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Will Appellate Body listen to “strong signal” from General Council?

by Chakravarthi Raghavan

Geneva, 22 Nov 2000 -- The General Council of the WTO, meeting in an urgent special session and after nearly 3-1/2 discussion, sent out a “strong signal” to the Appellate Body (AB) that the issue of participation of non-members in the Dispute Settlement Process was not a ‘procedural’ issue but a very substantive one that only the members can decide.

At the end of the meeting, the Chairman of the General Council, Amb.  Kare Bryn of Norway told a media-briefing that he would be getting in touch with the AB and convey to them “the sentiments from the meeting that the AB has to exercise extreme caution on this issue.”

“I am quite sure the members of the appellate body can draw conclusions,” Bryn added.

At the General Council, save for the United States which gave full backing to the AB for having opened the way for NGOs to file amicus briefs, no one else supported the action of the AB. An overwhelming majority of members spoke out strongly critical of, and opposing the action of the AB in a matter which they insisted was not a ‘procedural’ issue that the AB could decide under ‘working procedures’ but a very substantive issue of rights and obligations of members under the WTO agreements, including the Dispute Settlement Understanding (DSU) which they alone were competent to decide.

There were in fact demands that the AB should be asked to withdraw its rule of additional working procedure. However other members said that it was not feasible for the General Council to do this, but that they hoped the AB would draw appropriate conclusions.

No member of the Appellate Body was present. But if the WTO has the same kind of technical facilities as other international organizations, proceedings of such meetings could easily be listened in to by such personalities from their offices.

Any event, trade ambassadors inside the closed-door formal meeting of the General Council said that the Director of the Appellate Body division secretariat, Mme Debra Steger (a Canadian national), was present in the meeting, occupying a chair at the back of the hall, and listening to the statements.

Trade officials said that as a matter of fact on 17 November, after considering the requests from the NGOs for permission to file briefs, the AB had decided that none of them met the criteria set by the AB and hence permission had been refused, but that one would have to wait for the AB’s ruling in the appeal (expected in February or so) for the reasons of the AB.

The general view among many members Wednesday evening was that good sense would prevail and that the AB would perhaps reconsider its position (that it could do whatever it has not been forbidden to do under the rules).

This was implied in the statement of India’s ambassador, S.Narayanan who set out in detail how the AB actions was not provided in the DSU, and how the negotiating history showed that the idea of allowing NGOs access to the dispute settlement process had been proposed but rejected during the negotiations, and that it would be best if the AB confined itself to its mandate of dealing with issues of law and legal interpretation. “When it goes beyond its mandate and starts making rules or amending rules and thus encroaches into what is admittedly Member’s territory, it creates a problem for itself and the entire membership,” he said.

Narayanan then added: “My friends know that I consider the AB of the WTO to be the most powerful institution in the world, more powerful than the G-8. What the AB decides has commercial, economic and social implications for 139 countries in the world. The power of the AB should be frightening to everybody, including the AB members themselves. The membership has created this powerful institution in good faith, in the expectation of common good for all. The membership has always shown well-merited deference to the AB. Is it too much to expect from the powerful AB to show deference to the feelings of almost the entire Membership that in accepting unsolicited amicus curiae briefs and seeking amicus curiae briefs, the AB is acting without mandate.”

Unfortunately for Mr.Narayanan, there are no examples in history of those wielding absolute power, however frightening to others, are frightened themselves and hence desist, but plenty of examples of using it to unwelcome ends for themselves and others.

There were some members, speaking privately after the meeting, who felt that the AB had merely laid the ground for the future and would slowly expand its remit. They noted that despite the strong views expressed at the time of the adoption of the shrimp-turtle dispute on this issue, the AB waited for nearly a year (while panels were beginning to consider amicus briefs from NGOs put up to them by the secretariat and this was becoming a practice), and then came back to the issue in the Bismuth steel case (of the EC vs US) to assert the AB’s right to accept briefs (on the ground that the rules had not prohibited it from so doing). Again ignoring the very strong views that came out at the DSB at that time, the AB had now issued a working procedure applicable to the asbestos dispute.

Unless the General Council and the members act, if necessary by a majority vote, to curb this ‘absolute power’, the erosion of the rights of members and creation of new obligations on members would continue till the WTO system loses all legitimacy and the public at large in the developing countries make it virtually impossible for their governments to enforce the WTO writ in their countries - even when faced by trade sanctions.

The Special Session had been convened at the request of the informal group of developing countries over the AB’s action on 8 November in setting a procedure for non-governmental organizations to seek permission and file amicus curiae briefs to the AB division bench hearing the appeal of Canada against the EC over the French ban on import of asbestos and products.

The special procedure set by the AB and posted on the WTO website was circulated the next day by the WTO secretariat to the NGOs on its roster, and several of them posted it on their bulletin boards as an invitation from the AB calling for amicus briefs.

