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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 11: Function of Panels The function of panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements. Accordingly, a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements, and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements. Panels should consult regularly with the parties to the dispute and give them adequate opportunity to develop a mutually satisfactory solution.
1. "objective assessment of the matter before it, including an objective assessment of the facts" (a) "objective assessment of the matter before it" General 243. As regards the concept of matter, see paragraphs 186-187 above Finding on a claim not made by the complainant 244. In Chile - Price Band System, the Appellate Body considered that the Panel had exceeded its mandate and thus acted inconsistently with Article 11 because it had "made a finding on a claim that was not made by Argentina" and "in so doing, the Panel assessed a provision that was not a part 'of the matter before it' ": "In this case, the Panel made a finding on a claim that was not made by Argentina. Having determined that the duties resulting from Chile's price band system could not be assessed under the first sentence(373) of Article II:1(b) of the GATT 1994, the Panel then proceeded to examine the measure under the second sentence of that provision. In so doing, the Panel assessed a provision that was not a part 'of the matter before it'. As we have explained, the terms of reference were broad enough to have included a claim under the second sentence(374) of Article II:1(b). However, Argentina did not articulate a claim under that sentence; nor did Argentina submit any arguments on the consistency of Chile's price band system with the second sentence. Therefore, as with our finding in US - Certain EC Products(375), the second sentence of Article II:1(b) was not the subject of a claim before the Panel. Because it made a finding on a provision that was not before it, the Panel, therefore, did not make an objective assessment of the matter before it, as required by Article 11. Rather, the Panel made a finding on a matter that was not before it. In doing so, the Panel acted ultra petita and inconsistently with Article 11 of the DSU."(376) Reference in Panel's reasoning to provisions not included in the claims 245. In Argentina - Footwear (EC), the Appellate Body considered Argentina's argument that the Panel violated Article 7.2 of the DSU and exceeded its terms of reference, because the Panel not only considered, but also relied on, alleged violations of Article 3 of the Agreement on Safeguards even though the request for the establishment of a Panel submitted by the European Communities only alleged violations of Articles 2 and 4 of the Agreement on Safeguards.(377) The Appellate Body considered 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."(378) (ii) Consideration of parties' arguments by the Panel 246. In EC - Poultry, Brazil argued in its appeal that the Panel had not made "an objective assessment of the matter before it" because, in Brazil's view, the Panel had failed to consider various arguments made by Brazil regarding GATT/WTO jurisprudence. The Appellate Body rejected this argument: "An allegation that a panel has failed to conduct the 'objective assessment of the matter before it' required by Article 11 of the DSU is a very serious allegation. Such an allegation goes to the very core of the integrity of the WTO dispute settlement process itself. ... In United States - Measure Affecting Imports of Woven Wool Shirts and Blouses from India, we stated that nothing in Article 11 'or in previous GATT practice requires a panel to examine all legal claims made by the complaining party', and that '[a] panel need only address those claims which must be addressed in order to resolve the matter in issue in the dispute.' Just as a panel has the discretion to address only those claims which must be addressed in order to dispose of the matter at issue in a dispute, so too does a panel have the discretion to address only those arguments it deems necessary to resolve a particular claim. So long as it is clear in a panel report that a panel has reasonably considered a claim, the fact that a particular argument relating to that claim is not specifically addressed in the 'Findings' section of a panel report will not, in and of itself, lead to the conclusion that that panel has failed to make the 'objective assessment of the matter before it' required by Article 11 of the DSU."(379) 247. In Australia - Automotive Leather II (Article 21.5 - US), both parties argued that the task of the Panel was to choose between the position articulated by each party. The Panel disagreed and stated: "That neither party has argued a particular interpretation before us, and indeed, that both have argued that we should not reach issues of interpretation that they have not raised, cannot, in our view, preclude us from considering such issues if we find this to be necessary to resolve the dispute that is before us. A panel's interpretation of the text of a relevant WTO Agreement cannot be limited by the particular arguments of the parties to a dispute."(380) (iii) Due process implications 248. In Chile - Price Band System, the Appellate Body concluded that the Panel had made a finding on a claim that had not been made by Argentina.(381) Chile had claimed that, by making a finding on that claim, the Panel had deprived Chile of a fair right to response. The Appellate Body agreed with Chile and found that Panel had acted inconsistently with Article 11 of the DSU by denying Chile the due process of a fair right of response.(382) In support of this finding, the Appellate Body considered that "in making "an objective assessment of the matter before it", a panel is also duty bound to ensure that due process is respected": "Article 11 imposes duties on panels that extend beyond the requirement to assess evidence objectively and in good faith ... This requirement is, of course, an indispensable aspect of a panel's task. However, in making "an objective assessment of the matter before it", a panel is also duty bound to ensure that due process is respected. Due process is an obligation inherent in the WTO dispute settlement system. A panel will fail in the duty to respect due process if it makes a finding on a matter that is not before it, because it will thereby fail to accord to a party a fair right of response. In this case, because the Panel did not give Chile a fair right of response on this issue, we find that the Panel failed to accord to Chile the due process rights to which it is entitled under the DSU."(383) 249. In India - Quantitative Restrictions, India argued in its appeal that the Panel had acted inconsistently with Article 11 of the DSU because it had delegated to the IMF its duty to make an objective assessment. The Appellate Body disagreed with India and stated: "The Panel gave considerable weight to the views expressed by the IMF in its reply to these questions. However, nothing in the Panel Report supports India's argument that the Panel delegated to the IMF its judicial function to make an objective assessment of the matter. A careful reading of the Panel Report makes clear that the Panel did not simply accept the views of the IMF. The Panel critically assessed these views and also considered other data and opinions in reaching its conclusions.(384) (b) "objective assessment of the facts" (i) Egregious error calling into question the good faith of a panel 250. In EC - Hormones, the European Communities argued in its appeal that the Panel had disregarded or distorted the evidence submitted by the European Communities as well as the testimony provided by the experts advising the Panel. The European Communities claimed that the Panel failed to make an objective assessment of the facts as required by Article 11 of the DSU. The Appellate Body disagreed with the European Communities and set forth the standard, for a violation of Article 11, of "an egregious error that calls into question the good faith of a panel." The Appellate Body concluded by holding that "[a] claim that a panel disregarded or distorted the evidence submitted to it is, in effect, a claim that the panel, to a greater or lesser degree, denied the party submitting the evidence fundamental fairness, or what in many jurisdictions is known as due process of law or natural justice": "Whether or not a panel has made an objective assessment of the facts before it, as required by Article 11 of the DSU, is also a legal question which, if properly raised on appeal, would fall within the scope of appellate review.
