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A Possible Hierarchy of Dispute Settlement Systems?

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Abstract

In a post WTO-era, where the WTO dispute settlement system as we currently know it is no longer functioning, there will still be a need to settle trade-related disputes. It can be foreseen that the regional organisations’ new (and sometimes not so new) dispute settlement mechanisms could be used and developed to ensure that trade-related disputes can be resolved using the international trade law principles created by the WTO, but applied by the different regional bodies. This chapter thus argues that WTO-created law should be used in dispute settlement mechanisms created by regional trade agreements and should also be developed further in order to continue on the same legal pathway created by the WTO’s dispute settlement body where legal certainty regarding the meaning and interpretation of common trade terms and concepts existed. Hence, in a dystopian future where the WTO no longer exists, the remaining trade agreements’ dispute settlement bodies will continue to use and expand on WTO-developed legal principles ensuring legal certainty, consistency and coherence in trade-related disputes.

Professor of Law and Assistant Dean for Academic Planning and Strategy at the Faculty of Commerce, Law and Management at the University of the Witwatersrand, Johannesburg.

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Notes

  1. 1.

    Rodrik (2011), p. 158; Parts of this contribution is based on Schlemmer (2019), pp. 226–251.

  2. 2.

    For an analysis of the agreements (apart from TTIP), see Juutinen M (2016) Regional trade agreements: a strike at multilateralism? Observer Research Foundation Occasional Paper 93.

  3. 3.

    African Continental Free Trade Area (AfCFTA) https://au.int/en/cfta.

  4. 4.

    Apart from the Information Technology Agreement (ITA) 1996 and 2015 and the Trade Facilitation Agreement (TFA) 2017.

  5. 5.

    See Matshushita et al. (2015), p. 510 and the sources referred to.

  6. 6.

    Rüland J (2002) The European Union as an inter- and transregional actor: lessons for global governance from Europe’s relations with Asia. Paper presented at The European Union in International Affairs Conference, Australian National University, 3–4 July, 2002: ‘globalization and regionalization are complementary to each other’. https://openresearch-repository.anu.edu.au/bitstream/1885/41658/3/ruland.pdf.

  7. 7.

    It is for instance easier to reach consensus on issues in smaller groupings than in multilateral settings. And being part of a group also gives smaller states a bigger voice in larger fora. See also Siziba C (2016) Trade Dispute Settlement in the Tripartite Free Trade Area. SECO/WTI Academic Cooperation Project Working Paper 02/2016: 6.

  8. 8.

    See also Batchkova T (2013) Die Lissabon- und die Europa 2020-Strategie – Antwort der Europäischen Union auf die Globalisierung? Thesis, Halle-Wittenberg: p. 62 et seq p. 66 et seq ‘Durch die Globalisierung herbeigeführten staatlichen Steuerungsdefizite können durch Integration und Regionalisierung aufgefangen werden. Die explosionsartig angestiegene Neugründung regionaler Organisationen in den letzten Dekaden beweist, dass der politische Regionalismus generell als Antwort auf die Globalisierung verstanden werden kann’ (69); and Rüland (2002): ‘there is good reason to argue that globalization has facilitated the emergence of a multilayered system of global governance which is built on regional organizations. Regionalism is a response of nation states to the manyfold challenges posed by globalization’ (2); Messner (2005), pp. 27–54; and in general Matshushita et al. (2015), p. 510; Koskenniemi M (2006) Fragmentation of international law: difficulties arising from the diversification and expansion of international law – report of the study group of the international law commission. UN Doc A/CN.4/L.682.

  9. 9.

    This contribution’s focus is agreements with the southern Africa region.

  10. 10.

    See for the southern African region, Schlemmer (2019), pp. 243–251.

  11. 11.

    See some of the US criticism on the functioning of the WTO dispute settlement mechanism, whether valid or not—Lester and Bacchus (2019), pp. 1–6.

  12. 12.

    I.e. the treaties that established them.

  13. 13.

