WTO | Appellate Body Repertory of Reports and Awards 1995-2005

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C.7.1 India — Patents (US), para. 94 back to top
(WT/DS50/AB/R)

All parties engaged in dispute settlement under the DSU must be fully forthcoming from the very beginning both as to the claims involved in a dispute and as to the facts relating to those claims. Claims must be stated clearly. Facts must be disclosed freely. This must be so in consultations as well as in the more formal setting of panel proceedings. In fact, the demands of due process that are implicit in the DSU make this especially necessary during consultations. For the claims that are made and the facts that are established during consultations do much to shape the substance and the scope of subsequent panel proceedings. If, in the aftermath of consultations, any party believes that all the pertinent facts relating to a claim are, for any reason, not before the panel, then that party should ask the panel in that case to engage in additional fact-finding. But this additional fact-finding cannot alter the claims that are before the panel — because it cannot alter the panel’s terms of reference. And, in the absence of the inclusion of a claim in the terms of reference, a panel must neither be expected nor permitted to modify rules in the DSU.

C.7.2 Brazil — Aircraft, para. 132 back to top
(WT/DS46/AB/R)

We do not believe, however, that Articles 4 and 6 of the DSU, or paragraphs 1 to 4 of Article 4 of the SCM Agreement, require a precise and exact identity between the specific measures that were the subject of consultations and the specific measures identified in the request for the establishment of a panel. As stated by the Panel, “[o]ne purpose of consultations, as set forth in Article 4.3 of the SCM Agreement, is to ‘clarify the facts of the situation’, and it can be expected that information obtained during the course of consultations may enable the complainant to focus the scope of the matter with respect to which it seeks establishment of a panel.” We are confident that the specific measures at issue in this case are the Brazilian export subsidies for regional aircraft under PROEX. Consultations were held by the parties on these subsidies, and it is these same subsidies that were referred to the DSB for the establishment of a panel. …

C.7.3 US — FSC, para. 165 back to top
(WT/DS108/AB/R)

As we have said, a year passed between submission of the request for consultations by the European Communities and the first mention of this objection by the United States — despite the fact that the United States had numerous opportunities during that time to raise its objection. It seems to us that, by engaging in consultations on three separate occasions, and not even raising its objections in the two DSB meetings at which the request for establishment of a panel was on the agenda, the United States acted as if it had accepted the establishment of the Panel in this dispute, as well as the consultations preceding such establishment. In these circumstances, the United States cannot now, in our view, assert that the European Communities’ claims under Article 3 of the SCM Agreement should have been dismissed and that the Panel’s findings on these issues should be reversed. Accordingly, we decline the United States’ appeal from the Panel’s refusal to dismiss the European Communities’ claim under Article 3 of the SCM Agreement due to the European Communities’ alleged failure to comply with Article 4.2 of that Agreement. Thus, we do not find it necessary to rule on whether the European Communities’ request for consultations includes a “statement of available evidence” that satisfies the requirements of Article 4.2 of the SCM Agreement.

C.7.4 US — Certain EC Products, para. 70 back to top
(WT/DS165/AB/R)

… in our Report in Brazil — Export Financing Programme for Aircraft, we stated that:

Articles 4 and 6 of the DSU … set forth a process by which a complaining party must request consultations, and consultations must be held, before a matter may be referred to the DSB for the establishment of a panel.

The European Communities’ request for consultations of 4 March 1999 did not, of course, refer to the action taken by the United States on 19 April 1999, because that action had not yet been taken at the time. At the oral hearing in this appeal, in response to questioning by the Division, the European Communities acknowledged that the 19 April action, as such, was not formally the subject of the consultations held on 21 April 1999. We, therefore, consider that the 19 April action is also, for that reason, not a measure at issue in this dispute and does not fall within the Panel’s terms of reference.

C.7.5 Mexico — Corn Syrup (Article 21.5 — US), para. 54 back to top
(WT/DS132/AB/RW)

… We agree with Mexico on the importance of consultations. Through consultations, parties exchange information, assess the strengths and weaknesses of their respective cases, narrow the scope of the differences between them and, in many cases, reach a mutually agreed solution in accordance with the explicit preference expressed in Article 3.7 of the DSU. Moreover, even where no such agreed solution is reached, consultations provide the parties an opportunity to define and delimit the scope of the dispute between them. Clearly, consultations afford many benefits to complaining and responding parties, as well as to third parties and to the dispute settlement system as a whole.

