Procedural innovations in the MPIA: A way to strengthen the WTO

dispute settlement mechanism?

Mariana de Andrade*

1. Introduction

On December 2019, the World Trade Organization (WTO) Appel-

late Body (AB) ceased to function due to the insufficient number of mem-
bers on its bench. This happened after months of attempted negotiations
based on United States’ (US) criticisms against some of the practices of
the AB.1 The paralysis of the AB resulted in a structural crisis in the WTO
dispute settlement mechanism (DSM), since the notification to appeal
prevents the adoption of a report, and consequently excludes its binding
effect. As a result, the dispute is not definitively settled.
To remedy the paralysis of the AB and the systemic consequences
thereof, some WTO Members2 devised an appeals mechanism under Ar-
ticle 25 of the ‘Understanding on dispute settlement rules and proce-
dures’ (DSU), the WTO/DSM ‘procedural rulebook.’ Article 25 envis-
ages the option for arbitration for dispute resolution in the multilateral
trading system. This provision serves as basis for the institution of an in-
terim arbitration mechanism that would act as an alternative system of
appeal. This approach, initially conceived by the European Union, grad-
ually gained ground among other major WTO players.3 On April 30,

*
PhD in International Law, University of Milano-Bicocca. This paper is updated as
of August 2020.
1
See USTR, ‘Report on the Appellate Body of the World Trade Organization’
(February 2020) <https://ustr.gov/about-us/policy-offices/press-office/press-releases/
2020/february/ustr-issues-report-wto-appellate-body> (‘2020 report’).
2
For purposes of clarity, the WTO Members (States and the European Union) are
here referred to with capital ‘M,’ while AB members are referred to with lowercase ‘m’.
3
For a detailed overview of the development of this alternative, see E Baroncini, ‘The
EU Approach to Overcome the WTO Dispute Settlement Vacuum: Art 25 DSU Interim
Appeal Arbitration as a Bridge Between Renovation and Innovation’, in M Lewis and

QIL, Zoom-out 63 (2019) 121-149

122 QIL 63 (2019) 121-149 ZOOM OUT/FOLLOW UP

2020, after intense debates on how to implement this idea (debates that
continue to take place), the Multi-party Interim Appeal Arbitration
Mechanism (MPIA) was officially notified before the WTO and entered
into force.4 To date, 22 delegations have indicated their interest in being
part of the mechanism.5
The question posed by the present Zoom-out is whether there is a
‘meaningful place for the World Trade Organization in the future of In-
ternational Economic Law.’ The other contributions to this issue, crafted
by some of the most renowned names of international trade law, have
provided thorough responses to this question. This contribution pro-
poses, much more modestly, to address the role that the newly estab-
lished MPIA may play in the future of the WTO. In particular, it can be
interesting to see how procedural innovations introduced by the MPIA
can serve as a trigger for a systemic change in the WTO dispute settle-
ment.
So far, the US seems to be an isolated voice against the functioning
of the AB. Nevertheless, because of the need for consensus for the selec-
tion of AB members, the reinstatement of the AB depends on the will of
this delegation.6 It is important to note that the objective of the MPIA is
not to address the US criticisms, nor to replace the AB. As indicated by
its very title, it is an ‘interim arrangement,’ negotiated by some WTO
delegations to preserve the binding nature of the reports until AB be-
comes functional again.7 Howeover, one can argue that these changes
have the potential to ‘change course’ in the practice of WTO adjudica-
tion, thereby conforming to some of the criticisms regarding judicial
overreach by the US. Thus, the practices followed by the parties and the

others (eds), A Post-WTO International Legal Order: Utopian, Dystopian and other
scenarios (Springer 2020).
4
WTO, ‘Statement on a mechanism for developing, documenting and sharing
practices and procedures in the conduct of WTO disputes’ (30 April 2020)
JOB/DSB/1/Add.12 (‘MPIA’).
5
As of 06 July 2020, these are: Australia; Brazil; Benin; Canada; China; Chile;
Colombia; Costa Rica; Ecuador; the European Union; Guatemala; Hong Kong, China;
Iceland; Mexico; New Zealand; Nicaragua; Norway; Pakistan; Singapore; Switzerland;
Ukraine and Uruguay.
6
At the same time, as pointed out by Hoekman and Mavroidis, the crisis of the AB
is a symptom of a larger malfunctioning of the legislative branch of the multilateral trading
system. See B Hoekman, PC Mavroidis, ‘Twin Crises in the WTO, and No Obvious Way
Out’ (2019) 63 QIL-Questions Intl L 113-119.
7
WTO, ‘MPIA’ (n 4) 7th recital and para 15.
Procedural innovation in the MPIA: A way to strengthen the WTO DSM? 123

arbitrators under the auspices of MPIA may influence a future resurrec-

tion of the permanent AB.
This article starts from the concerns advanced made by the US re-
garding the functioning of the Appellate Body, and considers how some
of the procedural innovations introduced by MPIA may serve to address
these criticisms. It is thus divided into three parts. First, it explains the
US complaints, and briefly describes the objectives and functioning of
the MPIA (Section 2). Second, it analyses in greater detail the potential
that the MPIA procedural innovations may bring to the implementation
of changes in the form and procedure of WTO dispute settlement system
(Section 3). Third, it considers other elements, in addition to the proce-
dural innovations in the text of the MPIA, which may play a role in in-
fluencing the functioning of this arrangement (Section 4).

2. The criticisms of the United States and the creation of the MPIA

2.1. The US criticisms against AB practices

The US generally claims that the AB has indulged in ‘overreaching’

practices, which have altered (and diminished) Members’ rights under
the WTO. In the words of the United States Trade Representative
(USTR), ‘The Appellate Body has exceeded its authority and breached
the limitations explicitly agreed and imposed by WTO Members. Indi-
viduals on the Appellate Body have repeatedly attempted to assume for
themselves authority not granted to them by WTO Members.’8
The criticisms described below have been made unilaterally by the
US administration, and their validity can be debated. It is not the aim of
this contribution to review this debate, which has been thoroughly exam-
ined by other contributors to this Zoom-out. The US concerns were con-
sidered during the informal talks mediated by New Zealand ambassador
David Walker in the WTO, resulting in the drafting of the so-called
‘Walker Principles’ at the end of 2019.9 The draft decision proposed to
the WTO General Council consists of 22 paragraphs that consider ways

8
USTR, ‘2020 report’ (n 1) 4.
9
WTO, General Council, Draft Decision, ‘Functioning of the Appellate Body’,
WTO Doc WT/GC/W/791 (28 November 2019) (‘Draft Decision’).
124 QIL 63 (2019) 121-149 ZOOM OUT/FOLLOW UP

on how to mitigate the problems indicated by the US. These proposals,

however, were not accepted by the US.10
The US criticisms are not recent, and this delegation has effectively
been a ‘persistent objector’ to certain practices followed by the AB since
its early years of functioning.11 The US addresses its criticisms to practices
which are substantive, procedural and systemic in nature.12 More specif-
ically, the US delegation advances five main criticisms of the operation of
the AB.13

(i) Failure to meet the 90-day deadline established by Article 17(5)

of the DSU for issuing reports

Article 17(5) of the DSU establishes that the time limit for the presen-
tation of the appeal report is 90 days from the notification of the decision
to appeal by one of the parties to the dispute. In recent years, however,
the AB had not been able to meet that deadline.14 The US delegation,
moreover, points out that not only has the AB consistently breached the
90-day time limit, but it has similarly breached the obligation, also deter-
mined by DSU Article 17(5), to ‘[…] inform the [Dispute Settlement
Body] in writing of the reasons for the delay together with an estimate of
the period within which it will submit its report.’ Therefore, the US has
expressed its dissatisfaction not only with the AB’s failure to meet the
deadline, but also with the lack of transparency in stating reasons, esti-
mating the deadline and consulting the parties to the dispute regarding
the delay.15

