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J.2.1 General. See also Anti-Dumping Agreement, Article
17.4 — “matter referred to the DSB” (A.3.56); Balance-of-Payments
Restrictions (B.1); Legislation as such vs. Specific Application
(L.1);
Mandatory and Discretionary Legislation (M.1); Terms of Reference of
Panels (T.6) back to top
J.2.1.1 Brazil — Desiccated Coconut, p. 22, DSR 1997:I, p. 167
at 186
(WT/DS22/AB/R)
A panel’s terms of reference are important for two reasons. First,
terms of reference fulfil an important due process objective — they
give the parties and third parties sufficient information concerning the
claims at issue in the dispute in order to allow them an opportunity to
respond to the complainant’s case. Second, they establish the
jurisdiction of the panel by defining the precise claims at issue in the
dispute.
J.2.1.2 Brazil — Desiccated Coconut, p. 22, DSR 1997:I, p. 167
at 186
(WT/DS22/AB/R)
… the “matter” referred to a panel for consideration consists
of the specific claims stated by the parties to the dispute in the
relevant documents specified in the terms of reference. We agree with
the approach taken in previous adopted panel reports that a matter,
which includes the claims composing that matter, does not fall within a
panel’s terms of reference unless the claims are identified in the
documents referred to or contained in the terms of reference.
J.2.1.3 India — Patents (US),
paras. 92-93
(WT/DS50/AB/R)
… Although panels enjoy some discretion in establishing their own
working procedures, this discretion does not extend to modifying the
substantive provisions of the DSU. To be sure, Article 12.1 of the DSU
says: “Panels shall follow the Working Procedures in Appendix 3 unless
the panel decides otherwise after consulting the parties to the dispute”.
Yet that is all that it says. Nothing in the DSU gives a panel
the authority either to disregard or to modify other explicit provisions
of the DSU. The jurisdiction of a panel is established by that panel’s
terms of reference, which are governed by Article 7 of the DSU. A panel
may consider only those claims that it has the authority to consider
under its terms of reference. A panel cannot assume jurisdiction that it
does not have. …
… A panel is bound by its terms of reference.
J.2.1.4 India — Quantitative Restrictions,
paras. 84-86
(WT/DS90/AB/R)
This dispute was brought pursuant to, inter alia, Article
XXIII of the GATT 1994. According to Article XXIII, any Member which
considers that a benefit accruing to it directly or indirectly under the
GATT 1994 is being nullified or impaired as a result of the failure of
another Member to carry out its obligations, may resort to the dispute
settlement procedures of Article XXIII. The United States considers that
a benefit accruing to it under the GATT 1994 was nullified or impaired
as a result of India’s alleged failure to carry out its obligations
regarding balance-of-payments restrictions under Article XVIII: B of the
GATT 1994. Therefore, the United States was entitled to have recourse to
the dispute settlement procedures of Article XXIII with regard to this
dispute.
Article XXIII is elaborated and applied by the DSU. The first
sentence of Article 1.1 of the DSU provides:
The rules and procedures of this Understanding shall apply to
disputes brought pursuant to the consultation and dispute settlement
provisions of the agreements listed in Appendix 1 to this Understanding
(referred to in this Understanding as the “covered agreements”).
We note that Appendix 1 to the DSU lists “Multilateral Agreements
on Trade in Goods”, to which the GATT 1994 belongs, among the
agreements covered by the DSU. A dispute concerning Article XVIII:B is,
therefore, covered by the DSU.
Article 1.2 of the DSU provides in relevant part:
The rules and procedures of this Understanding shall apply subject to
such special or additional rules and procedures on dispute settlement
contained in the covered agreements as are identified in Appendix 2 to
this Understanding.
Appendix 2 does not identify any special or additional dispute
settlement rules or procedures relating to balance-of-payments
restrictions. It does not mention Article XVIII:B of the GATT 1994, or
any of its paragraphs. The DSU is, therefore, fully applicable to the
current dispute.
J.2.1.5 India — Quantitative Restrictions, paras. 87-88
(WT/DS90/AB/R)
Any doubts that may have existed in the past as to whether the
dispute settlement procedures under Article XXIII were available for
disputes relating to balance-of-payments restrictions have been removed
by the second sentence of footnote 1 to the BOP Understanding …
In our opinion, this provision makes it clear that the dispute
settlement procedures under Article XXIII, as elaborated and applied by
the DSU, are available for disputes relating to any matters
concerning balance-of-payments restrictions.