The question which then arises is this: when may a panel be regarded as having failed to discharge its duty under Article 11 of the DSU to make an objective assessment of the facts before it? Clearly, not every error in the appreciation of the evidence (although it may give rise to a question of law) may be characterized as a failure to make an objective assessment of the facts. In the present appeal, the European Communities repeatedly claims that the Panel disregarded or distorted or misrepresented the evidence submitted by the European Communities and even the opinions expressed by the Panel's own expert advisors. The duty to make an objective assessment of the facts is, among other things, an obligation to consider the evidence presented to a panel and to make factual findings on the basis of that evidence. The deliberate disregard of, or refusal to consider, the evidence submitted to a panel is incompatible with a panel's duty to make an objective assessment of the facts. The wilful distortion or misrepresentation of the evidence put before a panel is similarly inconsistent with an objective assessment of the facts. 'Disregard' and 'distortion' and 'misrepresentation' of the evidence, in their ordinary signification in judicial and quasi-judicial processes, imply not simply an error of judgment in the appreciation of evidence but rather an egregious error that calls into question the good faith of a panel. A claim that a panel disregarded or distorted the evidence submitted to it is, in effect, a claim that the panel, to a greater or lesser degree, denied the party submitting the evidence fundamental fairness, or what in many jurisdictions is known as due process of law or natural justice. ... ... it is generally within the discretion of the Panel to decide which evidence it chooses to utilize in making findings. ... The Panel cannot realistically refer to all statements made by the experts advising it and should be allowed a substantial margin of discretion as to which statements are useful to refer to explicitly."(385) 251. In Australia - Salmon, Australia argued in its appeal that the Panel had failed to make an objective assessment of the matter before it and had not applied the appropriate standard of review pursuant to Article 11 of the DSU. The Appellate Body noted Australia's argument that the Panel "partially or wholly ignored relevant evidence placed before it, or misrepresented evidence in a way that went beyond a mere question of the weight attributed to it, but constituted an egregious error amounting to an error of law." The Appellate Body stated: "[I]n response to Australia's contention that the Panel failed to accord 'due deference' to matters of fact it put forward, we note that Article 11 of the DSU calls upon panels to 'make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements'. Therefore, the function of this Panel was to assess the facts in a manner consistent with its obligation to make such an 'objective assessment of the matter before it'. We believe the Panel has done so in this case. Panels, however, are not required to accord to factual evidence of the parties the same meaning and weight as do the parties."(386) 252. In Korea - Alcoholic Beverages, Korea argued in its appeal that the Panel breached its obligation under Article 11 of the DSU by applying a "double standard" in assessing the evidence before it. The Appellate Body again referred to the "egregious error" standard: "We are bound to conclude that Korea has not succeeded in showing that the Panel has committed any egregious errors that can be characterized as a failure to make an objective assessment of the matter before it. Korea's arguments, when read together with the Panel Report and the record of the Panel proceedings, do not disclose that the Panel has distorted, misrepresented or disregarded evidence, or has applied a 'double standard' of proof in this case. It is not an error, let alone an egregious error, for the Panel to fail to accord the weight to the evidence that one of the parties believes should be accorded to it."(387) 253. In Japan - Agricultural Products II, the Appellate Body examined Japan's claim that the Panel did not comply with Article 11 of the DSU when it made a finding under Article 2.2 of the SPS Agreement concerning the varietal testing requirement as it applies to apples, cherries, nectarines and walnuts. More specifically, Japan claimed the Panel had not properly examined evidence, treated expert views in an arbitrary manner and did not properly evaluate the evidence before it. The Appellate Body referred to its previous decision in EC - Hormones and reiterated that "[o]nly egregious errors constitute a failure to make an objective assessment of the facts as required by Article 11 of the DSU ": "As we stated in our Report in European Communities - Hormones, not every failure by the Panel in the appreciation of the evidence before it can be characterized as failure to make an objective assessment of the facts as required by Article 11 of the DSU. Only egregious errors constitute a failure to make an objective assessment of the facts as required by Article 11 of the DSU.
In our view, Japan has not demonstrated that the Panel, in its examination of the consistency of the varietal testing requirement with Article 2.2, has made errors of the gravity required to find a violation of Article 11 of the DSU. We, therefore, conclude that the Panel did not abuse its discretion contrary to the requirements of Article 11 of the DSU."(388) (a) Duty to examine all evidence 254. The Panel on Australia - Automotive Leather II observed that any evidentiary rulings that the Panel makes must be consistent with its obligation under Article 11 to conduct "an objective assessment of the matter before it". In the Panel's view, "a decision to limit the facts and arguments that the United States may present during the course of this proceeding to those set forth in the request for consultations would make it difficult, if not impossible, for us to fulfil our obligation to conduct an 'objective assessment' of the matter before us."(389) 255. In Korea - Dairy, Korea argued in its appeal that the Panel should have looked solely at the evidence submitted by the European Communities as the complaining party to determine whether the European Communities had met its burden of proof of making a prima facie case. The Appellate Body disagreed and stated, inter alia: "In carrying out this mandate, a panel has the duty to examine and consider all the evidence before it, not just the evidence submitted by one or the other party, and to evaluate the relevance and probative force of each piece thereof."(390) With respect to the burden of proof issue in this context, see also paragraph 281 below. 256. The Panel on EC - Bed Linen examined the European Communities objection to the inclusion by India in its submission of reports of the consultations between the parties which took place before the establishment of the Panel. Although the Panel made no findings on the European Communities claims, it provided its thoughts about the difference between questions concerning the admissibility of evidence, and the weight to be accorded to the evidence in making its decisions. In doing so, it referred to the Panel on Australia - Automotive Leather II (see paragraph 254 above): "[I]t seems that the evidence concerning the consultations is at best unnecessary, and may be irrelevant. That said, however, merely because the evidence is unnecessary or irrelevant does not require us to exclude it. ... ... we consider that it is not necessary to limit the facts and arguments India may present, even if we might consider those facts or arguments to be irrelevant or not probative on the issues before us. In our view, there is a significant and substantive difference between questions concerning the admissibility of evidence, and the weight to be accorded evidence in making our decisions. That is, we may choose to allow parties to present evidence, but subsequently not consider that evidence, because it is not relevant or necessary to our determinations or is not probative on the issues before it. In our view, there is little to be gained by expending our time and effort in ruling on points of "admissibility" of evidence vel non.
In addition, we note that, under Article 13.2 of the DSU, Panels have a general right to seek information "from any relevant source". In this context, we consider that, as a general rule, panels have wide latitude in admitting evidence in WTO dispute settlement. The DSU contains no rule that might restrict the forms of evidence that panels may consider. Moreover, international tribunals are generally free to admit and evaluate evidence of every kind, and to ascribe to it the weight that they see fit. As one legal scholar has noted:
'The inherent flexibility of the international procedure, and its tendency to be free from technical rules of evidence applied in municipal law, provide the "evidence" with a wider scope in international proceedings.... Generally speaking, international tribunals have not committed themselves to the restrictive rules of evidence in municipal law. They have found it justified to receive every kind and form of evidence, and have attached to them the probative value they deserve under the circumstances of a given case'.(391)
It has clearly been held in the WTO that information obtained in consultations may be presented in subsequent panel proceedings.(392)"(393) (b) Deadlines for the submission of evidence 257. In Argentina - Textile and Apparel, Argentina argued that the Panel had acted inconsistently with Article 11 of the DSU by allowing certain evidence offered by the United States two days before the second substantive meeting of the Panel with the parties. The Appellate Body noted that "the Working Procedures in their present form do not constrain panels with hard and fast rules on deadlines for submitting evidence" and, accordingly, did not find a violation of Article 11: "Article 11 of the DSU does not establish time limits for the submission of evidence to a panel. Article 12.1 of the DSU directs a panel to follow the Working Procedures set out in Appendix 3 of the DSU, but at the same time authorizes a panel to do otherwise after consulting the parties to the dispute. The Working Procedures in Appendix 3 also do not establish precise deadlines for the presentation of evidence by a party to the dispute.(394) It is true that the Working Procedures "do not prohibit" submission of additional evidence after the first substantive meeting of a panel with the parties. It is also true, however, that the Working Procedures in Appendix 3 do contemplate two distinguishable stages in a proceeding before a panel. ...
Under the Working Procedures in Appendix 3, the complaining party should set out its case in chief, including a full presentation of the facts on the basis of submission of supporting evidence, during the first stage. The second stage is generally designed to permit 'rebuttals' by each party of the arguments and evidence submitted by the other parties.
As noted above, however, the Working Procedures in their present form do not constrain panels with hard and fast rules on deadlines for submitting evidence. The Panel could have refused to admit the additional documentary evidence of the United States as unseasonably submitted. The Panel chose, instead, to admit that evidence, at the same time allowing Argentina two weeks to respond to it. Argentina drew attention to the difficulties it would face in tracing and verifying the manually processed customs documents and in responding to them, since identifying names, customs identification numbers and, in some cases, descriptions of the products had been blacked out. The Panel could well have granted Argentina more than two weeks to respond to the additional evidence. However, there is no indication in the panel record that Argentina explicitly requested from the Panel, at that time or at any later time, a longer period within which to respond to the additional documentary evidence of the United States. Argentina also did not submit any countering documents or comments in respect of any of the additional documents of the United States.
