Panels are ad hoc bodies established for the purpose of adjudicating a particular dispute and are dissolved once they have accomplished this task.
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As specified in Article 6 of the DSU, panels are established by the DSB by reverse consensus, at the request of the complainant, at the latest at the second meeting of the DSB in which the panel request is on the agenda.
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After the establishment of the panel, the parties decide on its composition on the basis of proposals made by the WTO Secretariat.
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However, if they fail to reach agreement on the composition of the panel within twenty days after its establishment, either party may ask the Director-General of the WTO to appoint the panelists.
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The Director-General does so within ten days of the request (Article 8.7 of the DSU).
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In recent years, most panels have been composed by the Director-General.
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In general, panels are composed of three well-qualified governmental and/or non-governmental individuals (such as diplomats or trade officials; less commonly, academics or practicing lawyers) (Article 8.1 of the DSU).
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Panelists may not be nat ionals of the parties or third parties to the dispute unless the parties agree otherwise (Article 8.3 of the DSU).
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Panelists serve in their individual capacities, not as government representatives (Article 8.9 of the DSU).
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They are subject to the Rules of Conduct for WTO dispute settlement when hearing a WTO dispute.
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The Rules of Conduct require panelists to be independent and impartial, to avoid direct or indirect conflicts of interest and to respect the confidentiality of the proceedings.
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To ensure compliance with these obligations, panelists are required to disclose any interest, relationship or matter that affects or creates justifiable doubts as to their independence or impartiality.
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Parties can request the DSB Chair to disqualify a panelist on the grounds of material violation of the Rules of Conduct.
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To date, no panelist has ever been disqualified, but very rarely a panelist has voluntarily withdrawn from a panel after a party raised concerns regarding a possible conflict of interests.
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#.5.3 The Appellate Body
8.5.2
The Appellate Body is a standing (i.e. permanent) international tribunal of seven independent persons of recognized authority in law, international trade and the subject matter of the covered agreements generally (Articles 17.1 and 17.3 of the DSU).
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The Members of the Appellate Body are appointed by the DSB for a term of four years, renewable only once (Article 17.2 of the DSU).
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The composition of the Appellate Body must be broadly representative of the WTO membership.
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The Appellate Body is currently composed of Ujal Singh Bhatia (India), Peter Van den Bossche (Belgium), Seung Wha Chang (Korea), Thomas R. Graham (United States), Ricardo Ramirez-Hernandes (Mexico), Shree Baboo Chekitan Servansing (Mauritius) and Yuejiao Zhang (China).
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Appellate Body Members may not be affiliated with any government (Article 17.3 of the DSU).
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They may also not accept any employment or pursue any professional activities that are inconsistent with their duties as Appellate Body Members (Rule 2(2) of the Working Procedures for Appellate Review).
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The Appellate Body hears and decides appeals in divisions of three of its Members.
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The Appellate Body Members constituting a Division to hear an appeal are selected on the basis of rotation, taking into account the principles of random selection and unpredictability and the opportunity for all Members to serve regardless of their nationality (Rule 6(2) of the Working Procedures for Appellate Review).
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Appellate Body Members are bound by the Rules of Conduct.
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They are thus, like panelists, required to be independent and impartial, to avoid direct or indirect conflicts of interest and to respect the confidentiality of die proceedings.
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They must disclose the existence of development of any interest, relationship or matter that is likely to affect or give rise to justifiable doubts as to their independence and impartiality.
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They may not participate in the consideration of an appeal that would create a direct or indirect conflict of interests.
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Parties can request the Appellate Body to disqualify one of its Members on grounds of material violation of the Rules of Conduct.
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No such request has ever been made to date.
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Whereas an appeal is decided by the Division assigned to that appeal, in the interests of consistency and coherence in WTO case law, in each appeal an exchange of views on the issues raised by the appeal is held with the Appellate Body Members who are not on the Division.
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Procedural arrangements
The WTO dispute settlement process comprises four major steps:
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compulsory consultations between the parties to a dispute to try to reach a mutually agreed solution;
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panel proceedings;
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appellate review proceedings; and
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implementation and enforcement of the recommendations and rulings adopted by the DSB.
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These steps are illustrated by the flowchart in Figure 8.1, prepared by the WTO Secretariat, and are discussed further herein.
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8.6.1 Consultations
8.6.1
Reflecting the preference of the WTO dispute settlement system for mutually agreed solutions to disputes, rather than adjudication, WTO dispute settlement proceedings must always start with consultations (i.e. negotiations) between the parties (or at least an attempt by the complainant to hold such consultations).
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As noted by the Appellate Body in Mexico - Corn Syrup (Article 21.5 - US) (2001), consultations allow parties to 'exchange information, assess the strengths and weaknesses of their respective cases, narrow the scope of the differences between them and, in many cases, reach a mutually agreed solution in accordance with the explicit preference expressed in Article 3.7 of the DSU.
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Moreover, even where no such agreed solution is reached, consultations provide the parties an opportunity to define and delimit the scope of the dispute between them.
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Clearly consultations afford many benefits to the complaining and responding parties, as well as to third parties and to the dispute settlement system as a whole'.
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A request for consultations must identify the measure at issue and the legal basis for the complaint (Article 4.4 of the DSU).
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It delimits the scope of the dispute.
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The Member to which the request for consultations is addressed must respond to this request within ten days and enter into consultations within thirty days of the receipt of the request (Article 4.3 of the DSU).
