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> Basic rationale behind findings and conclusions. See also Claims and Arguments (C.1); Claims and Panel Reasoning (C.2); Standard of Review (S.7)
> Panel findings not appealed. See also Review of Implementation of DSB Rulings, Article 21.5 of the DSU — Effect of DSB rulings in the original dispute (R.4.3)
> Separate panel reports. See also Multiple Complainants (M.4); Working Procedures for Appellate Review, Rule 16 — Process, Rule 16(1) — Adoption of additional procedures (W.2.6.1)
P.1.1 Basic rationale behind findings and conclusions. See also Claims and Arguments (C.1); Claims and Panel Reasoning (C.2); Standard of Review (S.7) back to top
P.1.1.1 Korea — Alcoholic Beverages, paras. 166, 168
Korea claims that the Panel has failed to fulfil its obligation under Article 12.7 of the DSU to set out the basic rationale behind its findings and recommendations. …
In this case, we do not consider it either necessary, or desirable, to attempt to define the scope of the obligation provided for in Article 12.7 of the DSU. It suffices to state that the Panel has set out a detailed and thorough rationale for its findings and recommendations in this case. The Panel went to some length to take account of competing considerations and to explain why, nonetheless, it made the findings and recommendations it did. …
P.1.1.2 Chile — Alcoholic Beverages, para. 78
… In our view, in this case, the Panel did “set out” a “basic rationale” for its finding and recommendation on the issue of “not similarly taxed”, as required by Article 12.7 of the DSU. The Panel identified the legal standard it applied, examined the relevant facts, and provided reasons for its conclusion that dissimilar taxation existed. …
P.1.1.3 Argentina — Footwear (EC), para. 149
… In this case, the Panel conducted extensive factual and legal analyses of the competing claims made by the parties, set out numerous factual findings based on detailed consideration of the evidence before the Argentine authorities as well as other evidence presented to the Panel, and provided extensive explanations of how and why it reached its factual and legal conclusions. Although Argentina may not agree with the rationale provided by the Panel, and we do not ourselves agree with all of its reasoning, we have no doubt that the Panel set out, in its Report, a “basic rationale” consistent with the requirements of Article 12.7 of the DSU.
P.1.1.4 Mexico — Corn Syrup (Article 21.5 — US), paras. 106–109
… Article 12.7 establishes a minimum standard for the reasoning that panels must provide in support of their findings and recommendations. Panels must set forth explanations and reasons sufficient to disclose the essential, or fundamental, justification for those findings and recommendations.
… the duty of panels under Article 12.7 of the DSU to provide a “basic rationale” reflects and conforms with the principles of fundamental fairness and due process that underlie and inform the provisions of the DSU. In particular, in cases where a Member has been found to have acted inconsistently with its obligations under the covered agreements, that Member is entitled to know the reasons for such finding as a matter of due process. In addition, the requirement to set out a “basic rationale” in the Panel Report assists such Member to understand the nature of its obligations and to make informed decisions about: (i) what must be done in order to implement the eventual rulings and recommendations made by the DSB; and (ii) whether and what to appeal. Article 12.7 also furthers the objectives, expressed in Article 3.2 of the DSU, of promoting security and predictability in the multilateral trading system and of clarifying the existing provisions of the covered agreements, because the requirement to provide “basic” reasons contributes to other WTO Members’ understanding of the nature and scope of the rights and obligations in the covered agreements.
… Whether a panel has articulated adequately the “basic rationale” for its findings and recommendations must be determined on a case-by-case basis, taking into account the facts of the case, the specific legal provisions at issue, and the particular findings and recommendations made by a panel. Panels must identify the relevant facts and the applicable legal norms. In applying those legal norms to the relevant facts, the reasoning of the panel must reveal how and why the law applies to the facts. In this way, panels will, in their reports, disclose the essential or fundamental justification for their findings and recommendations.
This does not, however, necessarily imply that Article 12.7 requires panels to expound at length on the reasons for their findings and recommendations. We can, for example, envisage cases in which a panel’s “basic rationale” might be found in reasoning that is set out in other documents, such as in previous panel or Appellate Body reports — provided that such reasoning is quoted or, at a minimum, incorporated by reference. Indeed, a panel acting pursuant to Article 21.5 of the DSU would be expected to refer to the initial panel report, particularly in cases where the implementing measure is closely related to the original measure, and where the claims made in the proceeding under Article 21.5 closely resemble the claims made in the initial panel proceedings.