[W]hile another panel could well have exercised its discretion differently, we do not believe that the Panel here committed an abuse of discretion amounting to a failure to render an objective assessment of the matter as mandated by Article 11 of the DSU."(395) 258. In Korea - Alcoholic Beverages, Korea requested the Panel to issue a preliminary ruling rejecting certain evidence submitted by the European Communities after the second substantive meeting. Korea alleged that its rights of defence had been violated by the late submission of such evidence. "Korea complains that its rights of defense were violated by the late submission of a market study (the Trendscope survey) by the European Communities. Korea had submitted a study done by the AC Nielsen Company as part of its responses to questions arising from the first substantive meeting of the Panel. The European Communities responded to this with, among other things, the Trendscope survey presented at the Second Meeting of the Panel. The Panel gave Korea a week to respond to this and critique the results, methodology and questions used in the Trendscope survey. Korea argues that this time was insufficient, that it did not have copies in Korean of all the questions -asked, and that it did not have time to provide further questions or comments based upon the answers.
We do not consider that Korea's rights under the DSU were violated. The European Communities submitted its rebuttal survey at the next available opportunity after receiving Korea's Nielsen survey. Had Korea chosen to submit its survey at the first substantive meeting and the European Communities failed to respond at the next opportunity (in such a case, it would have been in the rebuttal submission), there obviously would have been more merit to the claim because then the European Communities, it could have been argued, delayed submitting their evidence. As it transpired, the European Communities submitted a new piece of evidence at the next available opportunity which Korea then was able to examine for a week in order to provide comments. The survey was not of a particularly complex type and, in our view, Korea had adequate time to respond given the nature of the evidence. The Trendscope survey is not critical evidence to the complainants' case; it serves as a supplement to arguments already made. If we considered that it represented critical evidence, Korea's request for further time for comment would have been given greater weight. While all parties to litigation might prefer open-ended potential for rebutting the other side's submissions, we believe that for practical reasons submissions must be cut-off at some point and such a point was reached in this case. Thus, neither the timing nor the importance of the evidence in question support a finding that Korea's rights have been violated in this instance."(396) 259. In Canada - Aircraft, Canada requested the Panel to issue a preliminary ruling on the question of whether the complaining party may adduce new evidence or allegations after the end of the first substantive meeting. Canada argued that it would suffer prejudice under the accelerated procedure under Article 4 of the SCM Agreement as a result of the late submission of allegations or evidence. The Panel, in a finding not addressed by the Appellate Body, ruled that it was not bound to exclude the submission of new allegations after the first substantive meeting and that it could not see any legal basis for so doing: "[A]n absolute rule excluding the submission of evidence by a complaining party after the first substantive meeting would be inappropriate, since there may be circumstances in which a complaining party is required to adduce new evidence in order to address rebuttal arguments made by the respondent. Furthermore, there may be instances, as in the present case,(397) where a party is required to submit new evidence at the request of the panel. For these reasons, we rejected Canada's request for a preliminary ruling that the Panel should not accept new evidence submitted by Brazil after the first substantive meeting.
[W]e are not bound to exclude the submission of new allegations after the first substantive meeting. We can see nothing in the DSU, or in the Appendix 3 Working Procedures, that would require the submission of new allegations to be treated any differently than the submission of new evidence. Indeed, one could envisage situations in which the respondent might present information to a panel during the first substantive meeting that could reasonably be used as a basis for a new allegation by the complaining party. Provided the new allegation falls within the panel's terms of reference, and provided the respondent party's due process rights of defence are respected, we can see no reason why any such new allegation should necessarily be rejected by the panel as a matter of course, simply because it is submitted after the first substantive meeting with the parties. We consider that this approach is consistent with the Appellate Body's ruling in European Communities - Bananas that '[t]here 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.' (398)"(399) (c) Evidence obtained during consultations 260. With respect to the issue of whether information obtained during consultations may be used in the subsequent panel proceedings, see 103-104 above. See also paragraphs 254 and 256 above. 261. In Canada - Aircraft, Canada asked the Panel to make a ruling on the Panel's jurisdiction before the deadline set for the submission of the written submission of the parties. The Panel stated: "In our view, there is no requirement in the DSU for panels to rule on preliminary issues prior to the parties' first written submissions. Nor is there any established practice to this effect, for there are numerous panel reports where rulings on preliminary issues have been reserved until the final report. Furthermore, there may be cases where the panel wishes to seek further clarification from the parties before providing a preliminary ruling."(400) 262. The Appellate Body has relied on the phrase "make such other findings" in order to confirm the ability of panels to exercise judicial economy. See paragraph 302 below. (a) Purpose of allocating the burden of proof 263. In US - Section 301 Trade Act, the Panel clarified, in the light of the allocation of the burden of proof, what the result would be in case of uncertainty (i.e. in case all evidence and arguments were to remain in "equipoise"): "Since, in this case, both parties have submitted extensive facts and arguments in respect of the EC claims, our task will essentially be to balance all evidence on record and decide whether the EC, as party bearing the original burden of proof, has convinced us of the validity of its claims. In case of uncertainty, i.e. in case all the evidence and arguments remain in equipoise, we have to give the benefit of the doubt to the US as defending party."(401) 264. In US - Wool Shirts and Blouses, the Appellate Body made the following statement on the issue of burden of proof: "[W]e find it difficult, indeed, to see how any system of judicial settlement could work if it incorporated the proposition that the mere assertion of a claim might amount to proof. It is, thus, hardly surprising that various international tribunals, including the International Court of Justice, have generally and consistently accepted and applied the rule that the party who asserts a fact, whether the claimant or the respondent, is responsible for providing proof thereof.(402) Also, it is a generally-accepted canon of evidence in civil law, common law and, in fact, most jurisdictions, that the burden of proof rests upon the party, whether complaining or defending, who asserts the affirmative of a particular claim or defence. If that party adduces evidence sufficient to raise a presumption that what is claimed is true, the burden then shifts to the other party, who will fail unless it adduces sufficient evidence to rebut the presumption.(403)
In the context of the GATT 1994 and the WTO Agreement, precisely how much and precisely what kind of evidence will be required to establish such a presumption will necessarily vary from measure to measure, provision to provision, and case to case."(404) 265. The Panel on Turkey - Textiles, in a finding not addressed by the Appellate Body, summed up the rules on burden of proof under WTO jurisprudence as follows: "(a) it is for the complaining party to establish the violation it alleges;
(b) it is for the party invoking an exception or an affirmative defense to prove that the conditions contained therein are met; and
(c) it is for the party asserting a fact to prove it."(405) (c) Burden of proof in GATT 1994 266. In India - Quantitative Restrictions, India argued in its appeal that the Panel erred in finding that the proviso to Article XVIII:11 of GATT 1994 was to be properly characterized as an affirmative defence and that India, therefore, bore the burden of proof in respect thereof. The Appellate Body upheld the finding of the Panel: "Assuming that the complaining party has successfully established a prima facie case of inconsistency with Article XVIII:11 and the Ad Note, the responding party may, in its defence, either rebut the evidence adduced in support of the inconsistency or invoke the proviso. In the latter case, it would have to demonstrate that the complaining party violated its obligation not to require the responding party to change its development policy. This is an assertion with respect to which the responding party must bear the burden of proof. We, therefore, agree with the Panel that the burden of proof with respect to the proviso is on India."(406) 267. In India - Quantitative Restrictions, India argued on appeal that the Panel did not apply the rules on burden of proof correctly. India claimed that the Panel failed to analyse whether the United States had made a prima facie case prior to considering the answers provided by the IMF to the Panel's questions and prior to shifting the burden of proof to India. India also argued that the evidence introduced by the United States could not, as a matter of law, have constituted a prima facie case that India's balance-of-payments restrictions were not justified under the Ad note. The Appellate Body stated that a Panel was not required to make an explicit statement that a prima facie case has been made: "In support of its argument, India refers to the Appellate Body Report in European Communities - Hormones, where the Appellate Body stated:
'In accordance with our ruling in United States - Shirts and Blouses, the Panel should have begun the analysis of each legal provision by examining whether the United States and Canada had presented evidence and legal instruments sufficient to demonstrate that the EC measures were inconsistent with the obligations assumed by the European Communities under each Article of the SPS Agreement addressed by the Panel. ... Only after such a prima facie determination had been made by the Panel may the onus be shifted to the European Communities to bring forward evidence and arguments to disprove the complaining party's claim.'
