Role of Precedents in Wto Dispute Settlement Understanding
Project on the topic
SHOULD PANELS BE BOUND BY AB: STARE DECISIS AND HIERARCHY IN THE WTO DISPUTE SETTLEMENT
Submitted towards the fulfilment of grading for the
2nd semester of LL.M. (Corporate Law) for the subject
DISPUTE SETTLEMENT MECHANISM
Submitted to: Submitted By:
Mr. Yogesh Pai Pratibha Motyar
Prof. of Law LL.M. (Corporate Laws)
National Law University II semester Roll No- 379
NATIONAL LAW UNIVERSITY, JODHPUR
10th April, 2012
TABLE OF CONTENTS:
S. No. | TOPIC | PAGE No. | 1. | INTRODUCTION | 3 | 2. | RULE OF STARE DECISIS IN INTERNATIONAL LAW | 5 | 3. | RULE OF STARE DECISIS IN WTO | 8 | 4. | OCCASIONS WHEN STARE DECISIS HAS BEEN INVOKED IN WTO | 9 | 5. | PRACTICE OF FOLLOWING STARE DECISIS DE FACTO IN WTO: SHOULD PANELS BE ALLOWED TO DEPART FROM PREVIOUS REPORTS OF AB | 12 | 6. | IMPLICATIONS OF HAVING DE JURE STARE DECISIS IN WTO | 13 | 7. | CONCLUSION | 14 | 8. | BIBLIOGRAPHY | 16 |
INTRODUCTION:
Stare decisis means “to stand firmly by things that have been decided..” The term is actually the shortened phrase from a Latin maxim stare decisis et non quieta movere. The maxim means “to stand firmly by things that have been decided and not to rouse/disturb/move things at rest.”
The doctrine of precedent based on the system of stare decisis has its origin in the common law of England. Doctrine of precedent plays a vital role in the Municipal law. The domestic courts of almost every nation follow this doctrine very religiously while adjudicating. Any dispute before a court of law has factual as well as legal aspects. A court applies a law in the facts of the case. This process of application of law to the facts of the case involves interpretation of that law. The decision of the court is binding only on the parties, but the law laid down in that case in the process of interpretation of a given law is binding on all lower courts within the jurisdiction of the higher court deciding the case. Therefore the lower courts are bound to apply the ratio of the case given by higher court in any case having similar facts.
Now coming to the bigger picture, interestingly, there exists no doctrine of stare decisis in international law. If we refer to Article 59 of the statute of the International Court of Justice (ICJ) which provides that, “The decision of the Court has no binding force except between the parties and in respect of that particular case.” This means that decisions are binding between the state parties in respect of a particular case only. Accordingly, the court is not bound by previous decisions. Now looking at Article 38 of the Statute of the ICJ which has been considered to be a general standard of applicable law in international relations, provides in its clause (d) that, “Subject to the provisions of Article 59, judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law.” By going with these internationally accepted provisions, shall we continue to assert, with Article 38(l) (d) of the Statute of the International Court of Justice that judicial decisions are mere evidence of the law, not the law itself? Shall we hold fast to the pretence that stare decisis does not operate in a de facto sense or that it is not eligible to be followed in a de jure sense?
There are many advantages of having the doctrine of precedent in international legal system. International courts strive for legitimacy in its decision making process, and to follow previous decisions in cases which involve similar facts is one of the ways of building credibility into decisions. Another recognised advantage of allowing a court or tribunal to follow previous decisions is that it helps in introducing a kind of certainty and stability in the judicial decisions, which in turn brings a definite order in the administration of justice, which are an asset to any organisation. A further advantage of the rule of stare decisis or the so called judge-made law is that it has the potential to provide a mechanism to evolve legal policy when the legislature has become inactive to fulfil its obligations properly. In any legal agreement or legislations at the international level, there are always gaps, incomplete provisions, and other ambiguities. Such gaps and ambiguities can well be done away with if the international courts and tribunals are equipped with the tool of following doctrine of precedent in their adjudications, not only in fact but in law also. If the importance and persuasive force which the previous decisions invariably possess is recognised and adopted, then this will result in the development of a comprehensive body of law which can not only be used as a direct evidence of rules of law but also will b useful in generating a new method and spirit in the way in which future disputes will be resolved. Despite the abovementioned and many other advantages of having the doctrine of precedent in international dispute settlement system, the general rule is, under international law, dispute settlement procedures and tribunal opinions or decisions do not create obligations upon which future bodies must rely.
It is a fundamental and well recognised principle of administration of justice that like cases should be treated alike and decided similarly. But this way of adding more credibility to the legal system can hardly be achieved if judicial decisions are inconsistent and lacks coherence in them. The previous decisions of a tribunal should be followed unless there is a good reason to contravene from them.
The World Trade Organisation has now been operating for almost 15 years and its Dispute Settlement Body (DSB) has accepted 434 trade disputes between and among WTO Members as on 13 March 2012. Out of this vast number of disputes, some remained at the Panel level only and some went in appeal to the Appellate Body. Despite the success of the DSU, there are many problems and uncertainties prevailing in it. For example, there exists uncertainty regarding the position of previous panel and Appellate Body reports. Then there is uncertainty as to the way in which Panels and Appellate Body looks at the previous reports. There is uncertainty regarding the exact sources of law to be employed by the Panels and AB. At present a de facto form of stare decisis appears to exist in the DSU, but there is a strong reluctance on the part of WTO DSU to recognise its existence and thereby formally accepting the doctrine of precedent.
Therefore, in the light of above discussion in particular, in relation to the ambiguity prevalent in regard to the doctrine of precedent, the various questions which arise here are: how far the Panels have given deference to the previous decisions of Appellate Body? Why WTO DSU has not introduced the rule of stare decisis in de jure form in the system? Whether and how far the hierarchy present in the WTO dispute settlement Body has contributed to the introduction of rule of stare decisis de facto, in the dispute settlement process?
Thus, this paper will try to discuss these abovementioned questions to analyze whether there should be an obligatory rule of stare decisis in the WTO DSB or not.
RULE OF STARE DECISIS IN INTERNATIONAL LAW:
The idea of following precedent in International law poses a complex problem of adherence and creates in its way conceptual and practical difficulties. The uncertainty about the current status of stare decisis can be attributed, to some extent, to the vagueness of the stare decisis principle itself. As a matter of fact, this rule allows the Courts to overrule precedents where there is a clear justification for the same. Thus, it is often impossible to assess whether a decision has or has not been based on the stare decisis principle given the situation that the courts may justify deviation by stating the case as of special importance or of a different implication from the previous one. Whatever may be justification, the fact that stare decisis is being deviated from, is a matter of considerable consequence. As a consequence, once the members of the Court begin to treat precedent lightly, other members of the Court are obviously likely to refuse to confirm to the mandate of precedent. Thus, once one majority overrules some of a previous majority 's decisions, it is difficult to expect that successor majorities respect their predecessors ' precedents.
In common law jurisdictions the doctrine of precedent is a fundamental source of law. It is a doctrine which provides certainty but is also able to adapt and depart from decisions when it appears right to do so. In a civil law jurisdiction the law is not based on case-law. For example, a judge in the French legal system is not obliged to consider case-law, la jurisprudence, when reaching a decision. In fact it is expressly prohibited by the French civil code. In Switzerland, judges are permitted to engage in free scientific research when both rule and custom are lacking. Thus the civil code allows a judge to act as if he were himself acting as a legislator. From a practical point of view the main difference between common law, e.g. England, and civil law, e.g. France, is the civil law judge does not regard himself as bound by the decision of any court in a single previous instance.
Looking again at article 38 and 59 of the Statute of International Court of Justice, which are as follows:
Article 38: “The Court, whose function is to decide in accordance with international law such disputes as are submitted to it, shall apply: a) International conventions, whether general or particular, establishing rules expressely recognized by the contesting states; b) International custom as evidence of a general practice accepted as law; c) The general priniciples of law accepted by civilized nations; d) Subject to the provisions of Article 59, judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law.”
Article 59: “The decision of the Court has no binding force except between the parties and in respect of that particular case.”
The inference which follows is that at least in theory, there is no rule of precedent in the international legal system. But going by this implication we tend to over look the fact that even though stare decisis is not followed as a rule of law but still in fact and practice it is been followed by the courts within the international legal system. There have been dissenting opinions on this debate of what are the exact consequences of Article 38 and 59 of the Statute of International Court of Justice on the doctrine of precedent.
Judge Mohamed Shahabuddeen of the ICJ does not locate the rule against stare decisis in Article 59, declaring this provision "has no bearing on the question of precedents."" This disarming statement rests on two quite plausible claims. First, a literal parsing of the language of Article 59 indicates it is meant "to ensure that a decision, qua decision, binds only the parties to the particular case." That is, the language is limited to defining the legal relations of the parties, seeking to circumscribe the juridical force of a decision to the parties to a particular case, but having nothing to do with whether a decision can serve as a precedent in subsequent litigation or what more general jurisprudential effect the decision may have on international law. Judge Shahabuddeen 's second argument begins with the observation that Article 38. 1(d) refers to decisions of tribunals other than the ICJ, whereas Article 59 refers only to the ICJ 's decisions. Suppose Article 59 was a rejection of stare decisis. Then, it would be a rejection only for ICJ decisions.