10
‘Statement as Delivered by Ambassador Dennis Shea at the WTO General Council
Meeting, December 9, 2019’ <https://geneva.usmission.gov/2019/12/09/ambassador-
shea-statement-at-the-wto-general-council-meeting/>.
11
R McDougall, ‘The Crisis in WTO Dispute Settlement: Fixing Birth Defects to
Restore Balance’ (2018) 52 J World Trade 878.
12
ibid 879.
13
See USTR, ‘The President's 2018 Trade Policy Agenda’ available at
<https://ustr.gov/sites/default/files/files/Press/Reports/2018/AR/2018%20Annual%20
Report%20FINAL.PDF> (‘2018 Trade Policy Agenda’) and ‘2020 report’ (n 1). See also
G Sacerdoti, The Stalemate Concerning the Appellate Body of the WTO: Any Way Out?
(2019) 63 QIL-Questions Intl L 37-58.
14
The current average between notice and appeal and circulation of AB reports is
140.75 days. See ‘Timing of Appeal, Circulation and Adoption of Appellate Body
Reports’ available at <www.worldtradelaw.net/databases/abtiming.php>.
15
USTR, ‘2020 report’ (n 1) 30-31.
Procedural innovation in the MPIA: A way to strengthen the WTO DSM? 125

(ii) The continuation of the service of AB members whose term has

expired, in accordance with Rule 15 of the Working Procedures
for Appeal Review

Rule 15 of the Working Procedures for Appeal Review (‘Working

procedures’)16 states that

A person who ceases to be a Member of the Appellate Body may, with

the authorization of the Appellate Body and upon notification to the
DSB, complete the disposition of any appeal to which that person was
assigned while a Member, and that person shall, for that purpose only,
be deemed to continue to be a Member of the Appellate Body.17

This possibility has been put in place in the practice of the AB. How-
ever, the US argues that AB members would have extrapolated the terms
of Rule 15, and that ‘it is the Dispute Settlement Body, not the Appellate
Body, that has the authority and responsibility to decide whether a per-
son whose term of appointment has expired should continue serving.’18
Moreover, according to the US, until 2017 this provision was used spar-
ingly, but from 2017 onwards ‘the Appellate Body invoked Rule 15 in a
number of disputes, for indefinite and extended periods of time, and
even on appeals where work had not begun before the member’s term
expired.’19

(iii) Reports containing ‘advisory opinions on issues not necessary to

resolve a dispute’

The US also claims that AB reports excessively delve into legal ques-
tions and findings which are not necessary or relevant to the resolution

16
The Working Procedures were drafted by the Appellate Body, in accordance to
art 17.9 of the DSU (‘Working procedures shall be drawn up by the Appellate Body in
consultation with the Chairman of the DSB and the Director-General, and communicated
to the Members for their information’). On this, see D Steger, ‘The Founding of the
Appellate Body’ in G Marceau (ed), History of Law and Lawyers in the GATT/WTO: The
Development of the Rule of Law in Multilateral Trading System (CUP 2015) 450-451.
17
WTO, ‘Working procedures for appellate review’ <www.wto.org/english/tratop_e/
dispu_e/ab_e.htm>.
18
USTR, ‘2018 Trade Policy Agenda’ (n 13) 26.
19
ibid 26.
126 QIL 63 (2019) 121-149 ZOOM OUT/FOLLOW UP

of disputes. This complaint is intricately linked to the broader US criti-

cism that the AB has indulged in judicial law-making. As an example, the
US mentions the AB report Argentina — Measures Relating to Trade in
Goods and Services, in which, as it argues, more than two thirds of the
report reflect obiter dicta, with no relevance to the resolution of the case,
‘consisting simply of advisory opinions in legal matters.’20
The criticisms related to what the US calls ‘advisory opinions not es-
sential to dispute resolution’ in AB reports involve, in particular, the ap-
plication of DSU Article 17(12). This provision states that ‘The Appellate
Body shall address each of the issues raised in accordance with paragraph
6 during the appellate proceeding.’ In general, the strategy of the litigat-
ing parties and their lawyers is to argue their allegations from the broad-
est possible regulatory framework. As a consequence of Article 17(12),
the AB would have a legal obligation to examine all allegations in dispute
by the parties.21
In contrast to this interpretation of Article 17(12), the US argues that
this provision ‘[…] does not direct the Appellate Body to “make legal
findings and conclusions” on each of the issues raised in the appeal.’22
The US then advances the principle of the judicial economy as a way of
preventing unnecessary issues from being addressed in a report.
In this regard, the US delegation argues that the purpose of the WTO
dispute settlement mechanism is to ‘resolve disputes,’ not to ‘create
law.’23 Under the WTO Agreement, only Members of the Organization
have the power to create new rights and obligations; and, according to

20
ibid 27.
21
Chen argues that DSU art 17(12) determines that the AB should consider all claims
raised on appeal, and that ‘Perhaps based on this understanding, in the Appellate Body’s
earlier decisions, the Appellate Body understood art 17.12 DSU as requiring it to set out
in its decision a formal legal conclusion on every issue raised. It may be the reason, for
example, that the Appellate Body would question a panel’s legal interpretation without
considering the interpretation’s effect on the actual outcome of the case’ (Tsai-fang Chen,
‘Judicial Economy and Advisory Opinions of the Appellate Body–Potential Reform of
Article 17.12 of the DSU’ in C Lo, J Nakagawa, T Chen (eds), The Appellate Body of the
WTO and Its Reform (Springer 2020) 190, fns ommitted). The author also considers,
however, that this understanding was relativised with the AB’s subsequent practice.
22
USTR, ‘2020 report’ (n 1) 51.
23
ibid 47.
Procedural innovation in the MPIA: A way to strengthen the WTO DSM? 127

the DSU, the WTO dispute settlement mechanism cannot create or di-
minish Members’ rights and obligations.24 According to the United
States, by engaging in extensive unnecessary legal reasoning, the AB
would be creating the law, especially as these obiter dicta are potentially
invoked to resolve subsequent disputes (a critique related to the use of
decisions with precedential value, as discussed below).

(iv) AB review of facts and review of a Member’s domestic law

DSU Article 17(6) provides that ‘An appeal shall be limited to issues
of law covered in the panel report and legal interpretations developed by
the panel.’ Put differently, the review of issues of fact are excluded from
the AB’s scope of review.25 However, in practice, appeals are oftentimes
based on allegations of violation of DSU Article 11, which in turn states
that ‘a panel should make an objective assessment of the matter before it,
including an objective assessment of the facts of the case and the applica-
bility 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.’
Due to the overarching scope of Article 11, appellants’ submissions
not rarely invoke this provision to ground the argument that a panel dis-
regarded its obligation to ‘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 agree-
ments.’26 This means revisiting, on appeal, issues of fact that were exam-
ined by the panel. In the same vein, the AB often needs to revisit issues

24
Art 3(2) of the DSU famously states that ‘The dispute settlement system of the
WTO is a central element in providing security and predictability to the multilateral
trading system. The Members recognize that it serves to preserve the rights and
obligations of Members under the covered agreements, and to clarify the existing
provisions of those agreements in accordance with customary rules of interpretation of
public international law. Recommendations and rulings of the DSB cannot add to or
diminish the rights and obligations provided in the covered agreements.’
25
On this, see J Bohanes, N Lockhart, ‘Standard of Review in WTO Law’ in D
Bethlehem and others (eds), The Oxford Handbook of International Trade Law (OUP
2009) 379-433.
26
The problems ensuing from resort to DSU art 11 as a basis for appeal claims are
not novel, and are described by Ehlermann, one of the original AB members, in the first
years of functioning of the AB (CD Ehlermann, ‘Six Years on the Bench of the World
128 QIL 63 (2019) 121-149 ZOOM OUT/FOLLOW UP

of fact in order to correctly determine the application of a legal standard

to the issue at stake. Therefore, a blurred line separates questions of fact
from questions of law.27 Instead, the US argues that the AB’s approach to
address such claims is overreaching, and that it ‘consistently reviewed
panel fact-finding under different legal standards, and has reached conclu-
sions that are not based on panel factual findings or undisputed facts.’28
As an illustration, in the DSB meeting of 29 June 2020, upon the circu-
lation of the Australia – Plain Packaging AB report, the US stated that ‘[t]he
Appellate Body’s decision to review the “objective assessment” of a panel
has been seized by appellants to cover practically all factual determinations
by a panel, as illustrated by this monstrous appeal.’29 The US also criticised
the disputants’ approach in extensively relying on Article 11 claims: ‘Such
erroneous and unfounded claims of error under Article 11 resulted in signif-
icant expenditures of time and resources. The parties and third parties met
with the Division for two oral hearings in June and November 2019, span-
ning a total of eight days of hearings.’30 There is, therefore, also a correlation
between the AB’s approach to fact-finding and de novo domestic law review
and the delays in the circulation of appeal reports.

