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Precedent In World Trade Law

Published online by Cambridge University Press:  21 May 2009

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The 1996 report of the Appellate Body of the World Trade Organization (WTO) concerning Japan – Taxes on Alcoholic Beverages constitutes a landmark decision on the matter of precedent in world trade dispute settlement. The Appellate Body operates within the framework of the world trade dispute settlement system, originally consisting of the customary practices pursuant to Articles XXII and XXIII of the General Agreement on Tariffs and Trade (GATT) in the field of dispute settlement and presently set forth in the Understanding on Rules and Procedures Governing the Settlements of Disputes (DSU) administered by the Dispute Settlement Body (DSB) of the WTO. This system has evolved since the entry into force of the Protocol of Provisional Application of the GATT on 1 January 1948. It is probable that the prospect of this system building up its own case law and the practical implication of that case law for the development of world trade law was not initially foreseen, yet it is not surprising that, just as the effects of the jurisprudence of the World Court on international law, the panel reports became part and parcel of the legal sense of the multilateral trade community. Even though previous panel reports do not legally bind subsequent panels, panel reports are replete of references to precedent, just as in the case of the standing international courts and tribunals. Panels rely on such precedents as authoritative expressions of their views on decided points of international trade law. Similarly, parties in world trade dispute cases are themselves guided by previous panel reports in framing and presenting their cases. In short, as Jackson has indicated, certain international law effects emanate from panel reports.

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Copyright © T.M.C. Asser Press 1997

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References

1. See E.U. Petersmann, ‘The Dispute Settlement System of the World Trade Organization and the Evolution of the GATT Dispute Settlement System since 1948’, 31 CMLR (1994) p. 157 et. seq.; see also by the same author, The GATT/WTO Dispute Settlement System (The Hague/London/Boston 1997), ch. 2, pp. 6691.Google Scholar

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9. Basic Instruments and Selected Documents (hereinafter: BISD) 36S/93 at pp. 123–124, para. 12.1 and BISD 36S/135 at p. 159, para. 5.1.

10. BISD 36S/93 at p. 127, para. 12.10 and BISD 36S/135 at p. 162, para. 5.10.

11. BISD 36S/93 at pp. 127–129, paras. 12.11–12.15 and BISD 36S/135 at pp. 162–165, paras. 5.11–11.17.

12. BISD 36S/93 at p. 129, para. 12–16 and BISD 36S/135 at p. 165, para. 5.18.

13. EEC – Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal Feed Proteins, L/6627 adopted on 25 January 1990, BISD 37S/86 at pp. 126–127, para. 144.

14. L/6268 adopted on 22 March 1988, BISD 35S/99.

15. BISD29S/91.

16. BISD 35S/99 at pp. 113–114 para. 4.5.

17. BISD 35S/116 at p. 154, para. 107.

18. BISD 35/163.

19. BISD 35S/116 at p. 154, para. 107.

20. BISD S/163.

21. BISD 30S/140.

22. BISD 35S/163 at pp. 226–227, para. 5.1.3.7.

23. BISD 36S/93 at p. 124, para. 12.3.

24. L/6439 adopted on 7 November 1989, BISD 36S/345.

25. BISD 30S/164.

26. BISD 36S/345 at p. 393, para. 5.27.

27. L/6514 adopted on 22 June 1989, BISD 36S/331.

28. L/6264, adopted on 2 February 1988, BISD 35S/245 at p. 289, para. 121.

29. BISD 35S/116.

30. BISD 36S/331 at p. 344, para. 5.9.

31. BISD 34/136 at p. 160, para. 5.2.3 and pp. 163–164, para. 5.2.9; this principle has already been acknowledged in the 1957 report under Article XXIV GATT on the EEC-Treaty, BISD 6S/70.