Thus, according to Judge Shahabuddeen, Article 59 does not bar the rule of stare decisis in the context of international law. But what is to be determined is not what are the implications of Article 59 or 38 of the Statute of International Court of Justice on the rule of stare decisis but whether the doctrine of precedent is present in International context and if not then whether there is any scope open for it to make an admission as a rule law.
At this juncture, it is noteworthy to mention the phraseology used by judges of the World Court is interesting. In one of the case concerning the Gabcikovo- Nagymaros Project (Hungary/Slovakia) the World Court stated that, “[T]he Court recalls that it has recently had occasion to stress …”. Similarly, the Court that it “[R]ecalls that, in the Fisheries Jurisdiction case … ;” “[T]he Court will recall in this context that , as it said in the North Sea Continental Shelf case …”; “[T]he Permanent Court of International Justice stated in its Judgment or 13 September 1928 in the case concerning the Factory at Chorzow …”. However, the words “ we recall”, “we note” or “stated” are not the same, in a legal context, as “we held,” there is an authoritative tone to them which suggests more than mere persuasion. As we know the World Court is a Court of last resort, and “[C]ourts of last resort have come to accept that they are not obliged to follow their previous decisions; within careful bound, they may depart.”
The main problem of applying stare decisis in international law is that with the increasing number of international tribunals, there is, indeed, a risk that two judicial decisions may contradict each other. For instance, one tribunal may find that no breach of international law occurred. Another may come to the opposite conclusion, as between the same parties on the same matter. Although such a situation of conflicting judicial decisions has not yet arisen and is, indeed, not likely to arise in the near future. Thus, it follows that stare decisis is absent only de jure from the international courts but is present in a subtle form i.e., de facto. International courts have been following the rule of precedent latently and in practice despite its absence in theory.
RULE OF STARE DECISIS IN WTO:
The question of rule of precedent in WTO is important because in the international perspective, only WTO dispute settlement understanding offers a system of hierarchy of courts, and the doctrine of precedent applies only where there is a hierarchy of courts. It is not possible to have a doctrine of precedent in the absence of hierarchy of courts. Bindingness of judicial decisions depends on the hierarchy of courts; higher courts bind lower courts, but not vice versa. Two conditions have to be satisfied before stare decisis can be established in any legal system: (1) there have to be a settled judicial hierarchy to know whose decision binds whom. (2) there have also to be reliable reports of cases; if cases are to be authoritative as ‘law’, there should be precise records of what they lay down.
Non-application of the doctrine of precedent within a judicial system would mean that each court sits as an independent entity and decides according to its own judgment. But once we introduce a process of appeal, we introduce a precedent system because the appellate court would always see that the law stated by it in a previous case is followed in a subsequent case.
The WTO dispute settlement mechanism is a more effective than other dispute settlement mechanism in international law. The dispute settlement mechanism under the WTO has introduced new concepts which are new to international law. WTO provides for compulsory jurisdiction. Another major contribution brought in the WTO is introduction of the institution of the Appellate Body. Moreover, the enforcement mechanism of the decisions under the WTO is comparatively more effective than in any other international institution. Introduction of the concept of negative consensus has remedied the lacunae of the GATT system of adoption of report by contracting parties by positive consensus. A major highlight of the dispute settlement understanding of the WTO is that it has introduced consultation, conciliation, arbitration and judicial settlement of disputes under one umbrella.
Article 3.2 of the DSU provides:
“The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system. The Members recognize that it serves to preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law.”
It was to attain this security and predictability in the multilateral system that the institution of the Appellate Body was introduced by the negotiators in the Uruguay Round. Introduction of the Appellate Body in the WTO for the first time brought a hierarchical judicial structure in the realm of international law. This hierarchical judicial structure paved the way for the application of the doctrine of precedent in the WTO.
OCCASIONS WHEN STARE DECISIS HAS BEEN INVOKED IN WTO:
Judicial decisions or the reported decisions of prior panels are the second important source of law after covered agreements. These reports include the reports of GATT panels, the WTO panels and the Appellate Body. Reports may either be unadopted or adopted by the DSB. In Japan – Taxes on Alcoholic Beverages the panel effectively treated adopted reports as judicial decisions and determined that they are an integral part of GATT 1994 since they are other decisions of the Contracting Parties to GATT 1947. The Appellate Body disagreed and held that a decision to adopt a panel report, is not a decision within the meaning of Article 1(b) (iv). The Appellate Body considered adopted reports as “an important part of the GATT acquis.” It is interesting to note, however, because in its discussion of the issue, the Appellate Body refers to a decision and decisions to adopt panel reports. The panel treated adopted reports as subsidiary sources of WTO law, comparable in status to judicial decisions in the World Court. It stated that they have to be taken into account by subsequent panels dealing with the same or a similar issue.
In other words, an adopted report does not constitute a definitive interpretation of an agreement; but a decision that has to be considered but not necessarily followed by the panel. What the Appellate Body explicitly said in the Japan Alcoholic case is not much different from this. It stated that “[Adopted reports] are often considered by subsequent panels. They create legitimate expectations among WTO Members, and, therefore, should be taken into account where they are relevant to any dispute. However, they are not binding with respect to resolving the particular dispute between the parties to that dispute.”
As a matter of fact, the WTO panel in Japan Taxes case declined to follow the reasoning in two prior panels, one unadopted, the other adopted. As to the unadopted report, the panel said that it “was not persuaded by the reasoning,” and, as to the adopted report, that it “decided not to follow the interpretation of the term “like product” as it appears in Article III:2, first sentence, advanced by the 1992 Malt Beverages report in so far as it incorporates the aim-and-effect test” which it dismissed. This is about adopted GATT reports. The status of adopted WTO reports is identical. In Argentina Footwear, the Appellate Body specified that panels may not go beyond deriving “useful guidance” from the reasoning employed in unadopted panel reports, criticizing the panel in that case on the ground that it “in fact, relies upon the [unadopted] Bananas II panel report.” Thus, adopted reports are not binding on the subsequent panels but they do take them into consideration. In other words, their status is that of persuasive precedent and not a binding one. The Appellate Body endorsed the view taken by the panel in the Japan Alcoholic Beverages case that unadopted reports “have no legal status in either the GATT or the WTO system since they have not been endorsed through decisions by the CONTRACTING PARTIES to GATT or WTO Members.” The Appellate Body also endorsed the opinion of the panel that an unadopted report could provide useful guidance that could be considered to be relevant. Although adopted reports (to borrow the words of the Appellate Body in Japan Taxes case) create “legitimate expectations”, it might not be easy for a panel to depart from an earlier decision.
These definitions and tests were subsequently followed in Canada Periodicals and Korea Alcoholic Beverages. In both cases the Appellate Body used it’s like product analysis, which it had developed in Japan Alcoholic Beverages. In the former, Canada specifically cited Japan Alcoholic Beverages where it believed the panel had erred in its judgment. Procedurally, the citation of previous decisions by parties to a dispute is a clear indication of the existence of a de facto doctrine of precedent. The Appellate Body approved most of the panel 's decision, which was a replica of that in Japan Alcoholic Beverages, but criticized the panel for not applying the test as accurately as it should have. In Korea Alcoholic Beverages the Appellate Body cited large chunks of the test and refused to alter it. Thus, the Appellate Body appears keen to enforce strict compliance with the reasoning handed down in previous decisions.
In the light of the abovementioned cases it can be said that the previous panel and Appellate Body decisions, due to their strong persuasive power, constitute a form of non-binding precedent. These and some other similar decisions were created a system of persuasive stare decisis into the WTO dispute settlement system and due to this, the Panels started and continued to take previous decisions into account by adopting the reasoning laid down in those decisions, in practice by following so called non binding or persuasive precedent. Thus, one may cull out that the overall result of non binding precedent following led to a system of it de facto precedential effect within the framework of WTO dispute settlement. However, the position changed when the AB forwarded a decision in a dispute before it by directing the Panels to follow the precedents not just considering them as persuasive in effect but attaching a certain kind of legitimacy to precedents and loading the Panels with the burden of mandatorily following them and to give strong reasons in writing for departure from them.
A recent Appellate Body decision has resulted in a heated discussion among the WTO Membership on the subject, as well as a questionable decision by a panel in a subsequent dispute. These new developments merit a closer look at the mentioned Appellate Body decision, the Report in US Stainless Steel, in which the Appellate Body required from panels to advance cogent reasons in order to justify a departure from its previous decisions.
The Appellate Body, in the end, showed itself “deeply concerned about the Panel’s decision to depart from well-established Appellate Body jurisprudence clarifying the interpretation of the same legal issues,” and decided that ensuring security and predictability as contemplated by Article 3.2 of the DSU implied that, “absent cogent reasons, an adjudicatory body will resolve the same legal question in the same way in subsequent case.”
