Topics handled by WTO committees and agreements
Issues covered by the WTO’s committees and agreements

REPERTORY OF APPELLATE BODY REPORTS

Municipal Law


ON THIS PAGE:

India — Patents (US), paras. 65-67
Brazil — Aircraft (Article 21.5 — Canada), para. 46
US — Shrimp (Article 21.5 — Malaysia), paras. 94-95
US — Hot-Rolled Steel, para. 200
US — Section 211 Appropriations Act, paras. 105-106
US — Line Pipe, para. 158
US — Offset Act (Byrd Amendment), para. 259
US — Carbon Steel, para. 157
US — Corrosion—Resistant Steel Sunset Review, para. 168
US — Softwood Lumber IV, para. 56
US — Oil Country Tubular Goods Sunset Reviews, para. 187
US — Gambling, paras. 361—362
US — Gambling, para. 364
Dominican Republic — Import and Sale of Cigarettes, para. 112
Dominican Republic — Import and Sale of Cigarettes, para. 114
US — Softwood Lumber IV (Article 21.5 — Canada), para. 82
China — Auto Parts, paras. 224—225 and footnote 306
US — Zeroing (Japan) (Article 21.5 — Japan), footnote 452 to para. 175
China — Publications and Audiovisual Products, paras. 177-178
China — Publications and Audiovisual Products, para. 187


M.5.1 India — Patents (US), paras. 65-67     back to top
(WT/DS50/AB/R)

In public international law, an international tribunal may treat municipal law in several ways. Municipal law may serve as evidence of facts and may provide evidence of state practice. However, municipal law may also constitute evidence of compliance or non-compliance with international obligations. For example, in Certain German Interests in Polish Upper Silesia, the Permanent Court of International Justice observed:

 

It might be asked whether a difficulty does not arise from the fact that the Court would have to deal with the Polish law of July 14th, 1920. This, however, does not appear to be the case. From the standpoint of International Law and of the Court which is its organ, municipal laws are merely facts which express the will and constitute the activities of States, in the same manner as do legal decisions and administrative measures. The Court is certainly not called upon to interpret the Polish law as such; but there is nothing to prevent the Court’s giving judgment on the question whether or not, in applying that law, Poland is acting in conformity with its obligations towards Germany under the Geneva Convention. (emphasis added)

 

… It is clear that an examination of the relevant aspects of Indian municipal law … is essential to determining whether India has complied with its obligations under Article 70.8(a). There was simply no way for the Panel to make this determination without engaging in an examination of Indian law. But, as in the case cited above before the Permanent Court of International Justice, in this case, the Panel was not interpreting Indian law “as such”; rather, the Panel was examining Indian law solely for the purpose of determining whether India had met its obligations under the TRIPS Agreement.

 

Previous GATT/WTO panels also have conducted a detailed examination of the domestic law of a Member in assessing the conformity of that domestic law with the relevant GATT/WTO obligations. …

 
M.5.2 Brazil — Aircraft (Article 21.5 — Canada), para. 46     back to top
(WT/DS46/AB/RW)

We note Brazil’s argument before the Article 21.5 Panel that Brazil has a contractual obligation under domestic law to issue PROEX bonds pursuant to commitments that have already been made, and that Brazil could be liable for damages for breach of contract under Brazilian law if it failed to respect its contractual obligations. In response to a question from us at the oral hearing, however, Brazil conceded that a WTO Member’s domestic law does not excuse that Member from fulfilling its international obligations. Like the Article 21.5 Panel, we do not consider that any private contractual obligations, which Brazil may have under its domestic law, are relevant to the issue of whether the DSB’s recommendation to “withdraw” the prohibited export subsidies permits the continued issuance of NTN-I bonds under letters of commitment issued before 18 November 1999.

 
M.5.3 US — Shrimp (Article 21.5 — Malaysia), paras. 94-95
(WT/DS58/AB/RW)     back to top

The CIT ruling in the Turtle Island case addressed the Revised Guidelines: that ruling made no change to the interpretation of Section 609. Moreover, as stated by the Panel, the ruling in the Turtle Island case is declaratory: the CIT has not ordered the United States Department of State to modify either the content or the interpretation of the Revised Guidelines; in the legal interpretation of the United States authorities entrusted with enforcing them, the Revised Guidelines remain the same. Rightly, when examining the United States measure, the Panel took into account the status of municipal law at the time. In particular, the Panel took note of the fact that the CIT ruling in the Turtle Island case has not altered the content of the Revised Guidelines, and has not prevented the United States government from authorizing the importation of TED-caught shrimp from uncertified countries. In response to our questions at the oral hearing, the United States confirmed that the Department of State has received no order from the CIT to change its practice, and, therefore, the Department of State continues to apply the Revised Guidelines as before. Malaysia has not shown otherwise.

