members should be selected with a view to ensuring the independence of the members, a sufficiently diverse background and a wide spectrum of experience.
3. Citizens of Members whose governments(6) are parties to the dispute or third parties as defined in paragraph 2 of Article 10 shall not serve on a panel concerned with that dispute, unless the parties to the dispute agree otherwise.
(footnote original) 6 In the case where customs unions or common markets are parties to a dispute, this provision applies to citizens of all member countries of the customs unions or common markets.
4. To assist in the selection of panelists, the Secretariat shall maintain an indicative list of governmental and non-governmental individuals possessing the qualifications outlined in paragraph 1, from which panelists may be drawn as appropriate. That list shall include the roster of non-governmental panelists established on 30 November 1984 (BISD 31S/9), and other rosters and indicative lists established under any of the covered agreements, and shall retain the names of persons on those rosters and indicative lists at the time of entry into force of the WTO Agreement. Members may periodically suggest names of governmental and non-governmental individuals for inclusion on the indicative list, providing relevant information on their knowledge of international trade and of the sectors or subject matter of the covered agreements, and those names shall be added to the list upon approval by the DSB. For each of the individuals on the list, the list shall indicate specific areas of experience or expertise of the individuals in the sectors or subject matter of the covered agreements.
5. Panels shall be composed of three panelists unless the parties to the dispute agree, within 10 days from the establishment of the panel, to a panel composed of five panelists. Members shall be informed promptly of the composition of the panel.
6. The Secretariat shall propose nominations for the panel to the parties to the dispute. The parties to the dispute shall not oppose nominations except for compelling reasons.
7. If there is no agreement on the panelists within 20 days after the date of the establishment of a panel, at the request of either party, the Director-General, in consultation with the Chairman of the DSB and the Chairman of the relevant Council or Committee, shall determine the composition of the panel by appointing the panelists whom the Director-General considers most appropriate in accordance with any relevant special or additional rules or procedures of the covered agreement or covered agreements which are at issue in the dispute, after consulting with the parties to the dispute. The Chairman of the DSB shall inform the Members of the composition of the panel thus formed no later than 10 days after the date the Chairman receives such a request.
8. Members shall undertake, as a general rule, to permit their officials to serve as panelists.
9. Panelists shall serve in their individual capacities and not as government representatives, nor as representatives of any organization. Members shall therefore not give them instructions nor seek to influence them as individuals with regard to matters before a panel.
10. When a dispute is between a developing country Member and a developed country Member the panel shall, if the developing country Member so requests, include at least one panelist from a developing country Member.
11. Panelists' expenses, including travel and subsistence allowance, shall be met from the WTO budget in accordance with criteria to be adopted by the General Council, based on recommendations of the Committee on Budget, Finance and Administration.
1. Article 8.4 - selection of panelists (a) Indicative list of governmental and non-governmental panelists 226. On 6 October 1995(334), 20 February 1996(335), 14 May 1996(336), 6 August 1996(337), 2 December 1996(338), 23 April 1997(339), 3 July 1997(340), 12 December 1997(341), 19 October 1998(342), 3 November 1999(343), 29 March 2000(344), 26 June 2001(345), 21 January 2002(346), 3 April 2002(347), 3 July 2002(348), and 2 December 2002(349), the Secretariat circulated the names of candidates for the indicative list of governmental and non-governmental panelists approved by the DSB. The administration of the indicative list approved by the DSB on 31 May 1995 has been reproduced as an Annex.(350)
IX. Article 9 back to top Article 9: Procedures for Multiple Complainants 1. Where more than one Member requests the establishment of a panel related to the same matter, a single panel may be established to examine these complaints taking into account the rights of all Members concerned. A single panel should be established to examine such complaints whenever feasible.
2. The single panel shall organize its examination and present its findings to the DSB in such a manner that the rights which the parties to the dispute would have enjoyed had separate panels examined the complaints are in no way impaired. If one of the parties to the dispute so requests, the panel shall submit separate reports on the dispute concerned. The written submissions by each of the complainants shall be made available to the other complainants, and each complainant shall have the right to be present when any one of the other complainants presents its views to the panel.
