The Multi Party Interim Appeal Arrangement (MPIA) settles trade agreement disputes among many parties as a temporary solution to the World Trade Organisation’s (WTO) paralyzed Appellate Body due to insufficient judges, launched by a group of 17 WTO members, including the EU, Canada, China, and Australia. It was launched in Dec 2019 to enable the parties’ right to appeal, based on Article 25 of the DSU. It integrates arbitration proceedings fully into the Geneva system, separate from the main DSU path. The transparency obligation allows WTO Members to assess and comment on arbitral awards. MPIA supports a rule-based trading system where disputes are resolved through a two-step binding adjudicatory process with a standing appeal instance for quality and independence.
Recently, the MPIA has decided on two crucial cases, Frozen fries and pharmaceutical products. Therefore, it becomes important to assess how the MPIA has fared with respect to its objective and whether it is a step to the long way of fixing WTO DSM. The assessment also becomes more important as Japan joins MPIA pursuant to Article 25 of the DSU, which again raises the question of the ceased functioning of the WTO Appellate Body (AB) and the significance of MPIA as an interim solution to the freezing of the AB. Therefore, it becomes important to assess how MPIA has fared vis-à-vis its objective and whether it can provide a suitable appeal mechanism like the WTO AB. To that extent, the author evaluates the MPIA’s effectiveness and viability as an alternative to the WTO AB.
Comparing the Structure and Principles of MPIA and AB: Advantages and Benefits of MPIA in Addressing WTO Disputes
Article 25.2 of the DSU mandates that when WTO members decide to settle a dispute using arbitration, they must agree on the procedures to be used. Annex 1 to the MPIA provides a template of rules to fulfill this purpose and serve as a mutually agreed upon procedure for arbitrations between participating members. However, participating members are not obligated to follow this template, and it will not govern the proceedings without the agreement of all parties involved. If participating members do agree to use Annex 1 as their procedure in a specific arbitration, it will serve as the primary source of the arbitrators’ procedural powers. When MPIA was established, the participating members addressed some of the controversial practices of the AB but exercised restraint on other practices.
To illustrate, the AB’s Working Procedures Rule 16(2) states that the 90-day deadline required by the DSU can be disregarded by the AB if it prevents « manifest arbitrariness. » The MPIA adheres strictly to the 90-day deadline of the DSU by granting MPIA arbitrators the authority to limit the length of submissions and the number of hearings without compromising the parties’ due process and procedural rights. This was observed in Pharmaceutical Products and Frozen fries where the arbitrators adhered to the 90 days deadline and took “organizational measures” which reflect the expeditious character of arbitration under Article 25 of the DSU. Such a measure prevented the exploitation of the appellate mechanism where parties often times claim Article 11 violation to relitigate the dispute as has been held in China-Rare Earth and Australia-Tobacco Plain Packaging. This not only restricts Article 11 violation to serious allegations of egregious error but also furthers the goal of Article 3.7, prompt and fruitful settlement of disputes.
Another instance is with regards to preservation of jurisprudence constante, where MPIA adheres to Article 4 of the DSU and refuses to resolve itself to decide a dispute in tabula rasa fashion. The importance of a jurisprudence constante has been highlighted in EU- Safeguard Measures on Steel and Japan Alchoholic beverages II, where the essentiality of predictability and consistency in the interpretation of rights and obligations under the covered agreements was stressed upon. However, one can raise a counter-argument that MPIA awards should not be adopted like AB awards as it is not multilateral and as there is no indication that the MPIA arbitrators should adhere to precedents of prior MPIA arbitration [note 1]. However, in frozen fries the MPIA used precedents of anti-dumping investigations previously conducted by AB to settle the dispute. Therefore, the criticism of not considering the precedential value of prior cases falls flat.
Challenges and Limitations of MPIA: Strategies for Addressing Drawbacks and Enhancing Effectiveness
The MPIA’s focus on resolving disputes quickly has raised concerns about certain areas that may impact the fairness of dispute resolution. For example, the US-Wool Shirts case established a minimum standard of evidence similar to a judicial settlement, but the MPIA does not specify the burden of proof required. This could potentially result in violations of legal principles and due process, where unsupported claims may be treated as evidence. However, this criticism has been refuted by the fact that in the frozen fries case, the MPIA relied on previous decisions by the AB to establish the standard of evidence required to prove a link between imported products and harm to the domestic industry.
Another area of concern is the lack of provisions for amicus curiae submissions in the MPIA, whereas the AB has previously recognized the value of such participation in cases like US-Shrimps, which have helped improve the efficiency of appeal proceedings, a crucial aspect of the WTO’s dispute settlement system. However, this issue can potentially be addressed by interpreting Article 10.4 of the MPIA, which allows for third-party participation at the consensus of the parties involved in a dispute. In such cases, the MPIA arbitrators can look to previous decisions by the AB to determine the appropriate level of participation by amicus curiae in order to ensure a fair and well-informed decision-making process.
