A brief note before proceeding to the paper: I used Peter’s textbook on the WTO for nearly ten years. Although I did not agree with everything in the text, including its heavy reliance on Appellate Body reports to explain WTO law, the book is learned and erudite, and quite helpful for students.
There is and can be no doubt that Peter is an eminent expert in the field and that his views on the present crisis merit close – and, indeed, critical – attention. Hence this long-form post.
The paper opens with a brief and useful discussion of the WTO dispute settlement mechanism and the features that make it unique among systems of international dispute resolution. The author observes that the WTO dispute settlement mechanism – especially its appellate feature – was “admired […] by international legal scholars” and “coveted” by practitioners; it served as a model of sorts for the EU’s proposed “international investment court” and borrowed almost verbatim for the ASEAN dispute resolution mechanism.
What are the causes of the present crisis? The paper identifies four “related reasons”:
- “[T]he workload of panels and the Appellate Body significantly augmented due to the increased size and the complexity of the disputes” and resources fell short;
- The paralysis of the “legislative” functions of the organization “made Members seek change to WTO law through adjudication”;
- “[S]ome Members, and in particular the United States, increasingly made antagonistic allegations of judicial overreach by the Appellate Body and accused it of unacceptable disregard of procedural rules”; and
- “[T]he United States took overt as well as covert action affecting the independence and impartiality of Appellate Body members, primarily in the context of the process of reappointment.”
The paper then goes on to discuss the appointment blockage leading to “a court without judges”. In setting out the US concerns, the paper identifies arguments about the timelines and also whether outgoing Appellate Body members could complete their appeals after their terms expired. It also sets out the principal substantive concerns of the United States:
“(3) issuing ‘advisory opinions’ on issues not necessary to resolve the dispute; (4) reviewing factual findings of panels and, and in particular, panel findings on the meaning of the respondent’s domestic law; and (5) treating its rulings
as binding precedent”
Next there is a very long paragraph examining the various proposals for amendments submitted by the European Union and others; the United States rejected all of these. The result of the impasse is that WTO Members are “deprived of” appellate review, and that the DSB may not adopt appealed panel reports. Thus, “[t]he end of appellate review by the Appellate Body has undermined the whole WTO dispute settlement system.”
The paper then moves on to discuss the “governance” of appellate review in the WTO. Turning to the Appellate Body itself, the paper notes – and I cannot do the passage justice except by reciting it in whole:
Paragraph 13 stipulates that the Appellate ‘may uphold, modify or reverse’ the legal findings and conclusions of a panel. In practice, the Appellate Body has interpreted its mandate broadly and, as already referred to above, has been strongly criticized for doing so by the United States. It has heard appeals of factual findings which were allegedly inconsistent with the legal obligation of the panel to make an objective assessment of the facts and therefore constituted a legal issue subject to appellate review. Also, the Appellate Body has, in addition to upholding, modifying and reversing panel findings and conclusions, on occasion, and under specific conditions, completed the legal analysis of a panel, and has thus acted as a first-instance adjudicator and not as an appeals tribunal. It did so not to leave a dispute unresolved.Bold added
After discussing the appointment process for Appellate Body members and the Secretariat, the paper turns to “aspects of malgovernance”. It addresses in detail the various issues raised by the United States (“judicial activism”, “rendering advisory opinions”, “appellate review of factual findings”, and precedent); it then discusses the impact of “persistent and unfounded allegations of judicial overreach”. In another long paragraph, the paper seeks to address the charge of “judicial activism” by relying on the Appellate Body’s “rigorous adherence” to the principles of treaty interpretation in the VCLT. It then notes:
While it is not uncommon for a WTO Member in the immediate aftermath of an unfavorable ruling to accuse the Appellate Body of having added to or diminished that Member’s WTO rights and obligations, in most instances this accusation is primarily for domestic consumption and short-lived. The latter is not the case for the United States, which has, with regard to case law with which it does not agree, maintained strongly-worded accusations of judicial activism. […] However, while the United States makes antagonistic allegations of judicial activism regarding Appellate Body case law it does not agree with, it has not convincingly demonstrated that the Appellate Body’s interpretation in these instances is not in accordance with Articles 31 and 32 of the VCLT.56Bold added
The paper then turns to “inadequate protection of the independence and impartiality of the Appellate Body and its Secretariat” and “unrealistic timeframe for appellate review”, and concludes by arguing that:
An international adjudicative body, court or tribunal can only function effectively as an adjudicator
when three essential conditions are met, namely:
* it acts, and is allowed to act, within its mandate as an adjudicator;
* it is independent and impartial and its independence and impartiality is respected; and
* it settles disputes in a timely manner, consistent with the requirements of due process, and is
endowed with the financial and human resources to do so.
