Improving the Legitimacy of Investor – State Dispute Settlement System: Can the WTO DSU System Act as a Model? (original) (raw)
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Social Science Research Network, 2019
I. Introduction Recent negotiations of trade and investment treaties between and among Canada, the European Union (EU), the United States (U.S.), and states in the Asia Pacific region have tested investor-state dispute settlement (ISDS). 1 Those opposed to ISDS argue that it provides investors with the right to challenge, and therefore potentially impede, domestic regulations implemented for legitimate public policy concerns, such as protection of the environment or public health. Others question whether ISDS contributes to, or is governed by, the rule of law. This latter concern is premised on allegations that cases are heard in confidential fora by arbitrators who are not bound by any rules of stare decisis, which together with the above-mentioned ideological stance leads opponents to question the very legitimacy of the system. 2 Certainly not all agree with each such claims. In response, proponents argue that ISDS provides a fundamental mechanism through which the rule of international law is vouchsafed, by holding States responsible for violating good governance obligations they have
The Effectiveness and Guiding principles of the Dispute Resolution System within the WTO
The Dispute Settlement Understanding (DSU) -annex II of all total 6 annexes of WTO establishment agreement, done at Marrakesh 15 th April 1994, was one of the outcomes of the Uruguay Round negotiations, adopted by WTO as its dispute settlement system. DSU can be considered as a sui generis 1 system that stands alone within the WTO system. 2 It serves as government to government Dispute resolution procedure in which only WTO members themselves may invoke WTO right and enforce WTO obligations vis-à-vis 3 other member, since such right and obligations are only applicable as between the members themselves. 4
European Investment Law and Arbitration Review
Author's version. Forthcoming in European Investment Law and Arbitration Review (2016) 1(1) xxx-xxx mechanism and the setting aside procedure for non-ICSID awards by national courts. These mechanisms-while not perfect-provide useful corrective tools. 3. The analysis of the WTO dispute settlement mechanism illustrates that caution should be exercised in simply transplanting it to investor-state disputes. The reason is that WTO law is structurally different from investment law, serves different purposes and has different users. 4. Generally, it can be concluded that the ICS clearly breaks with the current party-appointed, ad hoc ISDS common to most BITs and FTAs. The main result is that it deprives claimants of any role in the appointment of the judges, while giving the respondent States the exclusive authority to do so, albeit in advance of a particular case. The appointment of the judges by the States parties to the treaties raises several problems, which the ICS proposal does not sufficiently address. 5. The pre-selection of the judges of the Tribunal of First Instance (TFI) and Appellate Tribunal (AT) by the contracting parties carries the inherent risk of selecting 'pro-State' individuals. Apart from this danger, it remains doubtful whether a sufficient number of appropriately qualified individuals with the necessary expertise can be found. This is particularly true since many professionals currently working in arbitration may face the same accusations of partiality that have fuelled the reform. The pool of TFI and AT judges would seem to be limited to academics, (former) judges and (former) governmental officials. That might not be sufficient to guarantee the practical experience and expertise needed and/or independence from States. 6. The standard of impartiality and independence of the judges is highly subjective, and their independence on a practical level is not assured by the proposed text. Also, the system of challenging TFI judges and AT members in the TTIP proposal can be further criticised, for envisaging that the presiding judge will decide the challenge against one of his own colleagues on the bench, instead of leaving the decision to an independent authority. The CETA modelwhich entrusts the President of the International Court of Justice (ICJ) with the task-seems more appropriate. Author's version. Forthcoming in European Investment Law and Arbitration Review (2016) 1(1) xxx-xxx 4 consistent rejection of any direct effect of the reports of WTO panels and Appellate Body (AB)-even though approved by the DSB and after the implementation deadline has lapsedraises doubts as to the legal effects of ICS decisions within the EU legal order. 10. In sum, the suggested creation of a two-tier (semi)permanent court system would give the Contracting Parties a significantly stronger role in the whole dispute settlement processpotentially at the expense of the investor/claimant, and with dubious effects on the authority of the ICS. In particular, the appeal possibility carries the risk of burdening small and medium investors by increasing the potential length of the proceedings and costs. 11. While the US position towards the ICS proposal remains unclear for the time being, it also remains unclear how the ICS proposal could be multilateralized. Indeed, the perceived shortcomings of the current ISDS system are based on the fact that more than 3,000 BITs/FTAs are in place, which have been concluded by practically all countries in the world. The ICS-proposed for TTIP and included in CETA and EU-Vietnam-does little to change that. A possible way forward could be an opt-in system under a separate instrument, similar to the incremental application of the UNCITRAL Transparency Rules of. 12. As the TTIP negotiations between the US and the EU are now focusing on the ICS proposal, this is a perfect moment to further improve the proposal by addressing the matters identified in this analysis. 13. Finally, the US and the EU should also consider whether it would not be more preferable to modify and improve existing systems, such as turning the ICSID annulment procedure into a full appeal mechanism.