32. BISD 37S/132.

33. Ibid., pp. 198–199, para. 5.25.

34. Ibid., p. 199, para 5.26.

35. DS10/R, adopted on 7 November 1990, BISD 37S/200 at p. 227, para. 84.

36. DS44/R adopted on 4 October 1994, paras. 118, 121, 123; the latter case also cites the panel reports on United States – Measures Affecting Alcoholic and Malt Beverages, BISD 39/209 and United States - Denial of MFN Treatment as to Non-Rubber Footwear from Brazil, BISD 39/128.

37. EEC – Measures of Animal Feed Proteins, L/4599 adopted on 14 March 1978, BISD 25/49 at p. 63, para. 4.1.

38. L/5135 adopted on 11 June 1981, 28S/102 at pp. 11–112, para. 4.5.

39. L/5609 adopted on 15/16 May 1984, BISD 31S/74.

40. GATT/CP.3/42, adopted on 30 June 1949.

41. BISD 31S/74 at pp. 88–89, para. 36.

42. L/5623 adopted on 15/16 May 1984, 31S/94 at p. Ill, para. 44.

43. L/5511 adopted on 12 July 1983, BISD 30S/129 at p. 138, para. 27.

44. EEC – Payments and Subsidies Paid to Processors and Producers of Oilseeds and related Animal Feed Proteins, L/6627 adopted on 25 January 1990, BISD 37S/86.

45. BISD 35S/163.

46. Ibid., p. 130, para. 150 and BISD 35S/163 atp. 243, para. 5.4.3; the panel reports referred to are Japanese Leather Imports case, the Brazilian Internal Taxes case, and the Superfund case.

47. BISD 35S/163.

48. L/4687 adopted on 18 October 1978, BISD 25/68 at p. 106, para. 4.20.

49. BISD 35S/163 at p. 234, para. 5.3.5.1 and p. 236, para. 5.3.8.1.

50. BISD 36S/93 at p. 126, para. 12.8 and BISD 36S/135 at pp. 161–162, para. 5.9, citing Review pursuant to Article XVI:5, BISD 9S/192, Japan – Restrictions of Certain Agricultural Products, BISD 35S/163 Japan – Trade in Semi-Conductors, BISD 35S/116.

51. L/6470 adopted on 19 July 1989, BISD 36S/167.

52. L/5135 adopted on 11 June 1981, BISD 28S/102.

53. BISD 36S/167 at p. 198, para. 5.8.

54. L/6474 adopted on 22 June 1989, BISD 36S/306.

55. The three cited precedents involve only one contentious case: United States Manufacturing Clause, BISD 31S/74.

56. Idem.

57. BISD 36S/306.

58. L/1923 adopted on 16 November 1962, BISD US/95.

59. EEC – Programme of Minimum Import Prices Licences and Surety Deposits for Certain Processed Foods and Vegetables, L/4687 adopted on 18 October 1978, BISD 25/68 at p. 106, para. 4.20.

60. BISD 27S/98, at p. 116, para. 4.24.

61. L/4959 adopted on 18 June 1980, BISD 27S/119 at p. 126, para. 17.

62. L/5333 adopted on 26 May 1983, BISD 30S/107 at p. 121, para. 40.

63. L/1923 adopted on 16 November 1962, BISD US/95.

64. L/5623 adopted on 15/16 May 1984, BISD 31S/94 at p. 111, para. 46.

65. L/6309 adopted on 4 May 1988, BISD 35S/116.

66. EEC – Programme of Minimum Import Prices, Licences and Surety Deposits for Certain Processed Fruits and Vegetables, L/4687 adopted on 18 October 1978, BISD 25S/68.