P.1.1.5 Mexico — Corn Syrup (Article 21.5 — US), paras. 124, 126
Having regard to these circumstances, we are of the view that the Panel Report, read together with the original panel report, leaves no doubt about the reasons for the Panel’s additional finding under Article 3.1 of the Anti-Dumping Agreement. …
We wish to add that for purposes of transparency and fairness to the parties, even a panel proceeding under Article 21.5 of the DSU should strive to present the essential justification for its findings and recommendations in its own report. In this case, in particular, we consider that the Panel’s finding under Article 3.1 of the Anti-Dumping Agreement would have been better supported by a direct quotation from or, at least, an explicit reference to, the relevant reasoning set out in the original panel report.
P.1.1.6 US — Steel Safeguards, paras. 503–504
(WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R)
… Based on our review of the Panel’s reasoning, it appears to us that the Panel considered in detail the evidence that was before the USITC, and provided detailed explanations of how and why it concluded that the USITC had failed to demonstrate, through a reasoned and adequate explanation, that the alleged “unforeseen developments” resulted in increased imports of each product subject to a safeguard measure. …
In our view, in making these statements, the Panel has sufficiently set out in its Reports the “basic rationale” for its finding that the USITC failed to explain how, though “plausible”, the “unforeseen developments” identified in the report in fact resulted in increased imports of the specific products subject to the safeguard measures at issue.
P.1.1.7 US — Softwood Lumber VI (Article 21.5 — Canada), para. 141
We note that, having reversed these findings on the grounds that the Panel articulated and applied an incorrect standard of review to the Section 129 Determination, we need not examine Canada’s claim that the Panel failed to satisfy its duty, under Article 12.7 of the DSU, to provide a “basic rationale” for its findings and conclusions.
P.1.1.8 US — Oil Country Tubular Goods Sunset Reviews (Article 21.5 — Argentina), para. 183 and Footnote 383
… The Panel’s explanation is brief, but it is sufficient to convey that the Panel considered Argentina’s request and that, in the light of the discretionary nature of the authority to make a suggestion, the Panel declined to exercise that discretion. The discretionary nature of the authority to make a suggestion under Article 19.1 must be kept in mind when examining the sufficiency of a panel’s decision not to exercise such authority. However, it should not relieve a panel from engaging with the arguments put forward by a party in support of such a request. In the present case, Argentina offered several reasons in support of its request for a suggestion. Although it would have been advisable for the Panel to articulate more clearly the reasons why it declined to exercise its discretion to make a suggestion, this does not mean that Panel’s exercise of its discretion was improper, and, thus, even assuming arguendo that Articles 11 and 12.7 were applicable to a request for suggestion, we do not consider that, in the circumstances of this case, the Panel failed to fulfil its duties under those provisions.383
P.1.1.9 Chile — Price Band System (Article 21.5 — Argentina), paras. 243, 247
… we briefly review the duties that Article 12.7 of the DSU imposes on a panel in the event that the parties do not reach a mutually satisfactory solution to their dispute. Specifically, a panel is to “submit its findings in the form of a written report to the DSB” and, according to the second sentence of Article 12.7, “the report of a panel shall set out the findings of fact, the applicability of relevant provisions and the basic rationale behind any findings and recommendations that it makes”. The Appellate Body has explained that this provision “establishes a minimum standard for the reasoning that panels must provide in support of their findings and recommendations”, namely, that the explanations and reasons provided must suffice “to disclose the essential, or fundamental, justification for those findings and recommendations”. Panels need not “expound at length on the reasons for their findings and recommendations” in order to satisfy their obligations under Article 12.7. Moreover, panels may refer to reasoning from other sources …
We have already dealt with, and dismissed, Chile’s arguments that the Panel’s approach in this regard constituted an erroneous application of Footnote 1 and Article 4.2 of the Agreement on Agriculture, as well as a failure to comply with Article 11 of the DSU. Chile’s arguments under Article 12.7 of the DSU challenge the same elements of the Panel’s substantive analysis using a different legal basis, but without identifying how that analysis lacks a basic rationale. In fact, Chile’s own arguments disclose that the Panel provided ample reasoning in support of its findings. Moreover, our examination has shown that the Panel analyzed the measure at issue in detail, and explained why it found the measure to be similar to a variable import levy and to a minimum import price. The mere fact that Chile disagrees with the substance of that reasoning cannot suffice to establish a violation of Article 12.7.