There is no doubt that the importance and persuasive power of previous reports has increased largely since the holding in Japan Alcoholic Beverages. But with the opening up of new horizons of rule of stare decisis within WTO, by rulings such as made in the case of US Stainless steel, now it can be said that the seriousness with which the Appellate Body makes its decisions; it is unlikely that it would often deviate from its own precedents. Also for the Panels it now seems hard if not impossible to deviate from previous reports of Appellate Body without justifying such a deviation. It also seems clear that the panel is obliged to follow previous Appellate Body decisions.
PRACTICE OF FOLLOWING STARE DECISIS DE FACTO IN WTO: SHOULD PANELS BE ALLOWED TO DEPART FROM PREVIOUS REPORTS OF AB:
The fact that the doctrine of binding precedent does not apply does not mean that panel decisions have no precedential value. Wherever there is a body of case law, the doctrine of precedent is bound to take place in such a legal system. Precedents are decisions furnishing a basis for determining later cases involving similar facts or issues. After the above discussion, it can be said without hesitation that large amounts of such precedents exist in the WTO dispute settlement system. Every one of the published Panel or AB Reports cites previous Panel and AB Reports. It is now clear that both the GATT Panel Reports and the DSB Panel/AB Reports provide authoritative principle for subsequent cases having similar legal issues. From this respect, in practice the Panel and Appellate Reports function as precedent.
Even though WTO panel interpretations regarding the rule of stare decisis is that, previous reports are not binding on subsequent disputes, in practice they have significant precedential value. In order that a particular reasoning established in a previous report may be used as a precedent, that reasoning must form the ratio decidendi of a sufficient number of consensually adopted panel reports so that constitute a consistently adopted sequence of acts sufficient to establish the agreement of the parties to that reasoning.
Moreover, looking at the fact, in the light of the cases mentioned in the previous section, it is clear that doctrine of precedent do exist in the framework of WTO, though not as a de jure doctrine but certainly as a de facto doctrine and has been followed in practice by the Panels and AB uninterruptedly. In the current scenario WTO is the only system equipped with the machinery of hierarchy in its legal system. Looking at this and the fact that doctrine of precedent can be ceremoniously admitted only in those legal systems which possess the hierarchical system of judiciary, the issue of stare decisis in WTO gains more importance. Within WTO, the DSU is the exclusive and ultimate means of enforcing the WTO 's trade regulations. This is one more important reason that why a system of stare decisis should be instituted as a means of providing more stability in a system that is so important.
Thus, it follows that even though it is not mandatory for the Panels to follow the previous AB reports expressly, still it should not become a practice for the Panels to depart from the AB reports unless and until there exists cogent reasons for doing so. The practice in WTO DSB should be to follow previous AB reports with due deference and also in the light of facts of the dispute present before them. Thus, pursuing the previous reports should be the practice and departure from them.
IMPLICATIONS OF HAVING DE JURE STARE DECISIS IN WTO:
It has been said by Raj Bhala that, “If it is indeed the case that a de facto stare decisis doctrine is operating in WTO adjudication, ought we to consider admitting this openly and, further, amending the DSU and WTO Agreement where necessary to make this doctrine official, that is, a de jure one whereby reports really possess the potency of precedent?.”
If the rule of stare decisis exists de facto in the framework of WTO, then why there is no de jure rule of stare decisis in WTO? Why there is no initiative to create such a de jure rule in the DSU? If such a rule is admitted as a rule of law within the DSU then some important implications follow from it. Such a system of de jure stare decisis has the potential effect of fostering stability and certainty within the adjudicatory system of WTO. Stare decisis should be given a legal space within WTO because it offers a legitimate and consistent development of legal principles, fosters confidence in judicial decisions, and contributes to the integrity of the judicial process. Stare decisis can be considered as legitimate and consistent because it ensures that the law will not just develop inconsistently and also permits the society at large to be assured that the principles of law are followed consistently in every case. Public confidence in the judicial process, administrative efficiency, and the nature of the controversy at issue also encourage the following of precedent.
Another advantage of stare decisis is that whenever there arises confusion among the judges as to the correct interpretation of a particular law or fact then it provides a basis for laying effective decision making by looking into previously decided cases with similar facts and situation. Stare decisis enables judges to develop the ability to tell that when like cases are alike into a facility for deciding a wide variety of cases that involve substantive legal issues about which the judges may know next to nothing. In this regard, stare decisis allows judges to share information among one another, enabling them to develop different areas of knowledge. In addition, stare decisis enables decision-makers to reduce the uncertainty associated with making decisions because they can compare their analysis with analysis of similar decision makers. This is in particular useful in the WTO dispute settlement system because different individuals make up the panels that are chosen for each dispute. Thus it also helps in the conservation of resources. It leads to wastage of efficiency to re invent the law already decided and helps the focus to remain on new and substantial disputes.
To conclude, if the rule of stare decisis is added to the legal system of WTO, then it would help in the operation of WTO dispute settlement system in a more effective and efficient manner. Such a practice would have the effect of fostering the development of legal principles that consistently can be applied across disputes so that they constitute a legal practice that can guide future panels and, as such, ensure even greater consistency in the interpretation of treaties and the agreements of the WTO.
CONCLUSION:
Thus, it can be concluded after the above discussion that if speaking in strict formal terms, WTO legal system is devoid of strict binding rule of stare decisis. Thus, as a general rule the Panels and also The Appellate Body are free to depart from the previously decided reports and there are no questions for them as to be answerable for such departure. What remains to consider in regard to this rule inside the WTO dispute settlement is that precedent rule is followed by the Panels and Appellate Body, though not patently but in a disguised form by calling it as a persuasive or non binding precedent rule or what may be called as de facto stare decisis.
But with the progress in the cases admitted and settled by the DSU, it seems necessary to deal with the issue of de jure stare decisis in WTO seriously. Also considering the fact that WTO legal order is the only legal system possessing the hierarchical system of dispute settlement, adds to the concern of imbibing doctrine of precedent as a binding rule in the legal system of WTO. Further, considering the parties’ legitimate expectations in a dispute from the Panels and Appellate Body again puts forward the issue with a force. Legitimate expectations of the parties means that the individual parties in every case rely upon the previous reports in cases having similar facts to that of their own. The parties rely on previous decisions in order to support their arguments, which is evidence of the acceptance of the value of previous decisions among the Members.
Thus, if the rule of precedent is been relied on by both the Appellate Body and the members of the WTO then there arises no question of not admitting the jurisprudence of stare decisis into the WTO legal system. Though one may argue that de jure acceptance of the doctrine of precedent might give rise to the dangers of judicial activism and interpretation of treaties based heavily upon the reports of Panels and AB. But this concern is not practicable as members finally retain the authority to correct the interpretations provided in these reports.
After all, the Appellate Body was created in order to deal with legal issues arsing within the panel reports and the AB should be equipped with the task of interpreting the treaties not only in accordance with customary rules of international law but also giving due deference to the reports previously decided by the AB. AB in addition should also ensure that Panels also provide the same deference to previous decisions required of them.
At last, it can be concluded that there is still seems no hope for the inclusion of stare decisis de jure in the WTO legal system but what follows is that the new system of hierarchy initiated by WTO should be given due respect by the Panels and there should be more adherence to the previous reports of the AB on the part of the Panels and AB itself.
BIBLIOGRAPHY:
Books Referred: 1. Palmeter, David and Petros C. Mavroidis. Dispute Settlement and the World Trade Organization: Practice and Procedure. Cambridge, UK: Cambridge University Press, 2nd ed., 2004. 2. The WTO Dispute Settlement Procedures – A Collection of the Relevant Legal Texts, New York: Cambridge University Press, 2nd Ed., 2005. 3. Mitsuo Matsushita, et al., The World Trade Organisation- Law, Practice and Policy, Pp. 989, (Oxford: Oxford University Press, 2nd Ed., 2006). 4. Federico Ortino, Ernst-Ulrich Petersmann, The WTO dispute settlement system, 1995-2003, Pp. 607 (Kluwer Law International, Vol. 18, 2004) 5. Bernard M. Hoekman and Petros C. Mavroidis, The World Trade Organization- Law, Economics and Politics, (New York: Taylor & Francis Group, 1st Ed., 2007).
