Saturday, August 11, 2012

Can questions of fact be reviewed on appeal - Standards of Appellate review in the WTO

This post is about the powers of the Appellate Body of the WTO to go into questions of fact on appeal. To what extent can the Appellate Body of the WTO review a Panel's decision? Can it go into the facts of the particular case or should it limit itself to legal interpretation or principles of law? Can it overrule the findings of fact of the panel or is its power of judicial review limited to legal interpretations? What are the standards of Appellate review in the DSU of the WTO? Often a case involves complex issues of fact and law. An appreciation of facts sometimes intertwines with the interpretation of law. Should the Appellate Body intervene in these circumstances or should it concur with the Panel's decision on the findings of fact. It is also observed that the Appellate Body in many instances is constrained by a limited appreciation of facts of the Panel. Is it reluctant to explore the facts of the case and content to rely on the adequate or inadequate appreciation of facts by the Panel. On the other hand, is an inadequate analysis of law itself a question of law and thus explorable by the Appellate Body? The lines between what constitutes a pure question of fact, law and legal application of the law to the facts of a particular case get blurred in complex situations. An analysis of how the Appellate Body has dealt with these situations and the jurisprudence developed is a fertile area for research.

Simon Lester has raised these issues and more in an article titled "The Development of Standards of Appellate Review for Factual, Legal and Law Application Questions in WTO Dispute Settlement" in the Trade, Law and Development Journal.

Some of the relevant provisions of the DSU that address the issue of the contours of the Appellate Body's interpretative flexibility are Article 11 and Article 17(6) of the DSU.

Article 11 deals with the functions of Panels and states:

The function of panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements.  Accordingly, a panel should 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, and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements.  Panels should consult regularly with the parties to the dispute and give them adequate opportunity to develop a mutually satisfactory solution.

Article 17(6) of the DSU states that "An appeal shall be limited to issues of law covered in the panel report and legal interpretations developed by the panel."

While Article 17(6) is amply clear about the scope of an Appellate review, Article 11 gives leeway for the Appellate Body to exercise a wider ambit of judicial review. Simple questions of fact may be outside the scope of the Appellate body. On most occasions questions of fact and law do not overlap. However, an inconsistent application of law  to a set of facts, may require the interpretation of both the facts and the law. However, when application of law to particular facts becomes a complex issue of understanding the factual situation correctly or an inconsistent or non-objective assessment of the facts, Appellate review does play a role. There the simplistic distinction between law and fact disappear and converge into a complex quagmire of judicial appreciation and interpretation. 

As observed by Simon Lester:
"As a matter of policy, it may be desirable to give the Appellate Body a good deal of leeway in reviewing a panel’s examination of the measures that are being challenged. However, Article 17.6 explicitly narrows the scope of appellate review to ‘issues of law’ and ‘legal interpretations’. Arguably, the Appellate Body’s decision to consider the panel’s construction of the challenged measures, outside the context of WTO obligations, as a law application issue stretches the boundaries of this provision, as the Appellate Body seems to have taken a very broad view of what constitutes a law application question. The result of this interpretation is an expansion of the scope of issues over which the Appellate Body can exercise a review.  For those who think that appellate review is a good idea, this development may be a positive one. On the other hand, to the extent that the Appellate Body’s interpretation goes in a direction different than what the drafters intended, it may cause concerns."

To what extent the Appellate body might go to unravel facts in an Appellate review would depend on the particular facts and circumstances of each case (We lawyers love this phrase - "depend on facts and circumstances of each case"). However, the limits of Article 17(6) and the purpose of an appellate review to decide on matters of legal interpretation might hold it back. It would be worthwhile to make an analysis of the cases where the Appellate Body has crossed the line? Or perhaps, it draws the line itself, so never crosses it.

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