{"id":211,"date":"2021-11-04T09:33:36","date_gmt":"2021-11-04T09:33:36","guid":{"rendered":"https:\/\/genevatradelaw.com\/?p=211"},"modified":"2021-11-29T22:35:46","modified_gmt":"2021-11-29T22:35:46","slug":"critique-of-the-demise-of-the-wto-appellate-body-lessons-for-governance-of-international-adjudication","status":"publish","type":"post","link":"https:\/\/genevatradelaw.com\/index.php\/2021\/11\/04\/critique-of-the-demise-of-the-wto-appellate-body-lessons-for-governance-of-international-adjudication\/","title":{"rendered":"Critique of “The Demise of the WTO Appellate Body: Lessons for Governance of International Adjudication?”"},"content":{"rendered":"\n

There is a new paper<\/a> on the Appellate Body by a former member, Peter Van den Bossche<\/a>. <\/span><\/p>\n\n\n\n

A brief note before proceeding to the paper: I used Peter’s textbook on the WTO<\/a> 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. <\/span><\/p>\n\n\n\n

There is and can be no doubt that Peter is an eminent expert in the field<\/span> and that his views on the present crisis merit close – and, indeed, critical – attention. Hence this long-form post.<\/p>\n\n\n\n

The Thesis<\/span><\/strong><\/p>\n\n\n\n

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<\/span> served as a model of sorts for the EU’s proposed “international investment court” and borrowed almost verbatim for the ASEAN dispute resolution mechanism.<\/p>\n\n\n\n

What are the causes of the present crisis? The paper identifies four “related reasons”:<\/span><\/p>\n\n\n\n

  1. “[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;<\/span><\/li>
  2. The paralysis of the “legislative” functions of the organization “made Members seek change to WTO law through adjudication”; <\/span><\/li>
  3. “[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<\/span><\/li>
  4. “[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.”<\/span><\/li><\/ol>\n\n\n\n

    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:<\/span><\/p>\n\n\n\n

    “(3) issuing \u2018advisory opinions\u2019 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\u2019s domestic law; and (5) treating its rulings
    as binding precedent”<\/p><\/blockquote>\n\n\n\n

    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.”<\/span><\/p>\n\n\n\n

    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:<\/span><\/p>\n\n\n\n

    Paragraph 13 stipulates that the Appellate \u2018may uphold, modify or reverse\u2019 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<\/strong>. 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.<\/span><\/p>Bold added<\/cite><\/blockquote>\n\n\n\n

    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”. <\/span>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:<\/p>\n\n\n\n

    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\u2019s WTO rights and obligations, in most instances this accusation is primarily for domestic consumption and short-lived<\/strong>. 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\u2019s interpretation in these instances is not in accordance with Articles 31 and 32 of the VCLT.56 <\/p>Bold added<\/cite><\/blockquote>\n\n\n\n

    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”<\/span>, and concludes by arguing that:<\/span><\/p>\n\n\n\n

    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
    system.<\/p><\/blockquote>\n\n\n\n

    Analysis<\/span><\/strong><\/p>\n\n\n\n

    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. <\/span><\/p>\n\n\n\n

    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.<\/p>\n\n\n\n

    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. <\/p>\n\n\n\n

    The bigger issue with the paper is its analysis of the crisis and the solutions it proffers.<\/p>\n\n\n\n

    Blockage of the appointment of Appellate Body members<\/span><\/em><\/p>\n\n\n\n

    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, \u2018only\u2019 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<\/strong> 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.<\/span><\/p>\n\n\n\n

    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<\/strong> 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<\/a>. In return, the reaction of the EU and other Members was, at best, overblown. Here is the EU:<\/span><\/p>\n\n\n\n

    [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<\/strong>. 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<\/strong> if the Appellate Body member indicated that they were available to server for a second term of office.<\/p>Bold added<\/cite><\/blockquote>\n\n\n\n

    The first observation – reiterated in the ill-advised letter by the Appellate Body to the Chair of the DSB – is simply nonsensical; <\/span>taken literally, it violates a sacrosanct principle of judicial conduct<\/a> – 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.<\/span> 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.” <\/p>\n\n\n\n

    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<\/em>. 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<\/em> of “reappointment” is to subject the performance of a member to appraisal by Members.<\/span><\/p>\n\n\n\n

    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.<\/span><\/p>\n\n\n\n

    Persistent and unfounded allegations of \u2018overreach\u2019 by the Appellate Body<\/span><\/em><\/p>\n\n\n\n

    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. <\/span>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<\/a>, it was in negative reaction to something the Appellate Body did. <\/span><\/p>\n\n\n\n

    This is Uruguay:<\/span><\/p>\n\n\n\n

    First, despite its praise-worthy intentions, the decision of the Appellate Body Division in
    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<\/strong>. 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
    it.<\/p>Bold added<\/cite><\/blockquote>\n\n\n\n

    This is Egypt, speaking on behalf of Developing Countries:<\/span><\/p>\n\n\n\n

    During the meeting of the IGDC on 10 November 2000, it was strongly felt that the actions of
    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
    rectified<\/strong>.<\/p>Bold added<\/cite><\/blockquote>\n\n\n\n

    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.”<\/span><\/p>\n\n\n\n

    And so on.<\/span><\/p>\n\n\n\n

    This is on 22 November 2000.<\/span> To be sure, this was in respect of a procedural matter (rules for considering amicus<\/em> 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.<\/p>\n\n\n\n

    In the academic world, as early as 1998<\/em> – and this was not for “domestic consumption” – I wrote an article<\/a> about the dangers of teleological reasoning by the Appellate Body. This was further developed<\/a> 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<\/a>. 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.<\/p>\n\n\n\n

    As further proof, in 2019<\/em> we have the representative of the EU<\/a> 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 […].”<\/span><\/p>\n\n\n\n

    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.<\/span><\/p>\n\n\n\n

    And the other critiques? Let me cite one sentence from the paper: “Another \u2018concern\u2019 raised by the United States regarding the alleged \u2018overreach\u2019 of the Appellate Body relates to the scope of appellate review.” The paper goes on to cite from Hormones<\/em>; asserts that “under the current case law, the error must be such that it casts doubt on the objectivity of the panel\u2019s 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. <\/span><\/p>\n\n\n\n

    The author then states:<\/span><\/p>\n\n\n\n

    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<\/strong> and \u2013 if they are not alleged to be inconsistent with Article 11 \u2013 should, indeed, not be subject to appellate review. To the extent that the Appellate Body has reviewed such findings, it did so in error.<\/p>Bold added<\/cite><\/blockquote>\n\n\n\n

    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<\/em>; 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<\/em> 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. <\/span>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<\/em> rather than notional lack of objectivity – on the part of a panellist.<\/p>\n\n\n\n

    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”.<\/span><\/p>\n\n\n\n

    \n

    Even on factual determinations by the panel, a strong argument can be made that any judicial review or appellate function, regardless of how limited its mandate, must have a necessary residual discretion to address core errors of fact.

    The question is *how* the AB got here, 10\/     pic.twitter.com\/j52YuobjEk<\/a><\/p>— Rambod Behboodi (@GenevaTradeLaw) April 22, 2020<\/a><\/blockquote>