The recent arbitration of the SCOO available for Antigua to use against the United States in the Gambling case featured some important developments (WT/DS285/ARB, 12/21/07).
Perhaps the most interesting is the new standard employed by the arbitrator to determine the counterfactual that would be used to model the level of the SCOO. In this new test, the counterfactual selected has to be “reasonable” and “plausible” given the policy objectives of the government that has been found to violate WTO law (see paras. 3.45, 3.51, 3.56). I do not recall the arbitrator in the Hormones or FSC case taking into account policy objectives of the EC and the US respectively.
Another interesting feature was the willingness of the arbitrator to use a counterfactual that might not itself constitute compliance. The arbitrator implies that its counterfactual is WTO-consistent (see para. 3.49), but the arbitrator does not analyze the point. Indeed the arbitrator claims that it is not considering the WTO-legality of the counterfactual offered by the US and accepted by the arbitrator as a substitute for the counterfactual offered by Antigua and rejected by the arbitrator as being unreasonable. I don’t recall this happening in a previous arbitration.
A third feature was Antigua’s decision to reject the U.S. proposal for transparency in the arbitration process (see para. 2.29). Antigua does not explain why it opposed the open hearing and one wonders why they would have rejected the opportunity to get more public scrutiny of what the United States was saying in the arbitration and the questions that the arbitrator was asking.
One possible answer is that Antigua’s counsel pursued its self-interest on this point and did not want public scrutiny because they were so obviously out-lawyered by the U.S. government attorneys with greater experience. Antigua made a number of embarrassing mistakes in the arbitration (see for example, paras. 4.46 and 4.47).
A fourth feature was the arbitrator’s authorization for Antigua to use a SCOO in intellectual property. It will be interesting to see if Antigua does so.