67. BISD 35S/116 at p. 153, para. 105.

68. Canada – Administration of the Foreign Investment Review Act, L5504 adopted on 7 February 1984, BISD 30S/140.

69. BISD 35S/116 at p. 159, para. 122.

70. BISD 35S/163.

71. L/5198 adopted on 22 February 1982, BISD 29S/91.

72. BISD 35S/163 at p. 223, para. 5.1.3.1.

73. BISD 36S/93 at p. 125, para. 12.5 and BISD 36S/135 at p. 161, para. 5.5.

74. L/883 adopted on 23 October 1958, BISD 7S/60.

75. Ibid., p. 64, para. 12.

76. L/6439 adopted on 7 November 1989, BISD 36S/345.

77. Ibid., p. 385, para. 5.10.

78. United States – Taxes on Petroleum and Certain Imported Substances, L/6175 adopted on 17 June 1987, BISD 34S/136.

79. BISD 36S/345 at p. 387, para. 5.13.

80. BISD 37S/86 at p. 130, para. 152, citing, inter alia, Japanese Measures on Imports of Leather, BISD 31S/113:

81. Idem.

82. L/6657 adopted on 16 May 1990, BISD 37S/132.

83. L/4599 adopted on 17 March 1978, BISD 25S/49.

84. BISD 34S/136.

85. L/5198 adopted on 22 February 1982, BISD 29S/91 at p. 106, para. 4.3.

86. BISD 35S/163.

87. BISD 35S/163 at p. 242, para. 5.4.1.4.

88. DS17/R adopted on 18 February 1992, BISD 39S/27.

89. Canada – Import, Distribution and Sale of Certain Alcoholic Drinks by Provisional Mar- keting Agencies, L/6304 adopted on 22 March 1988, BISD 35S/37.

90. BISD 39S/27 at p. 37, para. 3.4.

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93. WT/DS8/R, WT/DS10/R, WT/DS11/R of 1 July 1996.

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96. Op. cit., p. 160; another author also considered this approach, P.J. Kuyper, ‘The Law of GATT as a Special Field of International Law: Ignorance, further refinement or self-contained system of international law?*, XX NYIL (1994) pp. 230–231.

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99. PCU Ser. B, No. 12, p. 24.

100. Separate Opinion of Judge Sir Percy Spencer, Certain expenses of the United Nations (Art. 17, para. 2, of the Charter), ICJ Rep. (1962) 189, citing the Brazilian Loans case, PCU, Ser. A/B, Nos. 20/21, at p. 119.

101. Ibid., pp. 194–195; but see Separate Opinion ofE. Jimenez de Aréchaga, Appeal relating to the Jurisdiction of the ICAO Council (India v. Pakistan), ICJ Rep. (1973) p. 141.

102. Japan – Taxes on Alcoholic Beverages, report of the Appellate Body of 4 October 1996, AB-1996-2, Section E. (‘Status of Adopted Panel Reports’), p. 13.

103. Idem.

104. Cf., on this question as far as concerns the World Court, see Sir Robert Jennings, ‘Foreword‘, in M. Shahabuddeen, op. cit., p. xiv.

105. Idem.

106. Shahabuddeen, op. cit., pp. 40–47.

107. Cf., Individual Opinion of E. Read, Anglo Iranian Oil Co. Case (Preliminary Objections) [United Kingdom v. Iran], (Judgment of 22 July 1952), ICJ Rep. (1952) 143.

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110. Dissenting Opinion of A. Alvarez, Competence of the General Assembly for the Admission of a State to the United Nations, (Advisory Opinion of 3 March 1950), ICJ Rep. (1950) 15.

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113. Ibid., p. 354.

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115. See the sources cited at Shahabuddeen, op. cit., pp. 45–47.

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117. Art. 3:2, second sentence, DSU.

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121. WT/DS8/R, WT/DS10/R, WT/DS11/R of 1 July 1996.

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124. Japan – Taxes on Alcoholic Beverages, report of the Appellate Body of 4 October 1996, AB-1996-2, Section E. (‘Status of Adopted Panel Reports’), pp. 14-14.

125. On the latter see Jackson, op. cit., pp. 158–160.

126. PCU Ser. B, No. 8, p. 37.

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131. WT/DS8/R, WT/DS10/R, WT/DS11/R of 1 July 1996.

