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P.3.1 Good faith — Pacta sunt servanda
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P.3.1.1 US — Shrimp, para. 158
(WT/DS58/AB/R)
The chapeau of Article XX is, in fact, but one expression of the
principle of good faith. This principle, at once a general principle of
law and a general principle of international law, controls the exercise of
rights by states. One application of this general principle, the application widely known as the doctrine of
abus de droit, prohibits the abusive exercise of a state’s rights
and enjoins that whenever the assertion of a right “impinges on the
field covered by [a] treaty obligation, it must be exercised bona fide,
that is to say, reasonably”. An abusive exercise by a Member of its own
treaty right thus results in a breach of the treaty rights of the other
Members and, as well, a violation of the treaty obligation of the Member
so acting. …
P.3.1.2 US — FSC, para. 166
(WT/DS108/AB/R)
Article 3.10 of the DSU commits Members of the WTO, if a dispute
arises, to engage in dispute settlement procedures “in good faith in an
effort to resolve the dispute”. This is another specific manifestation
of the principle of good faith which, we have pointed out, is at once a
general principle of law and a principle of general international law.
This pervasive principle requires both complaining and responding Members
to comply with the requirements of the DSU (and related requirements in
other covered agreements) in good faith. By good faith compliance,
complaining Members accord to the responding Members the full measure of
protection and opportunity to defend, contemplated by the letter and
spirit of the procedural rules. The same principle of good faith requires
that responding Members seasonably and promptly bring claimed procedural
deficiencies to the attention of the complaining Member, and to the DSB or
the Panel, so that corrections, if needed, can be made to resolve
disputes. The procedural rules of WTO dispute settlement are designed to
promote, not the development of litigation techniques, but simply the
fair, prompt and effective resolution of trade disputes.
P.3.1.3 Thailand — H-Beams, para. 97
(WT/DS122/AB/R)
… We also note that nothing in the DSU prevents a defending party
from requesting further clarification on the claims raised in a panel
request from the complaining party, even before the filing of the first
written submission. In this regard, we point to Article 3.10 of the DSU
which enjoins Members of the WTO, if a dispute arises, to engage in
dispute settlement procedures “in good faith in an effort to resolve the
dispute”. As we have previously stated, the “procedural rules of WTO
dispute settlement are designed to promote, not the development of
litigation techniques, but simply the fair, prompt and effective
resolution of trade disputes”.
P.3.1.4 US — Lamb, para. 115
(WT/DS177/AB/R, WT/DS178/AB/R)
We wish to emphasize that the discretion that WTO Members enjoy to
argue dispute settlement claims in the manner they deem appropriate does
not, of course, detract from their obligation, under Article 3.10 of the
DSU, “to engage in dispute settlement procedures ‘in good faith in an
effort to resolve the dispute’ ”. It follows that WTO Members cannot improperly withhold arguments from competent
authorities with a view to raising those arguments later before a panel. …
P.3.1.5 US — Hot-Rolled Steel, para. 101
(WT/DS184/AB/R)
… This provision requires investigating authorities to strike a
balance between the effort that they can expect interested parties to make
in responding to questionnaires, and the practical ability of those
interested parties to comply fully with all demands made of them by the
investigating authorities. We see this provision as another detailed
expression of the principle of good faith, which is, at once, a general
principle of law and a principle of general international law, that
informs the provisions of the Anti-Dumping Agreement, as well as
the other covered agreements. This organic principle of good faith, in
this particular context, restrains investigating authorities from imposing
on exporters burdens which, in the circumstances, are not reasonable.
P.3.1.6 US — Cotton Yarn, para. 81
(WT/DS192/AB/R)
There is no need for the purpose of this appeal to express a view on
the question whether an importing Member would be under an obligation,
flowing from the “pervasive” general principle of good faith that
underlies all treaties, to withdraw a safeguard measure if
post-determination evidence relating to pre-determination facts were to
emerge revealing that a determination was based on such a critical factual
error that one of the conditions required by Article 6 turns out never to
have been met.
