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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 23: Strengthening of the Multilateral System 1. When Members seek the redress of a violation of obligations or other nullification or impairment of benefits under the covered agreements or an impediment to the attainment of any objective of the covered agreements, they shall have recourse to, and abide by, the rules and procedures of this Understanding.
2. In such cases, Members shall:
(a) not make a determination to the effect that a violation has occurred, that benefits have been nullified or impaired or that the attainment of any objective of the covered agreements has been impeded, except through recourse to dispute settlement in accordance with the rules and procedures of this Understanding, and shall make any such determination consistent with the findings contained in the panel or Appellate Body report adopted by the DSB or an arbitration award rendered under this Understanding;
(b) follow the procedures set forth in Article 21 to determine the reasonable period of time for the Member concerned to implement the recommendations and rulings; and
(c) follow the procedures set forth in Article 22 to determine the level of suspension of concessions or other obligations and obtain DSB authorization in accordance with those procedures before suspending concessions or other obligations under the covered agreements in response to the failure of the Member concerned to implement the recommendations and rulings within that reasonable period of time.
548. In US - Section 301 Trade Act, the Panel stated that Article 23 has to be construed in light of the object and purpose of the WTO. The Panel opined that State responsibility was not only triggered when an actual violation takes place: "In treaties which concern only the relations between States, State responsibility is incurred only when an actual violation takes place. By contrast, in a treaty the benefits of which depend in part on the activity of individual operators the legislation itself may be construed as a breach, since the mere existence of legislation could have an appreciable 'chilling effect' on the economic activities of individuals."(829) 549. In US - Certain EC Products, the Panel considered the European Communities argument that the United States unilaterally imposed trade sanctions and thereby violated Article 23 of the DSU. The Panel, in a finding not directly reviewed by the Appellate Body, held that both paragraphs of Article 23 provide a prohibition on "unilateral redress", but that this prohibition is more directly provided for under the second paragraph of Article 23: "The structure of Article 23 is that the first paragraph states the general prohibition or general obligation, i.e. when Members seek the redress of a WTO violation(830), they shall do so only through the DSU. This is a general obligation. Any attempt to seek 'redress' can take place only in the institutional framework of the WTO and pursuant to the rules and procedures of the DSU.
The prohibition against unilateral redress in the WTO sectors is more directly provided for in the second paragraph of Article 23. From the ordinary meaning of the terms used in the chapeau of Article 23.2 ('in such cases, Members shall'), it is also clear that the second paragraph of Article 23 is 'explicitly linked to, and has to be read together with and subject to, Article 23.1'(831). That is to say, the specific prohibitions of paragraph 2 of Article 23 have to be understood in the context of the first paragraph, i.e. when such action is performed by a WTO Member with a view to redressing a WTO violation."(832) 550. The Panel also agreed with the European Communities that Article 23.2 contains specific examples of conduct inconsistent with the rules of the DSU, but held that the first analytical step necessarily was to determine - before turning to Article 23.2 - whether the measure at issue falls under the scope of Article 23.1: "We also agree with the US - Section 301 Trade Act Panel Report that Article 23.2 contains 'egregious examples of conduct that contradict the rules of the DSU'(833) and which constitute more specific forms of unilateral actions, otherwise generally prohibited by Article 23.1 of the DSU.
'[t]hese rules and procedures [Article 23.1] clearly cover much more than the ones specifically mentioned in Article 23.2. There is a great deal more State conduct which can violate the general obligation in Article 23.1 to have recourse to, and abide by, the rules and procedures of the DSU than the instances especially singled out in Article 23.2.' (Footnotes omitted)(834)
The same Panel identified a few examples of such instances where the DSU could be violated(835) contrary to the provisions of Article 23. Each time a Member seeking the redress of a WTO violation is not abiding by a rule of the DSU, it thus violates Article 23.1 of the DSU.
