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XI. Article 11    back to top

A. Text of Article 11

Article 11: Function of Panels

The function of panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements. Accordingly, a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements, and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements. Panels should consult regularly with the parties to the dispute and give them adequate opportunity to develop a mutually satisfactory solution.

B. Interpretation and Application of Article 11

1. Standard of review under the DSU

326.     In US — Cotton Yarn, the Appellate Body indicated that its Reports on Argentina — Footwear (EC), US — Lamb and US — Wheat Gluten (see paragraphs 381–385 below), all concerning disputes under the Agreement on Safeguards, “spell out key elements of a panel’s standard of review under Article 11 of the DSU in assessing whether the competent authorities complied with their obligations in making their determinations”. The Appellate Body stated:

“This standard may be summarized as follows: panels must examine whether the competent authority has evaluated all relevant factors; they must assess whether the competent authority has examined all the pertinent facts and assessed whether an adequate explanation has been provided as to how those facts support the determination; and they must also consider whether the competent authority’s explanation addresses fully the nature and complexities of the data and responds to other plausible interpretations of the data. However, panels must not conduct a de novo review of the evidence nor substitute their judgement for that of the competent authority.”(476)

327.     In EC — Hormones, the European Communities argued in its appeal that the Panel had failed to apply an appropriate standard of review in assessing certain acts of, and scientific evidentiary material submitted by, the European Communities. The Appellate Body held that the applicable standard of review under Article 11 of the DSU is neither de novo review, nor “total deference”, but rather the “objective assessment of the facts”:

“The standard of review appropriately applicable in proceedings under the SPS Agreement, of course, must reflect the balance established in that Agreement between the jurisdictional competences conceded by the Members to the WTO and the jurisdictional competences retained by the Members for themselves.(477) To adopt a standard of review not clearly rooted in the text of the SPS Agreement itself, may well amount to changing that finely drawn balance; and neither a panel nor the Appellate Body is authorized to do that.

… Article 11 of the DSU bears directly on [the] matter [of standard of review] and, in effect, articulates with great succinctness but with sufficient clarity the appropriate standard of review for panels in respect of both the ascertainment of facts and the legal characterization of such facts under the relevant agreements.

So far as fact-finding by panels is concerned, their activities are always constrained by the mandate of Article 11 of the DSU: the applicable standard is neither de novo review as such, nor ‘total deference’, but rather the ‘objective assessment of the facts’.”(478)

328.     As regards the application of the standard of review of Article 11 of the DSU to disputes concerning safeguard and countervailing measures, see Sections XI.B.6(a) and XI.B.6(d) below respectively.

2. “Objective assessment of the matter before it”

(a) “the matter before it”

(i) General

329.     As regards the concept of “matter”, see Section VII.B.2(a)(i) above.

330.     In EC — Poultry, the Appellate Body warned that “[a]n allegation that a panel has failed to conduct the ‘objective assessment of the matter before it’ required by Article 11 of the DSU is a very serious allegation. Such an allegation goes to the very core of the integrity of the WTO dispute settlement process itself.”(479)

(ii) Finding on a claim not made by the complainant

331.     In Chile — Price Band System, the Appellate Body considered that the Panel had exceeded its mandate and thus acted inconsistently with Article 11 because it had “made a finding on a claim that was not made by Argentina” and “in so doing, the Panel assessed a provision that was not a part ‘of the matter before it’”:

“In this case, the Panel made a finding on a claim that was not made by Argentina. Having determined that the duties resulting from Chile’s price band system could not be assessed under the first sentence(480) of Article II:1(b) of the GATT 1994, the Panel then proceeded to examine the measure under the second sentence of that provision. In so doing, the Panel assessed a provision that was not a part ‘of the matter before it’. As we have explained, the terms of reference were broad enough to have included a claim under the second sentence of Article II:1(b). However, Argentina did not articulate a claim under that sentence; nor did Argentina submit any arguments on the consistency of Chile’s price band system with the second sentence.(481) Therefore, as with our finding in US — Certain EC Products,(482) the second sentence of Article II:1(b) was not the subject of a claim before the Panel. Because it made a finding on a provision that was not before it, the Panel, therefore, did not make an objective assessment of the matter before it, as required by Article 11. Rather, the Panel made a finding on a matter that was not before it. In doing so, the Panel acted ultra petita and inconsistently with Article 11 of the DSU.”(483)

(iii) Reference in Panel’s reasoning to provisions not included in the claims

332.     In Argentina — Footwear (EC), the Appellate Body considered Argentina’s argument that the Panel violated Article 7.2 of the DSU and exceeded its terms of reference, because the Panel not only considered, but also relied on, alleged violations of Article 3 of the Agreement on Safeguards even though the request for the establishment of a Panel submitted by the European Communities only alleged violations of Articles 2 and 4 of the Agreement on Safeguards.(484) The Appellate Body considered that it “fail[ed] to see how any panel could be expected to make an ‘objective assessment of the matter’, as required by Article 11 of the DSU, if it could only refer in its reasoning to the specific provisions cited by the parties in their claims”:

“We note that the very terms of Article 4.2(c) of the Agreement on Safeguards expressly incorporate the provisions of Article 3. Thus, we find it difficult to see how a panel could examine whether a Member had complied with Article 4.2(c) without also referring to the provisions of Article 3 of the Agreement on Safeguards. More particularly, given the express language of Article 4.2(c), we do not see how a panel could ignore the publication requirement set out in Article 3.1 when examining the publication requirement in Article 4.2(c) of the Agreement on Safeguards. And, generally, we fail to see how the Panel could have interpreted the requirements of Article 4.2(c) without taking into account in some way the provisions of Article 3. What is more, we fail to see how any panel could be expected to make an ‘objective assessment of the matter’, as required by Article 11 of the DSU, if it could only refer in its reasoning to the specific provisions cited by the parties in their claims.”(485)

(iv) Consideration of parties’ arguments by the Panel

333.     In EC — Poultry, Brazil argued in its appeal that the Panel had not made “an objective assessment of the matter before it” because, in Brazil’s view, the Panel had failed to consider various arguments made by Brazil regarding GATT/WTO jurisprudence. The Appellate Body rejected this argument:

“In United States — Measure Affecting Imports of Woven Wool Shirts and Blouses from India, we stated that nothing in Article 11 ‘or in previous GATT practice requires a panel to examine all legal claims made by the complaining party’, and that ‘[a] panel need only address those claims which must be addressed in order to resolve the matter in issue in the dispute.’ Just as a panel has the discretion to address only those claims which must be addressed in order to dispose of the matter at issue in a dispute, so too does a panel have the discretion to address only those arguments it deems necessary to resolve a particular claim. So long as it is clear in a panel report that a panel has reasonably considered a claim, the fact that a particular argument relating to that claim is not specifically addressed in the ‘Findings’ section of a panel report will not, in and of itself, lead to the conclusion that that panel has failed to make the ‘objective assessment of the matter before it’ required by Article 11 of the DSU.”(486)

334.     In Australia — Automotive Leather II (Article 21.5 — US), both parties argued that the task of the Panel was to choose between the positions articulated by each party. The Panel disagreed and stated:

“That neither party has argued a particular interpretation before us, and indeed, that both have argued that we should not reach issues of interpretation that they have not raised, cannot, in our view, preclude us from considering such issues if we find this to be necessary to resolve the dispute that is before us. A panel’s interpretation of the text of a relevant WTO Agreement cannot be limited by the particular arguments of the parties to a dispute.”(487)

(v) Due process implications

335.     In Chile — Price Band System, the Appellate Body concluded that the Panel had made a finding on a claim that had not been made by Argentina.(488) Chile had claimed that, by making a finding on that claim, the Panel had deprived Chile of a fair right of response. The Appellate Body agreed with Chile and found that the Panel had acted inconsistently with Article 11 of the DSU by denying Chile the due process of a fair right of response.(489) In support of this finding, the Appellate Body considered that “in making ‘an objective assessment of the matter before it’, a panel is also duty bound to ensure that due process is respected”:

“Article 11 imposes duties on panels that extend beyond the requirement to assess evidence objectively and in good faith … This requirement is, of course, an indispensable aspect of a panel’s task. However, in making ‘an objective assessment of the matter before it’, a panel is also duty bound to ensure that due process is respected. Due process is an obligation inherent in the WTO dispute settlement system. A panel will fail in the duty to respect due process if it makes a finding on a matter that is not before it, because it will thereby fail to accord to a party a fair right of response. In this case, because the Panel did not give Chile a fair right of response on this issue, we find that the Panel failed to accord to Chile the due process rights to which it is entitled under the DSU.”(490)

(vi) Consultation of experts

336.     In India — Quantitative Restrictions, India argued in its appeal that the Panel had acted inconsistently with Article 11 of the DSU because it had delegated to the IMF its duty to make an objective assessment. The Appellate Body disagreed with India and stated:

“The Panel gave considerable weight to the views expressed by the IMF in its reply to these questions. However, nothing in the Panel Report supports India’s argument that the Panel delegated to the IMF its judicial function to make an objective assessment of the matter. A careful reading of the Panel Report makes clear that the Panel did not simply accept the views of the IMF. The Panel critically assessed these views and also considered other data and opinions in reaching its conclusions.”(491)

3. “Objective assessment of the facts”

(a) Extent of panels’ duty/discretion to examine the evidence

(i) Duty to examine all evidence

337.     In the first appeal presenting an Article 11 challenge to a Panel’s fact-finding,(492) EC — Hormones, the Appellate Body stressed that “[t]he duty to make an objective assessment of the facts is, among other things, an obligation to consider the evidence presented to a panel and to make factual findings on the basis of that evidence. The deliberate disregard of, or refusal to consider, the evidence submitted to a panel is incompatible with a panel’s duty to make an objective assessment of the facts.” The Appellate Body further considered that “[t]he wilful distortion or misrepresentation of the evidence put before a panel is similarly inconsistent with an objective assessment of the facts”.(493)

338.     In Korea — Dairy, Korea argued in its appeal that the Panel should have looked solely at the evidence submitted by the European Communities as the complaining party to determine whether the European Communities had met its burden of proof of making a prima facie case. The Appellate Body disagreed and stated that “under Article 11 of the DSU, a panel is charged with the mandate to determine the facts of the case and to arrive at factual findings. In carrying out this mandate, a panel has the duty to examine and consider all the evidence before it, not just the evidence submitted by one or the other party, and to evaluate the relevance and probative force of each piece thereof.”(494) With respect to the burden of proof issue in this context, see also paragraph 1000 below.

(ii) Panels’ discretion as trier and weigher of the facts

339.     In EC — Hormones, the Appellate Body stressed the role of the Panel as the trier of the facts and considered that the “[d]etermination of the credibility and weight properly to be ascribed to (that is, the appreciation of) a given piece of evidence is part and parcel of the fact finding process and is, in principle, left to the discretion of a panel as the trier of facts”.(495) It further stated that “it is generally within the discretion of the Panel to decide which evidence it chooses to utilize in making findings”.(496) It also said that “[t]he Panel cannot realistically refer to all statements made by the experts advising it and should be allowed a substantial margin of discretion as to which statements are useful to refer to explicitly”.(497)

340.     In Australia — Salmon, with respect to the evaluation of evidence, the Appellate Body considered that “[p]anels … are not required to accord to factual evidence of the parties the same meaning and weight as do the parties”.(498) The Appellate Body came to a similar conclusion in EC — Bed Linen (Article 21.5 — India). See paragraph 354 below.

341.     In Korea — Alcoholic Beverages, the Appellate Body reiterated the role of the Panel as the trier of the facts with the corresponding discretion to examine and weigh the evidence. The Appellate Body, however, held that this discretion “is not, of course, unlimited” since it is always subject to the panel’s duty to render an objective assessment of the matter before it:(499)

“The Panel’s examination and weighing of the evidence submitted fall, in principle, within the scope of the Panel’s discretion as the trier of facts and, accordingly, outside the scope of appellate review. This is true, for instance, with respect to the Panel’s treatment of the Dodwell Study, the Sofres Report and the Nielsen Study. We cannot second-guess the Panel in appreciating either the evidentiary value of such studies or the consequences, if any, of alleged defects in those studies. Similarly, it is not for us to review the relative weight ascribed to evidence on such matters as marketing studies, methods of production, taste, colour, places of consumption, consumption with ‘meals’ or with ‘snacks’, and prices.