Articles Referred: 1. Zhu Lanye, “The Effects Of The WTO Dispute Settlement Panel And Appellate Body Reports: Is The Dispute Settlement Body Resolving Specific Disputes Only Or Making Precedent At The Same Time?”, 221, Int 'l & Comp. L.J. Vol. 17 (2003). 2. Eoin Gubbins, “Precedent in the WTO: Advantages of De Jure Stare Decisis”, 70, Trinity C.L. Rev., Vol. 9 (2006). 3. Raj Bhala, “The Myth about Stare Decisis and International Trade Law (Part one of a Trilogy)”, 14 Am. U. Int 'l L. Rev. 845 (1998-1999) 4. Muhammad Munir, “Precedent in Civil Law and International Law”, (March 22, 2011). Available at SSRN: http://ssrn.com/abstract=1792415. 5. Sydney M. Cone, “The Asbestos Case and Dispute Settlement in the World Trade Organization: The Uneasy Relationship between Panels and the Appellate Body”, 103, Michigan J. Int 'l L. Vol. 23, (2001-2002). 6. Felix David, “The Role of Precedent in the WTO – New Horizons?”, Maastricht Faculty of Law Working Paper (2009-12). 7. Sumimaru Odano, Ziaul Abedin, “Insufficiency in the Dispute Settlement Mechanism of the WTO: Consequences and Implications for the Multilateral Trading System”, GSIR Working Papers Economic Development & Policy Series, (March 2008). 8. Walden Bello, “Lack of Transparency in the WTO”, Development Dialogue (2002). 9. Gabrielle Kaufmann-Kohler, “Arbitral Precedent: Dream, Necessity or Excuse?”, Arbitration International, Volume 23 Issue 3, (2007). 10. Raj Bhala, “The Power of the Past: Towards Dejure Stare Decisis in WTO Adjudication”, 873, Geo. Wash. Int 'l L. Rev. Vol. 33, (2000-2001). 11. Adrian T. L. Chua, “Precedents and Principles of WTO Panel Jurisprudence”, Berkeley Journal of International Law, Vol. 16, (1998). 12. Joel P. Trachtman, “The Domain of WTO Dispute Resolution”, Harvard International Law Journal, Vol.40, (spring, 1999). 13. Raj Bhala, “Five Theoretical Themes in the World Trade Organization Adjudicatory System”, 6 ILSA J. Int 'l & Comp. L. 437 (1999-2000).
Websites: 1. www.wto.org 2. www.jstor.org 3. www.ssrn.com 4. www.westlaw.com 5. www.worldtradelaw.net 6. www.heinonline.com
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[ 1 ]. To cite, Russ Versteeg, Essential Latin for Lawyers, 159 (1990), cited by, 3. Raj Bhala, “The Myth about Stare Decisis and International Trade Law (Part one of a Trilogy)”, 14 Am. U. Int 'l L. Rev. 845 (1998-1999) at p. 849.
[ 2 ]. Ibid at 922.
[ 3 ]. Chronological list of disputes cases, available at: http://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm. (last visited on 8th April, 2012).
[ 4 ]. Eoin Gubbins, “Precedent in the WTO: Advantages of De Jure Stare Decisis”, 70, Trinity C.L. Rev., Vol. 9 (2006). At P. 71.
[ 5 ]. Raj Bhala, “The Myth about Stare Decisis and International Trade Law (Part one of a Trilogy)”, 14 Am. U. Int 'l L. Rev. 845 (1998-1999) at P. 22.
[ 6 ]. To cite, Mohamed Shahabuddeen, Precedent in the World Court, Grotius, Cambridge, 1996, p.238, cited by, Muhammad Munir, Precedent in Civil Law and International Law, (March 22, 2011). Available at SSRN: http://ssrn.com/abstract=1792415.
[ 7 ]. Article XV: 1 of WTO Agreement.
[ 8 ]. To cite, WT/DSB/R, WT/DS10/R, WT/DS11/R (11 July 1996) (Adopted as Modified by the Appellate Body 1
November 1996), cited by, Muhammad Munir, Precedent in Civil Law and International Law, (March 22, 2011). Available at SSRN: http://ssrn.com/abstract=1792415 at p. 19.
[ 9 ]. Muhammad Munir, Precedent in Civil Law and International Law, (March 22, 2011). Available at SSRN: http://ssrn.com/abstract=1792415 at p. 21.
[ 10 ]. Eoin Gubbins, “Precedent in the WTO: Advantages of De Jure Stare Decisis”, 70, Trinity C.L. Rev., Vol. 9 (2006). At P. 74.
[ 11 ]. To cite, Appellate Body Report, US - Stainless Steel, WT/DS344/AB/R,, cited by, Felix David , “The Role of Precedent in the WTO– New Horizons?”, Maastricht Faculty of Law Working Paper (2009) at p. 3.
[ 12 ]. Felix David , “The Role of Precedent in the WTO– New Horizons?”, Maastricht Faculty of Law Working Paper (2009) at p. 3.
[ 13 ]. Ibid at p. 8.
[ 14 ]. Raj Bhala, “Five Theoretical Themes in the World Trade Organization Adjudicatory System”, 6 ILSA J. Int 'l & Comp. L. 437 (1999-2000) at p. 442.
Bibliography: 2. The WTO Dispute Settlement Procedures – A Collection of the Relevant Legal Texts, New York: Cambridge University Press, 2nd Ed., 2005. 3 4. Federico Ortino, Ernst-Ulrich Petersmann, The WTO dispute settlement system, 1995-2003, Pp. 607 (Kluwer Law International, Vol. 18, 2004) 5 2. Eoin Gubbins, “Precedent in the WTO: Advantages of De Jure Stare Decisis”, 70, Trinity C.L. Rev., Vol. 9 (2006). 3. Raj Bhala, “The Myth about Stare Decisis and International Trade Law (Part one of a Trilogy)”, 14 Am. U. Int 'l L. Rev. 845 (1998-1999) 4 5. Sydney M. Cone, “The Asbestos Case and Dispute Settlement in the World Trade Organization: The Uneasy Relationship between Panels and the Appellate Body”, 103, Michigan J. Int 'l L. Vol. 23, (2001-2002). 6. Felix David, “The Role of Precedent in the WTO – New Horizons?”, Maastricht Faculty of Law Working Paper (2009-12). 7. Sumimaru Odano, Ziaul Abedin, “Insufficiency in the Dispute Settlement Mechanism of the WTO: Consequences and Implications for the Multilateral Trading System”, GSIR Working Papers Economic Development & Policy Series, (March 2008). 8. Walden Bello, “Lack of Transparency in the WTO”, Development Dialogue (2002). 9. Gabrielle Kaufmann-Kohler, “Arbitral Precedent: Dream, Necessity or Excuse?”, Arbitration International, Volume 23 Issue 3, (2007). 10 11. Adrian T. L. Chua, “Precedents and Principles of WTO Panel Jurisprudence”, Berkeley Journal of International Law, Vol. 16, (1998). 12. Joel P. Trachtman, “The Domain of WTO Dispute Resolution”, Harvard International Law Journal, Vol.40, (spring, 1999). 13. Raj Bhala, “Five Theoretical Themes in the World Trade Organization Adjudicatory System”, 6 ILSA J. Int 'l & Comp. L. 437 (1999-2000). [ 1 ]. To cite, Russ Versteeg, Essential Latin for Lawyers, 159 (1990), cited by, 3. Raj Bhala, “The Myth about Stare Decisis and International Trade Law (Part one of a Trilogy)”, 14 Am. U. Int 'l L. Rev. 845 (1998-1999) at p. 849. [ 3 ]. Chronological list of disputes cases, available at: http://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm. (last visited on 8th April, 2012). [ 4 ]. Eoin Gubbins, “Precedent in the WTO: Advantages of De Jure Stare Decisis”, 70, Trinity C.L. Rev., Vol. 9 (2006). At P. 71. [ 5 ]. Raj Bhala, “The Myth about Stare Decisis and International Trade Law (Part one of a Trilogy)”, 14 Am. U. Int 'l L. Rev. 845 (1998-1999) at P. 22. [ 6 ]. To cite, Mohamed Shahabuddeen, Precedent in the World Court, Grotius, Cambridge, 1996, p.238, cited by, Muhammad Munir, Precedent in Civil Law and International Law, (March 22, 2011). Available at SSRN: http://ssrn.com/abstract=1792415. [ 8 ]. To cite, WT/DSB/R, WT/DS10/R, WT/DS11/R (11 July 1996) (Adopted as Modified by the Appellate Body 1 November 1996), cited by, Muhammad Munir, Precedent in Civil Law and International Law, (March 22, 2011) [ 9 ]. Muhammad Munir, Precedent in Civil Law and International Law, (March 22, 2011). Available at SSRN: http://ssrn.com/abstract=1792415 at p. 21. [ 10 ]. Eoin Gubbins, “Precedent in the WTO: Advantages of De Jure Stare Decisis”, 70, Trinity C.L. Rev., Vol. 9 (2006). At P. 74. [ 11 ]. To cite, Appellate Body Report, US - Stainless Steel, WT/DS344/AB/R,, cited by, Felix David , “The Role of Precedent in the WTO– New Horizons?”, Maastricht Faculty of Law Working Paper (2009) at p. 3. [ 12 ]. Felix David , “The Role of Precedent in the WTO– New Horizons?”, Maastricht Faculty of Law Working Paper (2009) at p. 3. [ 14 ]. Raj Bhala, “Five Theoretical Themes in the World Trade Organization Adjudicatory System”, 6 ILSA J. Int 'l & Comp. L. 437 (1999-2000) at p. 442.