C.7.6 Mexico — Corn Syrup (Article 21.5 — US), paras. 58-59 back to top
(WT/DS132/AB/RW)

… as a general matter, consultations are a prerequisite to panel proceedings. However, this general proposition is subject to certain limitations. …

Article 4.3 of the DSU relates the responding party’s conduct towards consultations to the complaining party’s right to request the establishment of a panel. When the responding party does not respond to a request for consultations, or declines to enter into consultations, the complaining party may dispense with consultations and proceed to request the establishment of a panel. In such a case, the responding party, by its own conduct, relinquishes the potential benefits that could be derived from those consultations.

C.7.7 Mexico — Corn Syrup (Article 21.5 — US), para. 61 back to top
(WT/DS132/AB/RW)

Article 4.7 also relates the conduct of the responding party concerning consultations to the complaining party’s right to request the establishment of a panel. This provision states that the responding party may agree with the complaining party to forgo the potential benefits that continued pursuit of consultations might bring. Thus, Article 4.7 contemplates that a panel may be validly established notwithstanding the shortened period for consultations, as long as the parties agree. Article 4.7 does not, however, specify any particular form that the agreement between the parties must take.

C.7.8 Mexico — Corn Syrup (Article 21.5 — US), para. 62 back to top
(WT/DS132/AB/RW)

In addition, … [the requirement in Article 6.2 of the DSU to indicate] whether consultations were held … may be satisfied by an express statement that no consultations were held. In other words, Article 6.2 also envisages the possibility that a panel may be validly established without being preceded by consultations.

C.7.9 Mexico — Corn Syrup (Article 21.5 — US), para. 63 back to top
(WT/DS132/AB/RW)

Thus, the DSU explicitly recognizes circumstances where the absence of consultations would not deprive the panel of its authority to consider the matter referred to it by the DSB. In our view, it follows that where the responding party does not object, explicitly and in a timely manner, to the failure of the complaining party to request or engage in consultations, the responding party may be deemed to have consented to the lack of consultations and, thereby, to have relinquished whatever right to consult it may have had.

C.7.10 Mexico — Corn Syrup (Article 21.5 — US), para. 64 back to top
(WT/DS132/AB/RW)

As a result, we find that the lack of prior consultations is not a defect that, by its very nature, deprives a panel of its authority to deal with and dispose of a matter, and that, accordingly, such a defect is not one which a panel must examine even if both parties to the dispute remain silent thereon. …

C.7.11 US — Upland Cotton, para. 260 back to top
(WT/DS267/AB/R)

It is clear from Article 4.2 that, although a requested Member is under an obligation to engage in “consultation” on “any” representations made by another Member, such representations must pertain to “measures affecting the operation of any covered agreement”. …

C.7.12 US — Upland Cotton, para. 261 back to top
(WT/DS267/AB/R)

We agree with the Panel that the word “affecting” refers primarily to “the way in which [measures] relate to a covered agreement”. As the Appellate Body stated in EC — Bananas III, “[t]he ordinary meaning of the word ‘affecting’ implies a measure that has ‘an effect on’” something else. At the same time, we also concur with the United States that the ordinary meaning of the word “affecting” suggests a temporal connotation. As the United States submits, the present tense of the phrase “affecting the operation of any covered agreement” denotes that the effects of such measures must relate to the present impact of those measures on the operation of a covered agreement. It is not sufficient that a Member alleges that challenged measures affected the operation of a covered agreement in the past; the representations of the Member requesting consultations must indicate that the effects are occurring in the present.

C.7.13 US — Upland Cotton, para. 262 back to top
(WT/DS267/AB/R)

Whether or not a measure is still in force is not dispositive of whether that measure is currently affecting the operation of any covered agreement. Therefore, we disagree with the United States’ argument that measures whose legislative basis has expired are incapable of affecting the operation of a covered agreement in the present and that, accordingly, expired measures cannot be the subject of consultations under the DSU. In our view, the question of whether measures whose legislative basis has expired affect the operation of a covered agreement currently is an issue that must be resolved on the facts of each case. The outcome of such an analysis cannot be prejudged by excluding it from consultations and dispute settlement proceedings altogether.

C.7.14 US — Upland Cotton, para. 263 back to top
(WT/DS267/AB/R)

We consider that requesting Members should enjoy a degree of discretion to identify, in their request for consultations under Article 4.2, matters relating to the covered agreements for discussion in consultations. As the Appellate Body observed in Mexico — Corn Syrup (Article 21.5 — US), consultations present an opportunity for clarifying factual and legal issues, and for narrowing the scope of a dispute, and for resolving differences between WTO Members. We do not think it would advance the purpose of consultations if Article 4.2 were interpreted as excluding a priori measures whose legislative basis may have expired, but whose effects are alleged to be impairing the benefits accruing to the requesting Member under a covered agreement. Nor, indeed, do we find textual support in the provision itself for doing so. Thus, we do not read Article 4.2 of the DSU as precluding a Member from making representations on measures whose legislative basis has expired, where that Member has reason to believe that such measures are still “affecting” the operation of a covered agreement.