We do not interpret the above statement as requiring a panel to conclude that a prima facie case is made before it considers the views of the IMF or any other experts that it consults. Such consideration may be useful in order to determine whether a prima facie case has been made. Moreover, we do not find it objectionable that the Panel took into account, in assessing whether the United States had made a prima facie case, the responses of India to the arguments of the United States. This way of proceeding does not imply, in our view, that the Panel shifted the burden of proof to India. We, therefore, are not of the opinion that the Panel erred in law in proceeding as it did".(407) 268. The Appellate Body in India - Quantitative Restrictions then rejected India's appeal to the effect that "that the evidence introduced by the United States could not, as a matter of law, have constituted a prima facie case". The Appellate Body recalled its previous findings in this respect and held that the "weighing and assessing of the evidence" was outside the scope of review. "As to the second alleged mistake, namely, that the evidence introduced by the United States could not, as a matter of law, have constituted a prima facie case that India's balance-of-payments restrictions were not justified under the Ad Note, we recall that in European Communities - Hormones, the Appellate Body stated:
'Determination of the credibility and weight properly to be ascribed to (that is, the appreciation of) a given piece of evidence is part and parcel of the fact finding process and is, in principle, left to the discretion of a panel as the trier of facts ...'
Similarly, in Korea - Taxes on Alcoholic Beverages, the Appellate Body stated:
'The Panel's examination and weighing of the evidence submitted fall, in principle, within the scope of the Panel's discretion as the trier of facts and, accordingly, outside the scope of appellate review. ...'
We believe that this second mistake alleged by India relates to the weighing and assessing of the evidence adduced by the United States, and is, therefore, outside the scope of appellate review."(408) (d) Burden of proof in the SPS Agreement 269. In EC - Hormones, the Appellate Body discussed the allocation of the burden of proof in the context of the SPS Agreement, but referred to its statement in US - Wool Shirts and Blouses and stated that this rule "embodies a rule applicable in any adversarial proceedings": "The initial burden lies on the complaining party, which must establish a prima facie case of inconsistency with a particular provision of the SPS Agreement on the part of the defending party, or more precisely, of its SPS measure or measures complained about. When that prima facie case is made, the burden of proof moves to the defending party, which must in turn counter or refute the claimed inconsistency. This seems straightforward enough and is in conformity with our ruling in United States - Shirts and Blouses(409), which the Panel invokes and which embodies a rule applicable in any adversarial proceedings."(410) 270. In EC - Hormones, the Appellate Body examined whether the Panel correctly allocated the burden of proof under the SPS Agreement. The Appellate Body noted that the Panel made an interpretative ruling that "the SPS Agreement allocates the 'evidentiary burden' to the Members imposing an SPS measure" on the basis of, inter alia, Article 3.2 of the SPS Agreement. The Appellate Body noted that the Panel drew a reverse inference from Article 3.2 of the SPS Agreement to the effect that "if a measure does not conform to international standards, the Member imposing such a measure must bear the burden of proof in any complaint of inconsistency with the provisions of the SPS Agreement." The Appellate Body reversed the Panel's ruling and stated: "The presumption of consistency with relevant provisions of the SPS Agreement that arises under Article 3.2 in respect of measures that conform to international standards may well be an incentive for Members so to conform their SPS measures with such standards. It is clear, however, that a decision of a Member not to conform a particular measure with an international standard does not authorize imposition of a special or generalized burden of proof upon that Member, which may, more often than not, amount to a penalty. ... The Panel relies on two interpretative points in reaching its above finding. First, the Panel posits the existence of a 'general rule - exception' relationship between Article 3.1 (the general obligation) and Article 3.3 (an exception) and applies to the SPS Agreement what it calls 'established practice under GATT 1947 and GATT 1994' to the effect that the burden of justifying a measure under Article XX of the GATT 1994 rests on the defending party. It appears to us that the Panel has misconceived the relationship between Articles 3.1, 3.2 and 3.3, a relationship discussed below, which is qualitatively different from the relationship between, for instance, Articles I or III and Article XX of the GATT 1994. Article 3.1 of the SPS Agreement simply excludes from its scope of application the kinds of situations covered by Article 3.3 of that Agreement, that is, where a Member has projected for itself a higher level of sanitary protection than would be achieved by a measure based on an international standard. Article 3.3 recognizes the autonomous right of a Member to establish such higher level of protection, provided that that Member complies with certain requirements in promulgating SPS measures to achieve that level. The general rule in a dispute settlement proceeding requiring a complaining party to establish a prima facie case of inconsistency with a provision of the SPS Agreement before the burden of showing consistency with that provision is taken on by the defending party, is not avoided by simply describing that same provision as an 'exception'. In much the same way, merely characterizing a treaty provision as an 'exception' does not by itself justify a 'stricter' or 'narrower' interpretation of that provision than would be warranted by examination of the ordinary meaning of the actual treaty words, viewed in context and in the light of the treaty's object and purpose, or, in other words, by applying the normal rules of treaty interpretation. It is also well to remember that a prima facie case is one which, in the absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule in favour of the complaining party presenting the prima facie case."(411) (e) Burden of proof in the SCM Agreement 271. In Brazil - Aircraft, Canada appealed the Panel's finding that, in a case involving a claim of violation of Article 3.1(a) against a developing country Member, the complaining party has the burden of proving that the developing country Member in question has not complied with at least one of the elements set out in Article 27.4 of the SCM Agreement. Canada argued that since Article 27.4 of the SCM Agreement is in the nature of a conditional exception or an affirmative, the respondent developing country Member has the burden of proof whereas Brazil submitted that since Article 27 is a transitional provision that contains a set of special and differential rights and obligations for developing country Members, the complaining party, namely Canada, has the burden of proving that the developing country Member is not in compliance with Article 27.4 of the SCM Agreement. The Appellate Body stated: "On reading paragraphs 2(b) and 4 of Article 27 together, it is clear that the conditions set forth in paragraph 4 are positive obligations for developing country Members, not affirmative defences. If a developing country Member complies with the obligations in Article 27.4, the prohibition on export subsidies in Article 3.1(a) simply does not apply. However, if that developing country Member does not comply with those obligations, Article 3.1(a) does apply.
