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REPERTORY OF APPELLATE BODY REPORTS

Standard of Review


ON THIS PAGE:

General
Article 11 of the DSU — Objective assessment of the matter
Article 11 of the DSU — Objective assessment of the measure
Article 11 of the DSU — Objective assessment of the facts
Article 11 of the DSU — Objective assessment of whether the investigating authority’s explanation is reasoned and adequate
Article 11 of the DSU — No de novo review
Article 11 of the DSU — Temporal scope of review
Article 11 of the DSU “make such other findings [to] assist the DSB… in giving the rulings”
Standard of Review: Article 11 of the DSU — Risk assessment under Article 5.1 of the SPS Agreement


S.7.1 General     back to top

S.7.1.1 EC — Hormones, para. 114
(WT/DS26/AB/R, WT/DS48/AB/R)

 

… Only Article 17.6(i) of the Anti-Dumping Agreement has language on the standard of review to be employed by panels engaged in the “assessment of the facts of the matter”. We find no indication in the SPS Agreement of an intent on the part of the Members to adopt or incorporate into that Agreement the standard set out in Article 17.6(i) of the Anti-Dumping Agreement. Textually, Article 17.6(i) is specific to the Anti-Dumping Agreement.

 

S.7.1.2 Argentina — Footwear (EC), para. 118
(WT/DS121/AB/R)

 

We have stated, on more than one occasion, that, for all but one of the covered agreements, Article 11 of the DSU sets forth the appropriate standard of review for panels. The only exception is the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, in which a specific provision, Article 17.6, sets out a special standard of review for disputes arising under that Agreement.

 

S.7.1.3 Argentina — Footwear (EC), para. 120
(WT/DS121/AB/R)

 

… The Agreement on Safeguards, like the Agreement on the Application of Sanitary and Phytosanitary Measures, is silent as to the appropriate standard of review. Therefore, Article 11 of the DSU, and, in particular, its requirement that “… a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements”, sets forth the appropriate standard of review for examining the consistency of a safeguard measure with the provisions of the Agreement on Safeguards.

 

S.7.1.4 US — Lead and Bismuth II, para. 49
(WT/DS138/AB/R)

 

… [the Declaration on Dispute Settlement Pursuant to the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 or Part V of the Agreement on Subsidies and Countervailing Measures (the “Declaration”)] does not impose an obligation to apply the standard of review contained in Article 17.6 of the Anti-Dumping Agreement to disputes involving countervailing duty measures under Part V of the SCM Agreement. The Declaration is couched in hortatory language; it uses the words “Ministers recognize”. Furthermore, the Declaration merely acknowledges “the need for the consistent resolution of disputes arising from anti-dumping and countervailing duty measures”. It does not specify any specific action to be taken. In particular, it does not prescribe a standard of review to be applied.

 

S.7.1.5 US — Hot-Rolled Steel, para. 54
(WT/DS184/AB/R)

 

Article 11 of the DSU imposes upon panels a comprehensive obligation to make an “objective assessment of the matter”, an obligation which embraces all aspects of a panel’s examination of the “matter”, both factual and legal. Thus, panels make an “objective assessment of the facts”, of the “applicability” of the covered agreements, and of the “conformity” of the measure at stake with those covered agreements. Article 17.6 is divided into two separate sub-paragraphs, each applying to different aspects of the panel’s examination of the matter. The first sub-paragraph covers the panel’s assessment of the facts of the matter”, whereas the second covers its “interpret[ation of] the relevant provisions” (emphasis added). The structure of Article 17.6, therefore, involves a clear distinction between a panel’s assessment of the facts and its legal interpretation of the Anti-Dumping Agreement.

 

S.7.1.6 US — Hot-Rolled Steel, para. 55
(WT/DS184/AB/R)

 

In considering Article 17.6(i) of the Anti-Dumping Agreement, it is important to bear in mind the different roles of panels and investigating authorities. Investigating authorities are charged, under the Anti-Dumping Agreement, with making factual determinations relevant to their overall determination of dumping and injury. Under Article 17.6(i), the task of panels is simply to review the investigating authorities’ “establishment” and “evaluation” of the facts. To that end, Article 17.6(i) requires panels to make an “assessment of the facts”. The language of this phrase reflects closely the obligation imposed on panels under Article 11 of the DSU to make an “objective assessment of the facts”. Thus the text of both provisions requires panels to “assess” the facts and this, in our view, clearly necessitates an active review or examination of the pertinent facts. Article 17.6(i) of the Anti-Dumping Agreement does not expressly state that panels are obliged to make an assessment of the facts which is “objective”. However, it is inconceivable that Article 17.6(i) should require anything other than that panels make an objective “assessment of the facts of the matter”. In this respect, we see no “conflict” between Article 17.6(i) of the Anti-Dumping Agreement and Article 11 of the DSU.

 

S.7.1.7 US — Hot-Rolled Steel, para. 62
(WT/DS184/AB/R)

 

… although the second sentence of Article 17.6(ii) of the Anti-Dumping Agreement imposes obligations on panels which are not found in the DSU, we see Article 17.6(ii) as supplementing, rather than replacing, the DSU, and Article 11 in particular. Article 11 requires panels to make an “objective assessment of the matter” as a whole. Thus, under the DSU, in examining claims, panels must make an “objective assessment” of the legal provisions at issue, their “applicability” to the dispute, and the “conformity” of the measures at issue with the covered agreements. Nothing in Article 17.6(ii) of the Anti-Dumping Agreement suggests that panels examining claims under that Agreement should not conduct an “objective assessment” of the legal provisions of the Agreement, their applicability to the dispute, and the conformity of the measures at issue with the Agreement. Article 17.6(ii) simply adds that a panel shall find that a measure is in conformity with the Anti-Dumping Agreement if it rests upon one permissible interpretation of that Agreement.

 

S.7.1.8 US — Cotton Yarn, para. 68
(WT/DS192/AB/R)

 

Article 11 of the DSU lays down the standard of review for panels in disputes under the covered agreements …

 

S.7.1.9 US — Countervailing Duty Investigation on DRAMS, para. 182
(WT/DS296/AB/R)

 

Article 11 of the DSU sets out the proper standard of review to be applied by panels when examining Members’ subsidy determinations. …

 

S.7.1.10 US — Countervailing Duty Investigation on DRAMS, para. 184
(WT/DS296/AB/R)

 

… The standard of review articulated by the Appellate Body in the context of agency determinations under [the Agreement on Safeguards] is instructive for cases under the SCM Agreement that also involve agency determinations. Nevertheless, we recall that an “objective assessment” under Article 11 of the DSU must be understood in the light of the obligations of the particular covered agreement at issue in order to derive the more specific contours of the appropriate standard of review. In this respect, we are especially mindful, in this appeal, of Articles 12, 19, and 22 of the SCM Agreement.

 

S.7.1.11 US — Softwood Lumber VI (Article 21.5 — Canada), paras. 91-92
(WT/DS277/AB/RW, WT/DS277/AB/RW/Corr.1)

 

As regards the standard of review to be applied when a single injury determination is challenged under both … the Anti-Dumping Agreement and the SCM Agreement, Canada’s appeal focuses on the standard of review under Article 11 of the DSU. The United States considers that Canada’s appeal deliberately downplays the significance of Article 17.6 of the Anti-Dumping Agreement, but the United States does not request us to give “separate consideration” to the issues on appeal as a result of that provision. …

 

We need not, in this appeal, answer the question of whether there may ever be circumstances in which separate consideration of a single injury determination would be required in the light of the standards of review under the Anti-Dumping Agreement and the SCM Agreement. In our view, this is not such a case, and neither of the participants requests such separate consideration. We also wish to add that whether such separate consideration is called for may depend not only on Article 11 of the DSU and Article 17.6 of the Anti-Dumping Agreement, but also on the substantive provisions of the Anti-Dumping Agreement and SCM Agreement that are at issue in the dispute. This is because, as the Appellate Body has previously observed, and as discussed further below, the proper standard of review to be applied by a panel must also be understood in the light of the specific obligations of the relevant agreements that are at issue in the case.

 

S.7.1.12 US — Oil Country Tubular Goods Sunset Reviews (Article 21.5 — Argentina), para. 183 and footnote 383
(WT/DS268/AB/RW)

 

… The Panel’s explanation is brief, but it is sufficient to convey that the Panel considered Argentina’s request and that, in the light of the discretionary nature of the authority to make a suggestion, the Panel declined to exercise that discretion. The discretionary nature of the authority to make a suggestion under Article 19.1 must be kept in mind when examining the sufficiency of a panel’s decision not to exercise such authority. However, it should not relieve a panel from engaging with the arguments put forward by a party in support of such a request. In the present case, Argentina offered several reasons in support of its request for a suggestion. Although it would have been advisable for the Panel to articulate more clearly the reasons why it declined to exercise its discretion to make a suggestion, this does not mean that Panel’s exercise of its discretion was improper, and, thus, even assuming arguendo that Articles 11 and 12.7 were applicable to a request for suggestion, we do not consider that, in the circumstances of this case, the Panel failed to fulfil its duties under those provisions.383

 

S.7.1.13 US — Stainless Steel (Mexico), para. 76
(WT/DS344/AB/R)

 

… we recall that the standard of review applicable to disputes under the Anti-Dumping Agreement is set out in both Article 11 of the DSU and Article 17.6 of the Anti-Dumping Agreement. In our analysis, we bear in mind that there could be more than one permissible interpretation of a provision of the Anti-Dumping Agreement.

 
S.7.2 Article 11 of the DSU — Objective assessment of the matter     back to top

S.7.2.1 EC — Hormones, paras. 116-119
(WT/DS26/AB/R, WT/DS48/AB/R)

 

… Article 11 of the DSU bears directly on this matter and, in effect, articulates with great succinctness but with sufficient clarity the appropriate standard of review for panels in respect of both the ascertainment of facts and the legal characterization of such facts under the relevant agreements. …

 

So far as fact-finding by panels is concerned, their activities are always constrained by the mandate of Article 11 of the DSU: the applicable standard is neither de novo review as such, nor “total deference”, but rather the “objective assessment of the facts”. Many panels have in the past refused to undertake de novo review, wisely, since under current practice and systems, they are in any case poorly suited to engage in such a review. On the other hand, “total deference to the findings of the national authorities”, it has been well said, “could not ensure an ‘objective assessment’ as foreseen by Article 11 of the DSU”.

 

In so far as legal questions are concerned — that is, consistency or inconsistency of a Member’s measure with the provisions of the applicable agreement — a standard not found in the text of the SPS Agreement itself cannot absolve a panel (or the Appellate Body) from the duty to apply the customary rules of interpretation of public international law. It may be noted that the European Communities refrained from suggesting that Article 17.6 of the Anti-Dumping Agreement in its entirety was applicable to the present case. Nevertheless, it is appropriate to stress that here again Article 11 of the DSU is directly on point, requiring a panel to “make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements… ”.

 

We consider, therefore, that the issue of failure to apply an appropriate standard of review, raised by the European Communities, resolves itself into the issue of whether or not the Panel, in making the above and other findings referred to and appealed by the European Communities, had made an “objective assessment of the matter before it, including an objective assessment of the facts … ”. …

 

S.7.2.2 EC — Poultry, para. 133
(WT/DS69/AB/R)

 

An allegation that a panel has failed to conduct the “objective assessment of the matter before it” required by Article 11 of the DSU is a very serious allegation. Such an allegation goes to the very core of the integrity of the WTO dispute settlement process itself. …

 

S.7.2.3 EC — Poultry, para. 135
(WT/DS69/AB/R)

 

… Just as a panel has the discretion to address only those claims which must be addressed in order to dispose of the matter at issue in a dispute, so too does a panel have the discretion to address only those arguments it deems necessary to resolve a particular claim. So long as it is clear in a panel report that a panel has reasonably considered a claim, the fact that a particular argument relating to that claim is not specifically addressed in the “Findings” section of a panel report will not, in and of itself, lead to the conclusion that that panel has failed to make the “objective assessment of the matter before it” required by Article 11 of the DSU.

 

S.7.2.4 Chile — Price Band System, para. 173
(WT/DS207/AB/R, WT/DS207/AB/R/Corr.1)

 

… Because it made a finding on a provision that was not before it, the Panel, therefore, did not make an objective assessment of the matter before it, as required by Article 11. Rather, the Panel made a finding on a matter that was not before it. In doing so, the Panel acted ultra petita and inconsistently with Article 11 of the DSU.

 

S.7.2.5 US — Gambling, para. 273
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… as part of their duties, under Article 11 of the DSU,… panels must ensure that the due process rights of parties to a dispute are respected. A panel may act inconsistently with this duty if it addresses a defence that a responding party raised at such a late stage of the panel proceedings that the complaining party had no meaningful opportunity to respond to it. To this end, panels are endowed with “sufficient flexibility” in their working procedures, by virtue of Article 12.2 of the DSU, to regulate panel proceedings and, in particular, to adjust their timetables to allow for additional time to respond or for additional submissions where necessary.

 

S.7.2.6 US — Gambling, paras. 281-282
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… a panel enjoys … discretion [freely to use arguments submitted by any of the parties — or to develop its own legal reasoning — to support its own findings and conclusions] only with respect to specific claims that are properly before it, for otherwise it would be considering a matter not within its jurisdiction. Moreover, when a panel rules on a claim in the absence of evidence and supporting arguments, it acts inconsistently with its obligations under Article 11 of the DSU.

 

In the context of affirmative defences, then, a responding party must invoke a defence and put forward evidence and arguments in support of its assertion that the challenged measure satisfies the requirements of the defence. When a responding party fulfils this obligation, a panel may rule on whether the challenged measure is justified under the relevant defence, relying on arguments advanced by the parties or developing its own reasoning. The same applies to rebuttals. A panel may not take upon itself to rebut the claim (or defence) where the responding party (or complaining party) itself has not done so.