In order to verify whether individual provisions of Article 23.2 have been infringed (keeping in mind that the obligation to also observe other DSU provisions can be brought under the umbrella of Article 23.1), we must first determine whether the measure at issue comes under the coverage of Article 23.1. In other words, we need to determine whether Article 23 is applicable to the dispute before addressing the specific violations envisaged in the second paragraph of Article 23 of the DSU or elsewhere in the DSU."(836) (a) "seeking the redress of a WTO violation" 551. In US - Certain EC Products, the Panel, in a finding not reviewed by the Appellate Body, considered whether the United States was "seeking to redress" what it perceived to be a WTO violation when it decided to withhold liquidation on imports from the European Communities of a list of products and impose a contingent liability for 100 per cent duties on each individual importation of affected products ("3 March Measure"). "The term 'seeking' or 'to seek' is defined in the Webster New Encyclopedic Dictionary as: 'to resort to, ... to make an attempt, try'. ... The term 'to redress' is defined in the New Shorter Oxford English Dictionary as 'repair (an action); atone for (a misdeed); remedy or remove; to set right or rectify (injury, a wrong, a grievance etc.); obtaining reparation or compensation'. ... The term 'redress' implies, therefore, a reaction by a Member against another Member, because of a perceived (or WTO determined) WTO violation, with a view to remedying the situation. ... On its face, this description of the 3 March Measure shows that, because of the US perceived WTO inconsistency of the 1998 Bananas regime put in place by the European Communities as a measure taken to implement the Panel and Appellate Body recommendations(the 'EC implementing measure'), the United States imposed an increased contingent liability on EC listed imports only. This 3 March Measure was, therefore, discriminatory and aimed at the European Communities exclusively. The unilateral imposition of a liability for 100 per cent duty as of 3 March (well above the bound rates of tariffs) constitutes the imposition of a debt on such imports, and adds further obligations on such imports, even if the full effect of such liability is suspended until a future liquidation date. This debt, this liability, this additional obligation imposed on listed EC imports, is evidence that the United States wanted to remedy, was 'seeking to redress', what it perceived to be a WTO violation."(837) (b) "recourse to, and abide by" 552. In US - Section 301 Trade Act, the Panel held that Article 23.1 of the DSU prescribes "a general duty of a dual nature": "Article 23.1 is not concerned only with specific instances of violation. It prescribes a general duty of a dual nature. First, it imposes on all Members to 'have recourse to' the multilateral process set out in the DSU when they seek the redress of a WTO inconsistency. In these circumstances, Members have to have recourse to the DSU dispute settlement system to the exclusion of any other system, in particular a system of unilateral enforcement of WTO rights and obligations. This, what one could call 'exclusive dispute resolution clause', is an important new element of Members' rights and obligations under the DSU."(838) 553. The Panel on US - Section 301 Trade Act held that a statute "which ... reserves the right for the Member concerned to do something which it has promised not to do under Article 23.2(a)" is a violation of Article 23.2(a) read together with Article 23.1: "The text of Article 23.1 is simple enough: Members are obligated generally to (a) have recourse to and (b) abide by DSU rules and procedures. These rules and procedures include most specifically in Article 23.2(a) a prohibition on making a unilateral determination of inconsistency prior to exhaustion of DSU proceedings. ... [T]he very discretion granted under Section 304, which under the US argument absolves the legislation, is what, in our eyes, creates the presumptive violation. The statutory language which gives the USTR this discretion on its face precludes the US from abiding by its obligations under the WTO. In each and every case when a determination is made whilst DSU proceedings are not yet exhausted, Members locked in a dispute with the US will be subject to a mandatory determination by the USTR under a statute which explicitly puts them in that very danger which Article 23 was intended to remove. ... Trade legislation, important or positive as it may be, which statutorily reserves the right for the Member concerned to do something which it has promised not to do under Article 23.2(a), goes, in our view, against the ordinary meaning of Article 23.2(a) read together with Article 23.1."