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
Comment by Matthias Oesch
The quest for appropriate standards of appellate review has gained a prominent place in the Appellate Body’s jurisprudence. The allegation that a panel misinterpreted and misapplied its duty “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”, has become a standard claim in appeals – according to the experienced courtroom lawyers’ motto: do not forget to include, in your appellant’s submission, the claim that the panel violated Article 11 of the DSU, however strong such a claim might or might not prove.
Simon Lester’s article provides an impressive and concise overview on the Appellate Body’s jurisprudence on standards of appellate review. At the outset, he defines the three elements to a case, namely factual issues, legal issues and law application issues. In his analysis of the case law developed by the Appellate Body, he focuses on appeals of factual and law application issues. He considers how the judiciaries in the US and the EU have addressed these issues. He concludes by raising several matters for future discussion. In addition to his findings and conclusions, I would like to offer the following four remarks.
First, the Appellate Body has developed guiding jurisprudence on the standards of appellate review applicable to legal, factual and law application issues. Although the relevant Articles 11 and 17.6 of the DSU lack clarity, the Appellate Body has done quite a remarkable job in doing so (probably with one exception to which I shall turn in the next paragraph). Its case law follows standard pattern common to most two-tier judicial systems. Against this background, it is doubtful, in my view, whether the WTO membership would be well advised to draft a new provision defining standards for appellate review in abstracto. The responsibility to develop appropriate standards and, in particular, to come to grips with the distinction between legal, factual and law applications issues typically lies with the judiciary, acting on a case-by-case basis. A side look at other judicial systems at the national level (such as the US) and the supranational level (such as the EU) seems to corroborate this view.
Second, I concur with Simon that domestic law is to be characterized, for the purpose of determining appropriate standards of appellate review, as a question of facts. This holds true with respect to both the plain text of a municipal law and the analysis of how it operates in practice, applying (domestically valid!) rules of interpretation. The qualification of domestic law as a factual element is a well-accepted principle in international law, acknowledged, inter alia, already in 1926 by the Permanent Court of International Justice: “From the standpoint of International Law and of the Court which is its organ, municipal laws are merely facts which express the will and constitute the activities of States, in the same manner as do legal decisions sand administrative measures.” Early case law of WTO panels and the Appellate Body clearly supported such a view, treating domestic law as factual evidence and, consequently, applying a deferential standard of review. As Simon demonstrates, however, recent cases seem to indicate that the Appellate Body has taken a slightly different route; China – Auto Parts and EC – Fasteners are examples to the point. This is, indeed, confusing. It is to be hoped that the Appellate Body corrects this line of argument, when called upon to do so, and clearly states that domestic law is to be treated as a factual issue and, consequently, as a matter of evidence.
Third, the distinction between factual elements and legal issues is arguably linked to the notion of burden of proof and the principle of iura novit curia. The notion of burden of proof can be defined as the obligation of each of the parties to a dispute to prove its claims to the satisfaction of, and in accordance with the rules acceptable to, the judiciary. It corresponds to the question of which party is responsible for providing proof of an asserted fact. The burden normally rests upon the party, whether complainant or defendant, which asserts the affirmative of a particular claim or defence, and is limited to issues of facts. According to the principle of iura novit curia (“the judge knows the law”), courts are expected to make their own perception of the law and their own legal evaluation of the factual record before them. They are supposed to know and apply the relevant law as it stands, and evidence of the state of law is not needed to prove it. The practical consequence of applying the principle of iura novit curia is that, contrary to factual claims, none of the parties bears the risk of non-persuasion. Iura novit curia obviously applies when interpreting WTO law (and, arguably, also when interpreting generally valid international law other than WTO law). Having these two notions in mind might help to distinguish factual elements from legal issues in difficult constellations, both for the purpose of defining appropriate standards of review applied by panels vis-à-vis member states and for the purpose of determining appropriate standards of appellate review applied by the Appellate Body vis-à-vis panel reports. To take domestic law as an example: The principle of iura novit curia does not apply in the context of identifying and interpreting domestic law, from the perspective of WTO panels and the Appellate Body, and, therefore, this process is qualified as factual rather than entailing legal questions.
Fourth, it is sometimes almost impossible to clearly distinguish questions of facts, law and law application from each other, irrespective of Appellate Body precedents and academic checklists. As Simon ably demonstrates, this holds in particular true with respect to the distinction between factual elements and law application issues. Often, panel and Appellate Body proceedings mainly turn on facts and their application to the law, whereas the relevant rights and obligations under the covered agreements are less controversial. In “borderline” cases, in which a contested claim might plausibly fall under both categories of facts and law, the Appellate Body might be well advised to accept such a claim generously and review it accordingly – based on the motto: in dubio pro appellate review. The Appellate Body has demonstrated that it is competent, by and large, to deal with delicate issues appropriately and that it does not operate overly intrusive vis-à-vis panels which remain the prime “triers of facts” and “masters” of the process of fact-finding.