For these reasons, we agree with the Panel that the burden is on the complaining party (in casu Canada) to demonstrate that the developing country Member (in casu Brazil) is not in compliance with at least one of the elements set forth in Article 27.4. If such non-compliance is demonstrated, then, and only then, does the prohibition of Article 3.1(a) apply to that developing country Member."(412) 272. In Canada - Aircraft, Canada justified its refusal to provide information on the disputed financing of the transaction at issue on the grounds that Brazil had not established a prima facie case that such financing constituted a prohibited export subsidy under Article 3.1(a) of the SCM Agreement. The Appellate Body stated: "A prima facie case, it is well to remember, is a case which, in the absence of effective refutation by the defending party (that is, in the present appeal, the Member requested to provide the information), requires a panel, as a matter of law, to rule in favour of the complaining party presenting the prima facie case. There is, as noted earlier, nothing in either the DSU or the SCM Agreement to support Canada's assumption. To the contrary, a panel is vested with ample and extensive discretionary authority to determine when it needs information to resolve a dispute and what information it needs. A panel may need such information before or after a complaining or a responding Member has established its complaint or defence on a prima facie basis. A panel may, in fact, need the information sought in order to evaluate evidence already before it in the course of determining whether the claiming or the responding Member, as the case may be, has established a prima facie case or defence. Furthermore, a refusal to provide information requested on the basis that a prima facie case has not been made implies that the Member concerned believes that it is able to judge for itself whether the other party has made a prima facie case. However, no Member is free to determine for itself whether a prima facie case or defence has been established by the other party. That competence is necessarily vested in the panel under the DSU, and not in the Members that are parties to the dispute."(413) (f) Burden of proof in the TRIPS Agreement 273. In India - Patents (US), India challenged the application of the burden of proof by the Panel, arguing that the Panel erroneously required the United States, the complaining party, merely to raise "reasonable doubts" suggesting a violation of Article 70.8 of the TRIPS Agreement, and subsequently placed the burden on India to dispel such doubts. The Appellate Body recalled the finding of the Panel and rejected India's claim: "India raises the additional argument that the Panel erred in its application of the burden of proof in assessing Indian municipal law. In particular, India alleges that the Panel, after having required the United States merely to raise 'reasonable doubts' suggesting a violation of Article 70.8, placed the burden on India to dispel such doubts.(414)
The Panel states:
As the Appellate Body report on Shirts and Blouses points out, 'a party claiming a violation of a provision of the WTO Agreement by another Member must assert and prove its claim'. In this case, it is the United States that claims a violation by India of Article 70.8 of the TRIPS Agreement. Therefore, it is up to the United States to put forward evidence and legal arguments sufficient to demonstrate that action by India is inconsistent with the obligations assumed by India under Article 70.8. In our view, the United States has successfully put forward such evidence and arguments. Then, ... the onus shifts to India to bring forward evidence and arguments to disprove the claim. We are not convinced that India has been able to do so (footnotes deleted).(415)
This statement of the Panel is a legally correct characterization of the approach to burden of proof that we set out in United States - Shirts and Blouses.(416) However, it is not sufficient for a panel to enunciate the correct approach to burden of proof; a panel must also apply the burden of proof correctly. A careful reading of paragraphs 7.35 and 7.37 of the Panel Report reveals that the Panel has done so in this case. These paragraphs show that the United States put forward evidence and arguments that India's 'administrative instructions' pertaining to mailbox applications were legally insufficient to prevail over the application of certain mandatory provisions of the Patents Act. India put forward rebuttal evidence and arguments. India misinterprets what the Panel said about 'reasonable doubts'. The Panel did not require the United States merely to raise 'reasonable doubts' before the burden shifted to India. Rather, after properly requiring the United States to establish a prima facie case and after hearing India's rebuttal evidence and arguments, the Panel concluded that it had 'reasonable doubts' that the 'administrative instructions' would prevail over the mandatory provisions of the Patents Act if a challenge were brought in an Indian court.
For these reasons, we conclude that the Panel applied the burden of proof correctly in assessing the compliance of India's domestic law with Article 70.8(a) of the TRIPS Agreement."(417) (g) Burden of proof in the TBT Agreement 274. In EC - Sardines, the European Communities had asserted before the Panel that Codex Stan 94 was "ineffective or inappropriate" to fulfil the "legitimate objectives" of the European Communities Regulation at issue. The Panel was of the view that the European Communities was thus asserting the affirmative of a particular claim or defence, and, therefore, that the burden of proof was on the European Communities to demonstrate that claim.(418) The Panel justified its position as follows: first, it reasoned that the complainant is not in a position to "spell out" the "legitimate objectives" pursued by a Member through a technical regulation; and, second, it reasoned "that the assessment of whether a relevant international standard is 'inappropriate' ... may extend to considerations which are proper to the Member adopting or applying a technical regulation."(419) The Panel, although it acknowledged the Appellate Body's finding in EC - Hormones (see paragraphs 269-270 above), concluded that it "does not have a direct bearing" on the question of the allocation of the burden of proof under the second part of Article 2.4 of the TBT Agreement."(420) The Appellate Body disagreed with the Panel's conclusion that its ruling on the issue of the burden of proof in EC - Hormones had no "direct bearing" on this case and reversed the Panel's finding on burden of proof.(421) The Appellate Body thus concluded that the complaining Member seeking a ruling on the inconsistency of the measure applied by the defendant with Article 2.4 of the TBT Agreement was to bear the burden of proving its claim: "We disagree with the Panel's conclusion that our ruling on the issue of the burden of proof has no 'direct bearing' on this case. The Panel provides no explanation for this conclusion and, indeed, could not have provided any plausible explanation. For there are strong conceptual similarities between, on the one hand, Article 2.4 of the TBT Agreement and, on the other hand, Articles 3.1 and 3.3 of the SPS Agreement, and our reasoning in EC - Hormones is equally apposite for this case. The heart of Article 3.1 of the SPS Agreement is a requirement that Members base their sanitary or phytosanitary measures on international standards, guidelines, or recommendations. Likewise, the heart of Article 2.4 of the TBT Agreement is a requirement that Members use international standards as a basis for their technical regulations. Neither of these requirements in these two agreements is absolute. Articles 3.1 and 3.3 of the SPS Agreement permit a Member to depart from an international standard if the Member seeks a level of protection higher than would be achieved by the international standard, the level of protection pursued is based on a proper risk assessment, and the international standard is not sufficient to achieve the level of protection pursued. Thus, under the SPS Agreement, departing from an international standard is permitted in circumstances where the international standard is ineffective to achieve the objective of the measure at issue. Likewise, under Article 2.4 of the TBT Agreement, a Member may depart from a relevant international standard when it would be an 'ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued' by that Member through the technical regulation.