 

There is no way of knowing or predicting when or how that particular legal proceeding will conclude in the United States. The Turtle Island case has been appealed and could conceivably go as far as the Supreme Court of the United States. It would have been an exercise in speculation on the part of the Panel to predict either when or how that case may be concluded, or to assume that injunctive relief ultimately would be granted and that the United States Court of Appeals or the Supreme Court of the United States eventually would compel the Department of State to modify the Revised Guidelines. The Panel was correct not to indulge in such speculation, which would have been contrary to the duty of the Panel, under Article 11 of the DSU, to make “an objective assessment of the matter … including an objective assessment of the facts of the case”.

 
M.5.4 US — Hot-Rolled Steel, para. 200     back to top
(WT/DS184/AB/R)

Although it is not the role of panels or the Appellate Body to interpret a Member’s domestic legislation as such, it is permissible, indeed essential, to conduct a detailed examination of that legislation in assessing its consistency with WTO law. …

 
M.5.5 US — Section 211 Appropriations Act, paras. 105-106
(WT/DS176/AB/R)     back to top

Our rulings in these previous appeals are clear: the municipal law of WTO Members may serve not only as evidence of facts, but also as evidence of compliance or noncompliance with international obligations. Under the DSU, a panel may examine the municipal law of a WTO Member for the purpose of determining whether that Member has complied with its obligations under the WTO Agreement. Such an assessment is a legal characterization by a panel. And, therefore, a panel’s assessment of municipal law as to its consistency with WTO obligations is subject to appellate review under Article 17.6 of the DSU.

 

To address the legal issues raised in this appeal, we must, therefore, necessarily examine the Panel’s interpretation of the meaning of Section 211 under United States law. … The meaning given by the Panel to Section 211 is, thus, clearly within the scope of our review as set out in Article 17.6 of the DSU.

 
M.5.6 US — Line Pipe, para. 158     back to top
(WT/DS202/AB/R)

… we are not concerned with how the competent authorities of WTO Members reach their determinations in applying safeguard measures. The Agreement on Safeguards does not prescribe the internal decision-making process for making such a determination. That is entirely up to WTO Members in the exercise of their sovereignty. We are concerned only with the determination itself, which is a singular act for which a WTO Member may be accountable in WTO dispute settlement. It is of no matter to us whether that singular act results from a decision by one, one hundred, or — as here — six individual decision-makers under the municipal law of that WTO Member. What matters to us is whether the determination, however it is decided domestically, meets the requirements of the Agreement on Safeguards.

 
M.5.7 US — Offset Act (Byrd Amendment), para. 259     back to top
(WT/DS217/AB/R, WT/DS234/AB/R)

… We note that the Panel referred to the “Findings of Congress”, not as a basis for its conclusion that the CDSOA constitutes a specific action against dumping or subsidies, but rather as a consideration confirming that conclusion. We agree with the Panel that the intent, stated or otherwise, of the legislators is not conclusive as to whether a measure is “against” dumping or subsidies under Article 18.1 of the Anti-Dumping Agreement or Article 32.1 of the SCM Agreement. Thus, it was not necessary for the Panel to inquire into the intent pursued by United States legislators in enacting the CDSOA and to take this into account in the analysis. The text of the CDSOA provides sufficient information on the structure and design of the CDSOA, that is to say, on the manner in which it operates, to permit an analysis whether the measure is “against” dumping or a subsidy. …

 
M.5.8 US — Carbon Steel, para. 157     back to top
(WT/DS213/AB/R, WT/DS213/AB/R/Corr.1)

… 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. Such evidence will typically be produced in the form of the text of the relevant legislation or legal instruments, which may be supported, as appropriate, by evidence of the consistent application of such laws, the pronouncements of domestic courts on the meaning of such laws, the opinions of legal experts and the writings of recognized scholars. The nature and extent of the evidence required to satisfy the burden of proof will vary from case to case.

 
M.5.9 US — Corrosion—Resistant Steel Sunset Review, para. 168
(WT/DS244/AB/R)     back to top

When a measure is challenged “as such”, the starting point for an analysis must be the measure on its face. If the meaning and content of the measure are clear on its face, then the consistency of the measure as such can be assessed on that basis alone. If, however, the meaning or content of the measure is not evident on its face, further examination is required. …

 
M.5.10 US — Softwood Lumber IV, para. 56     back to top
(WT/DS257/AB/R)

… we observe that the arguments put forward by Canada relating to the nature of “personal property”, raise issues concerning the relevance, for WTO dispute settlement, of the way in which the municipal law of a WTO Member classifies or regulates things or transactions. Previous Appellate Body Reports confirm that an examination of municipal law or particular transactions governed by it might be relevant, as evidence, in ascertaining whether a financial contribution exists. However, municipal laws — in particular those relating to property — vary amongst WTO Members. Clearly, it would be inappropriate to characterize, for purposes of applying any provisions of the WTO covered agreements, the same thing or transaction differently, depending on its legal categorization within the jurisdictions of different Members. Accordingly, we emphasize that municipal law classifications are not determinative of the issues raised in this appeal.