SHOULD PANELS BE BOUND BY AB: STARE DECISIS AND HIERARCHY IN THE WTO DISPUTE SETTLEMENT
Submitted towards the fulfilment of grading for the
2nd semester of LL.M. (Corporate Law) for the subject
DISPUTE SETTLEMENT MECHANISM
Submitted to: Submitted By:
Mr. Yogesh Pai Pratibha Motyar
Prof. of Law LL.M. (Corporate Laws)
National Law University II semester Roll No- 379
NATIONAL LAW UNIVERSITY, JODHPUR
10th April, 2012
TABLE OF CONTENTS:
S. No. | TOPIC | PAGE No. | 1. | INTRODUCTION | 3 | 2. | RULE OF STARE DECISIS IN INTERNATIONAL LAW | 5 | 3. | RULE OF STARE DECISIS IN WTO | 8 | 4. | OCCASIONS WHEN STARE DECISIS HAS BEEN INVOKED IN WTO | 9 | 5. | PRACTICE OF FOLLOWING STARE DECISIS DE FACTO IN WTO: SHOULD PANELS BE ALLOWED TO DEPART FROM PREVIOUS REPORTS OF AB | 12 | 6. | IMPLICATIONS OF HAVING DE JURE STARE DECISIS IN WTO | 13 | 7. | CONCLUSION | 14 | 8. | BIBLIOGRAPHY | 16 |
INTRODUCTION:
Stare decisis means “to stand firmly by things that have been decided..” The term is actually the shortened phrase from a Latin maxim stare decisis et non quieta movere. The maxim means “to stand firmly by things that have been decided and not to rouse/disturb/move things at rest.”
The doctrine of precedent based on the system of stare decisis has its origin in the common law of England. Doctrine of precedent plays a vital role in the Municipal law. The domestic courts of almost every nation follow this doctrine very religiously while adjudicating. Any dispute before a court of law has factual as well as legal aspects. A court applies a law in the facts of the case. This process of application of law to the facts of the case involves interpretation of that law. The decision of the court is binding only on the parties, but the law laid down in that case in the process of interpretation of a given law is binding on all lower courts within the jurisdiction of the higher court deciding the case. Therefore the lower courts are bound to apply the ratio of the case given by higher court in any case having similar facts.
Now coming to the bigger picture, interestingly, there exists no doctrine of stare decisis in international law. If we refer to Article 59 of the statute of the International Court of Justice (ICJ) which provides that, “The decision of the Court has no binding force except between the parties and in respect of that particular case.” This means that decisions are binding between the state parties in respect of a particular case only. Accordingly, the court is not bound by previous decisions. Now looking at Article 38 of the Statute of the ICJ which has been considered to be a general standard of applicable law in international relations, provides in its clause (d) that, “Subject to the provisions of Article 59, judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law.” By going with these internationally accepted provisions, shall we continue to assert, with Article 38(l) (d) of the Statute of the International Court of Justice that judicial decisions are mere evidence of the law, not the law itself? Shall we hold fast to the pretence that stare decisis does not operate in a de facto sense or that it is not eligible to be followed in a de jure sense?
There are many advantages of having the doctrine of precedent in international legal system. International courts strive for legitimacy in its decision making process, and to follow previous decisions in cases which involve similar facts is one of the ways of building credibility into decisions. Another recognised advantage of allowing a court or tribunal to follow previous decisions is that it helps in introducing a kind of certainty and stability in the judicial decisions, which in turn brings a definite order in the administration of justice, which are an asset to any organisation. A further advantage of the rule of stare decisis or the so called judge-made law is that it has the potential to provide a mechanism to evolve legal policy when the legislature has become inactive to fulfil its obligations properly. In any legal agreement or legislations at the international level, there are always gaps, incomplete provisions, and other ambiguities. Such gaps and ambiguities can well be done away with if the international courts and tribunals are equipped with the tool of following doctrine of precedent in their adjudications, not only in fact but in law also. If the importance and persuasive force which the previous decisions invariably possess is recognised and adopted, then this will result in the development of a comprehensive body of law which can not only be used as a direct evidence of rules of law but also will b useful in generating a new method and spirit in the way in which future disputes will be resolved. Despite the abovementioned and many other advantages of having the doctrine of precedent in international dispute settlement system, the general rule is, under international law, dispute settlement procedures and tribunal opinions or decisions do not create obligations upon which future bodies must rely.
It is a fundamental and well recognised principle of administration of justice that like cases should be treated alike and decided similarly. But this way of adding more credibility to the legal system can hardly be achieved if judicial decisions are inconsistent and lacks coherence in them. The previous decisions of a tribunal should be followed unless there is a good reason to contravene from them.
The World Trade Organisation has now been operating for almost 15 years and its Dispute Settlement Body (DSB) has accepted 434 trade disputes between and among WTO Members as on 13 March 2012. Out of this vast number of disputes, some remained at the Panel level only and some went in appeal to the Appellate Body. Despite the success of the DSU, there are many problems and uncertainties prevailing in it. For example, there exists uncertainty regarding the position of previous panel and Appellate Body reports. Then there is uncertainty as to the way in which Panels and Appellate Body looks at the previous reports. There is uncertainty regarding the exact sources of law to be employed by the Panels and AB. At present a de facto form of stare decisis appears to exist in the DSU, but there is a strong reluctance on the part of WTO DSU to recognise its existence and thereby formally accepting the doctrine of precedent.
Therefore, in the light of above discussion in particular, in relation to the ambiguity prevalent in regard to the doctrine of precedent, the various questions which arise here are: how far the Panels have given deference to the previous decisions of Appellate Body? Why WTO DSU has not introduced the rule of stare decisis in de jure form in the system? Whether and how far the hierarchy present in the WTO dispute settlement Body has contributed to the introduction of rule of stare decisis de facto, in the dispute settlement process?
Thus, this paper will try to discuss these abovementioned questions to analyze whether there should be an obligatory rule of stare decisis in the WTO DSB or not.
RULE OF STARE DECISIS IN INTERNATIONAL LAW:
The idea of following precedent in International law poses a complex problem of adherence and creates in its way conceptual and practical difficulties. The uncertainty about the current status of stare decisis can be attributed, to some extent, to the vagueness of the stare decisis principle itself. As a matter of fact, this rule allows the Courts to overrule precedents where there is a clear justification for the same. Thus, it is often impossible to assess whether a decision has or has not been based on the stare decisis principle given the situation that the courts may justify deviation by stating the case as of special importance or of a different implication from the previous one. Whatever may be justification, the fact that stare decisis is being deviated from, is a matter of considerable consequence. As a consequence, once the members of the Court begin to treat precedent lightly, other members of the Court are obviously likely to refuse to confirm to the mandate of precedent. Thus, once one majority overrules some of a previous majority 's decisions, it is difficult to expect that successor majorities respect their predecessors ' precedents.
In common law jurisdictions the doctrine of precedent is a fundamental source of law. It is a doctrine which provides certainty but is also able to adapt and depart from decisions when it appears right to do so. In a civil law jurisdiction the law is not based on case-law. For example, a judge in the French legal system is not obliged to consider case-law, la jurisprudence, when reaching a decision. In fact it is expressly prohibited by the French civil code. In Switzerland, judges are permitted to engage in free scientific research when both rule and custom are lacking. Thus the civil code allows a judge to act as if he were himself acting as a legislator. From a practical point of view the main difference between common law, e.g. England, and civil law, e.g. France, is the civil law judge does not regard himself as bound by the decision of any court in a single previous instance.
Looking again at article 38 and 59 of the Statute of International Court of Justice, which are as follows:
Article 38: “The Court, whose function is to decide in accordance with international law such disputes as are submitted to it, shall apply: a) International conventions, whether general or particular, establishing rules expressely recognized by the contesting states; b) International custom as evidence of a general practice accepted as law; c) The general priniciples of law accepted by civilized nations; d) Subject to the provisions of Article 59, judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law.”
Article 59: “The decision of the Court has no binding force except between the parties and in respect of that particular case.”
The inference which follows is that at least in theory, there is no rule of precedent in the international legal system. But going by this implication we tend to over look the fact that even though stare decisis is not followed as a rule of law but still in fact and practice it is been followed by the courts within the international legal system. There have been dissenting opinions on this debate of what are the exact consequences of Article 38 and 59 of the Statute of International Court of Justice on the doctrine of precedent.
Judge Mohamed Shahabuddeen of the ICJ does not locate the rule against stare decisis in Article 59, declaring this provision "has no bearing on the question of precedents."" This disarming statement rests on two quite plausible claims. First, a literal parsing of the language of Article 59 indicates it is meant "to ensure that a decision, qua decision, binds only the parties to the particular case." That is, the language is limited to defining the legal relations of the parties, seeking to circumscribe the juridical force of a decision to the parties to a particular case, but having nothing to do with whether a decision can serve as a precedent in subsequent litigation or what more general jurisprudential effect the decision may have on international law. Judge Shahabuddeen 's second argument begins with the observation that Article 38. 1(d) refers to decisions of tribunals other than the ICJ, whereas Article 59 refers only to the ICJ 's decisions. Suppose Article 59 was a rejection of stare decisis. Then, it would be a rejection only for ICJ decisions.