(839) 554. After determining that the so-called 3 March Measure, which imposed an increased bonding requirement upon goods from the European Communities, constituted a measure taken to redress a WTO violation (see the excerpt referenced in paragraph 551 above), the Panel in US - Certain EC Products examined whether the 3 March Measure violated Article 23.2(c) of the DSU. The Panel, in a finding not reviewed by the Appellate Body, held that "any WTO suspension of concessions or other obligations without prior DSB authorization is explicitly prohibited": "Article 23.2(c) prohibits any suspensions of concessions or other obligations (taken as measures seeking to redress a WTO violation), prior to a relevant DSB authorization. Article 3.7 provides that suspension of concessions or other obligations should be used as a last resort, and subject to a DSB authorization. In Article 22.6, the suspension of concessions or other obligations is prohibited during the arbitration process which can only take place before the DSB authorization. ... In the context of these provisions, any WTO suspension of concessions or other obligations without prior DSB authorization is explicitly prohibited. On 3 March there was no relevant DSB authorization of any sort."(840) 4. Relationship with other Agreements 555. In Canada - Aircraft Credits and Guarantees, the Panel recalled the prospective nature of WTO dispute settlement remedies and that such an approach was also applicable to the SCM Agreement: "In any event, even if the WTO dispute settlement mechanism does only provide for prospective remedies, we note that it does so in respect of all cases, and not only those involving prohibited export subsidies. Article 23.1 of the DSU provides that Members shall resolve all disputes through the multilateral dispute system, to the exclusion of unilateral self-help. Thus, to the extent that the WTO dispute settlement system only provides for prospective remedies, that is clearly the result of a policy choice by the WTO Membership. Given this policy choice, and given the fact that Article 23.1 of the DSU applies to all disputes, including those involving (alleged) prohibited export subsidies, we see no reason why the (allegedly) prospective nature of WTO dispute settlement remedies should impact on our interpretation of the second paragraph of item (k)."(841)
XXIV. Article 24 back to top Article 24: Special Procedures Involving Least-Developed Country Members 1. At all stages of the determination of the causes of a dispute and of dispute settlement procedures involving a least-developed country Member, particular consideration shall be given to the special situation of least-developed country Members. In this regard, Members shall exercise due restraint in raising matters under these procedures involving a least-developed country Member. If nullification or impairment is found to result from a measure taken by a least-developed country Member, complaining parties shall exercise due restraint in asking for compensation or seeking authorization to suspend the application of concessions or other obligations pursuant to these procedures.
2. In dispute settlement cases involving a least-developed country Member, where a satisfactory solution has not been found in the course of consultations the Director-General or the Chairman of the DSB shall, upon request by a least-developed country Member offer their good offices, conciliation and mediation with a view to assisting the parties to settle the dispute, before a request for a panel is made. The Director-General or the Chairman of the DSB, in providing the above assistance, may consult any source which either deems appropriate.
No jurisprudence or decision of a competent WTO body.
XXV. Article 25 back to top Article 25: Arbitration 1. Expeditious arbitration within the WTO as an alternative means of dispute settlement can facilitate the solution of certain disputes that concern issues that are clearly defined by both parties.
2. Except as otherwise provided in this Understanding, resort to arbitration shall be subject to mutual agreement of the parties which shall agree on the procedures to be followed. Agreements to resort to arbitration shall be notified to all Members sufficiently in advance of the actual commencement of the arbitration process.
3. Other Members may become party to an arbitration proceeding only upon the agreement of the parties which have agreed to have recourse to arbitration. The parties to the proceeding shall agree to abide by the arbitration award. Arbitration awards shall be notified to the DSB and the Council or Committee of any relevant agreement where any Member may raise any point relating thereto.
