ANNEX 2 UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES.docx
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ANNEX 2 UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES.docx
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ANNEX2UNDERSTANDINGONRULESANDPROCEDURESGOVERNINGTHESETTLEMENTOFDISPUTES
ANNEX2
UNDERSTANDINGONRULESANDPROCEDURES
GOVERNINGTHESETTLEMENTOFDISPUTES
Membersherebyagreeasfollows:
Article1
CoverageandApplication
1.TherulesandproceduresofthisUnderstandingshallapplytodisputesbroughtpursuanttotheconsultationanddisputesettlementprovisionsoftheagreementslistedinAppendix1tothisUnderstanding(referredtointhisUnderstandingasthe"coveredagreements").TherulesandproceduresofthisUnderstandingshallalsoapplytoconsultationsandthesettlementofdisputesbetweenMembersconcerningtheirrightsandobligationsundertheprovisionsoftheAgreementEstablishingtheWorldTradeOrganization(referredtointhisUnderstandingasthe"WTOAgreement")andofthisUnderstandingtakeninisolationorincombinationwithanyothercoveredagreement.
2.TherulesandproceduresofthisUnderstandingshallapplysubjecttosuchspecialoradditionalrulesandproceduresondisputesettlementcontainedinthecoveredagreementsasareidentifiedinAppendix2tothisUnderstanding.TotheextentthatthereisadifferencebetweentherulesandproceduresofthisUnderstandingandthespecialoradditionalrulesandproceduressetforthinAppendix 2,thespecialoradditionalrulesandproceduresinAppendix2shallprevail.Indisputesinvolvingrulesandproceduresundermorethanonecoveredagreement,ifthereisaconflictbetweenspecialoradditionalrulesandproceduresofsuchagreementsunderreview,andwherethepartiestothedisputecannotagreeonrulesandprocedureswithin20daysoftheestablishmentofthepanel,theChairmanoftheDisputeSettlementBodyprovidedforinparagraph1ofArticle2(referredtointhisUnderstandingasthe"DSB"),inconsultationwiththepartiestothedispute,shalldeterminetherulesandprocedurestobefollowedwithin10daysafterarequestbyeitherMember.TheChairmanshallbeguidedbytheprinciplethatspecialoradditionalrulesandproceduresshouldbeusedwherepossible,andtherulesandproceduressetoutinthisUnderstandingshouldbeusedtotheextentnecessarytoavoidconflict.
Article2
Administration
1.TheDisputeSettlementBodyisherebyestablishedtoadministertheserulesandproceduresand,exceptasotherwiseprovidedinacoveredagreement,theconsultationanddisputesettlementprovisionsofthecoveredagreements.Accordingly,theDSBshallhavetheauthoritytoestablishpanels,adoptpanelandAppellateBodyreports,maintainsurveillanceofimplementationofrulingsandrecommendations,andauthorizesuspensionofconcessionsandotherobligationsunderthecoveredagreements.WithrespecttodisputesarisingunderacoveredagreementwhichisaPlurilateralTradeAgreement,theterm"Member"asusedhereinshallreferonlytothoseMembersthatarepartiestotherelevantPlurilateralTradeAgreement.WheretheDSBadministersthedisputesettlementprovisionsofaPlurilateralTradeAgreement,onlythoseMembersthatarepartiestothatAgreementmayparticipateindecisionsoractionstakenbytheDSBwithrespecttothatdispute.
2.TheDSBshallinformtherelevantWTOCouncilsandCommitteesofanydevelopmentsindisputesrelatedtoprovisionsoftherespectivecoveredagreements.
3.TheDSBshallmeetasoftenasnecessarytocarryoutitsfunctionswithinthetime-framesprovidedinthisUnderstanding.
4.WheretherulesandproceduresofthisUnderstandingprovidefortheDSBtotakeadecision,itshalldosobyconsensus.
Article3
GeneralProvisions
1.MembersaffirmtheiradherencetotheprinciplesforthemanagementofdisputesheretoforeappliedunderArticlesXXIIandXXIIIofGATT1947,andtherulesandproceduresasfurtherelaboratedandmodifiedherein.
2.ThedisputesettlementsystemoftheWTOisacentralelementinprovidingsecurityandpredictabilitytothemultilateraltradingsystem.TheMembersrecognizethatitservestopreservetherightsandobligationsofMembersunderthecoveredagreements,andtoclarifytheexistingprovisionsofthoseagreementsinaccordancewithcustomaryrulesofinterpretationofpublicinternationallaw.RecommendationsandrulingsoftheDSBcannotaddtoordiminishtherightsandobligationsprovidedinthecoveredagreements.
3.ThepromptsettlementofsituationsinwhichaMemberconsidersthatanybenefitsaccruingtoitdirectlyorindirectlyunderthecoveredagreementsarebeingimpairedbymeasurestakenbyanotherMemberisessentialtotheeffectivefunctioningoftheWTOandthemaintenanceofaproperbalancebetweentherightsandobligationsofMembers.
