Legal basis for a dispute

4.2 Types of complaints and required allegations in GATT 1994

Non-violation complaint

One might wonder about the legitimacy of the non-violation complaint, given that the WTO Agreement contains all the rights and obligations on which the Members agreed in their negotiations. Why should there be a remedy against actions that are not inconsistent with these rights and obligations, in other words, measures that the WTO Agreement does not preclude?

The reason is that an international trade agreement such as the WTO Agreement can never be a complete set of rules without gaps. As a result, it is possible for WTO Members to take measures that comply with the letter of the agreement, but nevertheless frustrate one of its objectives or undermine trade commitments contained in the agreement. More technically speaking, the benefit a Member legitimately expects from another Member’s commitment under the WTO Agreement can be frustrated both by measures proscribed in the WTO Agreement and by measures consistent with it. If one Member frustrates another Member’s benefit by taking a measure otherwise consistent with the WTO Agreement, this impairs the balance between the mutual trade commitments of the two Members. The non-violation complaint provides for a means to redress this imbalance.

A GATT panel has described the purpose of the unusual remedy of the non-violation complaint as encouraging contracting parties to make tariff concessions. When the value of a tariff concession has been impaired by a contracting party giving that concession as a result of the application of a GATT-consistent measure, the contracting party receiving such concession — whose expectation of improved competitive opportunities is frustrated by that measure — must be given a right of redress.¹

It would be wrong to believe that the non-violation complaint has a wide scope of application and is suitable to address all sorts of measures otherwise consistent with GATT 1994 and the other covered agreements. Panels and the Appellate Body have stated that the remedy in Article XXIII:1(b) “should be approached with caution and should remain an exceptional remedy”.² One panel has added: “The reason for this caution is straightforward. Members negotiate the rules that they agree to follow and only exceptionally would expect to be challenged for actions not in contravention of those rules.” ³

Article 26.1 of the DSU specifically addresses non-violation complaints in the sense of Article XXIII:1(b) of GATT 1994 and requires the complainant to “present a detailed justification in support of any complaint relating to a measure which does not conflict with the relevant covered agreement.” No presumption applies in non-violation cases as regards nullification or impairment. The text of Article XXIII:1(b), combined with the concept of nullification or impairment of a benefit⁴ gives rise to three conditions whose existence a complainant must establish, in order to be successful with a non-violation complaint. These three conditions are: (1) the application of a measure by a Member of the WTO; (2) the existence of a benefit accruing under the applicable agreement; and (3) the nullification or impairment of a benefit as a result of the application of the measure.⁵

The first condition means that the measure applied is attributable to the government of the respondent Member. Purely private conduct, taken by itself, would not satisfy this condition. If a government simply tolerates private restrictive conduct, this also could not be challenged with the non-violation complaint. A different situation is that where the government actively supports or encourages such private actions.⁶ With respect to the second condition, complainants have in the past been able to rely on the legitimate expectation of improved market access opportunities resulting from the relevant tariff concessions. As to the third condition, this benefit is nullified or impaired when the measure in question has the effect of upsetting the competitive relationship between imported and domestic goods and the complainant was not able to reasonably anticipate the application of the measure when it was negotiating the concession.

There have been 14 cases in which a non-violation claim under Article XXIII:1(b) of GATT 1947 has been considered by working parties and panels. In six of these cases, the claim under Article XXIII:1(b) was successful⁷ and, on three of these occasions, the report was adopted by the GATT Council.

Situation complaint  back to top

The negotiating history indicates that Article XXIII:1(c) of GATT 1947, the so-called “situation complaint”, was intended to play a role in situations of macroeconomic emergency (e.g. general depressions, high unemployment, collapse of the price of a commodity, balance-of-payment difficulties). Under GATT 1947 practice, contracting parties relied on Article XXIII:1(c) in a few cases in order to complain about withdrawn concessions, failed re-negotiations of tariff concessions and non-realized expectations on trade flows. However, none of these complaints ever resulted in a panel ruling based on Article XXIII:1(c).⁸ Therefore neither GATT nor WTO jurisprudence provides guidance as to the criteria for a legitimate situation complaint.

From the plain text of Article XXIII:1(c), one can deduce that there needs to be a situation other than those mentioned in subparagraphs (a) and (b) of Article XXIII:1 and nullification or impairment of a benefit (or the impeded attainment of an objective of GATT 1994). Article 26.2(a) of the DSU provides that the complaining party must “present a detailed justification in support of any argument” with respect to the situation complaint.

Article 26.2 of the DSU also provides that the rules and procedures of the DSU apply only to situation complaints up to the circulation of the panel report. Regarding the adoption of a panel report and the surveillance and implementation of recommendations and rulings in these cases, the old dispute settlement rules and procedures contained in the Decision of 12 April 1989⁹ continue to apply. This means that there is no reverse consensus rule applying to the adoption of the panel report and the authorization of the suspension of obligations in the event of non-implementation of rulings with respect to situation complaints. In other words, any Member could block these decisions in the DSB by preventing a positive consensus.¹⁰ So far, this provision has never been invoked by any Member.

Synthesis for practical purposes  back to top

In summary, it can be said that there are two types of complaints which play a practical role in the WTO dispute settlement process. These are the violation complaint and, far less frequently, the non-violation complaint, as described above. It is possible for one case to simultaneously involve both these types of complaints, for instance when raised in the alternative (“if the Panel finds that there is no violation, the complainant submits that it would have to find that there is non-violation nullification or impairment”).¹¹

1. Panel Report, EEC — Oilseeds I, para. 144  back to text

2. Panel Report, Japan — Film, para. 10.37  back to text

3. Panel Report, Japan — Film, para. 10.36  back to text

4. Note that Article 26.1 of the DSU also covers the other kind of non-violation complaint, which combines the “measure applied by a Member” with the impeded “attainment of any objective” of GATT 1994, instead of combining the non-violating measure with “nullification or impairment of a benefit”, as it typically happens in non-violation complaints.  back to text

5. Panel Report, EC — Asbestos, para. 8.283  back to text

6. See also Article 11.3 of the Agreement on Safeguards  back to text

7. Working Party Report, Australia — Ammonium Sulphate, Panel Report, — Germany — Sardines, Panel Report, EC — Citrus, 7 February 1985, unadopted, L/5776, Panel Report, EEC — Canned Fruit  Panel Report, EEC — Oilseeds I, Panel Report, EEC — Oilseeds II  back to text

8. See GATT, Analytical Index, pp. 668-671 (6th updated edition 1995).  back to text

9. BISD 36S/61-67.  back to text

10. Article 26.2 of the DSU also implicitly excludes the possibility of an appeal against a panel report based on a situation complaint. This appears to preclude the Appellate Body from reviewing the legal criteria found by a panel to be the requirements of a valid situation complaint on the basis of Article XXIII:1(c) of GATT 1994 and Article 26.2 of the DSU.  back to text

11. Panel report, Japan — Film, Panel report, EC — Asbestos  back to text