P.3.1.7 Mexico — Corn Syrup (Article 21.5
— US), para. 47
(WT/DS132/AB/RW)
… the “observations” raised by Mexico were not expressed in a
fashion that indicated that Mexico was raising an objection to the
authority of the Panel. The requirements of good faith, due process and
orderly procedure dictate that objections, especially those of such
potential significance, should be explicitly raised. Only in this way will
the panel, the other party to the dispute, and the third parties,
understand that a specific objection has been raised, and have an adequate
opportunity to address and respond to it. …
P.3.1.8 US — Shrimp (Article 21.5
— Malaysia), footnote 97 to
para. 134
(WT/DS58/AB/RW)
… We do wish to note, though, that there is one observation by the
Panel with which we do not agree. In assessing the good faith efforts made
by the United States, the Panel stated that:
The United States is a
demandeur in this field and given its scientific, diplomatic and financial
means, it is reasonable to expect rather more than less from that Member in terms of serious good faith efforts. Indeed,
the capacity of persuasion of the United States is illustrated by the
successful negotiation of the Inter-American Convention. (Panel Report,
para. 5.76)
We are not persuaded by this line of reasoning. As we stated
in our [original] Report, the chapeau of Article XX is “but one
expression of the principle of good faith” (Appellate Body Report, United
States — Shrimp, supra, footnote 24, para. 158). This good faith
notion applies to all WTO Members equally.
P.3.1.9 EC — Sardines, para. 278
(WT/DS231/AB/R)
… We must assume that Members of the WTO will abide by their treaty
obligations in good faith, as required by the principle of pacta sunt
servanda articulated in Article 26 of the Vienna Convention.
And, always in dispute settlement, every Member of the WTO must assume the
good faith of every other Member.
P.3.1.10 US — Offset Act (Byrd Amendment), paras. 296-298
(WT/DS217/AB/R, WT/DS234/AB/R)
… Article 26 of the Vienna Convention, entitled Pacta
Sunt Servanda, to which several appellees referred in their
submissions, provides that “[e]very treaty in force is binding upon the
parties to it and must be performed by them in good faith.” The United
States itself affirmed “that WTO Members must uphold their obligations
under the covered agreements in good faith”.
… Clearly, therefore, there is a basis for a dispute settlement
panel to determine, in an appropriate case, whether a Member has not acted
in good faith.
Nothing, however, in the covered agreements supports the conclusion
that simply because a WTO Member is found to have violated a substantive
treaty provision, it has therefore not acted in good faith. In our view,
it would be necessary to prove more than mere violation to support such a
conclusion.
P.3.1.11 EC — Tube or Pipe Fittings, para. 127
(WT/DS219/AB/R)
This excerpt … indicates that the Panel did not rely exclusively on
the presumption of good faith, as Brazil suggests, given that some of the
Panel’s questions were directed at the validity of Exhibit EC-12.
If the Panel had placed total reliance on the presumption of good faith,
it would have simply accepted the European Communities’ assertion that
Exhibit EC-12 formed part of the record of the investigation and would not
have posed questions to assess the consistency of Exhibit EC-12 with other
evidence contained in the record. …
P.3.1.12 US — Corrosion-Resistant Steel Sunset Review, para. 86
(WT/DS244/AB/R)
… a measure attributable to a Member may be submitted to dispute
settlement provided only that another Member has taken the view, in good
faith, that the measure nullifies or impairs benefits accruing to it under the Anti-Dumping
Agreement. …
P.3.1.13 US — Corrosion-Resistant Steel Sunset Review, para. 89
(WT/DS244/AB/R)
… As long as a Member respects the principles set forth in Articles
3.7 and 3.10 of the DSU, namely, to exercise their “judgement as to
whether action under these procedures would be fruitful” and to engage
in dispute settlement in good faith, then that Member is entitled to
request a panel to examine measures that the Member considers nullify or
impair its benefits. …
P.3.1.14 US — Gambling, para. 269
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… This does not mean that a responding party may put forward its
defence whenever and in whatever manner it chooses. Article 3.10 of the
DSU provides that “all Members will engage in these procedures in good
faith in an effort to resolve the dispute”, which implies the
identification by each party of relevant legal and factual issues at the
earliest opportunity, so as to provide other parties, including third
parties, an opportunity to respond.