The issue figured at the informal consultations on ‘external transparency’, and then at a meeting of the informal group of developing countries (IGDC), which asked its chair, Amb. Mrs. Faiza Aboulnaga of Egypt to meet the GC chair and ask for a formal special council session on the subject.

A chairman’s statement circulated to the Special GC session said that if members could focus the debate and comments on how to deal with an area of DSU now subject to differing interpretations, the WTO and the dispute settlement system would benefit from addressing the systemic issue.

The secretariat background note which, Bryn told the media later, showed that “the appellate body was very defensive”. The note brought out that the ‘additional working procedure’ adopted by the AB division hearing the appeal was in fact taken “after a comprehensive study and careful consideration of this question by all Members of the AB.”

[The DSU provides for every appeal to be heard by a division of three members, and has no provision for the division to consult other AB members on substance or procedure.]

Egypt’s Aboulnaga, in a statement on behalf of the IGDC said that it was strongly felt at their meeting on 10 Nov that the actions of the AB and of the secretariat need serious consideration by the whole membership and at the level of the GC.

While the AB was entitled to adopt its own working procedures, this decision of theirs went beyond that to “an outreach activity, seeking information from individuals...not mandated in the DSU.” It was hence a substantive question about the functioning of the AB itself, and acting de facto to amend the DSU.

While the DSU gave panels the right to seek information (Art 13.1) to reach a fair finding, the AB’s consideration was confined to issues of law in the panel report and legal interpretations developed by a panel.  The AB members were of recognized authority and demonstrated expertise in law and it was difficult to contemplate need for the AB to receive briefs concerning issues of law.

It was ironic that the AB’s decision was conveyed to members one day before the overall relationship of the WTO with NGOs was to be considered within the external transparency consultations.

“This matter is not a transparency issue, but one of the AB crossing its limits.”

The AB is part of the WTO, governed by rules negotiated by members. It is not a “*supra body” within the WTO. It is for the General Council to make appropriate arrangements for consultations and cooperation with NGOs.

It was “crystal clear” there was no agreement among members on the issue of amicus curiae briefs - demonstrated during the DSU review process before Seattle, in the DSB over the reports on the shrimp-turtle and US-British Steel cases. The WTO is a member-driven intergovernmental organization and this basic and fundamental nature of the organization should and will remain as such. “If in future, the AB might not find a positive provision of this nature in the current rules, the matter should be referred to members.

If the implementation of this decision (of the AB) is permitted, a severe harm would be done and there would be a grave imbalance to the rights of the WTO members vis-a-vis external parties or individuals, not even contractually committed to the obligations of the system.  Individuals, NGOs, business community and interest groups would have the right under the AB’s procedure to get their views in a case known at the appeal stage when that right is not available to WTO members (other than parties and third parties).

If the procedure, intended for this appeal only, were allowed to apply, it would create further pressure for future cases and set a precedent.  The likely beneficiaries would be those with capacity in terms of resources and time—entities with more access to WTO work and documents, operating mainly in the developed world. “Electronic means do not help the disadvantaged in remote areas who are increasing in numbers with the further widening of the digital divide.”

India’s Narayanan said that though the GC chair had suggested that the issue involved an area of DSU with differing interpretations, in fact as far as the Members were concerned there were not many differing views about the interpretation of the DSU as it stood now. The debate in the special session was not about the specifics of the asbestos dispute nor about the desirability or otherwise of providing amicus curiae briefs—matters for the WTO members to deal with if they desired. The debate was not also about the so-called transparency issues. “The debate is one essentially dealing with the competence of the AB to accept unsolicited briefs and the competence of the AB to solicit amicus briefs.”

The additional procedures set by the AB under its working procedures enables any person, natural or legal, other than a party or third party to the dispute, to file a written brief with the AB.

Tracing the evolution of the AB’s approach to amicus briefs, Narayanan said the issue had first come into sharp focus in the shrimp-turtle case, where the panel had said it was not entitled to accept such briefs under Art.13 of the DSU, and that accepting ‘non-solicited’ information from NGOs would be incompatible with the DSU provisions. In that case the AB over-ruled the panel by saying that the panel’s reading of the word ‘seek’ (in Art 13.1) was “unnecessarily formal and technical in nature” and that a panel had “discretionary authority either to accept and consider or reject information and advice submitted to it.” When the AB report came up before the DSB, a large number of members pointed that the AB by giving such a new interpretation had “overstepped the bounds of its authority” and undermined the balance of rights and obligations of members.

Subsequently, in the Bismuth Carbon Steel case, the AB said that neither the DSU nor the working procedures explicitly prohibit acceptance or consideration of such briefs. Again when this report came before th DSB, a number of delegations expressed serious concern with the AB’s interpretation.

