Toward A More Disciplined, Effective System Of Dispute Settlement At The World Trade Organization

Monday, October 1, 2007 - 01:00

I. Introduction

In practice, dispute settlement at the World Trade Organization ("WTO") can reasonably be said to be something of a misnomer. Success in achieving effective implementation and enforcement of the WTO's various agreements on trade in goods and services across national boundaries depends heavily upon the faithful and accurate interpretation of these agreements' provisions in dispute settlement.

In a significant number of dispute settlement proceedings since the WTO's inauguration at the start of 1995, however, it is evident that panels and the Appellate Body improperly have created new rights and obligations and have not truly interpreted the rights and obligations that were previously negotiated, consented to by the individual Member States themselves, and then collectively agreed to by the Member States. Such transgressions are contrary to the provisions of the WTO's Understanding on Rules and Procedures Governing the Settlement of Disputes ("the DSU"), overlook the central dependence of public international legal obligations for their validity on the consent of the obligated State, and skew the Member States' carefully negotiated and collectively agreed balance of rights and obligations.

If the very reports that are meant to resolve disputes are to avoid being contentious and disruptive themselves, it will be necessary for panels and the Appellate Body to respect, not usurp, the legislative power of the WTO's Member States. This article reviews the essential role that the rule of consent plays in public international law generally and urges that this rule of consent should be observed consistently by panels and the Appellate Body in dispute settlement at the WTO.

II. The Rule Of Consent And Dispute Settlement At The WTO

The State is still recognized as central to the current international legal structure.1 Indeed, in a report in 2004 a high-level panel of the Secretary-General of the United Nations observed that individual sovereign States acting collectively as capable, responsible partners are the front-line actors and responders to deal with new and old threats, including poverty, protection of their own peoples' welfare, and satisfaction of their obligations to the wider international community.2 Greater effort consequently must be made to enhance States' capacity to exercise their sovereignty responsibly.3

As the international equivalent of a contract, each of the WTO's agreements is a treaty that represents an exercise of individual Member States' sovereignty in pursuit of their own respective national interests. In exchange for agreeing to exercise their sovereignty in accordance with their commitments made under the WTO's agreements, the individual Member States expect to derive benefits.4

In keeping with the individual sovereign Member States' negotiations with one another of rights and obligations contained in the WTO's agreements, Articles 3.2 and 19.2 of the DSU rightly state that the Dispute Settlement Body, panels, and the Appellate Body cannot add to or diminish the rights and obligations provided in the WTO's covered agreements. This restriction properly acknowledges and reinforces both that the balance of rights and obligations collectively agreed to by the Member States is to be preserved, not upset, by dispute settlement and that the legitimacy and the enforceability under public international law of the rights and obligations arrived at in the legislative process of negotiations depend upon the individual Member States' consent to those rights and obligations.

Articles 3.2 and 19.2 of the DSU reflect the definition of public international law as the body of customary and treaty rules that ". . . owe their validity both to the consent of States as expressed in custom and treaties and to the fact of the evidence of an international community of states and individuals."5 Put otherwise, a principal corollary of the sovereignty and equality of States is ". . . the dependence of obligations arising from customary international law and treaties on the consent of the obligor."6

International custom, as evidence of a general practice accepted as law and as expressed in various articles of the Vienna Convention on the Law of Treaties,7 reinforces the critical importance of a State's consent to a treaty's terms and holds that a treaty by States and a State's rights and obligations under that treaty do not come into force and do not remain valid and binding for a State on the international plane except insofar as that State has given its consent to be bound by the treaty.8 This customary rule of consent is applicable in the relations between and among the WTO's individual Member States. As such, under Article 31.3(c) of the Vienna Convention on the Law of Treaties, this rule of consent is to be taken into account by panels, the Appellate Body, and the Dispute Settlement Body during dispute settlement in the interpretation of the WTO's agreements.

