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Barriers to Panel Composition in RTA Dispute Settlement: Evaluating Solutions to a Perennial Problem
Published online by Cambridge University Press: 21 October 2022
Abstract
In the wake of the demise of the WTO's Appellate Body, there has been a growing trend of states resorting to the dispute settlement mechanisms under their regional trade agreements (RTAs) to resolve international trade disputes. While the vast majority of these mechanisms have never been used, many contain defective procedural provisions that are likely to slow down or completely derail the dispute settlement process should those provisions be invoked. This is particularly true of mechanisms that effectively permit a respondent to block or delay the composition of a panel to hear a dispute. This article examines the issues of ‘panel blocking’ and panel composition delay tactics in RTA dispute settlement with reference to both past and present practice, and provides a textual analysis of a cross-section of existing RTAs to identify procedural defects and prescribe solutions for ensuring timely panel composition in future disputes.
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References
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5 See, ‘Bilateral disputes’, European Commission, https://policy.trade.ec.europa.eu/enforcement-and-protection/dispute-settlement/bilateral-disputes_en (accessed 14 June 2022). The author notes that after the submission of this article, the panel report in SACU - Poultry Safeguards was released, bringing the total number of panel reports issued in bilateral trade disputes under EU RTAs to three as of the date of publication. The panel's findings do not contradict the substance of the EU's submissions on the Procedural history of the dispute, which is discussed in Sections 2.2, 5.2, and 6.3 below.
6 See, ‘CUSMA Dispute, Chapter 31’, USMCA Secretariat, https://can-mex-usa-sec.org/secretariat/disputes-litges-controversias.aspx?lang=eng (accessed 14 June 2022).
7 Comprehensive and Progressive Agreement for Trans-Pacific Partnership, ‘Canada – Dairy TRQ Allocation Measures’, Request for Consultations by New Zealand (12 May 2022).
8 E.-U. Petersmann (1994) ‘The Dispute Settlement System of the World Trade Organization and the Evolution of the GATT Dispute Settlement System Since 1948’, Common Market Law Review 31, 1157, 1203.
9 Ibid., 1214–1215.
10 Ibid., 1187.
11 Ibid., fn 86.
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14 Ibid.
15 See, R.E. Hudec (1993) Enforcing International Trade Law: The Evolution of the Modern GATT Legal System. Butterworth, 527–577.
16 Ibid., 527.
17 Ibid., 573–574.
18 Ibid., 249, 255.
19 Ibid., 545.
20 Ibid.
21 Ibid., 545, 574.
22 Ibid., 574.
23 Ibid., 571; Lowenfeld, A. (1994) ‘Remedies Along with Rights: Institutional Reform in the New GATT’, American Journal of International Law 88(3), 477, 480CrossRefGoogle Scholar fn 7.
24 Hudec, Enforcing International Trade Law, supra n. 15, 571; Lowenfeld, supra n. 23, 480, fn 7.
25 Hudec, Enforcing International Trade Law, supra n. 15, 571
26 Ibid.
27 Hudec, Enforcing International Trade Law, supra n. 15, 231.
28 Ibid., 232. See also, Improvements to the GATT Dispute Settlement Rules and Procedures (12 April 1989), L/6489 [F(a)].
29 See, ‘Understanding on Rules and Procedures Governing the Settlement of Disputes’, Marrakesh Agreement Establishing the World Trade Organization, Annex 2 (2004) 1869 UNTS 401, art. 6.1.
30 Vidigal, G. (2018) ‘Why Is There So Little Litigation under Free Trade Agreements? Retaliation and Adjudication in International Dispute Settlement’, Journal of International Economic Law 20(4), 927, 929–935Google Scholar; see also, C. Furculiță (2021) ‘The Time of PTA Dispute Settlement Mechanisms Might Have Come: Assessing the Risks’, in M. Elsing, R. Polanco, and P. van den Bossche (eds.), International Economic Dispute Settlement: Demise or Transformation? World Trade Forum, 444–447.
31 A. Porges (2018) ‘Designing Common but Differentiated Rules for Regional Trade Disputes’, ICTSD, 3.
32 Lester, S., Manak, I., and Arpas, A. (2019) ‘Access to Trade Justice: Fixing NAFTA's Flawed State-to-State Dispute Settlement Process’, World Trade Review 18(1), 63, 68CrossRefGoogle Scholar.
33 Cargill, Inc. v. United Mexican States, ICSID Case No. ARB(AF)/05/Z, Award (18 September 2009) [87].
34 RTAs variably employ the terms ‘panelist’ and ‘arbitrator’. For clarity, this article adopts the term ‘panelist’ in reference to an independent third-party adjudicator in first instance proceedings under an RTA.
