Does Caricom need a WTO-type dispute-resolution system?

Delroy Beckford

Sunday, June 24, 2018

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It cannot be gainsaid that an effective dispute-settlement system is required in any regional trade agreement to ensure the legitimacy of the trade arrangement.

The report of the commission to review Jamaica's relations within Caricom and CARIFORUM frameworks (Caricom Report) has recognised as much and suggests that there be a World Trade Organization (WTO)-type system of dispute settlement for Caricom because of the perceived failure of the current system in addressing trade disputes.

This recommendation entails a process involving concessions, good offices, arbitration, a tribunal to decide the issue if it is not resolved by these various modes, and the review of the tribunal's decision by the Caribbean Court of Justice (CCJ), where appropriate.

In other words, the CCJ would not be exercising jurisdiction over the matter until it is exercising its reviewing authority by evaluating a decision of the tribunal.

The basis for this recommendation seems to be that there are some disputes that either cannot be resolved by the CCJ or cannot be resolved by a resort to the CCJ first. The Caricom Report seems to proceed on the assumption that these include disputes under Article 187 of the Revised Treaty of Chaguaramas (RTC), which lists these as including:

(a) allegations that an actual or proposed measure of another member state is, or would be, inconsistent with the objectives of the community;

(b) allegations of injury; serious prejudice suffered, or likely to be suffered, nullification or impairment of benefits expected from the establishment and operation of the Caribbean Single Market and Economy;

(c) allegations that an organ or body of the community has acted ultra vires; or

(d) allegations that the purpose or object of the RTC is being frustrated or prejudiced.

There is, in this recommendation, a gloss over of the text of the treaty, which already provides for the very modes that are recommended, except the existence of a tribunal.

Chapter 9 of the RTC deals with the issue of dispute settlement and provides for the various modes to settle disputes, including consultation, mediation, arbitration, and adjudication. Moreover, the process contemplated in the recommendation would add another layer of bureaucracy and further delays for the resolution of a dispute.

At issue is the view that the CCJ's jurisdiction is not implicated once the political organs get involved; that is, once the dispute is referred to them. But the very recommendation is at variance with the problem identified; that is, no immediate access to the CCJ because the recommendation requires a tribunal to make a decision first before there can be resort to it.

This recommendation seems to have been influenced by an understanding of the dispute-settlement framework within Caricom as not providing for the prompt and effective settlement of disputes.

But this is also a view that is premised on the notion that once the political bodies are seized of a dispute it has to be resolved through those channels before the CCJ can have jurisdiction over the matter.

On this matter the position of Justice Duke Pollard, former judge of the CCJ, is that the words “subject to the provisions of this treaty”, as the introductory clause to the provision governing settlement of disputes through the political organs, means that other provisions are to be read as subordinated to this provision. This would include the provision concerning the CCJ's jurisdiction.

However, the provision governing modes other than the court for settling disputes also begins with an opening clause “subject to the provisions of the treaty”, and later with the words, “without prejudice to exclusive and compulsory jurisdiction of the court”, which in effect puts the two provisions on an even keel — none being subordinate to the other.

Embedded in the treaty, then, is the notion of the inherent jurisdiction of the court in its original jurisdiction, despite the existence of bodies being charged with resolving particular issues. On this view the CCJ can be a first resort to resolving a dispute, despite the wording of Article 188 of the RTC.

That the advisory role of the court can be used seems not to have been taken into account, whereby an advisory opinion is sought to guide the deliberations at the political level.

Introducing a WTO-type system may then mean that all of the modes of settling a dispute, other than arbitration or adjudication, must be exhausted before a matter is brought to the CCJ.

It is instructive to note that, like the WTO system, this already exists in the treaty. In the WTO system an adjudicatory panel is usually established after consultations fail to resolve the dispute. This is also the case with the treaty, whereby adjudication can be resorted to if consultations do not settle the dispute.

The notion of a WTO-type system is attractive from the standpoint that parties would be encouraged from the beginning to engage a consultative process which has a specific timeline, and the accompanying processes, also with specific timelines, until the dispute is resolved. This ensures that a dispute would not take years to be resolved.

What is unclear from the recommendation is how far we are to go in the adoption of the WTO-type dispute-settlement system in the RTC dispute-settlement framework. Would the recommended tribunal or the CCJ be able to suggest a specific remedy for a breach of the RTC? Under WTO rules this is not the practice; the offending State is simply told to bring its measure into compliance with the particular WTO agreement.

The allure of this practice is that it is consistent with the notion of State sovereignty, whereby the offending State is free to determine the mode of compliance without interference from the judicial branch.

The downside is that the mode of compliance chosen may not accord with the agreement, and then there has to be some determination as to whether there is actual compliance resulting from the ruling. In other words, cosmetic and not substantive changes may have been made to bring a measure into compliance with the agreement.

We have seen from the WTO system that, though rare, this can indeed occur as a precursor to authorised retaliation and, even rarer, a second resort to a compliance ruling, with the possibility of an appeal, before actual retaliation is put into effect.

This leads to another question, namely what if the recommendation of the tribunal or the CCJ is not followed, would Caricom member states be able to invoke self-help remedies, or must they go back to a panel to obtain authorisation to suspend concessions?

Going back to a panel would seem the better option, because this reduces the risk of self-help remedies being more than the amount of damage suffered by the aggrieved Caricom member state and a follow-up tit-for-tat response from the offending State to eliminate any advantage gained.

It also signals that the rule of law inherent in adjudication is the preferred means to resolve disputes, indicating also that compliance with a ruling is preferable to continued breach as a permanent course of action.

Such remedies, self-help or otherwise, would doubtless have implications for the liberalisation requirements in free trade areas or Customs unions. As is well known, free trade areas or Customs unions, such as CARIFORUM, must satisfy both an internal and an external liberalisation requirement in accordance with Article XXIV of General Agreement on Tariffs and Trade (GATT).

Permitting the withdrawal of concessions as a remedy for non-compliance risks upsetting the internal liberalisation requirement in the RTC in breach of Article XXIV of GATT.

So far, the CCJ in its jurisprudence has taken the view that it can order remedies that are superior to those offered by the WTO's settlement system. These include not only cessation of the offending conduct and implementation of corrective measures, but damages for breach as from the time of the breach, and costs.

It is to be expected that this feature of the Caricom dispute-settlement system remains intact whatever other modifications may be contemplated.

Dr Delroy S Beckford is a Fulbright scholar, attorney-at-law, and adjunct lecturer in the Faculty of Law, The University of the West Indies, Mona. He is the author of Power and Judicial Activism in the WTO: The Appellate Body's Interpretation of Trade Remedy Agreements . Send comments to the Observer or

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