On December 21, 2022, the appeal arbitrators in the Colombia - Frozen Fries (DS591) World Trade Organization (WTO) dispute circulated their award (the "Award"). This was the second appeal conducted under Article 25 of the WTO's Dispute Settlement Understanding (DSU) and the first appeal under the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), a framework created by a group of WTO members to overcome the challenges posed by the non-operational Appellate Body.
The Award has many positives. The MPIA arbitrators must be commended for conducting the proceedings smoothly and efficiently, drafting a concise and well-written Award, and circulating it in a timely manner. The parties to the dispute also must be commended for the high level of cooperation that they displayed, without which the proceedings would not have been possible.
The Award mentions procedural innovations that I personally like, such as a pre-hearing conference with the parties intended to narrow the claims and issues that needed to be explored at the hearing and, ultimately, decided in the appeal. This is a procedural innovation that could be replicated by panels. Personally, I would welcome panels using the organizational meeting to encourage the parties to narrow their claims/defenses. Panels could likewise hold short conferences with the parties prior to the panel meetings with the same aim in mind.
All WTO members stand to gain from this Award as it demonstrates that there is a viable alternative to appealing into the void that preserves the parties' right to an independent review of the panel report, while ensuring that disputes are resolved promptly and effectively.
Much of the Award addresses issues that are technical and fact specific and rightly so since the main purpose of the arbitration was to help resolve the specific dispute between the parties.
However, much attention has been drawn to the arbitrators' discussion of the standard of review under Article 17.6 of the Anti-Dumping Agreement. Here, the arbitrators were very deliberate in setting out what they considered to be the correct approach under Article 17.6(ii) of the Anti-Dumping Agreement. In doing so, the arbitrators disagreed with the approach that had been taken by the panel and implicitly with the approach taken earlier by the Appellate Body. Article 17.6(ii) has been controversial for many years with some (especially the petitioners' bar in the United States) arguing that it had not been given sufficient effect by the Appellate Body.
The Award gives the impression that the arbitrators were eager to express a view on Article17.6(ii). They address the issue even though, as they acknowledge, Colombia did not argue that the panel had erred in its approach to Article 17.6(ii). Furthermore, although the arbitrators disagree with the panel's approach to Article 17.6(ii), they ultimately "see no reason to disturb the Panel[]". In the circumstances, the question that arises is: was it necessary for the arbitrators to express a view on the right approach under Article 17.6(ii)? Was the discussion required to dispose of the issue? There has been a lot of emphasis lately on the need for adjudicators to refrain from expressing views on issues that are unnecessary to decide for purposes of resolving a dispute. Perhaps in this case the discussion of the correct approach under Article 17.6(ii) was not necessary to resolve the dispute and could have been avoided. In deciding to address the issue head on as they did, the arbitrators may have engaged in same the type of interpretative activism for which the Appellate Body was criticized in the past.
I can see the initial attraction of the approach articulated by the arbitrators. But was the approach really that different once one looks at how it was applied? The arbitrators begin their assessment of Colombia's interpretation with the statement: "When we read Articles 5.2(iii) and 5.3 together, in accordance with the Vienna Convention method for treaty interpretation, we cannot accept Colombia's interpretation as a 'permissible' one" (para. 4.20). This statement leaves the distinct impression that the arbitrators had already arrived at their own interpretation of Articles 5.2(iii) and 5.3 and that this interpretation differed from Colombia's proposed interpretation. Otherwise, on what basis was it being rejected? If so, was this really any different than what had been done previously?
Furthermore, even though the arbitrators purported to establish a more deferential standard, their analysis of Colombia's proposed interpretation is strict and shows no deference to Colombia's interpretation. The arbitrators' discussion of Colombia's interpretation sometimes reads like a rebuttal submission and seems preoccupied mostly with contradicting Colombia's interpretation. This applies both to the interpretation of Articles 5.2(iii) and 5.3 and to Colombia's appeal of the panel's findings on injury. I didn't really see any interpretative element on which the arbitrators were willing to give Colombia the benefit of the doubt (except as to certain Kennedy Round documents, but their significance was then quickly dismissed). As a result, it is not evident, at least to me, that the Article 17.6(ii) approach articulated by the arbitrators actually made a practical difference in this case.
I know some will welcome the arbitrators' discussion of Article 17.6(ii) and will think it could help win over those who have been critical of WTO dispute settlement. I have some doubts about this. As noted earlier, I fear that the discussion of Article 17.6(ii) could be viewed by some as an example of the same kind of interpretative activism (albeit in a different direction) for which the Appellate Body was criticized in the past. Moreover, those in the petitioners' bar who have been strong critics of WTO adjudication are more likely to use this discussion as evidence that they had been right in their views all along, but it will do little to sway them to embrace WTO adjudication. In other words, the discussion of Article17.6(ii) in this Award could end up hardening the critics without bringing us closer to resolving the current crisis.
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