Given the conceptual similarities between, on the one hand, Articles 3.1 and 3.3 of the SPS Agreement and, on the other hand, Article 2.4 of the TBT Agreement, we see no reason why the Panel should not have relied on the principle we articulated in EC - Hormones to determine the allocation of the burden of proof under Article 2.4 of the TBT Agreement. In EC - Hormones, we found that a "general rule-exception" relationship between Articles 3.1 and 3.3 of the SPS Agreement does not exist, with the consequence that the complainant had to establish a case of inconsistency with both Articles 3.1 and 3.3.(422) We reached this conclusion as a consequence of our finding there that "Article 3.1 of the SPS Agreement simply excludes from its scope of application the kinds of situations covered by Article 3.3 of that Agreement".(423) Similarly, the circumstances envisaged in the second part of Article 2.4 are excluded from the scope of application of the first part of Article 2.4. Accordingly, as with Articles 3.1 and 3.3 of the SPS Agreement, there is no "general rule-exception" relationship between the first and the second parts of Article 2.4. Hence, in this case, it is for Peru - as the complaining Member seeking a ruling on the inconsistency with Article 2.4 of the TBT Agreement of the measure applied by the European Communities - to bear the burden of proving its claim. This burden includes establishing that Codex Stan 94 has not been used "as a basis for" the EC Regulation, as well as establishing that Codex Stan 94 is effective and appropriate to fulfil the "legitimate objectives" pursued by the European Communities through the EC Regulation."(424) 275. As regards the statements of the Appellate Body in EC - Sardines on the lack of relevance of the difficulty of collecting information to prove a case in the allocation of the burden of proof, see paragraph 284 below. (h) Burden of proof in the Agreement on Agriculture 276. With respect to the burden of proof in relation to Article 10.3 of the Agreement on Agriculture, see the excerpts from the reports of the panels and Appellate Body referenced in the Chapter on the Agreement on Agriculture, paragraph 86-87. (i) Burden of proof in Article 21.3(c) arbitrations 277. With respect to the burden of proof in Article 21.3(c) proceedings, see paragraphs 454-456 below. (j) Burden of proof in Article 21.5 compliance Panel proceedings 278. With respect to the burden of proof in Article 21.5 proceedings, see paragraph 463 below. (k) Burden of proof in Article 22.6 arbitrations 279. With respect to the burden of proof under Article 22.6 proceedings, see paragraph 506 below. (l) Necessary collaboration of the parties 280. In Argentina - Textiles and Apparel, the Panel, in a finding not addressed by the Appellate Body, made the following statement regarding burden of proof and the requirement of collaboration of the parties in presenting facts and evidence to the panel: "Another incidental rule to the burden of proof is the requirement for collaboration of the parties in the presentation of the facts and evidence to the panel and especially the role of the respondent in that process. It is often said that the idea of peaceful settlement of disputes before international tribunals is largely based on the premise of co-operation of the litigating parties. In this context the most important result of the rule of collaboration appears to be that the adversary is obligated to provide the tribunal with relevant documents which are in its sole possession. This obligation does not arise until the claimant has done its best to secure evidence and has actually produced some prima facie evidence in support of its case. It should be stressed, however, that ''discovery' of documents, in its common-law system sense, is not available in international procedures'. "
... Before an international tribunal, parties do have a duty to collaborate in doing their best to submit to the adjudicatory body all the evidence in their possession."(425) (m) Source of evidence for a prima facie case 281. In Korea - Dairy, Korea argued in its appeal that the Panel should have looked solely at the evidence submitted by the European Communities as the complaining party to determine whether the European Communities had met its burden of proof of making a prima facie case. The Appellate Body disagreed and stated, inter alia: " In carrying out this mandate, a panel has the duty to examine and consider all the evidence before it, not just the evidence submitted by one or the other party, and to evaluate the relevance and probative force of each piece thereof." As a result, the Appellate Body rejected the argument that a panel, in determining whether the complaining party has met the requirement of making a prima facie case of inconsistency, may consider exclusively evidence submitted by that complaining party: "Korea appears to suggest that the Panel, in evaluating Korea's actions leading up to the adoption of its safeguard measure, should have looked solely to the evidence submitted by the European Communities as complaining party. We do not agree with Korea in this respect. It is, of course, true that the European Communities has the onus of establishing its claim that Korea's safeguard measure is inconsistent with the requirements of Article 4.2 of the Agreement on Safeguards. However, under Article 11 of the DSU, a panel is charged with the mandate to determine the facts of the case and to arrive at factual findings. In carrying out this mandate, a panel has the duty to examine and consider all the evidence before it, not just the evidence submitted by one or the other party, and to evaluate the relevance and probative force of each piece thereof. ... The determination of the significance and weight properly pertaining to the evidence presented by one party is a function of a panel's appreciation of the probative value of all the evidence submitted by both parties considered together.
We note that in examining the [Report of the Korean Authority], the Panel did not do anything out of the ordinary. The European Communities' claim was that Korea had disregarded certain requirements of Article 4.2 of the Agreement on Safeguards in its actions preceding and accompanying the adoption of its safeguard measure. The [Report of the Korean Authority] was issued by the Korean authorities which, inter alia, investigated and evaluated the assertions of serious injury to the domestic industry involved. Thus, that Report was clearly relevant to the task of the Panel to determine the facts, and the Panel was within its discretionary authority in deciding whether or not, or to what extent, it should rely upon the Report in ascertaining the facts relating to Korea's injury determination."(426) (n) No need to state explicitly that a prima facie case has been made. 282. The Appellate Body has held on several occasions that a Panel was not obliged to make an explicit finding that a party has met its burden of proof of making a prima facie case. See paragraph 267 above. Further, in Thailand - H-Beams, the Appellate Body stated: "In our view, a panel is not required to make a separate and specific finding, in each and every instance, that a party has met its burden of proof in respect of a particular claim, or that a party has rebutted a prima facie case. Thus, the Panel did not err to the extent that it made no specific findings on whether Poland had met its burden of proof."(427) 283. In Korea - Dairy, Korea argued in its appeal that "'as a threshold matter', 'a panel must evaluate and make a finding on whether the complaining Member (i.e., the Member with the burden of proof) has established a prima facie case of a violation', before requiring the respondent to submit evidence of its own case or defence." By ignoring this step, the Panel "'did not consider and a fortiori did not find that the European Communities made a prima facie case that justified its proceeding to examine the evidence and arguments' of Korea."(428) The Appellate Body stated: "We find no provision in the DSU or in the Agreement on Safeguards that requires a panel to make an explicit ruling on whether the complainant has established a prima facie case of violation before a panel may proceed to examine the respondent's defence and evidence."(429) (o) Relevance of the difficulty of collecting information to prove a case 284. In EC - Sardines, the Appellate Body also found that there is nothing in the WTO dispute settlement system to support the notion that the allocation of the burden of proof should be decided on the basis of a comparison between the respective difficulties that may possibly be encountered by the complainant and the respondent in collecting information to prove a case: "The degree of difficulty in substantiating a claim or a defence may vary according to the facts of the case and the provision at issue. For example, on the one hand, it may be relatively straightforward for a complainant to show that a particular measure has a text that establishes an explicit and formal discrimination between like products and is, therefore, inconsistent with the national treatment obligation in Article III of the GATT 1994. On the other hand, it may be more difficult for a complainant to substantiate a claim of a violation of Article III of the GATT 1994 if the discrimination does not flow from the letter of the legal text of the measure, but rather is a result of the administrative practice of the domestic authorities of the respondent in applying that measure. But, in both of those situations, the complainant must prove its claim. There is nothing in the WTO dispute settlement system to support the notion that the allocation of the burden of proof should be decided on the basis of a comparison between the respective difficulties that may possibly be encountered by the complainant and the respondent in collecting information to prove a case."(430) (p) Relationship between the burden of proof and a panel's fact-finding mandate 285. In Japan - Agricultural Products II, the Appellate Body held that while a panel had a broad and "comprehensive authority" to engage in fact-finding under Article 13 of the DSU, it could not use this authority so as to effectively relieve the complaining party of making a prima facie case of inconsistency: "Article 13 of the DSU allows a panel to seek information from any relevant source and to consult individual experts or expert bodies to obtain their opinion on certain aspects of the matter before it. In our Report in United States - Import Prohibition of Certain Shrimp and Shrimp Products ('United States - Shrimp'), we noted the 'comprehensive nature' of this authority, and stated that this authority is 'indispensably necessary' to enable a panel to discharge its duty imposed by Article 11 of the DSU to "make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements ... .'
Furthermore, we note that the present dispute is a dispute under the SPS Agreement. Article 11.2 of the SPS Agreement explicitly instructs panels in disputes under this Agreement involving scientific and technical issues to 'seek advice from experts'.
Article 13 of the DSU and Article 11.2 of the SPS Agreement suggest that panels have a significant investigative authority. However, this authority cannot be used by a panel to rule in favour of a complaining party which has not established a prima facie case of inconsistency based on specific legal claims asserted by it. A panel is entitled to seek information and advice from experts and from any other relevant source it chooses, pursuant to Article 13 of the DSU and, in an SPS case, Article 11.2 of the SPS Agreement, to help it to understand and evaluate the evidence submitted and the arguments made by the parties, but not to make the case for a complaining party.