 
M.5.11 US — Oil Country Tubular Goods Sunset Reviews, para. 187
(WT/DS268/AB/R)     back to top

We note the argument of the United States that the SPB is not a legal instrument under United States law. This argument, however, is not relevant to the question before us. The issue is not whether the SPB is a legal instrument within the domestic legal system of the United States, but rather, whether the SPB is a measure that may be challenged within the WTO system. The United States has explained that, within the domestic legal system of the United States, the SPB does not bind the USDOC and that the USDOC “is entirely free to depart from [the] SPB at any time”. However, it is not for us to opine on matters of United States domestic law. Our mandate is confined to clarifying the provisions of the WTO Agreement and to determining whether the challenged measures are consistent with those provisions. …

 
M.5.12 US — Gambling, paras. 361-362     back to top
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

… according to Antigua, the IHA, on its face, authorizes domestic service suppliers, but not foreign service suppliers, to offer remote betting services in relation to certain horse races. To this extent, in Antigua’s view, the IHA “exempts” domestic service suppliers from the prohibitions of the Wire Act, the Travel Act, and the IGBA.

 

The United States disagreed, claiming that the IHA — a civil statute — cannot “repeal” the Wire Act, the Travel Act, or the IGBA — which are criminal statutes — by implication, that is, merely by virtue of the IHA’s adoption subsequent to that of the Wire Act, the Travel Act, and the IGBA. Rather, under principles of statutory interpretation in the United States, such a repeal could be effective only if done explicitly, which was not the case with the IHA.

 
M.5.13 US — Gambling, para. 364     back to top
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

… the United States’ appeal essentially challenges the Panel’s failure to accord sufficient weight to the evidence submitted by the United States with respect to the relationship under United States law between the IHA and the measures at issue. The Panel had limited evidence before it, as submitted by the parties, on which to base its conclusion. This limitation, however, could not absolve the Panel of its responsibility to arrive at a conclusion as to the relationship between the IHA and the prohibitions in the Wire Act, the Travel Act, and the IGBA. The Panel found that the evidence provided by the United States was not sufficiently persuasive to conclude that, as regards wagering on horseracing, the remote supply of such services by domestic firms continues to be prohibited notwithstanding the plain language of the IHA. In this light, we are not persuaded that the Panel failed to make an objective assessment of the facts.

 
M.5.14 Dominican Republic — Import and Sale of Cigarettes, para. 112
(WT/DS302/AB/R)     back to top

Against this background, and consistent with the view expressed by the Appellate Body in US Carbon Steel, we agree with Honduras that consideration of the express wording of the text of legislation establishing a measure is a fundamental element of an assessment of that legislation. That said, however, we see no merit in the proposition advanced by Honduras that a panel must limit itself, in considering a claim against legislation as such, exclusively to the wording of legislation itself. Indeed, in US Carbon Steel, the Appellate Body recognized that different types of evidence may support assertions as to the meaning and scope of an impugned measure. A panel enjoys a margin of discretion in weighing such evidence, commensurate with its role as trier of fact.

 
M.5.15 Dominican Republic — Import and Sale of Cigarettes, para. 114
(WT/DS302/AB/R)     back to top

Finally, we observe that the situation in this appeal is different from that prevailing in India Patents (US), upon which Honduras relies. India Patents (US) was a case in which certain “administrative instructions” were held to be insufficient evidence of India’s compliance with its obligations under the “mailbox” requirements of the TRIPS Agreement, whereas certain legislative provisions were clearly inconsistent with those obligations. The panel and the Appellate Body were not required in India Patents (US) to interpret the words of the relevant legislation alone, in isolation from other evidence, as Honduras would have had the Panel do in this case. Indeed, in India Patents (US), there was a considerable amount of evidence available regarding the proper interpretation of the express terms of the Indian Patents Act, which included, but was not limited to, the text of the legislation itself. The panel in that case was thus able to balance India’s assertion that its “administrative instructions” — which required officials to disregard certain mandatory provisions of the Patents Act — were sufficient to implement India’s WTO obligations, against evidence that the Indian government itself considered that legislative amendment was necessary. Thus, in India Patents (US), the panel made full use of the record that was before it. Although the record in that case appears to have been considerably richer than the one available in these proceedings (which appears to consist only of the text of the measure and the letter from the Director-General of Internal Taxes), it appears to us that the Panel in this case also considered all of the evidence that was before it. Accordingly, although the facts of this case differ from India Patents (US), the panels in each case followed the same — correct — approach in taking into account relevant factual information presented by the parties.

