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P.3.1 Good faith — Pacta sunt servanda
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P.3.1.1 US — Shrimp, para. 158
(WT/DS58/AB/R)
The chapeau of Article XX is, in fact, but
one expression of the principle of good faith. This principle, at once
a general principle of law and a general principle of international
law, controls the exercise of rights by states. One application of
this general principle, the application widely known as the doctrine
of abus de droit, prohibits the abusive exercise of a state’s
rights and enjoins that whenever the assertion of a right “impinges
on the field covered by [a] treaty obligation, it must be exercised
bona fide, that is to say, reasonably.” An abusive exercise by a
Member of its own treaty right thus results in a breach of the treaty
rights of the other Members and, as well, a violation of the treaty
obligation of the Member so acting. …
P.3.1.2 US — FSC,
para. 166
(WT/DS108/AB/R)
Article 3.10 of the DSU commits Members of
the WTO, if a dispute arises, to engage in dispute settlement
procedures “in good faith in an effort to resolve the dispute”.
This is another specific manifestation of the principle of good faith
which, we have pointed out, is at once a general principle of law and
a principle of general international law. This pervasive principle
requires both complaining and responding Members to comply with the
requirements of the DSU (and related requirements in other covered
agreements) in good faith. By good faith compliance, complaining
Members accord to the responding Members the full measure of
protection and opportunity to defend, contemplated by the letter and
spirit of the procedural rules. The same principle of good faith
requires that responding Members seasonably and promptly bring claimed
procedural deficiencies to the attention of the complaining Member,
and to the DSB or the Panel, so that corrections, if needed, can be
made to resolve disputes. The procedural rules of WTO dispute
settlement are designed to promote, not the development of litigation
techniques, but simply the fair, prompt and effective resolution of
trade disputes.
P.3.1.3 Thailand
— H-Beams, para. 97
(WT/DS122/AB/R)
… We also note that nothing in the DSU
prevents a defending party from requesting further clarification on
the claims raised in a panel request from the complaining party, even
before the filing of the first written submission. In this regard, we
point to Article 3.10 of the DSU which enjoins Members of the WTO, if
a dispute arises, to engage in dispute settlement procedures “in
good faith in an effort to resolve the dispute”. As we have
previously stated, the “procedural rules of WTO dispute settlement
are designed to promote, not the development of litigation techniques,
but simply the fair, prompt and effective resolution of trade disputes”.
P.3.1.4 US — Lamb,
para. 115
(WT/DS177/AB/R, WT/DS178/AB/R)
We wish to emphasize that the discretion
that WTO Members enjoy to argue dispute settlement claims in the
manner they deem appropriate does not, of course, detract from their
obligation, under Article 3.10 of the DSU, “to engage in dispute
settlement procedures ‘in good faith in an effort to resolve the
dispute’.” It follows that WTO Members cannot improperly withhold
arguments from competent authorities with a view to raising those
arguments later before a panel. …
P.3.1.5 US — Hot-Rolled Steel, para. 101
(WT/DS184/AB/R)
… This provision requires investigating
authorities to strike a balance between the effort that they can
expect interested parties to make in responding to questionnaires, and
the practical ability of those interested parties to comply fully with
all demands made of them by the investigating authorities. We see this
provision as another detailed expression of the principle of good
faith, which is, at once, a general principle of law and a principle
of general international law, that informs the provisions of the Anti-Dumping
Agreement, as well as the other covered agreements. This organic
principle of good faith, in this particular context, restrains
investigating authorities from imposing on exporters burdens which, in
the circumstances, are not reasonable.
P.3.1.6 US — Cotton
Yarn, para. 81
(WT/DS192/AB/R)
There is no need for the purpose of this
appeal to express a view on the question whether an importing Member
would be under an obligation, flowing from the “pervasive”
general principle of good faith that underlies all treaties, to
withdraw a safeguard measure if post-determination evidence
relating to pre-determination facts were to emerge revealing that a
determination was based on such a critical factual error that one of
the conditions required by Article 6 turns out never to have been met.
