WTO Dispute Settlement: Who is Going to Participate?
The Ukrainian Journal of Business Law, Vol.7 #5 May 2009
During the process of Ukraine’s accession to the World Trade Organization (the WTO), as well as following 16 May 2008, the day when Ukraine finally became a Member of the WTO, a number of publications and discussions have focused on the dispute settlement mechanism as one of the main advantages of membership in this organization. The Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) regulates dispute settlement proceedings within the framework of the WTO, and is frequently mentioned as one of the main achievements of the Uruguay Round. The DSU grants access to the dispute settlement mechanism only to the governments of WTO Members which are parties to the Marrakesh Agreement Establishing the World Trade Organization (the WTO Agreement) and which, therefore, acquire rights and obligations under the WTO Agreement. Private parties (such as individuals, companies, non-government organizations and international organizations) cannot directly submit a complaint to the WTO and initiate the dispute settlement process.
This article analyses how governments organize their participation in the dispute settlement process and how private parties, those which are suffering most of all from the WTO inconsistent actions of other members, can defend their rights and interests.
A delegation of a WTO Member entrusted to dispute settlement proceeding
A government of a WTO Member is represented in the dispute settlement process by a delegation. WTO law does not provide for requirements regarding the composition of a delegation. This issue is left to the discretion of the WTO Member as well as the issue of which government body is responsible for representing the government in the dispute settlement process.
In Ukraine the Ministry of Justice is responsible for representing the Ukrainian government before all international dispute settlement institutions.
At the same time, the Ministry of Economy is the main body in charge of all of Ukraine’s WTO-related issues, which has within its structure a department working every day on various aspects of Ukraine’s relations with the WTO and its Members. Following Ukraine’s accession to the WTO in May 2008, the Ukrainian government issued an Instruction(1) approving a priority measure plan connected with the fulfillment of Ukraine’s obligations under the WTO Agreement. This Instruction has entrusted the Ministry of Justice and the Ministry of Economy (and also the Ministry of Foreign Affairs) to prepare proposals regarding representation of Ukraine’s interests in the dispute settlement proceeding within the framework of the WTO. The interesting point is how authority between the Ministry of Justice and the Ministry of Economy would be distributed and how the procedure of representing Ukraine’s interests will be organized. In fact, well-organised administration of a dispute by a member inside the country is a matter of great importance for the successful outcome of a WTO dispute. Diana Tussie and Valentina Delich, after analyzing the dispute settlement between developing countries in “Managing Challenges of WTO Participation”, concluded inter alia that: “In terms of the settling of domestic institutional, the lack of clear and pre-established mechanisms to handle disputes is detrimental to all actors. While the private sector risks arbitrary neglect or dismissal of its case, public agencies experience uncertain ty about their powers and decisions. The considerable cost and expertise required is a problem for developing countries. One feasible cost-effective solution would be to reallocate public officials to create a permanent and multidisciplinary corps of experts to handle trade disputes. In this way, experience and learning could be accumulated by the same agency (…)" (2).
The issue of composition of a delegation was raised initially during discussion of the participation of private counsels on behalf of a government in the proceeding of dispute settlement in the WTO. In EC – Bananas III, the issue arose whether a private counsel, not employed by the government may represent a party or third party before the Appellate Body. On this matter the Appellate Body found:
“There are no provisions in the WTO Agreement, in the DSU or in the Working Procedures that specify who can represent a government in making its representations in an oral hearing of the Appellate Body. With respect to GATT practice, we can find no previous panel report which speaks specifically to this issue in the context of panel meetings with the parties. We also note that representation by counsel of a government's own choice may well be a matter of particular significance — especially for developing country members — to enable them to participate fully in dispute settlement proceedings. Moreover, given the Appellate Body's mandate to review only issues of law or legal interpretation in panel reports, it is particularly important that governments be represented by qualified counsel in Appellate Body proceedings” (3).
In its ruling, the Appellate Body noted that nothing in either the WTO Agreement or the DSU, or in customary international law or the prevailing practice of international tribunals, prevents a WTO Member from determining for itself the composition of its delegation in dispute settlement proceedings. A party can, therefore, decide that private counsel forms part of its delegation and will represent it before the panel” (4).
In Indonesia — Certain Measures Affecting the Automobile Industry, the Panel confirmed the abovementioned findings of the Appellate Body and specified the issue of confidential information received by private counsels in the course of the dispute settlement process:
“We would like to emphasize that all members of parties’ delegations — whether or not they are government employees — are present as representatives of their governments, and as such are subject to the provisions of the DSU and of the standard working procedures, (…). In particular, parties are required to treat as confidential all submissions to the Panel and all information so designated by other Members; and, in addition, the Panel meets in closed session. Accordingly, we expect that all delegations will fully respect those obligations and will treat these proceedings with the utmost circumspection and discretion” (5).
Notwithstanding that only governments are parties to WTO disputes, very often WTO disputes arise from the interests of the private sector. “Many, if not most, of the disputes heard by the WTO are dispute brought by governments at the instigation of an industry or a company. It is well known that in Japan-Film, it was Kodak which masterminded and actively supported the US claims against Japan. In EC-Bananas III, Chiquita played a central role in the involvement of the United States in this dispute”.