4. Articles 21 and 22 of this Understanding shall apply mutatis mutandis to arbitration awards.
(a) Scope of the Arbitrators' mandate under Article 25 556. In US - Section 110(5) Copyright Act (Article 25.3), the first time since the inception of the WTO that Members have had recourse to arbitration pursuant to Article 25 of the DSU, the Arbitrators observed that such recourse is not subject to multilateral control and that, accordingly, "it is incumbent on the Arbitrators themselves to ensure that it is applied in accordance with the rules and principles governing the WTO system": "The Arbitrators note that this is the first time since the establishment of the WTO that Members have had recourse to arbitration pursuant to Article 25 of the DSU.(842) Whereas the DSB establishes panels or refers matters to other arbitration bodies, Article 25 provides for a different procedure. The parties to this dispute only had to notify the DSB of their recourse to arbitration. No decision is required from the DSB for a matter to be referred to arbitration under Article 25. In the absence of a multilateral control over recourse to that provision, it is incumbent on the Arbitrators themselves to ensure that it is applied in accordance with the rules and principles governing the WTO system.(843)..."(844) (b) Jurisdiction of the Arbitrators under Article 25 557. In US - Section 110(5) Copyright Act (Article 25.3), the Arbitrators were called upon to determine the level of nullification or impairment of benefits to the European Communities as a result of Section 110(5)B of the US Copyright Act. The Arbitrators considered that it was for them to determine whether they had jurisdiction to consider this issue; they concluded that they did have jurisdiction: "As recalled by the Appellate Body in United States - Anti-Dumping Act of 1916(845), it is a widely accepted rule that an international tribunal is entitled to consider the issue of its own jurisdiction on its own initiative. The Arbitrators believe that this principle applies also to arbitration bodies.(846)"(847) (c) Burden of proof in Article 25 arbitrations 558. In US - Section 110(5) Copyright Act (Article 25.3), the Arbitrators followed the rules on burden of proof applicable in Article 22.6 arbitrations as stipulated in the agreed procedures submitted by the parties. Therefore, it was for the United States, the defendant in the original panel proceedings, to provide a prima facie case that the methodology and estimates proposed by the European Communities did not accurately reflect the European Communities benefits being nullified or impaired: "The Arbitrators carefully examined the claims, arguments and evidence submitted by the parties in light of the rules on burden of proof applicable in the context of arbitrations under Article 22.6 of the DSU, as instructed by the parties. The Arbitrators were mindful of the fact that, in arbitration proceedings under Article 22.6, a party contests the level of countermeasures which the other intends to take under paragraphs 2, 3 and 4 of Article 22. It is therefore understandable that the burden be on the party that contests the level of countermeasures to make a prima facie demonstration that the methodology and the calculations submitted by the party intending to apply countermeasures are inconsistent with the requirements of Article 22 of the DSU. For instance, in the European Communities - Hormones cases, the initial burden was on the European Communities. The present case, however, was referred to the Arbitrators by both parties "by mutual agreement". It is arguable whether or not there is a complainant and a defendant. This said, we note that the agreed procedures submitted by the parties(848) expressly instruct us to follow the allocation of the burden of proof applied in arbitrations under Article 22.6. We also note that the parties agreed that the European Communities would submit a methodology paper ahead of the first written submissions, as in proceedings under Article 22.6. As a result, the Arbitrators decided to allocate the burden of proof accordingly, as in an Article 22.6 case."(849) (d) Matters dealt under Article 25 arbitrations (i) Nullification or impairment of benefits General 559. In US - Section 110(5) Copyright Act (Article 25.3), the Arbitrators were called to determine the level of nullification or impairment of benefits to the European Communities as a result of Section 110(5)B of the US Copyright Act. As indicated in paragraph 557 above, the Arbitrators concluded that they did have jurisdiction. The first step in their reasoning was to compare the panel procedure under the DSU with the Article 25 arbitration. The Arbitrators concluded that the procedure provided for in Article 25 may be considered an alternative to a panel procedure: "The Arbitrators first note that, pursuant to the text of Article 25.1, arbitration under Article 25 is an "alternative means of dispute settlement".(850) The term "dispute settlement" is generally used in the WTO Agreement to refer to the complete process of dispute(851) resolution under the DSU, not to one aspect of it, such as the determination of the level of benefits nullified or impaired as a result of a violation. It may be argued that the procedure provided for in Article 25 is actually an alternative to a panel procedure. This would seem to be confirmed by the terms of Article 25.4, which provides that "Articles 21 and 22 of this Understanding shall apply mutatis mutandis to arbitration awards."(852) Article 22.2 itself, unlike Article 21.3(c), does not refer to arbitration as an alternative to the negotiation of mutually acceptable compensation. It could then be argued that arbitration under Article 25 is not intended for "determin[ing] the level of nullification or impairment of benefits to the European Communities as a result of Section 110(5)(B) of the US Copyright Act."(853) 560. Despite their acknowledgement that an argument may be made whereby arbitration pursuant to Article 25 would be considered as not being intended for determining the level of nullification or impairment of benefits, the Arbitrators in US - Section 110(5) Copyright Act (Article 25.3) considered that the elements sustaining such an argument are outweighed by other elements of interpretation. The Arbitrators therefore concluded that, "pending further interpretation by the Members", they did have jurisdiction under Article 25 to determine the level of European Communities' benefits that were nullified or impaired in this case: "While being mindful of these elements of interpretation, the Arbitrators are of the view that they are outweighed by other elements, based on the fact that none of the provisions concerned expressly excludes recourse to arbitration under Article 25 in the particular context in which they apply. Article 25.2 itself provides that resort to arbitration shall be subject to mutual agreement of the parties which shall agree on the procedures to be followed "except as otherwise provided in this Understanding". Article 25 itself does not specify that recourse to Article 25 arbitration should be excluded when determining the level of nullification or impairment suffered by a Member. On the contrary, the terms of Article 25.1 referring to "the solution of certain disputes that concern issues that are clearly defined by the parties" may support the view that Article 25 should be understood as an arbitration mechanism to which Members may have recourse whenever necessary within the WTO framework. We also note that Article 22.2 refers to "negotiations [...] with a view to developing mutually acceptable compensation." There is no language in that provision which would make it impossible to consider arbitration as a means of reaching a mutually acceptable compensation.