P.3.1.7 Mexico — Corn Syrup (Article 21.5
— US), para. 47
(WT/DS132/AB/RW)
… the “observations” raised by Mexico
were not expressed in a fashion that indicated that Mexico was raising
an objection to the authority of the Panel. The requirements of good
faith, due process and orderly procedure dictate that objections,
especially those of such potential significance, should be explicitly
raised. Only in this way will the panel, the other party to the
dispute, and the third parties, understand that a specific objection
has been raised, and have an adequate opportunity to address and
respond to it. …
P.3.1.8 US — Shrimp
(Article 21.5 — Malaysia), footnote 97 to para. 134
(WT/DS58/AB/RW)
… We do wish to note, though, that there
is one observation by the Panel with which we do not agree. In
assessing the good faith efforts made by the United States, the Panel
stated that:
The United States is a demandeur in this field
and given its scientific, diplomatic and financial means, it is
reasonable to expect rather more than less from that Member in terms
of serious good faith efforts. Indeed, the capacity of persuasion of
the United States is illustrated by the successful negotiation of the
Inter-American Convention. (Panel Report, para. 5.76)
We are not persuaded by this line of
reasoning. As we stated in our previous Report, the chapeau of Article XX is “but one expression of the principle of good faith”.
(Appellate Body Report, United States — Shrimp, supra, footnote
24, para. 158) This good faith notion applies to all WTO Members
equally.
P.3.1.9 EC — Sardines, para. 278
(WT/DS231/AB/R)
… We must assume that Members of the WTO
will abide by their treaty obligations in good faith, as required by
the principle of pacta sunt servanda articulated in Article 26
of the Vienna Convention. And, always in dispute settlement,
every Member of the WTO must assume the good faith of every other
Member.
P.3.1.10 US — Offset Act (Byrd Amendment), paras. 296-298
(WT/DS217/AB/R, WT/DS234/AB/R)
… Article 26 of the Vienna Convention,
entitled Pacta Sunt Servanda, to which several appellees
referred in their submissions, provides that “[e]very treaty in
force is binding upon the parties to it and must be performed by them
in good faith.” The United States itself affirmed “that WTO
Members must uphold their obligations under the covered agreements in
good faith”.
… Clearly, therefore, there is a basis for
a dispute settlement panel to determine, in an appropriate case,
whether a Member has not acted in good faith.
Nothing, however, in the covered agreements
supports the conclusion that simply because a WTO Member is found to
have violated a substantive treaty provision, it has therefore not
acted in good faith. In our view, it would be necessary to prove more
than mere violation to support such a conclusion.
P.3.1.11 EC — Tube
or Pipe, para. 127
(WT/DS219/AB/R)
This excerpt … indicates that the Panel
did not rely exclusively on the presumption of good faith, as Brazil
suggests, given that some of the Panel’s questions were directed at
the validity of Exhibit EC-12. If the Panel had placed total
reliance on the presumption of good faith, it would have simply
accepted the European Communities’ assertion that Exhibit EC-12
formed part of the record of the investigation and would not have
posed questions to assess the consistency of Exhibit EC-12 with other
evidence contained in the record. …
P.3.1.12 US — Corrosion-Resistant Steel Sunset Review, para. 86
(WT/DS244/AB/R)
… a measure attributable to a Member may
be submitted to dispute settlement provided only that another Member
has taken the view, in good faith, that the measure nullifies or
impairs benefits accruing to it under the Anti-Dumping Agreement.
…
P.3.1.13 US — Corrosion-Resistant Steel Sunset Review, para. 89
(WT/DS244/AB/R)
… As long as a Member respects the
principles set forth in Articles 3.7 and 3.10 of the DSU, namely, to
exercise their “judgement as to whether action under these
procedures would be fruitful” and to engage in dispute settlement in
good faith, then that Member is entitled to request a panel to examine
measures that the Member considers nullify or impair its benefits. …
P.3.1.14 US — Gambling, para. 269
(WT/DS285/AB/R)
… This does not mean that a responding
party may put forward its defence whenever and in whatever manner it
chooses. Article 3.10 of the DSU provides that “all Members will
engage in these procedures in good faith in an effort to resolve the
dispute”, which implies the identification by each party of relevant
legal and factual issues at the earliest opportunity, so as to provide
other parties, including third parties, an opportunity to respond.