 

S.7.2.7 US — Gambling, paras. 342-344
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

In deciding to assess whether the measures satisfied the requirements of the chapeau, the Panel explained that, even though such an examination was “not necessary”, it wanted “to assist the parties in resolving the underlying dispute in this case”. Antigua alleges that the Panel acted inconsistently with the Appellate Body’s decision in Korea — Various Measures on Beef in determining whether the Wire Act, the Travel Act, and the IGBA meet the requirements of the chapeau after having found that they were not provisionally justified.

 

… [the statement by the Appellate Body at paragraph 156 of Korea — Various Measures on Beef] does not impose a requirement on panels to stop evaluating a responding party’s defence once they have determined that a challenged measure is not provisionally justified under one of the paragraphs of the general exception provision.

 

Provided that it complies with its duty to assess a matter objectively, a panel enjoys the freedom to decide which legal issues it must address in order to resolve a dispute. Moreover, in some instances, a panel’s decision to continue its legal analysis and to make factual findings beyond those that are strictly necessary to resolve the dispute may assist the Appellate Body should it later be called upon to complete the analysis, as, for example, in this case.

 

S.7.2.8 Dominican Republic — Import and Sale of Cigarettes, para. 105
(WT/DS302/AB/R)

 

Article 11 of the DSU provides that a panel “should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements”. The Appellate Body underlined in Chile — Price Band System that “Article 11 obliges panels not only to make ‘an objective assessment of the facts of the case’, but also ‘an objective assessment of the matter before it’ ”. The “matter” is constituted by both the facts of the case (and, in particular, the specific measures at issue) as well as the legal claims raised. The corollary is that a panel is not entitled to make an assessment of a matter that is not before it, for example, by making findings on a claim not raised by the complainant.

 

S.7.2.9 Dominican Republic — Import and Sale of Cigarettes, para. 125
(WT/DS302/AB/R)

 

In any event, we note that there is no obligation upon a panel to consider each and every argument put forward by the parties in support of their respective cases, so long as it completes an objective assessment of the matter before it, in accordance with Article 11 of the DSU.

 

S.7.2.10 US — Countervailing Duty Investigation on DRAMS, para. 174
(WT/DS296/AB/R)

 

… The issue raised by the United States’ appeal, therefore, is not whether the evidence was contained in the record, but rather, whether the evidence contained in the record should have “indicate[d]” to the USDOC “that three of the four creditors exercising appraisal rights under option 3 actually exercised their right to seek mediation in respect of the October 2001 restructuring”.

 

S.7.2.11 US — Countervailing Duty Investigation on DRAMS, paras. 176-179
(WT/DS296/AB/R)

 

We turn now to the evidence relied upon by the Panel. The Panel pointed to a single paragraph in Hynix’s 2001 Audit Report, which was on the record of the investigation, as the basis for finding that the USDOC should have been aware that three creditors had resorted to mediation …

 

This excerpt does not indicate explicitly that three creditors participated in a mediation. Nor does it state that a mediation in fact occurred, or that it was the mediation … that resulted in the payout of over 80 billion won.… Thus, we do not read the record evidence as supporting the Panel’s conclusion that the USDOC should have understood the “rais[ing]” of “objections” to include the recourse to mediation by three Hynix creditors.

 

… faced with no mention of mediation in response to questions, and given the wording of Article 29(5) of the CRPA, the USDOC, in our view, should not have been expected to read Hynix’s 2001 Audit Report as indicating the recourse to mediation by three Hynix creditors.

 

In our view, therefore, the Panel erroneously concluded that the USDOC should have made a factual inference from evidence on the record that would not reasonably have suggested such an inference. We therefore find that the Panel failed to “make an objective assessment of the matter before it”, as required by Article 11 of the DSU, by finding … that “the mediation provisions [of the CRPA] had actually been invoked by three creditors in respect of the October 2001 restructuring”, in the absence of supporting evidence on the record of the underlying investigation.

 

S.7.2.12 Mexico — Taxes on Soft Drinks, para. 51
(WT/DS308/AB/R)

 

… Article 11 also requires that a panel “make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements”. It is difficult to see how a panel would fulfil that obligation if it declined to exercise validly established jurisdiction and abstained from making any finding on the matter before it.

 

S.7.2.13 US — Zeroing (EC), para. 196
(WT/DS294/AB/R, WT/DS294/AB/R/Corr.1)

 

… a panel must not lightly assume the existence of a “rule or norm” constituting a measure of general and prospective application, especially when it is not expressed in the form of a written document. If a panel were to do so, it would act inconsistently with its obligations under Article 11 of the DSU to “make an objective assessment of the matter” before it.

 

S.7.2.14 US — Zeroing (EC), paras. 253-254, 256, 258, 260-261
(WT/DS294/AB/R, WT/DS294/AB/R/Corr.1)

 

The Appellate Body has previously underscored that a claim under Article 11 of the DSU is a “very serious allegation” and that:

 

[a] challenge under Article 11 of the DSU must not be vague or ambiguous. On the contrary, such a challenge must be clearly articulated and substantiated with specific arguments. An Article 11 claim is not to be made lightly, or merely as a subsidiary argument or claim in support of a claim of a panel’s failure to construe or apply correctly a particular provision of a covered agreement. [Appellate Body Report, US — Steel Safeguards, para. 498]

 

We consider this finding apt and instructive in this case. We do not believe that the European Communities has “substantiated its claim” that the Panel acted inconsistently with Article 11. Its allusion to “insufficient reasoning” by the Panel, or “internal inconsistency”, is vague and mentioned only in passing in its appellant’s submission. …

 

 

… As we understand it, the European Communities appears to suggest that the Panel “made the case” for the United States by asking these questions of the United States.

 

 

In the present case, the European Communities has not explained why the questions posed by the Panel would have been inappropriate for purposes of “clarify[ing] and distil[ling] the legal arguments” advanced by the parties in this dispute.

 

 

… The “ample and extensive” nature of a panel’s authority “to undertake and control the process” by which it informs itself of the relevant facts of the dispute and of the legal norms and principles applicable to a case, would appear to suggest that a panel also has broad authority to pose such questions to the parties as it deems relevant for purposes of considering the issues that are before it. The asking of questions is, after all, part and parcel of the investigative function and duty of panels.

 

We note, moreover, that, when referring, in Japan — Agricultural Products II, to “making the case” for the complaining party, the Appellate Body was speaking to a situation in which a panel makes a ruling “in favour of a complaining party which has not established a prima facie case of inconsistency based on specific legal claims asserted by it”. In contrast, asking questions to clarify the meaning of an argument does not, in our view, amount to “making the case”.

 

S.7.2.15 US — Oil Country Tubular Goods Sunset Reviews (Article 21.5 — Argentina), para. 172
(WT/DS268/AB/RW)

 

… Argentina considers that the Panel failed to fulfil properly its duties under Article 11 of the DSU by “subordinat[ing] the actual treaty text of Articles 11.3 and 11.4, and the disposition of Argentina’s claims under these provisions, to broader, ‘systemic’ considerations of the WTO dispute settlement system”. We have found that Articles 11.3 and 11.4 do not address specifically whether an investigating authority may collect additional facts relating to the initial review period when making a redetermination of likelihood of dumping. Therefore, the Panel did not subordinate the text of these provisions to broader systemic considerations of the WTO dispute settlement system when it found that the USDOC could develop a new evidentiary basis.

 

S.7.2.16 Chile — Price Band System (Article 21.5 — Argentina), para. 229
(WT/DS207/AB/RW)

 

Article 11 of the DSU deals with the function of panels and assigns to them certain duties, inter alia, to “make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements”. The Appellate Body has considered these duties on many occasions, and has consistently recognized that Article 11 affords panels a margin of discretion in their assessment of the facts. This margin includes the discretion to identify which evidence the panel considers most relevant in making its findings, and to determine how much weight to attach to the various items of evidence placed before it by the parties to the case. A panel does not commit error simply because it declines to accord to the evidence the weight that one of the parties believes should be accorded to it. …

 

S.7.2.17 Chile — Price Band System (Article 21.5 — Argentina), para. 238
(WT/DS207/AB/RW)

 

… We also recall that a claim that a panel failed to comply with its duties under Article 11 of the DSU must stand by itself and should not be made merely as a subsidiary argument or claim in support of a claim that a panel failed to apply correctly a provision of the covered agreements.

 

S.7.2.18 Japan — DRAMs (Korea), paras. 184-185
(WT/DS336/AB/R, WT/DS336/AB/R/Corr.1)

 

We have found that the Panel erred in its interpretation and application of Articles 1.1(b) and 14 of the SCM Agreement because it did not identify properly the appropriate market benchmark to be applied under those provisions. At the same time, we have found that the Panel did not err in finding that the JIA’s determination “erroneously overstate[d] the amount of benefit conferred on the recipient”. Moreover, based on our review of the Panel’s reasoning and the Panel record, we find that the Panel did not act inconsistently with its obligations under Article 11 of the DSU in concluding that Japan improperly calculated the amount of benefit conferred by the October 2001 and December 2002 Restructurings. As the Appellate Body has previously found: “not every error of law or incorrect legal interpretation attributed to a panel constitutes a failure on the part of the panel to make an objective assessment of the matter before it.

 

Therefore, we uphold, albeit for different reasons, the Panel’s finding, in paragraphs 7.316 and 8.2(c) of the Panel Report, that the JIA calculated the amount of benefit conferred on Hynix by the October 2001 and December 2002 Restructurings inconsistently with Articles 1.1(b) and 14 of the SCM Agreement.

 

S.7.2.19 US — Stainless Steel (Mexico), para. 162
(WT/DS344/AB/R)

 

We are deeply concerned about the Panel’s decision to depart from well-established Appellate Body jurisprudence clarifying the interpretation of the same legal issues. The Panel’s approach has serious implications for the proper functioning of the WTO dispute settlement system, as explained above. Nevertheless, we consider that the Panel’s failure flowed, in essence, from its misguided understanding of the legal provisions at issue. Since we have corrected the Panel’s erroneous legal interpretation and have reversed all of the Panel’s findings and conclusions that have been appealed, we do not, in this case, make an additional finding that the Panel also failed to discharge its duties under Article 11 of the DSU.

 

S.7.2.20 US — Continued Suspension / Canada — Continued Suspension, para. 482
(WT/DS320/AB/R, WT/DS321/AB/R)

 

Because the appointment and consultations with Drs Boisseau and Boobis compromised the Panel’s ability to act as an independent adjudicator, the Panel cannot be said to have made “an objective assessment of the matter” as required by Article 11 of the DSU. … Consequently, we find that the Panel failed to comply with its duties under Article 11 of the DSU, as a result of the appointment and consultations with Drs Boisseau and Boobis in the circumstances of this case.

 
S.7.2A Article 11 of the DSU — Objective assessment of the measure     back to top

S.7.2A.1 Canada — Wheat Exports and Grain Imports, paras. 176-177
(WT/DS276/AB/R)

 

We agree with Canada that [the United States’ claim that the Panel did not examine the measure in its entirety] fits more properly under Article 11 of the DSU [than under Article XVII:1 of the GATT 1994]. The Appellate Body has stated previously that the measure at issue (and the claims made by the complaining Member) make up the “matter referred to the DSB” for the purpose of Article 7 of the DSU. In this sense, the United States’ argument that the Panel did not examine the measure in its entirety relates to the Panel’s examination of the “matter”. Article 11 of the DSU sets out the duties of a panel, including that it “should make an objective assessment of the matter before it” (emphasis added). Therefore, as we see it, the United States’ allegation that the Panel did not examine the measure in its entirety amounts to an allegation that the Panel did not “make an objective assessment of the matter” under Article 11 of the DSU.

 

Although an appellant is free to determine how to characterize its claims on appeal, at the same time due process requires that the legal basis of a claim be sufficiently clear to allow an appellee to respond effectively. This is especially the case when the claim is an allegation that the panel did not make an objective assessment of the matter as required by Article 11 of the DSU because, by definition, such a claim will not be found in the request for the establishment of the panel and, therefore, the panel will not have referred to it in the panel report.

 

S.7.2A.2 Canada — Wheat Exports and Grain Imports, para. 191
(WT/DS276/AB/R)

 

In our view, it is incumbent upon a party to identify in its submissions the relevance of the provisions of legislation — the evidence — on which it relies to support its arguments. It is not sufficient merely to file an entire piece of legislation and expect a panel to discover, on its own, what relevance the various provisions may or may not have for a party’s legal position. We are not satisfied that the United States argued the relevance before the Panel of the various provisions of the Canadian Wheat Board Act on which it now relies. … Therefore, we do not agree with the United States that the Panel disregarded facts relevant to the independence of the CWB and we see no failure by the Panel in this respect to comply with its duty under Article 11 of the DSU.

 

S.7.2A.3 US — Oil Country Tubular Goods Sunset Reviews, paras. 209-210
(WT/DS268/AB/R)

 

In our view, therefore, in order to objectively assess, as required by Article 11 of the DSU, whether the three factual scenarios of Section II.A.3 of the SPB are regarded as determinative/conclusive, it is essential to examine concrete examples of cases where the likelihood determination of continuation or recurrence of dumping was based solely on one of the scenarios of Section II.A.3 of the SPB, even though the probative value of other factors might have outweighed that of the identified scenario. Such an examination requires a qualitative assessment of the likelihood determinations in individual cases.

 

We find that, in reaching its conclusion on the USDOC’s consistent application of the SPB, the Panel relied solely on the overall statistics or aggregate results. The Panel did not undertake a qualitative analysis of at least some of the individual cases in Exhibit ARG-63 in order to see whether the USDOC’s determinations in those cases were objective and rested on a sufficient factual basis.

 

S.7.2A.4 US — Oil Country Tubular Goods Sunset Reviews, para. 212
(WT/DS268/AB/R)

 

The Panel record does not show that the Panel undertook any such qualitative assessment of at least some of the cases of ExhibitARG-63 with a view to discerning whether the USDOC regarded the existence of one of the factual scenarios of the SPB as determinative/conclusive for its determinations. The Panel also appears not to have examined in how many cases the foreign respondent parties participated in the proceedings, in how many they introduced other “good cause” factors, and how the USDOC dealt with those factors when they were introduced. Such an inquiry would have enabled the Panel to identify and undertake a qualitative analysis of at least some of those cases to see whether the affirmative determinations were made solely on the basis of one of the scenarios to the exclusion of other factors. The Panel failed to undertake any such qualitative assessment and relied exclusively on the overall statistics or aggregated results of Exhibit ARG-63. The fact that affirmative determinations were made in reliance on one of the three scenarios in all the sunset reviews of anti-dumping duty orders where domestic interested parties took part strongly suggests that these scenarios are mechanistically applied. However, without a qualitative examination of the reasons leading to such determinations, it is not possible to conclude definitively that these determinations were based exclusively on these scenarios in disregard of other factors.

