THE INFLUENCE OF GENERAL PRINCIPLES OF LAW

Transcription

1 Working Paper No. 70 July 2011 qhdjsqjj THE INFLUENCE OF GENERAL PRINCIPLES OF LAW Prof. Dr. Jan Wouters Dr. Dominic Coppens Dylan Geraets

2 THE INFLUENCE OF GENERAL PRINCIPLES OF LAW Prof. Dr. Jan Wouters Dr. Dominic Coppens Dylan Geraets ABSTRACT We analyze and compare the influence of general principle in the judicial systems of the European Union (EU) and the World Trade Organization (WTO). By clearly differentiating between external and internal general principles, we demonstrate that the use of general principles by respective judiciaries under both legal regimes is dissimilar and even somewhat opposite. The Court of Justice of the EU creates and uses internal principles of EU law and tempers the use of external principles of internal law in order to reinforce the sui generis character of the EU legal order. To strengthen their legitimacy as judicial body, the WTO adjudicating bodies on the other hand align themselves to other international courts by applying procedural external principles but seem rather careful to not construct internal WTO principles and use external substantive principles that would add to WTO obligations. This illustrates that judicial activism is still much more present in EU courts than it is in WTO courts. KEY WORDS European Union, World Trade Organization, General principles of law, judicial activism AUTHOR(S) Jan Wouters is Jean Monnet Chair, Professor of International Law and International Organisations, President of the Flemish Foreign Affairs Council, and Director of the Leuven Centre for Global Governance Studies Dominic Coppens is post-doctoral researcher at the Leuven Centre for Global Governance Studies and Institute for International Law at the University of Leuven (KU Leuven).

3 Dylan Geraets is research fellow and PhD candidate at the Institute for International Law and the Leuven Centre for Global Governance Studies. CONTACT by Jan Wouters, Dominic Coppens and Dylan Geraets. All rights reserved. No portion of this paper may be reproduced without permission of the authors. Working papers are research materials circulated by their authors for purposes of information and critical discussion. They have not necessarily undergone formal peer review. 2

4 CONTENTS 1.INTRODUCTION 4 2.DEFINING AND DIFFERENTIATING GENERAL PRINCIPLES 4 3.EXTERNAL PRINCIPLES : GENERAL PRINCIPLES OF INTERNATIONAL LAW EXTERNAL PRINCIPLES IN THE WTO EXTERNAL PRINCIPLES IN THE EUROPEAN UNION INTERNAL PRINCIPLES OF EU AND WTO LAW INTERNAL PRINCIPLES OF EU LAW INTERNAL PRINCIPLES OF WTO LAW CONCLUSION 29 3

5 1. INTRODUCTION Comparing the influence of general principles of law in EU and WTO law is a far greater challenge than it seems at first sight. An expert in WTO law will at most remember the somewhat scattered references to principles of international law in a number of panel and Appellate Body reports 1, whereas an EU law specialist will right away advance a list (or even a full book 2 ) of fundamental principles of EU law that have been constructed by the Court of Justice of the European Union (CJ or the Court). Yet, an often neglected question though incontournable in any comparative analysis is whether both persons are speaking the same language: are they referring to the same types of principles under both legal regimes? By differentiating between two sets of general principles (Section 2), we will explain (Sections 3 and 4) that the use of general principles by the respective judiciaries is rather different. Our aim is not so much to construct a list of general principles under both legal regimes and compare them. Rather, we aim at explaining the fruitfulness of such an approach as there exists in essence a gap in overlap. We will demonstrate that until now general principles have played a substantively dissimilar and even somewhat opposite role under both legal regimes. The explanation lies in the different legal bases on which principles are grounded under these two legal systems and, more fundamentally, in the difference in nature and scope of these systems. Instead of bridging the gap, we thus aim at revealing its depth and raison d être. 2. DEFINING AND DIFFERENTIATING GENERAL PRINCIPLES General principles have been described by Dworkin as standards that are to be observed because they are a requirement of justice or fairness or some other dimension of morality. 3 This definition reveals two core aspects of general legal principles, which distinguishes them from simple legal rules. First of all, general principles do not specify legal consequences that follow automatically in certain defined circumstances, whereas legal rules usually do. Indeed, in the words of Kolb, their main characteristic is to be general ; they are therefore, as AG Mazák 1 As an exception, Mitchell has written a comprehensive study of the use of principles in the WTO law. Andrew D. Mitchell, Legal Principles in WTO Disputes (Cambridge: Cambridge University Press, 2006). 2 The most thorough study has been done by Tridimas. Takis Tridimas, The General Principles of EU Law Second Edition (Oxford: Oxford University Press, 2006). 3 Ronald M. Dworkin, The Model of Rules, (1967) 35(1) The University of Chicago Law Review at 23. 4

