Multilateral Legal Transactions

Section 2 examines the tools by which WTO members can make „multilateral“ changes and interpretations of WTO law. These include not only the instruments provided for in the WTO Agreements, but also multilateral interpretative mechanisms („subsequent agreement“, „subsequent practice“ and „development“), to which case law has attributed far-reaching implications for the interpretation of WTO law. Section 3 analyses the treatment of inter se agreements by WTO arbitrators and argues that, in particular, despite the allegation that it does not make decisions on this issue, the Appellate Body has consistently ruled out any possibility of self-serving modification or interpretation of WTO rules. This follows from their interpretation of Article 31(3)(c) of the Vienna Convention on the Law of Treaties (CVC) for Community aircraft. Section 4 concludes. Decentralization also has a fundamental impact on legislation. International law lacks a comprehensive legislator capable of imposing rules on states, as well as procedures by which a majority can impose rules on the minority. Of course, sovereign states may voluntarily restrict the exercise of their sovereignty,6 and rule-making mechanisms have been developed inside and outside the UN without the strict requirement of specific individual consent.7 Nevertheless, the principle remains that states are bound only by the rules to which they have consented (implicitly or explicitly). Moreover, they are free to modify this consent and to agree at any time on different types of rights and obligations vis-à-vis other States, without the formal requirements (and without the most substantive requirements) associated with a change of rule in national legal systems.

In a multilateral context such as the WTO, the interpretation of the provisions of WTO agreements must be based on a non-WTO rule, striking a delicate balance between, on the one hand, taking into account the international obligations of an individual WTO member and, on the other hand, ensuring a coherent and harmonious approach to the interpretation of WTO law by all WTO members.65 Decisions to be taken through one of the other possibilities of compulsory jurisdiction provided for in the DSU may be challenged because they are WTO-inconsistent. 3 para. 5 The DSU expressly provides that „any resolution of issues formally raised under the WTO provisions on consultations and dispute settlement“, „including arbitral awards, shall be consistent with those agreements and shall not nullify or prejudice any advantage“ or „impede the achievement of any objective“ of WTO law. This suggests the possibility of multilateral monitoring of the compatibility with WTO law of all results achieved by other means. Unless it can be demonstrated that the complainant acted in bad faith, a new body may be requested in all cases, including by a member who participated in the mutually agreed solution or alternative procedure. The virtual absence of formal requirements, combined with lax substantive requirements, means that instruments to which Members attach little importance may prove crucial to the interpretation of WTO rules. In US – Cloves, a Doha Ministerial Decision38 representing the „common understanding“ of Members was accepted; in US – Tuna II, the Appellate Body accepted a TBT Committee ruling that reached the same threshold.39 This similarity in treatment represents an important step towards broadening the scope of multilateral legislation. The Ministerial Conference is the WTO`s highest decision-making body and has the power to take „decisions on all matters within the framework of one of the multilateral trade agreements“. [40] In contrast, the TBT Committee, which reports hierarchically to the Commodities Council, is one of 20 of its kind,41 which meets monthly and is monitored by government officials without formal decision-making authority. When a TBT Committee decision is considered an ex post agreement, this also applies to all decisions taken by consensus between institutions and bodies whose members „include all WTO Members“42, regardless of hierarchical level. The only applicable limitation (by analogy with the finding of subsequent practice in US – Gambling43, see below) would be that a decision expressly marked as non-binding does not satisfy the requirement to deal „specifically with the interpretation“ of a WTO rule.

The Appellate Body has always been vague about the proportion of Members that is necessary to establish a common practice. The conduct of an individual member is clearly not sufficient,53 but it is not necessary for all members to have participated in the practice in order to be considered customary or consistent.54 It can be concluded that within the WTO, the introduction of subsequent practices requires the same multilateral approach as the conclusion of subsequent agreements (on the exact meaning of these, see below). Moreover, it is not sufficient to establish uniform practice between the mere parties to a given dispute; Concordant practice, or at least acceptance by other Members with „actual or potential commercial interests“, is equally relevant.55 Acceptance may be explicit or implicit and may result from a positive reaction to a practice of another Member and from silence;56 However, once a common understanding has been established, „the interpretation of a treaty clause on the basis of subsequent practice consists for all parties: 57 Subsequent practice does not therefore entail a mere internal modification of WTO rights and obligations, but determines an interpretation valid for all Members. For agreements to be legally binding, the parties must have some sort of record showing that all parties involved have agreed to the terms. This is usually done in the form of a contract that is signed. See the following examples of bilateral treaties. However, this „consideration“ of Members` international obligations does not mean that these international obligations constitute exceptions to the normal application of WTO law. That may be inferred from a dispute in which Article 31(3)(c) was not mentioned. Brazil – Tyres argued that a Mercosur decision required it to open an exemption for Mercosur members from its import ban on retreaded tyres.