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CONFLICT OF JURISDICTIONS OF WTO DISPUTE SETTLEMENT BODY AND ADJUDICATIVE PROCEDURES UNDER FREE TRADE AGREEMENTS
 
22.04.2015 09:36
Автор: Melnyk Ivanna Mariia, Student at University of Barcelona, LL.M International Economic Law and Policy
[Секція 2. Конституційне право. Конституційне процесуальне право. Міжнародне право]

The relationship between the dispute settlement mechanism of the World Trade Organization and that of regional trade agreements demonstrates the difficulties surrounding the issues of overlaps and conflict of jurisdiction and of hierarchy of norms of public international law. [1] In this respect, the central concept is always jurisdiction. Jurisdiction is often defined as authority to legislate or adjudicate matters. It is a well-established rule, that international adjudicatory bodies have inherent competence to decide whether they have jurisdiction over particular case or not, as well as the right to determine its scope.

Today large number of RTAs provide for compulsory jurisdiction mandating parties to refer their disputes to institutions established by the constituting treaty. Others provide a special forum shopping or forum choice clauses. [2] In its turn, Dispute Settlement Body of WTO has exclusive jurisdiction to decide over provisions of covered agreements. 

The main problem is that today many RTAs include into substantive rights and obligations, obligations that are parallel to those arising from Marrakesh Agreement Establishing the World Trade Organization. However, they often provide for separate dispute settlement, which makes it possible for states to resort to different, but parallel mechanism. [3] It is clear, that such situation in most cases shall be avoided, especially when two decisions of these mechanisms have different outcomes. 

Overlaps of the jurisdiction can be defined as situations where the same dispute or related aspects of the same dispute could be brought to two distinct jurisdictions. When the dispute settlement of two agreements are triggered in parallel or in sequence, there are problem on two levels: first, the two tribunals may claim final jurisdiction (supremacy) over the matter and, second, they may rich different, or opposite results. [4] Consequently, in such case, none of the decisions would be enforced. In practice, only winning party to the case is ready to fully recognize the decision. In addition, such conflict leads to fragmentation of system of public international law. Furthermore, using two different forums for solving the issue is very time-consuming, cost consuming for the parties and is delaying the outcome of the case. 

It is clear enough that among these spheres should be established a boundary or a hierarchy. Now, it is only a question of several years, when some provisions of hierarchy of jurisdiction will appear in WTO system or will be compulsorily included in each RTA.

At current stage of development of WTO law, the relationship between norms of RTAs and WTO is already partly mentioned in agreements of multilateral trading system. It is commonly accepted, that WTO law is indispensable part of public international law.[5] The DSU contains no clear prohibition on application of non-WTO law, in particular, general international law. Furthermore, it is well-established practice to apply international law on treaty interpretation by virtue of DSU Article 3.2. and rules of general international law, in order to fill legal gaps in WTO law, especially on procedural matters, such as questions of burden of proof [6], good faith [7],  due process [8], standing [9] etc.

The situation becomes even more complicated because GATT Art. XXIV and Art.V of the GATS authorize members to form RTAS. However, they do not determine how the conflict of jurisdiction shall be solved in this case. Consequently, WTO Members may be subject to jurisdiction of adjudicating bodies established under such treaties, therefore WTO Members can easily justified the use of dispute settlement mechanism under RTAs, in order to enforce provisions of such treaties. [10] 

Furthermore, the recognition of adjudicative bodies of RTAs was recognised in several WTO cases. Panel in Mexico-Soft Drinks indicated willingness to apply respective NAFTA choice of forum provision had it been pleaded by parties. [11] Later, the Panel in Argentina-Poultry faced with almost identical issue of overlaps of jurisdictions between MERCOSUR adjudicatory body and WTO dispute settlement mechanism. [12] 

The issue of conflict of jurisdictions is a procedural matter, which is not directly addressed by the DSU. Party wishing to institute parallel proceedings under different adjudicatory bodies can be considered as committing to abuse of right. [13] Prohibition of abuse of right is deriving from principle of good of faith and is qualified as general principle of international law. [14] As Appellate Body noted in US-Shrimp this principle "prohibits the abusive exercise of a state's rights and enjoins that whenever the assertion of a right "impinges on the field covered by [a] treaty obligation, it must be exercised bona fide". [15] 

The first effort to draw line between jurisdictions was made in Article 23 of the DSU. Article 23.1 of the DSU lays down the fundamental obligation of WTO Members to have recourse to the rules and procedures of the DSU when seeking redress of a violation of the covered agreements. Article 23 restricts WTO Members’ conduct in two respects: first, Article 23.1 establishes the WTO dispute settlement system as the exclusive forum for the resolution of such disputes and requires adherence to the rules of the DSU; secondly, Article 23.2 prohibits certain unilateral action by a WTO Member. [16] Thus, Article 23 of the DSU is a special treaty clause that seems to prevent other jurisdictions from adjudicating WTO matters. Although, Article 23 cannot prohibit tribunals, established by other treaties, to exercise jurisdiction over the claims arising from their treaty provisions, that runs parallel to, or overlap with the WTO provisions. [17] 