P.1.1.10 US — Large Civil Aircraft (2nd complaint), Footnote 1299 to para. 625
… the United States also suggests that the Panel’s finding of financial contribution relating to the access to facilities, equipment, and employees under the NASA procurement contracts did not comply with the requirements of Article 12.7 of the DSU because it “would appear” that the Panel failed to set out its findings of fact or the basic rationale behind its finding. … However, the only argument that the United States makes in support of its Article 12.7 allegation is that the Panel’s finding as to the access to facilities, equipment, and employees is dependent on the finding that the NASA procurement contracts were not purchases of services. Because we have not adopted the Panel’s “principal beneficiary and user” test, nor its conclusions as to whether the NASA procurement contracts are purchases of services, there is no basis to address … [the United States’] fleeting allegation under Article 12.7 of the DSU.
P.1.1.11 US — Large Civil Aircraft (2nd complaint), Footnote 2510 to para. 1248
We note the United States’ contention that the Panel, by failing to specify the third-country markets and lost sales in support of its findings under Article 6.3(b) and (c), respectively, did not comply with the requirements set out in Article 12.7 of the DSU. … Because we consider that the Panel’s failure to specify lost sales and third-country markets in its reasoning undermined the basis for its findings of significant lost sales and displacement and impedance, we find it unnecessary to rule on this claim of the United States on appeal.
Duty to address issues. See Completion of the Legal Analysis by the Appellate Body (C.4); Judicial Economy (J.1); Jurisdiction (J.2); Objections (O.1)
P.1.2 Panel findings not appealed. See also Review of Implementation of DSB Rulings, Article 21.5 of the DSU — Effect of DSB rulings in the original dispute (R.4.3) back to top
P.1.2.1 Canada — Periodicals, Footnote 28 to p. 19, DSR 1997:I, p. 449 at 464
… a Panel finding that has not been specifically appealed in a particular case should not be considered to have been endorsed by the Appellate Body. Such a finding may be examined by the Appellate Body when the issue is raised properly in a subsequent appeal.
P.1.3 Separate panel reports. See also Multiple Complainants (M.4); Working Procedures for Appellate Review, Rule 16 — Process, Rule 16(1) — Adoption of additional procedures (W.2.6.1) back to top
P.1.3.1 US — Offset Act (Byrd Amendment), para. 311
Having made these observations, we note that Article 9.2 must not be read in isolation from other provisions of the DSU, and without taking into account the overall object and purpose of that Agreement. The overall object and purpose of the DSU is expressed in Article 3.3 of that Agreement which provides, relevantly, that the “prompt settlement” of disputes is “essential to the effective functioning of the WTO”. If the right to a separate panel report under Article 9.2 were “unqualified”, this would mean that a panel would have the obligation to submit a separate Panel Report, pursuant to the request of a party to the dispute, at any time during the panel proceedings. Moreover, a request for such a report could be made for whatever reason — or indeed, without any reason — even on the day that immediately precedes the day the Panel Report is due to be circulated to WTO Members at large. Such an interpretation would clearly undermine the overall object and purpose of the DSU to ensure the “prompt settlement” of disputes.
P.1.3.2 US — Offset Act (Byrd Amendment), paras. 315–316
… we note that the first sentence in Article 9.2 provides that it is for the Panel to “organize its examination and present its findings in such a manner that the rights which the parties to the dispute would have enjoyed had separate panels examined the complaints are in no way impaired”. Our comments in EC — Hormones about panels’ discretion in dealing with procedural issues are pertinent here:
… the DSU and in particular its Appendix 3, leave panels a margin of discretion to deal, always in accordance with due process, with specific situations that may arise in a particular case and that are not explicitly regulated. Within this context, an appellant requesting the Appellate Body to reverse a panel’s ruling on matters of procedure must demonstrate the prejudice generated by such legal ruling. (emphasis added)
In our view, the Panel acted within its “margin of discretion” by denying the United States’ request for a separate panel report. We do not believe that we should lightly disturb panels’ decisions on their procedure, particularly in cases such as the one at hand, in which the Panel’s decision appears to have been reasonable and in accordance with due process. We observe that, on appeal, the United States is not claiming that it suffered any prejudice from the denial of its request for a separate Panel Report. We also note that the first sentence of Article 9.2 refers to the rights of all the parties to the dispute. The Panel correctly based its decision on an assessment of the rights of all the parties, and not of one alone.
Status of the GATT panel reports. See Review of Implementation of DSB Rulings, Article 21.5 of the DSU — Effect of DSB rulings in the original dispute (R.4.3); Status of Panel and Appellate Body Reports (S.8)
383. In the light of the above, we need not decide here whether the requirements of Articles 11 and 12.7 are applicable to a panel’s consideration of a request for a suggestion pursuant to Article 19.1 of the DSU. back to text
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