Article: The Development of Standards of Appellate Review for Factual, Legal and Law Application Questions in WTO Dispute Settlement, 4(1) Trade, L. & Dev. 125 (2012) [available here]
Author: Simon Lester
Reviewer: Matthias Oesch
Introduction to the article, by Shashank P. Kumar
Of all the moderators in this online symposium, my task is considerably easier in at least one respect: introducing the participants in the present discussion. After all, if you're reading this, you probably already know of Mr. Simon Lester as the blogger-in-chief of this wonderful blog. In addition, Simon (along with his wife) runs the powerful resource that is WorldTradeLaw.net. Likewise, the reviewer for this discussion, Dr. Matthias Oesch, currently an Assistant Professor at the University of Berne, is an expert in the area of standards of review at the WTO, having had authored a comprehensive monograph titled Standards of Review in the WTO Dispute Resolution (OUP, 2003). I should perhaps also highlight that both Mr. Lester and Dr. Oesch have been closely involved with the practice of WTO dispute settlement, and, as such, despite the usual disclaimers, one can expect this discussion to be informed by both theoretical and practical perspectives.
With the introductions out of the way, we now move on to a slightly more complex issue, that of standards of appellate review at the WTO. Whereas appellate review is a common feature in almost all domestic legal systems, up until the last decade of the twentieth century, an appeals mechanism was largely absent from the international landscape. It was only with the formation of the WTO, the international criminal tribunals and, to a certain extent the ICSID, that the idea of appeals from certain issues began to take shape. In my opinion, this is an innovative development in as much as it allows, in theory at least, an allocation of responsibilities leading to a more rigorous engagement with the facts, while at the same time ensuring greater certainty and coherence in the development of the law. To what extent the appeals facility actually achieves these ends depends largely on the functional relationship between, to take the WTO context, the panels and the AB. This relationship is necessarily defined by the standards of appellate review adopted by the AB. Apart from this systemic concern, standards of appellate review are also of great practical importance for the users of any appellate system. After all, as any good appellate lawyer would tell you, any finding that can be appealed, must be appealed!
Notwithstanding the systemic and practical importance of standards of appellate review at the WTO, like in the domestic context, it is not always easy to precisely define or identify standards of appellate review at the WTO. As Simon rightly highlights, one of the reasons for this is the binary treatment of questions of ‘law’ and ‘facts’, disregarding a third category of ‘law application’ questions. Having identified these three categories, Simon then moves on to look at the historical origins and evolution of standards for appeals from questions of law, facts, and law application. Particularly insightful is his analysis of how the Appellate Body has developed standards of appellate review of ‘internally inconsistent’ factual findings by panels under the ‘objective assessment’ requirement in Article 11 of the DSU – a provision that has become increasingly popular with appellants at the WTO. On ‘law application’ issues, acknowledging the inherent difficulty in appellate review of such mixed questions, Lester cites several examples to cogently argue that the standards of review developed by the AB are ‘overly broad, in the sense of treating a clear factual question as a law application question, … thus expanding the scope of appellate review’. This analysis of WTO law is followed by a useful comparison with appellate review in the US and EU. In conclusion, Lester offers three suggestions for the future development of standards of appellate review at the WTO. First, he suggests that, in addition to Articles 17.6 and 11, a review of the interaction between other provisions of the DSU such as Article 12.7 may help in better delineating the functions of panels. Next, noting the possibility that the use of Article 11 of the DSU by the AB has made factual appeals too expansive, Lester cites the example of EU law to briefly explain how factual issues could well be appealed even without resorting to Article 11. Finally, on law application questions, Lester argues that the AB’s examination of domestic measures in disputes such as China – Auto Parts and EC – Fasteners stretches the boundaries of Article 17.6 by categorizing what are essentially factual questions as law application issues.
In my opinion, the smooth functioning of the appellate process at the WTO requires: (a) an optimal allocation of responsibilities between the panels and the AB in light of their relative strengths and limitations; and, (b) clarity in precisely defining the standards of appellate review. To the extent that there are creases in the present system, it is necessary to conceptually engage with the issues to develop clearer and more precise standards of appellate review and recalibrate the relationship between panels and the AB. With these preliminary thoughts, I now invite Matthias to comment upon Simon’s article and take this discussion forward.