35 Cargill, supra n. 33 [87–100]; Panel Report, Mexico – Tax Measures on Soft Drinks and Other Beverages, WT/DS308/R, adopted 24 March 2006 [4.91–4.92].
36 Cargill, supra n. 33, 100.
37 Panel Report, Mexico – Taxes on Soft Drinks, supra n. 35; Appellate Body Report, Mexico – Tax Measures on Soft Drinks and Other Beverages, WT/DS308/AB/R, adopted 24 March 2006.
38 Cargill, supra n. 33; Archer Daniels Midland Co. and Tate & Lyle Ingredients Americas, Inc. v. Mexico, ICSID Case No. ARB(AF)/04/5 (NAFTA), Award (21 November 2007); Corn Products International, Inc. v. Mexico, ICSID Case No. ARB(AF)/04/1 (NAFTA), Award (18 August 2009).
39 Commission (2021) ‘Commission Staff Working Document: Individual Information Sheets on Implementation of EU Trade Agreements’, COM 297, 42–43.
40 Commission (2021) ‘Note Verbale Initiating Arbitration under Article 100 of the EU–Algeria Association Agreement’, COM 1981830.
41 EU–Algeria Association Agreement, art. 100(4).
42 Commission, ‘Implementation of EU Trade Agreements’, supra n. 39, 43.
43 D. Gantz (2000) ‘Government-to-Government Dispute Resolution under NAFTA's Chapter 20: A Commentary on the Process’, American Review International Arbitration 11(4), 481, 508.
44 Ibid., 495.
45 Tratado de Libre Comercio México–El Salvador, Guatemala y Honduras (Triángulo del Norte) (Mexico–Northern Triangle FTA).
46 Mexico–Northern Triangle FTA, art. 19-08.
47 Request from Mexico to Establish a Panel under the Mexico–Northern Triangle FTA (17 May 2004) 2.
48 Mexico–Northern Triangle FTA, art. 19-09.
49 El Salvador v Mexico – Medidas Vigentes Para El Otorgamiento Del Registro Sanitario Y Acceso De Medicamentos, Informe Final (14 August 2006) [6-9].
50 EU–Ukraine Association Agreement, art. 307(3); EU–South Korea FTA, art. 14.5(3), annex 14-B, art. 3; European Commission, ‘Disputes under bilateral trade agreements’, supra n. 5.
51 EU–South African Development Community EPA, arts. 80(2)–(4).
52 European Commission, ‘Arbitration panel established in the dispute concerning the safeguard measure imposed by SACU on imports of poultry from the EU’, Brussels, Press Release, 8 December 2021.
53 SACU – Safeguard Measure Imposed on Frozen Chicken from the European Union, First Written Submission of the EU (20 December 2021) [9–20].
54 Ibid., [21–29].
55 These issues are explored in greater detail in the following Sections.
56 WTO Secretariat (2017) ‘Annex X: Historic Development of the GATT/WTO Dispute Settlement System’, in WTO Secretariat, A Handbook on the WTO Dispute Settlement System. Cambridge University Press, 328–329.
57 D. Gantz (2009) ‘The United States and Dispute Settlement under the North American Free Trade Agreement: Ambivalence, Frustration, and Occasional Defiance’, in C.P.R. Romano (ed.), The Sword and the Scales: The United States and International Courts and Tribunals. Cambridge University Press, 391.
58 Vidigal, supra n. 30, 930–931.
59 Ibid., 931.
60 Cargill, supra n. 33 [87].
61 Lester et al., supra n. 32, 69.
62 ‘Regional Trade Agreement Database’ (WTO), https://rtais.wto.org/ (accessed 14 June 2022).
63 C. Chase, A. Yanovich, J.-A. Crawford, and P. Ugaz (2016) ‘Mapping of Dispute Settlement Mechanisms in Regional Trade Agreements – Innovative or Variations on a theme?’, in R. Acharya (ed.), Regional Trade Agreements and the Multilateral Trading System. Cambridge University Press, 618.
64 V. Donaldson and S. Lester (2015) ‘Dispute Settlement’, in S. Lester, B. Mercurio and L. Bartels (eds.), Bilateral and Regional Trade Agreements: Commentary and Analysis, 2nd edn. Cambridge University Press, 385.
