As you may have heard, yesterday (Oct. 17), the Appellate Body released its long awaited report in the Hormones suspension case. Remember: In that case, the EC challenged US & Canadian continued sanctions as a violation of the DSU on the ground that (i) the EC had “removed” the illegal measure, so the sanctions had to end and the complainants had to initiate a 21.5 procedure, and (ii) continuation of the sanctions plus DSB statements implied “unilateral determinations” by the US/Canada in violation of DSU Art. 23.
This AB report is not only one of the longest ever (333 pages!). It is also one of the most critical reports ever issued v-a-v the earlier panel (including the experts it appointed!). It makes you wonder who will still want to be a panellist in the future … That said, on most issues the AB seems to be right, at least in my view:
1. OPEN HEARINGS: This is the first case where the AB held public hearings, notwithstanding the fact that DSU 17.10 unambiguously says “[t]he proceedings of the AB shall be confidential”. The AB finds that derogations to this rule are possible, as between the main parties, as long as this does not affect third participants (who were against). The AB speaks of “separate relationships” or what I would call “bundles of bilateral relations” where one can be altered for as long as the others are not affected. This may actually have repercussions also for the bigger debate on whether non-WTO treaties can derogate from the WTO treaty. (p. 320)
2. CONTINUED SANCTIONS AWAITING OUTCOME ARE OK : The AB reverses the panel’s finding that would have meant that whenever a defendant implements a new measure the sanctions must be suspended pending a multilateral decision on compliance. This would have put complainants in a really difficult situation as defendants could then practically avoid any sanctions by simply implementing new measures. (paras. 306, 308-9, 317)
3. POST-RETALIATION DISAGREEMENTS MUST BE BROUGHT TO 21.5: The AB makes 21.5 exclusive for post-retaliation disagreements (but parties can mutually agree on alternatives) (paras. 336, 340)
4. 21.5 CAN BE INITIATED ALSO BY DEFENDANTS; BOTH PARTIES HAVE OBLIGATION TO BRING 21.5: The big question of who should move (EC to confirm consistency of its new measure; or US to confirm continued violation) was split in two by the AB: both share the responsibility (para. 310, 355), with a newly (and somewhat strangely) defined rule on burden of proof on the implementing member in all such cases (para. 362 and, more questionably, paras. 580, 716).
5. TWO EXPERTS WERE FOUND TO BE CONFLICTED: Because they were also on the committee that had made the international standards from which the EC wants to deviate (very though decision for both the WTO/JECFA Secretariats and Drs. Boisseau and Boobis!) (para. 481)
6. PANEL WAS FOUND TO HAVE DONE ITS OWN RISK ASSESSMENT, rather than having reviewed the EC’s risk assessment (grave error in standard of review, para. 590, 598)
7. LEVEL OF PROTECTION DOES MATTER both in how a risk assessment should look like (para. 542), and in deciding on when evidence is “insufficient” (this is a reversal not only of the panel in this case, but also of the Biotech panel) (para. 685)
8. A VALID RISK ASSESSMENT DOES NOT BY DEFINITION PRECLUDE “INSUFFICIENT EVIDENCE”: Even if there is an international standard, evidence may be (or have become) insufficient (and thus allow for provisional measures under 5.7), depending e.g. on your level of protection (para. 694). The panel’s test of “a critical mass” of new evidence to overturn an earlier risk assessment is too strict. New evidence that “casts doubts” can suffice to trigger 5.7 rights (para. 703).
In sum, none of the panel’s findings of violation remain. Instead, the AB makes its own finding of violation (under 22.8) in respect of ALL parties (not just the defendants) and "recommends" that the DSB (!!) "request" the US, Canada and the EC (the complainant!) to initiate 21.5 proceedings (since by not invoking 21.5 until now they basically violated 22.8).
This is an amazing win for the EC and those who think that the SPS agreement was having too much bite. Many things the AB found objectionably in this case had become kind of standard in earlier SPS cases.
The AB could not complete the analysis. What the US/Canada did win is that they can keep the sanctions in place until the 21.5 ends. The entire case must now be re-done with new panelists (actually, original panelists of 1996), new experts and plenty of new legal standards for the panel to apply. Another 2 or 3 years ahead of us … Good luck to all involved !
