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THE NATIONAL LAW INSTITUTE

UNIVERSITY BHOPAL

PROJECT

INTERNATIONAL TRADE LAW

COMPLIANCE PROCEEDINGS UNDER ART. 21.5 OF DSU

Date of Submission : 30th April, 2020

Submitted to: Prof. Saubhagya

Bhadkaria
Submitted by: Vidushi Sahu
(2017BALLB25)

Compliance Proceedings under Art. 21.5 of DSU

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ACKNOWLEDGEMENT
Writing a project is an academic challenge. Though this project has been presented by me but
there are many people who remained in veil, who gave their support and helped me to complete
this project.
First of all I am very grateful to my subject teacher Prof. Saubhagya Bhadkaria, without the kind
support of whom and help the completion of the project was a herculean task for me. She
donated her valuable time from her busy schedule to help me to complete this project and
suggested me from where and how to collect data.
I am really thankful to the librarian who provided me several books on this topic which proved
beneficial in completing this project. I would also acknowledge my friends who gave their
valuable and meticulous advice which was very useful and could not be ignored in writing the
project.
I also owe special thanks to my parents for their selfless help which was very useful in preparing
the project & without whose support this project wouldn’t have been prepared.

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TABLE OF CONTENTS

Acknowledgement...........................................................................................................................2

Table of Contents.............................................................................................................................3

Introduction......................................................................................................................................4

Statement of Problem......................................................................................................................5

Research Questions..........................................................................................................................6

Scope of Art. 21.5 of DSU...............................................................................................................6

A. The WTO Dispute Settlement Process.................................................................................6

B. Objectives of WTO DSU and Art. 21.5 Panels....................................................................6

i. Expeditious Compliance...................................................................................................7

ii. Protecting Rights and Obligations of Member Nations....................................................8

C. Art. 21.5................................................................................................................................8

Limitations on the risk of over-inclusion and under-inclusion......................................................11

A. Effectivity and validity of International Tribunals.............................................................11

i. Origin of the test.............................................................................................................11

B. Due Process........................................................................................................................12

Conclusion.....................................................................................................................................14

Bibliography..................................................................................................................................15

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INTRODUCTION
An adequate Dispute Settlement System is important for the functions of the WTO. As in the
words of Dispute Settlement Understandings (DSU), “it is an important element in giving
security and predictability to the multilateral trading system” 1. One of the salient features of the
World Trade Organization (WTO) is its enforcement capabilities: the Dispute Settlement
Understandings (DSU) lays down the procedures of dispute resolution for member nations. Art.
21.5 of DSU, specifically lays down the procedure for checking compliance with Dispute
Settlement Body (DSB) rulings post-dispute. The means used under the General Agreement on
Trade And Tariffs (GATT) were ineffective and time-consuming since a complainant party, as
well as the respondent party, could easily delay the process of dispute resolution. Therefore,
provisions of Art. 21.5 DSU provided proper functioning.

1
DSU, art. 3.2.

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STATEMENT OF PROBLEM
There has been an issue of delay in timely and practical implementation of panel reports by the
parties to the dispute, whereby the complainant party seeks resort to the process as given under
DSU Art. 21.5. The researcher through this project will address the legal issues of DSU Art. 21.5
compliance proceedings in terms of current case law and scope.

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RESEARCH QUESTIONS
 What is the scope of Art. 21.5 of Dispute Settlement Understanding (DSU).
 What are the primary challenges to the proper functioning of compliance proceedings.

SCOPE OF ART. 21.5 OF DSU

A. The WTO Dispute Settlement Process

At a point when a member nation presumes that another member has acted conflictingly with
its WTO responsibilities, it might demand consultations with the clashing member. 2 On the
off chance that these consultations don’t settle the question, the complainant may then
demand that a Panel be set up to intercede the issue. 3 If a panel finds that a measure is
inconsistent with the agreements under WTO, then it must suggest solutions or
recommendations as to how the respondent can bring its responsibilities within the meaning
of WTO obligations4. Until the end is achieved, the DSB look over the efforts put in by the
respondent.5
The complainant may demand relief, for instance, a decrees in tariff rates from the respondent
or any other manner in case the respondent fails to carry its responsibilities under WTO in a
reasonable time frame. If the respondent says that it has taken steps to agree to the proposals
and decisions given by the Panel, even so, there is a disagreement regarding the presence of
these measures. Then either party can demand the formation of Panel under an Art. 21.5. The
Panel will re-assess the measures taken to agree and decide if these measures do, truth be told,
bring the respondent into compliance.