For the WTO Appellate Body, these conditions have not been met for some time or have never been
met. The rules and procedures for the governance of WTO appellate review and the manner in which
these rules and procedures have been (ab)used, have resulted in the current crisis of WTO appellate
review and the undermining of the credibility and effectiveness of the whole WTO dispute settlement
There is much to unpack in this paper; I cannot hope, in this brief post, to adequately address the complexities of either the underlying crisis or the paper’s analysis of it. My response is further complicated by the fact that I approach the issues from multiple perspectives: a practitioner of international trade law and litigation, an academic teacher and observer of the institution, a former Canadian government official, a former WTO DSU negotiator, and a regular observer and contributor to the “interpretive community” of international trade law.
This post is meant to be an initial volley to engage with the paper, in the hope that we could then have a vigorous discussion about the path ahead.
To start with, a minor quibble: I’m not entirely sure in what sense “practitioners” of international law could be said to have “coveted” the Appellate Body: multilateral environmental negotiators stayed away from formal dispute resolution, and few regional trade agreements have established an appellate framework. And although the paper is correct in observing that the EU’s proposed “international investment court” is inspired in part by the WTO, whether it is actually going anywhere is an open question.
The bigger issue with the paper is its analysis of the crisis and the solutions it proffers.
Blockage of the appointment of Appellate Body members
The paper identifies this as the first aspect of “malgovernance” of the WTO appellate review. That this happened well into the life of the WTO and became an issue only after fifteen years of expression of concern by the United States about the direction of the Appellate Body is left unsaid. There is also no mention of the drama of reappointment that immediately preceded the blockage. Nor of the inflated language of the attacks on the US position, and the highly problematic intervention of the Appellate Body in that process – that is, the direct intervention of an “appellate court” in the process of appointment of one of its “judges”. The paper then notes, “The appointment of ICJ judges, for example, ‘only’ requires majority support in the Security Council and the General Assembly” without pointing out that the ICJ, unlike the WTO dispute resolution mechanism, does not have mandatory jurisdiction. In discussing the possibility of a majority vote in the General Council or the Ministerial Conference – though it dismisses its likelihood – the paper states, “dispute settlement matters have on occasion been discussed in the General Council.” More on that later.
The blockage was not sprung on unsuspecting WTO Members; it came after the Appellate Body, the Membership, and the Secretariat elected not to heed the message of three non-renewals. The United States had already failed to renominate two of its own candidates, thus unambiguously signalling that reappointment is not a right. When it came to the non-renewal of the term of a non-US Appellate Body member, the United States could have indicated its unwillingness to reappoint a sitting AB member without further explanation; it chose, instead, to explain why. In return, the reaction of the EU and other Members was, at best, overblown. Here is the EU:
[T]he EU was seriously concerned about the US veto against the reappointment of Mr. Chang on the basis of his alleged track record on the Appellate Body — alleged because rulings of the Appellate Body were made in a collegiate manner. This was unprecedented and posed a very serious threat to the independence and impartiality of current and future Appellate Body members. In the EU’s view, in order to ensure the independence of the Appellate Body, reappointments should be more or less automatic if the Appellate Body member indicated that they were available to server for a second term of office.Bold added
The first observation – reiterated in the ill-advised letter by the Appellate Body to the Chair of the DSB – is simply nonsensical; taken literally, it violates a sacrosanct principle of judicial conduct – that a judicial decision-maker must be present to hear the arguments of the parties; it makes a mockery of “Divisions” of the Appellate Body, and renders accountability a nullity. The EU’s second observation is hyperbolic; its third, legally untenable and institutionally deeply problematic. As one observer pointed out, “I think it fundamentally wrong to characterize the sovereign exercise of a right to withhold consent in an international institution as an instance of malgovernance.”
