DISPUTE SETTLEMENT: APPELLATE BODY
Farewell speech of Appellate Body Member David Unterhalter
On 22 January 2014, departing Appellate Body Member David Unterhalter delivered his farewell speech in the WTO. This is what he said:
It has been a very great privilege and pleasure to serve this institution, first as a panel member and then as a Member of the Appellate Body.
I always considered my appointment to the Appellate Body improbable, and have carried with me, over the years of my tenure, a debt of gratitude to those who gave me this most fulfilling and unexpected opportunity.
It is usually imprudent for adjudicators to speak on the issues they are asked to decide, far better to leave reflections about what they do or ought to do to others.
The good thing about sensible advice is that there are occasions not to follow it: and this may be one such occasion. Forgive me then, if I offer a few modest observations about the WTO dispute settlement system and the Appellate Body, as I take my leave.
What I wanted to say is divided into three parts. First, I will say something about the importance of WTO dispute settlement, as it enters a somewhat premature middle age. Second, I will offer some thoughts on the challenges faced by the system. And finally, in a more sentimental vein, I will reflect on some of the internal aspects of the Appellate Body that have lent it such vigour.
Those who serve institutions for some time are not always reliable or objective guides to their value. Insiders are given to inflationary assessment.
But that the institutions of WTO dispute settlement have gained such widespread acceptance, and, I think, legitimacy, in a relatively short period of time, is somewhat remarkable. There is much that evidences this legitimacy.
First, in a world where the multilateral trade project so often appears assailed by ambitious regional and bilateral agreements, the WTO remains the forum of choice for resolving trade disputes. Second, the system is used by more and more WTO Members to ventilate ever greater numbers of disputes across diverse areas of the covered agreements. Third, the WTO dispute settlement system is now regarded by international lawyers as one of the most prolific sources of international law. Fourth, the system has generated those hallmarks of institutional recognition: robust academic discourse on WTO law and the legal professions now count WTO law as a specialty.
This legitimacy and authority of the WTO dispute settlement system has been earned. It rests upon a number of key values. Above all else, adjudication is independent. Those who make decisions may fall into error. Their decisions may, by turns, infuriate, captivate or be considered banal. But they suffer no taint that they have not been rendered honestly, without favour, and under no conflict of interest. The virtue of independence may seem self-evident, but it is not to be taken for granted. Undue influence, conflicts of interest, compromised positions can arise all too easily, and, unchecked, can do grave damage to an institution. The price of independence is paid in a certain institutional distance. But it is indispensable.
Legitimacy comes about also because of the quality of decision-making. This has a twofold aspect. First, it matters that parties to a dispute are heard. And not just in a formal sense, but also that those who decide the dispute have come to grips with the issues and can engage fully on these issues with the parties. This permits those who must decide to make better decisions. And since litigation requires that in the end, on an issue, one party must prevail, it is essential that the losing party comes away from the process with the conviction that its case was properly understood and considered. Appellate Body hearings are sometimes thought too protracted. I think otherwise. I have never come out of a hearing with anything but a much better understanding of the case as a result of the debates that have taken place. And I think that parties who lose on an issue may consider the decision wrong, but will have little reason to think it unfair.
The second aspect of decision-making is the quality of judgment. Good judgment is made up of many parts. There are those with a compendious knowledge of the law; those who excel at grasping principle and its logical implications; those who marshal complex facts and render them coherent; and those whose practical reasoning guides sensible outcomes. Very few people embody all of these qualities, and certainly not in equal measure. The Appellate Body has been fortunate to have attracted Members who have had many of the qualities that matter in rendering sound judgments. One way in which to measure the significance of decision-making is to consider the extent to which reliance is placed upon past decisions to incline the outcome of a new dispute. In a system that knows no formal doctrine of precedent, the discourse before the Appellate Body and panels engages the content of past decision-making. That is not just a function of convenience, but recognition of the value of what past decisions have had to contribute to the interpretation of the covered agreements.
Of course there are decisions that have not won universal acceptance and some that have been controversial. But, in the round, the body of law that has been developed is well regarded. It is a body of jurisprudence that has mostly proceeded step by step; it strives for coherence and clarity in the interpretation of negotiated texts; it has applied WTO law to diverse systems of domestic law; it has sought to strike the right balance between the imperatives of domestic policy and the disciplines of WTO law; and has navigated its way through large, complex disputes that have often seemed intractable.