132. Art. 3:9 DSU reads: ‘The provisions of mis Understanding are without prejudice to the rights of the Members to seek authoritative interpretation of provisions of a covered agreement through decision-making under the WTO Agreement or a covered agreement which is a Plurilateral Trade Agreement’.

133. Japan – Taxes on Alcoholic Beverages, WT/DS8/R, WT/DS10/R, WT/DS11/R of 1 July 1996, p. 13.

134. Ibid., p. 14.

135. Vot e.g., Agreement Concerning the Interpretation and Application of Articles VI, XVIand XXII of the General Agreement, BISD, 26S/56.

136. See on these provisions H. Thirlway, ‘The Law and Procedure of the International Court of Justice’, LXII BYIL(1991) pp. 2–75, at 56 and Rosenne, S., Developments in the Law of Treaties 1945–1945 (Cambridge 1989) pp. 195196.Google Scholar It does not seem to be obvious, however, that there is a substantive difference between the two provisions. For example, Bastid, S., Les traites dans la vie internationale – conclusions et effets (Economica, 1985), p. 127;Google Scholar see also Beagle Channel (Argentina/Chile), case Vol. LII, ILR, para. 169.a and Shihata, I.F.I., Tschofen, F. & Para, A.R., eds., in The World Bank in a Changing World-Selected Essays (Dordrecht/Boston/London1991) p. 68.Google Scholar

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138. See Eastern Carelia case, PCIJ, Ser. B, No. 5, p. 27, Ambatielos case, ICJ Rep. (1953) 19 and Monetary Gold Removed from Rome in 1943 case, ICJ Rep. (1954) 32.

139. This is implied by the principle electa una via non datur recursus ad alteram.

140. On error in law as a ground for impugning judicial determinations in international law, see Cheng, B., General Principles of Law as Applied by International Courts and Tribunals (reprint Cambridge 1987) pp. 361 et seq.Google Scholar

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144. Shahabuddeen, op. cit., pp. 23–26 and Sir Hirsh Lauterpacht, op. cit., pp. 11–13.

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147. Ibid., p. 14.

148. Idem.

149. AB-1996, of 26 April 1996, adopted by the DSB on 20 May 1996, WT/DS/9.

150. Kuijper, supra n. 97, at pp. 229–232.

151. Ibid., p. 255.

152. Some of the likely candidates are: Japan – Restrictions on Imports of Certain Agricultural Products, BISD35S/163, Canada – Import Restrictions on Ice Cream and Yoghurt, BISD36S/68, and Korea – Restrictions of Imports on Beef, BISD 36S/268.

153. See Bos, op. cit., p. 185 et seq.; and on the operation of this principle on the international plane, see Cheng, op. cit., pp. 336–372.

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155. Idem., p. 337.

156. Société commercial de Belgique (1939), PCIJ Ser. A/B, No. 78, p. 176; see further Fitzmaurice, op. cit., pp. 584–586; see also Bos, op. cit., 186–187.

157. Cf., Jackson, loc. cit. n. 3, p. 158.

158. See Petersmann, , The GATT/WTO Dispute Settlement System, supra n. 1, pp. 206209, discussing cases without making a distinction between adopted and unadopted reports.Google Scholar

159. See GATT, Analytical Index: Guide to GATT Law and Practice, 6th edn. (Geneva 1995) p. 757.Google Scholar

160. CM/94, dated 4 October 1989, unadopted.

161. GATT, Analytical Index: Guide to GATT Law and Practice, updated 6th edn. (Geneva 1995) p. 757.Google Scholar

162. Cf., Japan – Taxes on Alcoholic Beverages, report of the Appellate Body of 4 October 1996, AB-1996-2, Section E. (‘Status of Adopted Panel Reports’), pp. 14–15.

163. GATT, Analytical Index: Guide to GATT Law and Practice, 6th edn. (Geneva 1995) p. 757.Google Scholar

164. Idem.

165. Judgments of the Administrative Tribunal of the ILO upon complaints against UNESCO, (Advisory Opinion), ICJ Rep. (1955) 84; see R. Ago, ‘Binding Advisory Opinions of the International Court of Justice*, 85 AJIL (1991) pp. 439–451.