P.3.1.15 US — Gambling, para. 272
(WT/DS285/AB/R)
It follows that the principles of good faith
and due process oblige a responding party to articulate its defence
promptly and clearly. This will enable the complaining party to
understand that a specific defence has been made, “be aware of its
dimensions, and have an adequate opportunity to address and respond to
it.” …
P.3.1.16 EC — Export Subsidies on Sugar, para. 307
(WT/DS265/AB/R,
WT/DS266/AB/R,
WT/DS283/AB/R)
… we observe that, to the extent that this
concept [of estoppel] applies at all, it is reasonable for a panel to
examine estoppel in the context of determining whether a Member has
engaged “in these procedures in good faith”, as required under
Article 3.10 of the DSU. Hence, not only do we believe that the Panel’s
examination did not fail to address the European Communities’
contention on Article 3.10 and good faith, but the Panel made no error
in addressing this issue together with the issue of estoppel. We
therefore see no error in the Panel’s approach. …
P.3.2 Jura novit curia back to top
P.3.2.1 EC — Tariff
Preferences, para. 105
(WT/DS246/AB/R)
We are therefore of the view that the
European Communities must prove that the Drug Arrangements
satisfy the conditions set out in the Enabling Clause. Consistent with
the principle of jura novit curia, it is not the responsibility
of the European Communities to provide us with the legal
interpretation to be given to a particular provision in the Enabling
Clause; instead, the burden of the European Communities is to adduce
sufficient evidence to substantiate its assertion that the Drug
Arrangements comply with the requirements of the Enabling Clause.
P.3.3 Non-recognition of foreign expropriations
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P.3.3.1 US — Section 211 Appropriations Act, para. 267
(WT/DS176/AB/R)
… even if we were to accept the United
States argument about the doctrine of non-recognition of foreign
confiscation, presumably that doctrine would apply to those who are
not nationals of the United States as well as to those who are. …
P.3.3.2 US — Section 211 Appropriations Act, para. 295
(WT/DS176/AB/R)
… the United States referred to its
longstanding doctrine of non-recognition of foreign confiscations.
However, this policy could not possibly apply to trademarks that
existed in the United States when a business or assets
connected with a trademark composed of the same or substantially
similar signs were confiscated in Cuba.
P.3.4 No retroactive application of treaties.
See also Temporal Application of Rights and Obligations (T.5)
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P.3.4.1 Brazil — Desiccated Coconut, p.
15, DSR 1997:I, p. 167 at 179-180
(WT/DS22/AB/R)
Article 28 [of the Vienna Convention on the
Law of Treaties] states the general principle that a treaty shall
not be applied retroactively unless a different intention appears from
the treaty or is otherwise established”. Absent a contrary intention,
a treaty cannot apply to acts or facts which took place, or situations
which ceased to exist, before the date of its entry into force. …
P.3.4.2 EC — Bananas III, paras. 235, 237
(WT/DS27/AB/R)
The European Communities also raises the
question whether the Panel erred in giving retroactive effect to
Articles and XVII of the GATS, contrary to the principle stated in
Article 28 of the Vienna Convention. Article 28 states the
general principle of international law that “[u]nless a different
intention appears from the treaty or is otherwise established, its
provisions do not bind a party in relation to … any situation which
ceased to exist before the date of entry into force of the treaty …”.
The Panel stated in its finding on this issue that:
… the scope of our legal examination
includes only actions which the EC took or continued to take, or
measures that remained in force or continued to be applied by the EC,
and thus did not cease to exist after the entry into force of the GATS.
Likewise, any finding of consistency or inconsistency with the
requirements of Articles and XVII of GATS would be made with respect to
the period after the entry into force of the GATS. [Panel Report, para. 7.308]
The Panel stated, further, in a footnote to
this finding, that “the EC measures at issue may be considered as
continuing measures, which in some cases were enacted before the entry
into force of the GATS but which did not cease to exist after
that date (the opposite of the situation envisaged in Article 28)”.