In the present case, the Panel was correct to seek information and advice from experts to help it to understand and evaluate the evidence submitted and the arguments made by the United States and Japan with regard to the alleged violation of Article 5.6. The Panel erred, however, when it used that expert information and advice as the basis for a finding of inconsistency with Article 5.6, since the United States did not establish a prima facie case of inconsistency with Article 5.6 based on claims relating to the 'determination of sorption levels'. The United States did not even argue that the 'determination of sorption levels' is an alternative measure which meets the three elements under Article 5.6."(431) (q) Relevance of the mandatory/discretionary distinction 286. In US - Carbon Steel, the Appellate Body endorsing the approach of the Panel, considered that when there is an issue related to the mandatory/discretionary aspect of the law of a Member, the burden of proof will be on the complainant to demonstrate that the law is mandatory. The Appellate Body further noted that a responding Member's law will be treated as WTO-consistent "until proven otherwise": "[A] responding Member's law will be treated as WTO-consistent until proven otherwise. The party asserting that another party's municipal law, as such, is inconsistent with relevant treaty obligations bears the burden of introducing evidence as to the scope and meaning of such law to substantiate that assertion.... The nature and extent of the evidence required to satisfy the burden of proof will vary from case to case."(432) 287. As regards which party has the burden of proof in respect of whether certain legislation is mandatory or discretionary when this is invoked as an affirmative defence, see paragraph 149 above. (a) Standard of review under the DSU 288. The Panel on US - Underwear examined the standard of review to be applied in cases involving the Agreement on Textiles and Clothing and noted that Article 11 of the DSU is the relevant provision. In a finding not reviewed by the Appellate Body, the Panel held that "the task of the Panel is to examine the consistency of the US action with the international obligations of the United States, and not the consistency of the US action with the US domestic statute implementing the international obligations of the United States": The Panel went on to state: "[A] policy of total deference to the findings of the national authorities could not ensure an 'objective assessment' as foreseen by Article 11 of the DSU. ... [T]he Panel's function should be to assess objectively the review conducted by the national investigating authority, in this case the CITA. We draw particular attention to the fact that a series of panel reports in the anti-dumping and subsidies/countervailing duties context have made it clear that it is not the role of panels to engage in a de novo review.(433) In our view, the same is true for panels operating in the context of the ATC, since they would be called upon, as in the context of cases dealing with anti-dumping and/or subsidies/countervailing duties, to review the consistency of a determination by a national investigating authority imposing a restriction under the relevant provisions of the relevant WTO legal instruments, in this case the ATC. In our view, the task of the Panel is to examine the consistency of the US action with the international obligations of the United States, and not the consistency of the US action with the US domestic statute implementing the international obligations of the United States. Consequently, the ATC constitutes, in our view, the relevant legal framework in this matter.
We have therefore decided, in accordance with Article 11 of the DSU, to make an objective assessment of the Statement issued by the US authorities on 23 March 1995 (the 'March Statement) which, as the parties to the dispute agreed, constitutes the scope of the matter properly before the Panel without, however, engaging in a de novo review. In our view, an objective assessment would entail an examination of whether the CITA had examined all relevant facts before it (including facts which might detract from an affirmative determination in accordance with the second sentence of Article 6.2 of the ATC), whether adequate explanation had been provided of how the facts as a whole supported the determination made, and, consequently, whether the determination made was consistent with the international obligations of the United States."(434) 289. In US - Wool Shirts and Blouses, the Panel examined whether a certain transitional safeguard measure imposed by the United States was consistent with Article 6. India, the complainant, claimed that the Panel should examine whether the United States had acted reasonably, while the United States argued that it should be "entitled to the benefit of reasonable doubt", as it had been so entitled in certain GATT case. The Panel responded as follows: "[A]lthough the DSU does not contain any specific reference to standards of review, we consider that Article 11 of the DSU ... is relevant here[.] ... Pursuant to Article 11 of the DSU, we must determine what is 'the matter before [the Panel]'. This Panel was established pursuant to Article 8.10 of the ATC and Article 6 of the DSU. ... ... The only restraint discussed under Article 6 of the ATC is the proposed restraint by the importing Member. Therefore, pursuant to Article 11 of the DSU, the function of this Panel, established pursuant to Article 8.10 of the ATC and Article 6 of the DSU, is limited to making an objective assessment of the facts surrounding the application of the specific restraint by the United States (and contested by India) and of the conformity of such restraint with the relevant WTO agreements."(435) 290. In support of the proposition referenced in paragraph 289 above, the Panel on US - Wool Shirts and Blouses referred to "an important distinction between the role of panels under the DSU and the role of the TMB under the ATC as regards safeguard actions."(436) 291. In US - Cotton Yarn, the Appellate Body indicated that its Reports in Argentina - Footwear (EC), US - Lamb and US - Wheat Gluten (see paragraphs 294-297 below), all concerning disputes under the Agreement on Safeguards, "spell out key elements of a panel's standard of review under Article 11 of the DSU in assessing whether the competent authorities complied with their obligations in making their determinations". The Appellate Body stated: "This standard may be summarized as follows: panels must examine whether the competent authority has evaluated all relevant factors; they must assess whether the competent authority has examined all the pertinent facts and assessed whether an adequate explanation has been provided as to how those facts support the determination; and they must also consider whether the competent authority's explanation addresses fully the nature and complexities of the data and responds to other plausible interpretations of the data. However, panels must not conduct a de novo review of the evidence nor substitute their judgement for that of the competent authority."(437) 292. In US - Cotton Yarn, the Appellate Body considered for the first time a panel's standard of review under Article 11 in a dispute under the Agreement on Textiles and Clothing, issue that had already been considered by panels in US - Underwear and US - Wool Shirts and Blouses when examining the consistency of transitional safeguard measures with Article 6 of the ATC.(438) The Appellate Body considered that the Panel, in assessing the due diligence of the United States in making a determination under Article 6.2 of the Agreement on Textiles and Clothing, had exceeded its mandate under Article 11 of the DSU by considering certain evidence that could not possibly have been examined by the United States when it made that determination. In this regard, the Appellate Body considered: "Unlike Article 3 of the Agreement on Safeguards, which provides explicitly for an investigation by competent authorities of a Member, Article 6 of the ATC does not specify either the organ or the procedure through which a Member makes its "determination". Nevertheless, the ... principles concerning the standard of review under Article 11 of the DSU with respect to the Agreement on Safeguards apply equally, in our view, to a panel's review of a Member's determination under Article 6 of the ATC. We note that Article 6 does not require the participation of all interested parties in the process leading to the determination. We consider, therefore, that the exercise of due diligence by a Member is all the more important in reaching a determination under Article 6 of the ATC. ... In our view, a panel reviewing the due diligence exercised by a Member in making its determination under Article 6 of the ATC has to put itself in the place of that Member at the time it makes its determination. Consequently, a panel must not consider evidence which did not exist at that point in time.(439) A Member cannot, of course, be faulted for not having taken into account what it could not have known when making its determination. If a panel were to examine such evidence, the panel would, in effect, be conducting a de novo review and it would be doing so without having had the benefit of the views of the interested parties. The panel would be assessing the due diligence of a Member in reaching its conclusions and making its projections with the benefit of hindsight and would, in effect, be reinvestigating the market situation and substituting its own judgement for that of the Member. In our view, this would be inconsistent with the standard of a panel's review under Article 11 of the DSU."(440) 293. In EC - Hormones, the European Communities argued in its appeal that the Panel failed to apply an appropriate standard of review in assessing certain acts of, and scientific evidentiary material submitted by, the European Communities. The Appellate Body held that the applicable standard of review under Article 11 of the DSU is neither de novo review, nor "total deference", but rather the "objective assessment of facts: "The standard of review appropriately applicable in proceedings under the SPS Agreement, of course, must reflect the balance established in that Agreement between the jurisdictional competences conceded by the Members to the WTO and the jurisdictional competences retained by the Members for themselves.(441) To adopt a standard of review not clearly rooted in the text of the SPS Agreement itself, may well amount to changing that finely drawn balance; and neither a panel nor the Appellate Body is authorized to do that.
... Article 11 of the DSU bears directly on [the] matter [of standard of review] and, in effect, articulates with great succinctness but with sufficient clarity the appropriate standard of review for panels in respect of both the ascertainment of facts and the legal characterization of such facts under the relevant agreements.
