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Issues covered by the WTO’s committees and agreements

REPERTORY OF APPELLATE BODY REPORTS

Right to Bring Claims — Legal Interest


ON THIS PAGE:

EC — Bananas III, para. 132
EC — Bananas III, para. 135
EC — Bananas III, paras. 136-138
Mexico — Corn Syrup (Article 21.5 — US), paras. 73-74
US — Corrosion-Resistant Steel Sunset Review, para. 86
US — Corrosion-Resistant Steel Sunset Review, para. 89
Mexico — Taxes on Soft Drinks, para. 52
Mexico — Taxes on Soft Drinks, para. 53
EC — Bananas III (Article 21.5 — Ecuador II) / EC — Bananas III (Article 21.5 — US), paras. 211-212, 215
EC — Bananas III (Article 21.5 — Ecuador II) / EC — Bananas III (Article 21.5 — US), para. 464
US — Zeroing (Japan) (Article 21.5 — Japan), paras. 126-127


R.5.1 EC — Bananas III, para. 132     back to top
(WT/DS27/AB/R)

We agree with the Panel that “neither Article 3.3 nor 3.7 of the DSU nor any other provision of the DSU contain any explicit requirement that a Member must have a ‘legal interest’ as a prerequisite for requesting a panel”. We do not accept that the need for a “legal interest” is implied in the DSU or in any other provision of the WTO Agreement. …

 
R.5.2 EC — Bananas III,
para. 135     back to top
(WT/DS27/AB/R)

… we believe that a Member has broad discretion in deciding whether to bring a case against another Member under the DSU. The language of Article XXIII:1 of the GATT 1994 and of Article 3.7 of the DSU suggests, furthermore, that a Member is expected to be largely self-regulating in deciding whether any such action would be “fruitful”.

 
R.5.3 EC — Bananas III,
paras. 136-138     back to top
(WT/DS27/AB/R)

We are satisfied that the United States was justified in bringing its claims under the GATT 1994 in this case. The United States is a producer of bananas, and a potential export interest by the United States cannot be excluded. The internal market of the United States for bananas could be affected by the EC banana regime, in particular, by the effects of that regime on world supplies and world prices of bananas. We also agree with the Panel’s statement that:

 

… with the increased interdependence of the global economy, … Members have a greater stake in enforcing WTO rules than in the past since any deviation from the negotiated balance of rights and obligations is more likely than ever to affect them, directly or indirectly.

 

We note, too, that there is no challenge here to the standing of the United States under the GATS, and that the claims under the GATS and the GATT 1994 relating to the EC import licensing regime are inextricably interwoven in this case.

 

Taken together, these reasons are sufficient justification for the United States to have brought its claims against the EC banana import regime under the GATT 1994. This does not mean, though, that one or more of the factors we have noted in this case would necessarily be dispositive in another case. …

 
R.5.4 Mexico — Corn Syrup (Article 21.5 — US),
paras. 73-74     back to top
(WT/DS132/AB/RW)

… [the first sentence of Article 3.7 of the DSU] reflects a basic principle that Members should have recourse to WTO dispute settlement in good faith, and not frivolously set in motion the procedures contemplated in the DSU. …

 

Given the “largely self-regulating” nature of the requirement in the first sentence of Article 3.7, panels and the Appellate Body must presume, whenever a Member submits a request for establishment of a panel, that such Member does so in good faith, having duly exercised its judgement as to whether recourse to that panel would be “fruitful”. Article 3.7 neither requires nor authorizes a panel to look behind that Member’s decision and to question its exercise of judgement. Therefore, the Panel was not obliged to consider this issue on its own motion.

 
R.5.5 US — Corrosion-Resistant Steel Sunset Review,
para. 86     back to top
(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. …

 
R.5.6 US — Corrosion-Resistant Steel Sunset Review,
para. 89     back to top
(WT/DS244/AB/R)

We observe, too, that allowing measures to be the subject of dispute settlement proceedings, whether or not they are of a mandatory character, is consistent with the comprehensive nature of the right of Members to resort to dispute settlement to “preserve [their] rights and obligations … under the covered agreements, and to clarify the existing provisions of those agreements”. 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. …

 
R.5.7 Mexico — Taxes on Soft Drinks,
para. 52     back to top
(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.

 
R.5.8 Mexico — Taxes on Soft Drinks,
para. 53     back to top
(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”.

 
R.5.9 EC — Bananas III (Article 21.5 — Ecuador II) / EC — Bananas III (Article 21.5 — US),
paras. 211-212, 215     back to top
(WT/DS27/AB/RW2/ECU, WT/DS27/AB/RW/USA, WT/DS27/AB/RW2/ECU/Corr.1, WT/DS27/AB/RW/USA/Corr.1)

In respect of the criterion of a “positive solution and effective settlement”, the Panel relied on Article 3.7 of the DSU. Article 3.7 states the “aim” of the dispute settlement system. It articulates a preference for solutions that are mutually acceptable to the parties to a dispute and consistent with the covered agreements. However, nothing in Article 3.7 establishes a condition under which a party would be prevented from initiating compliance proceedings or, indeed, dictates that the only kind of settlement envisaged in that provision is one that bars recourse to compliance proceedings under Article 21.5. Article 3.7 is not prescriptive as to the content of a mutually agreed solution, save that it must be consistent with the covered agreements. The only express limitation referred to in Article 3.7 is that “a Member shall exercise its judgement as to whether action under these procedures would be fruitful”. The Appellate Body has interpreted this phrase to indicate that a Member is “expected to be largely self-regulating in deciding whether any such action would be ‘fruitful’ ”. This is also borne out by Article 3.3, which provides that the prompt settlement of situations in which a Member, in its own judgement, considers that a benefit accruing to it under the covered agreements is being impaired by a measure taken by another Member is essential to the effective functioning of the WTO.