J.2.1.6 India — Quantitative Restrictions, paras. 102-103
(WT/DS90/AB/R)
… Recourse to the dispute settlement procedures does not call
into question either the availability or the utility of the procedures
under Article XVIII:12 and the BOP Understanding. On the
contrary, if panels refrained from reviewing the justification of
balance-of-payments restrictions, they would diminish the explicit
procedural rights of Members under Article XXIII and footnote 1 to the BOP
Understanding, as well as their substantive rights under Article
XVIII:11.
We are cognisant of the competence of the BOP Committee and the
General Council with respect to balance-of-payments restrictions under
Article XVIII:12 of the GATT 1994 and the BOP Understanding.
However, we see no conflict between that competence and the competence
of panels. Moreover, we are convinced that, in considering the
justification of balance-of-payments restrictions, panels should take
into account the deliberations and conclusions of the BOP Committee, as
did the panel in Korea — Beef.
J.2.1.7 India — Quantitative Restrictions, para. 109
(WT/DS90/AB/R)
… we conclude that panels have the competence to review the
justification of balance-of-payments restrictions. More generally, we
conclude that the dispute settlement provisions of the GATT 1994, as
elaborated and applied by the DSU, can be invoked with respect to any
matters relating to balance-of-payments restrictions. …
J.2.1.8 US — 1916 Act, para. 54
(WT/DS136/AB/R, WT/DS162/AB/R)
We agree with the Panel that the interim review was not an
appropriate stage in the Panel’s proceedings to raise objections to
the Panel’s jurisdiction for the first time. An objection to
jurisdiction should be raised as early as possible and panels must
ensure that the requirements of due process are met. However, we also
agree with the Panel’s consideration that “some issues of
jurisdiction may be of such a nature that they have to be addressed by
the Panel at any time”. We do not share the European Communities’
view that objections to the jurisdiction of a panel are appropriately
regarded as simply “procedural objections”. The vesting of
jurisdiction in a panel is a fundamental prerequisite for lawful panel
proceedings. We, therefore, see no reason to accept the European
Communities’ argument that we must reject the United States’ appeal
because the United States did not raise its jurisdictional objection
before the Panel in a timely manner.
J.2.1.9 US — 1916 Act, paras. 60-61
(WT/DS136/AB/R, WT/DS162/AB/R)
Prior to the entry into force of the WTO Agreement, it was
firmly established that Article XXIII:1(a) of the GATT 1947 allowed a
Contracting Party to challenge legislation as such, independently from
the application of that legislation in specific instances. While the
text of Article XXIII does not expressly address the matter, panels
consistently considered that, under Article XXIII, they had the jurisdiction
to deal with claims against legislation as such. In examining such
claims, panels developed the concept that mandatory and discretionary
legislation should be distinguished from each other, reasoning that only
legislation that mandates a violation of GATT obligations can be found
as such to be inconsistent with those obligations. We consider the
application of this distinction to the present cases in section IV(B)
below.
Thus, that a Contracting Party could challenge legislation as such
before a panel was well settled under the GATT 1947. We consider that
the case law articulating and applying this practice forms part of the
GATT acquis which, under Article XVI:1 of the WTO Agreement,
provides guidance to the WTO and, therefore, to panels and the Appellate
Body. Furthermore, in Article 3.1 of the DSU, Members affirm “their
adherence to the principles for the management of disputes heretofore
applied under Articles XXII and XXIII of GATT 1947”. We note that,
since the entry into force of the WTO Agreement, a number of
panels have dealt with dispute settlement claims brought against a
Member on the basis of its legislation as such, independently from the
application of that legislation in specific instances.
J.2.1.10 US — 1916 Act, paras. 62, 68
(WT/DS136/AB/R, WT/DS162/AB/R)
Turning to the issue of the legal basis for claims brought under the Anti-Dumping
Agreement, we note that Article 17 of the Anti-Dumping Agreement addresses
dispute settlement under that Agreement. Just as Articles XXII and XXIII
of the GATT 1994 create a legal basis for claims in disputes relating to
provisions of the GATT 1994, so also Article 17 establishes the basis
for dispute settlement claims relating to provisions of the Anti-Dumping
Agreement. In the same way that Article XXIII of the GATT 1994
allows a WTO Member to challenge legislation as such, Article 17
of the Anti-Dumping Agreement is properly to be regarded as
allowing a challenge to legislation as such, unless this possibility is
excluded. No such express exclusion is found in Article 17 or
elsewhere in the Anti-Dumping Agreement.