 

S.7.2A.5 US — Oil Country Tubular Goods Sunset Reviews, para. 215
(WT/DS268/AB/R)

 

In the light of the above, we find that the Panel did not “make an objective assessment of the matter”, as required by Article 11 of the DSU. It apparently reached its conclusion — that the three scenarios in Section II.A.3 of the SPB are perceived by the USDOC to be determinative/conclusive of the likelihood of continuation or recurrence of dumping — on the sole basis of the overall statistics in Exhibit ARG-63. The Panel record reveals no qualitative analysis of even some of the cases in Exhibit ARG-63, and the Panel Report contains only a single sentence justifying its conclusion based on the overall statistics. …

 

S.7.2A.6 US — Gambling, paras. 356-357
(WT/DS285/AB/R)

 

In our view, the proper significance to be attached to isolated instances of enforcement, or lack thereof, cannot be determined in the absence of evidence allowing such instances to be placed in their proper context. Such evidence might include evidence on the overall number of suppliers, and on patterns of enforcement, and on the reasons for particular instances of non-enforcement. Indeed, enforcement agencies may refrain from prosecution in many instances for reasons unrelated to discriminatory intent and without discriminatory effect.

 

Faced with the limited evidence the parties put before it with respect to enforcement, the Panel should rather have focused, as a matter of law, on the wording of the measures at issue. These measures, on their face, do not discriminate between United States and foreign suppliers of remote gambling services. …

 

S.7.2A.7 US — Gambling, para. 364
(WT/DS285/AB/R)

 

… 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.

 

S.7.2A.8 Chile — Price Band System (Article 21.5 — Argentina), paras. 233-236
(WT/DS207/AB/RW)

 

Chile also claims that the Panel acted inconsistently with Article 11 of the DSU in refusing to re-assess certain aspects of the original price band system that, according to Chile, both the original panel and the Appellate Body misunderstood, and in relying on this “factual error” in its analysis of the measure at issue. Chile argues that the original panel and Appellate Body mistakenly believed that, under the original measure, the c.i.f. band thresholds were compared to an f.o.b. reference price in order to determine applicable specific duties and rebates. …

 

In examining this aspect of Chile’s appeal, we first note that Chile did not raise this alleged misunderstanding concerning the operation of the original measure either to the original panel at the interim review stage, or during the appeal in the original proceedings. Moreover, Chile itself appeared to state, in response to a question posed by the original panel, that the reference prices determined on an f.o.b. basis were not subject to any adjustment. …

 

… In addition, the Panel expressly stated that its findings and conclusions regarding the measure at issue did not depend on whether, under the original price band system, the reference price was converted to a c.i.f. basis. In other words, even assuming arguendo that this aspect of the operation of the original price band system was misunderstood in the original proceedings, this misunderstanding would not have affected the Panel’s findings with respect to the measure at issue, and, therefore, even its correction would not have assisted Chile in these proceedings.

 

We also recall that, in Mexico — Corn Syrup (Article 21.5 — US), the Appellate Body declined to “revisit the original panel report” because that report had “been adopted and … these Article 21.5 proceedings concern a subsequent measure”. In this regard, the Appellate Body referred to Articles 3.2 and 3.3 of the DSU and the importance of security, predictability, and the prompt settlement of disputes. Moreover, we are mindful that adopted panel and Appellate Body reports must be accepted by the parties to a dispute. These same considerations must also be taken into account in this appeal, and they confirm our view that the Panel did not, in this case, fail to comply with its duties under Article 11 of the DSU in declining to correct the alleged misunderstanding concerning the original price band system.

 
S.7.3 Article 11 of the DSU — Objective assessment of the facts     back to top

S.7.3.1 EC — Hormones, para. 132
(WT/DS26/AB/R, WT/DS48/AB/R)

 

Under Article 17.6 of the DSU, appellate review is limited to appeals on questions of law covered in a panel report and legal interpretations developed by the panel. Findings of fact, as distinguished from legal interpretations or legal conclusions, by a panel are, in principle, not subject to review by the Appellate Body. The determination of whether or not a certain event did occur in time and space is typically a question of fact; for example, the question of whether or not Codex has adopted an international standard, guideline or recommendation on MGA is a factual question. Determination of the credibility and weight properly to be ascribed to (that is, the appreciation of) a given piece of evidence is part and parcel of the fact finding process and is, in principle, left to the discretion of a panel as the trier of facts. The consistency or inconsistency of a given fact or set of facts with the requirements of a given treaty provision is, however, a legal characterization issue. It is a legal question. …

 

S.7.3.2 EC — Hormones, para. 133
(WT/DS26/AB/R, WT/DS48/AB/R)

 

… when may a panel be regarded as having failed to discharge its duty under Article 11 of the DSU to make an objective assessment of the facts before it? Clearly, not every error in the appreciation of the evidence (although it may give rise to a question of law) may be characterized as a failure to make an objective assessment of the facts … The duty to make an objective assessment of the facts is, among other things, an obligation to consider the evidence presented to a panel and to make factual findings on the basis of that evidence. The deliberate disregard of, or refusal to consider, the evidence submitted to a panel is incompatible with a panel’s duty to make an objective assessment of the facts. The wilful distortion or misrepresentation of the evidence put before a panel is similarly inconsistent with an objective assessment of the facts. “Disregard” and “distortion” and “misrepresentation” of the evidence, in their ordinary signification in judicial and quasi-judicial processes, imply not simply an error of judgment in the appreciation of evidence but rather an egregious error that calls into question the good faith of a panel. A claim that a panel disregarded or distorted the evidence submitted to it is, in effect, a claim that the panel, to a greater or lesser degree, denied the party submitting the evidence fundamental fairness, or what in many jurisdictions is known as due process of law or natural justice.

 

S.7.3.3 EC — Hormones, paras. 135-136
(WT/DS26/AB/R, WT/DS48/AB/R)

 

… it is generally within the discretion of the Panel to decide which evidence it chooses to utilize in making findings. …

 

The European Communities argues that the Panel failed to request the submission of data on MGA and contends that this failure constituted a violation of Article 11 of the DSU. However, we see nothing in Article 11 to suggest that there is an obligation on the Panel to gather data relating to MGA and that it was therefore required to request the submission of this data.

 

S.7.3.4 EC — Hormones, para. 138
(WT/DS26/AB/R, WT/DS48/AB/R)

 

… The Panel cannot realistically refer to all statements made by the experts advising it and should be allowed a substantial margin of discretion as to which statements are useful to refer to explicitly. …

 

S.7.3.5 Australia — Salmon, para. 267
(WT/DS18/AB/R)

 

… in response to Australia’s contention that the Panel failed to accord “due deference” to matters of fact it put forward, we note that Article 11 of the DSU calls upon panels to “make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements”. Therefore, the function of this Panel was to assess the facts in a manner consistent with its obligation to make such an “objective assessment of the matter before it”. We believe the Panel has done so in this case. Panels, however, are not required to accord to factual evidence of the parties the same meaning and weight as do the parties.

 

S.7.3.6 Korea — Alcoholic Beverages, para. 164
(WT/DS75/AB/R, WT/DS84/AB/R)

 

We are bound to conclude that Korea has not succeeded in showing that the Panel has committed any egregious errors that can be characterized as a failure to make an objective assessment of the matter before it. Korea’s arguments, when read together with the Panel Report and the record of the Panel proceedings, do not disclose that the Panel has distorted, misrepresented or disregarded evidence, or has applied a “double standard” of proof in this case. It is not an error, let alone an egregious error, for the Panel to fail to accord the weight to the evidence that one of the parties believes should be accorded to it.

 

S.7.3.7 Japan — Agricultural Products II, para. 127
(WT/DS76/AB/R)

 

… Article 13 of the DSU allows a panel to seek information from any relevant source and to consult individual experts or expert bodies to obtain their opinion on certain aspects of the matter before it. In our Report in United States Import Prohibition of Certain Shrimp and Shrimp Products (“United States Shrimp”), we noted the “comprehensive nature” of this authority, and stated that this authority is “indispensably necessary” to enable a panel to discharge its duty imposed by Article 11 of the DSU to “make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements … ” [Appellate Body Report, para. 106].

 

S.7.3.8 Japan — Agricultural Products II, para. 129
(WT/DS76/AB/R)

 

Article 13 of the DSU and Article 11.2 of the SPS Agreement suggest that panels have a significant investigative authority. However, this authority cannot be used by a panel to rule in favour of a complaining party which has not established a prima facie case of inconsistency based on specific legal claims asserted by it. A panel is entitled to seek information and advice from experts and from any other relevant source it chooses, pursuant to Article 13 of the DSU and, in an SPS case, Article 11.2 of the SPS Agreement, to help it to understand and evaluate the evidence submitted and the arguments made by the parties, but not to make the case for a complaining party.

 

S.7.3.9 Japan — Agricultural Products II, para. 141
(WT/DS76/AB/R)

 

… not every failure by the Panel in the appreciation of the evidence before it can be characterized as failure to make an objective assessment of the facts as required by Article 11 of the DSU. Only egregious errors constitute a failure to make an objective assessment of the facts as required by Article 11 of the DSU.

 

S.7.3.10 India — Quantitative Restrictions, paras. 149, 151
(WT/DS90/AB/R)

 

… The Panel gave considerable weight to the views expressed by the IMF in its reply to these questions. However, nothing in the Panel Report supports India’s argument that the Panel delegated to the IMF its judicial function to make an objective assessment of the matter. A careful reading of the Panel Report makes clear that the Panel did not simply accept the views of the IMF. The Panel critically assessed these views and also considered other data and opinions in reaching its conclusions.

 

 

We conclude that the Panel made an objective assessment of the matter before it. …

 

S.7.3.11 Korea — Dairy, para. 137
(WT/DS98/AB/R)

 

… However, under Article 11 of the DSU, a panel is charged with the mandate to determine the facts of the case and to arrive at factual findings. In carrying out this mandate, a panel has the duty to examine and consider all the evidence before it, not just the evidence submitted by one or the other party, and to evaluate the relevance and probative force of each piece thereof. …

 

… The determination of the significance and weight properly pertaining to the evidence presented by one party is a function of a panel’s appreciation of the probative value of all the evidence submitted by both parties considered together.

 

S.7.3.11A US — Wheat Gluten, para. 151
(WT/DS166/AB/R)

 

… although the task of panels under Article 11 relates, in part, to its assessment of the facts, the question whether a panel has made an “objective assessment” of the facts is a legal one, that may be the subject of an appeal (emphasis added). However, in view of the distinction between the respective roles of the Appellate Body and panels, we have taken care to emphasize that a panel’s appreciation of the evidence falls, in principle, “within the scope of the panel’s discretion as the trier of facts” (emphasis added). In assessing the panel’s appreciation of the evidence, we cannot base a finding of inconsistency under Article 11 simply on the conclusion that we might have reached a different factual finding from the one the panel reached. Rather, we must be satisfied that the panel has exceeded the bounds of its discretion, as the trier of facts, in its appreciation of the evidence. As is clear from previous appeals, we will not interfere lightly with the panel’s exercise of its discretion.

 

S.7.3.12 US — Shrimp (Article 21.5 — Malaysia), para. 95
(WT/DS58/AB/RW)

 

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”.

 

S.7.3.12A EC — Asbestos, para. 161
(WT/DS135/AB/R)

 

The same holds true in this case. The Panel enjoyed a margin of discretion in assessing the value of the evidence, and the weight to be ascribed to that evidence. The Panel was entitled, in the exercise of its discretion, to determine that certain elements of evidence should be accorded more weight than other elements — that is the essence of the task of appreciating the evidence.

 

S.7.3.12B EC — Sardines, para. 299
(WT/DS231/AB/R)

 

… As we have stated in several previous appeals, panels enjoy a discretion as the trier of facts; they enjoy “a margin of discretion in assessing the value of the evidence, and the weight to be ascribed to that evidence”. We have also said that we will not “interfere lightly” with the Panel’s appreciation of the evidence: we will not intervene solely because we might have reached a different factual finding from the one the panel reached; we will intervene only if we are “satisfied that the panel has exceeded the bounds of its discretion, as the trier of facts, in its appreciation of the evidence”.

 

S.7.3.13 EC — Sardines, para. 301
(WT/DS231/AB/R)

 

… The interim review stage is not an appropriate time to introduce new evidence. We recall that Article 15 of the DSU governs the interim review. Article 15 permits parties, during that stage of the proceedings, to submit comments on the draft report issued by the panel, and to make requests “for the panel to review precise aspects of the interim report”. At that time, the panel process is all but completed; it is only — in the words of Article 15 — “precise aspects” of the report that must be verified during the interim review. And this, in our view, cannot properly include an assessment of new and unanswered evidence. Therefore, we are of the view that the Panel acted properly in refusing to take into account the new evidence during the interim review, and did not thereby act inconsistently with Article 11 of the DSU.

 

S.7.3.14 US — Carbon Steel, para. 142
(WT/DS213/AB/R, WT/DS213/AB/R/Corr.1)

 

… Article 11 requires panels to take account of the evidence put before them and forbids them to wilfully disregard or distort such evidence. Nor may panels make affirmative findings that lack a basis in the evidence contained in the panel record. Provided that panels’ actions remain within these parameters, however, we have said that “it is generally within the discretion of the Panel to decide which evidence it chooses to utilize in making findings”, and, on appeal, we “will not interfere lightly with a panel’s exercise of its discretion”.