A panel’s discretion as trier of facts is not, of course, unlimited. That discretion is always subject to, and is circumscribed by, among other things, the panel’s duty to render an objective assessment of the matter before it. In European Communities — Hormones, we dealt with allegations that the panel had ‘disregarded’, ‘distorted’ and ‘misrepresented’ the evidence before it.”(500)

342.     The Panel on Australia — Automotive Leather II observed that any evidentiary rulings that the Panel makes must be consistent with its obligation under Article 11 to conduct “an objective assessment of the matter before it”. In the Panel’s view, “a decision to limit the facts and arguments that the United States may present during the course of this proceeding to those set forth in the request for consultations would make it difficult, if not impossible, for us to fulfil our obligation to conduct an ‘objective assessment’ of the matter before us”.(501)

343.     In US — Wheat Gluten, the Appellate Body again referred to the Panel as the trier of facts in respect of its discretion to consider the evidence in a given case and recalled its prior jurisprudence on the scope of the review that the Appellate Body can undertake of the Panel’s findings pursuant to Article 17.6 of the DSU (see also Section XVII.B.4 below):

“[W]e recall that, in previous appeals, we have emphasized that the role of the Appellate Body differs from the role of panels. Under Article 17.6 of the DSU, appeals are ‘limited to issues of law covered in the panel report and legal interpretations developed by the panel’. (emphasis added) By contrast, we have previously stated that, under Article 11 of the DSU, panels are:

… charged with the mandate to determine the facts of the case and to arrive at factual findings. In carrying out this mandate, a panel has the duty to examine and consider all the evidence before it, not just the evidence submitted by one or the other party, and to evaluate the relevance and probative force of each piece thereof.(502) (emphasis added)

We have also stated previously that, although the task of panels under Article 11 relates, in part, to its assessment of the facts, the question whether a panel has made an ‘objective assessment’ of the facts is a legal one, that may be the subject of an appeal.(503) (emphasis added) However, in view of the distinction between the respective roles of the Appellate Body and panels, we have taken care to emphasize that a panel’s appreciation of the evidence falls, in principle, ‘within the scope of the panel’s discretion as the trier of facts’.(504) (emphasis added). In assessing the panel’s appreciation of the evidence, we cannot base a finding of inconsistency under Article 11 simply on the conclusion that we might have reached a different factual finding from the one the panel reached. Rather, we must be satisfied that the panel has exceeded the bounds of its discretion, as the trier of facts, in its appreciation of the evidence. As is clear from previous appeals, we will not interfere lightly with the panel’s exercise of its discretion.(506)”(507)

344.     The Panel on EC — Bed Linen examined the European Communities’ objection to the inclusion by India in its submission of reports of the consultations between the parties which took place before the establishment of the Panel. Although the Panel made no findings on the European Communities’ claims, it provided its thoughts about the difference between questions concerning the admissibility of evidence, and the weight to be accorded to the evidence in making its decisions. In doing so, it referred to the Panel on Australia — Automotive Leather II (see paragraph 342 above):

“[I]t seems that the evidence concerning the consultations is at best unnecessary, and may be irrelevant. That said, however, merely because the evidence is unnecessary or irrelevant does not require us to exclude it.

…

… we consider that it is not necessary to limit the facts and arguments India may present, even if we might consider those facts or arguments to be irrelevant or not probative on the issues before us. In our view, there is a significant and substantive difference between questions concerning the admissibility of evidence, and the weight to be accorded evidence in making our decisions. That is, we may choose to allow parties to present evidence, but subsequently not consider that evidence, because it is not relevant or necessary to our determinations or is not probative on the issues before it. In our view, there is little to be gained by expending our time and effort in ruling on points of ‘admissibility’ of evidence vel non.

In addition, we note that, under Article 13.2 of the DSU, Panels have a general right to seek information ‘from any relevant source’. In this context, we consider that, as a general rule, panels have wide latitude in admitting evidence in WTO dispute settlement. The DSU contains no rule that might restrict the forms of evidence that panels may consider. Moreover, international tribunals are generally free to admit and evaluate evidence of every kind, and to ascribe to it the weight that they see fit. As one legal scholar has noted:

‘The inherent flexibility of the international procedure, and its tendency to be free from technical rules of evidence applied in municipal law, provide the “evidence” with a wider scope in international proceedings …. Generally speaking, international tribunals have not committed themselves to the restrictive rules of evidence in municipal law. They have found it justified to receive every kind and form of evidence, and have attached to them the probative value they deserve under the circumstances of a given case’.(508)

It has clearly been held in the WTO that information obtained in consultations may be presented in subsequent panel proceedings.(509)”(510)

345.     In US — Carbon Steel, the Appellate Body summarized its previous jurisprudence on the extent of panels’ duty to examine the evidence:

“As we have observed previously, Article 11 requires panels to take account of the evidence put before them and forbids them to wilfully disregard or distort such evidence.(511) Nor may panels make affirmative findings that lack a basis in the evidence contained in the panel record.(512) Provided that panels’ actions remain within these parameters, however, we have said that ‘it is generally within the discretion of the Panel to decide which evidence it chooses to utilize in making findings’,(513) and, on appeal, we ‘will not interfere lightly with a panel’s exercise of its discretion’.(514)”(515)

346.     The Appellate Body on US — Carbon Steel, further underlined that “although panels enjoy a discretion, pursuant to Article 13 of the DSU,(516) to seek information ‘from any relevant source’, Article 11 of the DSU imposes no obligation on panels to conduct their own fact-finding exercise, or to fill in gaps in the arguments made by parties.”(517)

347.     In EC — Bed Linen (Article 21.5 — India), the Appellate Body ruled that it is not “an error, let alone an egregious error”, for a panel to decline to accord to the evidence the weight that one of the parties sought to have accorded to it.(518) In this regard, see paragraph 354 below. Specifically, India had argued that the Panel had not made an objective assessment of the facts of the case because the Panel had distorted the evidence by placing greater weight on the statements made by the European Communities than on those made by India. The Appellate Body stressed that “the weighing of the evidence is within the discretion of the Panel as the trier of facts, and there is no indication in this case that the Panel exceeded the bounds of this discretion”.(519)

348.     The Appellate Body on Japan — Apples considered that a panel was not obliged to give precedence to the importing Member’s approach to scientific evidence and risk over the views of the experts when analysing and assessing scientific evidence to determine whether a complainant established a prima facie case under Article 2.2.(520) As regards the examination of scientific evidence by panels in SPS disputes, see Section III.B.(c) of the Chapter on the SPS Agreement. In addition, the Appellate Body summarized its previous jurisprudence on the panels’ discretion as trier and weigher of the evidence:

“Since EC — Hormones, the Appellate Body has consistently emphasized that, within the bounds of their obligation under Article 11 to make an objective assessment of the facts of the case, panels enjoy a ‘margin of discretion’ as triers of fact.(521) Panels are thus ‘not required to accord to factual evidence of the parties the same meaning and weight as do the parties’(522) and may properly ‘determine that certain elements of evidence should be accorded more weight than other elements’.(523)

Consistent with this margin of discretion, the Appellate Body has recognized that ‘not every error in the appreciation of the evidence (although it may give rise to a question of law) may be characterized as a failure to make an objective assessment of the facts.’(524) When addressing claims under Article 11 of the DSU, the Appellate Body does not ‘second-guess the Panel in appreciating either the evidentiary value of … studies or the consequences, if any, of alleged defects in [the evidence]’.(525) Indeed:

‘[i]n assessing the panel’s appreciation of the evidence, we cannot base a finding of inconsistency under Article 11 simply on the conclusion that we might have reached a different factual finding from the one the panel reached. Rather, we must be satisfied that the panel has exceeded the bounds of its discretion, as the trier of facts, in its appreciation of the evidence.’(526)

Where parties challenging a panel’s fact-finding under Article 11 have failed to establish that a panel exceeded the bounds of its discretion as the trier of facts, the Appellate Body has not ‘interfere[d]’ with the findings of the panel.(527)”(528)

349.     In US — Wheat Exports and Grain Imports, the Appellate Body, referring to its prior jurisprudence, ruled that the Panel’s decision not to rely on some of the facts submitted by one of the parties “would not, by itself, constitute legal error”:

“As we said earlier,(529) the Appellate Body has previously held that ‘it is generally within the discretion of the Panel to decide which evidence it chooses to utilize in making findings’.(530) Accordingly, the Panel’s decision not to rely on some of the facts that the United States claims to have submitted would not, by itself, constitute legal error. To succeed in its claim that the Panel disregarded the evidence submitted to it, the United States would have to demonstrate that the Panel exceeded its discretion and that the Panel made, in effect, an ‘egregious error’(531)”(532)

(iii) Egregious error calling into question the good faith of a panel

350.     In EC — Hormones, the European Communities argued in its appeal that the Panel had disregarded or distorted the evidence submitted by the European Communities as well as the testimony provided by the experts advising the Panel. The European Communities claimed that the Panel had failed to make an objective assessment of the facts as required by Article 11 of the DSU. The Appellate Body disagreed with the European Communities and set forth the standard, for a violation of Article 11, as “an egregious error that calls into question the good faith of a panel”. The Appellate Body concluded by holding that “[a] claim that a panel disregarded or distorted the evidence submitted to it is, in effect, a claim that the panel, to a greater or lesser degree, denied the party submitting the evidence fundamental fairness, or what in many jurisdictions is known as due process of law or natural justice”:

“Whether or not a panel has made an objective assessment of the facts before it, as required by Article 11 of the DSU, is also a legal question which, if properly raised on appeal, would fall within the scope of appellate review.

The question which then arises is this: when may a panel be regarded as having failed to discharge its duty under Article 11 of the DSU to make an objective assessment of the facts before it? Clearly, not every error in the appreciation of the evidence (although it may give rise to a question of law) may be characterized as a failure to make an objective assessment of the facts. In the present appeal, the European Communities repeatedly claims that the Panel disregarded or distorted or misrepresented the evidence submitted by the European Communities and even the opinions expressed by the Panel’s own expert advisors. The duty to make an objective assessment of the facts is, among other things, an obligation to consider the evidence presented to a panel and to make factual findings on the basis of that evidence. The deliberate disregard of, or refusal to consider, the evidence submitted to a panel is incompatible with a panel’s duty to make an objective assessment of the facts. The wilful distortion or misrepresentation of the evidence put before a panel is similarly inconsistent with an objective assessment of the facts. ‘Disregard’ and ‘distortion’ and ‘misrepresentation’ of the evidence, in their ordinary signification in judicial and quasi-judicial processes, imply not simply an error of judgment in the appreciation of evidence but rather an egregious error that calls into question the good faith of a panel. A claim that a panel disregarded or distorted the evidence submitted to it is, in effect, a claim that the panel, to a greater or lesser degree, denied the party submitting the evidence fundamental fairness, or what in many jurisdictions is known as due process of law or natural justice.

…

[I]t is generally within the discretion of the Panel to decide which evidence it chooses to utilize in making findings.

…

The Panel cannot realistically refer to all statements made by the experts advising it and should be allowed a substantial margin of discretion as to which statements are useful to refer to explicitly.”(533)

351.     In Australia — Salmon, Australia argued in its appeal that the Panel had failed to make an objective assessment of the matter before it and had not applied the appropriate standard of review pursuant to Article 11 of the DSU. The Appellate Body noted Australia’s argument that the Panel “partially or wholly ignored relevant evidence placed before it, or misrepresented evidence in a way that went beyond a mere question of the weight attributed to it, but constituted an egregious error amounting to an error of law”. The Appellate Body stated:

“[I]n response to Australia’s contention that the Panel failed to accord ‘due deference’ to matters of fact it put forward, we note that Article 11 of the DSU calls upon panels to ‘make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements’. Therefore, the function of this Panel was to assess the facts in a manner consistent with its obligation to make such an ‘objective assessment of the matter before it’. We believe the Panel has done so in this case. Panels, however, are not required to accord to factual evidence of the parties the same meaning and weight as do the parties.”(534)

352.     In Korea — Alcoholic Beverages, Korea argued in its appeal that the Panel had breached its obligation under Article 11 of the DSU by applying a “double standard” in assessing the evidence before it. The Appellate Body again referred to the “egregious error” standard:

“We are bound to conclude that Korea has not succeeded in showing that the Panel has committed any egregious errors that can be characterized as a failure to make an objective assessment of the matter before it. Korea’s arguments, when read together with the Panel Report and the record of the Panel proceedings, do not disclose that the Panel has distorted, misrepresented or disregarded evidence, or has applied a ‘double standard’ of proof in this case. It is not an error, let alone an egregious error, for the Panel to fail to accord the weight to the evidence that one of the parties believes should be accorded to it.”(535)

353.     In Japan — Agricultural Products II, the Appellate Body examined Japan’s claim that the Panel had not complied with Article 11 of the DSU when it made a finding under Article 2.2 of the SPS Agreement concerning the varietal testing requirement as it applies to apples, cherries, nectarines and walnuts. More specifically, Japan claimed the Panel had not properly examined evidence, had treated expert views in an arbitrary manner and had not properly evaluated the evidence before it. The Appellate Body referred to its previous decision in EC — Hormones and reiterated that “[o]nly egregious errors constitute a failure to make an objective assessment of the facts as required by Article 11 of the DSU”:

“As we stated in our Report in European Communities — Hormones, not every failure by the Panel in the appreciation of the evidence before it can be characterized as failure to make an objective assessment of the facts as required by Article 11 of the DSU. Only egregious errors constitute a failure to make an objective assessment of the facts as required by Article 11 of the DSU.