But the AB has obviously ignored the overwhelming sentiments of members and the communication now received from the AB, actually indicates that it wants to go one step further in total disregard of the views of members and wants to introduce procedures amounting to soliciting amicus curiae briefs from NGOs.

The AB claims that it is acting pursuant to Rule 16.1 of the working procedures - a basically ‘residuary’ rule enabling a division to adopt an appropriate procedure for the purposes of that appeal only, provided this was not inconsistent with the DSU and covered agreements. Ignoring the powerful sentiments expressed by the members at the DSB in the Bismuth Steel dispute, the AB was taking recourse to Rule 16.1 to justify its latest action. Even though an overwhelming number of members feel even accepting unsolicited briefs is a substantive issue that could not be dealt with through Rule 16.1, the AB through its latest rule was proceeding on the basis that soliciting amicus curiae is not a substantive matter. “This is totally unjustified.”

The AB has said it had adopted the additional procedure after consulting the parties and third parties. Though the factual note of the AB secretariat is silent on this, the parties to the dispute (Canada and the EC) did not want this additional procedure, and one of the third parties (Brazil) opposed it. From the speeches here, it was apparent that one of the third parties (the US) supported the AB’s proposal. Though the AB could say ‘consultations’ did not mean ‘concurrence’, the phrase used in the note left a “misleading impression.”

As for the claim that the new procedure was intended to “discipline the process” and allow the division bench to manage in a fair, legal and orderly manner a difficult situation that the members of the AB anticipated would arise in the appeal, “the reality is that the AB was not exactly acting within the confines of the law, the DSU... (and) the real effect is to virtually seek or invite amicus briefs... the difficult situation has been created by the AB by its own rulings in the Shrimp-turtle and Bismuth Steel cases.. a more difficult situation is now being created for members by inviting amicus briefs in the name of managing in a fair legal and orderly manner... the argument that the additional procedure adopted in this appeal was designed to discipline the process are far from convincing.

It was not clear from the AB secretariat’s note about the additional procedure being posted on the WTO website after its circulation to members, why this was necessary to do, and why the secretariat “announcement” was sent by email to subscribers of the NGO bulletin. It was unlikely that the AB secretariat was not aware of the steps that would automatically follow from posting the procedure on the web site.  “it is not unfair to conclude that the AB knew or should have atleast known that putting the additional procedure, designed to discipline the process and specific to the particular appeal, on the WTO web site would virtually amount to an invitation to the hundreds of NGOs to file such briefs.”

The DSU is quite clear that those WTO members, not a third party before a panel, could not become a third party before the AB, and there were prescribed limits to third party submissions. But those filing an amicus brief under the additional procedure, need not have filed any brief before the panel. There is even talk that WTO members could also file briefs before the AB through the route of the reference in the additional procedure to ‘legal persons’.

“I don’t think that any WTO member would be particularly pleased at the prospect of characterizing itself as something other than a Member to get the privilege that non-Members are being given.”

The additional rule also calls on those seeking leave to file briefs to identify the specific issues of law and legal interpretations that are the subject of the appeal. “It is ironic that the AB which comprises persons of recognized authority, with demonstrated expertise in law should look for outside guidance in the form of amicus briefs.”

Narayanan said the question of providing for amicus curiae briefs in disputes was actively considered by the informal group on institutional issues. In Nov 1993, one major delegation (a reference to the US) had made a negotiating proposal that a panel may invited interested persons to present views in writing. This was not accepted due to overwhelming opposition.

“What the AB is doing now is to introduce into the dispute settlement system of the WTO, an element considered and rejected by the Members during the negotiations.”

In an attempt to explain this away, the US ambassador Mrs.Rita Hayes in an intervention, claimed that the proposal had been withdrawn because it was felt that the provisions of the DSU would cover this.

The DSU, Narayanan insisted, covered both procedural and substantive aspects, and it had been consciously provided in the DSU that disputes could be raised even if there was only a violation of the procedural aspect. Members had negotiated it with great care and after much deliberations. By changing these procedures the AB was changing the rights and obligations of the WTO members.

If a member violated the DSU procedures, the aggrieved member could initiate panel procedures and if necessary go to the AB. “The question today is what Members should do if the AB itself chooses to go beyond its mandate and virtually amend the DSU.”

The effect of the AB’s approach on amicus briefs was to strike at the intergovernmental nature of the WTO. The ultimate compliance with a ruling is to be done by governments, not others. A government’s position in a dispute are arrived at after consultations with domestic stake-holders. If governments know their NGOs have a further chance to influence the dispute settlement mechanism, they would pay less attention to finalising their positions, and it may even have implications for compliance. The AB’s approach also put the developing countries at a greater disadvantage in view of the relative unpreparedness of their NGOs who have much less resources and wherewithal to send briefs.