P.3.1.15 US — Gambling, para. 272
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
It follows that the principles of good faith and due process oblige a
responding party to articulate its defence promptly and clearly. This will
enable the complaining party to understand that a specific defence has
been made, “be aware of its dimensions, and have an adequate opportunity
to address and respond to it”. …
P.3.1.16 EC — Export Subsidies on Sugar, para. 307
(WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R)
… we observe that, to the extent that this concept [of estoppel]
applies at all, it is reasonable for a panel to examine estoppel in the
context of determining whether a Member has engaged “in these procedures
in good faith”, as required under Article 3.10 of the DSU. Hence, not
only do we believe that the Panel’s examination did not fail to address
the European Communities’ contention on Article 3.10 and good faith, but
the Panel made no error in addressing this issue together with the issue
of estoppel. We therefore see no error in the Panel’s approach. …
P.3.1.17 US — Continued Suspension / Canada
— Continued Suspension,
para. 313
(WT/DS320/AB/R, WT/DS321/AB/R)
The DSU makes reference to “good faith” in two provisions, namely,
Article 4.3, which relates to consultations, and Article 3.10, which
provides that, “if a dispute arises, all Members will engage in these
procedures in good faith in an effort to resolve the dispute”. These provisions require Members to
act in good faith with respect to the initiation of a dispute and in their
conduct during … dispute settlement proceedings. Neither
provision specifically addresses the question of whether a Member enjoys a
presumption of good faith compliance in respect of measures taken to
implement the DSB’s recommendations and rulings.
P.3.1.18 US — Continued Suspension / Canada
— Continued Suspension,
para. 315
(WT/DS320/AB/R, WT/DS321/AB/R)
The Member required to implement the DSB’s recommendations and
rulings may be presumed to have acted in good faith when adopting the
implementing measure. However, the presumption of good faith attaches to
the actor, but not to the action itself. Thus, whilst the presumption of
good faith concerns the reasons for which a Member acts, such a
presumption does not answer the question whether the measure taken by the
implementing Member has indeed brought about substantive compliance.
Similarly, the suspending Member can also be presumed to act in good faith
in maintaining the suspension of concessions, but that does not entail
that the suspension of concessions is necessarily consistent with Article
22.8. When a disagreement arises as to whether the implementing measure
achieves substantive compliance and whether the suspension of concessions
may continue, it should be submitted for adjudication in dispute
settlement proceedings. In sum, a presumption of good faith, which can be
claimed by both parties, does not offer a clear answer to the question of
when inconsistencies arising from the original measure should be
considered to have been removed within the meaning of Article 22.8 of the
DSU.
P.3.1.19 EC — Bananas III (Article 21.5
— Ecuador II) / EC — Bananas III (Article 21.5 — US), para. 228
(WT/DS27/AB/RW2/ECU, WT/DS27/AB/RW/USA, WT/DS27/AB/RW2/ECU/Corr.1,
WT/DS27/AB/RW/USA/Corr.1)
… irrespective of the type of proceeding, if a WTO Member has not
clearly stated that it would not take legal action with respect to a
certain measure, it cannot be regarded as failing to act in good faith if
it challenges that measure. In that vein, the Appellate Body found, in EC
— Export Subsidies on Sugar, that it was not possible to identify
any facts or statements made by the complainants admitting that the
European Communities’ measure was WTO-consistent or promising that they
would not take legal action against the European Communities. In the
present cases, if the complainants were to be regarded as being estopped
from initiating these Article 21.5 proceedings, such estoppel would have
to attach to a representation outside of the Understandings on Bananas.
This, however, is not the case. Therefore, we consider that the United
States and Ecuador have not failed to act in good faith in requesting
compliance proceedings pursuant to Article 21.5.
P.3.2 Jura novit curia back to top
P.3.2.1 EC — Tariff Preferences, para. 105
(WT/DS246/AB/R)
We are therefore of the view that the European Communities must prove
that the Drug Arrangements satisfy the conditions set out in the
Enabling Clause. Consistent with the principle of jura novit curia,
it is not the responsibility of the European Communities to provide us
with the legal interpretation to be given to a particular provision in the
Enabling Clause; instead, the burden of the European Communities is to
adduce sufficient evidence to substantiate its assertion that the Drug
Arrangements comply with the requirements of the Enabling Clause.
P.3.3 Non-recognition of foreign expropriations
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P.3.3.1 US — Section 211 Appropriations Act, para. 267
(WT/DS176/AB/R)
… even if we were to accept the United States argument about the
doctrine of non-recognition of foreign confiscation, presumably that
doctrine would apply to those who are not nationals of the United States
as well as to those who are. …
P.3.3.2 US — Section 211 Appropriations Act, para. 295
(WT/DS176/AB/R)
… the United States referred to its longstanding doctrine of
non-recognition of foreign confiscations. However, this policy could not
possibly apply to trademarks that existed in the United States when
a business or assets connected with a trademark composed of the same or
substantially similar signs were confiscated in Cuba.