In our view, Japan has not demonstrated that the Panel, in its examination of the consistency of the varietal testing requirement with Article 2.2, has made errors of the gravity required to find a violation of Article 11 of the DSU. We, therefore, conclude that the Panel did not abuse its discretion contrary to the requirements of Article 11 of the DSU.”(536)

354.     In EC — Bed Linen (Article 21.5 — India), India claimed in appeal that the Panel had failed to meet its obligation under Article 11 of the DSU to examine the facts of the case objectively. The Appellate Body ruled that it is not “an error, let alone an egregious error”, for a panel to decline to accord to the evidence the weight that one of the parties sought to have accorded to it.

“India has not persuaded us that the Panel in this case exceeded its discretion as the trier of facts. In our view, the Panel assessed and weighed the evidence submitted by both parties, and ultimately concluded that the European Communities had information on all relevant economic factors listed in Article 3.4. It is not ‘an error, let alone an egregious error’,(537) for the Panel to have declined to accord to the evidence the weight that India sought to have accorded to it. We, therefore, reject India’s argument that, by failing to shift the burden of proof, the Panel did not properly discharge its duty to assess objectively the facts of the case as required by Article 11 of the DSU.”(538)

(b) Municipal law

355.     In response to India’s assertion that municipal law is a fact that must be established before an international tribunal by the party relying on it and that the Panel should have sought guidance from India on matters relating to the interpretation of Indian law, the Appellate Body in India — Patents (US) stated:

“In public international law, an international tribunal may treat municipal law in several ways. Municipal law may serve as evidence of facts and may provide evidence of state practice. However, municipal law may also constitute evidence of compliance or non-compliance with international obligations. For example, in Certain German Interests in Polish Upper Silesia, the Permanent Court of International Justice observed:

‘It might be asked whether a difficulty does not arise from the fact that the Court would have to deal with the Polish law of July 14th, 1920. This, however, does not appear to be the case. From the standpoint of International Law and of the Court which is its organ, municipal laws are merely facts which express the will and constitute the activities of States, in the same manner as do legal decisions and administrative measures. The Court is certainly not called upon to interpret the Polish law as such; but there is nothing to prevent the Court’s giving judgment on the question whether or not, in applying that law, Poland is acting in conformity with its obligations towards Germany under the Geneva Convention.’(539) (emphasis added)

… It is clear that an examination of the relevant aspects of Indian municipal law and, in particular, the relevant provisions of the Patents Act as they relate to the ‘administrative instructions’, is essential to determining whether India has complied with its obligations under Article 70.8(a). There was simply no way for the Panel to make this determination without engaging in an examination of Indian law. But, as in the case cited above before the Permanent Court of International Justice, in this case, the Panel was not interpreting Indian law ‘as such’; rather, the Panel was examining Indian law solely for the purpose of determining whether India had met its obligations under the TRIPS Agreement. To say that the Panel should have done otherwise would be to say that only India can assess whether Indian law is consistent with India’s obligations under the WTO Agreement. This, clearly, cannot be so.

Previous GATT/WTO panels also have conducted a detailed examination of the domestic law of a Member in assessing the conformity of that domestic law with the relevant GATT/WTO obligations. For example, in United States — Section 337 of the Tariff Act of 1930, the panel conducted a detailed examination of the relevant United States’ legislation and practice, including the remedies available under Section 337 as well as the differences between patent-based Section 337 proceedings and federal district court proceedings, in order to determine whether Section 337 was inconsistent with Article III:4 of the GATT 1947. This seems to us to be a comparable case.”(540)

356.     In connection with the examination of Sections 301–310 of the US Trade Act of 1974, the Panel in US — Section 301 Trade Act stated that it would not “interpret US law ‘as such’, the way we would, say, interpret provisions of the covered agreements”. Rather, the Panel held that it was instead “called upon to establish the meaning of Sections 301–310 as factual elements”:

“Our mandate is to examine Sections 301–310 solely for the purpose of determining whether the US meets its WTO obligations. In doing so, we do not, as noted by the Appellate Body in India — Patents (US), interpret US law ‘as such’, the way we would, say, interpret provisions of the covered agreements. We are, instead, called upon to establish the meaning of Sections 301–310 as factual elements and to check whether these factual elements constitute conduct by the US contrary to its WTO obligations. The rules on burden of proof for the establishment of facts referred to above also apply in this respect.(541)

…

We note, finally, that terms used both in Sections 301–310 and in WTO provisions, do not necessarily have the same meaning. For example, the word ‘determination’ need not always have the same meaning in Sections 304 and 306 as it has in Article 23.2(a) of the DSU. Thus, conduct not meeting, say, the threshold of a ‘determination’ under Sections 304 and 306, is not by this fact alone precluded from meeting the threshold of a ‘determination’ under Article 23.2(a) of the DSU. By contrast, the fact that a certain act is characterized as a ‘determination’ under domestic legislation, does not necessarily mean that it must be construed as a determination under the covered agreements.”(542)

357.     In Brazil — Aircraft (Article 21.5 — Canada), the Appellate Body, upholding the Panel, stressed that a WTO Member’s domestic law does not excuse that Member from fulfilling its international obligations:

“We note Brazil’s argument before the Article 21.5 Panel that Brazil has a contractual obligation under domestic law to issue PROEX bonds pursuant to commitments that have already been made, and that Brazil could be liable for damages for breach of contract under Brazilian law if it failed to respect its contractual obligations.(543) In response to a question from us at the oral hearing, however, Brazil conceded that a WTO Member’s domestic law does not excuse that Member from fulfilling its international obligations. Like the Article 21.5 Panel,(544) we do not consider that any private contractual obligations, which Brazil may have under its domestic law, are relevant to the issue of whether the DSB’s recommendation to ‘withdraw’ the prohibited export subsidies permits the continued issuance of NTN-I bonds under letters of commitment issued before 18 November 1999.”(545)

358.     In US — 1916 Act (EC), in connection with the examination of the 1916 Act, the European Communities argued that the Panel should not be influenced by the terms used by the United States courts whereas the United States argued that “the proper interpretation of the 1916 Act is a question of fact to be established, as it is an accepted principle of international law that municipal law is a fact to be proven before international tribunals”.(546) Referring to paragraph 66 of the Appellate Body Report in India — Patents (US), the Panel stated:

“[O]ur understanding of the term ‘examination’ as used by the Appellate Body is that panels need not accept at face value the characterisation that the respondent attaches to its law. A panel may analyse the operation of the domestic legislation and determine whether the description of the functioning of the law, as made by the respondent, is consistent with the legal structure of that Member. This way, it will be able to determine whether or not the law as applied is in conformity with the obligations of the Member concerned under the WTO Agreement.(547)”(548)

359.     The Panel on US — 1916 Act (EC) then noted that both complaining parties and the defending party relied on United States court cases in their claims. In connection with the consideration of the case law relating to the 1916 Act, the Panel stated:

“We recall that the International Court of Justice, in the Elettronica Sicula S.p.A (ELSI) case, referred to the judgement of the Permanent Court of International Justice in the Brazilian Loans case — to which the United States also refers in its submissions — and noted that:

‘Where the determination of a question of municipal law is essential to the Court’s decision in a case, the Court will have to weigh the jurisprudence of the municipal courts, and ‘If this is uncertain or divided, it will rest with the Court to select the interpretation which it considers most in conformity with the law’ (Brazilian Loans, PCIJ, Series A, Nos. 20/21, p. 124).’(549)

We are fully aware that our role is to clarify the existing provisions of the covered agreements so as to determine the compatibility of a domestic law with those agreements. We are also aware that, in the Brazilian Loans case, the PCIJ was asked to apply domestic legislation to a given case. We are nevertheless of the view that there is nothing in the text of the DSU, nor in the practice of the Appellate Body, that prevents us from ‘weigh[ing] the jurisprudence of municipal [US] courts’ if it is ‘uncertain or divided’. This would not require us to develop our own independent interpretation of US law, but simply to select among the relevant judgements the interpretation most in conformity with the US law, as necessary in order to resolve the matter before us.(550)”(551)

360.     The Panel on US — 1916 Act (EC) also examined the legislative history to determine the intent of Congress to assist their understanding of the actual scope and operation of the 1916 Act. In so doing, the Panel considered public declarations of various United States officials and stated:

“[W]e should determine whether they could actually generate legal obligations for the United States under international law. For instance, since they are subsequent to the notification by the United States of its ‘grandfathered’ legislation under the GATT 1947, it might be argued that they implicitly modified that notification by stating that the 1916 Act was ‘grandfathered’. We recall that the International Court of Justice has developed, inter alia in its judgement in the Nuclear tests case,(552) criteria on when a statement by a representative of a State could generate international obligations for that State. In the present case, we are reluctant to consider the statements made by senior US officials in testimonies or letters to the US Congress or to members thereof as generating international obligations for the United States. First, we recall that the constitution of the United States provides for a strict separation of the judicial and executive branches. With the exception of criminal prosecutions, the application of the 1916 Act falls within the exclusive responsibility of the federal courts. Under those circumstances, a statement by the executive branch of government in a domestic forum can only be of limited value. Second, with the possible exception of the statement of US Trade Representative Clayton Yeutter, they were not made at a sufficiently high level compared with the statements considered by the International Court of Justice in the Nuclear Tests case, where essentially declarations by a head of State and of members of the French government were at issue. Moreover, the statements referred to in the present case were not directly addressed to the general public. Finally, they were not made on behalf of the United States, but — at best — on behalf of the executive branch of government. This aspect would not be essential if the statements had been made in an international forum, where the executive branch represents the State.(553) However, in the present case, the statements were addressed to the US legislative branch. Therefore, we cannot consider them as creating obligations for the United States under international law.”(554)

361.     In US — Shrimp (Article 21.5 — Malaysia), the Panel had examined the United States municipal law at issue taking into account the status of such law at the time of its review. Malaysia wanted the Panel to take into account a CTI ruling (Turtle Island ) which was still declaratory. The Appellate Body agreed with the Panel and considered that it would have been an exercise in speculation on the part of the Panel to predict either when or how that case might be concluded, or to assume that injunctive relief ultimately would be granted and that the United States Court of Appeals or the Supreme Court of the United States eventually would compel the Department of State to modify the Revised Guidelines. The Appellate Body insisted that “the Panel was correct not to indulge in such speculation, which would have been contrary to the duty of the Panel, under Article 11 of the DSU, to make ‘an objective assessment of the matter … including an objective assessment of the facts of the case”.(555)

362.     The Appellate Body on US — Hot-Rolled Steel stressed that, “[a]lthough it is not the role of panels or the Appellate Body to interpret a Member’s domestic legislation as such, it is permissible, indeed essential, to conduct a detailed examination of that legislation in assessing its consistency with WTO law.(556)”(557)

363.     In US — Section 211 Appropriations Act, the Appellate Body stressed that “municipal law of WTO Members may serve not only as evidence of facts, but also as evidence of compliance or non-compliance with international obligations”:

“Our rulings in these previous appeals are clear: the municipal law of WTO Members may serve not only as evidence of facts, but also as evidence of compliance or non-compliance with international obligations. Under the DSU, a panel may examine the municipal law of a WTO Member for the purpose of determining whether that Member has complied with its obligations under the WTO Agreement. Such an assessment is a legal characterization by a panel. And, therefore, a panel’s assessment of municipal law as to its consistency with WTO obligations is subject to appellate review under Article 17.6 of the DSU.