(v) The claim that AB treats its own reports as precedent, binding to
subsequent panels

Another US criticism against AB practices is that ‘Without basis in

the DSU, the Appellate Body has asserted its reports effectively serve as

Trade Court’ (2002) 36 J World Trade 619-623). Interestingly, the Ehlermann describes
that the United States was then already a critic of the approach taken by the AB.
27
The AB drew the distinction between issues of fact and issues of law for the first
time in the early EC — Hormones dispute: ‘Determination of the credibility and weight
properly to be ascribed to (that is, the appreciation of) a given piece of evidence is part
and parcel of the fact finding process and is, in principle, left to the discretion of a panel
as the trier of facts. The consistency or inconsistency of a given fact or set of facts with
the requirements of a given treaty provision is, however, a legal characterization issue. It
is a legal question. Whether or not a panel has made an objective assessment of the facts
before it, as required by art 11 of the DSU, is also a legal question, which, if properly
raised on appeal, would fall within the scope of appellate review’ (para 132).
28
USTR, ‘2018 Trade Policy Agenda’ (n 8) 28.
29
USTR, ‘U.S. Statements at the June 29, 2020 DSB Meeting’
<https://geneva.usmission.gov/wp-content/uploads/sites/290/Jun29.DSB_.Stmt_.as-deliv.
fin_.public13218.pdf> 18.
30
ibid 17.
Procedural innovation in the MPIA: A way to strengthen the WTO DSM? 129

precedent and that panels are to follow prior Appellate Body reports ab-
sent “cogent reasons”’.31 The US claims that previous reports provide
‘persuasive value,’ but are not to be treated as precedent.32
In general, the understanding that there is no formal precedent sys-
tem in the WTO dispute settlement mechanism is undisputed, even
within WTO Membership.33 However, as in any legal system, previous
judicial decisions serve to clarify the meaning of the law and serve as a
reference for subsequent legal disputes. This is fundamental for legal cer-
tainty and predictability of the law, elements recognised as fundamental
also by DSU Article 3(2).
Thus, the debate is of a practical nature: the US argues that previous
reports have ‘persuasive value,’ but not ‘precedential value.’ The US crit-
icises the AB’s approach, claiming that the AB would have placed an in-
correct emphasis on the precedential value of its own reports. The issue
is difficult to resolve, since the line between ‘precedent value’ and ‘per-
suasive value’ is not clearly delineated in practice.34 In other words, while
it is recognised that following previously established legal conclusions for
resolving new cases is useful and important, it is not clear to which extent
new cases can be decided differently, and to what extent, in the interest
of legal coherence, one can deviate from previous legal conclusions. Like-
wise, the delimitation of this fine line can hardly be achieved by means of
drafting new legal instruments. During negotiations mediated by Ambas-
sador David Walker, this issue was the subject of debate, and as a result
the following paragraphs were inserted in the final instrument suggested
by the mediator:

31
USTR, ‘2018 Trade Policy Agenda’ (n 8) 28. On the ‘absent cogent reasons’
criterion, see J Bacchus, S Lester, ‘The Rule of Precedent and the Role of the Appellate
Body’ (2020) 54 J World Trade 183–198; M de Andrade, ‘Precedent in the WTO:
Retrospective Reflections for a Prospective Dispute Settlement Mechanism’ (2020) 11(2)
J Intl Dispute Settlement 262–277.
32
USTR, ‘Statements by the United States at the Meeting of the WTO Dispute
Settlement Body – Geneva, December 18, 2018’ (‘DSB Statements of 18 December 2018’)
10 ff.
33
See General Council, ‘Informal Process on Matters Related to the Functioning of
the Appellate Body – Report by the Facilitator, H.E. Dr. David Walker (New Zealand)’
WTO Doc JOB/GC/215 (1 March 2019) para 1.27.
34
On this, and arguing that this distinction lacks practical implications, see Lester,
Bacchus (n 31).
130 QIL 63 (2019) 121-149 ZOOM OUT/FOLLOW UP

‘15. Precedent is not created through WTO dispute settlement proceed-

ings.
16. Consistency and predictability in the interpretation of rights and ob-
ligations under the covered agreements is of significant value to Mem-
bers.
17. Panels and the Appellate Body should take previous Panel/Appel-
late Body reports into account to the extent they find them relevant in
the dispute they have before them.’35

As mentioned, however, the draft decision by Ambassador Walker

was not accepted by the US.36

2.2. The paralysis of the AB and the creation of the MPIA: An ‘in-
terim arrangement’ with potential permanent impacts

Legally and politically motivated by the above complaints, the US de-

cided to block the nomination and renewal of terms for all AB members.
DSU Article 16.4 determines that ‘If a party has notified its decision to
appeal, the report by the panel shall not be considered for adoption by
the DSB until after completion of the appeal.’ If the panel report cannot
be adopted by the DSB, it does not become final and binding. Conse-
quently, parties to the dispute have no legal obligation to abide by this
report. If one of the (or both) parties to a dispute notify their intention
to appeal, the dispute is brought to a halt. The controversy, therefore,
will not have a binding final decision, nor can it be submitted to subse-
quent compliance procedures. In other words, it is an ‘appeal into the
void.’37 This situation of standstill largely eliminates the effectiveness of
the dispute settlement mechanism that has been traditionally seen as ex-
emplary in international law, and the ‘crown jewel’ of the multilateral
trading system.38

35
WTO, ‘Draft Decision’ (n 9).
36
See (n 10) and accompanying text.
37
See J Pauwelyn, ‘WTO Dispute Settlement Post 2019: What to Expect?’ (2019) 22
J Intl Economic L 297.
38
Thus called, inter alia, by JH Jackson, Sovereignty, the WTO, and Changing
Fundamentals of International Law (CUP 2006) 135.
Procedural innovation in the MPIA: A way to strengthen the WTO DSM? 131

To circumvent the legal vacuum created by the lack of the AB, WTO
Members have thus far fostered two solutions.39 The first one is the pos-
sibility that, after the start of a specific dispute, parties to it make an ad
hoc agreement stating their intention not to appeal to the panel’s report.
This alternative was adopted, for example, between Indonesia — Safe-
guard on Certain Iron or Steel Products dispute (DS 496).40 In other
words, the parties undertake (on an ad hoc basis and valid only for that
dispute) to adopt the panel’s report, so that there is no possibility of ‘ap-
pealing into the void.’
The second solution, which is discussed in more detail in the next
sections of this work, is the creation of an interim appeal mechanism
based on Article 25 of the DSU.41 This provision determines the possibil-
ity of resorting to arbitration procedures, by agreement between the dis-
puting parties, as an alternative to the standard procedure established in
the DSU:

‘Arbitration
1. Expeditious arbitration within the WTO as an alternative means of
dispute settlement can facilitate the solution of certain disputes that con-
cern issues that are clearly defined by both parties.
2. Except as otherwise provided in this Understanding, resort to arbi-
tration shall be subject to mutual agreement of the parties which shall
agree on the procedures to be followed. Agreements to resort to arbi-
tration shall be notified to all Members sufficiently in advance of the
actual commencement of the arbitration process.
3. Other Members may become party to an arbitration proceeding only
upon the agreement of the parties which have agreed to have recourse
to arbitration. The parties to the proceeding shall agree to abide by the
arbitration award. Arbitration awards shall be notified to the DSB and
the Council or Committee of any relevant agreement where any Member
may raise any point relating thereto.
4. Articles 21 and 22 of this Understanding shall apply mutatis mutandis
to arbitration awards.’