Thus, according to Judge Shahabuddeen, Article 59 does not bar the rule of stare decisis in the context of international law. But what is to be determined is not what are the implications of Article 59 or 38 of the Statute of International Court of Justice on the rule of stare decisis but whether the doctrine of precedent is present in International context and if not then whether there is any scope open for it to make an admission as a rule law.
At this juncture, it is noteworthy to mention the phraseology used by judges of the World Court is interesting. In one of the case concerning the Gabcikovo- Nagymaros Project (Hungary/Slovakia) the World Court stated that, “[T]he Court recalls that it has recently had occasion to stress …”. Similarly, the Court that it “[R]ecalls that, in the Fisheries Jurisdiction case … ;” “[T]he Court will recall in this context that , as it said in the North Sea Continental Shelf case …”; “[T]he Permanent Court of International Justice stated in its Judgment or 13 September 1928 in the case concerning the Factory at Chorzow …”. However, the words “ we recall”, “we note” or “stated” are not the same, in a legal context, as “we held,” there is an authoritative tone to them which suggests more than mere persuasion. As we know the World Court is a Court of last resort, and “[C]ourts of last resort have come to accept that they are not obliged to follow their previous decisions; within careful bound, they may depart.”
The main problem of applying stare decisis in international law is that with the increasing number of international tribunals, there is, indeed, a risk that two judicial decisions may contradict each other. For instance, one tribunal may find that no breach of international law occurred. Another may come to the opposite conclusion, as between the same parties on the same matter. Although such a situation of conflicting judicial decisions has not yet arisen and is, indeed, not likely to arise in the near future. Thus, it follows that stare decisis is absent only de jure from the international courts but is present in a subtle form i.e., de facto. International courts have been following the rule of precedent latently and in practice despite its absence in theory.
RULE OF STARE DECISIS IN WTO:
The question of rule of precedent in WTO is important because in the international perspective, only WTO dispute settlement understanding offers a system of hierarchy of courts, and the doctrine of precedent applies only where there is a hierarchy of courts. It is not possible to have a doctrine of precedent in the absence of hierarchy of courts. Bindingness of judicial decisions depends on the hierarchy of courts; higher courts bind lower courts, but not vice versa. Two conditions have to be satisfied before stare decisis can be established in any legal system: (1) there have to be a settled judicial hierarchy to know whose decision binds whom. (2) there have also to be reliable reports of cases; if cases are to be authoritative as ‘law’, there should be precise records of what they lay down.
Non-application of the doctrine of precedent within a judicial system would mean that each court sits as an independent entity and decides according to its own judgment. But once we introduce a process of appeal, we introduce a precedent system because the appellate court would always see that the law stated by it in a previous case is followed in a subsequent case.
The WTO dispute settlement mechanism is a more effective than other dispute settlement mechanism in international law. The dispute settlement mechanism under the WTO has introduced new concepts which are new to international law. WTO provides for compulsory jurisdiction. Another major contribution brought in the WTO is introduction of the institution of the Appellate Body. Moreover, the enforcement mechanism of the decisions under the WTO is comparatively more effective than in any other international institution. Introduction of the concept of negative consensus has remedied the lacunae of the GATT system of adoption of report by contracting parties by positive consensus. A major highlight of the dispute settlement understanding of the WTO is that it has introduced consultation, conciliation, arbitration and judicial settlement of disputes under one umbrella.
Article 3.2 of the DSU provides:
“The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system. The Members recognize that it serves to preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law.”
It was to attain this security and predictability in the multilateral system that the institution of the Appellate Body was introduced by the negotiators in the Uruguay Round. Introduction of the Appellate Body in the WTO for the first time brought a hierarchical judicial structure in the realm of international law. This hierarchical judicial structure paved the way for the application of the doctrine of precedent in the WTO.
OCCASIONS WHEN STARE DECISIS HAS BEEN INVOKED IN WTO:
Judicial decisions or the reported decisions of prior panels are the second important source of law after covered agreements. These reports include the reports of GATT panels, the WTO panels and the Appellate Body. Reports may either be unadopted or adopted by the DSB. In Japan – Taxes on Alcoholic Beverages the panel effectively treated adopted reports as judicial decisions and determined that they are an integral part of GATT 1994 since they are other decisions of the Contracting Parties to GATT 1947. The Appellate Body disagreed and held that a decision to adopt a panel report, is not a decision within the meaning of Article 1(b) (iv). The Appellate Body considered adopted reports as “an important part of the GATT acquis.” It is interesting to note, however, because in its discussion of the issue, the Appellate Body refers to a decision and decisions to adopt panel reports. The panel treated adopted reports as subsidiary sources of WTO law, comparable in status to judicial decisions in the World Court. It stated that they have to be taken into account by subsequent panels dealing with the same or a similar issue.
In other words, an adopted report does not constitute a definitive interpretation of an agreement; but a decision that has to be considered but not necessarily followed by the panel. What the Appellate Body explicitly said in the Japan Alcoholic case is not much different from this. It stated that “[Adopted reports] are often considered by subsequent panels. They create legitimate expectations among WTO Members, and, therefore, should be taken into account where they are relevant to any dispute. However, they are not binding with respect to resolving the particular dispute between the parties to that dispute.”
As a matter of fact, the WTO panel in Japan Taxes case declined to follow the reasoning in two prior panels, one unadopted, the other adopted. As to the unadopted report, the panel said that it “was not persuaded by the reasoning,” and, as to the adopted report, that it “decided not to follow the interpretation of the term “like product” as it appears in Article III:2, first sentence, advanced by the 1992 Malt Beverages report in so far as it incorporates the aim-and-effect test” which it dismissed. This is about adopted GATT reports. The status of adopted WTO reports is identical. In Argentina Footwear, the Appellate Body specified that panels may not go beyond deriving “useful guidance” from the reasoning employed in unadopted panel reports, criticizing the panel in that case on the ground that it “in fact, relies upon the [unadopted] Bananas II panel report.” Thus, adopted reports are not binding on the subsequent panels but they do take them into consideration. In other words, their status is that of persuasive precedent and not a binding one. The Appellate Body endorsed the view taken by the panel in the Japan Alcoholic Beverages case that unadopted reports “have no legal status in either the GATT or the WTO system since they have not been endorsed through decisions by the CONTRACTING PARTIES to GATT or WTO Members.” The Appellate Body also endorsed the opinion of the panel that an unadopted report could provide useful guidance that could be considered to be relevant. Although adopted reports (to borrow the words of the Appellate Body in Japan Taxes case) create “legitimate expectations”, it might not be easy for a panel to depart from an earlier decision.
These definitions and tests were subsequently followed in Canada Periodicals and Korea Alcoholic Beverages. In both cases the Appellate Body used it’s like product analysis, which it had developed in Japan Alcoholic Beverages. In the former, Canada specifically cited Japan Alcoholic Beverages where it believed the panel had erred in its judgment. Procedurally, the citation of previous decisions by parties to a dispute is a clear indication of the existence of a de facto doctrine of precedent. The Appellate Body approved most of the panel 's decision, which was a replica of that in Japan Alcoholic Beverages, but criticized the panel for not applying the test as accurately as it should have. In Korea Alcoholic Beverages the Appellate Body cited large chunks of the test and refused to alter it. Thus, the Appellate Body appears keen to enforce strict compliance with the reasoning handed down in previous decisions.
In the light of the abovementioned cases it can be said that the previous panel and Appellate Body decisions, due to their strong persuasive power, constitute a form of non-binding precedent. These and some other similar decisions were created a system of persuasive stare decisis into the WTO dispute settlement system and due to this, the Panels started and continued to take previous decisions into account by adopting the reasoning laid down in those decisions, in practice by following so called non binding or persuasive precedent. Thus, one may cull out that the overall result of non binding precedent following led to a system of it de facto precedential effect within the framework of WTO dispute settlement. However, the position changed when the AB forwarded a decision in a dispute before it by directing the Panels to follow the precedents not just considering them as persuasive in effect but attaching a certain kind of legitimacy to precedents and loading the Panels with the burden of mandatorily following them and to give strong reasons in writing for departure from them.
A recent Appellate Body decision has resulted in a heated discussion among the WTO Membership on the subject, as well as a questionable decision by a panel in a subsequent dispute. These new developments merit a closer look at the mentioned Appellate Body decision, the Report in US Stainless Steel, in which the Appellate Body required from panels to advance cogent reasons in order to justify a departure from its previous decisions.
The Appellate Body, in the end, showed itself “deeply concerned about the Panel’s decision to depart from well-established Appellate Body jurisprudence clarifying the interpretation of the same legal issues,” and decided that ensuring security and predictability as contemplated by Article 3.2 of the DSU implied that, “absent cogent reasons, an adjudicatory body will resolve the same legal question in the same way in subsequent case.”