4.RecommendationsorrulingsmadebytheDSBshallbeaimedatachievingasatisfactorysettlementofthematterinaccordancewiththerightsandobligationsunderthisUnderstandingandunderthecoveredagreements.
5.Allsolutionstomattersformallyraisedundertheconsultationanddisputesettlementprovisionsofthecoveredagreements,includingarbitrationawards,shallbeconsistentwiththoseagreementsandshallnotnullifyorimpairbenefitsaccruingtoanyMemberunderthoseagreements,norimpedetheattainmentofanyobjectiveofthoseagreements.
6.MutuallyagreedsolutionstomattersformallyraisedundertheconsultationanddisputesettlementprovisionsofthecoveredagreementsshallbenotifiedtotheDSBandtherelevantCouncilsandCommittees,whereanyMembermayraiseanypointrelatingthereto.
7.Beforebringingacase,aMembershallexerciseitsjudgementastowhetheractionundertheseprocedureswouldbefruitful.Theaimofthedisputesettlementmechanismistosecureapositivesolutiontoadispute.Asolutionmutuallyacceptabletothepartiestoadisputeandconsistentwiththecoveredagreementsisclearlytobepreferred.Intheabsenceofamutuallyagreedsolution,thefirstobjectiveofthedisputesettlementmechanismisusuallytosecurethewithdrawalofthemeasuresconcernedifthesearefoundtobeinconsistentwiththeprovisionsofanyofthecoveredagreements.Theprovisionofcompensationshouldberesortedtoonlyiftheimmediatewithdrawalofthemeasureisimpracticableandasatemporarymeasurependingthewithdrawalofthemeasurewhichisinconsistentwithacoveredagreement.ThelastresortwhichthisUnderstandingprovidestotheMemberinvokingthedisputesettlementproceduresisthepossibilityofsuspendingtheapplicationofconcessionsorotherobligationsunderthecoveredagreementsonadiscriminatorybasisvis-à-vistheotherMember,subjecttoauthorizationbytheDSBofsuchmeasures.
8.Incaseswherethereisaninfringementoftheobligationsassumedunderacoveredagreement,theactionisconsideredprima facietoconstituteacaseofnullificationorimpairment.ThismeansthatthereisnormallyapresumptionthatabreachoftheruleshasanadverseimpactonotherMemberspartiestothatcoveredagreement,andinsuchcases,itshallbeuptotheMemberagainstwhomthecomplainthasbeenbroughttorebutthecharge.
9.TheprovisionsofthisUnderstandingarewithoutprejudicetotherightsofMemberstoseekauthoritativeinterpretationofprovisionsofacoveredagreementthroughdecision-makingundertheWTOAgreementoracoveredagreementwhichisaPlurilateralTradeAgreement.
10.Itisunderstoodthatrequestsforconciliationandtheuseofthedisputesettlementproceduresshouldnotbeintendedorconsideredascontentiousactsandthat,ifadisputearises,allMemberswillengageintheseproceduresingoodfaithinanefforttoresolvethedispute.Itisalsounderstoodthatcomplaintsandcounter-complaintsinregardtodistinctmattersshouldnotbelinked.
11.ThisUnderstandingshallbeappliedonlywithrespecttonewrequestsforconsultationsundertheconsultationprovisionsofthecoveredagreementsmadeonorafterthedateofentryintoforceoftheWTOAgreement.WithrespecttodisputesforwhichtherequestforconsultationswasmadeunderGATT1947orunderanyotherpredecessoragreementtothecoveredagreementsbeforethedateofentryintoforceoftheWTOAgreement,therelevantdisputesettlementrulesandproceduresineffectimmediatelypriortothedateofentryintoforceoftheWTOAgreementshallcontinuetoapply.
12.Notwithstandingparagraph11,ifacomplaintbasedonanyofthecoveredagreementsisbroughtbyadevelopingcountryMemberagainstadevelopedcountryMember,thecomplainingpartyshallhavetherighttoinvoke,asanalternativetotheprovisionscontainedinArticles 4,5,6and12ofthisUnderstanding,thecorrespondingprovisionsoftheDecisionof5April 1966(BISD14S/18),exceptthatwherethePanelconsidersthatthetime-frameprovidedforinparagraph7ofthatDecisionisinsufficienttoprovideitsreportandwiththeagreementofthecomplainingparty,thattime-framemaybeextended.TotheextentthatthereisadifferencebetweentherulesandproceduresofArticles 4,5, 6and 12andthecorrespondingrulesandproceduresoftheDecision,thelattershallprevail.
Article4
Consultations
1.MembersaffirmtheirresolvetostrengthenandimprovetheeffectivenessoftheconsultationproceduresemployedbyMembers.
2.EachMemberundertakestoaccordsympatheticconsiderationtoandaffordadequateopportunityforconsultationregardinganyrepresentationsmadebyanotherMemberconcerningmeasuresaffectingtheoperationofanycoveredagreementtakenwithintheterritoryoftheformer.
3.Ifarequestforconsultationsismadepursuanttoacoveredagreement,theMembertowhichtherequestismadeshall,unlessotherwisemutuallyagreed,replytotherequestwithin10daysafterthedateofitsreceiptandsha
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