    See Van den Bossche and Zdouc (2013), p. 96 ff referring to Donald McRae and other sources.

  14. 14.

    Ibid., p. 97.

  15. 15.

    For e.g. Hu (2004), pp. 143–167; see also Pauwelyn (2001), pp. 535–538. See also generally McRae (2000), pp. 27–41.

  16. 16.

    United States — Standards of Reformulated and Conventional Gasoline WT/DS2/AB/R (20 May 1996), p. 17.

  17. 17.

    McRae (2000), p. 30.

  18. 18.

    WTO Secretariat (2017), p. 12.

  19. 19.

    This makes allowance for those states who are not party to the Vienna Convention on the Law of Treaties (VCLT) 3 May 1969 1155 UNTS 331.

  20. 20.

    McRae (2000), p. 36 emphasis added.

  21. 21.

    ‘“Rules of international law” in the sense of Article 31(3)(c) of the VCLT corresponds to the sources of international law in Article 38(1) of the Statute of the ICJ, and thus includes treaty law, as well as customary rules of international law and general principles of law’—WTO Secretariat (2017), p. 11 with reference to the Appellate Body Report United States – Definitive Anti-Dumping and Countervailing Duties on Certain Products from China WT/DS379/AB/R (adopted 25 Mar 2011) par 308, that said the following: ‘First, the reference to “rules of international law” corresponds to the sources of international law in Article 38(1) of the Statute of the International Court of Justice and thus includes customary rules of international law as well as general principles of law. Second, in order to be relevant, such rules must concern the same subject matter as the treaty terms being interpreted. To the extent that Articles 4, 5, and 8 of the ILC Articles concern the same subject matter as Article 1.1(a)(1) of the SCM Agreement, they would be “relevant” in the sense of Article 31(3)(c) of the Vienna Convention. With respect to the third requirement, the question is whether the ILC Articles are “applicable in the relations between the parties”. We observe that Articles 4, 5, and 8 of the ILC Articles are not binding by virtue of being part of an international treaty. However, insofar as they reflect customary international law or general principles of law, these Articles are applicable in the relations between the parties.’ Footnotes omitted. See also Appellate Body Report Canada – Continued Suspension of Obligations in the EC – Hormones Dispute, WT/DS321/AB/R (adopted 14 Nov 2008) par 382; Panel Report United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services WT/DS285/R (adopted 20 Apr 2005) para 6.128.

  22. 22.

    See Mitchell and Heaton (2010), pp. 561–621.

  23. 23.

    Ibid., p. 563.

  24. 24.

    Ibid., p. 566; On inherent jurisdiction see also Pauwelyn (2003), p. 447 ff; Appellate Body Report United States—Anti-Dumping Act of 1916 WT/DS136/AB/R WT/DS162/AB/R (adopted 26 Sep 2000); Appellate Body Report Mexico—Tax Measures on Soft Drinks and Other Beverages WT/DS308/AB/R (adopted 6 Mar 2006); Pauwelyn (2001), p. 555.

  25. 25.

    Koskenniemi (2006) para 167 (footnotes omitted).

  26. 26.

    See US — Gasoline (n 16), p. 17 with reference to inter alia Territorial Dispute Case (Libyan Arab Jamahiriya v Chad) 1994 ICJ Reports 6 (International Court of Justice); See also Koskenniemi (2006) para 168.

  27. 27.

    Koskenniemi (2006) para 169.

  28. 28.

    Ibid.; referring to Pauwelyn (2003).

  29. 29.

    ‘The formulation refers to rules of international law in general. The words cover all the sources of international law, including custom, general principles, and, where applicable, other treaties’ (Koskenniemi (2006) para 426(b)).

  30. 30.

    Koskenniemi (2006) para 425 emphasis added.

  31. 31.

    See Cottier T (2004) The legal framework for free trade areas & customs unions in WTO Law. Paper presented at Multilateralism and Bilateralism after Cancún – Challenges and Opportunities of Regionalism Workshop. Berne 15 April 2004. See also Mavroidis (2005), p. 230 ff; Erasmus (2009), p. 374 ff.