Moreover, recourse to Article 25 arbitration in the present situation is fully consistent with the object and purpose of the DSU. Arbitration is likely to contribute to the prompt settlement of a dispute between Members, as commanded by Article 3.3 of the DSU. Indeed, it may facilitate the resolution of a divergence in the context of a negotiation of compensations, thus paving the way to implementation without suspension of concessions or other obligations.
In general, recourse to arbitration under Article 25 strengthens the dispute resolution system by complementing negotiation under Article 22.2. The possibility for the parties to a dispute to seek arbitration in relation to the negotiation of compensation operates to increase the effectiveness of that option under Article 22.2. Incidentally, the Arbitrators note that compensation, in their opinion, is always to be preferred to countermeasures of any sort, since it enhances trade instead of restricting or diverting it. Finally, such an application of Article 25 does not, at least in the case at hand, affect the rights of other Members under the DSU.(854)
Having regard to the object of the arbitration requested by the parties and the fact that the rights of other Members under the DSU are not affected by the decision of the European Communities and the United States to seek arbitration under Article 25, the Arbitrators are of the view that, pending further interpretation by the Members, they should declare that they have jurisdiction under Article 25 to determine the level of EC benefits which are being nullified or impaired in this case.(855)"(856) Nature of the benefits nullified or impaired 561. In US - Section 110(5) Copyright Act (Article 25.3), the Arbitrators agreed with the parties that, for the purpose of the arbitration proceeding, the relevant benefits were those which were economic in nature: "In their submissions to the Arbitrators, the parties have focused on this type of benefit accruing to copyright holders. The Arbitrators concur with the parties that, for purposes of these arbitration proceedings, the relevant benefits are those which are economic in nature.(857) This is consistent with previous decisions of arbitrators acting under Article 22.6 of the DSU.(858) Moreover, like the parties to this dispute, the Arbitrators will proceed on the assumption that the licensing royalties realizable by copyright holders constitute an adequate measure of the economic benefits arising from Articles 11bis(1)(iii) and 11(1)(ii)."(859) Benefits denied to a WTO Member 562. The Arbitrators in US - Section 110(5) Copyright Act (Article 25.3) stated that their task was to asses the level of nullification or impairment of the benefits denied to the European Communities rather than determining the benefits denied to European Communities' right holders: "Accordingly, the Arbitrators will, in this case, assess the level of EC benefits which Section 110(5)(B) is nullifying or impairing in terms of the royalty income foregone by EC right holders. In making this observation, the Arbitrators are aware that their task in this case is to determine the benefits which are denied to the European Communities rather than determining the benefits which are denied to EC right holders. However, there can be no question that the benefits which are denied to the European Communities include the benefits which are denied to EC right holders.(860) What is more, the European Communities has not made out a claim to the effect that Section 110(5)(B) is nullifying or impairing benefits additional to those which EC right holders could otherwise derive from Articles 11bis(1)(iii) and 11(1)(ii). As a result, it is appropriate, for the purposes of these proceedings, to determine the level of EC benefits which Section 110(5)(B) is nullifying or impairing in terms of the benefits foregone by EC right holders."(861) Point in time to asses the level of nullification or impairment 563. In US - Section 110(5) Copyright Act (Article 25.3), the Arbitrators assumed that the parties wanted an assessment of the level of benefits nullified or impaired on the date the matter was referred to arbitration, disregarding the rules established in Article 22.6 of the DSU: "The Arbitrators note that they have been appointed under Article 25 of the DSU. As a result, they do not feel constrained by a number of obligations imposed on arbitrators in Article 22.6 proceedings. Unlike Article 22.6, which closely relates to compliance (or absence thereof) at the end of the reasonable period of time, Article 25 is silent as to the date on which a matter referred to arbitration should be assessed. However, the Arbitrators are aware that they are not called upon to consider the level of EC benefits which may still be nullified or impaired after the end of the implementation period, but to consider the level of EC benefits which are being nullified or impaired as a result of the current application of Section 110(5)(B).