Brazil also talked about “independence and impartiality” – and raised the stakes: “What was at stake was whether all Members could continue to use the dispute settlement system, and the Appellate Body, with confidence regarding its legal competence, independence, impartiality and integrity.” Note what this implies: We, the Members, have selected Appellate Body members who, unless they are guaranteed a second term, cannot be trusted to have integrity. The proposition answers itself. And then, “Members could also ponder on the implications of submitting ‘sitting members’ of the highest adjudicatory instance of the WTO to unilateral appraisals about the final outcome of each dispute and its conduct.” The whole point of “reappointment” is to subject the performance of a member to appraisal by Members.
This is the political background to the final blockage. The reaction of Members – and of the Appellate Body – to reappointment was prologue to the US action on appointments. To leave out that immediate history does great disservice to understanding the crisis and the current impasse.
Persistent and unfounded allegations of ‘overreach’ by the Appellate Body
This part of the paper is a response to persistent concerns raised by the United States at least since 2001 (and concretised in a DSU reform proposal in 2002). It gives the impression that the concerns were uniquely American. They were not. As indeed the author notes that the General Council was involved in dispute settlement issues; he does not explain that at least in one instance, it was in negative reaction to something the Appellate Body did.
This is Uruguay:
First, despite its praise-worthy intentions, the decision of the Appellate Body Division inBold added
this case, together with premature action on the part of the Secretariat, had had the practical effect of
altering the agreements, something which was not in its terms of reference. Second, the Appellate
Body had to restrict itself in establishing whether a panel had correctly applied or interpreted the rules
in a specific case. However, insofar as it knew that its decisions would set precedent, the Appellate
Body should inform the General Council when it identified difficulties that arose from the wider
interpretation of the agreements, so that the General Council could take the decisions incumbent upon
This is Egypt, speaking on behalf of Developing Countries:
During the meeting of the IGDC on 10 November 2000, it was strongly felt that the actions ofBold added
the WTO Appellate Body and the Secretariat needed serious consideration by the whole WTO
membership and at the level of the General Council, as the highest legislative and policy authority in
the organization in the intervals between Ministerial Conferences, in order that such actions be
And here is India: “the disquiet and anxiety generated among the Membership by the Appellate Body’s communication was so great that convening this special meeting of the General Council on short notice was more than justified.”
And so on.
This is on 22 November 2000. To be sure, this was in respect of a procedural matter (rules for considering amicus briefs); the US in fact supported the Appellate Body; and there were no other instances of the General Council as a body being engaged in questioning the Appellate Body’s “overreach”. But to say that concerns or “allegations” about the Appellate Body’s reasoning or approach were a uniquely US phenomenon would be to rewrite history. To dismiss the concerns of other Members – for example, as expressed in DSB statements – as “for domestic consumption” and “short lived” demonstrates a peculiar lack of respect for the DSB and the Membership of the WTO: according to the author, only the United States is serious when it makes DSB statements critical of the Appellate Body; the rest of us – officials or counsel advising other disputing parties – are merely play acting or being tactical.
In the academic world, as early as 1998 – and this was not for “domestic consumption” – I wrote an article about the dangers of teleological reasoning by the Appellate Body. This was further developed in response to certain rulings of the Appellate Body about the scope of Article 13 of the DSU. As for the Appellate Body’s apparent reliance on the VCLT, I addressed that in still another paper. If academic criticism abated in the intervening period, it was not because the Appellate Body did not err (the author himself agrees that it might have) or that it did not “overreach”, but that – at least for me as both a practitioner and an academic – there was a sense that both the Appellate Body and the Secretariat had become too insular to heed criticism. Indeed, the singular defensiveness of the paper on this topic is partial proof of that insularity.