…
It is … evident from the terms of its
finding that the Panel concluded, as a matter of fact, that the de
facto discrimination did continue to exist after the entry into
force of the GATS. This factual finding is beyond review by the
Appellate Body. Thus, we do not reverse or modify the Panel’s
conclusion in paragraph 7.308 of the Panel Reports.
P.3.4.3 Canada — Patent Term,
para. 72
(WT/DS170/AB/R)
… Article 28 [of the Vienna Convention on
the Law of Treaties] establishes that, in the absence of a contrary
intention, treaty provisions do not apply to “any situation
which ceased to exist” before the treaty’s entry into force for a
party to the treaty. Logically, it seems to us that Article 28 also
necessarily implies that, absent a contrary intention, treaty
obligations do apply to any “situation” which has not
ceased to exist — that is, to any situation that arose in the past, but
continues to exist under the new treaty. …
P.3.4.4 Canada — Patent Term, para. 70
(WT/DS170/AB/R)
… A treaty applies to existing rights, even
when those rights result from “acts which occurred” [in the wording
of Article 70.1 of the TRIPS Agreement] before the treaty
entered into force.
P.3.4.5 EC — Sardines,
para. 200
(WT/DS231/AB/R)
We recall that Article 28 of the Vienna
Convention on the Law of Treaties (the “Vienna Convention”)
provides that treaties generally do not apply retroactively. …
… As we have said in previous disputes, the
interpretation principle codified in Article 28 is relevant to the
interpretation of the covered agreements. …
P.3.5 Precautionary principle.
See also SPS Agreement, Article 5.7 — Precautionary principle (S.6.23)
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P.3.5.1 EC — Hormones, paras. 123-124
(WT/DS26/AB/R, WT/DS48/AB/RM)
The status of the precautionary principle in
international law continues to be the subject of debate among academics,
law practitioners, regulators and judges. The precautionary principle is
regarded by some as having crystallized into a general principle of
customary international environmental law. Whether it has been
widely accepted by Members as a principle of general or customary
international law appears less than clear. We consider, however,
that it is unnecessary, and probably imprudent, for the Appellate Body
in this appeal to take a position on this important, but abstract,
question. We note that the Panel itself did not make any definitive
finding with regard to the status of the precautionary principle in
international law and that the precautionary principle, at least outside
the field of international environmental law, still awaits authoritative
formulation.
It appears to us important, nevertheless, to
note some aspects of the relationship of the precautionary principle to
the SPS Agreement. First, the principle has not been
written into the SPS Agreement as a ground for justifying
SPS measures that are otherwise inconsistent with the obligations of
Members set out in particular provisions of that Agreement. Secondly,
the precautionary principle indeed finds reflection in Article 5.7 of
the SPS Agreement. We agree, at the same time, with the
European Communities, that there is no need to assume that Article 5.7
exhausts the relevance of a precautionary principle. It is reflected
also in the sixth paragraph of the preamble and in Article 3.3. These
explicitly recognize the right of Members to establish their own
appropriate level of sanitary protection, which level may be higher
(i.e., more cautious) than that implied in existing international
standards, guidelines and recommendations. Thirdly, a panel charged with
determining, for instance, whether “sufficient scientific evidence”
exists to warrant the maintenance by a Member of a particular SPS
measure may, of course, and should, bear in mind that responsible,
representative governments commonly act from perspectives of prudence
and precaution where risks of irreversible, e.g. life-terminating,
damage to human health are concerned. Lastly, however, the precautionary
principle does not, by itself, and without a clear textual directive to
that effect, relieve a panel from the duty of applying the normal (i.e.
customary international law) principles of treaty interpretation in
reading the provisions of the SPS Agreement.