 
M.5.16 US — Softwood Lumber IV (Article 21.5 — Canada), para. 82
(WT/DS257/AB/RW)     back to top

… the United States emphasizes the separate nature of original countervailing duty investigations and duty assessment proceedings, and cites, inter alia, to its domestic law in this regard. Although such references may be useful, the Appellate Body has already observed that municipal law classifications are not determinative of issues raised in WTO dispute settlement proceedings. …

 
M.5.17 China — Auto Parts, paras. 224-225 and footnote 306
(WT/DS339/AB/R, WT/DS340/AB/R, WT/DS342/AB/R)     back to top

In examining this issue, we first note that the participants appear to disagree on the standard of review that we should apply to the Panel’s findings regarding the scope and meaning of Articles 2(2) and 21(1) of Decree 125. China submits that the Panel’s finding as to the applicability of the charge imposed under the measures at issue to imports of CKD and SKD kits is a matter of legal interpretation. The United States, on the other hand, considers that a panel’s “constructions of municipal law are factual determinations in WTO dispute settlement”. This means, for the United States, that the Appellate Body may not review such findings de novo, but must accord them the “same deference as other types of factual findings made by panels in WTO dispute settlement proceedings”.306

 

The Appellate Body has explicitly stated that the municipal law of WTO Members may serve not only as evidence of facts, but also as evidence of compliance or non-compliance with international obligations. When a panel examines the municipal law of a WTO Member for purposes of determining whether the Member has complied with its WTO obligations, that determination is a legal characterization by a panel, and is therefore subject to appellate review under Article 17.6 of the DSU. The Appellate Body has reviewed the meaning of a Member’s municipal law, on its face, to determine whether the legal characterization by the panel was in error, in particular when the claim before the panel concerned whether a specific instrument of municipal law was, as such, inconsistent with a Member’s obligations. We recognize that there may be instances in which a panel’s assessment of municipal law will go beyond the text of an instrument on its face, in which case further examination may be required, and may involve factual elements. With respect to such elements, the Appellate Body will not lightly interfere with a panel’s finding on appeal.

 
M.5.18 US — Zeroing (Japan) (Article 21.5 — Japan), footnote 452 to para. 175     back to top
(WT/DS322/AB/RW)

There was a debate between the participants at the oral hearing about whether the United States’ executive branch can take actions in connection with a periodic review that is the object of domestic litigation during the pendency of those domestic judicial proceedings. The United States indicated that the USDOC loses jurisdiction over a periodic review while it is under review by the United States courts. Japan asserted that the USDOC can request that the court return (or “remand”) the case back to it. We note that whatever restrictions there are on the United States’ executive branch taking actions during the pendency of domestic judicial proceedings would derive solely from United States law and not from the text of Article 13 of the Anti-Dumping Agreement. Therefore, they would not provide a basis for delaying compliance with the DSB’s recommendations and rulings beyond the end of the reasonable period of time.

 
M.5.19 China — Publications and Audiovisual Products, paras. 177-178     back to top
(WT/DS363/AB/R)

We recall that a panel’s assessment of the meaning and content of a Member’s municipal law is subject to appellate review in order to determine whether the panel erred in its finding regarding the consistency of the Member’s municipal law with the WTO agreements. For example, in China Auto Parts, the Appellate Body examined one provision of a Chinese Decree, focusing on the text and context of the relevant provision in the Decree and the overall “structure and logic” of the Decree, so as to determine whether the legal characterization by the panel was in error. At the same time, Article 17.6 of the DSU places some constraints on the Appellate Body’s review of some elements of a panel’s analysis of municipal law. Where, for instance, a panel resorts to evidence of how a municipal law has been applied, the opinions of experts, administrative practice, or pronouncements of domestic courts, the panel’s findings on such elements are more likely to be factual in nature, and the Appellate Body will not lightly interfere with such findings. …

 

In this dispute, the issue of whether the Panel correctly characterized Article 30 of the Film Regulation as subject to China’s trading rights commitments is a legal issue within the scope of these appellate proceedings.

 
M.5.20 China — Publications and Audiovisual Products, para. 187
(WT/DS363/AB/R)     back to top

In addressing a claim that a panel mischaracterized a Member’s municipal law, the Appellate Body is not limited to reviewing only those provisions of the law explicitly examined by the panel. The Appellate Body has, in prior disputes, examined specific provisions, in the light of other provisions and the overall structure of the relevant municipal law, so as to determine whether a panel properly construed that law. …

 

306. … Canada expressed a similar view at the oral hearing in this appeal, stating that a panel’s interpretation of municipal law is a matter of fact and is subject to the standard of review to be accorded to factual findings.     back to text


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