6 observed, inherently marked by uncertainty. 4 A second characteristic of legal principles is their dimension of weight or importance. They tend to express the political philosophy of a polity, or at least the fundamental values that underpin it. In a way, principles bridge the gap between positive legal rules and normative legal ideas. 5 They are a legal translation and transformation of normative principles undertaken by the judge and thus serve as example par excellence of the performative (i.e., law-creating ) nature of judicial acts. Their open-ended, judgemade nature and fundamental character all explain why their application often raises concerns of illegitimate judicial activism. When exploring the use of general principles by EU and WTO judges, the distinction advanced by Hilf between external and internal general principles can be of use. 6 With regard to the WTO context, this distinction seems to correspond to Mitchell s distinction between principles of WTO law and general principles of law. 7 The external principles refer to the general principles of international law 8, as explicitly recognized in Article 38.1(c) of the ICJ Statute as a source of law for the International Court of Justice (ICJ). The internal principles, on the other hand, are sui generis to the legal regime in which they are constructed. Whereas external principles are general to international law, internal principles are only general on the level of the legal sub-regime. Of course, there could be an overlap between both groups of disciplines as external principles could be translated and transformed into internal principles. Importantly, as will be seen with regard to EU law, this might alter their legal status in the internal legal order. On the other hand, external general principles might also be induced from internal principles if they are applied across a variety of legal regimes. In this sense, a dynamic of cross-fertilization between general international law and legal sub-regimes might take place. But their application might serve different and even somewhat opposing functions. Whereas internal principles strengthen the internal legal order (internal coherence), the application of external principles might rather foster coherence among different international legal regimes (external coherence). The application of external 4 Robert Kolb, Principles as Sources of International Law, (2006) 53(1) Netherlands International Law Review, pp at 7; Advocate General Mazák, Opinion in Palacios de la Villa, Case C-411/05 [2007], ECR I-8531, para Kolb labels them as norm-sources : they can play a middle role between the lex lata and the lex ferenda. Kolb, Principles as Sources, above n 4, at 9. 6 Meinhard Hilf, Power, rules and principles Which orientation for WTO/GATT law?, (2001) Journal of International Economic Law, Andrew D. Mitchell, The Legal Basis for Using Principles in WTO Disputes, (2007) 10(4) Journal of International Economic Law, Mitchell also considers principles of customary international law as a third category of principles. 8 See also Panel Report, European Communities Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291,292,293/R, September 2006 [hereinafter Panel Report, EC Biotech], para

7 principles underscores the continuity and linkage with other legal regimes, while sui generis internal principles rather emphasize the discontinuity vis-à-vis outside legal regimes. 3. EXTERNAL PRINCIPLES: GENERAL PRINCIPLES OF INTERNATIONAL LAW 3.1 External principles in the World Trade Organization General The scope for the use of external principles is defined by Article 3.2 of the Dispute Settlement Understanding (DSU), which delineates the sources of law applicable in the WTO dispute settlement system: ( ) 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. Recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements. 9 [Emphasis added]. This provision tempers the risk of judicial activism by WTO panels and the Appellate Body. After all, we agree with those authors 10 which conclude that its text is clear in that it excludes the direct application of (substantive) non-wto law, 11 unless of course it is explicitly referred to in one of the covered agreements. 12 It could be argued that, as Article 3.2 of the DSU refers to customary rules of interpretation, a contrario other rules of customary law or other international law sources such as general principles or treaties are not to be included. However, the Panel in Korea Government Procurement has explicitly rejected such an a contrario reading of Article 3.2 DSU. 13 In the Panel s view, customary international law applies to the extent that the WTO treaty agreements do not contract out from it. 14 As a result, the Panel applied the general rules of customary international law on good faith and error in treaty negotiations. To underpin its reasoning, the Panel explicitly referred to the gap-filling role that such non WTO-law could fulfill. 15,16 Yet, this reasoning has 9 See also Article 19.2 of the DSU. 10 See, for instance, Mitchell, The Legal Basis for Using, above n 7, at ; Trachtman in Joost Pauwelyn, Joel P. Trachtman and Debra P. Steger, The Jurisdiction of the WTO is Limited to Trade, (2004) 98 Proceedings of the Annual Meeting (American Society of International Law) at Jan Klabbers, Treaty Conflict and the European Union, (Cambridge: Cambridge University Press, 2009), pp See, for instance, item (k) of Annex I SCM Agreement and Article 3.1 TRIPS Agreement. 13 Panel Report, Korea Measures Affecting Government Procurement, WT/DS163/R, 1 May 2000, [hereinafter Panel Report, Korea Government Procurement], footnote Panel Report, Korea Government Procurement, above n 13, para Ibid, paras ,