  32. 32.

    Similar to those that are discussed in Schlemmer (2019).

  33. 33.

    See Cottier and Schefer (1998), p. 85.

  34. 34.

    Apart from perhaps in the Common Market for Eastern and Southern Africa, although this too has not yet played any significant role and there is very little if any jurisprudence from the court.

  35. 35.

    See Schlemmer (2019) § 8.2 ff; and for discussions concerning Europe, see Cottier and Schefer (1998), p. 83 ff; Petersmann (2008), p. 834; see also Palmeter and Mavroidis (1998), p. 402 and the sources they refer to.

  36. 36.

    Regional courts refer to courts similar to the European Court of Justice in relation to its jurisdiction and status and not merely a court or tribunal like the now defunct tribunal of the Southern African Development Community.

  37. 37.

    Petersmann (2008), p. 834; see also Palmeter and Mavroidis (1998), p. 402.

  38. 38.

    WT/DS344/AB/R (30 Apr 2008) para 160; Petersmann (2008), p. 841.

  39. 39.

    Petersmann (2008), p. 838. ‘[The] Panel’s failure to follow previously adopted Appellate Body reports addressing the same issues undermines the development of a coherent and predictable body of jurisprudence clarifying Members’ rights and obligations under the covered agreements as contemplated under the DSU’ (US – Final Anti-Dumping Measures on Stainless Steel from Mexico (ibid) paras 160–161)—this would also be true for other tribunals in other treaty regimes that deal with similar legal questions.

  40. 40.

    See in relation to dispute settlement in the Sanitary and Phytosanitary (SPS) Chapter of the Trans-Pacific Partnership Agreement (TPPA) Wagner (2017), p. 467 ff.

  41. 41.

    See Cottier (2004), p. 9.

  42. 42.

    Agreement Establishing a Tripartite Free Trade Area among the Common Market for Eastern and Southern Africa, the East African Community and the Southern African Development Community (signed 10 June 2015, not in force yet https://treaties.dirco.gov.za/dbtw-wpd/images/20150610TripartiteFreeTradeAgreement.pdf. According to the South African Department of Trade and Industry, the Tripartite Free Trade Area (TFTA) was used as the basis for engaging in the African Continental Free Trade Agreement negotiations; see Mene (2018) Briefing by the Department of Trade and Industry (DTI) to the National Council of Provinces’ Trade and International Relations Committee on 8-08-2018 in relation to the ratification of the COMESA-EAC-SADC Tripartite Free Trade Area agreement—https://pmg.org.za/committee-meeting/26794/. The Tripartite Free Trade Area was launched in June 2015 and the negotiations concluded in May 2017; see Erasmus (2011), p. 1 ff. The regional economic communities are intended to be the ‘building blocks’ towards achieving wider integration within Africa. See African Union Media Advisory ‘Press briefing of H.E. Issoufou Mahamadou, President of the Republic of Niger and champion of the Continental Free Trade Area (CFTA) Process’ 4 July 2017 https://au.int/sites/default/files/newsevents/mediaadvisories/32638-ma-press_briefing_of_h_e_issoufou_mahamadou.pdf.

  43. 43.

    L 250/44 Official Journal of the European Union 16 September 2016.

  44. 44.

    ‘Art 95(1). Arbitration bodies set up under this Agreement shall not arbitrate disputes on a Party’s rights and obligations under the WTO Agreement. 2. Recourse to the dispute settlement provisions of this Agreement shall be without prejudice to any action in the WTO framework, including dispute settlement action. However, where a Party has, with regard to a particular measure, initiated a dispute settlement proceeding under this Agreement or under the WTO Agreement, it may not initiate a dispute settlement proceeding regarding the same measure in the other forum until the first proceeding has ended. For the purposes of this paragraph, dispute settlement proceedings under the WTO Agreement are deemed to be initiated by a Party’s request for the establishment of a panel under Article 6 of the DSU. 3. Nothing in this Agreement shall preclude a Party from implementing the suspension of obligations authorised by the Dispute Settlement Body of the WTO.’

