To appeal or not to appeal is the question

Simon Lester has a succinct account of the Appellate Body (AB) crisis at the WTO and what alternative arrangements in place now can offer to resolve the impasse. With the AB dysfunctional presently and an alternative ad hoc arbitration mechanism in place adopted by about 10% of the WTO's 164 members, one needs to wait and watch on how the Multi Party Interim Arbitration arrangement(MPIA) will pan out.

The MPIA still does have challenges - its limited following, secretarial and funding support, how it will address the issue raised on the AB's overreach, issue of interpretation, "law making instead of clarifying the rights and obligations of WTO members and how much deference it will show to domestic authorities' decisions.

As Simon points out:

Just as there was uncertainty about the Appellate Body in 1995, there is uncertainty about the MPIA now. In addition to the points noted above, there are other questions: What approach will the MPIA take regarding the interpretation of core WTO principles such as the nondiscrimination obligation and public policy exceptions? How often will the MPIA appeal process be used? What kind of legal culture will develop around it, including the approach of the arbitrators and of the litigants themselves? How much deference will the MPIA show toward politically sensitive domestic laws and regulations? How much deference will the MPIA show toward the findings and reasoning of WTO panels? Will the MPIA avoid novel and controversial issues that are put before it or take them on? Only practical experience will give us clear answers.

However, the issue is much more than compliance and enforceability. It is an issue inherent in judicial interpretation. The power to interpret carries with it the inherent possibility of expansive or restrictive interpretative approaches. The language of the law is not always clear and unambigious. The Vienna Convention on the Law of Treaties does provide guidance but the same articles of the VCLT have provided scope of varying interpretation according to the text, object and purpose or context.

The issue is whether sovereign countries are willing to accept a neutral arbiter with the power of enforcement in international trade disputes. It is inherent in such processes to have the arbiter have the final word on interpretation and jurisprudence, of course within limits. One sees the tension in investment arbitration where States seek joint interpretative notes to control the interpretative jurisprudence of treaty text. The irony is that in the arena of international investment arbitration, the debate is about having an appellate system - a Multilateral Investment Court, partly because there is a perceived inadequacy of the ad hoc arbitral tribunal system leading to incoherent jurisprudence.