P.3.6 Proportionality back to top
P.3.6.1 US — Cotton Yarn,
paras. 119-120
(WT/DS192/AB/R)
… the part of the total serious damage
attributed to an exporting Member must be proportionate to the damage
caused by the imports from that Member. Contrary to the view of the
United States, we believe that Article 6.4, second sentence, does not
permit the attribution of the totality of serious damage to one Member,
unless the imports from that Member alone have caused all the serious
damage.
Our view is supported further by the rules of
general international law on state responsibility, which require that
countermeasures in response to breaches by states of their international
obligations be commensurate with the injury suffered. In the same vein,
we note that Article 22.4 of the DSU stipulates that the suspension of
concessions shall be equivalent to the level of nullification or
impairment. This provision of the DSU has been interpreted consistently
as not justifying punitive damages. These two examples illustrate the
consequences of breaches by states of their international obligations,
whereas a safeguard action is merely a remedy to WTO-consistent “fair
trade” activity. It would be absurd if the breach of an international
obligation were sanctioned by proportionate countermeasures, while, in
the absence of such breach, a WTO Member would be subject to a
disproportionate and, hence, “punitive”, attribution of serious
damage not wholly caused by its exports. In our view, such an exorbitant
derogation from the principle of proportionality in respect of the
attribution of serious damage could be justified only if the drafters of
the ATC had expressly provided for it, which is not the case.
P.3.6.2 US — Line Pipe, para. 257
(WT/DS202/AB/R)
… If the pain inflicted on exporters by a
safeguard measure were permitted to have effects beyond the share of
injury caused by increased imports, this would imply that an exceptional
remedy, which is not meant to protect the industry of the importing
country from unfair or illegal trade practices, could be applied in a
more trade-restrictive manner than countervailing and anti-dumping
duties. On what basis should the WTO Agreement be
interpreted to limit a countermeasure to the extent of the injury caused
by unfair practices or a violation of the treaty but not so limit a
countermeasure when there has not even been an allegation of a violation
or an unfair practice?
P.3.6.3 US — Line Pipe, para. 259
(WT/DS202/AB/R)
We note as well the customary international
law rules on state responsibility, to which we also referred in US — Cotton Yarn. We recalled there that the rules of general
international law on state responsibility require that countermeasures
in response to breaches by States of their international obligations be
proportionate to such breaches. Article 51 of the International Law
Commission’s Draft Articles on Responsibility of States for
Internationally Wrongful Acts provides that “countermeasures must be
commensurate with the injury suffered, taking into account the gravity
of the internationally wrongful act and the rights in question”.
Although Article 51 is part of the International Law Commission’s
Draft Articles , which do not constitute a binding legal instrument as
such, this provision sets out a recognized principle of customary
international law. We observe also that the United States has
acknowledged this principle elsewhere. In its comments on the
International Law Commission’s Draft Articles , the United States
stated that “under customary international law a rule of
proportionality applies to the exercise of countermeasures”.
P.3.7 Estoppel back to top
P.3.7.1 EC — Export Subsidies on Sugar,
para. 310
(WT/DS265/AB/R,
WT/DS266/AB/R,
WT/DS283/AB/R)
We agree with the Panel that it is far from
clear that the estoppel principle applies in the context of WTO dispute
settlement. …
P.3.7.2 EC — Export Subsidies on Sugar,
para. 312
(WT/DS265/AB/R,
WT/DS266/AB/R,
WT/DS283/AB/R)
The principle of estoppel has never been
applied by the Appellate Body. Moreover, the notion of estoppel, as
advanced by the European Communities, would appear to inhibit the
ability of WTO Members to initiate a WTO dispute settlement proceeding.
We see little in the DSU that explicitly limits the rights of WTO
Members to bring an action; WTO Members must exercise their “judgement
as to whether action under these procedures would be fruitful”, by
virtue of Article 3.7 of the DSU, and they must engage in dispute
settlement procedures in good faith, by virtue of Article 3.10 of the
DSU. This latter obligation covers, in our view, the entire spectrum of
dispute settlement, from the point of initiation of a case through
implementation. Thus, even assuming arguendo that the principle
of estoppel could apply in the WTO, its application would fall within
these narrow parameters set out in the DSU.
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