Did Stare Decisis in WTO Dispute Settlement get introduced in United States– Final Anti-Dumping Measures?

WTO Dispute Settlement process does not recognize the role of "precedence" in the dispute settlement process. The question is, has this position changed post the Appellate Body Report in United States – Final anti-dumping Measures on Stainless Steel from Mexico on April 30, 2008?

The case itself concerned "zeroing" which is becoming without doubt the most controversial area of anti dumping law. My present post however does not concern zeroing. What it focuses on is whether the Appellate Body in reversing the Panel decision which itself had disregarded prior WTO Appellate Body Reports has in a way incorporated stare decisis into the dispute settlement process. While the Appellate Body itself might disagree that its purpose was to introduce precedence into the system by noting that "Appellate Body reports are not binding, except with respect to resolving the particular dispute between the parties" a close reading of the report reveals something else.

Legal Basis of the challenge remained Article 11 of the DSU reproduced below.

Article 11
The function of panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements. Accordingly, a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements, and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements. Panels should consult regularly with the parties to the dispute and give them adequate opportunity to develop a mutually satisfactory solution.

Basis of Mexico's claim was that in disregarding established WTO Appellate Body jurisprudence the WTO Dispute Settlement Panel had violated Article 11 of the DSU.

Excerpts from the Appellate Body report are reproduced below.

Para 156
We observe that the second sentence of Article 11 begins with the term "Accordingly". This term creates a link between the first and the second sentence of Article 11; it ties the second sentence to the general description contained in the first sentence. The second sentence enunciates two specific "functions" of panels, namely, the duty "to make an objective assessment of the matter before it" and "to make such other findings as will assist the DSB in making the recommendations or in giving the rulings" under the covered agreements.

It goes on to add that

The function of panels in the first sentence of Article 11 is informed by the general provisions contained in Article 3 of the DSU, which sets out the basic principles of the WTO dispute settlement system

In particular attention is drawn to Article 3.2 which in relevant part states

The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system. The Members recognize that it serves to preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law

Most pertinent is the observation of the Appellate Body that

"security and predictability" in the dispute settlement system, as contemplated in Article 3.2 of the DSU, implies that, absent cogent reasons, an adjudicatory body will resolve the same legal question in the same way in a subsequent case

The above paragraph lays down in more or less explicit term in the absence of any cogent reason which would in practical terms mean distinction on the basis of facts, a dispute settlement would not only have to consider but also follow a prior Appellate Body Report laid down in a different case.

While the Appellate Body is correct in reiterating the Japan - Alcoholic Beverages II jurisprudence which opined that adopted Panel decisions create legitimate expectations among WTO Members, and, therefore, should be taken into account where they are relevant to any dispute, it may have gone overboard in requiring that an adjudicatory body will resolve the same legal question in the same way in a subsequent case.

What is more interesting that at the end of it all the Appellate Body refrained from making a finding with regard to Article 11 stating
Since we have corrected the Panel's erroneous legal interpretation and have reversed all of the Panel's findings and conclusions that have been appealed, we do not, in this case, make an additional finding that the Panel also failed to discharge its duties under Article 11 of the DSU.

The question is if a finding with regard to Article 11 was not necessary for determination of the dispute why would the Appellate Body get into an analysis of Article 11 in this regard and not exercise judicial economy.

In the interesting world of dispute settlement the precedential value of the Appellate Body Report laying down that precedence is required remains to be seen.