Divisions: Appellate Body of the World Trade Organization (WTO)
Alan Yanovich, Riikka Kuoppamäki
- Precedent — Appeals — Election of judges — Consistent interpretation — International trade — International courts and tribunals, procedure
Published under the direction of Hélène Ruiz Fabri, with the support of the Department of International Law and Dispute Resolution, under the auspices of the Max Planck Institute Luxembourg for Procedural Law.
A. The Composition of the Appellate Body and its Divisions
1 The Appellate Body of the World Trade Organization (‘Appellate Body’) is a standing body established to hear appeals from the decisions of ad hoc panels, which issue first instance judgments—referred to as ‘reports’—in international trade disputes between World Trade Organization (WTO) Member States (Appellate Body: Dispute settlement of the World Trade Organization (WTO); World Trade Organization, Dispute Settlement). According to Article 17.1 Understanding on Rules and Procedures Governing the Settlement of Disputes (‘DSU’), the Appellate Body ‘shall be composed of seven persons, three of whom shall serve on any one case … in rotation’. The three persons serving on each appeal are collectively referred to as a ‘Division’.
2 The DSU’s provisions on the conduct of appeals are supplemented by the Working Procedures for Appellate Review 2010 (‘Working Procedures’), which are drawn up by the Appellate Body in consultation with the Chairman of the Dispute Settlement Body (‘DSB’), the Director-General (Art 17.9 DSU), and WTO Members (Working Procedures for Appellate Review: World Trade Organization (WTO); Additional Procedures for Consultations between the Chairperson of the DSB and WTO Members in relation to Amendments to the Working Procedures for Appellate Review, Decision Adopted by the Dispute Settlement Body on 19 December 2002). The Preparatory Committee for the WTO, which made a series of recommendations concerning the establishment of the Appellate Body, recommended that ‘[m]atters such as guaranteeing the rotation required by the DSU and facilitating communications, if necessary, within the Appellate Body should form part of the working procedures’ (Establishment of the Appellate Body, Recommendations by the Preparatory Committee for the WTO Approved by the Dispute Settlement Body on 10 February 1995, para 14; Donaldson and Yanovich, 2006, 389). The Working Procedures set forth rules on, inter alia, the composition of the Divisions, how decisions are to be taken when a Division is deciding an issue on appeal, and the roles to be played in a given case by members assigned to the Division, on the one hand, and members that have not been assigned to that Division, on the other hand.
3 According to Rule 6 (1) Working Procedures, the three Appellate Body members that constitute the Division for each appeal are selected on the basis of rotation, taking into account the principles of random selection, unpredictability, and the opportunity for all members to serve regardless of their national origin (Rule 6 (2) Working Procedures; International Courts and Tribunals, Chambers). The nationality of the Appellate Body members is irrelevant for the composition of the Division hearing the appeal (Ehlermann, 2003, 477). This means that, unlike panelists, Appellate Body members may sit in Divisions hearing appeals in which their country of nationality is a participant. However, it is important to recall that, unlike panel members, Appellate Body members must be unaffiliated with any government before taking up their post (Art 17.3 DSU).
4 There is always the same number of active Divisions as there are appeals before the Appellate Body. Thus, one Appellate Body member may, and often will, serve on more than one Division at the same time. In the early years of the Appellate Body, a confidential mathematical formula was established to ensure that, in each sequence of a certain number of appeals, each member has an equal opportunity to serve. The formula determines which appeals each member will hear by the order in which the appeals are filed (Steger, 2015, 456). This determination is done in closed meetings with only the Appellate Body members present. The composition of future Divisions is not disclosed to the Appellate Body Secretariat. When an appeal is filed, the Director of the Appellate Body Secretariat asks the members serving on that appeal to make themselves known.
5 The system for the composition of Divisions is meant to be unpredictable, so that the Divisions for each appeal cannot be ascertained or deduced by the parties to the dispute before the proceedings begin. Once a Division is composed, the members of that Division usually apply an informal rotation rule to select the presiding member, who is charged with coordinating the overall conduct of the appeal, chairing the oral hearing and internal meetings related to that appeal, and coordinating the drafting of the Appellate Body report (Rule 7 Working Procedures).