3. If more than one panel is established to examine the complaints related to the same matter, to the greatest extent possible the same persons shall serve as panelists on each of the separate panels and the timetable for the panel process in such disputes shall be harmonized.
227. In EC - Hormones, the European Communities argued that the Panel had made decisions that granted certain additional third-party rights to Canada and the United States that were not justifiable under Article 9.3 of the DSU. More specifically, the European Communities appealed the Panel's decision to hold a joint meeting with scientific experts, to give the United States and Canada access to all information submitted in both proceedings and to invite the United States to participate and make a statement at the second substantive meeting in the proceeding where Canada was the complaining party. The Appellate Body rejected the European Communities' arguments and upheld each of the Panel's decisions in this respect. In relation to holding one joint meeting with scientific experts, the Appellate Body stated: "We consider the explanation of the Panel quite reasonable, and its decision to hold a joint meeting with the scientific experts consistent with the letter and spirit of Article 9.3 of the DSU. Clearly, it would be an uneconomical use of time and resources to force the Panel to hold two successive but separate meetings gathering the same group of experts twice, expressing their views twice regarding the same scientific and technical matters related to the same contested European Communities measures. We do not believe that the Panel has erred by addressing the European Communities procedural objections only where the European Communities could make a precise claim of prejudice. It is evident to us that a procedural objection raised by a party to a dispute should be sufficiently specific to enable the panel to address it. ... Having access to a common pool of information enables the panel and the parties to save time by avoiding duplication of the compilation and analysis of information already presented in the other proceeding. Article 3.3 of the DSU recognizes the importance of avoiding unnecessary delays in the dispute settlement process and states that the prompt settlement of a dispute is essential to the effective functioning of the WTO. In this particular case, the Panel tried to avoid unnecessary delays, making an effort to comply with the letter and spirit of Article 9.3 of the DSU."(351) 228. The Appellate Body in EC - Hormones also considered reasonable the Panel's decision to grant the United States access to all information in the proceedings initiated by Canada and to grant Canada access to all information in the proceedings initiated by the United States and saw a link between granting such access and the attempt to "harmonize" timetables in multiple panel proceedings: "The decision of the Panel to use and provide all information to the parties in both disputes was taken in view of its previous decision to hold a joint meeting with the experts. The European Communities asserts that it cannot see how providing information in one of the proceedings to a party in the other helps to harmonize timetables. We can see a relation between timetable harmonization within the meaning of Article 9.3 of the DSU and economy of effort. In disputes where the evaluation of scientific data and opinions plays a significant role, the panel that is established later can benefit from the information gathered in the context of the proceedings of the panel established earlier. Having access to a common pool of information enables the panel and the parties to save time by avoiding duplication of the compilation and analysis of information already presented in the other proceeding. Article 3.3 of the DSU recognizes the importance of avoiding unnecessary delays in the dispute settlement process and states that the prompt settlement of a dispute is essential to the effective functioning of the WTO. In this particular case, the Panel tried to avoid unnecessary delays, making an effort to comply with the letter and spirit of Article 9.3 of the DSU. Indeed, as noted earlier, despite the fact that the Canadian proceeding was initiated several months later than that of the United States, the Panel managed to finish both Panel Reports at the same time." 229. Regarding the participation of the United States in the second substantive meeting of the Panel, as requested by Canada, the Appellate Body in EC - Hormones recalled the Panel's findings and agreed: "[The Panel held:]
'This decision was, inter alia, based on the fact that our second meeting was held the day after our joint meeting with the scientific experts and that the parties to this dispute would, therefore, most likely comment on, and draw conclusions from, the evidence submitted by these experts to be considered in both cases. Since in the panel requested by the United States the second meeting was held before the joint meeting with scientific experts, we considered it appropriate, in order to safeguard the rights of the United States in the proceeding it requested, to grant the United States the opportunity to observe our second meeting in this case and to make a brief statement at the end of that meeting.'(352)