(862) General practice under the DSU has been to consider the facts of a case as at the date of establishment of the panel. In the absence of any specification in our mandate, we believe that it should be assumed that the parties wanted us to assess the level of benefits nullified or impaired on the date the matter was referred to us. In other words, we must determine the level of nullification or impairment of EC benefits over a one-year period ending as closely as possible to 23 July 2001.(863)"(864) (e) Right to seek and disregard information 564. In US - Section 110(5) Copyright Act (Article 25.3), the Arbitrators disregarded the information they had requested from a United States' collective management organization because certain conditions were attached to the use of such information. See paragraph 343 above. (f) Treatment of confidential information 565. In US - Section 110(5) Copyright Act (Article 25.3), the Arbitrators decided that, in the absence of specific requests from the parties as to how confidentiality of business confidential information should be preserved, they would, in general, rely on the relevant practice of the Appellate Body: "In the absence of specific requests from the parties as to how confidentiality of business confidential information should be preserved, the Arbitrators will rely generally on the practice of the Appellate Body on this matter.(865) To the extent that confidential information may appear as such in the award in order to support the findings of the Arbitrators, the Arbitrators decided that two versions of the award would be prepared. One, for the parties, would contain all the information used in support of the determinations of the Arbitrators. The other, which would be circulated to all Members, would be edited so as not to include the information for which, after consultation with the parties, the Arbitrators would conclude that confidentiality for business reasons was sufficiently warranted. The information which the Arbitrators would consider to be business confidential would be replaced by 'x'.(866)"(867) (a) "expeditious arbitration ... as an alternative means of dispute settlement" 566. In US - Certain EC Products, the Panel noted that Article 25 of the DSU provides for arbitration as a means of adjudicating WTO related disputes. The Panel stated that: "[A]lthough the panel (and Appellate Body) process is the most commonly used WTO dispute settlement procedure, Article 25 of the DSU, for example, explicitly provides for arbitration as a means of adjudicating WTO related disputes. Article 25.4 provides for the applicability of Articles 21 and 22 of the DSU to the results of such arbitration. There is no reason why the WTO assessment of the compatibility of an implementing measure could not be determined by an Article 25 arbitration, as one of the WTO dispute settlement procedures."(868) 567. In US - Section 110(5) Copyright Act (Article 25.3), the Arbitrators noted that an Article 25 arbitration is an alternative means of dispute settlement and considered that an Article 25 arbitration procedure arguable "is actually an alternative to a panel procedure".(869) See paragraph 556 above. (b) Differences compared with panel proceedings 568. Also in US - Section 110(5) Copyright Act (Article 25.3), the Arbitrators observed that whereas the DSB establishes panels or refers matters to other arbitration bodies, under Article 25 proceedings, the parties only had to notify the DSB of their recourse to arbitration. See paragraph 556 above. (a) Arbitration under Article 25 should only be excluded when expressly provided 569. In US - Section 110(5) Copyright Act, the Arbitrators, when deciding whether they were competent to asses the level of nullification or impairment (see paragraphs 559-563 above), noted that "none of the provisions concerned expressly excludes recourse to arbitration under Article 25 in the particular context in which they apply. Article 25.2 itself provides that resort to arbitration shall be subject to mutual agreement of the parties which shall agree on the procedures to be followed 'except as otherwise provided in this Understanding'."(870) 570. In US - Section 110(5) Copyright Act (Article 25.3), the Arbitrators noted that the nature of an Article 25 arbitration as an alternative to the panel procedure (see paragraph 567 above), "would seem to be confirmed by the terms of Article 25.4, which provides that 'Articles 21 and 22 of this Understanding shall apply mutatis mutandis to arbitration awards'.(871)"(872) (b) "Articles 21 and 22 ... shall apply mutatis mutandis" 571. In US - Section 110(5) Copyright Act (Article 25.3), the Arbitrators indicated that "they [did] not feel constrained by a number of obligations imposed on arbitrators in Article 22.6 proceedings". See paragraph 563 above. 