39
For a complete description of the legal and procedural scenario ensuing from the
demise of the AB, see Pauwelyn (n 37).
40
WTO, ‘Understanding between Indonesia and Chinese Taipei Regarding
Procedures under arts 21 and 22 of the DSU’ WTO Doc WT/DS490/13 (15 April 2019)
para 7.
41
See Baroncini (n 3).
132 QIL 63 (2019) 121-149 ZOOM OUT/FOLLOW UP

In short, the above paragraphs determine the possibility of resorting

to an arbitral procedure if the parties to a dispute so agree, as an ‘alter-
native means of dispute settlement.’ In this case, as usual in international
arbitration, the parties must agree on the procedure to be followed.42 Par-
agraph 2 sets out the need for an agreement between the parties to use
this mechanism. Paragraph 3 determines that the parties will agree to
abide by the arbitration award – that is, they will accept the binding na-
ture of the decision. Paragraph 4 provides that the arbitration award will
be subject to the procedures for implementing the decision (DSU Article
21) and retaliation (compensation and suspension of concessions, DSU
Article 22).
The text of the MPIA, which was formally notified to the WTO on
30 April 2020,43 is divided into three parts. The first part consists of a
preamble and a series of paragraphs in which the participant Members
confirm their interest in maintaining the WTO DSM functional, and thus

‘indicate their intention to resort to arbitration under Article 25 of the

DSU as an interim appeal arbitration procedure (hereafter the “appeal
arbitration procedure”), as long as the Appellate Body is not able to hear
appeals of panel reports in disputes among them due to an insufficient
number of Appellate Body members.’44

Participating Members also state that they will not pursue the ‘tradi-
tional’ appeals procedure set out in Articles 16(4) and 17 of the DSU.
They thus give their confirmation (which serves at least for good faith
purposes) that they will not ‘appeal into the void’ when other participat-
ing parties are involved.45
The second part of the MPIA (Annex 1: ‘Agreed procedures for ar-
bitration under Article 25 of the DSU in dispute DSX’) consists of a tem-
plate agreement to be submitted by the parties to the MPIA, and it gives
effect to the consensus requirement between litigating parties set out by
Article 25.2 of the DSU. Annex 1 is composed of 19 paragraphs detailing
the procedure to be followed by the parties and the arbitrators. While

42
See United Nations, Handbook on the Peaceful Settlement of Disputes between
States (New York 1992) 55 ff.
43
See (n 4).
44
WTO, ‘MPIA’ (n 4) para 1.
45
ibid.
Procedural innovation in the MPIA: A way to strengthen the WTO DSM? 133

the first part of the MPIA provides a declaration of general principles

agreed by all members participating to the MPIA, Annex 1 details pro-
cedural issues including questions of deadline, jurisdictional limits, third
party rights, and enforcement of the arbitration award.
The third part (Annex 2: ‘Composition of the pool of arbitrators pur-
suant to paragraph 4 of communication JOB/DSB/1/ADD.12’), details
the procedure for choosing the list of MPIA arbitrators. This is a list of
ten arbitrators, to be appointed by the participating members of the
MPIA.
To date, the use of the MPIA as an alternative appealing mechanism
has been notified in the cases Canada — Aircraft (DS 522),46 Costa Rica
— Avocados (DS 524),47 and Canada — Sale of Wine (DS 537).48

3. Adapt or perish: The MPIA’s potential for triggering changes in the

WTO dispute settlement system

This section takes up the US criticisms briefly described in Section 2

and contrasts them with some of the procedural provisions established
by the MPIA. Partly influenced by the concerns that led to the crisis of
the AB, as well as by the discussions mediated by Ambassador David
Walker,49 MPIA negotiators included procedural provisions that ad-
dress, directly or indirectly, US criticisms. MPIA provisions touch upon
the question of precedent (sixth recital of the preamble and Paragraph 5
of the MPIA), the criticism regarding ‘advisory opinions’ on ‘issues un-
necessary for the resolution of a dispute’ (Paragraphs 10 and 13 of Annex

46
WTO, ‘Canada — Measures Concerning trade in commercial aircraft’, Agreed
procedures for Arbitration under Article 25 of the DSU’ Communication dated 29 May
2020 (WT/DS522/20).
47
WTO, ‘Costa Rica — Measures concerning the importation of fresh avocados from
Mexico, Agreed procedures for Arbitration under Article 25 of the DSU’ Communication
dated 29 May 2020 (WT/DS524/5).
48
WTO, ‘Canada — Measures governing the sale of wine’, Agreed procedures for
Arbitration under Article 25 of the DSU’ Communication dated 29 May 2020
(WT/DS537/15).
49
See WTO, ‘General Council, Minutes of the meeting - Held in the Centre William
Rappard on 28 February 2019’ WTO Doc WT/GC/M/176; General Council, ‘Informal
process on matters related to the functioning of the Appellate Body – Report by the
facilitator H.E. Dr. David Walker (New Zealand)’ WTO Doc JOB/GC/220 (23 July
2019).
134 QIL 63 (2019) 121-149 ZOOM OUT/FOLLOW UP

1 of the MPIA), the AB’s non-compliance with the 90-day deadline (Par-
agraphs 12 to 14 of MPIA Annex 1), and the standard of review of issues
of fact (also touched upon in Paragraph 13 of MPIA Annex 1).
The MPIA does not address the application of Rule 15 of the Work-
ing procedures. The absence of provisions related to Rule 15 is not sur-
prising, since in other international jurisdictions arbitrators also continue
to serve in cases to which they have been assigned even after the end of
their term.50 Moreover, MPIA Annex 2, Paragraph 5, highlights the ‘in-
terim nature’ of the arrangement, and states that ‘Should the conditions
laid down in paragraph 15 of the communication remain for a longer pe-
riod of time, the participating Members will, periodically, partially re-
compose the pool of arbitrators, starting two years after composition.’
The only MPIA provision related to transition rules for arbitrators
foresees only the case of resignation by arbitrators: ‘Should a need arise
to complete the pool of arbitrators, for instance following the resignation
of a member of the pool, the procedure set out above will apply.’51 Thus,
one can infer that MPIA participants have not initially determined how
to reappoint arbitrators if the AB is not reestablished within two years.
Furthermore, it can also be concluded that, at the end of the two years,
the list of arbitrators will be recomposed, but the arbitrators who have

50
For instance, art 56(2) of the ICSID Convention sets out that ‘A member of a
Commission or Tribunal shall continue to serve in that capacity notwithstanding that he
shall have ceased to be a member of the Panel.’ Arbitral proceedings under UNCLOS
Annex VII establish that ‘The name of an arbitrator shall remain on the list until
withdrawn by the State Party which made the nomination, provided that such arbitrator
shall continue to serve on any arbitral tribunal to which that arbitrator has been appointed
until the completion of the proceedings before that arbitral tribunal’ (Annex VII, art
2(3)). An illustration of a non-arbitral international jurisdiction, but which follows the
same lines, is the ICC: art 36(10) of the Rome Statute determines that ‘Notwithstanding
paragraph 9, a judge assigned to a Trial or Appeals Chamber in accordance with article
39 shall continue in office to complete any trial or appeal the hearing of which has already
commenced before that Chamber.’ Art 13(3) of the ICJ Statute establishes that ‘3. The
members of the Court shall continue to discharge their duties until their places have been
filled. Though replaced, they shall finish any cases which they may have begun.’ At the
same time, art 33 of the Rules of the ICJ determine: ‘Except as provided in art 17 of these
Rules, Members of the Court who have been replaced, in accordance with art 13,
paragraph 3, of the Statute following the expiration of their terms of office, shall discharge
the duty imposed upon them by that paragraph by continuing to sit until the completion
of any phase of a case in respect of which the Court convenes for the oral proceedings
prior to the date of such replacement.’
51
WTO, ‘MPIA’ (n 4) Annex 2 para 6.
Procedural innovation in the MPIA: A way to strengthen the WTO DSM? 135

already been assigned to a case will continue to hear it. This practice is
not only in accordance with Rule 15 of the Working Procedures, but also,
as mentioned above, common to arbitration procedures in international
jurisdictions.
The next subsections examine relevant MPIA provisions which touch
upon the other criticisms by the US.