6 The composition of a Division—and a working schedule drawn up by the Division for the conduct of the appeal—will normally be communicated to the parties to an appeal once the submissions of all appellants, appellees, and third participants have been filed. The composition of the Division is not made public until the circulation of the Appellate Body report, which is signed by the three Division members (Lockhart and Voon, 2005, 481).
7 A member must serve on a Division for which he/she is selected, unless there is a conflict of interest, illness, or other serious reasons, or if the member has notified his or her intention to resign (Rule 6 (3) Working Procedures). The Rules of Conduct for the Understanding on Rules and Procedures Governing the Settlement of Disputes (‘Rules of Conduct’) apply to Appellate Body members, and a party may request the disqualification of a member serving in a division on ground of a material violation of these rules. The Appellate Body will determine if such violation has occurred and take appropriate action (Rules of Conduct, paras VIII (1) and VIII (16); Rules of Conduct for the Dispute Settlement Understanding: World Trade Organization (WTO)). This has not been an issue to date.
8 Appellate Body members may resign from their office by notifying their intentions in writing to the Chairman of the Appellate Body, who will then immediately inform the Chairman of the DSB, the Director-General, and the other members of the Appellate Body. The resignation will take effect 90 days after the notification has been made, unless the DSB, in consultation with the Appellate Body, decides otherwise (Rule 14 Working Procedures). Recently, an Appellate Body member who served in the Division in European Union – Anti-Dumping Measures on Imports of Certain Fatty Alcohols from Indonesia, 2017 (‘EU – Fatty Alcohols (Indonesia)’) resigned after signing the Appellate Body report, but before the adoption of the report by the DSB. During the report’s adoption by the DSB, the United States raised concerns under Article 17.1 DSU because one member of the Division had ceased to be an Appellate Body member prior to its adoption. Article 17.1 provides that ‘three [members] … shall serve on any one case’. The United States considered that the report was not an Appellate Body report, but instead referred to it as the ‘Division’s Report’.
9 If the appeal is still ongoing when a member of the Division resigns or becomes otherwise unable to serve in the Division, the member will be replaced by another member (Rule 13 Working Procedures). In United States – Imposition of Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom, 2000, one member of the Division passed away during the appeal proceedings, and was replaced by another member. In United States – Continued Dumping and Subsidy Offset Act of 2000, 2003, and in United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada, 2004, an Appellate Body member who was serving on both Divisions was replaced by another member due to serious personal reasons.
10 Rule 15 Working Procedures provides a possibility for members of a Division to continue working on an appeal after their term of office has ended if they were assigned to the Division before their term expired. The member would be deemed to continue to be a member of the Appellate Body for that appeal only, and would not be allowed to participate in any other functions of the Appellate Body, such as the exchange of views on other appeals. This extension for the purpose of completing the disposition of an appeal to which the departing member was assigned requires authorization by the Appellate Body and notification to the DSB. The extension of members’ terms is quite common as there is no mechanism to ensure that all of the appeals to which a member is assigned are completed prior to the end of his/her term of office. The issue is exacerbated by the increasing complexity and size of appeals. So far, Rule 15 has been applied ten times.
11 However, the United States has recently challenged the practice of extending, under Rule 15 Working Procedures, Appellate Body members’ terms of office for the purpose of completing appeals. The United States has drawn special attention to the Appellate Body report in EU – Fatty Alcohols (Indonesia), in which, at the time of the adoption of the report, the term of one of the Division members had ended, and as previously discussed above, another member had resigned. The report was however signed by these two members. The United States considered that the report was not an Appellate Body report, but referred to it as the ‘Division’s Report’. The United States further considered that it was necessary for the DSB to consider the implications of such circumstances. The United States has especially questioned the manner in which the continuation of a term is granted. In the view of the United States, it is the Members of the WTO, and not the Appellate Body, who should decide whether a member should continue serving on the Appellate Body after his or her term has expired.
12 In 2017, the United States blocked the appointment of new Appellate Body members and considered that the first priority was for the DSB to discuss and decide how to deal with reports being issued by persons who continued to serve under Rule 15 Working Procedures (Minutes of Meeting Held in the Centre William Rappard on 31 August 2017 [‘Minutes of Meeting 31 August 2017’], para 7.3). Since then, other Members have raised concern over the United States linking these procedural issues with the appointment of new Appellate Body members, and called on the United States to provide a specific solution to its concerns (Minutes of Meeting 31 August 2017; Minutes of Meeting Held in the Centre William Rappard on 29 September 2017).
