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TWN Info Service on WTO and Trade Issues (Jan19/06)
25 January 2019
Third World Network


Honduras tables proposal on functioning of Appellate Body

Published in SUNS #8831 dated 24 January 2019

Geneva, 23 Jan (Kanaga Raja) – Honduras has tabled a proposal this week at the World Trade Organisation (WTO) aimed at fostering a discussion on the functioning of the WTO’s Appellate Body.

The proposal addresses the issue of timelines for the conclusion of appellate proceedings.

The US has been repeatedly blocking at the Dispute Settlement Body (DSB) the consensus to launch the selection processes to fill four current vacancies on the seven-member Appellate Body (AB).

Among the litany of complaints by the US against the AB is that appellate proceedings are going beyond the stipulated 90-day time period.

[In a post on the International Economic Law and Policy (IELP) blog, Prof Simon Lester, a US-based trade law academic, has said that the Honduran communication provides a good basis for discussing these issues, and expressed hope that there would be broad engagement with it. See: https://worldtradelaw.typepad.com/ielpblog/2019/01/communication-from-honduras-on-the-functioning-of-the-appellate-body-.html]

In its proposal (WT/GC/W/758) circulated on 21 January, Honduras noted that concerns have been expressed regarding the extension of appellate proceedings far beyond the stipulated period of 90 days provided in Article 17.5 of the Dispute Settlement Understanding (DSU).

Others have called for a revision of such deadline in order to be more realistic of today’s complex disputes and the Appellate Body’s workload.

First, said Honduras, Members need to decide what time-period they want to allocate to an appeal after the conclusion of the panel process.

Second, Members may explore how to streamline the Appellate process. The right of appeal extends the period of the dispute settlement process and hence needs to be limited and subject to certain conditions.

Better cooperation among disputing parties and the Appellate Body, and incorporating more stringent adherence to conditions of appeal may reduce unnecessary delays.

Third, Members may have to decide on the nature of the time-period allocated to an appeal, whether such deadline is mandatory and the consequence of its non-respect, said Honduras.

The Honduran communication proposed the following options:

TIMELINES

Adhering to the existing timeline?

a. One option could be to require the Appellate Body to comply with the existing 90-day time-frame set out in the DSU.

b. Could/should the methodology of calculating the 90-day time-frame be modified to refer to working days only, as opposed to calculations that include weekends and official holidays?

c. Could/should the methodology be modified to exclude from the 90 days, the time required for the translation of an Appellate Body report?

d. Could/should, parties agree to extend the time-period for filing an appeal in cases where the Appellate Body is seized with a large number of appeals and present an appeal when the Appellate Body is better equipped to receive it, and able to meet the 90-day time-frame?

Another time-period?

a. Could/should the existing time limit be replaced by a more generous one (e.g. 120 days) or even by a requirement that appeals be processed “as quickly as possible”?

b. Could/should the Appellate Body itself set a time limit for each case de pending on the estimated time it will require to consider it?

Increasing the responsibility of the parties?

a. In the DSU, the maximum period for conclusion of appellate proceedings is 90 days. In practice, the Appellate Body has not respected this period since 2011. In order to enhance the parties’ responsibility and involvement in the appellate process, could/should the rule be modified to require disputing parties, in consultation with the Appellate Body, to agree upon a time limit for consideration of an appeal, failing which 90 days may be applied as a default time-frame?

b. Could/should the rule be modified to require disputing parties to agree, in consultation with the Appellate Body, upon a time limit for consideration of an appeal, failing which the Appellate Body may decide the required time limit?

EFFICIENCY OF THE AB PROCESS

Procedural steps could/should be implemented to help the Appellate Body meet the 90-day or otherwise agreed time limit.

a. Consultations could/should be called for prior to commencement of AB proceedings whereby disputing parties, in consultation with the Appellate Body, could agree whether to extend the 90-day time-frame or limit the scope of the appeal. This could be done as soon as a party expresses its intention to appeal and at the latest [30] [45] days after the circulation of the panel report.

b. Failing agreement between the disputing parties, the Appellate Body could/should be empowered to suggest and eventually to impose measures to enable it to meet the stipulated deadline.

* Such measures may include the Appellate Body’s indication to delete issues from the scope of the appeal and/ or to extend the time-frame. Parties would then need to either agree to limit the scope of the appeal or extend the time-frame.

* The Appellate Body could be empowered to impose limitations on the length of written submissions, limitations on the number of hearings, etc. in order to enable it to meet the stipulated deadline.

* Generally, the AB could/should be requested to issue shorter reports dealing with legal issues in as little detail as possible.

— This may be operationalized by narrowing the Appellate Body’s consideration of issues, including the extent to which each issue is analysed.

— Similarly, cutting out unnecessary or repetitive information from Appel late Body reports may be considered in order to promote efficiency. This could include removing references to past cases, removing summaries, lengthy descriptions of facts, reducing the extent to which party submissions are p resented (as the AB has begun to do) (this would be facilitated if parties’ submissions were public or at least accessible to the WTO Members from the WTO website).

* The Appellate Body may become subject to “mandatory judicial economy” in order to limit the scope and length of Appellate Body reports in general. The existing obligation to “address all issues” could be modified such that the Appellate Body would be prohibited from making a finding or an inquiry into the merits of each issue where it is not necessary for the resolution of the dispute. A prohibition on Obiter Dicta could work in tandem with such an approach.

c. Remand could be introduced. This could reduce the amount of information under review by the Appellate Body. It is worth noting, however, that such a procedure may contribute to an extended time-frame for the overall dispute settlement process.

d. The practice of collegiality* may be modified to the extent to which it increases delays.