65 E.R. Robles (2006) ‘Political & Quasi-Adjudicative Dispute Settlement Models in European Union Free Trade Agreements: Is the Quasi-Adjudicative Model a Trend or Is It Just Another Model?’, WTO Economic Research and Statistics Division, Staff Working Paper ERSD-2006-09 1, at 15–16.
66 Euro-Mediterranean Agreement between the European Communities and Egypt, art. 82(4); Euro–Mediterranean Agreement between the European Communities and Morocco, art. 86(4).
67 Turkey–Chile FTA, art. 43(2); Turkey–Malaysia FTA, art. 12.8(2).
68 US–Oman FTA, art. 20.7(3); US–Bahrain FTA, art. 19.7(3).
69 I.G. Bercero (2006), ‘Dispute Settlement in EU Free Trade Agreements: Lessons Learned?’, in L. Bartels and F. Ortino (eds.), Regional Trade Agreements and the WTO Legal System. Oxford University Press, 389.
70 Ibid.
71 Other terms found in RTAs include ‘contingent list’, ‘indicative list’, or ‘list of arbitrators’, however this paper employs the term ‘roster’ in reference to all systems that establish a set list of arbitrators from which the disputing parties can, or must, select in composing the panel.
72 Lester et al., supra n. 32, 68.
73 North American Free Trade Agreement (US–Canada–Mexico)), art. 2011(1)(b).
74 Ibid., art. 2011(1)(c).
75 Ibid., art. 2011(1)(d).
76 Ibid., art. 2011(1)(c).
77 Ibid., art. 2009(1).
78 Ibid.
79 David A. Gantz (2009), Regional Trade Agreements: Law, Policy and Practice. Carolina Academic Press, 141, fn 270.
80 Cargill, supra n. 33 [87].
81 Lester et al., supra n. 32, 69.
82 NAFTA, art. 2011(3).
83 Ibid.
84 Gantz, Regional Trade Agreements, supra n. 79, 141.
85 NAFTA, art. 2009(1).
86 Ibid.
87 Cargill, supra n. 33 [87].
88 Lester et al., supra n. 32, 69.
89 US–Singapore FTA, art. 20.4(b)(iii); Canada–Costa Rica FTA, art. XIII.9(1).
90 US–Australia FTA, art. 21.7(4).
91 US–Singapore FTA, art. 20.4(4)(a)(ii).
92 Ibid., arts. 20.4(4)(b)(ii)–(iii).
93 EU–Korea FTA, arts. 71, 85.
94 Decision No. 2 of the EU–Korea Trade Committee (23 December 2011) L 58/13 (2013/111/EU); CAFTA-DR, Decision of the Free Trade Commission on Appointment to the Rosters (23 February 2011); Decision No 1/2019 of the Trade and Development Committee Established under the Economic Partnership Agreement between the European Union and Its Member States, of the One Part, and the SADC EPA States, of the Other Part, of 18 February 2019, On the Establishment of a List of Arbitrators [2019/391].
95 Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), art. 28.9(2)(c)(i).
96 Ibid., art. 28.9(2)(c)(ii).
97 Ibid., art. 28.9(2)(c)(iii).
98 Decision by the Commission of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership regarding the Establishment of a Roster of Panel Chairs under Chapter 28 on Dispute Settlement (9 October 2019) CPTPP/COM/2019/D006.
99 Comprehensive Economic and Trade Agreement between Canada and the EU (CETA), art. 27.6(7).
100 EU–Vietnam FTA, art. 15.7(7); EU–Ukraine Association Agreement, art. 307(7).
101 EU–Singapore FTA, arts. 14.5(5)–(6).
102 US–Canada–Mexico Agreement (USMCA), art. 31.9.
103 Ibid.
104 Ibid.
105 Ibid.
106 Ibid.
107 USMCA, art. 31.8(1).
108 Ibid.
109 Decision No. 1 of the Free Trade Commission of the USMCA (7 July 2020) annex IV.
110 Ibid.
111 Ibid., annex III, art. 17(1).
112 New Zealand–Korea FTA, art. 19.8; Canada–Korea FTA, art. 21.7.
113 Ibid.
114 Ibid.
115 Chase et al., supra n. 63) 644; A. Porges (2011) ‘Dispute Settlement’, in J.-P. Chaffour and J.-C. Maur (eds.), Preferential Trade Agreement Policies for Development: A Handbook. World Bank, 485.