A further source of legitimacy is the question of access. It is said that WTO litigation requires patience, a great deal of time, significant resources and the ability to engage an increasingly complex body of law and procedure. There is some truth in this, though it is not true of all cases. And yet, more and more Members use the system, and do so repeatedly. The procedural rules are clear and deployed without undue formality. Decisions of the Appellate Body are for the most part rendered in 90 days. Third party submissions are encouraged. The system may require some understanding to engage, but it is not opaque. It is rule-bound and privileges procedural fairness. These attributes all foster access and hence legitimacy.
Finally, there is the issue of composition. The Appellate Body is a central part of the adjudicative voice of the WTO membership. It does not represent the membership, but it must reflect the diversity that makes up the membership. It has always been a strength of the Appellate Body that its Members come from very different legal traditions, and very different societies. These perspectives are brought to bear upon a common purpose: the resolution of disputes under the discipline of WTO law. The decisions of the Appellate Body yield singular answers. The decision-makers are diverse. The result is the richer for it.
This is my summation of the attributes of the WTO dispute settlement system.
What then of its challenges? I turn next to this matter.
As international trade constitutes an ever-greater share of global commerce, its regulation is ever-less effectively located within the domestic law of individual states. This is well known. What is emerging, however, is a palimpsest of legal regimes: private arbitration, investment treaties, bilateral, regional, and multilateral agreements. The landscape of supranational regulation is fractured, overlapping; it proceeds in unpredictable ways and with complex interconnections It is a process the end point of which is unforeseeable.
In this ever-shifting space, the project of multilateralism is not assured. If the WTO was to become but a historical commitment to a foundational set of rights and obligations, then the institution will wither, and with it, the system of dispute settlement. If the WTO agreements no longer capture the commitments of the membership to new trade issues, dispute settlement within the WTO will lose its pre-eminence. First, because many of the key issues in the covered agreements will, over time, have been clarified in disputes. Second, because trade issues of greatest currency will be regulated elsewhere, and disputes will be resolved at the point where the rights and obligations are located. Third, because, if the main business of the WTO became dispute resolution, the institution would not hold together. Adjudication is robust when it lives in a dynamic relationship with legislative competence. If too much rests upon dispute settlement, the system gets out of kilter, and the atrophy of one part of the system ultimately takes hold of everything else.
During the long period over which the Doha Round failed to produce results, the stresses upon dispute settlement started to show. The Appellate Body was said to be too powerful, it was making decisions beyond its proper remit. I don’t think this is so. But these voices reflect the inability to move forward the treaty commitments of the membership, important among them being the competence to change the interpretations of the Appellate Body.
There is of course little that those charged with the functioning of the dispute settlement system can do to address the wider context of negotiation. But it is important to recognize that the system is fragile: its success depends upon its utility to the membership; and it will develop only if the WTO project as a whole does so.
Those who serve the system of dispute settlement and believe in its values always run the risk of thinking that the system is a self-standing good. It is not. If Members of the WTO cannot agree as to how they wish to take the multilateral project forward, the virtues of dispute settlement will not be saved from their disaffection. Happily, the outcome at Bali suggests that there is renewed faith that Doha and beyond is not out of reach.
There are other challenges, though I suspect these too are a symptom of the over-arching challenge I have just described. The WTO dispute settlement system has many attributes, but it needs to adapt to the changing nature of the disputes that come before it.
When the WTO dispute settlement system was conceived, it did not have in mind the complex, fact-heavy disputes that now come before panels and the Appellate Body, nor the number of such disputes. The system generates a high incidence of appeals, and a high rate of success on appeal. This suggests some disequilibrium in the system. Of course, I recognize that Members, in seeking authoritative clarifications of the covered agreements, will incline towards seeking a second opinion from the Appellate Body. But many disputes do not rest solely on issues of law, and thus the system should be more efficient so as to resolve issues at first instance. This suggests that some reform of the panels is needed. I favour an established body that will adjudicate at first instance to lend greater consistency to the results of adjudication at this level. Some think this unnecessary. But what is unfortunate is that we have no measured response to the need to conceive of better ways of doing things.
Even where there is consensus for change, we seem to have reached a point of stasis. Everyone accepts that disputes should have meaningful outcomes. That is sometimes not possible because of the limits of the findings made by a panel. The solution is to give the Appellate Body a remand power. Everyone thinks this sensible. But again that recognition flounders in technical circumlocution – and nothing gets done.