To address the legal issues raised in this appeal, we must, therefore, necessarily examine the Panel’s interpretation of the meaning of Section 211 under United States law. An assessment of the consistency of Section 211 with the Articles of the TRIPS Agreement and of the Paris Convention (1967) that have been invoked by the European Communities necessarily requires a review of the Panel’s examination of the meaning of Section 211. Likewise, that assessment necessarily requires a review also of the Panel’s examination of the meaning of both the CACR and the Lanham Act, to the extent that they are relevant for assessing the meaning of Section 211. This is an interpretation of the meaning of Section 211 solely for the purpose of determining whether the United States has fulfilled its obligations under the TRIPS Agreement. The meaning given by the Panel to Section 211 is, thus, clearly within the scope of our review as set out in Article 17.6 of the DSU.”(558)

364.     In US — Softwood Lumber IV, the Appellate Body indicated the following:

“[W]e observe that the arguments put forward by Canada relating to the nature of ‘personal property’, raise issues concerning the relevance, for WTO dispute settlement, of the way in which the municipal law of a WTO Member classifies or regulates things or transactions. Previous Appellate Body Reports confirm that an examination of municipal law or particular transactions governed by it might be relevant, as evidence, in ascertaining whether a financial contribution exists.(559) However, municipal laws — in particular those relating to property — vary amongst WTO Members. Clearly, it would be inappropriate to characterize, for purposes of applying any provisions of the WTO covered agreements, the same thing or transaction differently, depending on its legal categorization within the jurisdictions of different Members. Accordingly, we emphasize that municipal law classifications are not determinative of the issues raised in this appeal.”(560)

(c) Drawing adverse inferences

365.     In Canada — Aircraft, the Appellate Body addressed the issue whether panels have the authority to draw adverse inferences from a party’s refusal to provide information. In this dispute, Canada refused to provide Brazil, during consultations, with information on the financing activities of a particular agency, such information being subsequently also requested by the Panel. On appeal, Brazil submitted that the Panel erred by not drawing the inference that the information withheld by Canada was adverse to Canada and supportive of Brazil’s claim that the agency’s debt financing was a prohibited export subsidy under Article 3.1(a) of the SCM Agreement. The Appellate Body held that it is within the discretion of panels to draw adverse inferences and that in this particular case the Panel, in deciding not to draw adverse inferences, had not abused this discretion inconsistently with the provisions of the DSU:

“There is no logical reason why the Members of the WTO would, in conceiving and concluding the SCM Agreement, have granted panels the authority to draw inferences in cases involving actionable subsidies that may be illegal if they have certain trade effects, but not in cases that involve prohibited export subsidies for which the adverse effects are presumed. To the contrary, the appropriate inference is that the authority to draw adverse inferences from a Member’s refusal to provide information belongs a fortiori also to panels examining claims of prohibited export subsidies. Indeed, that authority seems to us an ordinary aspect of the task of all panels to determine the relevant facts of any dispute involving any covered agreement: a view supported by the general practice and usage of international tribunals.

Clearly, in our view, the Panel had the legal authority and the discretion to draw inferences from the facts before it — including the fact that Canada had refused to provide information sought by the Panel.

…

Yet, we do not believe that the record provides a sufficient basis for us to hold that the Panel erred in law, or abused its discretionary authority, in concluding that Brazil had not done enough to compel the Panel to make the inferences requested by Brazil. For this reason, we let the Panel’s finding of not proven remain, and we decline Brazil’s appeal on this issue.”(561)

366.     In US — Wheat Gluten, the European Communities argued, inter alia, that the Panel had failed to “draw the necessary adverse inferences from the United States’ refusal to submit … requested information”; the European Communities claimed that this failure was an error of law and that the Panel consequently had violated Article 11 of the DSU. The Appellate Body declined this ground of the appeal; in its analysis, it noted that generally “the appellant should [when alleging that a panel should have drawn adverse inferences], at least: identify the facts on the record from which the Panel should have drawn inferences; indicate the factual or legal inferences that the panel should have drawn from those facts; and, finally, explain why the failure of the panel to exercise its discretion by drawing these inferences amounts to an error of law under Article 11 of the DSU”.

“We … characterized the drawing of inferences as a ‘discretionary’ task falling within a panel’s duties under Article 11 of the DSU. In Canada — Aircraft, which involved a similar factual situation, the panel did not draw any inferences ‘adverse’ to Canada’s position. On appeal, we held that there was no basis to find that the panel had improperly exercised its discretion since ‘the full ensemble of the facts on the record’ supported the panel’s conclusion.(562)

In its appeal, the European Communities places considerable emphasis on the failure of the Panel to draw ‘adverse’ inferences from the refusal of the United States to provide information requested by the Panel. As we emphasized in Canada — Aircraft, under Article 11 of the DSU, a panel must draw inferences on the basis of all of the facts of record relevant to the particular determination to be made.(563) Where a party refuses to provide information requested by a panel under Article 13.1 of the DSU, that refusal will be one of the relevant facts of record, and indeed an important fact, to be taken into account in determining the appropriate inference to be drawn. However, if a panel were to ignore or disregard other relevant facts, it would fail to make an ‘objective assessment’ under Article 11 of the DSU. In this case, as the Panel observed, there were other facts of record that the Panel was required to include in its ‘objective assessment’. Accordingly, we reject the European Communities’ arguments to the extent that they suggest that the Panel erred in not drawing ‘adverse’ inferences simply from the refusal of the United States to provide certain information requested from it by the Panel under Article 13.1 of the DSU.

In reviewing the inferences the Panel drew from the facts of record, our task on appeal is not to redo afresh the Panel’s assessment of those facts, and decide for ourselves what inferences we would draw from them. Rather, we must determine whether the Panel improperly exercised its discretion, under Article 11, by failing to draw certain inferences from the facts before it. In asking us to conduct such a review, an appellant must indicate clearly the manner in which a panel has improperly exercised its discretion. Taking into account the full ensemble of the facts, the appellant should, at least: identify the facts on the record from which the Panel should have drawn inferences; indicate the factual or legal inferences that the panel should have drawn from those facts; and, finally, explain why the failure of the panel to exercise its discretion by drawing these inferences amounts to an error of law under Article 11 of the DSU.

In this appeal, the European Communities makes, what we regard to be, broad and general statements that the Panel erred by not drawing ‘adverse’ inferences from the facts. Besides the fact that the United States refused to provide certain information requested by the Panel under Article 13.1 of the DSU, the European Communities does not identify, in any specific manner, which facts supported a particular inference. Nor does the European Communities identify what inferences the Panel should have drawn from those facts, other than that the inferences should have been favourable to the European Communities. Besides the simple refusal of the United States to provide information requested by the Panel, which we have already addressed, the European Communities does not offer any other specific reasons why the Panel’s failure to exercise its discretion by drawing the inferences identified by the European Communities amounts to an error of law under Article 11 of the DSU.

Therefore, we decline this ground of appeal.”(564)

(d) Timing of submission of evidence

367.     In Argentina — Textiles and Apparel, Argentina argued that the Panel had acted inconsistently with Article 11 of the DSU by allowing certain evidence offered by the United States two days before the second substantive meeting of the Panel with the parties. The Appellate Body noted that “the Working Procedures in their present form do not constrain panels with hard and fast rules on deadlines for submitting evidence” and, accordingly, did not find a violation of Article 11:

“Article 11 of the DSU does not establish time limits for the submission of evidence to a panel. Article 12.1 of the DSU directs a panel to follow the Working Procedures set out in Appendix 3 of the DSU, but at the same time authorizes a panel to do otherwise after consulting the parties to the dispute. The Working Procedures in Appendix 3 also do not establish precise deadlines for the presentation of evidence by a party to the dispute.(565) It is true that the Working Procedures ‘do not prohibit’ submission of additional evidence after the first substantive meeting of a panel with the parties. It is also true, however, that the Working Procedures in Appendix 3 do contemplate two distinguishable stages in a proceeding before a panel….

Under the Working Procedures in Appendix 3, the complaining party should set out its case in chief, including a full presentation of the facts on the basis of submission of supporting evidence, during the first stage. The second stage is generally designed to permit ‘rebuttals’ by each party of the arguments and evidence submitted by the other parties.

As noted above, however, the Working Procedures in their present form do not constrain panels with hard and fast rules on deadlines for submitting evidence. The Panel could have refused to admit the additional documentary evidence of the United States as unseasonably submitted. The Panel chose, instead, to admit that evidence, at the same time allowing Argentina two weeks to respond to it. Argentina drew attention to the difficulties it would face in tracing and verifying the manually processed customs documents and in responding to them, since identifying names, customs identification numbers and, in some cases, descriptions of the products had been blacked out. The Panel could well have granted Argentina more than two weeks to respond to the additional evidence. However, there is no indication in the panel record that Argentina explicitly requested from the Panel, at that time or at any later time, a longer period within which to respond to the additional documentary evidence of the United States. Argentina also did not submit any countering documents or comments in respect of any of the additional documents of the United States.

[W]hile another panel could well have exercised its discretion differently, we do not believe that the Panel here committed an abuse of discretion amounting to a failure to render an objective assessment of the matter as mandated by Article 11 of the DSU.”(566)

368.     In Korea — Alcoholic Beverages, Korea requested the Panel to issue a preliminary ruling rejecting certain evidence submitted by the European Communities after the second substantive meeting. Korea alleged that its rights of defence had been violated by the late submission of such evidence:

“Korea complains that its rights of defence were violated by the late submission of a market study (the Trendscope survey) by the European Communities. Korea had submitted a study done by the AC Nielsen Company as part of its responses to questions arising from the first substantive meeting of the Panel. The European Communities responded to this with, among other things, the Trendscope survey presented at the Second Meeting of the Panel. The Panel gave Korea a week to respond to this and critique the results, methodology and questions used in the Trendscope survey. Korea argues that this time was insufficient, that it did not have copies in Korean of all the questions asked, and that it did not have time to provide further questions or comments based upon the answers.

We do not consider that Korea’s rights under the DSU were violated. The European Communities submitted its rebuttal survey at the next available opportunity after receiving Korea’s Nielsen survey. Had Korea chosen to submit its survey at the first substantive meeting and the European Communities failed to respond at the next opportunity (in such a case, it would have been in the rebuttal submission), there obviously would have been more merit to the claim because then the European Communities, it could have been argued, delayed submitting their evidence. As it transpired, the European Communities submitted a new piece of evidence at the next available opportunity which Korea then was able to examine for a week in order to provide comments. The survey was not of a particularly complex type and, in our view, Korea had adequate time to respond given the nature of the evidence. The Trendscope survey is not critical evidence to the complainants’ case; it serves as a supplement to arguments already made. If we considered that it represented critical evidence, Korea’s request for further time for comment would have been given greater weight. While all parties to litigation might prefer open-ended potential for rebutting the other side’s submissions, we believe that for practical reasons submissions must be cut-off at some point and such a point was reached in this case. Thus, neither the timing nor the importance of the evidence in question support a finding that Korea’s rights have been violated in this instance.”(567)

369.     In Canada — Aircraft, Canada requested the Panel to issue a preliminary ruling on the question of whether the complaining party may adduce new evidence or allegations after the end of the first substantive meeting. Canada argued that it would suffer prejudice under the accelerated procedure under Article 4 of the SCM Agreement as a result of the late submission of allegations or evidence. The Panel, in a finding not addressed by the Appellate Body, ruled that it was not bound to exclude the submission of new allegations after the first substantive meeting and that it could not see any legal basis for so doing:

“[A]n absolute rule excluding the submission of evidence by a complaining party after the first substantive meeting would be inappropriate, since there may be circumstances in which a complaining party is required to adduce new evidence in order to address rebuttal arguments made by the respondent. Furthermore, there may be instances, as in the present case,(568) where a party is required to submit new evidence at the request of the panel. For these reasons, we rejected Canada’s request for a preliminary ruling that the Panel should not accept new evidence submitted by Brazil after the first substantive meeting.

