DISPUTE SETTLEMENT SYSTEM TRAINING MODULE: CHAPTER 7
Legal effect of panel and appellate body reports and DSB recommendations and rulings
The previous chapters gave a explanation of the various procedures set out in the DSU. This chapter and the following ones will address specific issues of interest. This chapter addresses the legal effect of rulings made by panels, the Appellate Body and the DSB.
Recommendations and rulings of the DSB
After the DSB adopts a report of a panel (and the Appellate Body), the conclusions and recommendations contained in that report become binding upon the parties to the dispute. The DSU states that, when the parties cannot find a mutually agreeable solution, the first objective is normally to secure the withdrawal of the measure found to be inconsistent with the (WTO) Agreement (Article 3.7 of the DSU). In a successful violation complaint, the panel (and the Appellate Body) has found an inconsistency with the WTO Agreement and has expressed this finding in its conclusions. The panel (and the Appellate Body) then concludes by recommending that the Member concerned bring its measure into conformity with WTO law (Article 19.1 of the DSU). Article 21.1 of the DSU adds that prompt compliance with the recommendations or rulings of the DSB is essential in order to ensure the effective resolution of disputes.
The DSU clearly stipulates that compensation and suspension of concessions (countermeasures) are only temporary alternatives that fall short of resolving the dispute (Articles 3.7, 21.6 and 22.1 of the DSU). The only permanent remedy is for the losing party to “bring its measure into conformity” with the relevant covered agreements, as provided in Article 19 of the DSU. Moreover, for the reasons explained below, the term “recommendation” in Article 19.1 and the phrase “recommendation and ruling” should not be understood to give the party discretion as to whether to follow the recommendation.
First, it is worth recalling that panels and the Appellate Body only apply WTO law as it is contained in the covered agreements. They cannot add to or diminish the rights and obligations provided in the WTO Agreements (Articles 3.2 and 19.2 of the DSU). A panel’s or the Appellate Body’s conclusion that a certain measure is inconsistent with WTO law therefore merely reflects and declares the legal situation which exists by virtue of the WTO Agreement, independently of the dispute settlement ruling. Because the provisions of the covered agreements constitute binding legal obligations with which all Members must comply 1, such provisions already contain an obligation to refrain from any inconsistent action. The (adopted) report of a panel or the Appellate Body, therefore, constitutes an obligation for the losing party to put to an end the WTO inconsistency (and is in addition to the primary obligation not to maintain WTO-inconsistent measures in the first place).
Second, the DSU makes clear that a Member that does not bring its WTO-inconsistent measure into conformity with the WTO Agreement risks consequences: it either has to provide compensation with the agreement of the complainant, or it may face retaliatory countermeasures.
Third, the DSU specifically states that there is no obligation to withdraw the WTO-consistent measure in the event of a successful non-violation complaint (Article 26.1(b) of the DSU). This suggests there is such an obligation in the event of a successful violation complaint.
For these reasons, one can say that the recommendation contained in an adopted panel (and Appellate Body) report — if it concludes that there is a WTO violation — for the respondent to bring its measure into conformity with the WTO Agreement is binding upon the respondent.
The situation is different for non-violation complaints. The adopted panel (and Appellate Body) report is also binding with regard to the panel’s or the Appellate Body’s conclusion as to whether or not a benefit accruing to the complainant under a covered agreement has been nullified or impaired. However, the DSU specifically states that there is no obligation to withdraw the WTO-consistent measure that resulted in nullification or impairment. The panel or the Appellate Body, therefore, only recommends that the parties find a mutually satisfactory adjustment (Article 26.1(b) of the DSU).
An adopted panel (and Appellate Body) report is also binding on the complainant. This is relevant especially in those cases where the complainant does not prevail with all its claims of violation or of non-violation nullification or impairment. Article 23.2(a) of the DSU prohibits the complainant from determining unilaterally that a violation of the WTO Agreement or that nullification or impairment of a benefit has occurred if this is inconsistent with the findings contained in the panel or Appellate Body report adopted by the DSB.
Obligations in the event of a “regional or local violation” back to top
A qualification to the above applies when a successful violation complaint relates to a measure taken by regional or local governments or authorities within the territory of a Member. Such measures are attributable to the Member in question and can be the object of a dispute. The difference between such measures and those taken by the authorities belonging to that Member’s central government is that the central government, which represents the Member at the WTO (including in the dispute settlement proceedings), might not be able to secure the withdrawal of the measure. The domestic law of that Member, for instance the Constitution, might limit the central government’s powers over the regional or local levels of government. This may, for example, be the case in federal States, where the central government is not always entitled to interfere with regional or local legislative or administrative acts.
Accordingly, the implementation obligations of the responsible Member are limited to such reasonable measures as may be available to it to ensure observance of WTO law (Article 22.9 of the DSU). Article XXIV:12 of GATT 1994 contains identical language. This is a specific and limited exception to the principle that subjects of international law are responsible for the activities of all branches of power within their system of governance, including all regional levels or other subdivisions of government.
The qualifications of Article 22.9 should not be generalized and extrapolated to other authorities of a Member enjoying a degree of independence, for example, independent judiciaries. Even if a government is unable to remedy a WTO violation because an independent judicial body committed it, the Member in question is fully responsible for this violation in WTO dispute settlement. It is a general principle of international law that it is not possible to invoke domestic law as justification for the failure to carry out international obligations.
Article 22.9 only limits a Member’s implementation obligations insofar as the achievement of conformity with the WTO Agreement (by withdrawing the inconsistent measure) is concerned. The dispute settlement provisions relating to compensation and the suspension of obligations fully apply where the Member concerned has not been able to secure the observance of the WTO Agreement in its territory (Article 22.9).
1. Of course, the WTO Agreement also contains obligations that are of a less binding nature. The WTO rules at issue in violation disputes, however, are rules of a full binding nature. back to text