3.1. The AB’s alleged disregard to the 90-day deadline for the issuance
of reports

As described in subsection 2.1, the US criticises the fact that the 90-
day deadline for appeals established by DSU Article 17(5) has not been
observed by the AB. This US criticism is not without merit; after all, in-
ternational trade disputes usually have relevant short-term practical im-
plications. However, attributing the non-compliance with the deadline
only to AB practices is a questionable approach, since the the pace of the
procedures also depends to a large extent on the actions of the parties
(for example, size and complexity of submissions), the number of cases
in an adjudicatory body’s docket, and even on the Secretariat support for
AB members.52
The MPIA text features some provisions that deal with this issue.
Pursuant to Paragraph 12 of its Annex 1, the MPIA follows the 90-day
term determined by Article 17(5) of the DSU. Despite this, and possibly
recognising the difficulties related to meeting this deadline, Paragraphs
12 and 13 of the MPIA state that

‘12. The parties request the arbitrators to issue the award within 90 days
following the filing of the Notice of Appeal. To that end, the arbitrators
may take appropriate organizational measures to streamline the pro-
ceedings, without prejudice to the procedural rights and obligations of
the parties and due process. Such measures may include decisions on
page limits, time limits and deadlines as well as on the length and num-
ber of hearings required.

52
For a detailed assessment on the influence of dispute settlement submissions to the
workload and observance of deadlines in panel and AB proceedings, see CD Ehlermann,
‘The Workload of the WTO Appellate Body: Problems and Remedies’ (2017) 20 J Intl
Economic L 705.
136 QIL 63 (2019) 121-149 ZOOM OUT/FOLLOW UP

13. If necessary in order to issue the award within the 90 day time-pe-
riod, the arbitrators may also propose substantive measures to the par-
ties, such as an exclusion of claims based on the alleged lack of an ob-
jective assessment of the facts pursuant to Article 11 of the DSU.’53

Paragraph 13 is accompanied by a footnote which states that ‘For

greater certainty, the proposal of the arbitrators is not legally binding and
it will be up to the party concerned to agree with the proposed substan-
tive measures. The fact that the party concerned does not agree with the
proposed substantive measures shall not prejudice the consideration of
the case or the rights of the parties.’54
Although this possibility is clearly subordinate to the choice of the
party affected to follow by the arbitrators’ suggestion, it should be kept
in mind that MPIA participating parties are few in number, and represent
a parcel of WTO Membership who, in general, is particularly concerned
with the functioning of the WTO dispute settlement mechanism. Thus,
it is to be expected that, in the interest of the proper functioning of the
newly implemented system and with a view to promoting good faith in
the use of the mechanism, there could be greater inclination to follow the
arbitrators’ suggestions.
Finally, Annex 1, Paragraph 14, states that ‘On a proposal from the
arbitrators, the parties may agree to extend the 90 day time-period for
the issuance of the award.’55 As mentioned in Subsection 2.1(i), one of
the US criticisms is the AB’s lack of transparency to the disputant parties
regarding the extension of deadlines. According to the US, ‘Recent com-
munications from the Appellate Body simply inform WTO Members that
the Appellate Body will not meet the 90-day deadline, without providing
any estimated date for when the Appellate Body will circulate a report.’56
Despite, once again, having an indicative and not mandatory nature, Par-
agraph 14 inserts in the MPIA procedure an important element which
has the potential to strengthen legitimacy: it emphasises the choice of the
parties to the possibility of the extension of the period for the issue of the
report, consequently preventing the arbitrators from determining it on

53
WTO, ‘MPIA’ (n 4) Annex 1 para 12 (fn omitted).
54
ibid fn 6.
55
ibid para 14.
56
USTR, ‘2020 report’ (n 1) 31.
Procedural innovation in the MPIA: A way to strengthen the WTO DSM? 137

their own initiative. This approach can be a valuable tool to address the
US’ criticism of lack of transparency.

3.2. The use of obiter dicta and the issuance of ‘advisory opinions not
necessary to resolve a dispute’

The US argues that ‘The purpose of the dispute settlement system is

not to produce reports or to “make law,” but rather to help Members
resolve trade disputes among them.’57 Conversely, according to the US
the AB would have indulged in making lengthy findings which are un-
necessary to resolve a dispute. However, the difference between analysis
and legal findings which are ‘necessary to resolve a dispute’ and those
that are ‘unnecessary,’ superfluous, is not evident. As mentioned, the AB
has an obligation to review all claims raised by the parties – and, more
generally, this obligation stems from the broader principles of due pro-
cess and transparency. In this sense, it is unclear which findings are ‘nec-
essary for the resolution of a dispute’ and which ones are not.
Another obvious problem related to this specific criticism is how to
grasp the difference advanced by the US between advisory opinions /
obiter dicta and the natural and necessary process stemming from an ad-
judicator’s exercise to determine the meaning of the law to reach a legal
finding. The US claims that

‘the dispute settlement system is plainly structured around the idea that
panels and the Appellate Body cannot add to or detract from obligations
undertaken by WTO Members. The use of “clarify” in [DSU Article
3(2)], therefore, does not and cannot authorize panels or the Appellate
Body to provide interpretations in the abstract or on issues not necessary
to resolve the particular dispute.’58

Nevertheless, it is not clear to what extent the US believes that an

interpretation is ‘in the abstract’ and to which extent it is a necessary her-
meneutical step for the resolution of a dispute.

57
USTR, ‘2018 Trade Policy Agenda’ (n 13) 26. See also separate opinion in India –
Solar Cells (WT/DS456/AB/R) adopted on 14 October 2016 54 and ff.
58
USTR, ‘2020 report’ (n 1) 50 (original emphasis, fns omitted).
138 QIL 63 (2019) 121-149 ZOOM OUT/FOLLOW UP

Perhaps the only legal tool to avoid the AB’s legal obligation to ad-
dress all claims raised in the appeal and mitigate the perception that re-
ports extensively comprise obiter dicta is through judicial economy.59 In-
deed, this principle has gained wide acceptance and has been largely ap-
plied in the practice of WTO dispute settlement, at both panel and ap-
peal levels.60
MPIA negotiators included Paragraph 10 (Annex 1), which states
that ‘The arbitrators shall only address those issues that are necessary for
the resolution of the dispute. They shall address only those issues that
have been raised by the parties, without prejudice to their obligation to
rule on jurisdictional issues.’61 Yet, this provision does not clearly stipu-
late to what extent judicial economy can be exercised without overstep-
ping considerations of transparency and the principle of motivation of
judicial decisions.
Moreover, the inclusion of this paragraph is not particularly innova-
tive in terms of substance. On the contrary, AB and panels’ practice al-
ready displays resort to judicial economy when adjudicators consider that
the analysis of an issue is not necessary to the resolution of a dispute, or
that it is unnecessary given another previous conclusion that leads to the
same result..62
Despite the practical limitation of the inclusion of this paragraph, the
explicit determination in Paragraph 10 that adjudicators must limit their