C.7.15 US — Upland Cotton, para. 264 back to top
(WT/DS267/AB/R)

We find contextual support for this interpretation in Article 3.3 of the DSU, which underscores the importance of the “prompt settlement” of certain situations that, in the absence of settlement, could undermine the effective functioning of the WTO and the maintenance of a proper balance between the rights and obligations of Members. We note, first, that Article 3.3 focuses not upon “existing” measures, or measures that are “currently in force” but, rather, upon “measures taken” by a Member, which includes measures taken in the past. We also observe that Article 3.3 envisages that disputes arise when a Member “considers” that benefits accruing to it are being impaired by measures taken by another Member. By using the word “considers”, Article 3.3 focuses on the perception or understanding of an aggrieved Member. This does not exclude the possibility that a Member requesting consultations may have reason to believe that a measure is still impairing benefits even though its legislative basis has expired.

C.7.16 US — Upland Cotton, paras. 286-287 back to top
(WT/DS267/AB/R)

In reviewing the Panel’s analysis, we are faced with the question whether the scope of the consultations is determined by the written request for consultations or by what actually happens in the consultations. …

We believe that the Panel should have limited its analysis to the request for consultations because we are inclined to agree with the panel in Korea — Alcoholic Beverages, which stated that “[t]he only requirement under the DSU is that consultations were in fact held … [w]hat takes place in those consultations is not the concern of a panel”. Examining what took place in the consultations would seem contrary to Article 4.6 of the DSU, which provides that “[c]onsultations shall be confidential, and without prejudice to the rights of any Member in any further proceedings.” Moreover, it would seem at odds with the requirements in Article 4.4 of the DSU that the request for consultations be made in writing and that it be notified to the DSB. In addition, there is no public record of what actually transpires during consultations and parties will often disagree about what, precisely, was discussed. Ultimately, however, it is not necessary for us to inquire into this part of the Panel’s analysis because the Panel also found “that export credit guarantee measures relating to all eligible agricultural commodities were included in Brazil’s request for consultations, based on its reading of the text of the request itself”. …

C.7.17 US — Upland Cotton, para. 291 back to top
(WT/DS267/AB/R)

We have examined carefully Brazil’s request for consultations and we find that it provides a sufficient basis for the Panel to have concluded that the request included export credit guarantees to eligible agricultural commodities including, but not limited to, upland cotton. …

C.7.18 US — Upland Cotton, para. 293 back to top
(WT/DS267/AB/R)

We emphasize that consultations are but the first step in the WTO dispute settlement process. They are intended to “provide the parties an opportunity to define and delimit the scope of the dispute between them”. We also note that Article 4.2 of the DSU calls on a WTO Member that receives a request for consultations to “accord sympathetic consideration to and afford adequate opportunity for consultation regarding any representations made by another Member”. As long as the complaining party does not expand the scope of the dispute, we hesitate to impose too rigid a standard for the “precise and exact identity” between the scope of consultations and the request for the establishment of a panel, as this would substitute the request for consultations for the panel request. According to Article 7 of the DSU, it is the request for the establishment of a panel that governs its terms of reference, unless the parties agree otherwise.

C.7.19 US — Gambling, paras. 120-123 back to top
(WT/DS285/AB/R)

The question before us, therefore, is whether an alleged “total prohibition” on the cross-border supply of gambling and betting services constitutes a measure that may be challenged under the GATS. The DSU provides for the “prompt settlement” of situations where Members consider that their benefits under the covered agreements “are being impaired by measures taken by another Member”. Two elements of this reference to “measures” that may be the subject of dispute settlement are relevant. First, as the Appellate Body has stated, a “nexus” must exist between the responding Member and the “measure”, such that the “measure” — whether an act or omission — must be “attributable” to that Member. Secondly, the “measure” must be the source of the alleged impairment, which is in turn the effect resulting from the existence or operation of the “measure”.

Similarly [Article 4.2 of the DSU] contemplates that “measures” themselves will “affect” the operation of a covered agreement. Finally, we note that this distinction between measures and their effects is also evident in the scope of application of the GATS, namely, to “measures by Members affecting trade in services”.

We are therefore of the view that the DSU and the GATS focus on “measures” as the subject of challenge in WTO dispute settlement. To the extent that a Member’s complaint centres on the effects of an action taken by another Member, that complaint must nevertheless be brought as a challenge to the measure that is the source of the alleged effects.

The texts reproduced here do not have the legal standing of the original documents which are entrusted and kept at the WTO Secretariat in Geneva.