166. See Dissenting Opinion of Bustamantey Rivero, J. L., Northern Cameroons case (Cameroon v. United Kingdom), (Preliminary Objections), ICJ Rep. (1963) p. 71.Google Scholar

167. See on this term, Bedjaoui, M., The New World Order and the Security Council – Testing the Legality of its Acts (Dordrecht/Boston/London 1994) p. 56.Google Scholar

168. PCIJ Ser. B, No. 12, p. 26; Reports that are not adopted because of blockage by one party, means that the procedure remains incompleted. For this reason it is not deemed necessary to consider the cases discussed by Petersmann, , The GATT/WTO Dispute Settlement, supra n. 1, pp. 206209.Google Scholar

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170. Idem.

171. Corfu Channel case (United Kingdom/Albania) (Judgment), ICJRep. (1948) 248; Military and Paramilitary Activities in and against Nicaragua case (Nicaragua/USA), (Merits), (Judgment), ICJ Rep. (1986) 24, para. 27.

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173. Japan – Taxes on Alcoholic Beverages, report of the Appellate Body of 4 October 1996, AB-1996-2, Section E. (‘Status of Adopted Panel Reports’), p. 14.

174. Polish Postal Service in Danzig, PCIJ, Ser. B, No. 11, pp. 29–30.

175. Trail Smelter Arbitration, Final Award (Canada/USA) III UNRIAA (1941) 1952.

176. Cheng., op. cit., p. 341.

177. Ibid., pp. 357–372.

178. L/4687, adopted on 18 October 1978, BISD 25S/100.

179. Council Regulation No. 1927/75 and Council Regulation No. 516/77.

180. L/5047, adopted on 10 November 1980, BISD 27S/98.

181. Council Regulation No. 687/79

182. L/6491, adopted on 22 June 1989, BISD 36S/93

183. L/6513, adopted on 22 June 1989, BISD 36S/135.

184. Ibid., p. 143, para. 3.9.

185. L/6491, adopted on 22 June 1989, BISD 36S/93, p. 99, para. 3.3.

186. Delimitation of the Continental Shelf Case (France/UK), XVIIIUNRIAA, pp. 294–296, at para. 28.

187. See Bos, op. cit., pp. 105–109.

188. Shahabudeen, op. cit., pp. 105–109.

189. Kuijper, supra n. 96, at p. 230 (footnote 11).

190. B1SD 30S/107.

191. Ibid., p. 108, para. 4.

192. Ibid., p. 124, para. 49.

193. Ibid., p. 124, para. 50.

194. Ibid., p. 125, para. 56.

195. Idem.

196. BISD 30S/107 at p. 126, para. 60.

197. Ibid., p. 126, para. 61.

198. Ibid., p. 127, para. 66.

199. Quoted in para. 5.6 ofthe report on United States – Section 337 of the Tariff Act of 1930, BISD 36S/345.

200. BISD 36 S/345 at pp. 382–383, para. 5.1.

201. Contrary to the previous panel, the 1989 panel examined Section 337 first in the light of GATT Art. 111:4, and undertook an examination in the light of Art. XX(d) only after it had estab- lished inconsistencies with Art. 111:4. This sequence does not only follow from the wording of GATT Art. XX, as the 1989 panel indicated, but also from the fact that the approach adopted by the 1983 panel unduly relieved the complainant from the burden to proof the inconsistency while compelling the respondent to prematurely justify its measure. On die burden of proof in world trade law, see Martha, R.S.J., ‘Presumptions and Burden of Proof in World Trade Law’, 14 Journal ofInternational Arbitration (03 1997) pp. 6798.Google Scholar

202. Japan – Taxes on Alcoholic Beverages, report of the Appellate Body of 4 October 1996, AB-1996-2, Section E. (‘Status of Adopted panel reports’), P. 14.