8 not been affirmed by any other panel or the Appellate Body. 17 To the contrary, as explained below, the Appellate Body does not seem to permit parties to rely on substantive general principles as a basis of a claim or as a defense to justify a violation of WTO law. In our view, Article 3.2 of the DSU indeed seems to foreclose such direct application of non-wto law, like general principles of law, in the WTO Dispute Settlement System. 18,19 It shows that the panels and Appellate Body have limited jurisdiction and cannot apply law beyond their mandate. 20 Still, general principles of law can be useful in the interpretative process to clarify WTO provisions. Indeed, as the Appellate Body in US Gasoline emphasized, Article 3.2 DSU equally implies that the WTO provisions should not be read in clinical isolation from public international law as it directs the adjudicating bodies to apply the customary rules of treaty interpretation in their interpretative process, which can be found inter alia in Articles 31 and 32 of the Vienna Convention on the Law of Treaties (Vienna Convention). 21 In particular, Article 31.3(c) of the Vienna Convention directly speaks to the issue of the relevance of other rules of international law : 22 in the interpretative process, there shall be taken into account ( ) any relevant rules of international law applicable in the relations between the parties. 23 As rightly observed by the Panel in EC Biotech, a treaty interpreter is thus mandated, and not merely has the option, to take into account relevant rules of international law and this ensures the consistency of the rules of international law. 24 The same Panel observed that it is not self-evident that general principles of law can 16 Authors in favour of this interpretation: Joost Pauwelyn, The Role of Public International Law in the WTO: How Far Can We Go?, (2001) 95 American Journal of International Law at 543; Erich Vranes, Comments on Joost Pauwelyn s Paper: How to Win a WTO Dispute Based on Non-WTO Law in Stefan Griller (ed.), At the Crossroads: The World Trading System and the Doha Round, European Community Studies Association of Austria Publication Series, (Vienna: Springer, 2008), vol. VIII, pp ; Lorand Bartels, Applicable Law in WTO Dispute Settlement Proceedings, (2001) 35 Journal of World Trade See Panagiotis Delimatsis, The Fragmentation of International Trade Law, (2011) 45(1) Journal of World Trade, at 101; Petros C. Mavroidis, George A. Bermann and Mark Wu, The Law of the World Trade Organization (WTO): Documents, Cases and Analysis, American Casebook Series (St. Paul, MN: West Publishing, 2010), p See also Article 11 of the DSU. 19 This is also the reading of Article 3.2 of the DSU that is endorsed by the US in TN/DS/W/82/Add.1, 25 October 2005; WT/DSB/M/145, 7 May See Pauwelyn, Trachtman and Steger, The Jurisdiction of the WTO, above n 10 at 140 and See Appellate Body Report, United States Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, 29 April 1996 [hereinafter Appellate Body Report, US - Gasoline], at 17; Appellate Body Report, Japan Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, 4 October 1996 [hereinafter Appellate Body Report, Japan Taxes on Alcoholic Beverages], at Panel Report, EC Biotech, above n 8, para See Panel Report, EC Biotech, above n 8, para. 7.72; Appellate Body Report, European Communities and Certain Member States Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, circulated 18 May 2011 [hereinafter Appellate Body Report, EC Large Civil Aircraft (Airbus)], paras Panel Report, EC Biotech, above n 8, paras and See also: Gabrielle Marceau, Conflicts of Norms and Conflicts of Jurisdictions, (2001) 35(6) Journal of World Trade at

9 indeed be considered as rules of international law. Indeed, some authors had reasoned that the use of the terms rules of international law excludes those broader principles that may not be firmly established as rules. 25 But the Panel rightly observed that the Appellate Body in US Shrimp had concluded that general principles are very well covered under Article 31.3(c) of the Vienna Convention. 26 Without any reference to this previous case law, the Appellate Body recently confirmed this interpretation. 27 In light of the negotiating history of Article 31.3(c) of the Vienna Convention, this interpretation is legally solid. 28 But the vagueness regarding the meaning of general principles of law resonates in the WTO case law. By applying the technique of arguendo reasoning, panels and the Appellate Body frequently circumvent the difficult inquiry whether a certainly principle has attained the status of general principle of law. 29 If it has attained this status, the case law is settled by now that such a general principle of law is indirectly relevant, namely to help clarifying the interpretation of WTO provisions. 30 For instance, this was precisely the approach taken by the Appellate Body in US Shrimp, in which it decided that the chapeau of Article XX GATT is an expression of the principle of good faith, in particular from its application in the doctrine of abus de droit. 31 Referring to Article 31.3(c) of the Vienna Convention, the Appellate Body clearly demarcated the limited role that this principle could play: ( ) our task here is to interpret the language of the chapeau, seeking additional interpretative guidance, as appropriate, from the general principles of international law. 32 Similarly, in EC Large Civil Aircraft (Airbus), the Appellate Body emphasized that the normative weight to be ascribed to relevant international law is that it has to be taken into account in interpreting the WTO Agreements. 33 If non-wto law, such as general principles of law, is in principle only used in the interpretative process of WTO obligations, its gap-filling role is limited: the principle 25 See Campbell McLachlan, The principles of systemic integration and Article 31(3)(c) of the Vienna Convention, (2005) 54(2) The International and Comparative Law Quarterly at Panel Report, EC Biotech, above n 8, para. 7.67; Appellate Body Report, United States Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, 6 November 1998 [hereinafter Appellate Body Report, US - Shrimp], para. 158, footnote Appellate Body Report, United States Definitive Anti-dumping Duties and Countervailing Duties on Certain Products from China, WT/DS379/AB/R, 11 March 2011 [hereinafter Appellate Body Report, US Anti-Dumping and Countervailing Duties (China)], para. 308 and footnote 218. [Emphasis added]. 28 The fact that general principles of law were covered was not disputed though drafters could not agree on what was precisely meant by this term. See Panos Merkouris, Debating the Ouroboros of International Law: The Drafting History of Article 31.3(c) of the Vienna Convention, (2007) 9 International Community Law Review 1-31, at 12-13, 15 and See below n In addition to Article 31.3(c) of the Vienna Convention, general principles of law could also be used as part of the object and purpose of a certain WTO provision if that provision or the WTO agreement in question is a reflection of the broader general principle. Mitchell, above 7 at Appellate Body Report, US Shrimp, above n 26, para Appellate Body Report, US Shrimp, above n 26, para [Emphasis added]. 33 Appellate Body Report, EC Large Civil Aircraft (Airbus), above n 23, para