 

S.7.3.15 US — Carbon Steel, para. 153
(WT/DS213/AB/R, WT/DS213/AB/R/Corr.1)

 

We also wish to underline that although panels enjoy a discretion, pursuant to Article 13 of the DSU, to seek information “from any relevant source”, Article 11 of the DSU imposes no obligation on panels to conduct their own fact-finding exercise, or to fill in gaps in the arguments made by parties. In consequence, given that the European Communities itself had submitted no evidence — other than the text of the provision — on this point, the Panel did not act inconsistently with Article 11 in refraining from seeking additional information on its own initiative.

 

S.7.3.16 EC — Bed Linen (Article 21.5 — India), para. 177
(WT/DS141/AB/RW)

 

India has not persuaded us that the Panel in this case exceeded its discretion as the trier of facts. In our view, the Panel assessed and weighed the evidence submitted by both parties, and ultimately concluded that the European Communities had information on all relevant economic factors listed in Article 3.4. It is not “an error, let alone an egregious error”, for the Panel to have declined to accord to the evidence the weight that India sought to have accorded to it. We, therefore, reject India’s argument that, by failing to shift the burden of proof, the Panel did not properly discharge its duty to assess objectively the facts of the case as required by Article 11 of the DSU.

 

S.7.3.17 EC — Bed Linen (Article 21.5 — India), para. 181
(WT/DS141/AB/RW)

 

… Specifically, India argues that the Panel did not make an objective assessment of the facts of the case because the Panel distorted the evidence by placing greater weight on the statements made by the European Communities than on those made by India. As we stated earlier, the weighing of the evidence is within the discretion of the Panel as the trier of facts, and there is no indication in this case that the Panel exceeded the bounds of this discretion. …

 

S.7.3.18 Japan — Apples, para. 221
(WT/DS245/AB/R)

 

… Since EC — Hormones, the Appellate Body has consistently emphasized that, within the bounds of their obligation under Article 11 to make an objective assessment of the facts of the case, panels enjoy a “margin of discretion” as triers of fact. Panels are thus “not required to accord to factual evidence of the parties the same meaning and weight as do the parties” and may properly “determine that certain elements of evidence should be accorded more weight than other elements”.

 

S.7.3.19 Japan — Apples, para. 222
(WT/DS245/AB/R)

 

Consistent with this margin of discretion, the Appellate Body has recognized that “not every error in the appreciation of the evidence (although it may give rise to a question of law) may be characterized as a failure to make an objective assessment of the facts”. When addressing claims under Article 11 of the DSU, the Appellate Body does not “second-guess the Panel in appreciating either the evidentiary value of … studies or the consequences, if any, of alleged defects in [the evidence]”. …

 

… Where parties challenging a panel’s fact-finding under Article 11 have failed to establish that a panel exceeded the bounds of its discretion as the trier of facts, the Appellate Body has not “interfere[d]” with the findings of the panel.

 

S.7.3.20 US — Oil Country Tubular Goods Sunset Reviews, para. 313
(WT/DS268/AB/R)

 

In any event, we consider that the Panel’s decision not to rely on the statements of the USITC before domestic courts and before a NAFTA panel relates to the weighing of evidence. …

 

 

The Appellate Body has consistently emphasized that, within the confines of their obligation under Article 11 of the DSU to make “an objective assessment of the facts of the case”, panels enjoy a “margin of discretion” as triers of facts. Accordingly, we see no reason to interfere with the Panel’s treatment of the USITC’s statements before domestic courts and before a NAFTA panel.

 

S.7.3.21 US — Upland Cotton, para. 399
(WT/DS267/AB/R)

 

… Pursuant to Article 17.6 of the DSU, appeals are “limited to issues of law covered in the panel report and legal interpretations developed by the panel”. To the extent that the United States’ arguments concern the Panel’s appreciation and weighing of the evidence, we note from the outset that the Appellate Body will not interfere lightly with the Panel’s discretion “as the trier of facts”. At the same time, the Appellate Body has previously pointed out that the “consistency or inconsistency of a given fact or set of facts with the requirements of a given treaty provision is … a legal characterization issue”. Whether the Panel properly interpreted the requirements of Article 6.3(c) of the SCM Agreement and properly applied that interpretation to the facts in this case is a legal question. This question is different from whether the Panel made “an objective assessment of the matter before it, including an objective assessment of the facts of the case”, in accordance with Article 11 of the DSU. Therefore, the Panel’s application of the legal requirements of Article 6.3(c) of the SCM Agreement to the facts of this case falls within the scope of our review in this appeal, despite the fact that the United States does not claim that the Panel erred under Article 11 of the DSU.

 

S.7.3.22 US — Upland Cotton, para. 458
(WT/DS267/AB/R)

 

Unlike in certain other instances under the WTO agreements, a panel conducting an analysis under Article 6.3(c) of the SCM Agreement is the first trier of facts, rather than a reviewer of factual determinations made by a domestic investigating authority. Bearing this in mind, we underline the responsibility of panels in gathering and analysing relevant factual data and information in assessing claims under Article 6.3(c) in order to arrive at reasoned conclusions. In this case, the voluminous evidentiary record before the Panel included several economic studies, and substantial data and information. For its part, the Panel posed a large number of questions to which the parties submitted detailed answers. Overall, the Panel evidently conducted an extensive analysis, but we believe that, in its reasoning, the Panel could have provided a more detailed explanation of its analysis of the complex facts and economic arguments arising in this dispute. The Panel could have done so in order to demonstrate precisely how it evaluated the different factors bearing on the relationship between the price-contingent subsidies and significant price suppression. Nevertheless, in the light of the Panel’s examination of the relevant evidence, coupled with its legal reasoning, we find no legal error in the Panel’s causation analysis.

 

S.7.3.23 US — Upland Cotton, para. 663
(WT/DS267/AB/R)

 

… The United States is not asking us to review the Panel’s factual findings, nor is it arguing that the Panel’s assessment of the matter was not objective. Instead, the United States’ claim relates to the application of the legal standard set out in item (j) of the Illustrative List of Export Subsidies to the specific facts of this case. It is an issue of legal characterization. Thus, we do not agree with Brazil’s contention that the United States was under an obligation to bring its claim under Article 11 of the DSU. Consequently, our inquiry will be limited to the Panel’s application of the law to the facts in this case.

 

S.7.3.24 US — Upland Cotton, para. 686
(WT/DS267/AB/R)

 

We understand Brazil to argue that the Panel erred both in the application of Article 10.1 of the Agreement on Agriculture and in its assessment of the matter pursuant to Article 11 of the DSU. As we explained earlier, the application of a legal rule to the specific facts of a case is an issue of legal characterization. In this case, we understand that Brazil’s claim under Article 11 of the DSU is additional to its claim of legal error in respect of Article 10.1. We thus turn first to Brazil’s claim that the Panel erred in its application of Article 10.1 of the Agreement on Agriculture to the facts before it.

 

S.7.3.25 US — Gambling, para. 363
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… the Panel had before it conflicting evidence as to the relationship between the IHA, on the one hand, and the measures at issue, on the other. We have already referred to the discretion accorded to panels, as fact-finders, in the assessment of the evidence. As the Appellate Body has observed on previous occasions, “not every error in the appreciation of the evidence (although it may give rise to a question of law) may be characterized as a failure to make an objective assessment of the facts”.

 

S.7.3.26 Dominican Republic — Import and Sale of Cigarettes, para. 82
(WT/DS302/AB/R)

 

The Dominican Republic also submits that the Panel “misunderstood the proposition for which Exhibit DR-8 was offered”, because “[t]he Panel … incorrectly focused on the relationship between smuggling and forgery”, whereas “Exhibit DR-8 was offered as evidence of (a) smuggling and, separately, (b) forgery of tax stamps of a product in respect of which the Dominican Republic allows stamps to be affixed outside its territory.” In our view, the Panel did not act in a manner inconsistent with Article 11 of the DSU in not finding that Memo DAT-No. 46 “adds any conclusive elements as relate to the relationship between the seizure of alcoholic beverages and the possible forgery of tax stamps”. A panel does not act in a manner inconsistent with Article 11 of the DSU simply because it draws inferences from some of the evidence that do not coincide with the reason for which a party adduced it.

 

S.7.3.27 Dominican Republic — Import and Sale of Cigarettes, para. 84
(WT/DS302/AB/R)

 

The Dominican Republic disagrees with the Panel’s position that Exhibits DR-8 and DR-29 do not establish a causal link between allowing stamps to be affixed abroad and forgery of tax stamps. It contends that such a causal link exists, basing its contention on an inference it draws from evidence of smuggling and forgery of tax stamps with respect to alcohol products. However, a mere divergence of views between a party and a panel on the inferences to be drawn from pieces of evidence is not a sufficient ground to conclude that the Panel failed to “make … an objective assessment of the facts of the case”. …

 

S.7.3.28 Mexico — Anti-Dumping Measures on Rice, paras. 273-274
(WT/DS295/AB/R)

 

… we are of the view that this aspect of Mexico’s appeal should have been more appropriately brought under Article 11 of the DSU. Mexico’s argument is premised on the Panel’s purported failure to read the challenged provisions of the FTA in the light of another FTA provision that Mexico brought to the attention of the Panel. Mexico alleges that the Panel “disregarded” this evidence and “made unsubstantiated findings” on the mandatory nature of the challenged provisions of the FTA “virtually without undertaking any relevant analysis”. Mexico’s claim of error, therefore, rests on the Panel’s failure to conduct its analysis in a proper and impartial manner: Mexico does not contest, on the merits, the Panel’s decision rejecting the supposed import of Article 2 for the interpretation of the other provisions of the FTA.

 

In this light, Mexico’s claim on appeal appears to be a traditional Article 11 claim challenging the Panel’s failure to accord sufficient weight to evidence submitted by one of the parties. …

 

S.7.3.29 Mexico — Anti-Dumping Measures on Rice, para. 330
(WT/DS295/AB/R)

 

… The English translation of Article 93V that was provided to the Panel by the United States was the official WTO translation of these notifications. Although Mexico argued in its submissions to the Panel that Article 93V was not mandatory — based in part on the opening language of Article 93 — Mexico never questioned the use of these official WTO translations as the basis for the Panel’s examination. We do not see how the Panel can be said to have failed to make an objective assessment when it relied on an official WTO English translation of Mexico’s law, to which Mexico itself raised no objection. Therefore, we find that, in its interpretation of Article 93V of the FTA, the Panel did not fail to fulfil its obligations under Article 11 of the DSU.

 

S.7.3.30 Mexico — Taxes on Soft Drinks, paras. 82-83
(WT/DS308/AB/R)

 

Mexico argues, “separately and in addition” to the previous errors, that the Panel failed to make “an objective assessment of the facts”, as required by Article 11 of the DSU, in finding that “Mexico has not established that its measures contribute to securing compliance in the circumstances of this case.” Mexico argues that “[t]he evidence on the record demonstrates that the effects of the measures at issue have contributed to securing compliance in the circumstances of this case …

 

… we held that Mexico’s measures do not constitute measures “to secure compliance with laws or regulations”, within the meaning of Article XX(d) of the GATT 1994. Therefore, Mexico’s claim under Article 11 of the DSU is predicated on an interpretation of Article XX(d) of the GATT 1994 that we have found to be incorrect. Since Mexico’s measures cannot be justified under Article XX(d) as a matter of law, we reject Mexico’s claim under Article 11 of the DSU.

 

S.7.3.31 US — Zeroing (EC), paras. 213-214
(WT/DS294/AB/R, WT/DS294/AB/R/Corr.1)

 

It seems to us that the Panel took into account all of the evidence placed before it and sought verification of its accuracy. Moreover, the Panel set out sufficiently the basis for its conclusions on the evidence. We disagree with the United States that the Panel did not assess objectively the issue of whether the zeroing methodology, as it relates to original investigations in which the weighted-average-to-weighted average comparison method is used to calculate margins of dumping, is inconsistent, as such, with Article 2.4.2.We also disagree with the United States that the Panel’s analysis “relie[d] on nothing more than the fact that the USDOC has engaged in zeroing in the past using computers”. Instead, as discussed above, the Panel had before it evidence including standard computer programs used by the USDOC to calculate margins of dumping, the Anti-Dumping Manual, expert opinions, and the Standard Zeroing Procedures. …

 

We … do not agree with the United States that the Panel erred simply because it did not apply the mandatory/discretionary distinction in analysing and finding a violation of Article 2.4.2 of the Anti-Dumping Agreement. As the Appellate Body has said [in US — Corrosion-Resistant Steel Sunset Review, paragraph 93], “the import of the ‘mandatory/discretionary distinction’ may vary from case to case”. In the light of the above, we conclude that the Panel did not act inconsistently with its obligations under Article 11 of the DSU.

 

S.7.3.32 EC — Selected Customs Matters, para. 258
(WT/DS315/AB/R)

 

With respect to draft EC Regulation 2171/2005, we disagree with the European Communities that the Panel did not consider this draft Regulation. Draft EC Regulation 2171/2005 was discussed by the Panel in footnote 580 to paragraph 7.305 of the Panel Report. The European Communities might have wished the Panel had attached more weight than it did to this piece of evidence. It is, however, well established that the weighing of the evidence is, in principle, within the discretion of the panel as the trier of facts. Thus, the Panel was “not required to accord to factual evidence of the parties the same meaning and weight as do the parties”. We also recall that “a mere divergence of views between a party and a panel on the inferences to be drawn from pieces of evidence is not a sufficient ground to conclude that the Panel failed to ‘make … an objective assessment of the facts of the case’ ”.

 

S.7.3.33 US — Zeroing (Japan), para. 82
(WT/DS322/AB/R)

 

As we see it, the United States’ challenge under Article 11 of the DSU is directed at the Panel’s appreciation and weighing of the evidence. The Appellate Body has stated on several occasions that panels enjoy a certain margin of discretion in assessing the credibility and weight to be ascribed to a given piece of evidence. At the same time, the Appellate Body has underscored that Article 11 of the DSU requires panels “to take account of the evidence put before them and forbids them to wilfully disregard or distort such evidence”. Moreover, panels must not “make affirmative findings that lack a basis in the evidence contained in the panel record”. Provided that a panel’s assessment of evidence remains within these parameters, the Appellate Body will not interfere with the findings of the panel.