B. The Work and Decision-Making of the Divisions
13 Appeals are decided solely by the three Appellate Body members on the Division assigned to that appeal (Rule 3 (1) Working Procedures). As noted above, each Division has a presiding member who is elected by the members of that Division (Rule 7 (1) Working Procedures).
14 As all appeals are decided by Divisions of three, and there are seven members in the Appellate Body, there is a risk of diverging interpretations by different Divisions. In order to reduce this risk and to contribute to the coherence and continuity of decision-making by the Appellate Body, a process of ‘exchange of views’ among all seven Appellate Body members was introduced as part of each appeal (Ehlermann, 2003, 477; Rule 4 Working Procedures; Deliberation and drafting: Appellate Body of the World Trade Organization (WTO)). The exchange of views is a ‘central feature’ of the collective decision-making of the Appellate Body (Steger, 2015, 457) as it has been said to have contributed greatly to the consistency and coherence of its decision-making (Ehlermann, 2003, 478). The exchange of views takes place immediately after the oral hearing. To prepare for the exchange of views, all seven members receive and review copies of the parties’ submissions and oral statements, as well as the Division’s questions and the transcripts from the oral hearing. At the exchange of views, each member is expected to put forward his or her view on the substantive and procedural issues at hand (Janow, 2008, 253). The members do not have to reach a consensus on the issues as it is the Division that makes the final decision. However, members do try to reach a mutually agreeable view on each issue.
15 After the exchange of views, it is left up to the Division to incorporate those thoughts and considerations into its own preparation and drafting of the Appellate Body report. The Divisions ‘shall make every effort’ to take their decisions by consensus (Rule 3 (2) Working Procedures), but consensus is not required. Where a decision cannot be arrived at by consensus, the matter is decided by a majority vote (Rule 3 (2) Working Procedures). The members meet and discuss the matter in person until a decision is reached. Through this process of at times rather extended discussions, it has been possible for Divisions to reach consensus even on matters where their views seemed to be originally completely divergent (Lacarte-Muró, 2015, 479). All decisions relating to an appeal are taken by the division assigned to that appeal, and the final Appellate Body report is signed by the three Division members (Van den Bossche and Zdouc, 2017, 236).
16 The United States has expressed the view that individual Appellate Body members are accountable for the findings of the Division on which they serve. In 2016, the United States refused to support the reappointment of an Appellate Body member because it considered that the reports this member had signed did not accord with the role of the Appellate Body (Minutes of Meeting Held in the Centre William Rappard on 23 May 2016 [‘Minutes of Meeting, 23 May 2016’], para 6.3). Referring to its concerns with the adjudicative approach used in certain reports, the United States raised concern, among other things, with regard to the manner in which this member had conducted himself at oral hearings (Minutes of Meeting, 23 May 2016, para 6.7). Former Appellate Body members raised serious concerns with the United States’ approach, stating that Appellate Body reports ‘are reports of the Appellate Body’ (Letter to the Chairman of the DSB from 13 Former Appellate Body Members, 31 May 2016 [‘Letter to the Chairman’]). The former Appellate Body members considered that if the fact that a member joined in the consensus on the outcome on a particular legal issue or on a particular dispute becomes a factor in a decision on that member’s reappointment, all of the accomplishments of the past generation in establishing the credibility of the WTO dispute settlement system can be put in jeopardy (Letter to the Chairman). Several WTO Members criticized the United States’ approach, noting for example that rulings of the Appellate Body were made in a collegiate manner (Minutes of Meeting, 23 May 2016).