10 itself cannot be directly applied, by which we mean that a claim cannot be based on such a general principle and that it can also not be invoked as a defense to justify a violation of a basic WTO provision. The Appellate Body seems indeed to foreclose such a direct application of substantive general principles. For instance, in India Patents (US), it held that a complainant could not invoke a violation of the general principle of legitimate expectations in the absence of a legal basis in the TRIPS Agreement. By reading the principle of legitimate expectations into the TRIPS Agreement, the Panel had surpassed its adjudicating role. 34 Further, the Appellate Body in EC Hormones seems to have rejected the direct application of the precautionary principle and directed panels to apply the customary rules on interpretation. 35,36,37 However, a conceptually different approach though with limited practical consequences - was taken by the Appellate Body in US Offset Act (Byrd Amendment) regarding the substantive aspects of the good faith principle. 38 Not only the US in the subsequent Dispute Settlement Body (DSB) meeting, 39 but also part of the doctrine rightly criticized such an independent application of the good faith principle as there is no legal basis justifying that a claim could be based on the violation of good faith as such. 40 The practical relevance of this independent application might, however, be minimal because the violation of another substantive WTO obligation seems a necessary condition to reach the conclusion that the good faith principle is violated. In this way, the violation of the good faith principle is thus linked again to the violation of another substantive WTO provision. 41 Overall, the Appellate Body correctly tends to refute the direct application of substantive general principles of law. 42 Since these principles are only used in the interpretative process, the question of hierarchy of norms thus not emerges with regard to such general 34 Appellate Body Report, India Patent Protection for Pharmaceutical and Agricultural Chemical Products, Complaint by the United States, WT/DS50/AB/R 19 December 1997 [hereinafter Appellate Body Report, India Patents (US)], para [Emphasis added]. 35 See Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R 13 February 1998 [hereinafter Appellate Body Report, EC Hormones], paras Appellate Body Report, EC Hormones, above n 35, para [Emphasis added]. 37 See also Panel Report, EC Biotech, above n 8, para Appellate Body Report, United States Continued Dumping and Subsidy Offset Act of 2000, WT/DS217/AB/R, WT/DS234/AB/R 16 September 2002 [hereinafter Appellate Body Report, US Offset Act (Byrd Amendment)], para WTO, DSB (WT/DSB/M/142, 6 March 2003), para This independent application of the good faith principle should be distinguished from proper uses of this principle (see below). See Andrew D. Mitchell, Good Faith in WTO Dispute Settlement (2006) 7(2) Melbourne Journal of International Law , at See also Appellate Body Report, European Communities Regime for the Importation, Sale and Distribution of Bananas Second Recourse to Article 21.5 of the DSU by Ecuador, WT/DS27/AB/RW2/ECU 26 November 2008 [hereinafter: Appellate Body Report, EC Bananas III (Article 21.5)], para See also Appellate Body Report, China Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/AB/R 21 December 2009 [hereinafter Appellate Body Report, China Publications and Audiovisual Products], para [Emphasis added]. 9

11 principles of law. As they cannot directly be applied, they can never overrule an existing WTO obligation or constitute an exception thereto Procedural principles of international law Could some principles of international law also be used on a different legal basis than Article 3.2 of the DSU juncto Article 31.3(c) of the Vienna Convention? Some general principles of law that are interpretative principles 43 (i.e., they guide the interpretative process in itself) have indeed another specific legal basis under the Vienna Convention. The procedural aspect of the principle of good faith (i.e., as interpretative principle) is reflected in Article 31.1 of the Vienna Convention and the principle of in dubio mitius is according to the Appellate Body widely recognized in international law as a supplementary means of interpretation (Article 32 of the Vienna Convention). 44 The principle of effectiveness (ut res magis valeat quam pereat), i.e. that interpretation must give meaning and effect to all the terms of the treaty, is rightly considered by the Appellate Body as [o]ne of the corollaries of the general rule of interpretation in the Vienna Convention. 45 The presumption against conflict is equally an interpretative principle applied by panels. 46 These interpretative principles fall within the scope of customary rules of interpretation of public international law (Article 3.2 of the DSU). But could some other, non-interpretative principles also be used beyond interpretation? The case law and doctrine have indeed accepted that a number of other procedural general principles can be applied in the dispute settlement procedure. 47 These principles are procedural, which means that they - by their very nature - cannot be used as a ground for violation or justification. Rather, they play a gap filling role with regard to the DSU and underpin the legitimacy of the WTO dispute settlement system as it aligns itself to other international judicial systems. 43 The term is also used by the Appellate Body Report, EC Hormones, above n 35, footnote Appellate Body Report, EC Hormones, footnote 154. But see also Appellate Body Report, China Publications and Audiovisual Products, above n 42, para Appellate Body, US - Gasoline, at 23; Appellate Body Report, Japan Taxes on Alcoholic Beverages, at See, for example, Panel Report, Indonesia Certain Measures Affecting the Automobile Industry, WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R 2 July 1998, para ; Panel Report, Turkey Restrictions on Imports of Textile and Clothing Products, WT/DS34/R 31 May 1999, paras See Delimatsis, Fragmentation of International Trade Law, above n 17, at ; Pauwelyn, Trachtman and Steger, The Jurisdiction of the WTO, above n 10 at 136; Mitchell, above n 7; Gabrielle Marceau and Anastasios Tomazos, Comments on Joost Pauwelyn s Paper: How to Win a WTO Dispute Based on Non-WTO Law in Stefan Griller (ed.), At the Crossroads: The World Trading System and the Doha Round, European Community Studies Association of Austria Publication Series, (Vienna: Springer, 2008), vol. VIII, pp at 65 and 72-73; Trachtman in, Pauwelyn, Trachtman and Steger, The Jurisdiction of the WTO, above n 10 at 139; Isabelle Van Damme, Jurisdiction, Applicable Law, and Interpretation in Daniel Bethlehem, Donald McRae, Rodney Neufeld and Isabelle Van Damme (eds.), The Oxford Handbook of International Law (Oxford: Oxford University Press, 2009) at 318; 10