 

S.7.3.34 US — Zeroing (Japan), para. 86
(WT/DS322/AB/R)

 

The United States argues that the statements which the Panel deemed to reflect a “deliberate policy” consist “primarily of quotations from one assessment review”. Although this may be so, we cannot fault the Panel for concluding that these statements, when considered in conjunction with the other evidence before the Panel, lend support to the conclusion that a single rule or norm of general and prospective application that provides for disregarding negative comparison results exists. As the Appellate Body has previously said, the appreciation of “a given piece of evidence is part and parcel of the fact-finding process and is, in principle, left to the discretion of a panel as the trier of facts”.

 

S.7.3.35 US — Zeroing (Japan), para. 87
(WT/DS322/AB/R)

 

The thrust of the United States’ argument is that context-specific evidence is required to demonstrate the existence of the zeroing procedures in T-T and W-T comparisons in original investigations. In other words, according to the United States, the existence of a rule or norm requiring the application of zeroing must be examined separately for each comparison methodology and for each type of antidumping proceeding. Japan submitted evidence to the Panel indicating that zeroing is a constant feature whenever a margin of dumping is calculated regardless of the comparison methodology used. In contrast, the United States did not adduce evidence of a single case in which zeroing was not applied. Nor did it indicate how the use of alternative comparison methodologies would make a difference in the operation or application of the zeroing procedures. Moreover, the United States did not explain why the rationale underlying the zeroing procedures in W-W comparisons in original investigations, or W-T comparisons in periodic reviews, does not apply to the calculation of margins of dumping on the basis of T-T and W-T comparisons in original investigations. The fact that the consistency of zeroing may be challenged in relation to a specific comparison methodology, or a specific type of anti-dumping proceeding, does not necessarily mean that the existence of a general rule or norm directing its use must be established through evidence of the actual application of those procedures in all possible situations, as long as they were applied every time the occasion arose.

 

S.7.3.36 US — Zeroing (Japan), para. 88
(WT/DS322/AB/R)

 

In sum, we agree with the Panel’s understanding of the Appellate Body’s previous jurisprudence and the manner in which the Panel framed the question before it. We also consider that the Panel had sufficient evidence before it to conclude that the “zeroing procedures” under different comparison methodologies, and in different stages of anti-dumping proceedings, do not correspond to separate rules or norms, but simply reflect different manifestations of a single rule or norm. The Panel also examined ample evidence regarding the precise content of this rule or norm, its nature as a measure of general and prospective application, and its attribution to the United States. In our view, the Panel properly assessed this evidence. We therefore disagree with the United States that the Panel did not assess objectively the issue of whether a single rule or norm exists by virtue of which the USDOC applies zeroing “regardless of the basis upon which export price and normal value are compared and regardless of the type of proceeding in which margins are calculated”.

 

S.7.3.37 Chile — Price Band System (Article 21.5 — Argentina), para. 238
(WT/DS207/AB/RW)

 

… The fact that the Panel did not agree with arguments or evidence proffered by Chile cannot, in itself, establish a failure to consider such evidence or to assess it objectively as required by Article 11.We see no indication that the Panel’s treatment of the evidence was biased or otherwise exceeded the bounds of discretion enjoyed by the Panel as the trier of fact. …

 

S.7.3.38 Chile — Price Band System (Article 21.5 — Argentina), para. 240
(WT/DS207/AB/RW)

 

We are mindful that the information placed before a panel is often voluminous in nature and that the probative value of specific pieces of evidence varies considerably. A panel must examine and consider all of the evidence placed before it, must identify the evidence upon which it has relied in reaching its findings, and must not make findings that are unsupported by evidence. Yet, a panel is also afforded a considerable margin of discretion in its appreciation of the evidence. This means, among other things, that a panel is not required, in its report, to explain precisely how it dealt with each and every piece of evidence on the panel record. As we see it, Chile is trying to have us weigh the evidence differently than did the Panel. Chile may well consider that the Panel should have ascribed more weight to, and relied upon, certain evidence that Chile put forward, or should not have relied on certain evidence submitted by Argentina, but, in the absence of any indication that the Panel ignored or distorted Chile’s evidence, or made findings that were unsupported by any evidence, we see no basis for interfering with the Panel’s exercise of its discretion in this case.

 

S.7.3.39 Brazil — Retreaded Tyres, paras. 196-197
(WT/DS332/AB/R)

 

… The European Communities claims that the Panel engaged in a “wilful exclusion” of evidence relating to the importation of used tyres through court injunctions, even though this evidence was relevant because it demonstrates that Brazilian retreaded tyres are produced with imported casings, and casts doubt on Brazil’s position that domestic casings suitable for retreading are readily available in Brazil.

 

We are not persuaded that the Panel ignored evidence relating to the importation of used tyres through court injunctions in its analysis of the contribution of the Import Ban to the realization of the ends pursued by it. The Panel acknowledged these injunctions and the arguments put forth by the European Communities in its analysis of the conflicting arguments and evidence regarding the level of retreadability of tyres in Brazil. In the end, the Panel ascribed more weight to evidence adduced by Brazil suggesting that “at least some domestic used tyres are being retreaded in Brazil” and that “domestic used tyres are suitable for retreading”. It appears to us that, in proceeding in that manner, the Panel did not exceed the bounds of its discretion as the trier of facts.

 

S.7.3.40 Brazil — Retreaded Tyres, para. 202
(WT/DS332/AB/R)

 

The European Communities also suggests that the Panel erred under Article 11 in its rejection of landfilling as an alternative to the Import Ban because it did not take into account legislation allowing some landfilling of shredded tyres in Brazil. It is true that the Panel did not refer specifically to this legislation in its analysis. We note, however, that Brazil had argued that the legislation in question was exceptional, temporary, and in no way contradicted the existence or risks generally associated with landfilling. A panel enjoys discretion in assessing whether a given piece of evidence is relevant for its reasoning, and is not required to discuss, in its report, each and every piece of evidence.

 

S.7.3.41 US — Upland Cotton (Article 21.5 — Brazil), paras. 291-292
(WT/DS267/AB/RW)

 

Thus, the Panel dismissed the import of the re-estimates data as estimates, yet concluded that the initial estimates provided a “strong indication” that the GSM 102 programme is expected to run at a net cost. However, all the quantitative evidence examined by the Panel, except for the cash basis accounting data submitted by Brazil, are estimates, or projections, of future financial performance. There is no rationale offered by the Panel as to why it marginalized the re-estimates data while, at the same time, accepting the initial estimates as “provid[ing] a strong indication” that the GSM 102 programme is expected to run at a net cost.

 

The Panel’s treatment of the competing evidence submitted by the parties is therefore internally inconsistent. The initial estimates, the re-estimates, and the CCC’s Financial Statements are all routinely produced by the United States Government, yet obvious discrepancies exist among them. For example, both the re-estimates data and the credit guarantee liability figure relate to the financial performance of the CCC’s export credit guarantee programmes up to 2006, but the former project profits, whereas the latter projects losses. The Panel did not reconcile these discrepancies. If this was not possible, the Panel should have provided a reasoned explanation as to why it preferred one category of quantitative evidence over the other. Instead, the Panel dismissed the import of the re-estimates, which were the central piece of evidence relied on by the United States, on the basis of reasoning that, in our view, is internally incoherent, and compounded the matter by relying on evidence that suffered from the same limitation as the re-estimates. The Panel’s treatment of the evidence submitted by the parties lacked even-handedness.

 

S.7.3.42 US — Upland Cotton (Article 21.5 — Brazil), paras. 294-295
(WT/DS267/AB/RW)

 

Our concern with the Panel’s treatment of the re-estimates, however, is not directed towards its weighing of the evidence. Rather, there is a lack of explanation and coherent reasoning by the Panel that led it to marginalize the re-estimates. The Panel was presented with a class of quantitative evidence that is based on estimates, including the initial estimates, the re-estimates, and the CCC’s Financial Statements, but effectively disregarded the re-estimates data submitted by the United States. The error is amplified by the fact that the Panel unquestioningly accepted the initial estimates and CCC Financial Statements submitted by Brazil, although they too are based on estimates. The Panel’s internally incoherent treatment of the same class of quantitative evidence thus vitiates the conclusion it drew based on the financial data submitted by the parties.

 

In sum, we find that, by dismissing the import of the re-estimates data submitted by the United States on the basis of internally inconsistent reasoning, the Panel did not make “an objective assessment of the matter before it, including an objective assessment of the facts of the case”, under Article 11 of the DSU. Consequently, the Panel erred in its intermediate conclusion that “the initial subsidy estimates provide a strong indication that GSM 102 export credit guarantees are provided against premia which are inadequate to cover the long-term operating costs and losses of the GSM 102 programme.

 

S.7.3.43 US — Upland Cotton (Article 21.5 — Brazil), footnote 618 to para. 293
(WT/DS267/AB/RW)

 

… In cases concerning a panel’s examination of determinations by domestic investigating authorities, the Appellate Body has also held that a panel must assess “whether the explanations provided by the authority are ‘reasoned and adequate’ … and [assess] the coherence of its reasoning” [Appellate Body Report, US — Softwood Lumber VI (Article 21.5 — Canada), para. 97]. In cases where a panel operates as the initial trier of facts, such as this one, it would similarly be expected to provide reasoned and adequate explanations and coherent reasoning.

 

S.7.3.44 US — Upland Cotton (Article 21.5 — Brazil), paras. 381, 385
(WT/DS267/AB/RW)

 

… Although its analysis of China’s role may be succinct, the Panel considered, “based on the evidence before it, that while China may play a significant role in the market for upland cotton, this does not diminish the significance of the impact of [United States] subsidies on the world price for upland cotton as a result of their effect on [United States] supply to the world market”. Moreover, we stated above that the evidence submitted by the United States on the role of China in the world cotton trade does not establish that China is a factor that contributes to the suppression of world upland cotton prices. We do not believe, therefore, that the Panel was required to conduct a more thorough analysis of the role of China in the light of the evidence … the Panel did take into account the evidence submitted by the United States on the role of China and properly reached the conclusion that China’s role in the world cotton trade did not impact negatively on world upland cotton prices. For the same reasons, we also do not believe that the Panel failed to provide a “reasoned and adequate explanation” for its conclusions in the light of “possible alternative explanations”, as alleged by the United States.

 

 

The United States has characterized its appeal under Article 6.3(c) of the SCM Agreement as one relating to the Panel’s application of the law to the facts, although it has also brought some claims under Article 11 of the DSU that challenge the objectivity of the Panel’s assessment of the facts. We recognize that the boundary between an issue that is purely factual and one that involves mixed issues of law and fact is often difficult to draw. However, we consider that many of the United States’ claims against the Panel’s evaluation of the elements supporting its finding of significant price suppression are primarily directed at the Panel’s appreciation and weighing of the evidence, and the inferences that the Panel drew from the evidence, both of which fall within its authority that is recognized under Article 11 of the DSU. Therefore, we shall review those claims and arguments raised by the United States concerning the application of the law to the facts under the legal standard of Article 6.3(c) of the SCM Agreement, and those claims and arguments concerning the Panel’s appreciation and weighing of the evidence under Article 11 of the DSU.

 

S.7.3.45 US — Upland Cotton (Article 21.5 — Brazil), paras. 404, 406
(WT/DS267/AB/RW)

 

In our view, the arguments presented by the United States do not succeed in demonstrating that the Panel erred in its evaluation of the economic studies submitted by the United States on the effects of counter-cyclical payments on production. To the contrary, the Panel made a careful evaluation of the studies. … The fact that the Panel accorded to the studies a different meaning and weight than did the United States does not constitute a failure to make an objective assessment of the matter under Article 11 of the DSU.

 

 

We see nothing improper in the Panel’s reasoning that the fact that 83 per cent of cotton planted acreage corresponded directly to upland cotton base acres supports the conclusion that a strongly positive relationship exists between recipients of upland cotton counter-cyclical payments who hold upland cotton base acres and those who continue to plant upland cotton. In any event, we consider that, on this issue, the United States is essentially challenging the inferences drawn by the Panel from the evidence before it, and this is a matter that was within the Panel’s authority as the trier of facts. We note that the United States did not raise a claim under Article 11 of the DSU on this issue.

 

S.7.3.46 US — Upland Cotton (Article 21.5 — Brazil), para. 415
(WT/DS267/AB/RW)

 

The United States has also raised a claim under Article 11 of the DSU that the Panel failed to carry out an objective assessment of the facts, because it “deliberately distorted” the meaning and significance of the evidence on stable United States shares of world upland cotton production and exports, and failed to provide a reasoned and adequate explanation for its conclusions in the light of plausible alternative explanations. We do not consider that the arguments presented by the United States succeed in demonstrating that the Panel erred in its evaluation of the meaning and significance of the evidence on stable United States shares of world upland cotton production and exports. As we explained above, the Panel did not disregard or distort the meaning and significance of such evidence, nor did it fail to provide a reasoned and adequate explanation for its conclusions in the light of plausible alternative explanations. We, therefore, find that the Panel did not fail to carry out an objective assessment of the facts, as required by Article 11 of the DSU.

 

S.7.3.47 US — Upland Cotton (Article 21.5 — Brazil), para. 435
(WT/DS267/AB/RW)

 

… the results of the simulations were one of several elements on which the Panel based its finding under Article 6.3(c) of the SCM Agreement. In our view, the Panel’s assessment of the economic simulations falls within its authority as the trier of facts and we have not been persuaded that the Panel exceeded the bounds of its authority.