5. Relationship with other Articles of the DSU 572. In US - Section 110(5) Copyright Act, the Arbitrators considered that the recourse to Article 25 arbitration in that case was fully consistent with the object and purpose of the DSU since the arbitration at issue was likely to contribute to the prompt settlement of a dispute between the European Communities and the United States, as commanded by Article 3.3 of the DSU: "Moreover, recourse to Article 25 arbitration in the present situation is fully consistent with the object and purpose of the DSU. Arbitration is likely to contribute to the prompt settlement of a dispute between Members, as commanded by Article 3.3 of the DSU. Indeed, it may facilitate the resolution of a divergence in the context of a negotiation of compensations, thus paving the way to implementation without suspension of concessions or other obligations."(873) 573. With respect to the relationship with Article 21, see paragraphs 559, 566, and 570 above. 574. With respect to the relationship with Article 22.2, see paragraphs 559, 560, 566, and 570 above. 575. With respect to the relationship between Article 25 arbitrations and Article 22.6, see paragraphs 558, 561, 563 and 571 above
XXVI. Article 26 back to top Article26: 1. Non-Violation Complaints of the Type Described in Paragraph 1(b) of Article XXIII of GATT 1994
Where the provisions of paragraph 1(b) of Article XXIII of GATT 1994 are applicable to a covered agreement, a panel or the Appellate Body may only make rulings and recommendations where a party to the dispute considers that any benefit accruing to it directly or indirectly under the relevant covered agreement is being nullified or impaired or the attainment of any objective of that Agreement is being impeded as a result of the application by a Member of any measure, whether or not it conflicts with the provisions of that Agreement. Where and to the extent that such party considers and a panel or the Appellate Body determines that a case concerns a measure that does not conflict with the provisions of a covered agreement to which the provisions of paragraph 1(b) of Article XXIII of GATT 1994 are applicable, the procedures in this Understanding shall apply, subject to the following:
(a) the complaining party shall present a detailed justification in support of any complaint relating to a measure which does not conflict with the relevant covered agreement;
(b) where a measure has been found to nullify or impair benefits under, or impede the attainment of objectives, of the relevant covered agreement without violation thereof, there is no obligation to withdraw the measure. However, in such cases, the panel or the Appellate Body shall recommend that the Member concerned make a mutually satisfactory adjustment;
(c) notwithstanding the provisions of Article 21, the arbitration provided for in paragraph 3 of Article 21, upon request of either party, may include a determination of the level of benefits which have been nullified or impaired, and may also suggest ways and means of reaching a mutually satisfactory adjustment; such suggestions shall not be binding upon the parties to the dispute;
(d) notwithstanding the provisions of paragraph 1 of Article 22, compensation may be part of a mutually satisfactory adjustment as final settlement of the dispute.
2. Complaints of the Type Described in Paragraph 1(c) of Article XXIII of GATT 1994
Where the provisions of paragraph 1(c) of Article XXIII of GATT 1994 are applicable to a covered agreement, a panel may only make rulings and recommendations where a party considers that any benefit accruing to it directly or indirectly under the relevant covered agreement is being nullified or impaired or the attainment of any objective of that Agreement is being impeded as a result of the existence of any situation other than those to which the provisions of paragraphs 1(a) and 1(b) of Article XXIII of GATT 1994 are applicable. Where and to the extent that such party considers and a panel determines that the matter is covered by this paragraph, the procedures of this Understanding shall apply only up to and including the point in the proceedings where the panel report has been circulated to the Members. The dispute settlement rules and procedures contained in the Decision of 12 April 1989 (BISD 36S/61-67) shall apply to consideration for adoption, and surveillance and implementation of recommendations and rulings. The following shall also apply:
(a) the complaining party shall present a detailed justification in support of any argument made with respect to issues covered under this paragraph;
(b) in cases involving matters covered by this paragraph, if a panel finds that cases also involve dispute settlement matters other than those covered by this paragraph, the panel shall circulate a report to the DSB addressing any such matters and a separate report on matters falling under this paragraph.