The explanation of the Panel appears reasonable to us. If the Panel had not given the United States an opportunity to participate in the second substantive meeting of the proceedings initiated by Canada, the United States would not have had the same degree of opportunity to comment on the views expressed by the scientific experts that the European Communities and Canada enjoyed. Although Article 12.1 and Appendix 3 of the DSU do not specifically require the Panel to grant this opportunity to the United States, we believe that this decision falls within the sound discretion and authority of the Panel, particularly if the Panel considers it necessary for ensuring to all parties due process of law. In this regard, we note that in European Communities - Bananas(353), the panel considered that particular circumstances justified the grant to third parties of rights somewhat broader than those explicitly envisaged in Article 10 and Appendix 3 of the DSU. We conclude that, in the case before us, circumstances justified the Panel's decision to allow the United States to participate in the second substantive meeting of the proceedings initiated by Canada."(354) 230. In US - 1916 Act, the Appellate Body held that issues of third-party rights were not addressed by Article 9 of the DSU. See also paragraph 237 below. The Appellate Body stated: "Although the European Communities and Japan invoke Article 9 of the DSU, and, in particular, Article 9.3, in support of their position, we note that Article 9 of the DSU, which concerns procedures for multiple complaints related to the same matter, does not address the issue of the rights of third parties in such procedures."(355)
X. Article 10 back to top Article 10: Third Parties 1. The interests of the parties to a dispute and those of other Members under a covered agreement at issue in the dispute shall be fully taken into account during the panel process.
2. Any Member having a substantial interest in a matter before a panel and having notified its interest to the DSB (referred to in this Understanding as a "third party") shall have an opportunity to be heard by the panel and to make written submissions to the panel. These submissions shall also be given to the parties to the dispute and shall be reflected in the panel report.
3. Third parties shall receive the submissions of the parties to the dispute to the first meeting of the panel.
4. If a third party considers that a measure already the subject of a panel proceeding nullifies or impairs benefits accruing to it under any covered agreement, that Member may have recourse to normal dispute settlement procedures under this Understanding. Such a dispute shall be referred to the original panel wherever possible.
(a) "Third parties shall receive the submissions of the parties to the dispute to the first meeting of the panel" 231. In Australia - Automotive Leather (Article 21.5 - US), the European Communities, a third party in this case, argued that because only one meeting of the panel would be held to address both the first and rebuttal submissions of each party, the European Communities should, in accordance with Article 10.3 of the DSU, receive all of the parties' submissions. The Panel rejected this request: " [I]f [the Panel] had decided to hold two meetings with the parties, as is the normal situation envisioned in Appendix 3 of the DSU, third parties would have received only the written submissions made prior to the first meeting, but not rebuttals or other submissions made subsequently. Thus, in the more usual case, third parties would be in the same position as they were in this case with respect to their ability to present views to the panel. In the view of the Panel, the procedure it had established conformed more closely with the usual practice than would be the case if third parties received the rebuttals, and was in keeping with Article 10.3 of the DSU in a case where the Panel holds only one meeting."(356) (a) Enhanced third-party rights 232. The Panel on EC - Bananas III considered requests by Members to be allowed to participate more broadly in the Panel proceedings than provided for under the relevant provisions of the DSU. More specifically, these Members requested that they be granted the right of presence at all meetings of the Panel with the parties and the right to make statements at all such meetings. Furthermore, these Members also demanded the right to receive copies of all submissions and other materials and to be granted permission to make written submissions to both meetings of the Panel. While the DSB took note of these statements, there was no consensus on such participation.(357) Several of these countries later confirmed their requests in letters addressed to the Chairman of the DSB. The Panel began by considering the provisions of the DSU and GATT practice: "The rights of third parties are dealt with in Article 10 and Appendix 3 of the Dispute Settlement Understanding. Article 10 provides that third parties "shall have an opportunity to be heard by the panel and to make written submissions to the panel". It also provides that third parties are entitled to receive the submissions of the parties made to the first substantive panel meeting. Paragraph 6 of Appendix 3 specifies that third parties shall be invited "to present their views during a session of the first substantive meeting of the panel set aside for that purpose. All such third parties may be present during the entirety of this session". Under prior GATT practice, more expansive rights were granted to third parties in several disputes, including the two prior disputes involving bananas and in the Semiconductors case.(358) In those cases, however, the extension of such rights had been the subject of agreement between the parties at that time. No such agreement existed between the parties in the present dispute."(359) 233. After the first substantive meeting, the Panel on EC - Bananas III made the following ruling: "We thereafter ruled as follows:
(a) The Panel has decided, after consultations with the parties in conformity with DSU Article 12.1, that members of governments of third parties will be permitted to observe the second substantive meeting of the Panel with the parties. The Panel envisages that the observers will have the opportunity also to make a brief statement at a suitable moment during the second meeting. The Panel does not expect them to submit additional written material beyond responses to the questions already posed during the first meeting.