 

S.7.3.48 US — Continued Zeroing, para. 331
(WT/DS350/AB/R)

 

Article 11 of the DSU requires a panel to make “an objective assessment of the matter before it, including an objective assessment of the facts of the case”. The Appellate Body has explained that panels enjoy a certain margin of discretion under Article 11 of the DSU in assessing the credibility and weight to be ascribed to a given piece of evidence, and that it will “not interfere lightly” with that discretion. At the same time, the Appellate Body has stated that Article 11 requires panels “to take account of the evidence put before them and forbids them to wilfully disregard or distort such evidence”. In carrying out its mandate under Article 11, “a panel has the duty to examine and consider all the evidence before it, not just the evidence submitted by one or the other party, and to evaluate the relevance and probative force of each piece thereof”. Article 11 requires a panel to consider evidence before it in its totality, which includes consideration of submitted evidence in relation to other evidence. A particular piece of evidence, even if not sufficient by itself to establish an asserted fact or claim, may contribute to establishing that fact or claim when considered in conjunction with other pieces of evidence. We also note, in relation to the question of the totality of the evidence and the burden of proof, the requirement that a complaining party establish a prima facie case in WTO dispute settlement. As the Appellate Body has explained, “a prima facie case is one which, in the absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule in favour of the complaining party presenting the prima facie case”.

 
S.7.4 Article 11 of the DSU — Objective assessment of whether the investigating authority’s explanation is reasoned and adequate     back to top

S.7.4.1 US — Wheat Gluten, paras. 161-162
(WT/DS166/AB/R)

 

… We consider that the Panel’s conclusion is at odds with its treatment and description of the evidence supporting that conclusion. We do not see how the Panel could conclude that the USITC Report did provide an adequate explanation of the allocation methodologies, when it is clear that the Panel itself saw such deficiencies in that Report that it placed extensive reliance on “clarifications” that were not contained in the USITC Report.

 

By reaching a conclusion regarding the USITC Report, which relied so heavily on supplementary information provided by the United States during the Panel proceedings — information not contained in the USITC Report — the Panel applied a standard of review which falls short of what is required by Article 11 of the DSU.

 

S.7.4.2 US — Lamb, para. 103
(WT/DS177/AB/R, WT/DS178/AB/R)

 

Thus, an “objective assessment” of a claim under Article 4.2(a) of the Agreement on Safeguards has, in principle, two elements. First, a panel must review whether competent authorities have evaluated all relevant factors, and, second, a panel must review whether the authorities have provided a reasoned and adequate explanation of how the facts support their determination. Thus, the panel’s objective assessment involves a formal aspect and a substantive aspect. The formal aspect is whether the competent authorities have evaluated “all relevant factors”. The substantive aspect is whether the competent authorities have given a reasoned and adequate explanation for their determination.

 

S.7.4.3 US — Lamb, para. 104
(WT/DS177/AB/R, WT/DS178/AB/R)

 

… Under Article 4.2(a), competent authorities must, as a formal matter, evaluate “all relevant factors”. However, that evaluation is not simply a matter of form, and the list of relevant factors to be evaluated is not a mere “check-list”. …

 

S.7.4.4 US — Lamb, para. 105
(WT/DS177/AB/R, WT/DS178/AB/R)

 

It follows that the precise nature of the examination to be conducted by a panel, in reviewing a claim under Article 4.2 of the Agreement on Safeguards, stems, in part, from the panel’s obligation to make an “objective assessment of the matter” under Article 11 of the DSU and, in part, from the obligations imposed by Article 4.2, to the extent that those obligations are part of the claim. Thus, as with any claim under the provisions of a covered agreement, panels are required to examine, in accordance with Article 11 of the DSU, whether the Member has complied with the obligations imposed by the particular provisions identified in the claim. By examining whether the explanation given by the competent authorities in their published report is reasoned and adequate, panels can determine whether those authorities have acted consistently with the obligations imposed by Article 4.2 of the Agreement on Safeguards.

 

S.7.4.5 US — Cotton Yarn, para. 74
(WT/DS192/AB/R)

 

Our Reports in … disputes under the Agreement on Safeguards spell out key elements of a panel’s standard of review under Article 11 of the DSU in assessing whether the competent authorities complied with their obligations in making their determinations. This standard may be summarized as follows: panels must examine whether the competent authority has evaluated all relevant factors; they must assess whether the competent authority has examined all the pertinent facts and assessed whether an adequate explanation has been provided as to how those facts support the determination; and they must also consider whether the competent authority’s explanation addresses fully the nature and complexities of the data and responds to other plausible interpretations of the data. However, panels must not conduct a de novo review of the evidence nor substitute their judgement for that of the competent authority.

 

S.7.4.6 US — Countervailing Duty Investigation on DRAMS, paras. 186-188
(WT/DS296/AB/R)

 

… we are of the view that the “objective assessment” to be made by a panel reviewing an investigating authority’s subsidy determination will be informed by an examination of whether the agency provided a reasoned and adequate explanation as to: (i) how the evidence on the record supported its factual findings; and (ii) how those factual findings supported the overall subsidy determination. Such explanation should be discernible from the published determination itself. The explanation provided by the investigating authority — with respect to its factual findings as well as its ultimate subsidy determination — should also address alternative explanations that could reasonably be drawn from the evidence, as well as the reasons why the agency chose to discount such alternatives in coming to its conclusions.

 

… A failure to apply the proper standard of review constitutes legal error under Article 11 of the DSU.

 

These general principles reflect the fact that a panel examining a subsidy determination should bear in mind its role as reviewer of agency action, rather than as initial trier of fact. Thus, a panel examining the evidentiary basis for a subsidy determination should, on the basis of the record evidence before the panel, inquire whether the evidence and explanation relied on by the investigating authority reasonably supports its conclusions. In the context of reviewing individual pieces of evidence, for example, a panel should focus on issues such as the accuracy of a piece of evidence, or whether that piece of evidence may reasonably be relied on in support of the particular inference drawn by the investigating authority. …

 

S.7.4.7 US — Softwood Lumber VI (Article 21.5 — Canada), paras. 93, 95
(WT/DS277/AB/RW, WT/DS277/AB/RW/Corr.1)

 

… we examine first the duties that apply to panels in their review of the factual components of the findings made by investigating authorities. The Appellate Body has considered these duties on several previous occasions. It is well established that a panel must neither conduct a de novo review nor simply defer to the conclusions of the national authority. A panel’s examination of those conclusions must be critical and searching, and be based on the information contained in the record and the explanations given by the authority in its published report. A panel must examine whether, in the light of the evidence on the record, the conclusions reached by the investigating authority are reasoned and adequate. What is “adequate” will inevitably depend on the facts and circumstances of the case and the particular claims made, but several general lines of inquiry are likely to be relevant. The panel’s scrutiny should test whether the reasoning of the authority is coherent and internally consistent. The panel must undertake an in-depth examination of whether the explanations given disclose how the investigating authority treated the facts and evidence in the record and whether there was positive evidence before it to support the inferences made and conclusions reached by it. The panel must examine whether the explanations provided demonstrate that the investigating authority took proper account of the complexities of the data before it, and that it explained why it rejected or discounted alternative explanations and interpretations of the record evidence. A panel must be open to the possibility that the explanations given by the authority are not reasoned or adequate in the light of other plausible alternative explanations, and must take care not to assume itself the role of initial trier of facts, nor to be passive by “simply accept[ing] the conclusions of the competent authorities”.

 

 

In US — Countervailing Duty Investigation on DRAMS [at paragraph 184], the Appellate Body further pointed out that the standard of review to be applied in a given case is also a function of the substantive provisions of the specific covered agreements that are at issue in the dispute. In disputes involving a threat of injury determination under the Anti-Dumping Agreement and the SCM Agreement, the provisions of the two Agreements relevant to the standard of review include: Articles 3.1, 3.5, 3.7, 3.8, and 12 of the Anti-Dumping Agreement; and Articles 15.1, 15.5, 15.7, 15.8, and 22 of the SCM Agreement.

 

S.7.4.8 US — Softwood Lumber VI (Article 21.5 — Canada), para. 97
(WT/DS277/AB/RW, WT/DS277/AB/RW/Corr.1)

 

… we observe that it is in the nature of anti-dumping and countervailing duty investigations that an investigating authority will gather a variety of information and data from different sources, and that these may suggest different trends and outcomes. The investigating authority will inevitably be called upon to reconcile this divergent information and data. However, the evidentiary path that led to the inferences and overall conclusions of the investigating authority must be clearly discernible in the reasoning and explanations found in its report. When those inferences and conclusions are challenged, it is the task of a panel to assess whether the explanations provided by the authority are “reasoned and adequate” by testing the relationship between the evidence on which the authority relied in drawing specific inferences, and the coherence of its reasoning. In particular, the panel must also examine whether the investigating authority’s reasoning takes sufficient account of conflicting evidence and responds to competing plausible explanations of that evidence. This task may also require a panel to consider whether, in analysing the record before it, the investigating authority evaluated all of the relevant evidence in an objective and unbiased manner, so as to reach its findings “without favouring the interests of any interested party, or group of interested parties, in the investigation”.

 

S.7.4.9 US — Softwood Lumber VI (Article 21.5 — Canada), para. 98
(WT/DS277/AB/RW, WT/DS277/AB/RW/Corr.1)

 

In sum, a panel charged with reviewing the factual basis for a threat of injury determination must determine whether the investigating authority has provided “a reasoned and adequate explanation” of:

 

(a) how individual pieces of evidence can be reasonably relied on in support of particular inferences, and how the evidence in the record supports its factual findings;

 

(b) how the facts in the record, rather than allegation, conjecture, or remote possibility, support and provide a basis for the overall threat of injury determination;

 

(c) how its projections and assumptions show a high degree of likelihood that the anticipated injury will materialize in the near future; and

 

(d) how it examined alternative explanations and interpretations of the evidence and why it chose to reject or discount such alternatives in coming to its conclusions.

 

S.7.4.10 US — Softwood Lumber VI (Article 21.5 — Canada), para. 99
(WT/DS277/AB/RW, WT/DS277/AB/RW/Corr.1)

 

Moreover, the injunction that panels should not substitute their own conclusions for those of the competent authorities does not mean that all a panel needs to do in order to comply with its duties when reviewing a determination is to consider whether the investigating authority’s findings or conclusions appear to be “reasonable” or “plausible” in the abstract. To the contrary, a panel can assess whether an authority’s explanation for its determination is reasoned and adequate only if the panel critically examines that explanation in the light of the facts and the alternative explanations that were before that authority. A panel’s consideration of whether a certain inference can reasonably be drawn from individual pieces of evidence and/or from evidence in its totality is one of the means by which a panel satisfies its duty to examine whether a determination was based on positive evidence on the record. In its assessment, the panel should seek to review the determination while giving due regard to the approach taken by the investigating authority, or it risks constructing a case different from the one put forward by that authority. Finally, in its assessment of whether the conclusions reached by an investigating authority are reasoned and adequate, “[a] panel may not reject an [investigating authority’s] conclusions simply because the panel would have arrived at a different outcome if it were making the determination itself.”

 

S.7.4.11 US — Softwood Lumber VI (Article 21.5 — Canada), paras. 107, 109-110
(WT/DS277/AB/RW, WT/DS277/AB/RW/Corr.1)

 

According to Canada, … the Panel wrongly “held the investigating authority to a lower standard of care and explanation on the grounds that it made a determination of threat rather than a determination of current material injury” and… “the Panel’s own review was conducted according to a more deferential standard because it involved a threat of injury determination”. …

 

 

… we are not persuaded that the Panel’s statements amount to a denial of the high standard that applies to a threat of injury determination. In particular, the excerpt from the Panel Report relied upon by Canada does not seem, to us, to be inconsistent with the requirement that the reasoning set out by an investigating authority making a determination of threat of injury must clearly disclose the assumptions and extrapolations that were made, on the basis of the record evidence, regarding future occurrences. Nor are the Panel’s statements inconsistent with the requirements that the reasoning of the investigating authority demonstrate that such assumptions and extrapolations were based on positive evidence and not merely on allegation, conjecture, or remote possibility; and show a high degree of likelihood that projected occurrences will occur.

 

At the same time, the Panel’s reasoning does raise two concerns. First, the Panel stated that “predictions based on the observed facts may be less susceptible to being found, on review by a panel, to be outside the range of conclusions that might be reached by an unbiased and objective decision maker on the basis of the facts and in light of the explanations given”. Taken at face value, this could imply a greater likelihood of panels upholding a threat of injury determination, as compared to a determination of current material injury, when those determinations rest on the same level of evidence. Any such implication would be erroneous, but we do not view the Panel’s statement as having such an implication. Of somewhat greater concern, however, is the Panel’s statement that the “possible range of reasonable predictions of the future that may be drawn based on the observed events of the period of investigation may be broader than the range of reasonable conclusions concerning the present that might be drawn based on those same facts”. We are not persuaded that, in making this observation, the Panel intended to express the view that a threat of injury determination must be upheld if the investigating authority’s report discloses the occurrence of injury as one reasonable prediction within the possible range of future occurrences. If this were the Panel’s view, then it would be erroneous.

 

S.7.4.12 US — Softwood Lumber VI (Article 21.5 — Canada), paras. 112-113
(WT/DS277/AB/RW, WT/DS277/AB/RW/Corr.1)

 

We are not persuaded that the Panel erred in stating that its task was to consider “whether the conclusions reached, in light of the explanations given, were such as could have been reached by an unbiased and objective decision maker based on the facts”. Indeed, such a standard is consistent with previous Appellate Body statements on the standard of review, including the appeal in US — Countervailing Duty Investigation on DRAMS, upon which the Panel relied. We do not, however, consider the Panel’s repeated findings, that it had not been demonstrated that an objective and unbiased authority “could not” have reached the same conclusion that the USITC had reached, as amounting to the same standard.

 

Similarly, although we consider that a panel would be acting consistently with the applicable standard of review if it sets out to determine whether an objective and unbiased authority could reasonably find that a particular piece of evidence supports an intermediate factual finding, we are not persuaded that this is the same as the Panel’s version of this standard, which appears simply to involve testing whether the USITC’s conclusions were “not unreasonable”. In our view, the Panel’s repeated references to the USITC’s conclusions as “not unreasonable” suggest that the Panel applied an insufficient degree of scrutiny to the Section 129 Determination and failed to engage in the type of critical and searching analysis called for by Article 11 of the DSU. Inquiring into whether an authority’s finding is “not unreasonable” does not, in our view, necessarily answer the question of whether that finding is based on positive evidence rather than conjecture or remote possibility.