12 There is, however, no explicit legal basis to apply such procedural disciplines in the WTO dispute settlement system and the Appellate Body in most cases simply applies those principles, without revealing on which basis it has this authority. 48 Mitchell refers to the concept of inherent jurisdiction, which every court derives from its nature as a judicial body. 49 This concept would allow panels and the Appellate Body to employ procedural disciplines even though such powers are not explicitly conferred upon them by the DSU. Mitchell convincingly argues that the WTO panels and Appellate Body could indeed be characterized as judicial bodies, even though there are still some political features in the present system (e.g., adoption of reports by the DSB). The inverse consensus rule inserted during the Uruguay Round for the establishment of panels, the adoption of their reports, and the approval of countermeasures has indeed made the system in essence judicial. 50 Therefore, panels and the Appellate Body have, like any other international judicial bodies, inherent jurisdiction which enables them to perform their essential task of guaranteeing the proper administration of justice. Hence, this inherent jurisdiction might be linked to Article 3.2 of the DSU, which not only states that the WTO dispute settlement system is a central element in providing security and predictability to the multilateral trading system but likewise that it serves to preserve the rights and obligations of Members under the covered agreements. By employing their inherent jurisdiction, panels and the Appellate Body precisely guarantee that they could play this central role. As these principles are procedural in nature, the application thereof does also not add to or diminish the rights and obligations provided in the covered agreements but rather ensures that these WTO rights and obligations are protected. 51 Of course, the thorny question circumvented so far is what the boundaries are of their power vested in the concept of inherent jurisdiction. Mitchell admits that it cannot be precisely delineated but advances two cumulative conditions. First, it should be necessary for panels or the Appellate Body to rely on the principle to 48 See, for instance, with regard to the non-retroactivity principle, Appellate Body Report, Brazil Measures Affecting Desiccated Coconut, WT/DS22/AB/R 21 February 1997 [hereinafter Appellate Body Report, Brazil Desiccated Coconut], p See, Mitchell, The Legal Basis for Using, above n 7, at 821 and The fact that the Appellate Body also considers the WTO dispute settlement system as judicial could be derived from its reference to the practice of other international tribunals to apply some procedural principles in the WTO context. See, for example, Appellate Body Report, United States Anti-Dumping Act of 1916, WT/DS136/AB/R, WT/DS162/AB/R 28 August 2000 [hereinafter Appellate Body, US 1916 Act], footnote 30; Appellate Body Report, United States Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R 25 April 1997 [hereinafter Appellate Body Report, US Wool Shirts and Blouses], p Note that by applying these procedural principles, panels and the Appellate Body reinforce their status as judicial body, which in turn further legitimizes their application. 11

13 perform their judicial function, i.e. to give a positive solution to a dispute. 52 Second, the principle should be procedural in nature, and thus solve procedural issues and not be used as a source of substantive rights or obligations. 53 Since these procedural principles are directly applied, the question of the hierarchy of norms arises. Strictly speaking, this query is simply solved since one of the conditions for their application is precisely that there is a need to employ them, thus that there is a gap in the DSU to be solved. Hence, there would de facto not emerge a conflict of norms. An alternative way reaching a similar outcome is to consider the specific provisions in the DSU or other WTO Agreements spelling out procedural elements as lex specialis preceding over legi generali, in casu the general principles of law. 54 This lex specialis adagium is by the way precisely such a procedural principle applied by panels that could be derived from their inherent jurisdiction. 55,56 The Appellate Body has also recognized that panels and the Appellate Body have, in the first place, inherent jurisdiction to decide on their own jurisdiction, the compétence de la compétence. 57 Other procedural principles that have been applied to fill gaps in the DSU are related to the allocation of the burden of proof, 58 evidentiary questions, 59 legal standing, 60 time constraints on bringing claims and arguments, 61 and 52 Articles 3.4 and 3.7 of the DSU. 53 See, Mitchell, The Legal Basis for Using, above n 7, at For example, the Appellate Body in Canada Dairy (Article 21.5 II) decided that (t)he language of Article 10.3 (of the Agreement on Agriculture) is clearly intended to alter the generally-accepted rules on burden of proof. [Text between brackets added]. Regarding the usual rules on the burden of proof, see below n 58. Appellate Body Report, Canada Measures Affecting the Importation of Milk and the Exportation of Dairy Products Second Recourse to Article 21.5 of the DSU by New Zealand and the United States, WT/DS103/AB/RW2, WT/DS113/AB/RW2 20 December 2002, paras See, for example, Panel Report, United States Anti-Dumping Act of 1916, Complaint by Japan, WT/DS162/R and Add.1, adopted 26 September 2000, as upheld by Appellate Body Report WT/DS136/AB/R, WT/DS162/AB/R, para ; Panel Report, United States Customs Bond Directive for Merchandise Subject to Anti-Dumping/Countervailing Duties, WT/DS345/R 29 February 2008, para ; Panel Report, United States Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/R and Corr.1 15 May 1998, ; Panel Report, United States Definitive Anti-Dumping and Countervailing Duties on Certain Products from China, WT/DS379/R 22 October 2010, para See also, Appellate Body Report, European Communities Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R 9 September 1997 [hereinafter Appellate Body, EC Bananas III], para See also Panel Report, Thailand Customs and Fiscal Measures on Cigarettes from the Philippines, WT/DS371/R 15 November 2010, para Of course, all the interpretative principles described above fall within the scope of procedural principles. 57 Appellate Body Report, US 1916 Act, para. 54, footnote 30; Appellate Body, US Offset Act (Byrd Amendment), above n 38, para. 208; Pauwelyn, The Role of Public International Law, above n 16, at Appellate Body Report, US Wool Shirts and Blouses, above n 50, at Appellate Body, India Patents (US), above n 34, para. 65; Appellate Body Report, Canada Measures Affecting the Export of Civilian Aircraft, WT/DS70/AB/R 20 August 1999, para See Appellate Body Report, EC Bananas III, above n 55, para See Article 3.10 of the DSU for procedural aspects of the good faith principle. Appellate Body Report, United States Tax Treatment for "Foreign Sales Corporations", WT/DS108/AB/R 14 January 2002, para See also David Palmeter and Petros C. Mavroidis, Dispute Settlement in the World Trade Organization: Practice and Procedure (Cambridge: Cambridge University Press, 2004), pp and p. 78; Simon A.B. Schropp and David Palmeter, Commentary on the Appellate Body Report in EC Bananas III (Article 21.5): Waiver-Thin, Or Lock, Stock, and Metric Ton?, (2010) 9 World Trade Review 7-57 at