Nevertheless, the WTO's jurisprudence to date has not consistently and adequately emphasized, respected, and accorded sufficient weight to the essential role that customary public international law assigns to the consent of an individual sovereign State to be bound by a treaty. On occasion, the Appellate Body has noted that the imputation into a treaty of words that are not in the treaty or of concepts that were not intended by the parties is neither required nor condoned by the principles of treaty interpretation9 and that the determination of what rights and obligations ought to be under the WTO's agreements is clearly the sole responsibility of the Member States and not of the panels and the Appellate Body.10 Such statements, however, are notable for their infrequency.

Instead, the rule of consent has been obscured and weakened in dispute settlement. On more than one occasion the Appellate Body has observed that the task of interpreting any treaty's text involves identifying the common intention of the Member States.11 While this statement is true in a broad and general sense, it has been misconstrued by at least one panel to signify that the scope of a commitment ". . . cannot depend upon what a Member intended or did not intend to do at the time of the negotiations."12 The Appellate Body did not correct this remark by the panel and appears implicitly to have endorsed this conclusion.13

This approach erroneously ignores, however, the fundamental tenet in public international law recognized in the Vienna Convention on the Law of Treaties that a treaty by States and a State's rights and obligations under that treaty do not come into force and do not remain valid and binding for a State on the international plane except insofar as that State has given its consent to be bound by the treaty. What a Member State intends at the time of negotiations clearly bears directly upon whether or not that Member State has consented to whatever rights and obligations have been under negotiation.

With respect to legal issues that arise in dispute settlement, therefore, it is submitted that panels and the Appellate Body should address (a) whether or not the issue in question has been the subject of negotiations, and (b) if negotiations on the issue in question were conducted, whether or not a negotiated resolution of that issue was reached and consented to by the individual Member States as part of the Member States' collectively agreed balance of rights and obligations. When analysis shows that either the issue in question was not negotiated or, if negotiated, was not resolved, panels and the Appellate Body should so acknowledge and not create any new rights and obligations in the course of dispute settlement, thus leaving the matter for further negotiations.

III. Conclusion

Dispute settlement at the WTO should not be what has been called "creative law enforcement."14 Adding to or diminishing in dispute settlement rights and obligations arrived at by the WTO's Member States in negotiations jeopardizes the integrity and stability of the WTO as an institution. The focus of panels and the Appellate Body in dispute settlement should be on discerning exactly what the WTO's Member States have negotiated and consented to as their rights and obligations under international law.

1 "The Future of the WTO," para. 113, p. 29 (World Trade Organization 2004).

2 See "A more secure world: Our shared responsibility," pp. 9, 17 (para. 29), and 18 (para. 34) (United Nations 2004).

3 Id. at para. 34, p. 18.

4 See Appellate Body Report, Japan - Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, p. 15, cited in "The Future of the WTO," at 111, n.26, p. 29 (World Trade Organization 2004).

5 David M. Walker, "The Oxford Companion to Law" 634 (1980).

6 Ian Brownlie, "Principles of Public International Law" 289 (5th ed. 1998).

7 Vienna Convention on the Law of Treaties, opened for signature , May 23, 1969, entered into force , Jan. 27, 1980, 1155 U.N.T.S. 331.

8 This rule that a State must express its consent to be bound by a treaty is reflected in the Vienna Convention on the Law of Treaties at, for example, Articles 2, 7, 9, 11-17, 20, 24, 34, 36-37, 42, 46-51, 54, 57, 62, and 65.

9 See Appellate Body Report, India - Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998, para. 45.

10 See Appellate Body Report, United States - Import Measures on Certain Products from the European Communities, WT/DS165/AB/R, adopted 10 January 2001, para. 92.

11 See, e.g., Appellate Body Report, United States - Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April 2005, paras. 159, 160.

12 See Panel Report, United States - Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted as amended, 20 April 2005, para. 6.136.

13 See Appellate Body Report, United States - Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April 2005, paras. 159, 160.

14 "The Future of the WTO," para. 247, p. 55 (World Trade Organization 2004).

Jeffrey S. Beckington is a Partner in the Washington, DC office Of Kelley Drye Collier Shannon. His practice is with the International Trade and Customs Practice Group where he has represented U.S. companies in antidumping and countervailing duty proceedings, escape clause actions, export control issues, customs matters, market access issues and dispute settlements before the World Trade Organization .

Please email the author at jbeckington@kelleydrye.com with questions about this article.