DISPUTE SETTLEMENT SYSTEM TRAINING MODULE: CHAPTER 6
The process — Stages in a typical WTO dispute settlement case
Third parties cannot appeal a panel report.1 However, third parties that have been third parties at the panel stage may also participate in the appeal as a so-called “third participant”. Article 17.4 of the DSU provides that third parties may make written submissions to, and be given an opportunity to be heard by, the Appellate Body.
A WTO Member that has not been a third party at the panel stage, in contrast, is excluded from participation in the appellate review. It cannot “jump on board”, if it identifies its interest in the dispute, for instance, in the light of the content of the panel report. Under the current practice, however, such Members may seek to submit a so-called amicus curiae brief, which the Appellate Body is entitled to accept, but not obliged to consider.2
In the first years of the WTO dispute settlement system, third parties that wanted to participate in the appellate process as third participants had to file a written submission, stating their intention to participate as a third participant in the appeal and explaining the grounds and legal arguments in support of their position, within 25 days after the notice of appeal. Third parties who had not done so had no right to participate in the oral hearing before the Appellate Body. Over the years, however, a practice had developed of admitting such third parties as “passive observers” to the oral hearing, with the (explicit or tacit) agreement of the participants. Against the background of this practice and in an effort to enhance third party participation in appeals, the Working Procedures have recently been changed. They now no longer require a third party to file a third participants’ submission in order to be entitled to attend the oral hearing before the Appellate Body. A third party now has the following options, if it wants to be a third participant in an appellate review, with varying degrees of involvement. The third party may:
- file a third participants submission within 25 days of the notice of appeal, appear at the oral hearing and make an oral statement, if desired (Rules 24(1) and 27(3)(a) of the Working Procedures); or
- not file any submission, but notify the Appellate
Body Secretariat in writing and within 25 days of the intention to appear at
the oral hearing, and make an oral statement, if desired (Rules 24(2) and 27(3)(a)
of the Working Procedures);
- not file any submission, and not make any notification
within 25 days, but notify the Appellate Body Secretariat, preferably
in writing and at the earliest opportunity, of the intention to appear at the
and request to make an oral statement, and make an oral statement if the Appellate
Body has acceded to the request (Rules 24(4) and 27(3)(b) and (c) of the
- not file any submission, and not make any notification within 25 days, but notify the Appellate Body Secretariat, preferably in writing and at the earliest opportunity, of the intention to appear at the oral hearing and appear at the oral hearing as passive observer (Rules 24(4) and 27(3)(b) of the Working Procedures).
Object of an appeal back to top
Appeals are limited to legal questions. They may only address issues of law covered in the panel report and legal interpretations developed by the panel (Article 17.6 of the DSU). An appeal cannot address the facts on which the panel report is based, for example, by requesting the examination of new factual evidence or by re-examining existing evidence. Evaluating the evidence and establishing the facts is the task of panels in the dispute settlement system. The distinction between legal and factual questions is therefore important in defining the scope of appellate review. In the abstract, it seems easy to distinguish between law and facts: e.g. whether or not a national authority has charged a 30% tariff rather than a 20% tariff on the importation of a certain shipment of goods and whether or not vodka and shochu are being produced through the distillation of fermented starch-containing products are clearly facts. More generally speaking, a fact is the occurrence of a certain event in time and space.3
In contrast, how the expression of “like products” in Article III:2 of GATT 1994 is to be interpreted is clearly a question of law. However, many of the more complex questions that regularly arise in disputes are mixed questions of law and facts, or, in other words, questions that can be answered only on the basis of both a factual and a legal assessment. For example, the question of whether shochu and vodka are “like products” in the sense of Article III:2 of GATT 1994 is such a mixed legal and factual question. In such cases, the identification of the legal issue that can be subject to appeal hinges upon a more detailed and differentiated analysis of the question involved. The Appellate Body jurisprudence to date gives some guidance in that regard.
For instance, the legal appreciation of facts, or, in other words, a panel’s application of a legal rule to specific facts, is a legal question and subject to appellate review. As the Appellate Body has stated, “[t]he consistency or inconsistency of a given fact or set of facts with the requirements of a given treaty provision is, however, a legal characterisation issue. It is a legal question”.4
In contrast, the panel’s examination and weighing of the submitted evidence, and its establishment of the facts, fall within the panel’s discretion as the trier of facts and are normally not subject to appeal.5 However, there are limits to the panel’s discretion, to the extent that the panel’s factual examination is subject to legal requirements, the compliance with which is a legal question that can be raised on appeal. Such a legal rule is contained in Article 11 of the DSU which obliges panels to “make an objective assessment of the matter before it, including an objective assessment of the facts of the case”. The question of “whether or not a panel has made an objective assessment of the facts before it, as required by Article 11 of the DSU, is a legal question which, if properly raised on appeal, would fall within the scope of appellate review.” 6 Thus, the Appellate Body can review the panel’s appreciation of the evidence where the panel has exceeded the bounds of its discretion.7 Where exactly those bounds lie remains to be fully explored. The Appellate Body has already had the opportunity to give several examples, which do not exhaust the universe of possible legal errors in the establishment of facts.8 The Appellate Body has ruled that for a panel to “disregard”, “distort” or “misrepresent” evidence, or a panel’s “egregious errors” that would call into question the good faith of a panel, are issues that can be appealed.9
Article 11 of the DSU is also relevant where the issue is whether the panel applied the correct standard of review. This, however, is clearly a legal question and not one of establishing facts, since it relates to determining what legal standard panels must apply. This in turn determines which facts pertaining to which period of time are relevant to the legal examination.
1. Third parties are not directly affected by the decision: it is not their measure which has been found to breach WTO law or to nullify or impair benefits, nor is it their challenge of the measure which has been rejected. back to text