DISPUTE SETTLEMENT SYSTEM TRAINING MODULE: CHAPTER 6
The process — Stages in a typical WTO dispute settlement case
With regard to the content of an Appellate Body report, the DSU prescribes that the Appellate Body must address each of the legal issues and panel interpretations that have been appealed (Articles 17.6 and 17.12 of the DSU). The Appellate Body may uphold, modify or reverse the legal findings and conclusions of the panel (Article 17.13 of the DSU). However, where certain legal findings of the panel are no longer relevant because they are related to or based on a legal interpretation reversed or modified by the division, the Appellate Body sometimes declares such panel findings as “moot and having no legal effect”.
In many cases, the Appellate Body will partly modify the panel’s legal findings and conclusions because it agrees with the panel’s final conclusion but not necessarily with the panel’s reasoning. If the Appellate Body agrees with both, it upholds the panel’s findings and conclusions. Where the Appellate Body disagrees with the panel’s conclusion, it reverses it.
Especially in this latter case, the function of the appellate proceeding must not only be seen in the review of panel reports. There is also a dispute to resolve (Articles 3.3 and 3.2 of the DSU). Where, for instance, the Appellate Body has reversed the panel’s conclusion of a violation of a certain provision, the respondent’s measure might instead be inconsistent with another WTO provision. Often, the complainant has also claimed an inconsistency with this other provision, either in the alternative, or cumulatively. However, often the panel, given its finding of a violation of the former provision, did not address this other alternative claim or it chose not to address the other cumulative claim for reasons of judicial economy. In such a case, if the Appellate Body has limited itself to reversing the panel’s erroneous findings and conclusion, the dispute would not be fully resolved. The complainant would then have to start all over again by initiating a new dispute settlement proceeding.
Two approaches are common in the procedures of many appellate tribunals whose mandate is limited to questions of law. One is to decide the outstanding issue at the appellate level. Indeed, many appellate tribunals have this authority (often without obligation) where the case is “ripe” for such a decision (i.e. no further facts must be explored). The other approach (the only one where a factual question remains open) is to send the case back to the trier of facts. In this situation, the panel is the trier of facts. The authority to send a case back to the lower level is called remand authority but does not exist in the (WTO) system.
Given this absence of remand authority in the WTO, the first approach, that is, having the Appellate Body decide the outstanding issue, becomes more compelling. Indeed, the Appellate Body has on a number of occasions “completed the legal analysis” in order to resolve a dispute. This has been possible only where there were sufficient factual findings in the panel report or undisputed facts in the panel record to enable the Appellate Body to address and decide on the outstanding issue. Where this has not been the case, the Appellate Body has been unable to complete the legal analysis because it is not entitled to make new factual findings. Moreover, an insufficiency of the facts is not the only reason for the Appellate Body has declined to complete the legal analysis. In one instance, in EC — Asbestos, the Appellate Body declined to address a “novel” issue because it had not been argued in sufficient detail at the panel level, either in the case in question or in previous disputes.1
Conclusions and recommendations of the Appellate Body back to top
An Appellate Body report has two sections: the descriptive part and the findings section. The descriptive part contains the factual and procedural background of the dispute and summarizes the arguments of the participants and third participants. In the findings section, the Appellate Body addresses in detail the issues raised on appeal, elaborates its conclusions and reasoning in support of such conclusions, and states whether the appealed panel findings and conclusions are upheld, modified or reversed. It also contains additional relevant conclusions, for instance if the respondent has been found in violation of another WTO provision than the one the panel addressed.
As for recommendations and suggestions, Articles 19 and 26 of the DSU apply to Appellate Body reports as well as to panel reports. Where the conclusion is that the challenged measure is inconsistent with a covered agreement, the Appellate Body recommends that the responding Member bring the inconsistent measure into conformity with its obligations under the covered agreement in question (Article 19.1 of the DSU, first sentence). In practice, these recommendations are addressed to the DSB, which is then to request the Member concerned to bring its measure into conformity with the relevant provisions of WTO law. Like the panel, the Appellate Body may also suggest ways in which the Member concerned could implement the recommendation (Article 19.1 of the DSU, second sentence), but the Appellate Body has not so far made use of this right. When a non-violation complaint succeeds, the Appellate Body would normally recommend that the parties find a mutually satisfactory adjustment (Article 26.1(b) of the DSU).
Finally, the Appellate Body report is circulated to all WTO Members and becomes a public WT/DS document (the symbol ends on “AB/R”, thus WT/DS###/AB/R). The participants frequently receive a confidential copy of the report up to one day in advance.
Withdrawal of an appeal back to top
Rule 30(1) of the Working Procedures permits an appellant to withdraw its appeal at any time. It falls within the discretion of WTO Members not only to initiate disputes, but also to terminate them. The possibility of withdrawing an appeal reflects the preference of the DSU for the parties to find a mutually agreeable solution to their dispute (Article 3.7 of the DSU).
A withdrawal normally terminates an initiated appellate procedure, as happened in India — Autos.2 In that case, the Appellate Body issued a brief Appellate Body report setting out the procedural history of the appeal, and concluded that it had therefore completed its work in view of India’s withdrawal.3
On three occasions, appellants have withdrawn their appeals in order to re-file an appeal shortly thereafter. Twice, this was done for scheduling reasons (i.e. to postpone the entire appeal process by a few weeks).4 More recently, in EC — Sardines, the European Communities withdrew its appeal in response to Peru’s challenge of the notice of appeal. Peru challenged the notice of appeal as insufficiently clear, to which the European Communities reacted by withdrawing and immediately filing a new, more detailed notice of appeal. As in two other cases of withdrawn appeals, the withdrawal was explicitly conditioned upon the right to file a new notice of appeal. Peru then challenged the European Communities’ right to withdraw a notice of appeal conditionally and to file another, second appeal. The Appellate Body rejected Peru’s request to reject the appeal as inadmissible. It saw “no reason to interpret Rule 30 as granting a right to withdraw an appeal only if that withdrawal is unconditional” 5, unless the condition undermines the fair, prompt and effective resolution of the dispute, and as long as the Member in question engages in dispute settlement procedures in good faith.6
Deadline for the completion of the appellate review back to top
Appellate review proceedings must generally be completed within 60 days, and in no case take longer than 90 days from the date when the notice of appeal was filed. When an appellate procedure takes more than 60 days, the Appellate Body must inform the DSB of the reasons for the delay and give an estimate of the time until circulation of the report (Article 17.5 of the DSU). In most appeals thus far, the Appellate Body has circulated its report 90 days after the notification of appeal.7 In a few cases of exceptional circumstances, and with the agreement of the participants, the Appellate Body has circulated its report later than within 90 days.8
The SCM Agreement provides for a shorter appellate deadline in disputes on prohibited subsidies: 30 days as a general time-frame and 60 days as maximum (Article 4.9 of the SCM Agreement). This 60-day maximum has also been exceeded in two appeals.9
1. Appellate Body Report, US — Section 211 Omnibus Appropriations Act, para. 343 with references to the relevant cases. back to text
5. One can conceive of the withdrawal as undoing the first notice of appeal. Therefore, within the deadline for filing , the right of appeal continues to exist. The condition attached to the withdrawal in the present case was not a factual condition and did not reach outside the appellate procedure. It therefore created no procedural obstacles. back to text
7. Completing the process within 60 days is hardly realistic in practice, where the last submission is filed on day 25, the oral hearing takes place on day 30-40, and the last two weeks at least are devoted to translation. back to text