  45. 45.

    One example is found in article 32 where it is provided that anti-dumping and countervailing measures are governed by the relevant WTO agreements; but article 34.10 removes safeguard measures ‘adopted under the provisions of this Article’ from the jurisdiction of the WTO DSB: ‘shall not be subject to WTO Dispute Settlement provisions’. There are many more similar examples in the treaty.

  46. 46.

    http://www.sacu.int/docs/agreements/2016/mercosur-and-sacu-trade-agreement.pdf. Art 12: ‘On matters related to customs valuation, the Signatory Parties shall refer to Article VII of GATT 1994 and the WTO Agreement on the Implementation of Article VII of GATT 1994.’ Article 15 provides a bit differently ‘In applying antidumping and countervailing measures, the Signatory Parties shall be governed by their respective legislation, which shall be consistent with Articles VI and XVI of the GATT 1994, the Agreement on Implementation of Article VI of GATT 1994 and the WTO Agreement on Subsidies and Countervailing Measures.’

  47. 47.

    Annex V a 2. Article 2(7): ‘Notwithstanding the foregoing provisions, disputes that may arise in connection with Chapter VIII [anti-dumping and countervailing measures] of this Agreement as well as Article 1 of Annex IV [safeguard measures] of this Agreement shall exclusively be submitted to the DSU’.

  48. 48.

    https://treaties.un.org/doc/publication/unts/no%20volume/part/un_charter.pdf.

  49. 49.

    ‘In the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the present Charter shall prevail.’

  50. 50.

    Many have addressed this issue, either in general or in relation to specific treaties. See for example Henckels (2008), pp. 571–599; Petersmann (2008); Kuijper P-J (2010) Conflicting rules and clashing courts: the case of multilateral environmental agreements, free trade agreements and the WTO. ICTSD issue paper No 10; Koskenniemi (2006) and the sources they refer to.

  51. 51.

    The implications that non-compliance with the WTO provisions may have on the legality of the agreements or the dispute settlement bodies established in terms of the agreements, will not be discussed in this contribution.

  52. 52.

    It may even be that due to the increase in plurilateral agreements, that a new constitutional design is developing, but this is not an aspect that this contribution will delve into.

  53. 53.

    WT/DS34/AB/R (adopted 22 Oct 1999) para 49 ff.

  54. 54.

    See Wagner (2017), p. 467 ff for a similar argument in the relationship between the dispute settlement provisions in the SPS chapter of the TPPA and the WTO.

  55. 55.

    Atilgan (2016), p. 138 (referring to Teubner 2010, p. 329).

  56. 56.

    For e.g., Erasmus (2011) states that there is a “phenomenon that governments are not keen to litigate against each other, especially in Africa… . Not a single SADC case involved a trade dispute between governments although there were instances where this could have happened” p. 91.

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  1. School of Law, University of the Witwatersrand, Johannesburg, South Africa

    Engela C. Schlemmer

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Editors and Affiliations

  1. University at Buffalo School of Law, The State University of New York, Buffalo, NY, USA

    Meredith Kolsky Lewis

  2. Faculty of Liberal Arts, Chuo Gakuin University, Chiba, Japan

    Junji Nakagawa

  3. Faculty of Law, University of Macau, Taipa, Macao

    Rostam J. Neuwirth

  4. University of Wollongong, Wollongong, NSW, Australia

    Colin B. Picker

  5. Jean Monnet Chair, Institute for International Law and European Law, Georg August University of Göttingen, Göttingen, Germany

    Peter-Tobias Stoll

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Schlemmer, E.C. (2020). A Possible Hierarchy of Dispute Settlement Systems?. In: Lewis, M.K., Nakagawa, J., Neuwirth, R.J., Picker, C.B., Stoll, PT. (eds) A Post-WTO International Legal Order. Springer, Cham. https://doi.org/10.1007/978-3-030-45428-9_11

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