(* See addition below.)

e. The capacity of the Appellate Body to deal with a greater caseload may be increased through various means.

DEALING WITH REPORTS CIRCULATED AFTER EXPIRATION OF TIME LIMIT

The consequences of expiration of the agreed or 90-day period depend on whether the said time-period is mandatory and whether its non-respect is fatal, leading to the automatic adoption of the prior panel report.

a. Parties may enter into consultations prior to the expiration of the 90-day period to agree to extend the time-frame in light of the impending delay. Guidelines may be developed in this regard.

b. The delay may be rectified by parties ex post-facto by way of deeming letters to the DSB recognizing the delivery of the Report as having been made within the stipulated time-frame.

c. A report circulated after the expiration of the 90-day or otherwise agreed time-period may be subject to a positive consensus procedure for adoption. Such procedure may or may not include the disputing parties’ votes in such positive consensus.

d. The Appellate Body may be permitted, under certain conditions, to present a Report after the expiration of the stipulated deadline without losing jurisdiction. The Appellate Body may, for instance, be required to demonstrate the existence of “exceptional or mitigating circumstances” that caused the delay.

There may be several ways to operationalize such a provision.

For instance:

* the Appellate Body’s justification may be considered sufficient;

* the justification may require further review and approval by a higher authority.

For instance:

i. the Director-General;

ii. a group of the three Chairpersons of the DSB, the General Council and the Trade Policy Review Body; or

iii. the Director-General and the group of the three Chairpersons acting together.

The time-frame for such a review would be [10 days] from the initially agreed or determined deadline.

Meanwhile, Honduras has also re-circulated as a formal communication (WT/GC/W/759) an earlier non-paper (JOB/DSB/2) that it had tabled on 23 July 2018 on addressing Rule 15 of the Working Procedures for Appellate Review.

Rule 15 of the Working Procedures currently states that: “A person who ceases to be a member of the Appellate Body may, with the authorization of the Appellate Body and upon notification to the DSB, complete the disposition of any appeal to which that person was assigned while a member, and that person shall, for that purpose only, be deemed to continue to be a member of the Appellate Body.”

The Honduran proposal addresses the issue of when an Appellate Body member can continue to serve beyond the four-year term for the purpose of completion of duties on an appeal, as well as the issue of who decides if an Appellate Body member should serve after his/her four-year term has expired.

Chakravarthi Raghavan, Editor Emeritus of the SUNS, adds:

For a treaty organisation whose members and the secretariat constantly proclaim that the WTO is a “rules-based” multilateral organisation, the collegiality practice of the AB is not based on any Rule in the DSU, but on the Working Procedures of the AB. Though the AB, when it drew up these “working procedures”, notified them to the DSB, there is nothing in the DSU itself that enables this most un-judicial practice. How the AB, a creation of the WTO treaty, could adopt working procedures not rooted in any provision of the treaty itself, is something that makes the WTO and its AB a “strange animal”.

The United States, which under the Trump administration, has been raising s o many objections to the AB and its functioning, has never hitherto raised any objections or criticism of this.

Rule 4 of the AB’s working procedures provides for “Collegiality”. Para one of this Rule says: “To ensure consistency and coherence in decision-making, and to draw on the individual and collective experience of the Members, the Member s shall convene on a regular basis to discuss matters of policy, practice and procedure.”

If the collegiality practice were limited to this, there may not be a reason for serious objection.

However, para 3 of the same rule provides: “In accordance with the objectives set out in paragraph 1, the division responsible for deciding each appeal shall exchange views with other Members before the division finalizes the appellate report for circulation to the WTO Members. This paragraph is subject to paragraphs 2 and 3 of Rule 11 (paras which require any Member having a conflict of interest not being a member of the division bench hearing the appeal or involved in the consultations of the division bench with other AB members)”.

Though these AB rules of working procedure had not been made public in 2000 (5 years after the WTO came into being), it would appear (in the light of conversations this writer then had with panel and AB members after they handed down their decisions) that after the hearing of parties and third parties in a dispute, panels and the AB division, in reaching their conclusions, are “guided” by officials of the legal (and substantive) divisions of the WTO secretariat “servicing” the panel; and that in most cases the secretariat also drew up a draft report.

And in the case of the AB, the three-member division bench interacts throughout, without the presence of the parties and third parties to the appeal, with other members of the AB, and their reports too are drafted by the AB secretariat’s legal assistance.

In any domestic jurisdiction (whether of Anglo-Saxon or continental legal systems), any and/or all of these practices are enough to make a ruling or decision (judicial, quasi-judicial or administrative), illegal and invalid.

The WTO apparently is a different animal, and part of the DSU review process to be undertaken (mandated under the Marrakesh Treaty and the Doha Ministerial Declaration and Work Programme) at the WTO must address these and remedy them, “and ensure adopted rulings at the DSB do not add to or diminish the rights and obligations provided in the covered agreements.”

[For more detailed discussion, see Raghavan, “Trade: US double standards in complaints against AB”, Parts I & II in SUNS #8258 dated 9 June 2016 and #8 259 dated 10 June 2016.]

 


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