(b) The Panel based its decision, inter alia, on the following considerations:
(i) the economic effect of the disputed EC banana regime on certain third parties appeared to be very large;
(ii) the economic benefits to certain third parties from the EC banana regime were claimed to derive from an international treaty between them and the EC;
(iii) past practice in panel proceedings involving the banana regimes of the EC and its member States; and
(iv) the parties to the dispute could not agree on the issue.
As a consequence of our ruling, the third parties in these proceedings enjoyed broader participatory rights than are granted to third parties under the DSU."(360) 234. After granting certain enhanced third-party rights, the Panel on EC - Bananas III declined to grant further such rights, including participation in the interim review process: "Following the second substantive meeting of the Panel with the parties, several of the third parties asked for further participatory rights, including participation in the interim review process. We consulted the parties and found that, as before, they had diverging views on the appropriateness of granting this request. We decided that no further participatory rights should be extended to third parties, except, in accord with normal practice, to permit them to review the draft of the summary of their arguments in the Descriptive Part. In this regard, we noted that Article 15 of the DSU, which deals with the interim review process, refers only to parties as participants in that process. In our view, to give third parties all of the rights of parties would inappropriately blur the distinction drawn in the DSU between parties and third parties."(361) 235. In EC - Hormones, the Appellate Body upheld the Panel's decisions to grant additional participatory rights to the United States and Canada, specifically to have access to all information from the proceedings initiated by the other country, respectively, and for the United States to observe and to make a statement at the second substantive meeting in the proceeding initiated by Canada. See paragraphs 227-229 above. 236. In contrast to the EC - Hormones dispute, the Panel on US - 1916 Act refused to grant the European Communities and Japan enhanced third-party rights in each other's case. The Panel, in a finding subsequently upheld by the Appellate Body held:(362) "We conclude from the reports in the EC - Hormones cases that enhanced third party rights were granted primarily because of the specific circumstances in those cases.
We find that no similar circumstances exist in the present matter, which does not involve the consideration of complex facts or scientific evidence. Moreover, none of the parties requested that the panels harmonise their timetables or hold concurrent deliberations in the two procedures (WT/DS136 and WT/DS162). In fact, the European Communities was not in favour of delaying the proceedings in WT/DS136 and the United States objected to concurrent deliberations."(363) 237. The Appellate Body in US - 1916 Act confirmed its finding in the EC - Hormones case that the grant of additional third-party rights is within "the sound discretion" of a Panel and rejected the arguments by the European Communities and Japan: "The rules relating to the participation of third parties in panel proceedings are set out in Article 10 of the DSU, and, in particular, paragraphs 2 and 3 thereof, and in paragraph 6 of Appendix 3 to the DSU. ... Although the European Communities and Japan invoke Article 9 of the DSU, and, in particular, Article 9.3, in support of their position, we note that Article 9 of the DSU, which concerns procedures for multiple complaints related to the same matter, does not address the issue of the rights of third parties in such procedures.
Under the DSU, as it currently stands, third parties are only entitled to the participatory rights provided for in Articles 10.2 and 10.3 and paragraph 6 of Appendix 3. ... Pursuant to Article 12.1, a panel is required to follow the Working Procedures in Appendix 3, unless it decides otherwise after consulting the parties to the dispute.
