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TWN
Info Service on WTO and Trade Issues (May25/08) Yerevan, 25 Apr (D. Ravi Kanth) — The European Union on 24 April initiated arbitration proceedings against China at the World Trade Organization, after a WTO dispute panel had largely ruled in favour of China in a rather complex dispute involving the WTO’s TRIPS Agreement, said people familiar with the ruling. In its “Notice of Appeal”, the EU also included the full text of the panel report, as provided for in the agreed arbitration procedures between China and the EU. At issue is the EU’s complaint that certain measures implemented by China allegedly adversely affected the protection and enforcement of intellectual property rights. The dispute panel ruled that on the issue of the anti-suit injunction (ASI) policy prohibiting the other party from taking certain legal actions in other jurisdictions, the EU had proved the existence of such a policy, but “as to the consistency of the ASI policy with the TRIPS Agreement”, the EU had not demonstrated an inconsistency with Articles 28.1, 28.2, 41.1 and 44.1. As regards the consistency of the five individual Chinese court decisions granting ASIs with the TRIPS Agreement, the panel found that “the European Union had advanced identical claims and arguments as those raised with respect to the ASI policy.” Therefore, the panel “declined to make findings on these claims concerning the five individual decisions, as any findings would be duplicative of the findings on the ASI policy.” As regards the transparency obligations under the TRIPS Agreement, the panel found that China had acted inconsistently with the publication obligation in Article 63.1 of the TRIPS Agreement by failing to publish the decision issuing an ASI in Xiaomi v. InterDigital. The panel found that China was not prepared to supply the information requested by the European Union and had thus acted inconsistently with Article 63.3, first sentence, of the TRIPS Agreement. Finally, with respect to the European Union’s claims that the five ASI decisions by Chinese courts were inconsistent with Section 2(A)(2) of China’s Accession Protocol, the panel found that the European Union had not demonstrated that Chinese courts had applied China’s laws, regulations, or other measures in a non-uniform, not impartial, or unreasonable manner. CHINA WELCOMES PANEL RULING On 23 April, a spokesperson of China’s Ministry of Commerce welcomed the panel ruling, stating that Beijing “has always attached great importance to the protection of intellectual property rights.” China said that it has “received the Notice of Appeal from the EU and will handle it according to the relevant rules of the MPIA [Multi-Party Interim Appeal Arbitration Arrangement] to safeguard China’s legitimate rights and interests.” China also said, “as an institutional arrangement of WTO Members to maintain the operation of the dispute settlement mechanism, the MPIA is conductive to maintaining the security and predictability of the multilateral trading system.” EU CHALLENGE UNDER MPIA The EU initiated arbitration proceedings under Article 25 of the WTO’s Dispute Settlement Understanding (DSU) to review the findings of a WTO dispute panel (DS611) regarding the EU’s complaint challenging China’s measures that allegedly adversely affect the protection and enforcement of intellectual property rights. The EU’s request was circulated to WTO members on 24 April. Under Article 25 of the DSU, the two parties to a dispute can carry out an agreed alternative appeal process for facilitating final resolution of the dispute. The panel report was issued to the parties on a confidential basis on 21 February 2025. At the EU’s request on 31 March – which under the agreed procedures is deemed a joint request from both parties – the dispute panel in this proceeding suspended its work and, therefore, did not circulate its final report to all WTO members. In its decision, the panel found that the European Union had proved that China’s unwritten anti-suit injunction (ASI) policy existed, but rejected the European Union’s claims that the ASI policy violated the WTO TRIPS Agreement with respect to the exclusive rights conferred on patent holders (including the right to license the patent), the application of enforcement procedures, and the authority to issue injunctions. The panel rejected the European Union’s interpretation of the obligation for Members to “give effect” to the provisions of the TRIPS Agreement. The panel declined to rule on the European Union’s TRIPS claims on five Chinese court decisions. The panel also rejected the European Union’s claims that, through five court decisions, China had applied its legal framework governing the adoption of ASIs in a non-uniform, not impartial, or unreasonable manner inconsistently with its Accession Protocol. The EU said it “appeals and requests the Arbitrators to reverse the conclusions and related findings of the Panel containing the errors of law and legal interpretations identified below and, where appropriate, to complete the analysis on the basis of the Panel’s findings and uncontested facts on the record.” According to the EU, the Panel erred in the interpretation of Article 1.1, first sentence, of the TRIPS Agreement by determining that this provision merely requires WTO Members to implement the provisions of the Agreement within their domestic legal systems and does not require them to refrain from taking measures that undermine the protection and enforcement of IP rights in the territories of other Members. Accordingly, the EU requested the Arbitrators “to reverse the Panel’s findings on the interpretation of Article 1.1, first sentence, of the TRIPS Agreement in paragraphs 7.217, 7.224 and 7.226 to 7.231 of the Report.” According to the EU, “the Panel erred in the interpretation of Article 1.1, first sentence, in conjunction with Article 28.1 of the TRIPS Agreement, by finding that these provisions merely require Members to ensure that, within their domestic legal systems, a patent confers on its owners the exclusive rights set forth in Article 28.1 and that the European Union has not demonstrated that China’s ASI policy is inconsistent with Article 28.1, whether or not read in conjunction with Article 1.1, first sentence.” Consequently, the EU requested the Arbitrators “to reverse the Panel’s conclusion and related findings on the interpretation of Article 1.1, first sentence, in conjunction with Article 28.1 of the TRIPS Agreement in paragraphs 7.240 to 7.242 and 8.2.a. of the Report.” +
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