There is no doubt that the importance and persuasive power of previous reports has increased largely since the holding in Japan Alcoholic Beverages. But with the opening up of new horizons of rule of stare decisis within WTO, by rulings such as made in the case of US Stainless steel, now it can be said that the seriousness with which the Appellate Body makes its decisions; it is unlikely that it would often deviate from its own precedents. Also for the Panels it now seems hard if not impossible to deviate from previous reports of Appellate Body without justifying such a deviation. It also seems clear that the panel is obliged to follow previous Appellate Body decisions.
PRACTICE OF FOLLOWING STARE DECISIS DE FACTO IN WTO: SHOULD PANELS BE ALLOWED TO DEPART FROM PREVIOUS REPORTS OF AB:
The fact that the doctrine of binding precedent does not apply does not mean that panel decisions have no precedential value. Wherever there is a body of case law, the doctrine of precedent is bound to take place in such a legal system. Precedents are decisions furnishing a basis for determining later cases involving similar facts or issues. After the above discussion, it can be said without hesitation that large amounts of such precedents exist in the WTO dispute settlement system. Every one of the published Panel or AB Reports cites previous Panel and AB Reports. It is now clear that both the GATT Panel Reports and the DSB Panel/AB Reports provide authoritative principle for subsequent cases having similar legal issues. From this respect, in practice the Panel and Appellate Reports function as precedent.
Even though WTO panel interpretations regarding the rule of stare decisis is that, previous reports are not binding on subsequent disputes, in practice they have significant precedential value. In order that a particular reasoning established in a previous report may be used as a precedent, that reasoning must form the ratio decidendi of a sufficient number of consensually adopted panel reports so that constitute a consistently adopted sequence of acts sufficient to establish the agreement of the parties to that reasoning.
Moreover, looking at the fact, in the light of the cases mentioned in the previous section, it is clear that doctrine of precedent do exist in the framework of WTO, though not as a de jure doctrine but certainly as a de facto doctrine and has been followed in practice by the Panels and AB uninterruptedly. In the current scenario WTO is the only system equipped with the machinery of hierarchy in its legal system. Looking at this and the fact that doctrine of precedent can be ceremoniously admitted only in those legal systems which possess the hierarchical system of judiciary, the issue of stare decisis in WTO gains more importance. Within WTO, the DSU is the exclusive and ultimate means of enforcing the WTO 's trade regulations. This is one more important reason that why a system of stare decisis should be instituted as a means of providing more stability in a system that is so important.
Thus, it follows that even though it is not mandatory for the Panels to follow the previous AB reports expressly, still it should not become a practice for the Panels to depart from the AB reports unless and until there exists cogent reasons for doing so. The practice in WTO DSB should be to follow previous AB reports with due deference and also in the light of facts of the dispute present before them. Thus, pursuing the previous reports should be the practice and departure from them.
IMPLICATIONS OF HAVING DE JURE STARE DECISIS IN WTO:
It has been said by Raj Bhala that, “If it is indeed the case that a de facto stare decisis doctrine is operating in WTO adjudication, ought we to consider admitting this openly and, further, amending the DSU and WTO Agreement where necessary to make this doctrine official, that is, a de jure one whereby reports really possess the potency of precedent?.”
If the rule of stare decisis exists de facto in the framework of WTO, then why there is no de jure rule of stare decisis in WTO? Why there is no initiative to create such a de jure rule in the DSU? If such a rule is admitted as a rule of law within the DSU then some important implications follow from it. Such a system of de jure stare decisis has the potential effect of fostering stability and certainty within the adjudicatory system of WTO. Stare decisis should be given a legal space within WTO because it offers a legitimate and consistent development of legal principles, fosters confidence in judicial decisions, and contributes to the integrity of the judicial process. Stare decisis can be considered as legitimate and consistent because it ensures that the law will not just develop inconsistently and also permits the society at large to be assured that the principles of law are followed consistently in every case. Public confidence in the judicial process, administrative efficiency, and the nature of the controversy at issue also encourage the following of precedent.
Another advantage of stare decisis is that whenever there arises confusion among the judges as to the correct interpretation of a particular law or fact then it provides a basis for laying effective decision making by looking into previously decided cases with similar facts and situation. Stare decisis enables judges to develop the ability to tell that when like cases are alike into a facility for deciding a wide variety of cases that involve substantive legal issues about which the judges may know next to nothing. In this regard, stare decisis allows judges to share information among one another, enabling them to develop different areas of knowledge. In addition, stare decisis enables decision-makers to reduce the uncertainty associated with making decisions because they can compare their analysis with analysis of similar decision makers. This is in particular useful in the WTO dispute settlement system because different individuals make up the panels that are chosen for each dispute. Thus it also helps in the conservation of resources. It leads to wastage of efficiency to re invent the law already decided and helps the focus to remain on new and substantial disputes.
To conclude, if the rule of stare decisis is added to the legal system of WTO, then it would help in the operation of WTO dispute settlement system in a more effective and efficient manner. Such a practice would have the effect of fostering the development of legal principles that consistently can be applied across disputes so that they constitute a legal practice that can guide future panels and, as such, ensure even greater consistency in the interpretation of treaties and the agreements of the WTO.
CONCLUSION:
Thus, it can be concluded after the above discussion that if speaking in strict formal terms, WTO legal system is devoid of strict binding rule of stare decisis. Thus, as a general rule the Panels and also The Appellate Body are free to depart from the previously decided reports and there are no questions for them as to be answerable for such departure. What remains to consider in regard to this rule inside the WTO dispute settlement is that precedent rule is followed by the Panels and Appellate Body, though not patently but in a disguised form by calling it as a persuasive or non binding precedent rule or what may be called as de facto stare decisis.
But with the progress in the cases admitted and settled by the DSU, it seems necessary to deal with the issue of de jure stare decisis in WTO seriously. Also considering the fact that WTO legal order is the only legal system possessing the hierarchical system of dispute settlement, adds to the concern of imbibing doctrine of precedent as a binding rule in the legal system of WTO. Further, considering the parties’ legitimate expectations in a dispute from the Panels and Appellate Body again puts forward the issue with a force. Legitimate expectations of the parties means that the individual parties in every case rely upon the previous reports in cases having similar facts to that of their own. The parties rely on previous decisions in order to support their arguments, which is evidence of the acceptance of the value of previous decisions among the Members.
Thus, if the rule of precedent is been relied on by both the Appellate Body and the members of the WTO then there arises no question of not admitting the jurisprudence of stare decisis into the WTO legal system. Though one may argue that de jure acceptance of the doctrine of precedent might give rise to the dangers of judicial activism and interpretation of treaties based heavily upon the reports of Panels and AB. But this concern is not practicable as members finally retain the authority to correct the interpretations provided in these reports.
After all, the Appellate Body was created in order to deal with legal issues arsing within the panel reports and the AB should be equipped with the task of interpreting the treaties not only in accordance with customary rules of international law but also giving due deference to the reports previously decided by the AB. AB in addition should also ensure that Panels also provide the same deference to previous decisions required of them.
At last, it can be concluded that there is still seems no hope for the inclusion of stare decisis de jure in the WTO legal system but what follows is that the new system of hierarchy initiated by WTO should be given due respect by the Panels and there should be more adherence to the previous reports of the AB on the part of the Panels and AB itself.
BIBLIOGRAPHY:
Books Referred: 1. Palmeter, David and Petros C. Mavroidis. Dispute Settlement and the World Trade Organization: Practice and Procedure. Cambridge, UK: Cambridge University Press, 2nd ed., 2004. 2. The WTO Dispute Settlement Procedures – A Collection of the Relevant Legal Texts, New York: Cambridge University Press, 2nd Ed., 2005. 3. Mitsuo Matsushita, et al., The World Trade Organisation- Law, Practice and Policy, Pp. 989, (Oxford: Oxford University Press, 2nd Ed., 2006). 4. Federico Ortino, Ernst-Ulrich Petersmann, The WTO dispute settlement system, 1995-2003, Pp. 607 (Kluwer Law International, Vol. 18, 2004) 5. Bernard M. Hoekman and Petros C. Mavroidis, The World Trade Organization- Law, Economics and Politics, (New York: Taylor & Francis Group, 1st Ed., 2007).