 

S.7.4.13 US — Softwood Lumber VI (Article 21.5 — Canada), para. 117
(WT/DS277/AB/RW, WT/DS277/AB/RW/Corr.1)

 

In our view, a panel is not compelled under Article 11 to “automatically reject” the explanation given by an investigating authority merely because a plausible alternative explanation has been proffered. At the same time, a panel may find the investigating authority’s explanation inadequate when, even though that explanation seemed “reasoned and adequate” at the outset, or in the abstract, it no longer seems so when viewed in the light of the plausible alternatives. In other words, it is not the mere existence of plausible alternatives that renders the investigating authority’s explanation “implausible”. Rather, in undertaking its review of a determination, including the authority’s evaluation (or lack thereof) of alternative interpretations of the evidence, a panel may conclude that conclusions that initially, or in the abstract, seemed “reasoned and adequate” can no longer be characterized as such.

 

S.7.4.14 US — Softwood Lumber VI (Article 21.5 — Canada), para. 137
(WT/DS277/AB/RW, WT/DS277/AB/RW/Corr.1)

 

… The Panel examined, separately, the various USITC findings challenged by Canada, but did not undertake any assessment of whether the totality of the factors and evidence considered supported the ultimate finding of a threat of material injury. In neglecting this aspect of its review, the Panel does not seem to have taken account of the express requirement in Article 3.7 of the Anti-Dumping Agreement and Article 15.7 of the SCM Agreement that “the totality of the factors considered must lead to the conclusion that further [dumped/subsidized] exports are imminent and that, unless protective action is taken, material injury would occur” (emphasis added). This neglect is particularly striking given that the original panel recognized the need to undertake such an analysis, and the Panel asked Canada a specific question in this regard.

 

S.7.4.15 US — Softwood Lumber VI (Article 21.5 — Canada), para. 138
(WT/DS277/AB/RW, WT/DS277/AB/RW/Corr.1)

 

In sum, the Panel’s analysis, viewed as a whole, reveals a number of serious infirmities in the standard of review that it articulated and applied in assessing the consistency of the Section 129 Determination with Articles 3.5 and 3.7 of the Anti-Dumping Agreement and Articles 15.5 and 15.7 of the SCM Agreement. First, the Panel’s repeated reliance on the test that Canada had not demonstrated that an objective and unbiased authority “could not” have reached the conclusion that the USITC did, is at odds with the standard of review that has been articulated by the Appellate Body in previous reports. As we noted earlier, the standard applied by the Panel imposes an undue burden on the complaining party. Secondly, the “not unreasonable” standard employed by the Panel at various reprises is also inconsistent with the standard of review that has been articulated by the Appellate Body in previous reports, and it is even more so for ultimate findings as opposed to intermediate inferences made from particular pieces of evidence. Thirdly, the Panel did not conduct a critical and searching analysis of the USITC’s findings in order to test whether they were properly supported by evidence on the record and were “reasoned and adequate” in the light of alternative explanations of that evidence. Fourthly, the Panel failed to conduct an analysis of whether the totality of the factors and evidence considered by the USITC supported the ultimate finding of a threat of material injury.

 

S.7.4.16 Japan — DRAMs (Korea), para. 159
(WT/DS336/AB/R, WT/DS336/AB/R/Corr.1)

 

In our view, it follows from the requirement that the investigating authority provide a reasoned and adequate explanation for its conclusions, that the underlying rationale behind those conclusions be set out in the investigating authority’s determination. It is on the basis of the rationale or explanation provided by the investigating authority that a panel must examine the consistency of the determination with a covered agreement, including whether the investigating authority has adequately explained how the facts support the determination it has made. Just as a panel must focus in its review on the rationale or explanation provided by the investigating authority in its report, so, too, is the respondent Member precluded during the panel proceedings from offering a new rationale or explanation ex post to justify the investigating authority’s determination.

 
S.7.5 Article 11 of the DSU — No de novo review     back to top

S.7.5.1 US — Lamb, paras. 106-107
(WT/DS177/AB/R, WT/DS178/AB/R)

 

We wish to emphasize that, although panels are not entitled to conduct a de novo review of the evidence, nor to substitute their own conclusions for those of the competent authorities, this does not mean that panels must simply accept the conclusions of the competent authorities. To the contrary, in our view, in examining a claim under Article 4.2(a), a panel can assess whether the competent authorities’ explanation for its determination is reasoned and adequate only if the panel critically examines that explanation, in depth, and in the light of the facts before the panel. Panels must, therefore, review whether the competent authorities’ explanation fully addresses the nature, and, especially, the complexities, of the data, and responds to other plausible interpretations of that data. A panel must find, in particular, that an explanation is not reasoned, or is not adequate, if some alternative explanation of the facts is plausible, and if the competent authorities’ explanation does not seem adequate in the light of that alternative explanation. Thus, in making an “objective assessment” of a claim under Article 4.2(a), panels must be open to the possibility that the explanation given by the competent authorities is not reasoned or adequate.

 

In this respect, the phrase “de novo review” should not be used loosely. If a panel concludes that the competent authorities, in a particular case, have not provided a reasoned or adequate explanation for their determination, that panel has not, thereby, engaged in a de novo review. Nor has that panel substituted its own conclusions for those of the competent authorities. Rather, the panel has, consistent with its obligations under the DSU, simply reached a conclusion that the determination made by the competent authorities is inconsistent with the specific requirements of Article 4.2 of the Agreement on Safeguards.

 

S.7.5.2 US — Lamb, para. 113
(WT/DS177/AB/R, WT/DS178/AB/R)

 

… In arguing claims in dispute settlement, a WTO Member is not confined merely to rehearsing arguments that were made to the competent authorities by the interested parties during the domestic investigation, even if the WTO Member was itself an interested party in that investigation. Likewise, panels are not obliged to determine, and confirm themselves the nature and character of the arguments made by the interested parties to the competent authorities. Arguments before national competent authorities may be influenced by, and focused on, the requirements of the national laws, regulations and procedures. On the other hand, dispute settlement proceedings brought under the DSU concerning safeguard measures imposed under the Agreement on Safeguards may involve arguments that were not submitted to the competent authorities by the interested parties.

 

S.7.5.3 US — Steel Safeguards, paras. 298-299
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… A panel must not be left to wonder why a safeguard measure has been applied.

 

It is precisely by “setting forth findings and reasoned conclusions on all pertinent issues of fact and law”, under Article 3.1, and by providing “a detailed analysis of the case under investigation as well as a demonstration of the relevance of the factors examined”, under Article 4.2(c), that competent authorities provide panels with the basis to “make an objective assessment of the matter before it” in accordance with Article 11. As we have said before, a panel may not conduct a de novo review of the evidence or substitute its judgement for that of the competent authorities. Therefore, the “reasoned conclusions” and “detailed analysis” as well as “a demonstration of the relevance of the factors examined” that are contained in the report of a competent authority, are the only bases on which a panel may assess whether a competent authority has complied with its obligations under the Agreement on Safeguards and Article XIX:1(a) of the GATT 1994. This is all the more reason why they must be made explicit by a competent authority.

 

S.7.5.4 US — Steel Safeguards, para. 303
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)

 

… we cannot accept the United States’ interpretation that a failure to explain a finding does not support the conclusion that the USITC “did not actually perform the analysis correctly, thereby breaching Article 2.1, 4.2, or 4.2(b) [of the Agreement on Safeguards]”. As we stated above, because a panel may not conduct a de novo review of the evidence before the competent authority, it is the explanation given by the competent authority for its determination that alone enables panels to determine whether there has been compliance with the requirements of Article XIX of the GATT 1994 and of Articles 2 and 4 of the Agreement on Safeguards. It may well be that, as the United States argues, the competent authorities have performed the appropriate analysis correctly. However, where a competent authority has not provided a reasoned and adequate explanation to support its determination, the panel is not in a position to conclude that the relevant requirement for applying a safeguard measure has been fulfilled by that competent authority. …

 

S.7.5.5 US — Countervailing Duty Investigation on DRAMS, para. 150
(WT/DS296/AB/R)

 

In our view, having accepted an investigating authority’s approach, a panel normally should examine the probative value of a piece of evidence in a similar manner to that followed by the investigating authority. Moreover, if, as here, an investigating authority relies on individual pieces of circumstantial evidence viewed together as support for a finding of entrustment or direction, a panel reviewing such a determination normally should consider that evidence in its totality, rather than individually, in order to assess its probative value with respect to the agency’s determination. Indeed, requiring that each piece of circumstantial evidence, on its own, establish entrustment or direction effectively precludes an agency from finding entrustment or direction on the basis of circumstantial evidence. Individual pieces of circumstantial evidence, by their very nature, are not likely to establish a proposition, unless and until viewed in conjunction with other pieces of evidence.

 

S.7.5.6 US — Countervailing Duty Investigation on DRAMS, paras. 187-189
(WT/DS296/AB/R)

 

A panel may not reject an agency’s conclusions simply because the panel would have arrived at a different outcome if it were making the determination itself. In addition, in the absence of an allegation that the agency failed to investigate sufficiently or to collect certain information, a panel must limit its examination to the evidence that was before the agency during the course of the investigation, and must take into account all such evidence submitted by the parties to the dispute. In other words, a panel may not conduct a de novo review of the evidence or substitute its judgement for that of the investigating authority. …

 

… the Panel in this case examined whether certain pieces of evidence were sufficient to establish certain conclusions that the USDOC did not seek to draw, at least solely on the basis of those pieces of evidence. Moreover, it failed to examine the evidence in its totality. The Panel thus failed to assess the agency’s determination. Instead, the Panel’s examination reflected its own view of whether entrustment or direction existed in this case; the Panel thereby engaged, improperly, in a de novo review of the evidence before the agency.

 

Furthermore, with respect to the Panel’s refusal to admit certain evidence submitted by the United States, we note that the Panel did not indicate that the evidence was not contained in the record of the underlying investigation. Nevertheless, the Panel excluded such evidence from its consideration in the absence of any legal basis to do so. In addition, the Panel erred in concluding that the USDOC should have been aware of a fact that was not reasonably based on evidence in the agency record, namely, that three creditors exercised mediation rights under the CRPA. In so doing, the Panel essentially “second-guessed” the investigating authority’s analysis of the evidence and thus overstepped the bounds of its review.

 

S.7.5.7 US — Softwood Lumber VI (Article 21.5 — Canada), para. 99
(WT/DS277/AB/RW, WT/DS277/AB/RW/Corr.1)

 

Moreover, the injunction that panels should not substitute their own conclusions for those of the competent authorities does not mean that all a panel needs to do in order to comply with its duties when reviewing a determination is to consider whether the investigating authority’s findings or conclusions appear to be “reasonable” or “plausible” in the abstract. To the contrary, a panel can assess whether an authority’s explanation for its determination is reasoned and adequate only if the panel critically examines that explanation in the light of the facts and the alternative explanations that were before that authority. A panel’s consideration of whether a certain inference can reasonably be drawn from individual pieces of evidence and/or from evidence in its totality is one of the means by which a panel satisfies its duty to examine whether a determination was based on positive evidence on the record. In its assessment, the panel should seek to review the determination while giving due regard to the approach taken by the investigating authority, or it risks constructing a case different from the one put forward by that authority. Finally, in its assessment of whether the conclusions reached by an investigating authority are reasoned and adequate, “[a] panel may not reject an [investigating authority’s] conclusions simply because the panel would have arrived at a different outcome if it were making the determination itself.”

 
S.7.6 Article 11 of the DSU — Temporal scope of review     back to top

S.7.6.1 US — Cotton Yarn, paras. 76-79
(WT/DS192/AB/R)

 

Unlike Article 3 of the Agreement on Safeguards, which provides explicitly for an investigation by competent authorities of a Member, Article 6 of the ATC does not specify either the organ or the procedure through which a Member makes its “determination”. Nevertheless, the above principles concerning the standard of review under Article 11 of the DSU with respect to the Agreement on Safeguards apply equally, in our view, to a panel’s review of a Member’s determination under Article 6 of the ATC. We note that Article 6 does not require the participation of all interested parties in the process leading to the determination. We consider, therefore, that the exercise of due diligence by a Member is all the more important in reaching a determination under Article 6 of the ATC.

 

The exercise of due diligence by a Member cannot imply, however, the examination of evidence that did not exist and that, therefore, could not possibly have been taken into account when the Member made its determination. The demonstration by a Member that a particular product is being imported into its territory in such increased quantities as to cause serious damage (or actual threat thereof) to the domestic industry can be based only on facts and evidence which existed at the time the determination was made. The urgent nature of such an investigation may not permit the Member to delay its determination in order to take into account evidence that might be available only at a future date. Even a determination on the existence of threat of serious injury must be based on projections extrapolating from existing data.

 

In our view, a panel reviewing the due diligence exercised by a Member in making its determination under Article 6 of the ATC has to put itself in the place of that Member at the time it makes its determination. Consequently, a panel must not consider evidence which did not exist at that point in time. A Member cannot, of course, be faulted for not having taken into account what it could not have known when making its determination. If a panel were to examine such evidence, the panel would, in effect, be conducting a de novo review and it would be doing so without having had the benefit of the views of the interested parties. The panel would be assessing the due diligence of a Member in reaching its conclusions and making its projections with the benefit of hindsight and would, in effect, be reinvestigating the market situation and substituting its own judgement for that of the Member. In our view, this would be inconsistent with the standard of a panel’s review under Article 11 of the DSU.

 

Moreover, if a Member that has exercised due diligence in complying with its obligations of investigation, evaluation and explanation, were held responsible before a panel for what it could not have known at the time it made its determination, this would undermine the right afforded to importing Members under Article 6 to take transitional safeguard action when the determination demonstrates the fulfilment of the specific conditions provided for in this Article.

 

S.7.6.2 US — Countervailing Duty Investigation on DRAMS, para. 175
(WT/DS296/AB/R)

 

… The Appellate Body has stated previously that, when assessing an investigating authority’s determination, a panel may not fault the agency for failing to take into account facts that it could not reasonably have known. A panel must therefore limit its examination to the facts that the agency should have discerned from the evidence on record. Where a panel reads evidence with the “benefit of hindsight”, it fails to consider how the evidence should have fairly been understood at the time of the investigation, and thereby fails to make an “objective assessment” in accordance with Article 11 of the DSU.