Lastly, by way of example, the workload of the Appellate Body is unpredictable. There are periods when there are more appeals to decide than capacity permits. In these circumstances, we need some rules as to the order of determining appeals. And we need a relaxation of the 90-day rule. Even this practical but important issue has been debated, but not resolved. So too, there should, in a rational system, be rules that determine when appeals are brought and the number that may be dealt with at one time. This would lend predictability to the process of appellate review, both for the Appellate Body and for the parties; it would also allow for the rational use of resources. The orderly, expeditious disposal of appeals must always be preferred to an unregulated free-for-all.
With every passing year, I have observed the incoming Chair of the Dispute Settlement Body fired with enthusiasm to do something about these and other issues. And every year, that enthusiasm comes up hard against the seeming impossibility of effecting even modest change.
None of these matters imperils the system. They are the kind of incremental changes that would make the system work better. But they speak to a wider malaise that we should be careful to arrest.
I have emphasized the institutional value of independence. That is tested every time an appointment is made to the Appellate Body. As in the past, we all trust that a new Member will be appointed soon around whom there is consensus.
The WTO system of dispute resolution has won justified praise. When Tribunals and Courts that consider questions of international law are assessed, the WTO panels and the Appellate Body are highly regarded for the reach, quality and number of their decisions. In a world where so many issues must now be faced outside of the remit of domestic legal systems, supranational regimes require dispute settlement. The WTO system is a fine model of how this can be done. It should remain so.
It is my great hope that all those who participate in the system will assist to redeem its promise, rather than tread water and allow others to eclipse its pre-eminence.
I turn finally to say something of those who have made my time here so fruitful and enjoyable.
When I was appointed to the Appellate Body, I think there may have been some apprehension that I would be a dissonant voice (I had previously participated in a WTO panel that had taken a somewhat different line to the Appellate Body). What I found was an enormously friendly and welcoming place.
Judging disputes can be an isolating business. It is important to observe degrees of separation from litigants, or likely litigants. Appellate Body Members are thrown together for long periods of time. They must determine appeals under pressure of time. Appeals raise many issues over which reasonable people can disagree. The Appellate Body engages in robust debate. And there is ample scope for seared feelings. But it has not been that way at all.
What prevails is captured by the idea of collegiality. All voices are heard .. There is an abundance of analysis . There is a shared desire to come up with an answer that shows fidelity to the agreements and reflects consensual positions hammered out on the anvil of full debate.
This engagement fosters friendship and respect, and I am very grateful to all my colleagues, past and present, who have made this such a fruitful time to contribute to the work of the Appellate Body. They have been companions on many long, legal roads. They have guided, assisted and made the work so very worthwhile, and my gratitude is, I hope, plain.
I began life at the WTO as a panelist. There too, I engaged with dedicated people of great ability. And I thank them and the Secretariat that supports the panels for so generously educating me in the ways of WTO law and overlooking my many frailties as I attempted to come to grips with the system.
The Members of the Appellate Body depend heavily on the assistance they receive from the Appellate Body Secretariat. The Secretariat is the lifeblood of the institution. First, I pay tribute to the lawyers of the Secretariat who have assisted the Appellate Body over the years. It is hard to imagine more talented people. Their collective knowledge of the law and their industry in researching and preparing for appeals is exemplary. The Secretariat is headed by its Director. Throughout my time, he has guided the work of the Secretariat with great intellectual leadership, an unmatched eye for talent, and the ability to nurture that talent.
The Appellate Body also rests heavily on the enormous efforts of those who administer the work of the Appellate Body. With calm efficiency they assemble the Members of the Appella Body from the four corners of the world, and keep us here free of many burdens that would otherwise take time from our principal task. To them all my great thanks.
Finally, as I say farewell to the WTO, there are many people both inside and outside of the House who have made my time here memorable. Among them, WTO interpreters and translators, though seldom seen, are indispensable in a multilingual organization. Thank you. Importantly, to the delegates who appeared before the Appellate Body in the many cases we have heard over the last seven years, it is the quality of your arguments and the acuity of your engagements with us that have helped to produce an important body of law to which I was privileged to make a contribution.
Goodnight and goodbye.
Address of Mr Ricardo Ramírez-Hernández
Chairman of the Appellate Body
Thank you very much, Ambassador Fried, Chairs of the WTO Councils, your Excellencies, ladies and gentlemen:
As the current Chairman of the Appellate Body, I join you in bidding farewell to our dear colleague David Unterhalter.