B. Objectives of WTO DSU and Art. 21.5 Panels

Compliance procedures did not exist under the WTO's forerunner, the GATT. In spite of the
fact that the Contracting Parties to the GATT presented the idea of post-panel observation
2
Art. 4.7, DSU.
3
Art. 6.7, DSU.
4
Art. 19.1, DSU.
5
Art. 21.6, DSU.

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toward the end of the Tokyo Round in 1979, this observation system basically asked the
parties to the dispute to see their own compliance. At the end of the day, it didn't
accommodate an autonomous review of a member’s efforts. Moreover, while Art. XXIII of
the GATT 1994 gave that panel may every so often survey the presence or consistency of
measures taken to conform to past suggestions and decisions, these panels were not powerful
implementation systems since they were not normally settled and did not pursue any set
procedures.
The Uruguay Round of 1986-1994, created the WTO and the DSU. The reason for the
WTO's new dispute settlement framework under the DSU were to give security and
consistency to the multilateral trading system, to safeguard the rights and responsibility of
WTO Members, to settle dispute promptly.
The procedures under Art.21.5 serves these ends but their techniques are as they proposed to
advance brief compliance according to the DBS’s suggestions and decisions and to protect
the rights and commitments of individual.

i. Expeditious Compliance

Art. 21.5 procedures are intended to be quicker than Art. 6 procedures. While the initial panel
has a half year to issue its final report, an Art. 21.5 panel has just ninety days. 6 Furthermore,
the individuals from the initial panel involve the individuals from the Art. 21.5 panel. 7
Consequently, the specialists don't need to invest much energy acquainting themselves with
the facts and lawful issues in the dispute.
The presence of procedures under Art. 21.5 advances the expeditious resolution of the
dispute by avoiding a new settlement process instigated by the complainant when the
respondent hasn’t acted in consonance to initial decisions. Proceedings under Art. 21.5 sped
up the process.

6
Arts. 12.8, 21.5. Of course, both Art. 6 and Art. 21.5 panels generally take longer to circulate their reports. But Art.
21.5 panel reports are still issued in an expedited manner relative to Art. 6 panel reports.
7
Art. 21.5, DSU.

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ii. Protecting Rights and Obligations of Member Nations

Art. 21.5 procedures are additionally intended to safeguard the rights and obligations of
Individuals. The GATT's absence of supervision system of Members' efforts to follow the
initial panel's decisions and suggestions adequately enabled Members to disregard
compliance in the event that they wished. It also safeguards the Members substantive rights
and obligations by safeguarding their procedural rights and obligations.
To this end, the DSB has the ability to and does screen Members' endeavours to comply
until compliance is achieved. The question in EC – Bananas III, for instance, was on the DSB
motivation for quite a long time and opened each normal DSB meeting amid that period.
Art. 21.5 panels likewise ensure Members' substantive rights and commitments by ensuring
their procedural rights and commitments. All things considered, Members can just get a
sufficient adjudication under Art. 21.5 on the off chance that they remain on the procedurally
same footing. The systems in Art. 21.5 are intended to ensure Members' procedural
uniformity in various ways. To start with, the individuals from every first panel—and hence
Art. 21.5 panels—are chosen to guarantee their independence. The fairness of judges enables
Members to acquire a contemplated instead of the one-sided judgment of their cases, to such
an extent that Members' rights and commitments are safeguarded instead of controlled by an
adjudicator's partiality. Second, the appealability of Art. 21.5 discoveries additionally
furnishes Members with procedural security for their substantive rights: where they feel that
the Art. 21.5 panel blundered in its discoveries, they may ask the Appellate Body to rethink
whether the tested measures are WTO-reliable.

C. Art. 21.5

As clarified over, an Art. 21.5 panel might be assembled if there is a question about the
presence as well as compliance of measures taken to conform to the first panel's or the
Appellate Body's decisions and suggestions. Art. 21.5 gives “Where there is a
contradiction with regards to the presence or consistency with a secured understanding of
measures taken to follow the suggestions and decisions such dispute will be chosen
through a plan of action to these dispute settlement strategies, counting wherever
conceivable retreat to the first panel. As this language shows, an Art. 21.5 panel must