116 Ibid.
117 Olivos Protocol for the Settlement of Disputes in MERCOSUR (Protocol of Olivos), art. 10(2)(ii).
118 Protocol on Enhanced Dispute Settlement Mechanism (ASEAN EDSM), annex II, art. I.7.
119 CETA, art. 29.7(3).
120 EU–SADC EPA, art. 80(3); EU–Japan EPA, art. 31.8(3).
121 China–New Zealand FTA, art. 189(4); ASEAN–Japan CEPA, art. 65(2).
122 Japan–Switzerland FTA, art. 141(6); Canada–European Free Trade Association FTA (Canada–EFTA FTA), annex K [2(e)].
123 New Zealand–Thailand FTA, art. 17.5(3).
124 Regional Comprehensive Economic Partnership (RCEP), arts. 19.11(7)–(8).
125 In their recent chapter, Grigorova and Zachari also critically examine methods to address panel blocking under recently concluded RTAs. See, J. Grigorova and E. Zachari (2021) ‘Dispute Settlement in Free Trade Agreements as a Suggested Alternative to WTO Dispute Settlement’, in M. Elsing, R. Polanco, and P. van den Bossche (eds.), International Economic Dispute Settlement: Demise or Transformation?. World Trade Forum, 483–486.
126 CPTPP, art. 28.9(2).
127 CPTPP, art. 28.9(2)(d)(ii).
128 CPTPP, art. 28.9(2)(d)(iii).
129 CPTPP, art. 28.9(2)(d)(iv).
130 USMCA, art. 31.9(c).
131 Ibid.
132 USMCA, art. 31.9.
133 Ibid.
134 In US – Solar Products, the US’ appointee Donald McRae was not a member of the roster, nor was Mario Matus, who was selected by the disputing parties as chair. In US – Automotive Rules of Origin, the US again appointed Prof. McRae, along with Jorge Miranda, who was also not a roster member. See, United States – Safeguard Measures on Certain Crystalline Silicon Photovoltaic Products from Canada, USA-CDA-2021-31-01, Notice of Panel Selection (4 August 2021); United States – Automotive Rules of Origin, USA-MEX-2022-31-01, Joint Notice of Panel Selection (23 March 2022).
135 In US – Solar Products, the process took 46 days instead of the 35-day period set under Article 31.9(1), whereas in US – Automotive Rules of Origin, the process took 75 days instead of the 40-day period envisioned under Article 31.9(2). See, United States - Safeguard Measures on Certain Crystalline Silicon Photovoltaic Products from Canada, USA-CDA-2021-31-01, Notice of Panel Selection (4 August 2021); United States - Automotive Rules of Origin, USA-MEX-2022-31-01, Joint Notice of Panel Selection (23 March 2022); United States – Safeguard Measures on Certain Crystalline Silicon Photovoltaic Products from Canada, USA-CDA-2021-31-01, Request for the Establishment of a Panel by Canada (18 June 2021); United States – Automotive Rules of Origin, USA-MEX-2022-31-01, Request for the Establishment of a Panel by Mexico (6 January 2022).
136 Canada – Dairy TRQ Allocation Measures, CDA-USA-2021-31-010, Final Panel Report (20 December 2021) [4–6].
137 CETA, art. 29.7(2).
138 CETA, art. 29.7(3).
139 CETA, art. 29.7(6).
140 See Section 2.2 above.
141 Discussed at Section 6.3 below.
142 Trakman, L. (2017) ‘Enhancing Standing Panels in Investor–State Arbitration: The Way Forward?’, Georgetown Journal of International Law 41, 1145, 1168Google Scholar.
143 For example, under the EU–Singapore FTA's Rules of Procedure for Arbitration, a panelist selected from the roster may only be challenged for non-compliance with the agreement's Code of Conduct, which relate to the panelists’ duties and obligations throughout the proceedings. See, EU–Singapore FTA, annexes 14-A and 14-B.
144 Picker, S. Jr. (1997) ‘The NAFTA Chapter 20 Dispute Resolution Process: A View from the Inside’, Canada–United States Law Journal 23, 525, 529Google Scholar.
145 G.C. Hufbauer and J.J. Schott (2005) NAFTA Revisited: Achievements and Challenges. Columbia University Press, 249.
146 ‘Bilateral Disputes’, supra n. 5.
147 Decision No 1/2019 of the Trade and Development Committee established under the Economic Partnership Agreement between the European Union and its Member States, of the one part, and the SADC EPA States, of the other part, on the establishment of a list of arbitrators (18 February 2019) L 70/33; Council Decision (EU) 2019/1578 on the position to be adopted on behalf of the European Union within the Committee on Trade and Sustainable Development established by the Free Trade Agreement between the European Union and its Member States, of the one part, and the Republic of Korea, of the other part, as regards the Panel of Experts referred to in Article 13.15 of the Agreement (20 September 2019) L 244/4; Council Decision (EU) 2018/1838 on the position to be taken on behalf of the European Union within the Association Committee in Trade configuration established by the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part (19 November 2018) L 298/11.