P.3.4 No retroactive application of treaties. See also Temporal
Application of Rights and Obligations (T.5) back to top
P.3.4.1 Brazil — Desiccated Coconut, p. 15, DSR 1997:I, p. 167 at
179-180
(WT/DS22/AB/R)
Article 28 [of the Vienna Convention on the Law of Treaties]
states the general principle that a treaty shall not be applied
retroactively unless a different intention appears from the treaty or is
otherwise established”. Absent a contrary intention, a treaty cannot
apply to acts or facts which took place, or situations which ceased to
exist, before the date of its entry into force. …
P.3.4.2 EC — Bananas III, paras. 235, 237
(WT/DS27/AB/R)
The European Communities also raises the question whether the Panel
erred in giving retroactive effect to Articles II and XVII of the GATS,
contrary to the principle stated in Article 28 of the Vienna Convention.
Article 28 states the general principle of international law that “[u]nless
a different intention appears from the treaty or is otherwise established, its provisions do not bind a party
in relation to … any situation which ceased to exist before the date
of entry into force of the treaty … ”. The Panel stated in its
finding on this issue that:
… the scope of our legal examination
includes only actions which the EC took or continued to take, or measures
that remained in force or continued to be applied by the EC, and thus did
not cease to exist after the entry into force of the GATS. Likewise, any
finding of consistency or inconsistency with the requirements of Articles
II and XVII of GATS would be made with respect to the period after the
entry into force of the GATS. [Panel Report, para. 7.308]
The Panel
stated, further, in a footnote to this finding, that “the EC measures at
issue may be considered as continuing measures, which in some cases were
enacted before the entry into force of the GATS but which did not cease
to exist after that date (the opposite of the situation envisaged in
Article 28)”.
…
It is … evident from the terms of its finding that the Panel
concluded, as a matter of fact, that the de facto discrimination
did continue to exist after the entry into force of the GATS. This factual
finding is beyond review by the Appellate Body. Thus, we do not reverse or
modify the Panel’s conclusion in paragraph 7.308 of the Panel Reports.
P.3.4.3 Canada — Patent Term, para. 72
(WT/DS170/AB/R)
… Article 28 [of the Vienna Convention on the Law of Treaties]
establishes that, in the absence of a contrary intention, treaty
provisions do not apply to “any situation which ceased to exist”
before the treaty’s entry into force for a party to the treaty.
Logically, it seems to us that Article 28 also necessarily implies that,
absent a contrary intention, treaty obligations do apply to any “situation”
which has not ceased to exist — that is, to any situation that
arose in the past, but continues to exist under the new treaty. …
P.3.4.4 Canada — Patent Term, para. 70
(WT/DS170/AB/R)
… A treaty applies to existing rights, even when those rights
result from “acts which occurred” [in the wording of Article 70.1 of
the TRIPS Agreement] before the treaty entered into force.
P.3.4.5 EC — Sardines, para. 200
(WT/DS231/AB/R)
We recall that Article 28 of the Vienna Convention on the Law of
Treaties (the “Vienna Convention”) provides that treaties
generally do not apply retroactively. …
… As we have said in previous disputes, the interpretation
principle codified in Article 28 is relevant to the interpretation of the
covered agreements. …
P.3.5 Precautionary principle. See also SPS Agreement,
Article 5.7 — Precautionary principle (S.6.23) back to top
P.3.5.1 EC — Hormones, paras. 123-124
(WT/DS26/AB/R, WT/DS48/AB/R)
The status of the precautionary principle in international law
continues to be the subject of debate among academics, law practitioners,
regulators and judges. The precautionary principle is regarded by some as
having crystallized into a general principle of customary international environmental
law. Whether it has been widely accepted by Members as a principle of general
or customary international law appears less than clear. We
consider, however, that it is unnecessary, and probably imprudent, for the
Appellate Body in this appeal to take a position on this important, but
abstract, question. We note that the Panel itself did not make any
definitive finding with regard to the status of the precautionary
principle in international law and that the precautionary principle, at
least outside the field of international environmental law, still awaits
authoritative formulation.
It appears to us important, nevertheless, to note some aspects of the
relationship of the precautionary principle to the SPS Agreement.