14 representation by private counsel before panels and the Appellate Body. 62 The principle of non-retroactivity as embodied in Article 28 of the Vienna Convention has equally been recognized in the case law. 63 However, some principles, such as estoppel, have not attained explicit recognition in the WTO judicial process even though they might be characterized as procedural in nature External principles in the European Union In contrast to the WTO context, the general principles of law as recognized by civilized nations (Art 38.1(c) ICJ Statute) are as part of general international law a source of law binding upon the European Union. The intention of the Union to be bound by international law is inter alia reflected in Articles 3(5) and 21(1) and (2)(b) of the Treaty on European Union and in Article 351 of the Treaty on the Functioning of the European Union (TFEU) and the binding nature of international law has since long been recognized by the CJ. 65 Hence, the EU has to respect external principles in the exercise of its powers, which means that they become part of the Union legal order and that Union acts have to be interpreted in conformity with these external general principles. 66,67 Contrary to this monist tradition, the CJ in the landmark Kadi judgment (2008) specified that agreements binding upon the Union take precedence over secondary Union acts but not over primary Union law, including internal EU principles (see below). 68 Thus, in the EU legal order, internal EU principles also precede over external principles of international law. The Court s reasoning has been defined as robustly dualist 69 in tone given its emphasis on the sui generis character of the EU legal order, separate and distinct from the international legal order. 70 It is symptomatic for the somewhat ambiguous relationship of the Court to 62 Appellate Body Report, EC Bananas III, above n 55, para See, for instance, Appellate Body Report, EC Large Civil Aircraft (Airbus), above n 23, para Appellate Body Report, European Communities Export Subsidies on Sugar, WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R 28 April 2005 [hereinafter Appellate Body Report, EC Sugar], para. 312; Appellate Body Report, EC Bananas III (Article 21.5), above n 41, paras ; Panel Report, European Communities and Certain Member States Measures Affecting Trade in Large Civil Aircraft, circulated WT/DS316/R 30 June 2010 [hereinafter Panel Report, EC Large Civil Aircraft (Airbus)], paras. 7.75, 7.83, 7.100, 7.104, footnote See Joint Cases 21-24/72, International Fruit Company [1992] ECR 1219, para. 6; Case C-286/90, Poulsen and Via Navigation [1992] ECR I-6019, para. 9; C 162/96, Racke [1998] ECR I-3655, paras Case C-386/08, Brita [2010] ECR I-0000, paras Joined Cases C-402/05 P and C-415/05, Kadi and Al Barakaat International Foundation [2008], ECR I-6351, paras CJ, Kadi, above n 67, paras See Gráinne de Búrca, The European Court of Justice and the International Legal Order After Kadi, (2010) 51(1) Harvard International Law Review, at CJ, Kadi, above n 67, paras The Court referred inter alia to the EC Treaty as an autonomous legal system which is not to be prejudiced by an international agreement and the internal and autonomous legal order of the Community. See for further critical remarks Jan Wouters, The Tormented Relationship between International Law and EU Law, in P.H.F. Dekker, R. Dolzer and M. Waibel (eds.), Making Transnational Law Work in the Global Economy. Essays in Honour of Detlev Vagts, Cambridge, Cambridge University Press, 2010,