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decide, first, regardless of whether any measures are taken to agree to the DSB's
suggestions and decisions exist, and, second, expecting that such measures do exist,
regardless of whether they are predictable with the secured WTO understandings. The
language of Art. 21.5 demonstrates the extent of compliance panels is more extensive than
measures "taken to go along" in a few different ways, all of which permit Art. 21.5 panels
to restrain the dangers of over-and under-inclusion. To start with, since "contradictions"
about measures taken to consent fall inside the extent of Art. 21.5 panels, these panels may
consider certain estimates that the executing Member does not distinguish as measures it
has taken to conform to the DSB's suggestions and rulings. Holding generally would
enable the culpable Member to sidestep audit of any new measure by basically declining to
recognize it as a measure "taken to consent"— as it was, holding generally would chance
under-consideration of measures that ought to be considered by Art. 21.5 panels. Then
again, the griping Member does not have the specialist to choose what establishes a
measure taken to agree either, as this training would fit control toward over-incorporation
of measures in consistence proceedings. The Appellate Body has as needs be discovered
that, while a Member's assignment of a measure as one "taken to go along" is constantly
significant to the assurance of an Art. 21.5 panel's scope, it is at last up to the panel itself to
figure out which estimates fall inside its purview. Second, "presence" in Art. 21.5 specifies
"that estimates falling inside the extent of Art. 21.5 envelop positive acts, yet in addition
omissions”. Consequently, an Art. 21.5 panel may consider not just those measures that
the supposedly culpable Member has taken to go along yet, in addition, those measures
that the Member "ought to have taken to bring itself into compliance." The consideration
of "oversights" in the domain of Art. 21.5 panels serves to evade the danger of under-
incorporation: if a compliance panel couldn't think about a reacting Part's inability to make
any move to execute the first panel's suggestions and decisions, it would be seriously
compelled in its capacity to verify brief compliance with those proposals and decisions.
Third, "consistency" suggests that Art. 21.5 panels should equitably decide regardless of
whether the measures being referred to are steady with the secured WTO understandings,
not simply regardless of whether they are steady with the panel's proposals and rulings.
The assurance of WTO consistency (or deficiency in that department) necessitates that the
compliance panel consider the tested measure "in its totality"— concentrating on "both the

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measure itself and the measure's application"— not simply explicit parts of it. as it were,
the Art. 21.5 panel isn't bound to look at whether the tested measure comply to (or was
taken so as to agree to) the panel's suggestions and decisions, however, may likewise
decide if it fulfils all of the other WTO commitments of the actualizing Member. This
decision bodes well as intends to maintain a strategic distance from under-consideration in
Art. 21.5 procedures: Measures taken to go along may well be conflicting with WTO
commitments in unexpected routes in comparison to the first tested measures. In the event
that Art. 21.5 panel could just consider measures taken to comply for their consistency
with the original panel's decisions and suggestions, it would not accomplish the brief goals
of dispute. Or maybe, a complaining Member would be compelled to start particular
procedures against the responding Member to address any extra irregularities in the new
measures.

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LIMITATIONS ON THE RISK OF OVER-INCLUSION AND

UNDER-INCLUSION

A. Close Nexus Test

First time this test was used in Australia – Salmon (Art. 21.5 – Canada) and Australia –
Automotive Leather II (Art. 21.5 – US). It permits Art. 21.5 panels to survey estimates that
the executing Member denies are measures taken to go along, however that have a nearby
relationship to any proclaimed measures taken to comply, and to the suggestions and
decisions of the DSB. The test permits Art. 21.5 panels to stay away from the under-
inclusion of measures that don't, externally, appear to be measures taken to go along,
despite the fact that they are.

i. Origin of the test

In Australia – Salmon (Art. 21.5 – Canada), a panel found that a measure by the
Legislature of Tasmania that viably precluded the importation of certain Canadian salmon
items into the vast majority of Tasmania fell inside the domain of the Art. 21.5 panel,
where the decisions and proposals from the first procedures had discovered an Australia-
wide preclusion of imports of Canadian salmon conflicting with WTO commitments.
Australia guaranteed that the Tasmanian boycott couldn't be assessed by the Art. 21.5
panel, as it was anything but a measure that Australia had taken with the aim of
conforming to the DSB's proposals and decisions. In any case, as the panel clarified, it
"would be preposterous to hold that the impacts of a measure by one dimension of
government that obstructs a measure by another dimension of government can't be
considered by an Art. 21.5 panel since it isn't itself a measure 'taken to comply’. Such a
result would not advance the motives behind Art. 21.5 procedures: guaranteeing brief
compliance with the suggestions and decisions of the DSB, and saving the rights and
commitments of Members. at the end of the day, understanding the domain of an Art. 21.5
panel to stretch out just to measures deliberately taken to agree would result in the under-
inclusion of measures that

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Art. 21.5 panels ought to have the capacity to survey to serve the ends for which they were
made. To maintain a strategic distance from such under-inclusion, the panel clarified that
Art. 21.5 panels would be capable to audit measures that are "so unmistakably associated
with the panel and Appellate Body reports concerned, both in time and in regard of the
topic, that any unbiased spectator consider them equal to 'taken to go along,'" at that point
they are, indeed, measures taken to go along, regardless of whether the executing Member
has not distinguished them as such.