…
Article 17.3 does not explicitly address challenges to legislation as
such. As we have seen above, Articles XXII and XXIII allow challenges to
be brought under the GATT 1994 against legislation as such. Since
Article 17.3 is the “equivalent provision” to Articles XXII and
XXIII of the GATT 1994, Article 17.3 provides further support for our
view that challenges may be brought under the Anti-Dumping Agreement against
legislation as such, unless such challenges are otherwise excluded.
J.2.1.11 US — 1916 Act, para. 72
(WT/DS136/AB/R, WT/DS162/AB/R)
Nothing in our Report in Guatemala — Cement [Appellate Body
Report, paras. 79-80] suggests that Article 17.4 precludes review of
anti-dumping legislation as such. Rather, in that case, we simply found
that, for Mexico to challenge Guatemala’s initiation and conduct of
the anti-dumping investigation, Mexico was required to identify one of
the three anti-dumping measures listed in Article 17.4 in its request
for establishment of a panel. Since it did not do so, the panel in that
case did not have jurisdiction.
J.2.1.12 Mexico — Corn Syrup (Article 21.5
— US), para. 36
(WT/DS132/AB/RW)
…We believe that a panel comes under a duty to address issues in
at least two instances. First, as a matter of due process, and the
proper exercise of the judicial function, panels are required to address
issues that are put before them by the parties to a dispute. Second,
panels have to address and dispose of certain issues of a fundamental
nature, even if the parties to the dispute remain silent on those
issues. In this regard, we have previously observed that “[t]he
vesting of jurisdiction in a panel is a fundamental prerequisite for
lawful panel proceedings.” For this reason, panels cannot simply
ignore issues which go to the root of their jurisdiction — that is, to
their authority to deal with and dispose of matters. Rather, panels must
deal with such issues — if necessary, on their own motion — in order
to satisfy themselves that they have authority to proceed.
J.2.1.13 Mexico — Corn Syrup (Article 21.5
— US), para. 53
(WT/DS132/AB/RW)
… our task is simply to determine whether the “objections”
that Mexico now raises before us are of such a nature that they could
have deprived the Panel of its authority to deal with and dispose of the
matter. If so, then the Panel was bound to address them on its own
motion. …
J.2.1.14 US — Carbon Steel, para. 123
(WT/DS213/AB/R, WT/DS213/AB/R/Corr.1)
… we have consistently held that, in the interests of due
process, parties should bring alleged procedural deficiencies to the
attention of a panel at the earliest possible opportunity. In this case,
we see no reason to disagree with the Panel’s view that the United
States’ objection was not raised in a timely manner. At the same time,
however, as we have observed previously, certain issues going to the jurisdiction
of a panel are so fundamental that they may be considered at any
stage in a proceeding. In our view, the Panel was correct, therefore, in
turning to consider its terms of reference and in satisfying itself as
to its jurisdiction with respect to this matter.
J.2.1.15 US — Offset Act (Byrd
Amendment), para. 208
(WT/DS217/AB/R, WT/DS234/AB/R)
… “[a]n objection to jurisdiction should be raised as early as
possible” and it would be preferable, in the interests of due process,
for the appellant to raise such issues in the Notice of Appeal, so that
appellees will be aware that this claim will be advanced on appeal.
However, in our view, the issue of a panel’s jurisdiction is so
fundamental that it is appropriate to consider claims that a panel has
exceeded its jurisdiction even if such claims were not raised in the
Notice of Appeal.
J.2.1.16 Mexico — Taxes on Soft Drinks, paras. 44-46
(WT/DS308/AB/R)
… the issue before us in this appeal is not whether the Panel was
legally precluded from ruling on the United States’ claims that were
before it, but, rather, whether the Panel could decline, and should have
declined, to exercise jurisdiction with respect to the United States’
claims under Article III of the GATT 1994 that were before it.
… We agree with Mexico that WTO panels have certain powers that
are inherent in their adjudicative function. Notably, panels have the
right to determine whether they have jurisdiction in a given case, as
well as to determine the scope of their jurisdiction. …
In our view, it does not necessarily follow, however, from the
existence of these inherent adjudicative powers that, once jurisdiction
has been validly established, WTO panels would have the authority to
decline to rule on the entirety of the claims that are before them in a
dispute. To the contrary, we note that, while recognizing WTO panels’
inherent powers, the Appellate Body has previously emphasized that:
Although panels enjoy some discretion in establishing their own
working procedures, this discretion does not extend to modifying the
substantive provisions of the DSU. … Nothing in the DSU gives a
panel the authority either to disregard or to modify … explicit
provisions of the DSU. (emphasis added) [Appellate Body Report, India
— Patents (US), para. 92]
J.2.1.17 Mexico — Taxes on Soft Drinks, para. 52
(WT/DS308/AB/R)
… The fact that a Member may initiate a WTO dispute whenever it
considers that “any benefits accruing to [that Member] are being
impaired by measures taken by another Member” implies that that Member
is entitled to a ruling by a WTO panel.