15 international law, which is also revealed in some of its case law on external general principles. The recent Brita judgment illustrates the position in the EU legal order of external principles as well as the Vienna Convention with regard to the application of international agreements concluded by the Union. Because the Vienna Convention only applies to treaties between states (Article 1 of the Vienna Convention), the CJ held that the Union is not bound by this convention as such but that this does not preclude that the Union is bound by those provisions of the Vienna Convention that reflect customary international law. 71,72 This means that, to the same extent, the Vienna Convention also applies to international agreements concluded by the Union. Hence, the CJ concluded that the EC-Israel Association Agreement had to be interpreted in accordance with those rules. 73 Here, the CJ applied the rules of treaty interpretation spelled out in Article 31 of the Vienna Convention and referred in particular to any relevant rules of international law applicable in the relations between the parties (Article 31.3(c) of the Vienna Convention). 74 Similar to the Appellate Body s reading of this provision in the WTO context (see above), the CJ considered that Article 31.3(c) of the Vienna Convention includes general principles of international law, such as in casu the principle of the relative effect of treaties, according to which treaties do not impose any obligations, or confer any rights, on third States ( pacta tertiis nec nocent nec prosunt ). 75 The CJ observed that this principle finds expression in Article 34 of the Vienna Convention though the justification for its application to the EC-Israel Association Agreement was strictly speaking based on Article 31.3(c) of Vienna Convention. 76 Given the status of international law, including general principles of law and customary international law, in the EU legal order, the CJ could also have applied this general principle of law without de detour via Article 31.3(c) of the Vienna Convention. In sum, the CJ held, similar to the Appellate Body in the WTO context, that general principles of law could (and should) be relied upon on the basis of Article 31.3(c) of the Vienna Convention. Noteworthy, the CJ held that the international agreement should be consistent with the general principles of law, without explicitly qualifying this primacy of the general principle by reference to the lex posterior or lex specialis principles. 77 Moreover, the 71 These also form part of the Union s internal legal order. CJ, Brita, above n 66, para Support is found in Article 3 of the Vienna Convention. See, inter alia, Brita, para 40; Pieter Jan Kuijper, 'Case C-386/08, Brita GmbH v. Hauptzollamt Hamburg-Hafen Judgment of the European Court of Justice of 25 February 2010', (2010) 37 Legal Issues of Economic Integration , at CJ, Brita, above n 66, paras CJ, Brita, above n 66, para CJ, Brita, above n 66, paras. 44 and CJ, Brita, above n 66, para The lex posterior and/or lex specialis adagio are themselves customary rules of treaty interpretation. 14

16 CJ in Brita explicitly indicated that international agreements concluded by the Union should be consistent with the Vienna Convention s provisions having customary law status: having been concluded by two subjects of public international law, the EC- Israel Association Agreement is governed by international law and, more specifically, as regards its interpretation, by the international law of treaties. 78 Similar to the WTO context, the CJ deems that it can and should apply the customary principles of treaty interpretation reflected in the Vienna Convention when interpreting international agreements. 79 Although this decision reconfirmed its previous case law 80, it was the first time that the CJ clearly specified the reasons why it can and even should apply the customary rules of treaty interpretation reflected in the Vienna Convention. 81 However, these interpretative principles articulated in the Vienna Convention only seem to be explicitly employed by the CJ when international agreements have to be interpreted and not when the EU treaties as such are at stake. Under WTO law, on the other hand, the customary rules of treaty interpretation are, by virtue of Article 3.2 of the DSU, always rather rigorously employed by the panels and the Appellate Body and not only when the overlap with external international law is at stake, for which, as we said, there is any way limited scope because non-wto law cannot be directly applied but is only used in the interpretative process (on the basis of Article 31.3(c) of the Vienna Convention) of WTO provisions. Reviewing previous case law using the rules of treaty interpretation spelled out in Article 31 of the Vienna Convention, Kuijper points to an emphasis of the Court on the object and purpose step in treaty interpretation and reveals an interesting twist in the Court s use of the Vienna Convention as it is an attempt to base the exceptional character of the Community legal order on normal rules of treaty interpretation. 82 Hence, external law, in casu customary rules of treaty interpretation, is employed to underscore the sui generis character of the Union. 83 Note that the CJ has equally referred to the spirit of the GATT/WTO, which it deemed to be based on the principle of reciprocal negotiations and to be 78 CJ, Brita, above n 66, para See also Kuijper, 'Case C-386/08, above n 72, at 248-9; Philippe Manin, 'The European Communities and the Vienna Convention on the Law of Treaties between States and International Organizations or between International Organizations', (1987) 24(3) Common Market Law Review See inter alia, CJ, Racke, above n 65, paras. 24, 45 and 46; Case T-115/94, Opel Austria GmbH v Council [1997] ECR II-39, para. 24; Case C-416/96, El-Yassini [1999] ECR I-1209, para. 47, and Case C-268/99 Jany and Others [2001] ECR I-8615, para. 35 and the case-law cited; 81 See Kuijper, 'Case C-386/08, above n 72, at Pieter Jan Kuijper, The Court and the Tribunal of the EC and the Vienna Convention on the Law of Treaties 1969, (1998) 25(1) Legal Issues of European Integration, 1-23, at 3. CJ, El-Yassini, above n 80, para. 47; CJ, Jany and Others, above n 80, paras As explained below, a somewhat similar twist also seems to present in the Kadi judgment. 15