The legislation of some WTO Members, in particular the United States, EC and China, provides a possibility for individuals and legal entities to address its government with a request to start a WTO dispute settlement proceeding due to breach of WTO law by another WTO Member. However, in practice only a few such requests from private parties then go to the Dispute Settlement Body (DSB). As for the final result, the government is the last body to decide whether or not it is necessary to apply to the DSB. For instance, very often governments refuse to initiate a dispute in the WTO at the request of small companies. Moreover, “companies or industry associations will not only lobby governments to bring dispute settlement cases to the WTO, they (and their law firms) will often also play an important, ‘behind-the-scenes’ role in planning the legal strategy and drafting the submissions” (6).
Another issue related to the participation of private parties in the dispute settlement proceeding in the WTO which should be highlighted is so-called ‘amicus curiae’ (‘friend of the court(’)) briefs. Although private parties are not entitled to submit a claim to the WTO, a panel and the Appellate Body have accepted amicus curiae briefs from private parties. In such briefs private parties provide, inter alia, information regarding important facts of a case available to them. The acceptance of such briefs is justified by the right of each panel to seek information or technical advice provided for in Article 13 of the DSU. However, the wording of Article 13 permits a panel to choose at its own discretion whether a brief submitted by an individual or body is appropriate as well as whether such information should be taken into account. Thus, in United States Import Prohibition of Certain Shrimp and Shrimp Products, a non-government organization submitted an amicus curiae brief to the panel, which was considered during adoption of the final decision. But in EC – Measures Affecting Asbestos and Products Containing Asbestos, where the Appellate Body even drew up the specific procedure for submission of amicus curiae briefs, none of them were considered by the Appellate Body.
Challenging WTO law in national courts
Ukraine belongs to the list of countries where international treaties ratified by Parliament have a direct effect and the compliance of national measures with international treaties can be challenged in national courts. Pursuant to Article 9 of the Constitution of Ukraine, international treaties that are in force, agreed to be binding by the Ukrainian Parliament, are part of the national legislation of Ukraine7. Moreover, if an international agreement, duly ratified by the Ukrainian Parliament, sets rules other than those envisaged in the respective act of Ukrainian legislation, the rules of the international agreement shall apply(8). The direct effect of the WTO Agreement in Ukraine is also confirmed by the Working Party Report on the Accession of Ukraine to the WTO(9). Thus, private parties can refer to the WTO Agreement while litigating in national courts in Ukraine, invoking provisions of the WTO Agreement.
The direct effect of the WTO Agreement in Ukraine is an exception rather than the rule among WTO Members. It is not only in the EC that individuals rarely, if ever, invalidate domestic measures on the basis of WTO law(10). This is basically the case in all major
jurisdictions around the world, including the United States and China(11).
As was examined by Peter Van Den Bossche, “there is a fierce academic debate on whether provisions of WTO law should be granted direct effect… For the advocates of direct effect of WTO rules, direct effect is a necessary and effective ‘weapon’ against national governments which encroach upon the right to trade freely with foreigners, a right these advocates of direct effect consider to be a fundamental right. John Jackson and many others object to the direct effect of WTO rules. Central to his stance against the direct effect of WTO rules is that direct effect might be dangerous for democracy and that it conflicts with the legitimate wish of legislatures to adapt international treaty language to the domestic legal system… Note also that, while some WTO scholars forcefully plead for the granting of direct effect to WTO law in the domestic legal order of WTO Members, most WTO Members refuse to grant such effect to WTO law. In most WTO Members, a breach of WTO law obligations cannot be challenged or invoked in domestic courts”(12).
We believe that the direct effect of WTO law in Ukraine is a positive rather than a negative feature of our legal system. It provides the possibility for private individuals in Ukraine to defend their rights and interests related to the WTO Agreement before a national court. This may become, to some extent, a guarantee for foreign companies and individuals which conduct business in Ukraine.
It is also recommended that the government adopts a regulation permitting private parties that have suffered adverse effects from a WTO-inconsistent measure of another WTO Member to address the Ukrainian government with a notice about violation of WTO law by another WTO Member, and to request government to initiate a dispute in the WTO. This way the Ukrainian government can defend the rights and interests of national producers and exporters, which are often violated by other countries.
Finally, it is a matter of great importance for the Ukrainian government to organize effective management of WTO disputes involving Ukraine inside the country. Clear and unambiguous distribution of powers between government bodies or accumulation of powers relating to WTO disputes involving Ukraine in one institution would have an extremely positive effect on the successful participation by Ukraine into dispute settlement proceedings.
1. Instruction No. 1570-p On Approving the Plan of Priority Measures Regarding Fulfillment by Ukraine of its Obligations in the Frame of the WTO of 17 December 2008.
3. EU-Bananas WT/DS27/AB/R, para. 12.
4. United Nations Conference on Trade and Development “Dispute Settlement. World Trade Organization, 3.2. Panels”, p. 21.
5. Indonesia — Certain Measures Affecting the Automobile Industry, WT/DS59/R, para. 14.1.
7. Article 19.1 of the On International Treaties of Ukraine Act of Ukraine provides that international agreements ratified by the Parliament of Ukraine are a part of domestic legislation and shall be applied under the procedure provided for the norms of domestic legislation.
8. Pursuant to Article 19.2 of the On International Treaties of Ukraine Act.
9. “Direct effect” of the WTO Agreement in Ukraine is provided for by the para. 91 of the Report of the Working Party on the Accession of Ukraine to the WTO.
10. Marco Bronckers, Private Appeals to WTO Law: An Update, Journal of World Trade 42(2), 2008, p. 255.
12 Peter Van Den Bossche, The Law and Policy of the World Trade Organization (Cambridge University Press, 2008), pp. 66, 67, 73.
is an Senior Associate with
Volkov Koziakov &
Partners law firm