59
On this, see Chen (n 21).
60
For a detailed description on the exercise of judicial economy in the case law of
WTO dispute settlement, see A Alvarez-Jiménez, ‘The WTO Appellate Body’s Exercise
of Judicial Economy’ (2009) 12 J Intl Economic L 393. The discretionary character of
resort to judicial economy should be born in mind, given that this principle opens the
door for ‘cherry-picking’ specific complaints by adjudicators within their understanding
of what is relevant for the assessment of the dispute. For a thorough analysis in this sense,
see ML Busch, K Pelc, ‘Ruling Not to Rule: The Use of Judicial Economy by WTO
Panels’ in A Porges, ML Busch, T Broude (eds), The Politics of International Economic
Law (CUP 2010).
61
WTO, ‘MPIA’ (n 4) para 10. It is interesting to note that this provision authorizes
the consideration proprio motu of matters of jurisdictional character, such as the
determination of kompetenz-kompetenz.
62
A Alvarez-Jiménez (n 60) 403. The author divides what he calls resort to
‘substantive judicial economy’ in the practice of the AB into two categories: ‘(i) refusing
to assess a substantive issue when it is not necessary to resolve the dispute; and (ii) not
seeing the pertinent case as an appropriate occasion to make a very important ruling on
a systemic issue for some case-specific reasons’ (ibid).
Procedural innovation in the MPIA: A way to strengthen the WTO DSM? 139

findings to ‘issues necessary to resolve the dispute’ has the potential to

encourage the exercise of judicial economy. In an almost contrary sense
to DSU Article 17(12), this MPIA provision provides the arbitrators with
the possibility of using an explicit legal means to justify recourse to judi-
cial economy, partially reducing the discretionary power stemming from
the exercise of this procedural tool.

3.3. The precedential value of previous AB reports

Unlike Paragraph 15 of the Walker principles,63 the MPIA does not

explicitly cite the expression ‘precedent.’ However, interestingly, already
in the preamble of the MPIA one can find a recital which is potentially
relevant to the issue:

‘Re-affirming that consistency and predictability in the interpretation of

rights and obligations under the covered agreements is of significant
value to Members and that arbitration awards cannot add to or diminish
the rights and obligations provided in the covered agreements.’64

Although the wording of this recital is overarching and to a large ex-

tent reproduces DSU Article 3(2),65 it would be surprising if it had not
been conceived having in mind the debate regarding the precedential
value of adopted reports to the resolution of disputes. Indeed, this debate
focuses largely on the need for a dispute settlement system that, on the
one hand, promotes consistency and predictability, but at the same time
respects the DSU’s determination that DSB rulings cannot add or dimin-
ish the rights and obligations of WTO agreements.66

63
See (n 35) and accompanying text.
64
WTO, ‘MPIA’ (n 4).
65
Art 3(2) sets out: ‘2. The dispute settlement system of the WTO is a central element
in providing security and predictability to the multilateral trading system. The Members
recognize that it serves to preserve the rights and obligations of Members under the
covered agreements, and to clarify the existing provisions of those agreements in
accordance with customary rules of interpretation of public international law.
Recommendations and rulings of the DSB cannot add to or diminish the rights and
obligations provided in the covered agreements’
66
A conundrum which Bacchus and Lester (n 31) describe as ‘inherent tension on
the question of precedent’ (185). See also G Guillaume, ‘The Use of Precedent by
International Judges and Arbitrators’ (2011) 2 J Intl Dispute Settlement 5.
140 QIL 63 (2019) 121-149 ZOOM OUT/FOLLOW UP

In this vein, it is particularly interesting to note that there is a slight

difference in the wording of DSU Article 3(2) and the MPIA’s sixth re-
cital: while the former speaks of ‘security and predictability,’ the latter
mentions ‘coherence and predictability.’ One may argue that coherence is
a choice of words that puts more emphasis on the need of a consistent
case law. The use of the term coherence is also repeated in MPIA Annex
1, Paragraph 5, this time combined with the term ‘consistency’:

‘5. Members of the pool of arbitrators will stay abreast of WTO dispute
settlement activities and will receive all documents relating to appeal ar-
bitration proceedings under the MPIA. In order to promote consistency
and coherence in decision-making, the members of the pool of arbitra-
tors will discuss amongst themselves matters of interpretation, practice
and procedure, to the extent practicable.’67

This provision does not directly refer to the precedential value of pre-
vious adopted reports, but it confirms the central value of ‘consistency
and coherence’ in MPIA arbitral awards. Moreover, it also reaffirms the
principle of collegiality in the MPIA decision-making process. Indeed,
the principle of collegiality directs arbitrators to exchange views even
among those MPIA adjudicators who have not been assigned to a given
case. Collegiality discourages divergences of views among different arbi-
trators, and is therefore a strong element for the promotion of a con-
sistent case law.
The principle of collegiality was established early on in the practice
of the AB. As explained by Marceau, Porges and Baker,

‘[...] the “original seven” [members of the AB], together with the sup-
port of [Debra] Steger and her staff, implemented a procedure known
as the “exchange of views” in which all Appellate Body members sit to-
gether, sometimes for days, to discuss and share opinions on all the is-
sues in a dispute. This fosters collegiality and ensures coherence and
consistency in the development of Appellate Body jurisprudence.’68

67
WTO, ‘MPIA’ (n 4), emphasis added.
68
G Marceau, A Porges, D Baker, ‘Introduction and Overview’ in G Marceau (ed),
A History of Law and Lawyers in the GATT/WTO: The Development of the Rule of Law
in Multilateral Trading System (CUP 2015) 48 (fn omitted).
Procedural innovation in the MPIA: A way to strengthen the WTO DSM? 141

Indeed, Rule 4(1) of the Working Procedures for Appellate Review

clearly indicates that consistency is a desired aim of the principle of col-
legiality:

‘To ensure consistency and coherence in decision-making, and to draw

on the individual and collective expertise of the Members, the Members
shall convene on a regular basis to discuss matters of policy, practice
and procedure.’69

The absence of a provision which more explicitly notes the absence

of a system of precedent in the WTO, similar to Paragraph 15 of the
Walker principles, is also noteworthy. In fact, the MPIA omits to make
any attempt to clarify the value of past reports. The details discussed dur-
ing the negotiation process of the MPIA are not publicly available, and
therefore any conclusion regarding this omission can only be speculative;
in any case, it is important to remark such an omission.
Against this background, the MPIA seems to reinforce the im-
portance of consistent jurisprudence, but it does not clarify the prece-
dential value of previous reports. In this sense, it is to be expected that
the approach followed by the arbitrators will continue along the same
lines already followed by the panels and the AB.
At the same time, references to previous reports in the WTO are
largely influenced by the work of its Secretariat (more specifically, by the
Rules, Legal Affairs and Appellate Body divisions).70 Accordingly, the
weight given to past reports in new arbitration decisions in MPIA will
possibly be influenced by the institutional apparatus that the arbitrators
will receive for the decision-making process, i.e. the administrative and
legal support provided to the arbitrators.71 In addition, it can be inferred

69
WTO, Working procedures for appellate review’ <www.wto.org/english/tratop_e/
dispu_e/ab_e.htm>.
70
See J Pauwelyn, K Pelc, ‘Who Writes the Rulings of the World Trade
Organization? A Critical Assessment of the Role of the Secretariat in WTO Dispute
Settlement’ (September 26, 2019) <https://papers.ssrn.com/sol3/papers.cfm?abstract_
id=3458872>.
71
WTO, ‘MPIA’ (n 4) para 7 determines that ‘The participating Members envisage
that appeal arbitrators will be provided with appropriate administrative and legal
support, which will offer the necessary guarantees of quality and independence, given the
nature of the responsibilities involved. The participating Members envisage that the
support structure will be entirely separate from the WTO Secretariat staff and its
divisions supporting the panels and be answerable, regarding the substance of their work,
142 QIL 63 (2019) 121-149 ZOOM OUT/FOLLOW UP

that the way in which the arbitrators will exercise the collegiality princi-
ple established by MPIA Paragraph 5 will also constitute an important
element in shaping the precedent weight of previous decisions in MPIA
practice.