 

S.7.6.3 EC — Selected Customs Matters, paras. 186, 188
(WT/DS315/AB/R)

 

We agree with the conclusion of the Panel that “the steps and acts of administration that pre-date or post-date the establishment of a panel may be relevant to determining whether or not a violation of Article X:3(a) of the GATT 1994 exists at the time of establishment”. …

 

 

In order to determine whether the measures at issue have been administered at the time of the Panel’s establishment in a manner that is inconsistent with Article X:3(a) of the GATT 1994, the Panel was … entitled to rely on evidence of acts of administration. Thus, it is important to distinguish between, on the one hand, the measures at issue and, on the other hand, acts of administration that have been presented as evidence to substantiate the claim that the measures at issue are administered in a manner inconsistent with Article X:3(a) of the GATT 1994. The Panel failed to make the distinction between measures and pieces of evidence. While there are temporal limitations on the measures that may be within a panel’s terms of reference, such limitations do not apply in the same way to evidence. Evidence in support of a claim challenging measures that are within a panel’s terms of reference may pre-date or post-date the establishment of the panel. A panel is not precluded from assessing a piece of evidence for the mere reason that it pre-dates or post-dates its establishment. In this case, the United States was not precluded from presenting evidence relating to acts of administration before and after the date of Panel establishment. A panel enjoys a certain discretion to determine the relevance and probative value of a piece of evidence that pre-dates or post-dates its establishment.

 

S.7.6.4 EC — Selected Customs Matters, para. 254
(WT/DS315/AB/R)

 

… In our view, the Panel did not err in referring, in its analysis, to “evidence related to instances of administration which occurred after its establishment” [that is to say, in March 2005], because this evidence was relevant to the task of determining whether there was a violation of Article X:3(a) at the time of the establishment of the Panel. The Dutch decree of 8 July 2005 and the German BTI of 19 July 2005 had come into existence within a short time after the establishment of the Panel. In our view, it was not unreasonable for the Panel to consider that this evidence was relevant for assessing how the measures at issue were administered at the time the Panel was established. …

 

S.7.6.5 US — Oil Country Tubular Goods Sunset Reviews (Article 21.5 — Argentina), paras. 167-168
(WT/DS268/AB/RW)

 

… Therefore, we do not consider that Articles 11.3 and 11.4 address the specific question of whether an investigating authority can develop a new evidentiary basis when implementing DSB recommendations and rulings.

 

Neither do Articles 11.3 and 11.4 provide a basis for drawing a distinction between allowing an investigating authority to clarify information, or provide further explanations, on the one hand, and to develop a new factual basis, on the other hand. …

 
S.7.7 Article 11 of the DSU “make such other findings [to] assist the DSB… in giving the rulings”     back to top

S.7.7.1 EC — Export Subsidies on Sugar, para. 331
(WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R)

 

Thus, in addition to ruling on the matter before it, a panel is required [under Article 11 of the DSU] to “make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements”. Such “other findings” could, for instance, relate to implementation, to the extent that such findings “will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements”.

 

S.7.7.2 EC — Export Subsidies on Sugar, para. 335
(WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R)

 

In this case, the Panel’s findings under Articles 3 and 8 of the Agreement on Agriculture were not sufficient to “fully resolve” the dispute. This is because, in declining to rule on the Complaining Parties’ claims under Article 3 of the SCM Agreement, the Panel precluded the possibility of a remedy being made available to the Complaining Parties, pursuant to Article 4.7 of the SCM Agreement, in the event of the Panel finding in favour of the Complaining Parties with respect to their claims under Article 3 of the SCM Agreement. Moreover, in declining to rule on the Complaining Parties’ claims under Article 3 of the SCM Agreement, the Panel failed to discharge its obligation under Article 11 of the DSU by failing to make “such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements”, namely, a recommendation or ruling by the DSB pursuant to Article 4.7. This constitutes false judicial economy and legal error.

 

S.7.7.3 US — Stainless Steel (Mexico), para. 76
(WT/DS344/AB/R)

 

… we recall that the standard of review applicable to disputes under the Anti-Dumping Agreement is set out in both Article 11 of the DSU and Article 17.6 of the Anti-Dumping Agreement. As regards issues of legal interpretation, Article 17.6(ii) provides that:

 

[a] panel shall interpret the relevant provisions of the Agreement in accordance with customary rules of interpretation of public international law. Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities’ measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.

 

The Appellate Body has noted that the customary rules of interpretation of public international law as codified in Articles 31 and 32 of the Vienna Convention apply to the interpretation of the Anti-Dumping Agreement. The Appellate Body has recognized that the second sentence of Article 17.6(ii):

 

presupposes that application of the rules of treaty interpretation in Articles 31 and 32 of the Vienna Convention could give rise to, at least, two interpretations of some provisions of the Anti-Dumping Agreement, which, under that Convention, would both be “permissible interpretations”. In that event, a measure is deemed to be in conformity with the Anti-Dumping Agreement “if it rests upon one of those permissible interpretations”. (original emphasis)

 

In our analysis, we therefore bear in mind that there could be more than one permissible interpretation of a provision of the Anti-Dumping Agreement.

 
S.7.8 Standard of Review: Article 11 of the DSU — Risk assessment under Article 5.1 of the SPS Agreement     back to top

S.7.8.1 US — Continued Suspension / Canada — Continued Suspension, paras. 590-592
(WT/DS320/AB/R, WT/DS321/AB/R)

 

A panel reviewing the consistency of an SPS measure with Article 5.1 must determine whether that SPS measure is “based on” a risk assessment. It is the WTO Member’s task to perform the risk assessment. The panel’s task is to review that risk assessment. Where a panel goes beyond this limited mandate and acts as a risk assessor, it would be substituting its own scientific judgement for that of the risk assessor and making a de novo review and, consequently, would exceed its functions under Article 11 of the DSU. Therefore, the review power of a panel is not to determine whether the risk assessment undertaken by a WTO Member is correct, but rather to determine whether that risk assessment is supported by coherent reasoning and respectable scientific evidence and is, in this sense, objectively justifiable.

 

The Appellate Body has observed that a WTO Member may properly base an SPS measure on divergent or minority views, as long as these views are from qualified and respected sources. This must be taken into account in defining a panel’s standard of review. Accordingly, a panel reviewing the consistency of an SPS measure with Article 5.1 of the SPS Agreement must, first, identify the scientific basis upon which the SPS measure was adopted. This scientific basis need not reflect the majority view within the scientific community but may reflect divergent or minority views. Having identified the scientific basis underlying the SPS measure, the panel must then verify that the scientific basis comes from a respected and qualified source. Although the scientific basis need not represent the majority view within the scientific community, it must nevertheless have the necessary scientific and methodological rigour to be considered reputable science. In other words, while the correctness of the views need not have been accepted by the broader scientific community, the views must be considered to be legitimate science according to the standards of the relevant scientific community. A panel should also assess whether the reasoning articulated on the basis of the scientific evidence is objective and coherent. In other words, a panel should review whether the particular conclusions drawn by the Member assessing the risk find sufficient support in the scientific evidence relied upon. Finally, the panel must determine whether the results of the risk assessment “sufficiently warrant” the SPS measure at issue. Here, again, the scientific basis cited as warranting the SPS measure need not reflect the majority view of the scientific community provided that it comes from a qualified and respected source.

 

A panel may and should rely on the advice of experts in reviewing a WTO Member’s SPS measure, in accordance with Article 11.2 of the SPS Agreement and Article 13.1 of the DSU. In doing so, however, a panel must respect the due process rights of the parties. Moreover, a panel may not rely on the experts to go beyond its limited mandate of review. The purpose of a panel consulting with experts is not to perform its own risk assessment. The role of the experts must reflect the limited task of a panel. The panel may seek the experts’ assistance in order to identify the scientific basis of the SPS measure and to verify that this scientific basis comes from a qualified and respected source, irrespective of whether it represents minority or majority scientific views. It may also rely on the experts to review whether the reasoning articulated on the basis of the scientific evidence is objective and coherent, and whether the particular conclusions drawn by the Member assessing the risk find sufficient support in the evidence. The experts may also be consulted on the relationship between the risk assessment and the SPS measure in order to assist the panel in determining whether the risk assessment “sufficiently warrants” the SPS measure. The consultations with the experts, however, should not seek to test whether the experts would have done a risk assessment in the same way and would have reached the same conclusions as the risk assessor. In other words, the assistance of the experts is constrained by the kind of review that the panel is required to undertake.

 

S.7.8.2 US — Continued Suspension / Canada — Continued Suspension, paras. 594-598
(WT/DS320/AB/R, WT/DS321/AB/R)

 

Next, the Panel referred to its consultations with scientific experts, noting that it had consulted six scientific experts individually, and not as an expert review group. The Panel stated that:

 

Although the Panel is not carrying out its own risk assessment, its situation is similar in that it may benefit from hearing the full spectrum of experts’ views and thus obtain a more complete picture both of the mainstream scientific opinion and of any divergent views.

 

The analogy that the Panel draws between its situation and that of a risk assessor is unfortunate, but is not in itself a sufficient indication that the Panel incorrectly understood the applicable standard of review. We do not think that the Panel meant to suggest that it saw its task under Article 5.1 as requiring it to perform a risk assessment. At the beginning of the statement, the Panel expressly recognizes that it “is not carrying out its own risk assessment”.

 

The Panel then elaborated on the approach it would take in respect of the testimony of the experts:

 

We note that, in some circumstances, only one or two experts have expressed their views on an issue. Sometimes these views were similar or complemented each other. In other circumstances, a larger number of experts expressed opinions and, sometimes, they expressed diverging opinions. While, on some occasions, we followed the majority of experts expressing concurrent views, in some others the divergence of views were such that we could not follow that approach and decided to accept the position(s) which appeared, in our view, to be the most specific in relation to the question at issue and to be best supported by arguments and evidence. (footnotes omitted)

 

The European Communities submits that “the majority view is not probative simply because it represents the majority”. We agree that automatically giving more weight to the testimony of the majority of experts would be too rigid an approach. The fact that a majority in the spectrum of the scientific experts consulted by the Panel had a particular view is not a proper basis for determining whether a WTO Member’s risk assessment complies with the requirements of Article 5.1 and Annex A of the SPS Agreement.

 

Looking at the Panel’s analysis of whether the European Communities specifically assessed the risks arising from the consumption of meat from cattle treated with oestradiol-17β, we note that a significant portion of the Panel’s reasoning consists of summaries of the responses of the experts. It is only after summarizing the experts’ responses that the Panel describes some of the issues discussed in the 1999 Opinion. Given the applicable standard of review and the role of the Panel that is determined by it, the Panel’s analysis should have proceeded differently. The Panel should have first looked at the European Communities’ risk assessment. It should then have determined whether the scientific basis relied upon in that risk assessment came from a respected and qualified source. The Panel should have sought assistance from the scientific experts in confirming that it had properly identified the scientific basis underlying the European Communities’ risk assessment or to determine whether that scientific basis originated in a respected and qualified source. The Panel should also have sought the experts’ assistance in determining whether the reasoning articulated by the European Communities on the basis of the scientific evidence is objective and coherent, so that the conclusions reached in the risk assessment sufficiently warrant the SPS measure. Instead, the Panel seems to have conducted a survey of the advice presented by the scientific experts and based its decisions on whether the majority of the experts, or the opinion that was most thoroughly reasoned or specific to the question at issue, agreed with the conclusion drawn in the European Communities’ risk assessment. This approach is not consistent with the applicable standard of review under the SPS Agreement.

 

S.7.8.3 US — Continued Suspension / Canada — Continued Suspension, paras, 601-602,
(WT/DS320/AB/R, WT/DS321/AB/R)

 

Following the approach that we outlined earlier regarding the applicable standard of review, the first step in the Panel’s analysis should have been to identify what in the European Communities’ risk assessment was the scientific basis for the conclusions on the genotoxicity of oestradiol-17β; verify whether this scientific basis came from a respected and qualified source; and determine whether the reasoning articulated on the basis of that scientific evidence is objective and coherent. As a second step, the Panel should have pursued a similar inquiry concerning the conclusion that the genotoxicity of oestradiol-17β did not permit the establishment of a threshold, as the European Communities submits. In that context, the Panel would have sought the experts’ view as to whether the conclusions reached by the European Communities can find support in the scientific evidence relied upon by the European Communities (even if the expert in question was of a different scientific view).

 

… However, under the applicable standard of review, neither the Panel nor the experts it consulted were called upon to evaluate the correctness of the European Communities’ risk assessment. The Panel’s role was more limited and consisted, as we explained earlier, of identifying the scientific basis and evidence relied upon in the risk assessment; verifying that the scientific evidence comes from respected and qualified sources; and determining whether the reasoning articulated by the European Communities on the basis of the scientific evidence is objective and coherent.

 

S.7.8.4 US — Continued Suspension / Canada — Continued Suspension, paras. 614-615
(WT/DS320/AB/R, WT/DS321/AB/R)

 

… It was not the Panel’s task, much less that of the experts that the Panel consulted, to determine whether there is an appreciable risk of cancer arising from the consumption of meat from cattle treated with oestradiol-17β. Instead, the Panel was called upon to review the European Communities’ risk assessment.

 

… We have found that the Panel did not apply the proper standard of review. This is a legal error and does not fall within the authority of the Panel as the trier of facts. Moreover, we have found instances in which the Panel exceeded its authority in the assessment of the testimony of the scientific experts. By merely reproducing testimony of some experts that would appear to be favourable to the European Communities’ position, without addressing its significance, the Panel effectively disregarded evidence that was potentially relevant for the European Communities’ case. This cannot be reconciled with the Panel’s duty to make an “objective assessment of the facts of the case” pursuant to Article 11 of the DSU.

 

383. In the light of the above, we need not decide here whether the requirements of Articles 11 and 12.7 are applicable to a panel’s consideration of a request for a suggestion pursuant to Article 19.1 of the DSU.     back to text


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