As further proof, in 2019 we have the representative of the EU saying that, “I think, unfortunately, circumstances have allowed the agenda to be set based on the assumption that there is a major problem that needs to be addressed. I think that assumption is false […].”
Concerns about Appellate Body overreach were not restricted to the US; they have a long history in the organization and outside. In my 1998 paper, I underlined the importance of judicial organs’ listening to the “interpretive community”; the Appellate Body did not and, based on the paper, evidently some of its members did not think and do not think they had to.
And the other critiques? Let me cite one sentence from the paper: “Another ‘concern’ raised by the United States regarding the alleged ‘overreach’ of the Appellate Body relates to the scope of appellate review.” The paper goes on to cite from Hormones; asserts that “under the current case law, the error must be such that it casts doubt on the objectivity of the panel’s factual assessment”; and then turns the question onto the US – well, would the US want an unobjective assessment? This is a logical sleight of hand: as the author must know – given that the United States has been an active user of the Article 11 loophole – that is not and has never been the question.
The author then states:
Limiting appellate review of such findings would significantly undermine the credibility of WTO dispute settlement. Note that the US concern regarding the review of factual findings often focusses on panel findings on the meaning of US municipal law. Such panel findings are factual findings and – if they are not alleged to be inconsistent with Article 11 – should, indeed, not be subject to appellate review. To the extent that the Appellate Body has reviewed such findings, it did so in error.Bold added
In fact, the US concern – recognised by the EU in a footnote in one of its proposals – was that the Appellate Body did not always make a distinction between factual and legal findings in respect of interpretations of US law; that the Appellate Body did not pay due attention to Article 17.6 of the Antidumping Agreement; that the Appellate Body, inconsistently with what EU representatives have asserted, has in fact erred on occasion without admitting or clearly correcting its errors; and that the Appellate Body has been too willing to review factual findings even in the absence of lack of “objectivity” on the part of panels, at the cost of complexity of the proceedings and undue delays. In comments on this note, one very eminent observer pointed out that there has been no allegation of lack of impartiality on the part of an Appellate Body member; similarly, despite the author’s rhetorical question, there has been no allegation of lack of impartiality – that is, actual rather than notional lack of objectivity – on the part of a panellist.
For my part, the author’s reference to “current case law” related to Article 11 is curious: I challenge any observer to articulate a coherent standard for factual review by the Appellate Body based on “current case law”.
This is what the author says about the timelines:
Article 17.5 of the DSU stipulates regarding appellate review that ‘in no case shall the proceedingsBold added
exceed 90 days’. No other international court or tribunal works with a time frame of a similar nature
and severity. Until 2011 the Appellate Body was able to keep to this very demanding time frame in
This is incomplete to the point of misinformation.
I‘m on the record saying that the 90-day issue was not, in itself, central to the US concerns.
And yes, 2011 was a watershed also for the United States:
And the US insistence that the treaty be interpreted and applied in accordance with its specific terms? The author characterises the US position as “uncompromising insistence on an unrealistic time frame” and notes:
However, as from 2010 onwards the Appellate Body stopped this practice of inviting deeming
letters. Such practice could be seen as a recognition by the Appellate Body that the 90-day time frame
could only be exceeded with the agreement of the parties. This cannot be so because it would allow an
appellee to frustrate proper appellate review in appeals which – due to the complexity or size of the
appeal or due to the number of appeals before the Appellate Body at a given time – could not possibly
be dealt with in 90 days. The Appellate Body refused to interpret and apply Article 17.5 of the DSU in
a manner that would effectively deny an appellant its right to proper appellate review by compromising
the quality and thoroughness of such review.