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If it does not do so, the requesting Member may proceed directly to request the establishment of a panel to hear the dispute.
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Otherwise, consultations are held for a minimum of sixty days, unless the parties agree within the sixty-day period that the consultations have failed to resolve the dispute (Article 4.7 of the DSU).
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Consultations are confidential and without prejudice to the rights of any Member in further proceedings (Article 4.6 of the DSU).
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Although Members are required to engage in consultations in good faith, there is no public record of the consultations and panels are not authorized to assess the adequacy of consultations.
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Panels may only determine whether consultations were held.
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If the respondent raises the lack of consultations in a timely manner, the panel would have to conclude that it has no jurisdiction to hear the dispute.
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It is possible for other Members that have a 'substantial trade interest' in the dispute to join the consultations provided that the consultations were initiated under Article XXII (rather than Article XXIII) of the GATT 1994 and that the respondent agrees.
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If consultations are successful, the mutually agreed solution achieved must be notified to the DSB and be consistent with WTO law (Articles 3.5 and 3.6 of the DSU).
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One in five disputes are resolved through consultations.
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If consultations are unsuccessful in resolving the dispute within sixty days of receipt of the request for consultations, the complainant may request the establishment of a panel to hear the dispute.
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However, often, the complainant will allow more time for consultations before proceeding to requesting a panel to be established.
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8.6.2 Panel proceedings
8.6.2
If consultations are unsuccessful in resolving a dispute, a complainant may proceed to request the establishment of a panel.
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As noted earlier, a panel will be established by reverse consensus at the latest at the second DSB meeting at which this request is on the agenda.
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Almost all panels have standard terms of reference, which refer back to the complainant's request for the establishment of a panel (Article 7.1 of the DSU).
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The request for the establishment of a panel must therefore clearly identify the measure at issue and set out the claims of violation of WTO law (Article 6.2 of the DSU).
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A measure or a claim fails within the panel's terms of reference (i.e. within the jurisdiction of the panel) only if that measure or that claim is sufficiently identified in the panel request.
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A panel is bound by its terms of reference and may not examine measures or claims falling outside it.
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If this were not so, a respondent would not be able to prepare a proper defense, and therefore its due process rights would be violated.
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Agricola requested the establishment of a panel to hear a dispute regarding Industrial minimum price requirements for chocolate bars, which Agricola claimed to be in violation of Article XI:
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However, in its written submission to the panel, Agricola now argues that the minimum price requirements violate not only Article Xl:
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Agricola further argues that not only do Industria's minimum price requirements for chocolate bars violate Article XI:
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1 of the GATT 1994, but also its requirement that chocolate bars be imported through only one port of entry violates this article.
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Because the panel is bound by its terms of reference as set out in Agricola's request for the establishment of the panel, the claim of a violation of Article 111:4 of the GATT 1994 and the challenge to the port of entry requirement for imports of chocolate bars are outside its jurisdiction and thus cannot be considered by the panel.
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The basic Working Procedures for panels are set out in Appendix 3 to the DSU, and panels are free to (and usually do) adopt, in consultation with the parties, more detailed ad hoc working procedures for purposes of the dispute before them (Article 12 of the DSU).
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The function of a panel is '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' (Article 11 of the DSU).
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A panel must consider all the evidence before it in an even-handed manner and base its findings on sufficient factual evidence.
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However, this does not mean that a panel has to accord to evidence the weight that a party believes it should be accorded.
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A panel has discretion as the trier of facts to determine that certain evidence should be accorded more weight than other evidence.
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Frequently, complainants allege several violations of various WTO agreements with regard to the same measure.
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Panels are not obliged to address each claim made by the complainant but are entitled to exercise judicial economy.
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According to the Appellate Body in US - Wool Shirts and Blouses (1997), panels 'need only address those claims which must be addressed in order to resolve the matter in issue in the dispute'.
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However, panels should guard against 'false judicial economy'.
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The claims that are not addressed by the panel may give rise to a new dispute.
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Panels must therefore address all claims on which a finding is necessary to ensure the effective resolution of the dispute.
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Panel proceedings often involve complex factual, technical or scientific issues.
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In such cases, panels regularly consult experts to obtain their advice on the issues under consideration.
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A panel has broad discretion to seek information from any individual or body that it deems appropriate (Article 13 of the DSU) in order to help the panel understand and evaluate the evidence and arguments brought by the parties.
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The panel may not use information obtained from its experts to make the case for one of the parties.
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Experts consulted by the panel are bound by the Rules of Conduct and must therefore be independent and impartial.
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A panel must submit its findings to the DSB in the form of a written report containing its findings of fact, its findings on the applicability of the relevant legal provisions and the basic rationale for its findings and recommendations (Article 12.7 of the DSU).
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Before finalizing its report, a panel will share the draft of the report with the parties for their comments (Article 15 of the DSU).
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During this so-called interim review, parties will often and primarily suggest the correction of factual errors that they consider the panel made.
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The final version of the panel report is first issued to the parties to the dispute and then, after translation into the remaining two of the three official languages of the WTO (English, French and Spanish), is circulated to all Members and published on the WTO website.
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The recommendations and rulings of a panel contained in the panel report only become binding once they have been adopted by the DSB.
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This occurs within sixty days of the circulation of the pane) report unless a party notifies its decision to appeal.
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As discussed in Section 8.5.1, the decision to adopt a panel report is taken by the DSB by reverse consensus and is thus quasi- automatic.