So far as fact-finding by panels is concerned, their activities are always constrained by the mandate of Article 11 of the DSU: the applicable standard is neither de novo review as such, nor 'total deference', but rather the 'objective assessment of the facts'."(442) (b) Standard of review in trade remedy cases Agreement on Safeguards 294. In Argentina - Footwear (EC), Argentina argued in its appeal that the Panel correctly articulated the standard of review but alleged that the Panel erred in applying that standard of review by conducting a "de facto de novo review" of the findings and conclusions of the Argentine authorities. The Appellate Body rejected Argentina's argument, stating as follows: "We have stated, on more than one occasion, that, for all but one of the covered agreements, Article 11 of the DSU sets forth the appropriate standard of review for panels. ... Based on our review of the Panel's reasoning, we find that the Panel correctly stated the appropriate standard of review, as set forth in Article 11 of the DSU. And, with respect to its application of the standard of review, we do not believe that the Panel conducted a de novo review of the evidence, or that it substituted its analysis and judgement for that of the Argentine authorities. Rather, the Panel examined whether, as required by Article 4 of the Agreement on Safeguards, the Argentine authorities had considered all the relevant facts and had adequately explained how the facts supported the determinations that were made. Indeed, far from departing from its responsibility, in our view, the Panel was simply fulfilling its responsibility under Article 11 of the DSU in taking the approach it did. To determine whether the safeguard investigation and the resulting safeguard measure applied by Argentina were consistent with Article 4 of the Agreement on Safeguards, the Panel was obliged, by the very terms of Article 4, to assess whether the Argentine authorities had examined all the relevant facts and had provided a reasoned explanation of how the facts supported their determination."(443) 295. In Korea - Dairy, the Panel considered Korea's request for the Panel not to engage in a de novo review of its national authorities' determination to impose a safeguard. More specifically, Korea argued that the standard of review of Article 11 implies that the function of the Panel is to assess whether Korea (i) examined the relevant facts before it at the time of the investigation; and (ii) provided an adequate explanation of how the facts before it as a whole supported the determination made. Furthermore, Korea claimed that a certain deference or latitude should be left to the national authorities in this respect. The Panel held that it could not grant "total deference" to the national authorities but agreed that it could not substitute its assessment for that of the national authority: "We consider that for the Panel to adopt a policy of total deference to the findings of the national authorities could not ensure an 'objective assessment' as foreseen by Article 11 of the DSU. This conclusion is supported, in our view, by previous panel reports that have dealt with this issue(444). However, we do not see our review as a substitute for the proceedings conducted by national investigating authorities. Rather, we consider that the Panel's function is to assess objectively the review conducted by the national investigating authority, in this case the KTC. For us, an objective assessment entails an examination of whether the KTC had examined all facts in its possession or which it should have obtained in accordance with Article 4.2 of the Agreement on Safeguards (including facts which might detract from an affirmative determination in accordance with the last sentence of Article 4.2 of the Agreement on Safeguards), whether adequate explanation had been provided of how the facts as a whole supported the determination made, and, consequently, whether the determination made was consistent with the international obligations of Korea."(445) 296. In US - Lamb, the Appellate Body held that, in considering a claim under the Agreement on Safeguards, a "panel's objective assessment involves a formal aspect and a substantive aspect. The formal aspect is whether the competent authorities have evaluated 'all relevant factors'."(446) The Appellate Body stated further that, in reviewing determinations of competent authorities, panels should not simply accept the conclusions of that authority: "[I]n our view, in examining a claim under Article 4.2(a), a panel can assess whether the competent authorities' explanation for its determination is reasoned and adequate only if the panel critically examines that explanation, in depth, and in the light of the facts before the panel. Panels must therefore review whether the competent authorities' explanation fully addresses the nature, and, especially, the complexities, of the data, and responds to other plausible interpretations of that data. A panel must find, in particular, that an explanation is not reasoned, or is not adequate, if some alternative explanation of the facts is plausible, and if the competent authorities' explanation does not seem adequate in the light of that alternative explanation.(447) 297. In US - Wheat Gluten, the Appellate Body considered the duties of competent authorities and stated that an investigation by a competent authority requires a proper degree of activity. Their "duties of investigation and evaluation preclude them from remaining passive in the face of possible short-comings in the evidence submitted".(448) They "must undertake additional investigative steps, when the circumstances so require, in order to fulfil their obligation to evaluate all relevant factors."(449) 298. In US - Cotton Yarn, the Appellate Body, after referring to its rulings in the above-mentioned cases, summarized the panel standard of review as follows: "Our Reports in these disputes under the Agreement on Safeguards spell out key elements of a panel's standard of review under Article 11 of the DSU in assessing whether the competent authorities complied with their obligations in making their determinations. This standard may be summarized as follows: panels must examine whether the competent authority has evaluated all relevant factors; they must assess whether the competent authority has examined all the pertinent facts and assessed whether an adequate explanation has been provided as to how those facts support the determination; and they must also consider whether the competent authority's explanation addresses fully the nature and complexities of the data and responds to other plausible interpretations of the data. However, panels must not conduct a de novo review of the evidence nor substitute their judgement for that of the competent authority."(450) Transitional safeguard measure under the Agreement on Textiles and Clothing 299. See the excerpts from the reports of the Panels referenced in paragraphs 288-292 above. 300. See the excerpts from the reports of the Panels and Appellate Body referenced in the Chapter on the Anti-Dumping Agreement, paragraphs 199-206 and 502-503. 301. The Appellate Body in US - Lead and Bismuth II rejected the argument that, "by virtue of the Declaration, the standard of review specified in Article 17.6 of the Anti-Dumping Agreement also applies to disputes involving countervailing duty measures under Part V of the SCM Agreement."(451) The Appellate Body emphasized the hortatory language of the Declaration and the fact that the Declaration does not provide for the application of any particular standards of review to be applied: "By its own terms, the Declaration does not impose an obligation to apply the standard of review contained in Article 17.6 of the Anti-Dumping Agreement to disputes involving countervailing duty measures under Part V of the SCM Agreement. The Declaration is couched in hortatory language; it uses the words 'Ministers recognize'. Furthermore, the Declaration merely acknowledges 'the need for the consistent resolution of disputes arising from anti-dumping and countervailing duty measures.' It does not specify any specific action to be taken. In particular, it does not prescribe a standard of review to be applied.
This Decision provides for review of the standard of review in Article 17.6 of the Anti-Dumping Agreement to determine if it is 'capable of general application' to other covered agreements, including the SCM Agreement. By implication, this Decision supports our conclusion that the Article 17.6 standard applies only to disputes arising under the Anti-Dumping Agreement, and not to disputes arising under other covered agreements, such as the SCM Agreement. To date, the DSB has not conducted the review contemplated in this Decision."(452) (a) Legal basis for the exercise of judicial economy 302. The Panel on US - Wool Shirts and Blouses decided to exercise judicial economy with respect to some of the Indian claims in that dispute, stating "India is entitled to have the dispute over the contested "measure" resolved by the Panel, and if we judge that the specific matter in dispute can be resolved by addressing only some of the arguments raised by the complaining party, we can do so. We, therefore, decide to address only the legal issues we think are needed in order to make such findings as will assist the DSB in making recommendations or in giving rulings in respect of this dispute." The Appellate Body upheld the finding of the Panel and discussed the legal basis for judicial economy. The Appellate Body began by noting the function of panels, as defined under Article 11 of the DSU: "The function of panels is expressly defined in Article 11 of the DSU, which reads as follows:
'The function of panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements. Accordingly, a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements, and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements ... (emphasis added).'
Nothing in this provision or in previous GATT practice requires a panel to examine all legal claims made by the complaining party. Previous GATT 1947 and WTO panels have frequently addressed only those issues that such panels considered necessary for the resolution of the matter between the parties, and have declined to decide other issues. T |