(a) "detailed justification in support of any complaint" 576. In Japan - Film, the Panel examined the issue of which party bears the burden of proof in a claim involving non-violation under Article 26.1 of the DSU. The Panel stated: "In a case of non-violation nullification or impairment pursuant to Article XXIII:1(b), Article 26.1(a) of the DSU and GATT jurisprudence confirm that this is an exceptional remedy for which the complaining party bears the burden of providing a detailed justification to back up its allegations. ... Consistent with the explicit terms of the DSU and established WTO/GATT jurisprudence, and recalling the Appellate Body ruling that 'precisely how much and precisely what kind of evidence will be required to establish ... a presumption [that what is claimed is true] will necessarily vary from ... provision to provision', we thus consider that the United States, with respect to its claim of non-violation nullification or impairment under Article XXIII:1(b), bears the burden of providing a detailed justification for its claim in order to establish a presumption that what is claimed is true. It will be for Japan to rebut any such presumption."(874) 2. Jurisprudence under Article XXIII:1(b) 577. With respect to Panel Reports and Appellate Body Reports on claims brought under Article XXIII:1(b), see Chapter on GATT 1994, paragraphs 575-606. 1. Article XXIII:1(a) of the GATT 1994 578. With respect to the relationship between Article XXIII:1(a) and Article XXIII:1(b) of the GATT, see Chapter on GATT 1994, paragraph 573. 2. Article XXIII:1(b) of the GATT 1994 579. With respect to the issue of non-violation, see Chapter on GATT 1994, paragraphs 575-606.
XXVII. Article 27 back to top Article 27: Responsibilities of the Secretariat 1. The Secretariat shall have the responsibility of assisting panels, especially on the legal, historical and procedural aspects of the matters dealt with, and of providing secretarial and technical support.
2. While the Secretariat assists Members in respect of dispute settlement at their request, there may also be a need to provide additional legal advice and assistance in respect of dispute settlement to developing country Members. To this end, the Secretariat shall make available a qualified legal expert from the WTO technical cooperation services to any developing country Member which so requests. This expert shall assist the developing country Member in a manner ensuring the continued impartiality of the Secretariat.
3. The Secretariat shall conduct special training courses for interested Members concerning these dispute settlement procedures and practices so as to enable Members' experts to be better informed in this regard.
No jurisprudence or decision of a competent WTO body.
XXVIII. Appendix 1: Agreements Covered by the DSU back to top Appendix 1: Agreements Covered by the Understanding (A) Agreement Establishing the World Trade Organization
(B) Multilateral Trade Agreements
Annex 1A: Multilateral Agreements on Trade in Goods Annex 1B: General Agreement on Trade in Services Annex 1C: Agreement on Trade-Related Aspects of Intellectual Property Rights
Annex 2: Understanding on Rules and Procedures Governing the Settlement of Disputes
(C) Plurilateral Trade Agreements
Annex 4: Agreement on Trade in Civil Aircraft Agreement on Government Procurement International Dairy Agreement International Bovine Meat Agreement
The applicability of this Understanding to the Plurilateral Trade Agreements shall be subject to the adoption of a decision by the parties to each agreement setting out the terms for the application of the Understanding to the individual agreement, including any special or additional rules or procedures for inclusion in Appendix 2, as notified to the DSB. 580. As regards the concept of "covered agreements", see paragraphs 1-5 above.
XXIX. Appendix 2: Special or Additional Dispute Settlement Rules and Procedures back to top Appendix 2: Special or Additional Rules and Procedures Contained in the Covered Agreements
The list of rules and procedures in this Appendix includes provisions where only a part of the provision may be relevant in this context.
Any special or additional rules or procedures in the Plurilateral Trade Agreements as determined by the competent bodies of each agreement and as notified to the DSB. 581. With respect to the interpretation and application of Article 1.2 DSU, setting forth the rules applying to the "special or additional rules and procedures", see paragraphs 6-9 above.
Footnotes: 829. Panel Report
on US - Section 301 Trade Act, para. 7.81. back to text |
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