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REPERTORY OF APPELLATE BODY REPORTS

Claims and Panel Reasoning


ON THIS PAGE:

> EC — Hormones, para. 156
> US — Certain EC Products, para. 123
> Chile — Price Band System, paras. 167–168
> Argentina — Footwear (EC), para. 74
> Argentina — Footwear (EC), para. 75
> US — Gambling, paras. 281–282
> Dominican Republic — Import and Sale of Cigarettes, para. 82
> US — Large Civil Aircraft (2nd complaint), paras. 643–644
> Canada — Renewable Energy / Canada — Feed-in Tariff Program, para. 5.215

C.2.1 EC — Hormones, para. 156     back to top
(WT/DS26/AB/R, WT/DS48/AB/R)

… Panels are inhibited from addressing legal claims falling outside their terms of reference. However, nothing in the DSU limits the faculty of a panel freely to use arguments submitted by any of the parties — or to develop its own legal reasoning — to support its own findings and conclusions on the matter under its consideration. A panel might well be unable to carry out an objective assessment of the matter, as mandated by Article 11 of the DSU, if in its reasoning it had to restrict itself solely to arguments presented by the parties to the dispute. Given that in this particular case both complainants claimed that the EC measures were inconsistent with Article 5.5 of the SPS Agreement, we conclude that the Panel did not make any legal finding beyond those requested by the parties.
 

C.2.2 US — Certain EC Products, para. 123     back to top
(WT/DS165/AB/R)

This appeal by the United States raises the question whether a panel is entitled to develop its own legal reasoning in reaching its findings and conclusions on the matter under its consideration. In our Report in European CommunitiesHormones, we held:
 

Panels are inhibited from addressing legal claims falling outside their terms of reference. However, nothing in the DSU limits the faculty of a panel freely to use arguments submitted by any of the parties — or to develop its own legal reasoning — to support its own findings and conclusions on the matter under its consideration.
 

The Panel in this case exercised its discretion to develop its own legal reasoning. Contrary to what the United States argues, the Panel was not obliged to limit its legal reasoning in reaching a finding to arguments presented by the European Communities. We, therefore, do not consider that the Panel committed a reversible error by developing its own legal reasoning.
 

C.2.3 Chile — Price Band System, paras. 167–168     back to top
(WT/DS207/AB/R, WT/DS207/AB/R/Corr.1)

However, Argentina’s reliance on our ruling in EC — Hormones is misplaced. In EC — Hormones, and in US — Certain EC Products, we affirmed the capacity of panels to develop their own legal reasoning in a context in which it was clear that the complaining party had made a claim on the matter before the Panel. It was also clear, in both those cases, that the complainant had advanced arguments in support of the finding made by the Panel — even though the arguments in support of the claim were not the same as the interpretation eventually adopted by the Panel. The situation in this appeal is altogether different. No claim was properly made by Argentina under the second sentence of Article II:1(b). No legal arguments were advanced by Argentina under the second sentence of Article II:1(b). Therefore, those rulings have no relevance to the situation here.
 

Contrary to what Argentina argues, given our finding that Argentina has not made a claim under the second sentence of Article II:1(b), the Panel in this case had neither a “right” nor a “duty” to develop its own legal reasoning to support a claim under the second sentence. The Panel was not entitled to make a claim for Argentina, or to develop its own legal reasoning on a provision that was not at issue.
 

C.2.4 Argentina — Footwear (EC), para. 74     back to top
(WT/DS121/AB/R)

We note that the very terms of Article 4.2(c) of the Agreement on Safeguards expressly incorporate the provisions of Article 3. Thus, we find it difficult to see how a panel could examine whether a Member had complied with Article 4.2(c) without also referring to the provisions of Article 3 of the Agreement on Safeguards. More particularly, given the express language of Article 4.2(c), we do not see how a panel could ignore the publication requirement set out in Article 3.1 when examining the publication requirement in Article 4.2(c) of the Agreement on Safeguards. And, generally, we fail to see how the Panel could have interpreted the requirements of Article 4.2(c) without taking into account in some way the provisions of Article 3. What is more, we fail to see how any panel could be expected to make an “objective assessment of the matter”, as required by Article 11 of the DSU, if it could only refer in its reasoning to the specific provisions cited by the parties in their claims.
 

C.2.5 Argentina — Footwear (EC), para. 75     back to top
(WT/DS121/AB/R)

Consequently, we conclude that the Panel did not exceed its terms of reference by referring in its reasoning to the provisions of Article 3 of the Agreement on Safeguards. On the contrary, we find that the Panel was obliged by the terms of Article 4.2(c) to take the provisions of Article 3 into account. Thus, we do not believe that the Panel erred in its reasoning relating to the provisions of Article 3 of the Agreement on Safeguards in making its findings under Article 4.2(c) of that Agreement.
 

C.2.6 US — Gambling, paras. 281–282     back to top
(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.
 

C.2.7 Dominican Republic — Import and Sale of Cigarettes, para. 82     back to top
(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.
 

C.2.8 US — Large Civil Aircraft (2nd complaint), paras. 643–644     back to top
(WT/DS353/AB/R)

It is possible that the Panel believed that its view represented common sense, or its own conception of economic rationality. If this were indeed the case, we would nevertheless consider the Panel’s approach unsatisfactory. We do not believe that panels can base determinations as to what would occur in the marketplace only on their own intuition of what rational economic actors would do. We recognize that a panel confronted with a measure of the kind at issue here may have intuitions as to the consistency of the measure with the market, based on economic theory. However, we would expect that in such circumstances the panel would at least explain the economic rationale or theory that supports its intuition. The Panel in this case did not do so. More importantly, we are of the view that a panel should test its intuitions empirically, especially where the parties have submitted evidence as to how market actors behave. …
 

… We believe that … the Panel could not have arrived at a conclusion as to whether a benefit was conferred within the meaning of Article 1.1(b) without empirically testing the views that it had about the market on the basis of the evidence submitted by the parties pertinent to relevant market benchmarks.
 

C.2.9 Canada — Renewable Energy / Canada — Feed-in Tariff Program, para. 5.215     back to top
(WT/DS412/AB/R, WT/DS426/AB/R)

We note that, in making a claim, a complainant has the responsibility of providing evidence and arguments that the panel must objectively assess. While a panel cannot make the case for a complainant, it has the competence “freely to use arguments submitted by any of the parties — or to develop its own legal reasoning — to support its own findings and conclusions on the matter under its consideration”. Panels also have broad fact-finding powers and may seek information from any source. We do not think that the Panel should have limited its analysis to the proposed benefit approach, and/or to the benchmarks that were part of the complainants’ principal argument, in a situation where the evidence and the arguments presented by the complainants, and the arguments in response by Canada, may have allowed it to develop its own reasoning and to make findings based on a benchmark that took into account the government’s definition of the energy supply-mix. Provided the complainants had presented relevant evidence and arguments to make a prima facie case, it was for the Panel to analyze the appropriate benchmark or proxy. We observe that arguments and evidence were presented before the Panel that could have been useful in identifying a benefit benchmark that took into account the Government of Ontario’s definition of the energy supply-mix, including wind- and solar PV-generated electricity.
 


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