Assessing the Legitimacy of MPIA through decided cases
After weighing the pros and cons of the MPIA, it would be beneficial to assess its effectiveness as an alternative to the two-tier dispute resolution system of the WTO. The Costa Rica-Avocados case saw a revised version of MPIA being adopted through Article 25 notification, which allowed the parties to present evidence to support their claims regarding the Sanitary and Phytosanitary (SPS) Agreement.
In the frozen fries case, it is apparent that MPIA enables parties to resolve disputes in a mutually agreeable manner without requiring strict remedies from the WTO panel, which can prolong disputes and be costly for the parties involved. Meanwhile, in the Pharmaceutical Products case, Turkey’s obligation was considered a violation of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. MPIA allowed the parties to negotiate and reach an agreement that addressed the issues raised without prolonging the process like the WTO’s Appellate Body.
Thus, it is argued that MPIA offers two significant advantages over the WTO’s AB. Firstly, MPIA provides flexibility that enables parties to design a solution tailored to their specific concerns and interests, as seen in the frozen fries case. Secondly, MPIA encourages greater efficiency and cooperation among parties, leading to better participation and mutual understanding, as demonstrated in the Pharmaceutical Products case. This, in turn, can foster trust and prevent future disputes.
However, in the ongoing disputes over countervailing duty measures on wines (Australia) and countervailing duty measures on certain products (China) where the MPIA would need to prove its mettle in terms of navigating through multiple international agreements. These cases involve multiple intertwined agreements between China and Australia, including questions of National Treatment and the Agreement on Subsidies and Countervailing Measures (SCM). The outcome of these cases will be crucial in establishing the legitimacy and credibility of MPIA as a pathway to a reformed WTO AB.
MPIA as an Alternative to the WTO AB: A Critical Evaluation of its Viability and Efficiency
After providing a detailed overview of the MPIA, including its creation and legal contents, it is crucial to highlight that if MPIA is to be retained, it should take the form of a two-tier dispute settlement system similar to that of the WTO’s Dispute Settlement Mechanism (DSM). This would enable MPIA to review the rulings of the WTO Panels concerning the interpretation of WTO international agreements. Such an appellate mechanism is necessary because sometimes the reports of the panels contain legal errors.
For example, in the Korea-Radionuclides (Japan) case, the WTO’s AB overturned all the panel’s findings as the panel had addressed issues that fell beyond its jurisdiction. Such mistakes can be avoided if MPIA is granted the same power and authority as the WTO AB. Other benefits of MPIA include limitations on written submissions and strict timeframes of 90 days, which can only be extended with the consent of both parties.
However, some may argue that MPIA is not a binding international agreement, and any party can reject its obligations or decisions. This issue can be resolved by invoking Article 25, paragraph 3 of the DSU, which makes the award binding on the parties. Additionally, Article 21 and 22 of the DSU allows for the implementation and enforcement of WTO panels/AB reports « mutatis mutandis to arbitration award. » This implies that the MPIA award would be exactly similar to the AB report. The flexible, dynamic, and open nature of MPIA has demonstrated its importance in the Frozen Fries and Pharmaceutical Products cases. MPIA arbitrators, who have the same inherent powers, can ensure the resolution of disputes with res judicata force under international law. As a result, MPIA, which includes many of the same features as the AB, can build support for a reformed AB that incorporates similar features in the long run.
NOTES
[1] – Niels M. Blokker, “International Organizations or Institutions, Implied Powers” in Anne Peters & Rüdiger Wolfrum, eds, Max Planck Encyclopedia of Public International Law (Oxford: Oxford University Press, April 2009, last updated in December 2021). The present article’s construction of inherent powers as a purely judicial concept aligns with Professor Blokker’s observation that—in the context of non-judicial organs—the approach of “[a]uthors such as Seyersted, and more recently White, [who] distinguish inherent powers from implied powers […] has not found much support, perhaps because it could not convincingly be demonstrated how the notion of inherent powers could draw a clearer, more objective line than the notion of implied powers between what is inherent—or implied— and what is not” [emphasis added] at para 4. See also Krzysztof Skubiszewski, “Implied Powers of International Organizations” in Tabory Mala, Yoram Dinstein, and Shabtai Rosenne, eds, International Law at a Time of Perplexity: Essays in Honour of Shabtai Rosenne (Dordrecht: Martinus Nijhoff Publishers, 1989) at 855; Guy Fiti Sinclair, To Reform the World: International Organizations and the Making of Modern States (Oxford: Oxford University Press, 2017) (discussion on the origins of this doctrine in constitutional law at 153); Manuel Rama-Montaldo, “International Legal Personality and Implied Powers of International Organizations” (1970) 44 Brit YB Intl L 111 at 154–155.