[W]e are not bound to exclude the submission of new allegations after the first substantive meeting. We can see nothing in the DSU, or in the Appendix 3 Working Procedures, that would require the submission of new allegations to be treated any differently than the submission of new evidence. Indeed, one could envisage situations in which the respondent might present information to a panel during the first substantive meeting that could reasonably be used as a basis for a new allegation by the complaining party. Provided the new allegation falls within the panel’s terms of reference, and provided the respondent party’s due process rights of defence are respected, we can see no reason why any such new allegation should necessarily be rejected by the panel as a matter of course, simply because it is submitted after the first substantive meeting with the parties. We consider that this approach is consistent with the Appellate Body’s ruling in European Communities — Bananas that ‘[t]here is no requirement in the DSU or in GATT practice for arguments on all claims relating to the matter referred to the DSB to be set out in a complaining party’s first written submission to the panel. It is the panel’s terms of reference, governed by Article 7 of the DSU, which set out the claims of the complaining parties relating to the matter referred to the DSB.’(569)”(570)

370.     In US — Offset Act (Byrd Amendment), Canada asked the Panel to accept as evidence a letter which it submitted after the first substantive meeting. In spite of the United States’ objections, the Panel issued a preliminary ruling accepting the evidence. The Panel noted that the letter at issue did not come into the possession of Canada until after the first substantive meeting. The Panel also noted that the information contained in the letter was in the public domain, and that the information was pertinent to the proceedings since it related to an issue which it had been asked to consider.(571)

371.     In EC — Sardines, the Appellate Body explained that the interim review stage is not an appropriate time to introduce new evidence:

“The interim review stage is not an appropriate time to introduce new evidence. We recall that Article 15 of the DSU governs the interim review. Article 15 permits parties, during that stage of the proceedings, to submit comments on the draft report issued by the panel,(572) and to make requests ‘for the panel to review precise aspects of the interim report’.(573) At that time, the panel process is all but completed; it is only — in the words of Article 15 — ’precise aspects’ of the report that must be verified during the interim review. And this, in our view, cannot properly include an assessment of new and unanswered evidence. Therefore, we are of the view that the Panel acted properly in refusing to take into account the new evidence during the interim review, and did not thereby act inconsistently with Article 11 of the DSU.”(574)

372.     The Panel in Japan — Apples accepted evidence that became available only after the establishment of the Panel, as the other party had had an opportunity to comment:

“A related question is whether the Panel should consider evidence that became available only after the establishment of the Panel. Our approach in this regard should be pragmatic. Besides the situation contemplated in paragraph 11 of our Working Procedures, we decided not to reject evidence submitted by a party on which the other party had had an opportunity to comment, whether it took advantage of such an opportunity or not. This is without prejudice to the admissibility of such evidence on other grounds or the weight that we might eventually give to such evidence.

…

… We are of the view that our obligation, pursuant to Article 11 of the DSU, to make an objective assessment of the matter before us, including an objective assessment of the facts of the case, imposes on us an obligation not to exclude a priori any evidence submitted in due time by any party. However, the fact that we accepted the evidence at issue as a matter of principle is, as stated in the latter above, without prejudice to the weight that we will ultimately give to these exhibits in our discussion of the substance of this case. We also note that, consistent with the practice of panels, we provided Japan with the opportunity to comment on the substance of these documents.”(575)

373.     In US — Steel Safeguards, the Panel sent a letter to all parties that included a series of preliminary rulings(576) on organizational matters. Among the issues, the Panel referred to the United States’ request to replace the term “rebuttal submissions” in paragraph 11 of the Panel’s Working Procedures regarding the timing of the submission of evidence, with the word “rebuttals”. For the United States the word “submission” is ordinarily taken to mean written submissions and thus the reference to “rebuttal submissions” would exclude the application of that paragraph to evidence in rebuttals made orally. The complainants disagreed and argued that the suggested amendment would allow, for example, new arguments and evidence to be adduced orally at the Panel’s second substantive meeting. The Panel, after referring to the Appellate Body Report on Argentina — Textiles and Apparel (see paragraph 367 above), redrafted paragraph 11 “to ensure due process and to ensure that new evidence is not adduced at a late stage in the panel process, while simultaneously ensuring that all parties and the Panel are fully informed of all relevant evidence”.(577) The new paragraph 11 read as follows:

“Parties shall submit all factual evidence to the Panel no later than during the first substantive meeting, except with respect to evidence necessary for purposes of rebuttal submissions, or answers to questions or provided that good cause is shown. In all cases, the other party(ies) shall be accorded a period of time for comment, as appropriate.”

(e) Temporal scope of the review

374.     In US — Cotton Yarn, the Appellate Body considered that a panel reviewing the due diligence exercised by a Member in making its determination under Article 6 of the ATC has to put itself in the place of that Member at the time it makes its determination and thus “must not consider evidence which did not exist at that point in time”. In this regard, see paragraph 391 below.

(f) Evidence obtained during consultations

375.     With respect to the issue of whether information obtained during consultations may be used in the subsequent panel proceedings, see paragraphs 135–136 above. See also paragraphs 342 and 344 above.

(g) Relationship with Article 13

376.     As regards the panels’ right to seek information, see Section XIII.B below.

4. Objective assessment of whether the investigating authority’s explanation is reasoned and adequate: not a “de novo” review

377.     In this respect, see paragraphs 381–386 below.

5. “make such other findings”

378.     In US — Wool Shirts and Blouses, the Appellate Body relied, inter alia, on the phrase “make such other findings” in order to confirm the ability of panels to exercise judicial economy. See paragraph 1030 below.

379.     In Canada — Aircraft, Canada asked the Panel to make a ruling on the Panel’s jurisdiction before the deadline set for the submission of the written submission of the parties. The Panel stated:

“In our view, there is no requirement in the DSU for panels to rule on preliminary issues prior to the parties’ first written submissions. Nor is there any established practice to this effect, for there are numerous panel reports where rulings on preliminary issues have been reserved until the final report. Furthermore, there may be cases where the panel wishes to seek further clarification from the parties before providing a preliminary ruling.”(578)

6. Standard of review in trade remedy cases

(a) Agreement on Safeguards

(i) Application of general standard of review under Article 11 of the DSU

380.     In US — Cotton Yarn, the Appellate Body indicated that its Reports in Argentina — Footwear (EC), US — Lamb and US — Wheat Gluten (see paragraphs 381–385 below), all concerning disputes under the Agreement on Safeguards, “spell out key elements of a panel’s standard of review under Article 11 of the DSU in assessing whether the competent authorities complied with their obligations in making their determinations”.

(ii) Objective assessment of whether the investigating authority’s explanation is reasoned and adequate: not a “de novo” review

381.     In Argentina — Footwear (EC), Argentina argued in its appeal that the Panel correctly articulated the standard of review but alleged that the Panel erred in applying that standard of review by conducting a “de facto de novo review” of the findings and conclusions of the Argentine authorities. The Appellate Body rejected Argentina’s argument, stating as follows:

“We have stated, on more than one occasion, that, for all but one of the covered agreements, Article 11 of the DSU sets forth the appropriate standard of review for panels.

…

Based on our review of the Panel’s reasoning, we find that the Panel correctly stated the appropriate standard of review, as set forth in Article 11 of the DSU. And, with respect to its application of the standard of review, we do not believe that the Panel conducted a de novo review of the evidence, or that it substituted its analysis and judgement for that of the Argentine authorities. Rather, the Panel examined whether, as required by Article 4 of the Agreement on Safeguards, the Argentine authorities had considered all the relevant facts and had adequately explained how the facts supported the determinations that were made. Indeed, far from departing from its responsibility, in our view, the Panel was simply fulfilling its responsibility under Article 11 of the DSU in taking the approach it did. To determine whether the safeguard investigation and the resulting safeguard measure applied by Argentina were consistent with Article 4 of the Agreement on Safeguards, the Panel was obliged, by the very terms of Article 4, to assess whether the Argentine authorities had examined all the relevant facts and had provided a reasoned explanation of how the facts supported their determination.”(579)

382.     In Korea — Dairy, the Panel considered Korea’s request for the Panel not to engage in a de novo review of its national authorities’ determination to impose a safeguard. More specifically, Korea argued that the standard of review of Article 11 implies that the function of the Panel is to assess whether Korea (i) examined the relevant facts before it at the time of the investigation; and (ii) provided an adequate explanation of how the facts before it as a whole supported the determination made. Furthermore, Korea claimed that a certain deference or latitude should be left to the national authorities in this respect. The Panel held that it could not grant “total deference” to the national authorities but agreed that it could not substitute its assessment for that of the national authority:

“We consider that for the Panel to adopt a policy of total deference to the findings of the national authorities could not ensure an ‘objective assessment’ as foreseen by Article 11 of the DSU. This conclusion is supported, in our view, by previous panel reports that have dealt with this issue.(580) However, we do not see our review as a substitute for the proceedings conducted by national investigating authorities. Rather, we consider that the Panel’s function is to assess objectively the review conducted by the national investigating authority, in this case the KTC. For us, an objective assessment entails an examination of whether the KTC had examined all facts in its possession or which it should have obtained in accordance with Article 4.2 of the Agreement on Safeguards (including facts which might detract from an affirmative determination in accordance with the last sentence of Article 4.2 of the Agreement on Safeguards), whether adequate explanation had been provided of how the facts as a whole supported the determination made, and, consequently, whether the determination made was consistent with the international obligations of Korea.”(581)

383.     In US — Lamb, the Appellate Body held that, in considering a claim under the Agreement on Safeguards, a panel’s objective assessment involves both a formal aspect (whether the competent authorities have evaluated “all relevant factors”) and a substantive aspect (whether the competent authorities have given a reasoned and adequate explanation for their determination):

“[A]n ‘objective assessment’ of a claim under Article 4.2(a) of the Agreement on Safeguards has, in principle, two elements. First, a panel must review whether competent authorities have evaluated all relevant factors, and, second, a panel must review whether the authorities have provided a reasoned and adequate explanation of how the facts support their determination.(582) Thus, the panel’s objective assessment involves a formal aspect and a substantive aspect. The formal aspect is whether the competent authorities have evaluated ‘all relevant factors’. The substantive aspect is whether the competent authorities have given a reasoned and adequate explanation for their determination.

This dual character of a panel’s review is mandated by the nature of the specific obligations that Article 4.2 of the Agreement on Safeguards imposes on competent authorities. Under Article 4.2(a), competent authorities must, as a formal matter, evaluate ‘all relevant factors’. However, that evaluation is not simply a matter of form, and the list of relevant factors to be evaluated is not a mere ‘check list’. Under Article 4.2(a), competent authorities must conduct a substantive evaluation of ‘the “bearing”, or the “influence” or “effect”’(583) or ‘impact’ that the relevant factors have on the ‘situation of [the] domestic industry’. (emphasis added) By conducting such a substantive evaluation of the relevant factors, competent authorities are able to make a proper overall determination, inter alia, as to whether the domestic industry is seriously injured or is threatened with such injury as defined in the Agreement.”(584)

384.     In US — Lamb, the Appellate Body further stated that the panel must examine whether the explanation given by the competent authorities in their published report is reasoned and adequate without conducting a de novo review of the evidence nor substituting the authorities’ conclusions:

“It follows that the precise nature of the examination to be conducted by a panel, in reviewing a claim under Article 4.2 of the Agreement on Safeguards, stems, in part, from the panel’s obligation to make an ‘objective assessment of the matter’ under Article 11 of the DSU and, in part, from the obligations imposed by Article 4.2, to the extent that those obligations are part of the claim. Thus, as with any claim under the provisions of a covered agreement, panels are required to examine, in accordance with Article 11 of the DSU,(585) whether the Member has complied with the obligations imposed by the particular provisions identified in the claim. By examining whether the explanation given by the competent authorities in their published report is reasoned and adequate, panels can determine whether those authorities have acted consistently with the obligations imposed by Article 4.2 of the Agreement on Safeguards.

We wish to emphasize that, although panels are not entitled to conduct a de novo review of the evidence, nor to substitute their own conclusions for those of the competent authorities, this does not mean that panels must simply accept the conclusions of the competent authorities. To the contrary, in our view, in examining a claim under Article 4.2(a), a panel can assess whether the competent authorities’ explanation for its determination is reasoned and adequate only if the panel critically examines that explanation, in depth, and in the light of the facts before the panel. Panels must, therefore, review whether the competent authorities’ explanation fully addresses the nature, and, especially, the complexities, of the data, and responds to other plausible interpretations of that data. A panel must find, in particular, that an explanation is not reasoned, or is not adequate, if some alternative explanation of the facts is plausible, and if the competent authorities’ explanation does not seem adequate in the light of that alternative explanation. Thus, in making an ‘objective assessment’ of a claim under Article 4.2(a), panels must be open to the possibility that the explanation given by the competent authorities is not reasoned or adequate.