D. Due Process

While the close nexus test helps compliance panel abstain from barring measures from
their domain that they ought to have the capacity to examine, due process restrictions help
compliance panel abstain from including measures inside their domain that they ought not
to have the capacity to investigate. For instance, in finding that the second credit in
Australia – Salmon (Art. 21.5 – Canada) was a measure taken to agree, the Appellate Body
advocated its holding mostly in light of the fact that this decision would not "deny
Australia of its entitlement to satisfactory notice under Art. 6.2. On the premise of the
Panel demand, Australia ought to have sensibly anticipated that any further estimates it
would take to go along, could be examined by the Panel." Similarly, where a respondent
couldn't have sensibly foreseen that a measure may be tested in compliance procedures,
Art. 21.5 panels have discovered that the measure did not fall inside their purview. Thus,
concerns about notice—a basic segment about due process work to lessen the danger of
over-inclusion of measures in Art. 21.5 procedures.
Moreover, in spite of the fact that the WTO has not received the doctrine of res judicata or
insurance estoppel, it utilizes a few standards of issue and guarantee prevention to
diminish the danger of the over-inclusion of measures in Art. 21.5 proceedings. New cases
can now and again be raised before an Art. 21.5 panel: as referenced prior, measures taken
to comply likely could be conflicting with WTO commitments in manners that the first
measures were not, and these irregularities legitimately fall inside an Art. 21.5 panel's
domain. An Art. 21.5 panel could not legitimately execute its errand of surveying

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measures "taken to go along" for WTO-consistency on the off chance that it couldn't
analyse claims that were not the same as an extra to those brought up in the first
proceeding. However, an Art. 21.5 panel can't consider a similar case on a part of a
measure taken to agree that is unaltered from the first measure and was ineffectively tested
in the previous proceedings. Allowing Members to affirm similar cases against parts of
usage measures would undermine the capacity of Art. 21.5 panels to accomplish the
prompt settlement of dispute that is so "fundamental to the successful working of the
WTO."8 Individuals would probably raise similar cases over again continually,
squandering the two Members' time without continuing toward a goal, and wasting
restricted adjudicatory assets. Subsequently, an unappealed finding of no infringement that
is embraced by the DSB must be dealt with as a last resolution of the dispute between the
parties as for that specific claim.9 The determination that a complainant may not challenge
a part of a measure that was maintained in the first proceeding bodes well from a due
process point of view: the respondent couldn't sensibly envision that the part of the
measure that was maintained in the first proceeding would liable to be challenged again in
the Art. 21.5.

8
Report of Appellate Body in US – Shrimp (Art. 21.5 – Malaysia).
9
Report of Appellate Body in EC – Bed Linen (Art. 21.5 – India).

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CONCLUSION
In spite of the fact that Art. 21.5 is by all accounts working well, the recurrence of Art.
21.5 panel demands has declined in the course of recent years. One of the difficulties for
Art. 21.5 panels in the event that they wish to keep up their pertinence and adequacy is
deciding how best to characterize their degree specifically, how to abstain from including
measures that ought not be checked on in compliance procedures inside their degree (over-
inclusion), and barring estimates that ought to be evaluated in compliance procedures from
their degree (under-inclusion). The close nexus test serves to decrease the probability of
under-inclusion, while due process concerns reduce the danger of over-inclusion. The
instruments, while helpful, do have certain deformities: The impacts prong of the nearby
nexus test requests abandonment, or possibly further explanation. Due process concerns
should at present don't bar Members from getting claims under Art. 21.5 procedures that
could have been brought up in the previous procedures, however, were definitely not.
Distinguishing the proper extent of Art. 21.5 panel is fundamental in light of the fact that,
without the understanding, these panels will neglect to serve their essential closures:
advancing the brief goals of dispute and ensuring the rights and obligations of Members.
Furthermore, without compelling compliance procedures, the WTO, similar to the GATT
before it, will stop to be a fruitful component for upgrading the security and consistency of
the multilateral trading framework.

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BIBLIOGRAPHY
 Websites
 https://www.wto.org/
 https://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm
 Research paper
 https://www.jstor.org/stable/40708002
 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1022274

Compliance Proceedings under Art. 21.5 of DSU