A Survey of the Literature on the WTO Dispute Settlement System
Cepr Discussion Papers, 2006
cannot be initiated ex officio; there is no authority assigned to a supra-national entity (a watchdog) to initiate complaints against WTO Members; and disputes are launched at the initiative of a WTO Member. Adjudication in the WTO system has two phases: one in principle bilateral, and one multilateral. The bilateral phase consists of consultations between the complainant and the defendant. Few disputes are of a purely bilateral nature however, and even if this is the case, other WTO Members might have an interest in the interpretation of the rules pertinent to this particular transaction since, arguably, such interpretation might be influential in interpreting their own commitments in the future. To this effect, when requesting consultations, the complainant has to notify the WTO as to the subject-matter of the dispute. Other WTO Members wishing to join as co-complainants can do so, provided that the defendant accepts their request (Art. 4.11 DSU). The subject-matter of a particular dispute can range from disagreement over a particular transaction and its consistency with the relevant WTO law (e.g., A believes that B imposed antidumping duties without having demonstrated any injury resulting from dumped imports), to disagreements over the consistency of a legislation with the WTO rules (e.g., A believes that B, by enacting legislation which precludes its investigating authorities from conducting injury-analysis in the context of an antidumping investigation, is violating its obligations under the WTO). The standard of review however, is more demanding in the latter case. Assuming that the parties reach no solution during the consultations-stage, the complainant can request the establishment of a panel to adjudicate the dispute. Such a request leads to the second, multilateral phase, consisting of two parts: the first is the panel procedures, the panel being the analog to a first instance court; the second part is the procedure before the Appellate Body, the last instance court. Whereas the threeperson panels are ad hoc adjudicating bodies, the composition of which depends, in
Resolving or Exacerbating Disputes: The WTO's New Dispute System
International Affairs, Vol. 79, No. 4, 2003
As the WTO's dispute settlement system mires in controversy, this article–written in 2003–reminds us how we got here: In 1995 the dispute resolution system of the WTO was transformed to make it more effective in enforcing WTO rules. Ironically, the improvements in the dispute resolution system have contributed directly to greater conflict in the WTO. How can improving a system to resolve disputes actually exacerbate conflict? Alter identifies a number of conflict enhancing consequences of the change in the dispute resolution mechanism. Conflict is not per se bad. Indeed if the outcome of this conflict is that governments must better justify participation in the WTO, then conflict is good. But there is a danger that international courts are more likely than most courts to generate conflict, while the international legal and political system is less adept at weathering controversy and addressing valid public concerns. Left unaddressed, conflicts generated by international legal bodies can erode support for the international legal system and multilateral strategies in general. Alter puts forth solutions designed to build into internationally legalised processes political safety valves, greater political sensitivity, and improved accountability, as well as legitimacy enhancing devices. Demonstrated here in the case of the WTO, Alter's analysis applies to international legal systems generally.
The primacy of the WTO dispute settlement system
2015
The world trading system has seen a proliferation of Regional Trade Agreements (RTAs) since the early 1990s. Many of the RTAs negotiated in the recent times are equipped with a sophisticated dispute settlement mechanism (DSMs) clause. There is a belief that these RTA-DSMs have the potential of interfering with the integrity of the WTO-DSM. This short note comments on this belief. For this purpose, my comments will proceed to examine: 1) the nature of the jurisdiction of the WTO-DSM; 2) the issue of ‘choice of appropriate forum’ for resolving a trade dispute given the potential overlap and conflict of jurisdictions between the RTA-DSMs and the WTO-DSM; 3) the legal value of the RTADSMs decisions in the WTO-DSM; 4) principles of private international law which could be used to deal with potential overlap and conflict of jurisdictions between the RTA-DSMs and the WTO-DSM ; and 5) the provisions within the WTO which could be used to coordinate RTA’s and WTO’s DSMs. This note suggests th...