 

The term “solution” employed in Article 3.7 refers to the “act of solving a problem”. There are usually different ways of solving any given problem. Pursuant to Article 19.1 of the DSU, when a panel or the Appellate Body concludes that a measure is inconsistent with a covered agreement, it shall recommend that the Member concerned bring the measure into conformity with that agreement. Accordingly, it is, in principle, within the Member’s discretion to choose the means of implementation and to decide in which way it will seek to achieve compliance. The DSU thus recognizes that a solution leading to compliance can be implemented in various ways. Similarly, a mutually agreed solution pursuant to Article 3.7 may encompass an agreement to forgo the right to initiate compliance proceedings. Or it may provide for the suspension of the right of recourse to Article 21.5 until the steps agreed upon in a mutually agreed solution have been implemented. Yet, this need not always be so. We therefore do not consider that the mere agreement to a “solution” necessarily implies that parties waive their right to have recourse to the dispute settlement system in the event of a disagreement as to the existence or consistency with the covered agreements of a measure taken to comply. Instead, we consider that there must be a clear indication in the agreement between the parties of a relinquishment of the right to have recourse to Article 21.5. …

 

 

… We see nothing in Article 3.7 or elsewhere in the DSU that prevents parties to a dispute from reaching a settlement that would preclude recourse to Article 21.5 proceedings after the adoption of recommendations and rulings by the DSB. In fact, Article 22.8 of the DSU stipulates that suspension of concessions shall only be applied until such time as a mutually satisfactory solution is reached. Thus, the DSU itself clearly envisages the possibility of entering into mutually agreed solutions after recommendations and rulings are made by the DSB. We do not consider that the factor that the Understandings were concluded only after the DSB made recommendations and rulings assists to determine whether the Understandings precluded the parties from initiating Article 21.5 proceedings.

 
R.5.10 EC — Bananas III (Article 21.5 — Ecuador II) / EC — Bananas III (Article 21.5 — US),
para. 464     back to top
(WT/DS27/AB/RW2/ECU, WT/DS27/AB/RW/USA, WT/DS27/AB/RW2/ECU/Corr.1, WT/DS27/AB/RW/USA/Corr.1)

We consider that the notion of “standing”, as interpreted by the Appellate Body in the original proceedings, is broader than the notion of “nullification or impairment”. In other words, if there is nullification or impairment, there will also be standing to bring a complaint. However, standing may also exist in cases that result in no finding of nullification or impairment. In the original EC — Bananas III proceedings, the Appellate Body found that “a Member has broad discretion in deciding whether to bring a case against another Member under the DSU”, and that “a Member is expected to be largely self-regulating in deciding whether any such action would be ‘fruitful’ ”. The Appellate Body further concluded that, considering that the United States was a producer and potential exporter of bananas, it was justified in bringing its claims under the GATT 1994. The Appellate Body then used this same argument to find that the United States had suffered nullification or impairment of benefits.

 
R.5.11 US — Zeroing (Japan) (Article 21.5 — Japan),
paras. 126-127     back to top
(WT/DS322/AB/RW)

… the United States argues that Review 9 could not have been impairing any benefits accruing to Japan, within the meaning of Article 3.3 of the DSU. The United States relies on a statement by the panel in US — Upland Cotton that a measure implemented under legislation that, at the time of the panel request, “did not exist, had never existed and might not subsequently have ever come into existence” was not within the panel’s terms of reference because such legislation could not have been impairing any benefits accruing to the complainant, in the sense of Article 3.3 of the DSU.

 

First, we note that the specific finding of the panel in US — Upland Cotton, on which the United States relies, was not appealed. Secondly, the Panel in these compliance proceedings found that the situation before it differed from the one presented to the panel in US — Upland Cotton. We agree that the circumstances of these compliance proceedings are different from those before the panel in US — Upland Cotton. In this case, Review 9 had already been initiated at the time of the panel request, was due to be completed during the Panel proceedings, and was the most recent periodic review stemming from the same anti-dumping duty order on imports of ball bearings from Japan. Thirdly, we recall that the Appellate Body in US — Upland Cotton stated that, as regards the initiation of dispute settlement proceedings, Article 3.3 focuses “on the perception or understanding of an aggrieved Member”. In the circumstances of this case, Japan had a basis to consider that Review 9, as part of a “chain of measures or a continuum” in which zeroing was used, could lead to the impairment of benefits accruing to it under the Anti-Dumping Agreement and the GATT 1994. Moreover, as we explained above, the inclusion of Review 9 was consistent with the objective envisaged in Article 3.3, namely, ensuring the prompt settlement of the dispute. It was then for the Panel to determine whether Review 9 fell within the scope of its jurisdiction and assess its consistency with the covered agreements.

 


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