In this respect, the phrase ‘de novo review’ should not be used loosely. If a panel concludes that the competent authorities, in a particular case, have not provided a reasoned or adequate explanation for their determination, that panel has not, thereby, engaged in a de novo review. Nor has that panel substituted its own conclusions for those of the competent authorities. Rather, the panel has, consistent with its obligations under the DSU, simply reached a conclusion that the determination made by the competent authorities is inconsistent with the specific requirements of Article 4.2 of the Agreement on Safeguards.”(586)

385.     In US — Wheat Gluten, the Appellate Body considered the duties of competent authorities and stated that an investigation by a competent authority requires a proper degree of activity. Their “duties of investigation and evaluation preclude them from remaining passive in the face of possible shortcomings in the evidence submitted”.(587) They “must undertake additional investigative steps, when the circumstances so require, in order to fulfil their obligation to evaluate all relevant factors”.(588) In this case, the Appellate Body found that the Panel had applied a standard of review which fell short of what is required by Article 11 of the DSU by concluding that the report of the investigating authority contained an adequate explanation. In the Appellate Body’s view, the Panel had heavily relied upon supplementary information supplied by the United States during the Panel proceedings.(589)

386.     In US — Cotton Yarn, the Appellate Body, after referring to its rulings in the above-mentioned cases, summarized the panel standard of review; see paragraph 326 above.

387.     In US — Steel Safeguards, the Appellate Body reminded the parties of the importance of providing a reasoned and adequate explanation of the facts supporting the imposition of safeguards measures, thereby enabling panels to make their objective assessment as required under Article 11 of the DSU:

“It bears repeating that a panel will not be in a position to assess objectively, as it is required to do under Article 11 of the DSU, whether there has been compliance with the prerequisites that must be present before a safeguard measure can be applied, if a competent authority is not required to provide a ‘reasoned and adequate explanation’ of how the facts support its determination of those prerequisites, including ‘unforeseen developments’ under Article XIX:1(a) of the GATT 1994. A panel must not be left to wonder why a safeguard measure has been applied.

It is precisely by ‘setting forth findings and reasoned conclusions on all pertinent issues of fact and law’, under Article 3.1, and by providing ‘a detailed analysis of the case under investigation as well as a demonstration of the relevance of the factors examined’, under Article 4.2(c), that competent authorities provide panels with the basis to ‘make an objective assessment of the matter before it’ in accordance with Article 11. As we have said before, a panel may not conduct a de novo review of the evidence or substitute its judgement for that of the competent authorities.(590) Therefore, the ‘reasoned conclusions’ and ‘detailed analysis’ as well as ‘a demonstration of the relevance of the factors examined’ that are contained in the report of a competent authority, are the only bases on which a panel may assess whether a competent authority has complied with its obligations under the Agreement on Safeguards and Article XIX:1(a) of the GATT 1994. This is all the more reason why they must be made explicit by a competent authority.

…

[W]e cannot accept the United States’ interpretation that a failure to explain a finding does not support the conclusion that the USITC ‘did not actually perform the analysis correctly, thereby breaching Article 2.1, 4.2, or 4.2(b) [of the Agreement on Safeguards]’.(591) As we stated above, because a panel may not conduct a de novo review of the evidence before the competent authority, it is the explanation given by the competent authority for its determination that alone enables panels to determine whether there has been compliance with the requirements of Article XIX of the GATT 1994 and of Articles 2 and 4 of the Agreement on Safeguards. It may well be that, as the United States argues, the competent authorities have performed the appropriate analysis correctly. However, where a competent authority has not provided a reasoned and adequate explanation to support its determination, the panel is not in a position to conclude that the relevant requirement for applying a safeguard measure has been fulfilled by that competent authority. Thus, in such a situation, the panel has no option but to find that the competent authority has not performed the analysis correctly.”(592)

(b) Transitional safeguard measure under the Agreement on Textiles and Clothing

(i) Application of general standard of review under Article 11 of the DSU

388.     The Panel on US — Underwear examined the standard of review to be applied in cases involving the Agreement on Textiles and Clothing and noted that Article 11 of the DSU is the relevant provision. In a finding not reviewed by the Appellate Body, the Panel held that “the task of the Panel is to examine the consistency of the US action with the international obligations of the United States, and not the consistency of the US action with the US domestic statute implementing the international obligations of the United States”. The Panel went on to state:

“[A] policy of total deference to the findings of the national authorities could not ensure an ‘objective assessment’ as foreseen by Article 11 of the DSU.

…

[T]he Panel’s function should be to assess objectively the review conducted by the national investigating authority, in this case the CITA. We draw particular attention to the fact that a series of panel reports in the anti-dumping and subsidies/countervailing duties context have made it clear that it is not the role of panels to engage in a de novo review.(593) In our view, the same is true for panels operating in the context of the ATC, since they would be called upon, as in the context of cases dealing with anti-dumping and/or subsidies/countervailing duties, to review the consistency of a determination by a national investigating authority imposing a restriction under the relevant provisions of the relevant WTO legal instruments, in this case the ATC. In our view, the task of the Panel is to examine the consistency of the US action with the international obligations of the United States, and not the consistency of the US action with the US domestic statute implementing the international obligations of the United States. Consequently, the ATC constitutes, in our view, the relevant legal framework in this matter.

We have therefore decided, in accordance with Article 11 of the DSU, to make an objective assessment of the Statement issued by the US authorities on 23 March 1995 (the ‘March Statement) which, as the parties to the dispute agreed, constitutes the scope of the matter properly before the Panel without, however, engaging in a de novo review. In our view, an objective assessment would entail an examination of whether the CITA had examined all relevant facts before it (including facts which might detract from an affirmative determination in accordance with the second sentence of Article 6.2 of the ATC), whether adequate explanation had been provided of how the facts as a whole supported the determination made, and, consequently, whether the determination made was consistent with the international obligations of the United States.”(594)

389.     In US — Wool Shirts and Blouses, the Panel examined whether a certain transitional safeguard measure imposed by the United States was consistent with Article 6. India, the complainant, claimed that the Panel should examine whether the United States had acted reasonably, while the United States argued that it should be “entitled to the benefit of reasonable doubt”, as it had been so entitled in a certain GATT case. The Panel responded as follows:

“[A]lthough the DSU does not contain any specific reference to standards of review, we consider that Article 11 of the DSU … is relevant here[.]

…

Pursuant to Article 11 of the DSU, we must determine what is ‘the matter before [the Panel]’. This Panel was established pursuant to Article 8.10 of the ATC and Article 6 of the DSU….

…

The only restraint discussed under Article 6 of the ATC is the proposed restraint by the importing Member. Therefore, pursuant to Article 11 of the DSU, the function of this Panel, established pursuant to Article 8.10 of the ATC and Article 6 of the DSU, is limited to making an objective assessment of the facts surrounding the application of the specific restraint by the United States (and contested by India) and of the conformity of such restraint with the relevant WTO agreements.”(595)

390.     In support of the proposition referenced in paragraph 389 above, the Panel on US — Wool Shirts and Blouses referred to “an important distinction between the role of panels under the DSU and the role of the TMB under the ATC as regards safeguard actions”.(596)

391.     In US — Cotton Yarn, the Appellate Body considered for the first time a panel’s standard of review under Article 11 in a dispute under the Agreement on Textiles and Clothing, an issue that had already been considered by Panels in US — Underwear and US — Wool Shirts and Blouses when examining the consistency of transitional safeguard measures with Article 6 of the ATC.(597) The Appellate Body considered that the Panel, in assessing the due diligence of the United States in making a determination under Article 6.2 of the Agreement on Textiles and Clothing, had exceeded its mandate under Article 11 of the DSU by considering certain evidence that could not possibly have been examined by the United States when it made that determination. In this regard, the Appellate Body considered:

“Unlike Article 3 of the Agreement on Safeguards, which provides explicitly for an investigation by competent authorities of a Member, Article 6 of the ATC does not specify either the organ or the procedure through which a Member makes its ‘determination’. Nevertheless, the … principles concerning the standard of review under Article 11 of the DSU with respect to the Agreement on Safeguards apply equally, in our view, to a panel’s review of a Member’s determination under Article 6 of the ATC. We note that Article 6 does not require the participation of all interested parties in the process leading to the determination. We consider, therefore, that the exercise of due diligence by a Member is all the more important in reaching a determination under Article 6 of the ATC.

…

In our view, a panel reviewing the due diligence exercised by a Member in making its determination under Article 6 of the ATC has to put itself in the place of that Member at the time it makes its determination. Consequently, a panel must not consider evidence which did not exist at that point in time.(598) A Member cannot, of course, be faulted for not having taken into account what it could not have known when making its determination. If a panel were to examine such evidence, the panel would, in effect, be conducting a de novo review and it would be doing so without having had the benefit of the views of the interested parties. The panel would be assessing the due diligence of a Member in reaching its conclusions and making its projections with the benefit of hindsight and would, in effect, be reinvestigating the market situation and substituting its own judgement for that of the Member. In our view, this would be inconsistent with the standard of a panel’s review under Article 11 of the DSU.”(599)

(c) Anti-dumping measures

392.     See the excerpts from the reports of the Panels and Appellate Body referenced in the Chapter on the Anti-Dumping Agreement, Sections V.B.3(a)(iv) and XVII.B.7(a). See also paragraphs 393–394 below.

(d) Countervailing measures

(i) Application of general standard of review under the DSU

393.     The Appellate Body on US — Lead and Bismuth II rejected the argument that, “by virtue of the Declaration, the standard of review specified in Article 17.6 of the Anti-Dumping Agreement also applies to disputes involving countervailing duty measures under Part V of the SCM Agreement”.(600) The Appellate Body emphasized the hortatory language of the Declaration and the fact that the Declaration does not provide for the application of any particular standards of review to be applied:

“By its own terms, the Declaration does not impose an obligation to apply the standard of review contained in Article 17.6 of the Anti-Dumping Agreement to disputes involving countervailing duty measures under Part V of the SCM Agreement. The Declaration is couched in hortatory language; it uses the words ‘Ministers recognize’. Furthermore, the Declaration merely acknowledges ‘the need for the consistent resolution of disputes arising from antidumping and countervailing duty measures.’ It does not specify any specific action to be taken. In particular, it does not prescribe a standard of review to be applied.

This Decision provides for review of the standard of review in Article 17.6 of the Anti-Dumping Agreement to determine if it is ‘capable of general application’ to other covered agreements, including the SCM Agreement. By implication, this Decision supports our conclusion that the Article 17.6 standard applies only to disputes arising under the Anti-Dumping Agreement, and not to disputes arising under other covered agreements, such as the SCM Agreement. To date, the DSB has not conducted the review contemplated in this Decision.”(601)

394.     In US — Softwood Lumber VI, the Panel was called on to consider a case involving a single injury determination with respect to both subsidized and dumped imports. The claims therefore involved identical or almost identical provisions of the SCM Agreement and the Anti-Dumping Agreement. The Panel concluded that given its understanding of the applicable standards of review under Article 11 of the DSU and Article 17.6 of the Anti-Dumping Agreement, it was neither necessary nor appropriate to conduct separate analyses of the injury determination under the two agreements. In arriving at this conclusion, the Panel relied on the Declaration on Dispute Settlement Pursuant to the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 or Part V of the Agreement on Subsidies and Countervailing Measures:

“In light of Canada’s clarification of its position, and based on our understanding of the applicable standards of review under Article 11 of the DSU and Article 17.6 of the AD Agreement, we do not consider that it is either necessary or appropriate to conduct separate analyses of the USITC determination under the two Agreements.

We consider this result appropriate in view of the guidance in the Declaration of Ministers relating to Dispute Settlement under the AD and SCM Agreements. While the Appellate Body has clearly stated that the Ministerial Declaration does not require the application of the Article 17.6 standard of review in countervailing duty investigations,(602) it nonetheless seems to us that in a case such as this one, involving a single injury determination with respect to both subsidized and dumped imports, and where most of Canada’s claims involve identical or almost identical provisions of the AD and SCM Agreements, we should seek to avoid inconsistent conclusions”.(603)

7. Dissenting/separate opinions

395.     The following table refers to dissenting/separate opinions that occurred in panel reports up to 31 December 2004:

396.     As regards the separate opinions in Article 22.6 arbitrations, see Section XXII.B.9(d) below. For the concurrent statements in Appellate Body Reports, see Section XVII.B.7 below.

8. Relationship with other Articles

(a) Articles 12 and 13

397.     With respect to the relationship between Article 11, and Articles 12 and 13 of the DSU, see the excerpts from the reports of the panels and Appellate Body referenced in paragraphs 417, 429 and 431 below.