Articles Referred: 1. Zhu Lanye, “The Effects Of The WTO Dispute Settlement Panel And Appellate Body Reports: Is The Dispute Settlement Body Resolving Specific Disputes Only Or Making Precedent At The Same Time?”, 221, Int 'l & Comp. L.J. Vol. 17 (2003). 2. Eoin Gubbins, “Precedent in the WTO: Advantages of De Jure Stare Decisis”, 70, Trinity C.L. Rev., Vol. 9 (2006). 3. Raj Bhala, “The Myth about Stare Decisis and International Trade Law (Part one of a Trilogy)”, 14 Am. U. Int 'l L. Rev. 845 (1998-1999) 4. Muhammad Munir, “Precedent in Civil Law and International Law”, (March 22, 2011). Available at SSRN: http://ssrn.com/abstract=1792415. 5. Sydney M. Cone, “The Asbestos Case and Dispute Settlement in the World Trade Organization: The Uneasy Relationship between Panels and the Appellate Body”, 103, Michigan J. Int 'l L. Vol. 23, (2001-2002). 6. Felix David, “The Role of Precedent in the WTO – New Horizons?”, Maastricht Faculty of Law Working Paper (2009-12). 7. Sumimaru Odano, Ziaul Abedin, “Insufficiency in the Dispute Settlement Mechanism of the WTO: Consequences and Implications for the Multilateral Trading System”, GSIR Working Papers Economic Development & Policy Series, (March 2008). 8. Walden Bello, “Lack of Transparency in the WTO”, Development Dialogue (2002). 9. Gabrielle Kaufmann-Kohler, “Arbitral Precedent: Dream, Necessity or Excuse?”, Arbitration International, Volume 23 Issue 3, (2007). 10. Raj Bhala, “The Power of the Past: Towards Dejure Stare Decisis in WTO Adjudication”, 873, Geo. Wash. Int 'l L. Rev. Vol. 33, (2000-2001). 11. Adrian T. L. Chua, “Precedents and Principles of WTO Panel Jurisprudence”, Berkeley Journal of International Law, Vol. 16, (1998). 12. Joel P. Trachtman, “The Domain of WTO Dispute Resolution”, Harvard International Law Journal, Vol.40, (spring, 1999). 13. Raj Bhala, “Five Theoretical Themes in the World Trade Organization Adjudicatory System”, 6 ILSA J. Int 'l & Comp. L. 437 (1999-2000).
Websites: 1. www.wto.org 2. www.jstor.org 3. www.ssrn.com 4. www.westlaw.com 5. www.worldtradelaw.net 6. www.heinonline.com
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[ 1 ]. To cite, Russ Versteeg, Essential Latin for Lawyers, 159 (1990), cited by, 3. Raj Bhala, “The Myth about Stare Decisis and International Trade Law (Part one of a Trilogy)”, 14 Am. U. Int 'l L. Rev. 845 (1998-1999) at p. 849.
[ 2 ]. Ibid at 922.
[ 3 ]. Chronological list of disputes cases, available at: http://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm. (last visited on 8th April, 2012).
[ 4 ]. Eoin Gubbins, “Precedent in the WTO: Advantages of De Jure Stare Decisis”, 70, Trinity C.L. Rev., Vol. 9 (2006). At P. 71.
[ 5 ]. Raj Bhala, “The Myth about Stare Decisis and International Trade Law (Part one of a Trilogy)”, 14 Am. U. Int 'l L. Rev. 845 (1998-1999) at P. 22.
[ 6 ]. To cite, Mohamed Shahabuddeen, Precedent in the World Court, Grotius, Cambridge, 1996, p.238, cited by, Muhammad Munir, Precedent in Civil Law and International Law, (March 22, 2011). Available at SSRN: http://ssrn.com/abstract=1792415.
[ 7 ]. Article XV: 1 of WTO Agreement.
[ 8 ]. To cite, WT/DSB/R, WT/DS10/R, WT/DS11/R (11 July 1996) (Adopted as Modified by the Appellate Body 1
November 1996), cited by, Muhammad Munir, Precedent in Civil Law and International Law, (March 22, 2011). Available at SSRN: http://ssrn.com/abstract=1792415 at p. 19.
[ 9 ]. Muhammad Munir, Precedent in Civil Law and International Law, (March 22, 2011). Available at SSRN: http://ssrn.com/abstract=1792415 at p. 21.
[ 10 ]. Eoin Gubbins, “Precedent in the WTO: Advantages of De Jure Stare Decisis”, 70, Trinity C.L. Rev., Vol. 9 (2006). At P. 74.
[ 11 ]. To cite, Appellate Body Report, US - Stainless Steel, WT/DS344/AB/R,, cited by, Felix David , “The Role of Precedent in the WTO– New Horizons?”, Maastricht Faculty of Law Working Paper (2009) at p. 3.
[ 12 ]. Felix David , “The Role of Precedent in the WTO– New Horizons?”, Maastricht Faculty of Law Working Paper (2009) at p. 3.
[ 13 ]. Ibid at p. 8.
[ 14 ]. Raj Bhala, “Five Theoretical Themes in the World Trade Organization Adjudicatory System”, 6 ILSA J. Int 'l & Comp. L. 437 (1999-2000) at p. 442.
Bibliography: 2. The WTO Dispute Settlement Procedures – A Collection of the Relevant Legal Texts, New York: Cambridge University Press, 2nd Ed., 2005. 3 4. Federico Ortino, Ernst-Ulrich Petersmann, The WTO dispute settlement system, 1995-2003, Pp. 607 (Kluwer Law International, Vol. 18, 2004) 5 2. Eoin Gubbins, “Precedent in the WTO: Advantages of De Jure Stare Decisis”, 70, Trinity C.L. Rev., Vol. 9 (2006). 3. Raj Bhala, “The Myth about Stare Decisis and International Trade Law (Part one of a Trilogy)”, 14 Am. U. Int 'l L. Rev. 845 (1998-1999) 4 5. Sydney M. Cone, “The Asbestos Case and Dispute Settlement in the World Trade Organization: The Uneasy Relationship between Panels and the Appellate Body”, 103, Michigan J. Int 'l L. Vol. 23, (2001-2002). 6. Felix David, “The Role of Precedent in the WTO – New Horizons?”, Maastricht Faculty of Law Working Paper (2009-12). 7. Sumimaru Odano, Ziaul Abedin, “Insufficiency in the Dispute Settlement Mechanism of the WTO: Consequences and Implications for the Multilateral Trading System”, GSIR Working Papers Economic Development & Policy Series, (March 2008). 8. Walden Bello, “Lack of Transparency in the WTO”, Development Dialogue (2002). 9. Gabrielle Kaufmann-Kohler, “Arbitral Precedent: Dream, Necessity or Excuse?”, Arbitration International, Volume 23 Issue 3, (2007). 10 11. Adrian T. L. Chua, “Precedents and Principles of WTO Panel Jurisprudence”, Berkeley Journal of International Law, Vol. 16, (1998). 12. Joel P. Trachtman, “The Domain of WTO Dispute Resolution”, Harvard International Law Journal, Vol.40, (spring, 1999). 13. Raj Bhala, “Five Theoretical Themes in the World Trade Organization Adjudicatory System”, 6 ILSA J. Int 'l & Comp. L. 437 (1999-2000). [ 1 ]. To cite, Russ Versteeg, Essential Latin for Lawyers, 159 (1990), cited by, 3. Raj Bhala, “The Myth about Stare Decisis and International Trade Law (Part one of a Trilogy)”, 14 Am. U. Int 'l L. Rev. 845 (1998-1999) at p. 849. [ 3 ]. Chronological list of disputes cases, available at: http://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm. (last visited on 8th April, 2012). [ 4 ]. Eoin Gubbins, “Precedent in the WTO: Advantages of De Jure Stare Decisis”, 70, Trinity C.L. Rev., Vol. 9 (2006). At P. 71. [ 5 ]. Raj Bhala, “The Myth about Stare Decisis and International Trade Law (Part one of a Trilogy)”, 14 Am. U. Int 'l L. Rev. 845 (1998-1999) at P. 22. [ 6 ]. To cite, Mohamed Shahabuddeen, Precedent in the World Court, Grotius, Cambridge, 1996, p.238, cited by, Muhammad Munir, Precedent in Civil Law and International Law, (March 22, 2011). Available at SSRN: http://ssrn.com/abstract=1792415. [ 8 ]. To cite, WT/DSB/R, WT/DS10/R, WT/DS11/R (11 July 1996) (Adopted as Modified by the Appellate Body 1 November 1996), cited by, Muhammad Munir, Precedent in Civil Law and International Law, (March 22, 2011) [ 9 ]. Muhammad Munir, Precedent in Civil Law and International Law, (March 22, 2011). Available at SSRN: http://ssrn.com/abstract=1792415 at p. 21. [ 10 ]. Eoin Gubbins, “Precedent in the WTO: Advantages of De Jure Stare Decisis”, 70, Trinity C.L. Rev., Vol. 9 (2006). At P. 74. [ 11 ]. To cite, Appellate Body Report, US - Stainless Steel, WT/DS344/AB/R,, cited by, Felix David , “The Role of Precedent in the WTO– New Horizons?”, Maastricht Faculty of Law Working Paper (2009) at p. 3. [ 12 ]. Felix David , “The Role of Precedent in the WTO– New Horizons?”, Maastricht Faculty of Law Working Paper (2009) at p. 3. [ 14 ]. Raj Bhala, “Five Theoretical Themes in the World Trade Organization Adjudicatory System”, 6 ILSA J. Int 'l & Comp. L. 437 (1999-2000) at p. 442.
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