First, the principle has not been written into the SPS Agreement as
a ground for justifying SPS measures that are otherwise inconsistent with
the obligations of Members set out in particular provisions of that
Agreement. Secondly, the precautionary principle indeed finds reflection
in Article 5.7 of the SPS Agreement. We agree, at the same time,
with the European Communities, that there is no need to assume that
Article 5.7 exhausts the relevance of a precautionary principle. It is
reflected also in the sixth paragraph of the preamble and in Article 3.3.
These explicitly recognize the right of Members to establish their own
appropriate level of sanitary protection, which level may be higher (i.e.,
more cautious) than that implied in existing international standards,
guidelines and recommendations. Thirdly, a panel charged with determining,
for instance, whether “sufficient scientific evidence” exists to
warrant the maintenance by a Member of a particular SPS measure may, of
course, and should, bear in mind that responsible, representative
governments commonly act from perspectives of prudence and precaution
where risks of irreversible, e.g. life-terminating, damage to human health
are concerned. Lastly, however, the precautionary principle does not, by
itself, and without a clear textual directive to that effect, relieve a
panel from the duty of applying the normal (i.e. customary international
law) principles of treaty interpretation in reading the provisions of the SPS
Agreement.
P.3.6 Proportionality back to top
P.3.6.1 US — Cotton Yarn, paras. 119-120
(WT/DS192/AB/R)
… the part of the total serious damage attributed to an exporting
Member must be proportionate to the damage caused by the imports from that
Member. Contrary to the view of the United States, we believe that Article
6.4, second sentence, does not permit the attribution of the totality of serious damage to one
Member, unless the imports from that Member alone have caused all the
serious damage.
Our view is supported further by the rules of general international law
on state responsibility, which require that countermeasures in response to
breaches by states of their international obligations be commensurate with
the injury suffered. In the same vein, we note that Article 22.4 of the
DSU stipulates that the suspension of concessions shall be equivalent to
the level of nullification or impairment. This provision of the DSU has
been interpreted consistently as not justifying punitive damages. These
two examples illustrate the consequences of breaches by states of their
international obligations, whereas a safeguard action is merely a remedy
to WTO-consistent “fair trade” activity. It would be absurd if the
breach of an international obligation were sanctioned by proportionate
countermeasures, while, in the absence of such breach, a WTO Member would
be subject to a disproportionate and, hence, “punitive”, attribution
of serious damage not wholly caused by its exports. In our view, such an
exorbitant derogation from the principle of proportionality in respect of
the attribution of serious damage could be justified only if the drafters
of the ATC had expressly provided for it, which is not the case.
P.3.6.2 US — Line Pipe, para. 257
(WT/DS202/AB/R)
… If the pain inflicted on exporters by a safeguard measure were
permitted to have effects beyond the share of injury caused by increased
imports, this would imply that an exceptional remedy, which is not meant
to protect the industry of the importing country from unfair or illegal
trade practices, could be applied in a more trade-restrictive manner than
countervailing and anti-dumping duties. On what basis should the WTO
Agreement be interpreted to limit a countermeasure to the extent of
the injury caused by unfair practices or a violation of the treaty but not
so limit a countermeasure when there has not even been an allegation of a
violation or an unfair practice?
P.3.6.3 US — Line Pipe, para. 259
(WT/DS202/AB/R)
We note as well the customary international law rules on state
responsibility, to which we also referred in US — Cotton Yarn. We
recalled there that the rules of general international law on state
responsibility require that countermeasures in response to breaches by
States of their international obligations be proportionate to such
breaches. Article 51 of the International Law Commission’s Draft
Articles on Responsibility of States for Internationally Wrongful Acts
provides that “countermeasures must be commensurate with the injury
suffered, taking into account the gravity of the internationally wrongful
act and the rights in question”. Although Article 51 is part of the
International Law Commission’s Draft Articles, which do not constitute a
binding legal instrument as such, this provision sets out a recognized
principle of customary international law. We observe also that the United
States has acknowledged this principle elsewhere. In its comments on the International Law Commission’s Draft Articles, the United States
stated that “under customary international law a rule of proportionality
applies to the exercise of countermeasures”.