In support of their argument that the Panel should have granted them "enhanced" third party rights, the European Communities and Japan refer to the considerations that led the panel in European Communities - Hormones to grant third parties "enhanced" participatory rights, and stress the similarity between European Communities - Hormones and the present cases. ... In our Report in European Communities - Hormones, we stated:
Although Article 12.1 and Appendix 3 of the DSU do not specifically require the Panel to grant ... ["enhanced" third party rights] to the United States, we believe that this decision falls within the sound discretion and authority of the Panel, particularly if the Panel considers it necessary for ensuring to all parties due process of law.(364)
A panel's decision whether to grant "enhanced" participatory rights to third parties is thus a matter that falls within the discretionary authority of that panel. Such discretionary authority is, of course, not unlimited and is circumscribed, for example, by the requirements of due process. In the present cases, however, the European Communities and Japan have not shown that the Panel exceeded the limits of its discretionary authority. We, therefore, consider that there is no legal basis for concluding that the Panel erred in refusing to grant "enhanced" third party rights to Japan or the European Communities."(365) 238. The Appellate Body referred briefly to Article 10.2 in its finding in EC - Bananas III that no "legal interest" is required for a Member to bring a case under the DSU. See paragraph 123 above. 3. Third-party rights under Article 22.6 of the DSU 239. With respect to third-party rights under Article 22.6 of the DSU, see the excerpts from the reports of the decisions by the arbitrator referenced in paragraph 507 below. 4. Authority of the panel to direct a Member to be a third party 240. In Turkey - Textiles, Turkey argued that the European Communities should be a party to the dispute because the measure taken by Turkey was done so pursuant to a regional trade agreement between Turkey and the European Communities. The Panel ruled: "In the absence of any relevant provision in the DSU, in light of international practice(366), and noting the position of the EC to this point, we consider that we do not have the authority to direct that a WTO Member be made third-party or that it otherwise participate throughout the panel process."(367) 241. In Turkey - Textiles, Turkey claimed that the Panel should dismiss India's claims because the measures were taken pursuant to a regional trade agreement between Turkey and the European Communities and the latter therefore should have been a party to the dispute. The Panel addressed the concept of "essential parties" first by referring to the case of law of the International Court of Justice (ICJ), more specifically to the Military and Paramilitary Activities in and Against Nicaragua and the Phosphate Lands in Nauru cases:(368) "The practice of the ICJ indicates that if a decision between the parties to the case can be reached without an examination of the position of the third state (i.e. in the WTO context, a Member) the ICJ will exercise its jurisdiction as between the parties. In the present dispute, there are no claims against the European Communities before us that would need to be determined in order for the Panel to assess the compatibility of the Turkish measures with the WTO Agreement."(369) 242. After analysing the practice of the ICJ with respect to the "essential parties" concept, the Panel on Turkey - Textiles noted: "[T]here is no WTO concept of 'essential parties'. Based on our terms of reference and the fact that we have decided (as further discussed hereafter) not to examine the GATT/WTO compatibility of the Turkey-EC customs union, we consider that the European Communities was not an essential party to this dispute; the European Communities, had it so wished, could have availed itself of the provisions of the DSU, which we note have been interpreted with a degree of flexibility by previous panels(370), in order to represent its interests. We recall in this context that Panel and Appellate Body reports are binding on the parties only.(371)
Under WTO rules, the European Communities and Turkey are Members with equal and independent rights and obligations. For Turkey, it is not at all inconceivable that it adopted the measures in question in order to have its own policy coincide with that of the European Communities. However, in doing so, it should have been aware, in respect of the measures it has chosen, that its circumstances were different from those of the European Communities in relation to the Agreement on Textiles and Clothing ('ATC') and thus could reasonably have been anticipated to give rise to responses which focussed on that distinction."(372)
Footnotes: 259. Appellate Body Report on Brazil
- Desiccated Coconut, p. 21. back to text |