C. Separate Opinions
17 The decisions taken by a Division in its disposition of an appeal are decisions of the Appellate Body as a whole. Members may however provide separate opinions in the Appellate Body report (Separate opinion: Dispute settlement of the World Trade Organization (WTO)). Separate opinions have not been common amongst the Appellate Body members, but they do exist. To date there have been at least eight separate opinions (Van den Bossche and Zdouc, 2017, 236; see eg European Communities – Measures Affecting Asbestos and Asbestos-Containing Products, Appellate Body Report, 2001; United States – Subsidies on Upland Cotton, Appellate Body Report, 2005; United States – Laws, Regulations and Methodology for Calculating Dumping Margins (Zeroing) – Recourse to Article 21.5 of the DSU by the European Communities, Appellate Body Report, 2009; India – Certain Measures Relating to Solar Cells and Solar Modules, Appellate Body Report, 2016; US – Washing Machines (Article 21.3(c)), Appellate Body Report, 2016). In European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft, Appellate Body Report, 2011, all three Division members had separate views on one issue, but the resolution of the issue was not essential to, or a necessary condition for, the resolution of the dispute. In United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint), Appellate Body Report, 2012, one Division member arguably made a separate opinion by qualifying the understanding expressed in the report of paragraph 2 of Annex V to the SCM Agreement. Separate or dissenting opinions expressed in the Appellate Body report by individuals serving on the Division are always anonymous (Art 17.11 DSU).
18 Former Appellate Body members have suggested that separate opinions were deliberately avoided when the Appellate Body was in its infancy since such separate opinions could have diminished the credibility and reliability of the appellate review process (Ganesan, 2015, 531).
19 Appellate Body Divisions have operated without significant difficulties since the establishment of the Appellate Body, and it is not an area that has generated controversy or even much attention. Only recently have some questions been asked about the extension of the mandate of Appellate Body members who have resigned or whose terms of office have expired. This criticism appears to relate to the broader question of WTO Member control and the scope of the Appellate Body’s mandate. Currently, the United States is linking the extension of the Appellate Body members’ term under Rule 15 Working Procedures to the appointment of new Appellate Body members. This has caused problems at a time when the terms of several members has or will expire, leaving the Appellate Body short of the seven members.
20 The operation of Divisions may come under greater strain if WTO Members do not manage to fill the open vacancies on the Appellate Body. As the size of the Appellate Body becomes smaller, there will be less rotation, more predictability as to the composition of the Division, and possibly more concerns about a few Appellate Body members deciding all of the appeals. As a Division consists of three members, it seems that the Appellate Body will be unable to take on any new cases after the number of Appellate Body members has gone down to two, which could happen on 10 December 2019 unless the Members are able to agree on the appointment of new Appellate Body members.
C-D Ehlermann, ‘Experiences from the WTO Appellate Body’ (2003) 38 TexIntlLJ 469–88.
J Lockhart and T Voon, ‘Reviewing Appellate Review in the WTO Dispute Settlement System’ (2005) 6 Melbourne Journal of International Law 474–84.
V Donaldson and A Yanovich, ‘The Appellate Body’s Working Procedures for Appellate Review’ in G Sacerdoti, A Yanovich, and J Bohanes (eds), The WTO at Ten: The Contribution of the Dispute Settlement System (CUP Cambridge 2006) 386–413.
M Janow, ‘Reflections on Serving on the Appellate Body’ (2008) 6 Loyola University Chicago International Law Review 249–58.
AV Ganesan, ‘The Appellate Body in its Formative Years’ in G Marceau (ed), A History of Law and Lawyers in the GATT/WTO: The Development of the Rule of Law in the Multilateral Trading System (CUP Cambridge 2015) 517–46.
J Lacarte-Muró, ‘Launching the Appellate Body’ in G Marceau (ed), A History of Law and Lawyers in the GATT/WTO: The Development of the Rule of Law in the Multilateral Trading System (CUP Cambridge 2015) 476–81.
D Steger, ‘The Founding of the Appellate Body’ in G Marceau (ed), A History of Law and Lawyers in the GATT/WTO: The Development of the Rule of Law in the Multilateral Trading System (CUP Cambridge 2015) 447–65.
P Van den Bossche and W Zdouc, The Law and Policy of the World Trade Organization: Text, Cases and Materials (CUP Cambridge 2017).
WTO DSB, ‘Additional Procedures for Consultations between the Chairperson of the DSB and WTO Members in relation to Amendments to the Working Procedures for Appellate Review’ (20 December 2002) WT/DSB/31.
United States – Imposition of Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom, Appellate Body Report, WT/DS138/AB/R, adopted 7 June 2000, DSR 2000:V, 2595.
United States – Laws, Regulations and Methodology for Calculating Dumping Margins (Zeroing) – Recourse to Article 21.5 of the DSU by the European Communities, Appellate Body Report, WT/DS294/AB/RW and Corr.1, adopted 11 June 2009, DSR 2009:VII, 2911.