P.3.7 Estoppel back to top
P.3.7.1 EC — Export Subsidies on Sugar, paras. 307, 310
(WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R)
… we observe that, to the extent that this concept [of estoppel]
applies at all, it is reasonable for a panel to examine estoppel in the
context of determining whether a Member has engaged “in these procedures
in good faith”, as required under Article 3.10 of the DSU. …
…
We agree with the Panel that it is far from clear that the estoppel
principle applies in the context of WTO dispute settlement. …
P.3.7.2 EC — Export Subsidies on Sugar, para. 312
(WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R)
The principle of estoppel has never been applied by the Appellate Body.
Moreover, the notion of estoppel, as advanced by the European Communities,
would appear to inhibit the ability of WTO Members to initiate a WTO
dispute settlement proceeding. We see little in the DSU that explicitly
limits the rights of WTO Members to bring an action; WTO Members must
exercise their “judgement as to whether action under these procedures
would be fruitful”, by virtue of Article 3.7 of the DSU, and they must
engage in dispute settlement procedures in good faith, by virtue of
Article 3.10 of the DSU. This latter obligation covers, in our view, the
entire spectrum of dispute settlement, from the point of initiation of a
case through implementation. Thus, even assuming arguendo that the
principle of estoppel could apply in the WTO, its application would fall
within these narrow parameters set out in the DSU.
P.3.7.3 EC — Bananas III (Article 21.5 — Ecuador II) / EC
— Bananas III (Article 21.5 — US), para. 228
(WT/DS27/AB/RW2/ECU, WT/DS27/AB/RW/USA, WT/DS27/AB/RW2/ECU/Corr.1,
WT/DS27/AB/RW/USA/Corr.1)
… irrespective of the type of proceeding, if a WTO Member has not
clearly stated that it would not take legal action with respect to a
certain measure, it cannot be regarded as failing to act in good faith if
it challenges that measure. In that vein, the Appellate Body found, in EC
— Export Subsidies on Sugar, that it was not possible to identify
any facts or statements made by the complainants admitting that the
European Communities’ measure was WTO-consistent or promising that they
would not take legal action against the European Communities. In the
present cases, if the complainants were to be regarded as being estopped
from initiating these Article 21.5 proceedings, such estoppel would have
to attach to a representation outside of the Understandings on Bananas.
This, however, is not the case. Therefore, we consider that the United States and Ecuador have not failed to act
in good faith in requesting compliance proceedings pursuant to Article
21.5.
P.3.8 Relevance/Effect of recourse to other dispute settlement
mechanisms back to top
P.3.8.1 Mexico — Taxes on Soft Drinks,
paras. 55-56 and
footnote 115
(WT/DS308/AB/R)
… as we understand it, Mexico’s position is that the “applicability”
of its WTO obligations towards the United States would be “call[ed] into
question” as a result of the United States having prevented Mexico, by
an illegal act (namely, the alleged refusal by the United States to
nominate panellists to the NAFTA panel), from having recourse to the NAFTA
dispute settlement mechanism to resolve a bilateral dispute between Mexico
and the United States regarding trade in sweeteners. Specifically, Mexico
refers to the ruling of the Permanent Court of International Justice (the
“PCIJ”) in the Factory at Chorzów case, and “calls into
question the ‘applicability’ of its WTO obligations towards the United
States in the context of this dispute”.
Mexico’s arguments, as well as its reliance on the ruling in Factory
at Chorzów, is misplaced. Even assuming, arguendo, that the
legal principle reflected in the passage referred to by Mexico is
applicable within the WTO dispute settlement system, we note that this
would entail a determination whether the United States has acted
consistently or inconsistently with its NAFTA obligations.115 We see
no basis in the DSU for panels and the Appellate Body to adjudicate non-WTO
disputes. Article 3.2 of the DSU states that the WTO dispute settlement
system “serves to preserve the rights and obligations of Members under
the covered agreements, and to clarify the existing provisions of those
agreements” (emphasis added). Accepting Mexico’s interpretation
would imply that the WTO dispute settlement system could be used to
determine rights and obligations outside the covered agreements. In light
of the above, we do not see how the PCIJ’s ruling in Factory at
Chorzów supports Mexico’s position in this case.
115. We also note that the ruling of the PCIJ in the Factory at Chorzów case relied on by Mexico was made in a situation in which
the party objecting to the exercise of jurisdiction by the PCIJ was the
party that had committed the act alleged to be illegal. In the present
case, the party objecting to the exercise of jurisdiction by the Panel
(Mexico) relies instead on an allegedly illegal act committed by the other
party (the United States). back to text
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