Finally, international law dealing with issue of overlaps of jurisdictions has elaborated legal tools that might be of relevance to the present case. Among these tools is the principle of res judicata.  Existence of res judicata is conditioned by two reasons: firstly, for the stability of legal relations it is necessary to ensure that litigation comes to an end; secondly, it represents interest of each party to dispute that an issue which has already been adjudicated in favour of that party be not argued again. [18] The Panel in India — Autos recognized that principle of res judicata is directly applicable within WTO dispute settlement mechanism. [19]  According to the Panel in India — Autos in order to establish existence of res judicata it is necessary to demonstrate that disputed measures and legal claims are the same. [20] Possible minor divergences in context of treaties shall not play a decisive role, as was demonstrated in Southern Bluefin Tuna case. [21] 

Although principle of res judicata applies rather to the rendered judgments than to overlapping proceedings, it is highly likely that a situation may emerge where tribunals render parallel conflicting judgments on almost same issues. In such situation, enforcement of any of these decisions would be practically impossible since giving effect to one award may lead to simultaneous violation of the other.

Thus, today there are three possible ways out of conflict and overlaps of jurisdiction: forum shopping or a forum choice clauses and principle res judicata. Moreover, there is still a room for implementations of new norm in multilateral trading system to put strict boundaries between two separate jurisdictions and avoid future conflicts. 




1. J.P. Trachtman, “Institutional leakages: Transcendenting Trade and…” 2002, AJIL, p.77

2. K. Kwak and G. Marceau, “Overlaps of Conflict of Jurisdiction between World Trade Organization and Regional Trade Agreements”, Oxford University Press, New York, 2006, p. 476

3. K. Kwak and G. Marceau, “Overlaps of Conflict of Jurisdiction between World Trade Organization and Regional Trade Agreements”, Oxford University Press, New York, 2006, p. 465-482

4. K. Kwak and G. Marceau, “Overlaps of Conflict of Jurisdiction between World Trade Organization and Regional Trade Agreements”, Oxford University Press, New York, 2006, p. 465-482

5. Joost Pauwelyn, “The application of non-WTO rules of international law in WTO dispute settlement”, p.1406

6. Appelate Body Report, United States - Measure affecting imports of women wool shirts and blouses from india, , WT/DS33/AB/R  25 April 1997, pp.12-17, also  EC Measures concerning meat and meat products  (hormones), Report of the Appellate Body, WT/DS26/AB/R , WT/DS48/AB/R,16 January 1998, paras.103-109

7. United States – Anti-Dumping measures on certain hot-rolled steel products from Japan, WT/DS184/AB/R 24 July 2001

8. European Communities - Customs classification of certain computer equipment, Report of the Appellate Body, WT/DS62/AB/R 5 June 1998, also EC Measures concerning meat and meat products  (hormones), Report of the Appellate Body, WT/DS26/AB/R , WT/DS48/AB/R,16 January 1998, para. 133; 138

9. Appelate Body Report,  Report in EC-Bananas III, para. 133.

10. K. Kwak and G. Marceau, “Overlaps of Conflict of Jurisdiction between World Trade Organization and Regional Trade Agreements”, Oxford University Press, New York, 2006, p. 477

11. Mexico – Tax measures on soft drinks and other beverages, Report of the Appellate Body, WT/DS308/AB/R 6 March 2006, para. 54

12. Panel Report,  Argentina – Definitive anti-dumping duties  on poultry from Brazil, WT/DS241/R 22 April 2003, para 7.38

13. Overlaps and conflicts of jurisdiction between the WTO and RTAs, Gabrielle Marceau and  Kyung Kwak, Conference on regional trade agreements world trade organization, 26 April 2002, para. 24; Regional Trade Agreements and the WTO Legal System, Lorand Bartels and Federico Ortino, 2006, p.478-479 ;also V. Lowe, Overlapping Jurisdictions in International Tribunals’ (2000) 20 Aust YIL 1, at 13;

14. US-Shrimp, WT/DS58/AB/R, adopted 6 November 1998, at para. 158, see also Ian Brownlie, Principles of Public International Law (5th ed.), Oxford, 1998, pp. 447–448

15. United States - Import prohibition of certain shrimp and shrimp products, para.158

16. Appellate Body Reports, US/Canada — Continued Suspension, paras. 371-372

17. K. Kwak and G. Marceau, “Overlaps of Conflict of Jurisdiction between World Trade Organization and Regional Trade Agreements”, Oxford University Press, New York, 2006, p. 476

18. Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v. Serbia and Montenegro), Summary of the Judgment of 26 February 2007 para. 117

19. India — Measures Affecting the Automotive Sector, WT/DS146/RWT/DS175/R, 21 December 2001, paras 7.53; 7.55;7.56;7.57;7.80;7.103

20. India — Measures Affecting the Automotive Sector, WT/DS146/RWT/DS175/R, 21 December 2001, para 7.80

21. Southern Bluefin Tuna Case (Australia and New Zealand v Japan) (Award on Jurisdiction and Admissibility) (2000) 39 ILM 1359, para. 54



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