17 characterized by great flexibility, to underpin its rejection of their direct effect in the EU legal order. 84 Kuijper explains that the more legal systems such as the WTO become rule-oriented and borrow notions from EU law, the more need there will exist to emphasize the Union s sui generis nature. 85 Hence, one more interesting twist seems to emerge: the more other legal systems mirror the EU legal order, the more need for the CJ to underscore its sui generis character but the more difficult to mark this on differences in object and purpose between both legal regimes. In Opel Austria, a case that dealt with public aid provided by Austria to Opel prior to the accession to the EU, the Court of First Instance (CFI; since Lisbon the General Court) affirmed that the principle of good faith is a rule of customary international law whose existence is recognized by the International Court of Justice (...) and is therefore binding on the Community. 86 Although the Court equally referred to the codification of this principle in Article 18 of the Vienna Convention, 87 it further replaces this principle of customary international law by the Union law principle of legitimate expectations: the principle of good faith is the corollary in public international law of the principle of protection of legitimate expectations which, according to the case-law, forms part of the Community legal order. ( ) Any economic operator to whom an institution has given justified hopes may rely on the principle of protection of legitimate expectations. 88 Apparently biased towards internal principles, the Court considers the external principle as the corollary of the internal principle, whereas this is rather opposite: the principle of legitimate expectations seems the corollary of the good faith principle. 89 By shifting the legal basis from the external general principle of good faith to the internal general principle of legitimate expectations, the Court tactfully bypasses the hard question whether the external principle of good faith has direct effect in the EU legal order. 90,91 The 84 See, inter alia, CJ, International Fruit Company, above n 65, paras ; Case C-280/93 Germany v Commission [1994] ECR I-4973, paras ; Case C-469/93 Chiquita Italia [1995] ECR I-4533, paras Kuijper, The Court and the Tribunal, above n 82, at CFI, Opel Austria, above n 80, para As Fischer observed, Article 18 of the Vienna Convention is not simply the codification of this principle but just one area of its application. Peter Fischer, 'Case T-115/94, Opel Austria GmbH v. Council, Judgment of 22 January 1997, [1997] ECR II-39', (1998) 35(3) Common Market Law Review , at CFI, Opel Austria, above n 80, para Other aspects of the Court s interpretation of the good faith principle have also been criticized in the doctrine. See Fischer, above n 87, at 778; Christiaan Timmermans, The EU and Public International Law, (1999) 4 European Foreign Affairs Review, at 191-2; Kolb, Principles as Sources, above n 4, at 17; Jan Wouters and Dries Van Eeckhoutte, Enforcement of Customary International Law through European Community Law in Jolande M. Prinssen and Annette Schrauwen (eds.), Direct effect. Rethinking a Classic of EC Legal Doctrine, Groningen, European Law Publishing, 2002, CFI, Opel Austria, above n 80, paras 79 and 86; Timmermans, The EU and Public International Law, above n 89, at ; Case C-27/96 Danisco Sugar [1997] ECR I-6653, para In the Intertanko judgment, the Court equally relied on the good faith principle together with an internal principle of EU law, i.c. the duty of loyalty. See Case C-308/06 Intertanko [2008] ECR I-4057, 16

18 Appellate Body has rejected that a general principle of legitimate expectations could serve as a legal basis in the WTO context either as external principle (see above) or internal principle (see below). Although it has accepted that claims of violating the good faith principle could be articulated, these would only be successful if a specific WTO obligation has also been violated. In EU law, by contrast, the Union and Member States are bound by the good faith principle and the principle of legitimate expectations could as internal principle serve as legal basis for claims or defenses by individuals and would even override secondary Union law and international agreements. Another corollary of the good faith principle, namely the principle of pacta sunt servanda, has been considered by the CJ in Racke as a fundamental principle of any legal order and, in particular, the international legal order. 92 The Court (wrongly 93 ) asserted that Racke invoked an exception to this principle, namely the customary law principle of rebus sic stantibus, to challenge the validity of a Council regulation that suspended trade concessions granted by an international agreement. Even though the Court emphasized these principles importance and acknowledged that they are binding upon the Community and form part of its legal order, 94 judicial review was limited to the question whether the Council made manifest errors against these rules, because of the complexity of the rules in question and the imprecision of some of the concepts to which they refer. 95 This case reopened the discussion on whether customary rules of international law could resort direct effect in the EU legal order since they are inherently vague. 96 Nonetheless, regarding the rather straightforward pacta sunt servanda principle, the CFI applied it with regard to treaties signed by the Union or its Member States, whereby it indicates that this para. 52 and the annotation of J. Wouters and Ph. De Man, 103 American Journal of International Law 2009, See also Piet Eeckhout, 'Case C-308/06, The Queen on the application of Intertanko and Others v Secretary of State for Transport, judgment of the Court of Justice (Grand Chamber) of 3 June 2008', (2009) 46(6) Common Market Law Review, at ; Case C-203/07 P, Greece v Commission, [2008] ECR I-8161, para Already in the 1980s, the Court in Kupferberg reasoned that it had to look at relevant international law to determine the effects in the Community legal order of an agreement concluded with a non-member country. Case C-104/81, Hauptzollamt Mainz v. C.A. Kupferberg & Cie KG a.a. [1982] ECR I-3641, paras A similar reference to the obligation of bona fide performance of international agreements could be found in Hoesch. Case C-373/08, Hoesch Metals and Alloys [2010] ECR I-0000, para. 30. Note, however, that both judgments do not explicitly refer to the codification of the pacta sunt servanda principle in Article 26 of the Vienna Convention. 93 As Klabbers reveals, Racke rather invoked the pacta sunt servanda principle, whereas it was the Court who relied on the rebus sic stantibus doctrine. See Jan Klabbers, 'Case C-162/96, A. Racke GmbH & Co. v. Hauptzollamt Mainz judgment of 16 June 1998, nyr', (1999) 36 Common Market Law Review, at CJ, Racke, above n 65, paras. 45, 46 and CJ, Racke, above n 65,para. 52. [Emphasis added]. 96 For a discussion, see Klabbers, 'Case C-162/96, above n 93, at 184; Wouters and Van Eeckhoutte, above n