The AB has no competence to deal with this issue. What was most disconcerting was that the AB, always very rigorous and intense in analysis of provisions of various agreements and various elements like ordinary meaning of words and the Vienna Convention on Law of Treaties as well as negotiating history should be arguing it has the authority to receive unsolicited briefs  as well as seek such briefs in the absence of a prohibition in the DSU.

“A rule-based system means everybody in the system including judicial organs function within the framework of existing rules.

“The AB is at its best when it confines itself to its mandate, to deal with law and legal interpretation. When it goes beyond its mandate and starts making rules or amending rules and encroaches into what is admittedly Member’s territory, it creates a problem for itself and the entire Membership.”

Earlier, Uruguay in its intervention, similarly challenged the action of the AB and said that only the members had the right to decide these questions. The issue was not a procedure but a very substantive one.  The AB’s action encroached on the rights of members, set out in negotiated agreements.

Canada said the issues of transparency and participation in dispute settlements should not be confused. While Canada fully supported greater external transparency, the amicus issue was not a transparency issue, but went to the fundamental issue of who could participate in a WTO dispute settlement. Should it be limited to governments or non-governments could also be entitled. The issue had important systemic and institutional implications and could not said to be exclusively procedural. The participation of NGOs in the WTO dispute system had to be examined consistent with the principal objectives of the system, and also whether the amicus petitions issue should be resolved on an ad hoc basis or by the membership as a whole.

Canada was hence concerned that the AB division had chosen this particular moment to adopt these new procedures.

The US however said the AB had acted appropriately in adopting the additional procedure. In the US view there was value in establishing amicus procedures in the context of an individual case because a concrete dispute provided a clear context of how such procedures would work.

Earlier Hong Kong China shared the general concerns and said it was a systemic, constitutional issue. This idea had been raised during the Uruguay Round negotiations, negotiated and rejected. A quick research into the DSU drafting history would show this. Similar proposals had been made during the DSU review and there was no consensus. In this background, the answer was clear that the issue was a substantive one.

the HKC could find no provision in the DSU explicitly providing for the AB to solicit, receive or consider amicus briefs. “Seeking” information as provided in Rule 13 did not mean “soliciting legal arguments”. The reliance on Rule 16(1) of the AB’s Working Procedures, to make new rules of substantive or systemic significance as when the AB is pleased, without going through legislative process, will undermine the fundamental objectives of the DSU. Though set for this case only, it would create a precedent. It was not clear whether under the procedures set, WTO members not parties or third parties could make use of it. If not, WTO members would be at a disadvantage. The AB decision would create an impossible burden for any developing member who may wish to comment on or respond to the amicus briefs. If 20 briefs are received, it would mean 400 pages of legal arguments to be responded to in a few days time. While the invitation was open-ended, attention to it was drawn only for a “restricted” group of NGOs who are ‘subscribers’ to the WTO’s NGO bulletin Brazil’s Amb. Celso Amorim, in a brief but pointed intervention, said the discussion had nothing top do with transparency or participation of NGOs or civil society in WTO procedures. It was legal issue.

The crux of the issue lay in the way the AB had interpreted the “working procedures”. The AB’s findings on amicus curiae briefs rely heavily on the authority given to panels and AB to draw their own ‘working procedures’. The AB has read into it more than what is in it.  Working Procedures mean only what the words say. A procedure is a formal step to be taken in a legal action, and ‘working’ before ‘procedure’ further qualified it.

As a result of the new procedure, a member would be obliged to read and respond to written briefs by “any person, natural or legal”, and to make sure that its own “natural or legal” persons that file briefs have their rights fully observed by the panels and AB. Members would now have to make sure that the system operates in a way that tilts the field in favour of members whose natural or legal persons are better funded and more influential in the international community, and not necessarily for legitimate reasons.

The WTO jurisprudence should not consolidate the notion that in the process of drawing up ‘working procedures’, panels and AB may add or subtract members rights and obligations.

Brazil was also concerned that the evolution of the jurisprudence would bring the WTO into gray and problematic areas. Brazil admired the work of the AB, but on this issue “we are dealing with a matter that must be decided by Members.”

Singapore for the ASEAN said the issue was one relating to the integrity of the WTO as an intergovernmental organization. Though the issue of amicus briefs had been debated in the UR and in the DSU review, and there was an overwhelming sentiment that only members who are parties and third parties should participate in disputes, briefs from others have been accepted. It was hence with great disquiet that notwithstanding the strong sentiment of WTO members, the AB had chosen to proceed with the adoption of this procedure. It was only Members who have the exclusive authority to adopt interpretations. Even in cases where there is no expressed prohibition, panels and the AB should be sensitive to the sentiments of the majority of members.

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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