I leave aside, for the moment, the bad faith (“allow an appellee to frustrate proper appellate review“, bold added) imputed to disputing parties and the evident institutional ignorance of the impact of lengthy appeals on disputing parties. Regardless of the expressed objectives, this is an admission of impermissible amendment by a judicial instance with mandatory jurisdiction of its own constituting statute. It is possible that when the author argues about “the Appellate Body’s choice for, and near-consistent application of, a ‘text first’ approach to interpretation,” this is one of those instances that fell outside the “near-consistent application.” As with Article 11 of the DSU. As with Article 13 of the DSU. As with the confidentiality requirement for the Appellate Body’s proceedings. To be fair, the paper’s ringing defence of teleological interpretation of limits on its own procedures and mandate has the merit of intellectual honesty, as opposed to the transparent sophistry the Commission Legal Services offered up when I put a specific question to them:
Second, when that ninety-day limit is not respected, the Appellate Body violates an obligation in a treaty, which violation is attributable to the World Trade Organization, as a matter of public international law. If we look at the regulating instrument of public international law, which is the International Law Commission draft Articles on the Responsibility of International Organizations, we will find in its Article 10.2 that it states expressly, and this is an extremely well known problem, that when an international organization breaches an international obligation, including towards its own members, and including as a result of failing to comply with one of the rules of the organization – this is written in the ILC Articles and explained at a great length in the commentaries – the WTO is exposed as a result of that, and an aggrieved Member in theory can seek reparation. Now for various technical reasons that cause of action would be rather unlikely to be successful, but legally…legally there is a consequence to the breach of 17.5 by the Appellate Body and the WTO.
The two apologias on the 90-day issue are, to be sure, at extreme ends of the intellectual spectrum: the paper stresses the same lofty institutional concern that blithely turned an exhortation into an obligation and nearly transformed panels into commissions of inquiry, while the EU position reveals deep cynicism about the legal relevance of the limits that the treaty places on its judicial organs. But they are the ends of a horseshoe, and they meet at the point of lack of accountability. We see this throughout: on the reappointment issue, no member is to be held accountable for the findings he or she signs; if there are errors, the paper elides them; problems with factual appeals are addressed through case law of the very organ that is alleged to have caused the problems; if there are statements critical of the Appellate Body in the DSB, they are for domestic consumption merely. This lack of accountability – bordering at times on judicial hubris – has both intellectual and legitimacy dimensions that I have amply set out in my papers; I will not belabour the point.
More troubling, the author defends this institutional law making even as he admits that the legislative functions of the WTO are not functioning – that is, even as there is no way for the institution to fix the appellate amendments.
And even more troubling, the author proposes measures for other international judicial organs that would make them even less responsive and accountable.
For all its aggressive insistence on lack of judicial accountability, this is an oddly defensive apologia; more to the point, for a paper written by a former member, it is almost entirely bereft of institutional self-reflection. There is but one conditional concession to error. Neither the Appellate Body, nor its Secretariat, is permitted any agency in the calamity that befell the organization. And yet, those of us who have interviewed nominees and who have appeared before the Appellate Body can attest that none of the candidates, including the successful ones, was perfect. It is neither appropriate nor necessary for a former Appellate Body member to ruminate on the shortcomings of his colleagues or the Secretariat; it is imperative that in reflecting on the organization and its output over twenty years, one should acknowledge at a minimum the possibility that even “correct” decisions might give rise to legitimate concerns, that those concerns might well reflect deep-seated national interests and legal traditions, and that not all criticism is either irrelevant short-termism or an unfounded attack. A modicum of institutional humility might well have led the Appellate Body to consider that timely resolution of disputes is an important element of legitimacy for a judicial organ; that upsetting its own carefully negotiated mandate is not conducive of confidence; that when a Member such as Canada makes critical statements in the DSB, it has, in good faith, considered the legal and systemic ramifications of both the AB report and its statement; and that inserting itself in the appointment process by insisting on institutionalized lack of accountability might not have been a sound approach.
In this sense, the paper is a wholly unhelpful contribution at a critical point in the life of the WTO. The EU is seeking to have MC12 establish a working group on WTO reform; it is difficult to imagine USTR expecting a positive outcome from the proposed working group when the former EU-nominated Appellate Body member all but accuses the United States of bad faith and absolves the Appellate Body as an institution and Appellate Body members of any part in the crisis that has befallen it.
There is a definitive phenomenology of the crisis to be written and lessons to be learned from it; this paper is not it.