(b) Article 19

398.     The Panel on India — Autos considered how Articles 11 and 19 of the DSU should be interpreted to deal with events occurring in the course of proceedings that question the appropriateness of a recommendation that a measure inconsistent with a covered agreement be brought into conformity with that agreement under Article 19.1 of the DSU:

“If only as a matter of logic, there can be no sense in making such a recommendation if a Panel is of the view that the violation at issue has ceased to exist when its recommendation is being made.(604), (605) The Panel does not believe that Articles 11 and 19 of the DSU should be interpreted to demand that a panel must make a formalistic statement that a measure needs to be brought into compliance when it is faced with factual and legal arguments that this is no longer the case and must do so without being entitled to resolve those contentions.

…

[T]he Panel felt that it would not be making an ‘objective assessment of the matter before it’, or assisting the DSB in discharging its responsibilities under the DSU in accordance with Article 11 of the DSU, had it chosen not to address the impact of events having taken place in the course of the proceedings, in assessing the appropriateness of making a recommendation under Article 19.1 of the DSU.

This is, in the Panel’s view, an entirely distinct question from the issue of how India might appropriately remedy this situation and bring its measures into conformity in the future. The Panel does not seek here to engage in such an analysis. Any future issues arising as to whether India has complied with any recommendations resulting from the adoption of this report would be for a compliance panel to assess.

It should be highlighted in concluding this section that the decision taken by this Panel to proceed in this way in the particular circumstances of this case is in no way intended to imply that panels have a general duty to systematically re-evaluate the existence of any violations identified before proceeding with making their recommendations under Article 19.1. This Panel is simply responding to the particular arguments placed before it, where the parties disagree as to the implications of subsequent events on the Panel’s power to make recommendations and rulings. The principal aim of the Panel in proceeding in this manner is to discharge its duty in the most efficient way towards resolving the matter at issue in this dispute.”(606)

9. Relationship with non-WTO law

399.     In EC — Bananas III, the European Communities asserted “that the Panel should not have conducted an objective examination of the requirements of the Lomé Convention, but instead should have deferred to the ‘common’ EC and ACP views on the appropriate interpretation of the Lomé Convention”. The Appellate Body expressly agreed with the following statement of the Panel:

“We note that since the GATT Contracting Parties incorporated a reference to the Lomé Convention into the Lomé waiver, the meaning of the Lomé Convention became a GATT/WTO issue, at least to that extent. Thus, we have no alternative but to examine the provisions of the Lomé Convention ourselves in so far as it is necessary to interpret the Lomé waiver.”(607)

Footnotes:

476. Appellate Body Report on US — Cotton Yarn, para. 74. back to text
477. (footnote original) See, for example, S. P. Croley and J. H. Jackson, “WTO Dispute Panel Deference to National Government Decisions, The Misplaced Analogy to the U.S. Chevron Standard-of-Review Doctrine”, in E.-U. Petersmann (ed.), International Trade Law and the GATT/WTO Dispute Settlement System (Kluwer, 1997) 185, p. 189; P. A. Akakwam, “The Standard of Review in the 1994 Antidumping Code: Circumscribing the Role of GATT Panels in Reviewing National Antidumping Determinations” (1996), 5:2 Minnesota Journal of Global Trade 277, pp. 295–296. back to text
478. Appellate Body Report on EC — Hormones, paras. 115–117. back to text
479. Appellate Body Report on EC — Poultry, para. 133. back to text
480. (footnote original) Panel Report, para. 7.104. back to text
481. See para. 287 of this Chapter. back to text
482. See para. 286 of this Chapter. back to text
483. Appellate Body Report on Chile — Price Band System, para. 173. back to text
484. Appellate Body Report on Argentina — Footwear (EC), para. 71. back to text
485. Appellate Body Report on Argentina — Footwear (EC), para. 74. As regards the Panel’s mandate limitations concerning the assessment of only specific claims, see paras. 286–287 of this Chapter. back to text
486. Appellate Body Report on EC — Poultry, para. 135. back to text
487. Panel Report on Australia — Automotive Leather II (Article 21.5 — US), para. 6.19. back to text
488. See para. 287 of this Chapter. back to text
489. As regards the right of response in the context of due process, see paras. 928–930 of this Chapter. back to text
490. Appellate Body Report on Chile — Price Band System, para. 176. back to text
491. Appellate Body Report on India — Quantitative Restrictions, para. 149. back to text
492. Prior to EC — Hormones, an Article 11 claim was raised on appeal in US — Wool Shirts and Blouses, but that claim addressed solely the issue of “whether Article 11 of the DSU entitles a complaining party to a finding on each of the legal claims it makes to a panel”. See Appellate Body Report on US — Wool Shirts and Blouse, p. 17. As such, the claim did not challenge the panel’s “assessment of the facts of the case”. In addition, in Canada — Periodicals, the appellant raised the issue of Article 11 when challenging the panel’s reliance on a “hypothetical example” to make a determination of “like products” under Article III:2 of the GATT 1994. See Appellate Body Report on Canada — Periodicals, p. 5. The Appellate Body, however, made no ruling on Article 11 (pp. 20–23). back to text
493. Appellate Body Report on EC — Hormones, para. 133. back to text
494. Appellate Body Report on Korea — Dairy, para. 137. back to text
495. Appellate Body Report on EC — Hormones, para. 132. back to text
496. Appellate Body Report on EC — Hormones, para. 135. back to text
497. Appellate Body Report on EC — Hormones, para. 138. back to text
498. Appellate Body Report on Australia — Salmon, para. 267. back to text
499. As regards the Panel’s duty to render an objective assessment of the facts, see Section XI.B.1. back to text
500. (footnote original) Appellate Body Report on Korea — Alcoholic Beverages, paras. 161–162. See also Appellate Body Report on India — Quantitative Restrictions, paras. 143–144. back to text
501. Panel Report on Australia — Automotive Leather II, para. 9.25. back to text
502. (footnote original) Appellate Body Report, Korea — Dairy Safeguard, supra, footnote 29, para. 137. back to text
503. (footnote original) Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones) (“European Communities — Hormones”), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, 135, at 183, para. 132. back to text
504. (footnote original) Appellate Body Report, Korea — Taxes on Alcoholic Beverages (“Korea — Alcoholic Beverages”), WT/DS75/AB/R, WT/DS84/AB/R, adopted 17 February 1999, paras. 161 and 162. back to text
506. (footnote original) Appellate Body Report, European Communities — Hormones, supra, footnote 138, at 183–188, paras. 131–142; Appellate Body Report, European Communities — Poultry, supra, footnote 119, paras. 131–136; Appellate Body Report, Australia — Salmon, supra, footnote 119, paras. 262–267; Appellate Body Report, Korea — Alcoholic Beverages, supra, footnote 139, paras. 159–165; Appellate Body Report, Japan — Measures Affecting Agricultural Products, WT/DS76/AB/R, adopted 19 March 1999, paras. 140–142; Appellate Body Report, India — Quantitative Restrictions on Agricultural, Textile and Industrial Products, WT/DS90/AB/R, adopted 22 September 1999, paras. 149 and 151; and, Appellate Body Report, Korea — Dairy Safeguard, supra, footnote 29, paras. 137 and 138. back to text
507. Appellate Body Report on US — Wheat Gluten, paras. 150–151. See also Appellate Body Report on EC — Sardines, para. 299. back to text
508. (footnote original) Kazazi, Mojtaba, Burden of Proof and Related Issues — A Study of Evidence Before International Tribunals, Malanczuk, Peter, ed., Kluwer Law International, The Hague, pp. 180, 184. back to text
509. (footnote original) Korea — Taxes on Alcoholic Beverages, Panel Report, WT/DS75/R WT/DS84/R, adopted 17 February 1999, para. 10.23 (issue not raised on appeal). This is unlike the situation before many international tribunals, which often refuse to admit evidence obtained during settlement negotiations between the parties to a dispute. The circumstances of such settlement negotiations are clearly different from WTO dispute settlement consultations, which are, as the Appellate Body has noted, part of the means by which facts are clarified before a panel proceeding. back to text
510. Panel Report on EC — Bed Linen, paras. 6.32–6.35. back to text
511. (footnote original) Appellate Body Report, EC — Hormones, para. 133. back to text
512. (footnote original) Appellate Body Report, US — Wheat Gluten, paras. 161–162. back to text
513. (footnote original) Appellate Body Report, EC — Hormones, para. 135. back to text
514. (footnote original) Appellate Body Report, US — Wheat Gluten, para. 151. back to text
515. Appellate Body Report on US — Carbon Steel, para. 142. back to text
516. (footnote original) As we have stated, “[T]his is a grant of discretionary authority: a panel is not duty-bound to seek information in each and every case or to consult particular experts under this provision.” (Appellate Body Report, Argentina — Textiles and Apparel, para. 84.) back to text
517. Appellate Body Report on US — Carbon Steel, para. 153. back to text
518. Appellate Body Report on EC — Bed Linen (Article 21.5 — India), para. 177. back to text
519. Appellate Body Report on EC — Bed Linen (Article 21.5 — India), para. 181. back to text
520. Appellate Body Report on Japan — Apples, paras. 165–166. back to text
521. (footnote original) Appellate Body Report, EC — Asbestos, para. 161. See also, for example, Appellate Body Report, EC — Tube or Pipe Fittings, para. 125; Appellate Body Report, EC — Bed Linen (Article 21.5 — India), paras. 170, 177, and 181; Appellate Body Report, EC — Sardines, para. 299; Appellate Body Report, Korea — Alcoholic Beverages, paras. 161–162; Appellate Body Report, Japan — Agricultural Products II, paras. 141–142; Appellate Body Report, US — Wheat Gluten, para. 151; Appellate Body Report, Australia — Salmon, para. 266; and Appellate Body Report, Korea — Dairy, para. 138. back to text
522. (footnote original) Appellate Body Report, Australia — Salmon, para. 267. back to text
523. (footnote original) Appellate Body Report, EC — Asbestos, para. 161. back to text
524. (footnote original) Appellate Body Report, EC — Hormones, para. 133. back to text
525. (footnote original) Appellate Body Report, EC — Asbestos, para. 177, quoting Appellate Body Report, Korea — Alcoholic Beverages, para. 161. back to text
526. (footnote original) Appellate Body Report, EC — Asbestos, para. 159, quoting Appellate Body Report, US — Wheat Gluten, para. 151. back to text
527. (footnote original) Appellate Body Report, EC — Bed Linen (Article 21.5 — India), para. 170; Appellate Body Report, US — Carbon Steel, para. 142, quoting Appellate Body Report, US — Wheat Gluten, para. 151. back to text
528. Appellate Body Report on Japan — Apples, paras. 221–222. back to text
529. (footnote original) Supra, para. 181, quoting from Appellate Body Report, US — Carbon Steel, para. 142. back to text
530. (footnote original) Appellate Body Report, EC — Hormones, para. 135. The Appellate Body further observed that “The Panel cannot realistically refer to all statements made by the experts advising it and should be allowed a substantial margin of discretion as to which statements are useful to refer to explicitly.” (Appellate Body Report, EC — Hormones, para. 138.) back to text
531. (footnote original) Appellate Body Report, EC — Hormones, para. 133; Appellate Body Report, EC — Bed Linen (Article 21.5 — India), para. 177. back to text
532. Appellate Body Report on US — Wheat Exports and Grain Imports, para. 186. back to text
533. Appellate Body Report on EC — Hormones, paras. 132–133, 135 and 138. See also Appellate Body Report on Japan — Apples, para. 222. back to text
534. Appellate Body Report on Australia — Salmon, para. 267. back to text
535. Appellate Body Report on Korea — Alcoholic Beverages, para. 164. back to text
536. Appellate Body Report on Japan — Agricultural Products II, paras. 141–142. back to text
537. (footnote original) Appellate Body Report, Korea — Alcoholic Beverages, para. 164. back to text
538. Appellate Body Report on EC — Bed Linen (Article 21.5 — India), para. 177. back to text
539. (footnote original) [1926], PCIJ Rep., Series A, No. 7, p. 19. back to text
540. Appellate Body Report on India — Patents (US), paras. 65–67. back to text
541. (footnote original) In this respect, the International Court of Justice (“ICJ”), referring to an earlier judgment by the Permanent Court of International Justice (“PCIJ”) noted the following: “Where the determination of a question of municipal law is essential to the Court’s decision in a case, the Court will have to weigh the jurisprudence of the municipal courts, and ‘If this is uncertain or divided, it will rest with the Court to select the interpretation which it considers most in conformity with the law’ (Brazilian Loans, PCIJ, Series A, Nos. 20/21, p. 124)” (Elettronica Sicula S.p.A. (ELSI), Judgment, ICJ Reports 1989, p. 47, para. 62). back to text
542. Panel Report on US — Section 301 Trade Acts, paras. 7.18 and 7.20. See also Panel Report on US — Steel Plate, para. 90. back to text
543. (footnote original) Article 21.5 Panel Report, para. 6.16. back to text
544. (footnote original) Ibid. back to text
545. Appellate Body Report on Brazil — Aircraft (Article 21.5 — Canada), para. 46. back to text
546. Panel Report on US — 1916 Act (EC), para. 6.46. back to text
547. (footnote original) This is evidenced by the examples used by the Appellate Body (ibid., para. 67):
     “Previous GATT/WTO panels also have conducted a detailed examination of the domestic law of a Member in assessing the conformity of that domestic law with the relevant GATT/ WTO obligations. For example, in United States — Section 337 of the Tariff Act of 1930 [footnote omitted], the panel conducted a detailed examination of the relevant United States’ legislation and practice, including the remedies available under Section 337 as well as the difference between patent-based Section 337 proceedings and federal district court proceedings, in order to determine whether Section 337 was inconsistent with Article III:4 of the GATT 1947.” back to text
548. Panel Report on US — 1916 Act (EC), para. 6.51. back to text
549. (footnote original) ICJ, Case Concerning Elettronica Sicula S.p.A. (ELSI) (United States of America v. Italy), ICJ Reports 1989, p. 15, at p.47, para. 62. back to text
550. (footnote original) We do not consider that this would be engaging in interpreting US law, with the risks highlighted by the United States in its submissions. Our approach is in line with the reasoning of the PCIJ in the Brazilian Loans case, which, even though it had to apply domestic law, was prudent in its approach to the domestic case law:
     “It follows that the Court must pay the utmost regard to the decisions of the municipal courts of a country, for it is with the aid of their jurisprudence that it will be enabled to decide what are the rules which, in actual fact, are applied in the country the law of which is recognized as applicable in a given case.” (PCIJ, Series A, Nos. 20/21, p. 124) back to text
551. Panel Report on US — 1916 Act (EC), para. 6.53. back to text
552. (footnote original) ICJ, Nuclear Tests case, judgements of 20 December 1974, ICJ Reports 1974, p. 253 (Australia v. France), p. 457 (New Zealand v. France). See, e.g., Patrick Daillier & Alain Pellet, Droit International Public, 5th edition (1994), pp. 354–358. back to text
553. (footnote original) See also Article 7 of the Vienna Convention. back to text
554. Panel Report on US — 1916 Act (EC), para. 6.63. back to text
555. Appellate Body Report on US — Shrimp (Article 21.5 — Malaysia), para. 95. back to text
556. (footnote original) Appellate Body Report, India — Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998, DSR 1998: I, 9, paras. 66 and 67. back to text
557. Appellate Body Report on US — 1916 Act (EC), para. 200. back to text
558. Appellate Body Report on US — Section 211 Appropriations Act, paras. 105–106. back to text
559. (footnote original) In US — FSC, for example, a consideration of the meaning of United States tax law was required to determine whether the taxation measure at issue in those proceedings represented the foregoing of “revenue that is otherwise due”, as contemplated by Article 1.1(a)(1)(ii) of the SCM Agreement. (Appellate Body Report, US — FSC, para. 90.) We recall as well that, in India — Patents (US), the Appellate Body observed that panels must often complete a detailed examination of the relevant aspects of a Member’s domestic law to determine whether a situation regulated by the covered agreements exists. (Appellate Body Report, India — Patents (US), paras. 65–71.) See also Appellate Body Report, US — Section 211 Appropriations Act, paras. 103–106. back to text
560. Appellate Body Report on US — Softwood Lumber IV, para. 56. back to text
561. Appellate Body Report on Canada — Aircraft, paras. 202–203 and 205. With respect to the drawing of adverse inferences under the SCM Agreement, see also Annex V in the Chapter on SCM Agreement. back to text
562. (footnote original) Appellate Body Report on Canada — Aircraft, paras. 204 and 205. back to text
563. (footnote original) Appellate Body Report on Canada — Aircraft, paras. 204 and 205. back to text
564. Appellate Body Report on US — Wheat Gluten, paras. 173–176. back to text
565. (footnote original) As we have observed in two previous Appellate Body Reports, we believe that detailed, standard working procedures for panels would help to ensure due process and fairness in panel proceedings. See European Communities — Regime for the Importation, Sale and Distribution of Bananas, adopted 25 September 1997, WT/DS27/AB/R, para. 144; India — Patent Protection for Pharmaceutical and Agricultural Chemical Products, adopted 16 January 1998, WT/DS50/AB/R, para. 95. back to text
566. Appellate Body Report on Argentina — Textiles and Apparel, paras. 79–81. back to text
567. Panel Report on Korea — Alcoholic Beverages, paras. 5.24–5.25. back to text
568. (footnote original) At the time of the second substantive meeting, we asked the parties a series of questions that could have led to the submission of new evidence or arguments. In order to ensure due process, we allowed each party 18 days (i.e., equivalent to the time between the deadline for the respondent’s first submission and the deadline for rebuttal submissions) in which to comment on any new evidence or arguments adduced by the other party in response to our questions. back to text
569. (footnote original) Appellate Body Report on EC — Bananas III, para. 145. back to text
570. Panel Report on Canada — Aircraft, paras. 9.73–9.74. back to text
571. Panel Report on US — Offset Act (Byrd Amendment), para. 7.2. back to text
572. (footnote original) Article 15.1 of the DSU provides:
     Following the consideration of rebuttal submissions and oral arguments, the panel shall issue the descriptive (factual and argument) sections of its draft report to the parties to the dispute. Within a period of time set by the panel, the parties shall submit their comments in writing. back to text
573. (footnote original) Article 15.2 of the DSU provides:
     Following the expiration of the set period of time for receipt of comments from the parties to the dispute, the panel shall issue an interim report to the parties, including both the descriptive sections and the panel’s findings and conclusions. Within a period of time set by the panel, a party may submit a written request for the panel to review precise aspects of the interim report prior to circulation of the final report to the Members. At the request of a party, the panel shall hold a further meeting with the parties on the issues identified in the written comments. If no comments are received from any party within the comment period, the interim report shall be considered the final panel report and circulated promptly to the Members. (emphasis added) back to text
574. Appellate Body Report on EC — Sardines, para. 301. back to text
575. Panel Report on Japan — Apples, paras. 8.49 and 8.56. back to text
576. For “preliminary rulings”, see Section XXXVI.C. back to text
577. Appellate Body Report on US — Steel Safeguards, para. 5.3. back to text
578. Panel Report on Canada — Aircraft, para. 9.15. back to text
579. Appellate Body Report on Argentina — Footwear (EC), paras. 118 and 121. back to text
580. (footnote original) We recall that in US — Underwear, paras. 7.53–54, a case dealing with a safeguard action under the ATC, the panel reached the conclusions that the standard of review was that established in Article 11 of the DSU and commented on the implications of such standard of review for safeguard measures. See also the Panel Report in Brazil — Countervailing Duty Proceeding Concerning Imports of Milk Powder from the European Community, SCM/179: “It was incumbent upon the investigating authorities to provide a reasoned opinion explaining how such facts and arguments had led to their finding”, para. 286. back to text
581. Panel Report on Korea — Dairy, para. 7.30. back to text
582. (footnote original) Clearly, a claim under Article 4.2(a) might not relate at the same time to both aspects of the review envisaged here, but only to one of these aspects. For instance, the claim may be that, although the competent authorities evaluated all relevant factors, their explanation is either not reasoned or not adequate. back to text
583. (footnote original) Appellate Body Report, United States — Wheat Gluten Safeguard, supra, footnote 19, para. 71. back to text
584. Appellate Body Report on US — Lamb, paras. 103–104. See also Appellate Body Report on Steel Safeguards, para. 279. back to text
585. (footnote original) We note, however, that Article 17.6 of the Anti-Dumping Agreement sets forth a special standard of review for claims under that Agreement. back to text
586. Appellate Body Report on US — Lamb, paras. 105–107. See also Appellate Body Report on US — Steel Safeguards, para. 302. back to text
587. Appellate Body Report on US — Wheat Gluten, para. 55. back to text
588. Appellate Body Report on US — Wheat Gluten, para. 55. See also Appellate Body Report on US — Cotton Yarn, para. 73. back to text
589. Appellate Body Report on US — Wheat Gluten, paras. 161–162. The Appellate Body found as follows:
     “Although the Panel’s conclusion on this issue was that the USITC Report contained an adequate explanation of the allocation methodologies, the Panel’s reasoning discloses that the Panel clearly did not consider this to be the case. The Panel did not feel able to rely solely or, even, principally, on the explanation actually provided in the USITC Report and, instead, relied heavily on supplementary information provided by the United States in response to the Panel’s questions. Indeed, the most important part of the Panel’s reasoning on this issue is based on those ‘clarifications’. We consider that the Panel’s conclusion is at odds with its treatment and description of the evidence supporting that conclusion. We do not see how the Panel could conclude that the USITC Report did provide an adequate explanation of the allocation methodologies, when it is clear that the Panel itself saw such deficiencies in that Report that it placed extensive reliance on ‘clarifications’ that were not contained in the USITC Report.
     By reaching a conclusion regarding the USITC Report which relied so heavily on supplementary information provided by the United States during the Panel proceedings — information not contained in the USITC Report — the Panel applied a standard of review which falls short of what is required by Article 11 of the DSU.” back to text
590. Appellate Body Report, Argentina — Footwear (EC), para. 121. back to text
591. United States’ appellant’s submission, para. 73. (original emphasis) back to text
592. Appellate Body Report on US — Steel Safeguards, paras. 298–299 and 303. back to text
593. (footnote original) See GATT Panel Reports on Korea — Anti-Dumping Duties on Imports of Polyacetal Resins from the United States, BISD 40S/205; United States — Imposition of Anti-Dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway; and United States — Initiation of a Countervailing Duty Investigation into Softwood Lumber Products from Canada, BISD 34S/194. back to text
594. Panel Report on US — Underwear, paras. 7.10 and 7.12–7.13. back to text
595. Panel Report on US — Wool Shirts and Blouses, paras. 7.16–7.17. back to text
596. Panel Report on US — Wool Shirts and Blouses, para. 7.18. back to text
597. The Appellate Body, in reference to its previous decisions regarding the standard of review in cases under the Agreement on Safeguards (see paras. 381–385 above), indicated that “in describing the duties of competent authorities, we simultaneously define the duties of panels in reviewing the investigations and determinations carried out by competent authorities”. Appellate Body Report on US — Cotton Yarn, para. 73. back to text
598. (footnote original) We do not rule upon other forms of evidence, such as an expert opinion submitted to a panel that is based on data which existed when the Member made its determination. (Appellate Body Report, United States — Lamb Safeguard, supra, […], paras. 114–116) … back to text
599. Appellate Body Report on US — Cotton Yarn, paras. 76 and 78. As regards the scope of the review under Article 6 of the Agreement on Textiles and Clothing, see Section VII.B(c) of the Chapter on the Agreement on Textiles and Clothing. back to text
600. Appellate Body Report on US — Lead and Bismuth II, para. 48. back to text
601. Appellate Body Report on US — Lead and Bismuth II, paras. 49–50. back to text
602. (footnote original) Appellate Body Report, United States — Imposition of Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom (“US — Lead and Bismuth II“), WT/DS138/AB/R, adopted 7 June 2000, DSR 2000:V, 2601 at para. 49. back to text
603. Panel Report on US — Softwood Lumber VI, paras. 7.17–7.18. back to text
604. (footnote original) This was recalled by the Appellate Body in its report on US — Certain EC Products, where it observed that “there is an obvious inconsistency between the finding of the Panel that ‘the 3 March Measure is no longer in existence’ and the subsequent recommendation of the Panel that the DSB request that the United States bring its measure into conformity with its WTO obligations. The Panel erred in recommending that the DSB request the United States to bring into conformity with its WTO obligations a measure which the Panel has found no longer exists” (US — Certain EC Products, Report of the Appellate Body, WT/DS165/AB/R, adopted on 10 January 2001, para. 81). back to text
605. The Appellate Body in US — Certain EC Products confirmed this line of thought at paras. 81–82. back to text
606. Panel Report on India — Autos, paras. 8.25–8.30. back to text
607. Appellate Body Report on EC — Bananas III, para. 167. back to text