3.4. Standard of review of issues of fact and Members’ domestic law

at appellate stage

Paragraph 13 of MPIA Annex 1, previously mentioned in Subsection

3.1, is also relevant to the US criticism regarding the ‘Appellate Body Re-
view of facts and review of a Member’s domestic law de novo.’ As dis-
cussed above, Paragraph 13 explicitly allows arbitrators to request the
exclusion of claims based on DSU Article 11. As described in subsection
2.4, appellants often invoke this provision to claim that a panel failed to
‘make an objective assessment of the matter before it, including an objec-
tive assessment of the facts of the case and the applicability of and con-
formity with the relevant covered agreements.’ Consequently, in several
disputes the AB had to revisit factual conclusions by panelists in order to
determine whether the panel had incurred in a violation of Article 11.
It should be stressed (again) that MPIA Paragraph 13 sets out the
possibility for arbitrators to advance a suggestion that parties withdraw a
given claim, and it is up to the affected party to decide whether to follow
the suggestion. In any case, the explicit mention to exclude arguments
based on Article 11 of the DSU on appeal proceedings has two possible
implications. The first is that, by making direct reference to DSU Article
11 in Paragraph 13, the MPIA leaves no doubt as to the possibility for
arbitrators to request the exclusion of claims based on the allegation of
lack of ‘objective assessment of the facts of the case and the applicability
of and conformity with the relevant covered agreements.’ If the arbitra-
tors follow this prerogative, and the parties abide by the indication, there
may be a decrease in disputes involving this provision on appeal. The
second consequence is the ‘psychological’ effect that the direct reference
to Article 11 may have on the participants of the MPIA (i.e. the litigants).
Influenced by this provision, it is possible that the litigating parties will

only to appeal arbitrators. The participating Members request the WTO Director
General to ensure the availability of a support structure meeting these criteria.’
Procedural innovation in the MPIA: A way to strengthen the WTO DSM? 143

refrain from making appeals based on DSU Article 11 on their own initi-
ative.
Another relevant provision in MPIA Annex 1 is Paragraph 9: ‘An ap-
peal shall be limited to issues of law covered by the panel report and legal
interpretations developed by the panel.’ This sentence is, however, a re-
production of Article 17(6) of the DSU and, therefore, does not really
address the US criticisms regarding the standard of review at appeal
stage.
Although it is difficult to clarify through legal texts questions like the
determination of the standard of review of issues of fact and domestic
measures, as well as the debates about ‘consultative opinions,’ some spec-
ifications on these questions could be attempted. In this sense, ‘[a] more
prescriptive and deferential standard of review could be adopted to sup-
plement the current requirement to make an “objective assessment of the
facts”, especially in cases where obligations are ambiguous or cases in-
volving national measures that result from quasi-judicial proceedings.’72
For instance, the Walker principles suggested the adoption of four para-
graphs regarding the scope of appeal:

‘9. Article 17.6 of the DSU restricts matters that can be raised on appeal
to issues of law covered in the relevant panel report and legal interpre-
tations developed by that panel.
10. The ‘meaning of municipal law’ is to be treated as a matter of fact
and therefore is not subject to appeal.
11. The DSU does not permit the Appellate Body to engage in a “de
novo” review or to “complete the analysis” of the facts of a dispute.
12. Consistent with Article 17.6 of the DSU, it is incumbent upon Mem-
bers engaged in appellate proceedings to refrain from advancing exten-
sive and unnecessary arguments in an attempt to have factual findings
overturned on appeal, under DSU Article 11, in a de facto “de novo
review”.’73

These paragraphs of the Walker Principles provide useful specifica-

tions, which could have been incorporated, at least in part, into the MPIA

72
McDougall (n 11) 890 (fns omitted).
73
WTO, ‘Draft decision’ (n 9).
144 QIL 63 (2019) 121-149 ZOOM OUT/FOLLOW UP

text. At the same time, such determinations would have significant impli-
cations for appeals procedures.74 It can be speculated that the negotiators
of the MPIA text did not consider it appropriate to innovate in this area.

4. Elements potentially influencing the functioning of the MPIA

The MPIA includes in its text important provisions that detail or clar-
ify some of the issues pointed out by the US as the cause of its discontent.
As considered in the previous subsections, the application (both on the
side of the parties and on the side of the arbitrators) of some of these new
procedural elements in the practice of the MPIA provisions has the po-
tential to trigger practical changes in WTO adjudication. Consequently,
it is speculated here that some of these practical changes may also rein-
state the US interest in reviving the AB, or at least possibly joining the
MPIA (although the latter is not the desired solution, given the ‘interim
nature’ of the mechanism).
At the same time, it is to be expected that many of the conditions
which existed prior to the paralysis of the AB will continue to exist with
the MPIA. First, MPIA participants are not particularly dissatisfied with
the approach previously taken by the AB. As McDougall pointed out,
part of the disagreement between the US and other Members is based on
a different understanding of the nature of WTO dispute settlement: that
of ‘only’ settling disputes between Members, or that of authoritatively
providing interpretation and clarifying the meaning of WTO law.75 In
particular, the European Union (who is arguably the main promoter of
the MPIA) appears to be on the spectrum of Members who advocate for
an independent dispute resolution system with a more markedly judicial
role (as opposed to a mere ‘settler of disputes’).76 Indeed, the ‘European
governance model’ approach has strongly influenced the judicial ap-
proach followed in WTO adjudication.77

74
For a detailed assessment on this topic, see J Bohanes, N Lockhart, ‘Standard of
Review in WTO Law’ in Daniel Bethlehem and others (eds), The Oxford Handbook of
International Trade Law (OUP 2009).
75
McDougall (n 11) 881.
76
ibid 883.
77
See T Soave, ‘European Legal Culture and WTO Dispute Settlement: Thirty Years
of Socio-Legal Transplants from Brussels to Geneva’ (2020) 19 L and Practice of Intl
Procedural innovation in the MPIA: A way to strengthen the WTO DSM? 145

Thus, from the viewpoint of the legitimacy of the functioning of a

body which is subject to the approval of its Members, there is little in-
centive for MPIA arbitrators to adopt an approach more deferential to
the WTO Membership, as arguably aimed by the US. Secondly, because
the WTO agreements remain – of course – unchanged, the same inter-
pretative issues will arise. As many times remembered by trade law schol-
arship, WTO agreements are the product of negotiations between differ-
ent Members.78 These negotiations were particularly driven by the need
for consensus. This process, as is common in treaty negotiation, has left
a series of gaps and ‘constructive ambiguities’ in the text of the agree-
ments, and these ambiguities are taken for clarification in practical cases
before the adjudicatory mechanism.79 This process of ‘clarification of law’
gives the adjudicator a minimal lawmaking role, regardless of whether it
is a panel, the AB, or an ‘interim agreement’ for appeals.
At the same time, it is also true that the institutional effect created by
an ‘Appellate Body’ may create unique systemic consequences. These can
be mitigated with the substitution of a permanent review organ by an
‘interim arrangement’ for appeals. In the case of the AB, three elements
are noteworthy. First, the fact that the AB is a body, a permanent organ
for appeals – this denomination carries with it a certain weight. As put by
Marotti, perhaps the arbitral nature of the appeals would mean a ‘return
to the purely private functions of the double degree of jurisdiction.’ By
setting aside the permanent character of the second instance tribunal, the
MPIA would weaken the systemic impacts of the review mechanism.80

Courts and Tribunals 129. Soave eloquently describes that ‘This self-perceived role was
made explicit through a number of jurisprudential postures, including: (i) establishing “a
doctrine of implicit judicial powers, including to fill gaps”; (ii) rejecting a “notion of
institutional balance that would require some deference to political/diplomatic rule-
making processes of the WTO”; and (iii) highlighting the “precedential weight” of past
decisions as a means to ensure security and predictability in the interpretation of trade
norms’ (ibid 130).
78
See for instance Ehlermann (n 26).
79
In the same sense, McDougall (n 11) 878.
80
Translated from the original: ‘D’altro canto, se, con una certa approssimazione
(data la menzionata complessità della crisi attuale dell’intero sistema multilaterale degli
scambi internazionale), imputiamo la crisi dell’Organo di Appello ad una resistenza nei
confronti della nomofilachia, l’appello arbitrale decreterebbe un ritorno alle funzioni
puramente private del doppio grado, facendo venir meno uno dei fattori principali – la
permanenza del tribunale di seconda istanza – che, secondo la nostra ipotesi, determinano
146 QIL 63 (2019) 121-149 ZOOM OUT/FOLLOW UP