148 Chase et al., supra n. 63, 645.
149 In a 2018 report, the PCA reported having received over 700 requests to designate or act as an appointing authority, while ICSID claimed to have acted as appointing authority in nearly 300 cases. See, UNCITRAL Working Group III, ‘Possible reform of investor–State dispute settlement (ISDS) Submissions from International Intergovernmental Organizations and additional information: appointment of arbitrators’ (2018) A/CN.9/WG.III/WP.146 [11, 42]. See also, D. Gaukrodger (2018) ‘Appointing Authorities and the Selection of Arbitrators in Investor–State Dispute Settlement: An Overview’, OECD Consultation Paper.
150 Korea–Chile FTA, arts. 19.9(3)–(4).
151 Korea–Chile FTA, art. 18.1(5).
152 EU–SADC EPA, arts. 80(3), 103(2).
153 Grigorova and Zachari, supra n. 125, 485.
154 CETA, arts. 29.7(2)–(3).
155 CETA, arts. 26.1(1), 26.3(3).
156 Decision 001/2018 of the CETA Joint Committee of 26 September 2018 adopting its Rules of Procedure and of the Specialized Committees, OJ 2018 L 190/15.
157 EU–Japan FTA, art. 21.8(3).
158 EU–Japan FTA, art. 21.8(4).
159 EU–Japan FTA, arts. 21.8(5)–(6).
160 Gaukrodger, supra n. 149, 24–35.
161 Confirmed with one current and one former senior official in the WTO Secretariat. See also, Chase et al., supra n. 63, 27.
162 M.N. Shaw (2015) Rosenne's Law and Practice of the International Court, 1920–2005, 5th edn., vol. 3. Brill. [398].
163 Ibid.
164 International Court of Justice, ‘Yearbook 2015–2016’ (2015) 70 ICJ Yearbook 68.
165 Shaw, supra n. 162 [398].
166 B. Daly, E. Goriatcheva, and H. Meighen (2014) Guide to the PCA Arbitration Rules. Oxford University Press, 23–24.
167 Ibid., appendix XIV.
168 M. Indlekofer (2013) International Arbitration and the Permanent Court of Arbitration. Kluwer, 246; Falls, S. (2020) ‘Outsourcing FTA Dispute Settlement Administration to Third-Party International Arbitral Institutions: Opportunities and the Roles of the Permanent Court of Arbitration’, Law & Practice of International Courts & Tribunals 19(1), 49, 59CrossRefGoogle Scholar; Permanent Court of Arbitration, ‘Annual Report 2018’, 15.
169 While the status of the rosters under these agreements is not clear, it is reasonable to assume they do not exist. Where rosters have been established under RTAs, they have been created via a decision of the RTA ministerial body, which has then been publicized. In 2012, the US invited applications for inclusion on the rosters of its RTAs with Australia, Colombia, Korea, Morocco, and Singapore, but no public information is available indicating that these rosters were established, and there are no decision of the ministerial bodies under these RTAs establishing a formal roster.
170 Gantz, ‘Government-to-Government Dispute Resolution’, supra n. 43, 508.
171 NAFTA, art. 2011(1)(b).
172 Gantz, ‘Government-to-Government Dispute Resolution’, supra n. 43, 496; Gantz, D. (2007) ‘Settlement of Disputes Under the Central America–Dominican Republic–United States Free Trade Agreement’, Boston College International & Comparative Law Review 30(2), 331, 395Google Scholar; D. Gantz, ‘The US and Dispute Settlement under the NAFTA’, supra n. 57, 388, fn 129.
173 Lester et al., supra n. 32, 68; D. McRae and J. Siwiec (2010) ‘NAFTA Dispute Settlement: Success or Failure?,’ Biblioteca Virtual del Instituto de Investigaciones Juridicas de la UNAM 363, 372.
174 CUSFTA, art. 1807(3); G.R. Winham (1993) ‘Dispute Settlement in NAFTA and the FTA’, in S. Globerman and M. Walker (eds.), Assessing NAFTA: A Trilateral Analysis. Fraser Institute, 258, fn 12; Porges, ‘Dispute Settlement’, supra n. 115, 494.
175 EU–SADC EPA, art. 80(2).
176 SACU – Safeguard Measure imposed on Frozen Chicken from the European Union, First Written Submission of the EU (20 December 2021) [20–24].