J.2.1.18 Mexico — Taxes on Soft Drinks, para. 53
(WT/DS308/AB/R)
A decision by a panel to decline to exercise validly established
jurisdiction would seem to “diminish” the right of a complaining
Member to “seek the redress of a violation of obligations” within
the meaning of Article 23 of the DSU, and to bring a dispute pursuant to
Article 3.3 of the DSU. This would not be consistent with a panel’s
obligations under Articles 3.2 and 19.2 of the DSU. We see no reason,
therefore, to disagree with the Panel’s statement that a WTO panel “would
seem … not to be in a position to choose freely whether or not to
exercise its jurisdiction”.
J.2.1.19 Mexico — Taxes on Soft Drinks, para. 54
(WT/DS308/AB/R)
Mindful of the precise scope of Mexico’s appeal, we express no view
as to whether there may be other circumstances in which legal
impediments could exist that would preclude a panel from ruling on the
merits of the claims that are before it. In the present case, Mexico
argues that the United States’ claims under Article III of the GATT
1994 are inextricably linked to a broader dispute, and that only a NAFTA
panel could resolve the dispute as a whole. Nevertheless, Mexico does
not take issue with the Panel’s finding that “neither the subject
matter nor the respective positions of the parties are identical in the
dispute under the NAFTA… and the dispute before us”. Mexico also
stated that it could not identify a legal basis that would allow it to
raise, in a WTO dispute settlement proceeding, the market access claims
it is pursuing under the NAFTA. It is furthermore undisputed that no
NAFTA panel as yet has decided the “broader dispute” to which Mexico
has alluded. Finally, we note that Mexico has expressly stated that the
so-called “exclusion clause” of Article 2005.6 of the NAFTA had not
been “exercised”. We do not express any view on whether a legal
impediment to the exercise of a panel’s jurisdiction would exist in
the event that features such as those mentioned above were present. In
any event, we see no legal impediments applicable in this case.
J.2.1.20 Mexico — Taxes on Soft Drinks, para. 56
(WT/DS308/AB/R)
…We see no basis in the DSU for panels and the Appellate Body to
adjudicate non-WTO disputes. Article 3.2 of the DSU states that the WTO
dispute settlement system “serves to preserve the rights and
obligations of Members under the covered agreements, and to
clarify the existing provisions of those agreements” (emphasis
added). Accepting Mexico’s interpretation would imply that the WTO
dispute settlement system could be used to determine rights and
obligations outside the covered agreements. …
J.2.1.21 Mexico — Taxes on Soft Drinks, para. 57
(WT/DS308/AB/R)
For all these reasons, we uphold the Panel’s conclusion, in
paragraphs 7.1, 7.18, and 9.1 of the Panel Report, that “under the DSU,
it ha[d] no discretion to decline to exercise its jurisdiction in the
case that ha[d] been brought before it”. Having upheld this
conclusion, we find it unnecessary to rule in the circumstances
of this appeal on the propriety of exercising such discretion.
J.2.1.22 Mexico — Taxes on Soft Drinks, para. 78
(WT/DS308/AB/R)
…Mexico’s interpretation would imply that, in order to resolve
the case, WTO panels and the Appellate Body would have to assume that
there is a violation of the relevant international agreement (such as
the NAFTA) by the complaining party, or they would have to assess
whether the relevant international agreement has been violated. WTO
panels and the Appellate Body would thus become adjudicators of non-WTO
disputes. As we noted earlier, this is not the function of panels and
the Appellate Body as intended by the DSU.
J.2.1.23 EC — Selected Customs Matters, para. 166
(WT/DS315/AB/R)
We agree with the Panel that “there is nothing in the DSU nor in
the other WTO agreements that would prevent a complaining Member from
challenging a responding Member’s system as a whole or overall”. We
also agree with the Panel that a challenge that a system “as a whole
or overall” is WTO-inconsistent must be presented in a manner that
meets the two distinct requirements in Article 6.2 of the DSU. …
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