This institutional design has implications that differentiate the AB from

the MPIA, considering the interim and limited aspect in terms of the lat-
ter’s applicability.
Second, another factor that will possibly distinguish the MPIA to the
AB is the absence of a specific division that assists MPIA arbitrators. It
can be assumed that such absence will bear an influence not only on how
the procedural innovations described above will be implemented in prac-
tice, but also how the adjudicatory mechanism will function. For exam-
ple, the role of the Secretariat in assisting the drafting of reports is well-
known, at both panel and AB levels. As demonstrated in an empirical
study carried out by Pauwelyn and Pelc, the participation of the Rules,
Legal Affairs and Appellate Body divisions in different instances of the
adjudicatory procedure (from the choice of panelists’ to the formulation
of questions for the parties in oral proceedings and the writing of so-
called ‘issue papers’) significantly impacts the final product of the pro-
cess, ie the reports.81 The authors also stress that the role of the Secretar-
iat in drafting the first versions of the report to be circulated is an ‘open
secret’ in Geneva.82
The assistance of the WTO Secretariat in the various stages of dispute
resolution bears consequences to at least three of the US criticisms:

‘what we describe below as an inclination to write rulings that are am-

bitious and expansive in scope may, indeed, lead to what at least some
Members have viewed as (i) activist interpretations that go “beyond the
text”; (ii) advisory opinions on issues not necessary to resolving the dis-
pute; and (iii) an expansive position on “legal issues” subject to AB re-
view (e.g. including panel findings on the meaning of domestic law).
Convoluted writing style and longer reports and proceedings, in turn,
may partly explain why the AB has struggled to decide within the pre-
scribed 90 days which, in turn, has necessitated many outgoing AB
members to continue working on appeals even after their term ended
(pursuant to Rule 15 of the AB Working Procedures).’83

il cedimento alla “forza espansiva” del doppio grado verso la sua dimensione sistemica’
(L Marotti, Il doppio grado di giudizio nel processo internazionale (Giappichelli 2019) 239).
81
Pauwelyn, Pelc (n 70) 10-11.
82
ibid 11.
83
ibid 26.
Procedural innovation in the MPIA: A way to strengthen the WTO DSM? 147

Therefore, the final output of arbitrators – the format of the awards,

the language there employed, the references to previous case law – will
possibly be largely influenced by the absence of this institutional appa-
ratus.84
Third, it can be speculated that there will be a difference in the au-
thoritative value of MPIA’s arbitral reports when compared to AB re-
ports. In addition to the ‘systemic impact,’ described above, stemming
from the advent of an appeals permanent organ, the MPIA also has a
much more modest Membership representation than that of the AB. Put
differently, while the AB’s jurisdiction formally encompasses the entirety
of WTO Membership, the MPIA is subscribed by only a portion of those
Members. This aspect also lessens the institutional legitimacy of the
MPIA when compared to the AB, and may bear implications in the func-
tioning of this interim arrangement.
In addition to these considerations, one cannot forget the evident po-
litical nature of the US complaints. It is true that such complaints are not
recent. At the same time, there is an evident element of power politics
that cannot be underestimated.85 As a result, it is possible, even if the
MPIA brings about changes in the practice of WTO adjudication which
are in line with US criticisms, that such changes may be completely inef-
fective for the reestablishment of the AB.

5. Concluding remarks

The text of the MPIA introduces in WTO dispute settlement a few

provisions which may bear an impact on the systemic functioning of the
appeals system. Perhaps the most notable one is Annex 1, Paragraph 13.

84
See also G Marceau, A Porges, D Baker, ‘Introduction and Overview’ in G
Marceau (ed), A History of Law and Lawyers in the GATT/WTO: The Development of
the Rule of Law in Multilateral Trading System (CUP 2015) 29, describing: ‘the increasing
involvement of Secretariat staff in the work of dispute settlement panels. [...] The more
disputes there were, the more Secretariat staff were required to step in to assist panels.’
85
See M Wagner, ‘The Impending Demise of the WTO Appellate Body: From
Centrepiece to Historical Relic?’ in C Lo, J Nakagawa, T Chen (eds) The Appellate Body
of the WTO and Its Reform (Springer 2019) 67-90. For a fierce criticism of the US’
approach and justifications to the blocking of appointment of AB members, see E-U
Petersmann, ‘How Should WTO Members React to Their WTO Crises?’ (2019) 18
World Trade Rev 503.
148 QIL 63 (2019) 121-149 ZOOM OUT/FOLLOW UP

This inclusion tackles directly at least two of the US concerns: the ob-
servance of the 90-day time limit for appeals and the standard of review
for issues of fact and domestic law de novo review. Moreover, by allowing
for the possibility of excluding claims from the scope of the appeal, Par-
agraph 13 also has the potential to mitigate the perception of ‘findings
unnecessary to resolve a dispute’ in Article 25 awards. At the same time,
other provisions do not seem to bear a particularly ‘transforming’ poten-
tial. An example in this sense is Annex 1, Paragraph 9, which is a repro-
duction of DSU Article 17(6). On the issue of precedent, little seems to
have been clarified with the adoption of the MPIA. As discussed, this
may be so because MPIA negotiators do not particularly partake with the
US’s criticism in this area.
To be sure, it is not contended here that adjusting adjudicatory prac-
tices to the concerns expressed by the US will solve the more systemic
issues in the multilateral trading system. It seems well-acknowledged that
the AB crisis is intrinsically linked with a broader dysfunction of the
WTO, that of the stalemate of negotiations and the hurdles involved in
changing and amending the existing rules.86 Moreover, given the under-
lying political nature of the US’s intentions, it is difficult to know whether
adapting to its concerns would constitute a step towards re-establishing
the AB.
However, the considerations advanced in this work may serve two
pragmatic purposes. The first is to regain the support of the US, the
WTO Member who is in fact stopping the AB from functioning, and
whose participation in WTO adjudication more generally is significant.87
Moreover, based on scholarly works and statements from delegations in
DSB meetings, it can be considered that there is merit to some of the
criticisms advanced by the US, such as the lack of clarity in the standard

86
In this sense, see Hoekman, Mavroidis (n 6); CB Picker, ‘The AB Crisis as
Symptomatic of the WTO’s Foundational Defects or: How I Learned to Stop Worrying
and Love the AB’ in C Lo, J Nakagawa, T Chen (eds) The Appellate Body of the WTO
and Its Reform (Springer 2019).
87
As of September 2020, 155 complaints have been filed against the US, and 124
complaints have been filed by the US. Excluding disputes in which the US appears as
third-party, this adds up to 278 disputes (out of a total of 596 DSU complaints), an
equivalent of approximately 46% of the DSU complaints. Data available in WTO,
‘United States of America and the WTO’ <www.wto.org/english/thewto_e/countries_e/
usa_e.htm> and ‘Dispute Settlement Statistics and Tables’ <www.worldtradelaw.net/
static.php?type=dsc&page=stats>.
Procedural innovation in the MPIA: A way to strengthen the WTO DSM? 149

of review for Article 11 and the impossibility to abide by the 90-day dead-
line for appeals. Therefore, the second pragmatic outcome of adjusting
some of the practices in WTO adjudication (both on the side of the Mem-
bership and on the side of adjudicators) is to enhance the WTO dispute
settlement mechanism and strengthen the legitimacy as perceived by
WTO Members. This contribution concludes that, although procedural
innovations contained in the MPIA are insufficient to address these con-
cerns, some of them, combined with a good faith approach by the MPIA
participants and adjudicators, may serve to trigger a positive change in
WTO adjudicatory practices, thus ensuring a more strengthened role of
the WTO in the future of international trade law.