One Member of the Appellate Body once said: “There must be an end to every great debate.” Today we are reminded that not only debates are finite; unfortunately, so are the terms of office of Appellate Body Members.
We begin this year with great expectations derived from the success of the Bali Ministerial. This success was possible thanks to the willingness of the WTO membership, as well as the effort of the staff of the Organization, starting with our Director-General.
With respect to the dispute settlement system, we note that the level of activity has not decreased. This underscores the great measure of confidence Members continue to place in our Organization's dispute settlement mechanism. As we described in the so-called “Workload Paper” circulated last summer, the number of disputes has increased and other several upward trends can be observed: first, growth in the size of disputes appealed to the Appellate Body; second, an increase in the number of issues raised on appeal, including more frequent claims under Article 11 of the DSU challenging the objectivity of the factual assessments by panels; and third, a growth in the number of participants and third participants in appeals. In our communication of last summer, we further demonstrated that these trends have also led to an increase in the volume of submissions filed with the Appellate Body and, consequently, in the size of our reports.
The document also evidences that the dynamics of WTO dispute settlement have changed and so, too, must the resources available to the Appellate Body if it is to maintain the success it has enjoyed in the almost 20 years of its existence. We are grateful that the WTO membership has recognized these developments in the 2014-2015 budget by envisaging the allocation of additional resources to the dispute settlement system.
Nevertheless, these resources may be insufficient in the event that several appeals are filed simultaneously, or within a short period of time. There are currently 18 active panel proceedings. We are expecting that at least 10 panel reports will be circulated in 2014 and statistically at least two thirds of these reports will be appealed. The numbers speak for themselves. The Appellate Body is ready to face the challenge that is arising with its structural limitations and with the resources that will be made available to it.
After four and one half years of working with David, I could never speak English as he does. Now I wanted to show him for the last time that he could never speak Spanish as I do.1
The ironies of life. More than four years ago, I was sworn in by David, now it is my turn to wish him farewell. Typically these days are of mixed feelings. On one side, “regret”, because of the departure of one of our dear colleagues, but at the same time, “joy”, due to the prospects of working with a new one. Unfortunately, today, we are only left with the great void of David's departure. Using your own words, David, you are leaving us in the middle of a great conundrum.
David has played a leading role in the Appellate Body's work. He guided the Appellate Body through numerous complex appeals and made an enormous contribution to the work and reputation of this institution over the past seven years. During his tenure, David served on an Appellate Body Division in eleven proceedings; in four of them, as the Presiding Member. He was a Member of the Division in the two largest appeals in the history of the Appellate Body, namely, the two aircraft disputes. In addition, he participated in the exchange of views among all seven Appellate Body Members in 18 proceedings. I will always remember how, in many exchanges of views, he would see an issue from an angle that no one else had considered. Of course iudex non calculat, but if we suspend that principle for a moment, we come to realize that during his tenure on the Appellate Body, David participated in 29 proceedings.
Of course, these numbers are inadequate and insufficient to give an impression of the true nature of David's contribution to the work of the Appellate Body, which only my colleagues and I can fully appreciate. Representatives of WTO Members, who experienced David's questioning at an oral hearing, despite suffering quite a lot, certainly got an impression of to what I am referring. Disputes adjudicated during David's two terms of office were of a size, number, and complexity that could never have been predicted, and that certainly were not contemplated by the negotiators of the DSU when setting the rigid timelines used for WTO adjudication. In short, David has played a vital role in ensuring that the Appellate Body continues to preserve the rights and obligations of WTO Members and to ensure the security and predictability of the multilateral trading system.
Dear David, Nelson Mandela once said: “What counts in life is not the mere fact that we have lived. It is what difference we have made to the lives of others that will determine the significance of the life we lead.” Since your appointment in 2006, you have brought to this institution a unique wealth of knowledge, intellect, and experience. You have helped to consolidate and to guide what has been acknowledged to be a highly effective and well-respected dispute settlement institution. Throughout your tenure, you have been a leading voice of the Appellate Body, contributing to the development of the international rule of law. Certainly, your voice is now instilled in our jurisprudence. You have been a staunch defender of the independence and impartiality of the Appellate Body as a global adjudicator of international trade disputes. It has been an honour serving with you. My colleagues, the Secretariat staff, and I wish you a warm farewell. As Mandela also said: “After climbing a great hill, one only finds that there are many more hills to climb.” I am sure you will have no trouble finding those hills.
1. Up to the beginning of this paragraph, this address was delivered in Spanish. back to text