The Role and Added Value of Compulsory Dispute Settlement in the International Trade Environment Dichotomy

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The Role and Added Value of Compulsory Dispute

Settlement in the International Trade Environment

Dichotomy

Ma Thesis Public International Law Section: International Environmental Law P.L. van Dongen (10102752) University of Amsterdam Supervisor/First Reader: Dr. I. Plakokefalos Second Reader: Markos Karavias

Words: 14.000 (excl. referencing) July 31th 2015

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Abbreviations

AB (WTO) Appellate Body

ARSIWA (ILC) Articles on Responsibility of States for Internationally Wrongful Acts

DSB (WTO) Dispute Settlement Body

DSU (WTO) Understanding on Rules and Procedures Governing the Settlement of Disputes

CCSBT Convention for the Conservation of Southern Bluefin Tuna COP Conference of the Parties

CTE (WTO) Committee on Trade and the Environment

ECJ European Court of Justice

EEZ Exclusive Economic Zone

ICJ International Court of Justice

IEL International Environmental Law

IISD International Institute for Sustainable Development

ILC International Law Commission

IMF International Monetary Fund

ITLOS International Tribunal for the Law of the Seas LOSC (UNCLOS 1982) Law of the Sea Convention

MPEPIL Max Planck Encyclopedia of Public International Law

MS Member State

MTS Multilateral Trading System

OSPAR 1992 Convention for the Protection of the Marine Environment of the North-East Atlantic

PCIJ Permanent Court of International Justice

UNCLOS United Nations Convention on the Law of the Sea 1982 UNEP United Nations Environmental Programme

UNGA United Nations General Assembly

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Ch. I – Introduction

1.1 – The Field is Changing

The amount of international trade has increased tremendously over the last decades.1

This increase is accompanied by the creation of an increasing ‘rules-based’ trading environment, meaning that the system is rooted in an extensive set of legal barriers. Subsequently, this system is protected by comprehensive and compulsory legal mechanisms once States try to step outside the boundaries of this system.2 However, the increase of trade is also accompanied by ‘worrisome phenomena’, such as the deterioration of the environment. This is also recognised by the World Trade Organization (WTO), the world’s most important and comprehensive trade organisation.3

Therefore, besides trade law, the development of International Environmental Law (IEL) is becoming more important in the international legal order, seeking “to develop a body of law more specifically aimed at the protection of the environment”.4 This is mainly done through Multilateral Environmental Agreements (MEAs), specialised agreements that deal with specific environmental issues that arise due to the ‘highly dynamic’ nature of environmental problems. The flexible nature of the MEAs should, at least in theory, make it possible to create legal mechanisms that can relatively easily be adjusted to the continually changing understanding of environmental problems.5_{The United Nations Environmental Programme (UNEP)}

supervises 272 of these agreements.6 Additionally, sixteen of these MEAs include provisions on trade and, consequently, stand in direct contact with the WTO. 7_{One of}

these sixteen agreements is the 1989 Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal (Basel Convention), which is also seen as one of the most widely supported MEAs. Therefore, Basel will function as proxy to make broader inferences about trade related MEAs.

1

Van den Bossche & Zdouc 2013, p. 8; WTO 2014.

2

Van den Bossche & Zdouc 2014, p. 12.

3

Lamy 2007.

4

Birnie, Boyle & Redgwell 2009, pp. 1-2.

5

Brunnée 2011, para. 1.

6

UNEP, Register of International Treaties and Other Agreements in the Field of the

Environment, 2005.

7

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5 Furthermore, this thesis will discuss the Law of the Sea Convention (LOSC). This Convention is seen as the most comprehensive environmental treaty and deals with marine affairs in a broad sense – from territorial seas to ships.8 The use of this Convention provides for the opportunity to place another comprehensive regime vis-à-vis the WTO. Besides that, the LOSC is seen as frontrunner in environmental law. 9

Thus, in order to discuss the development of IEL, it cannot be ignored.

Both international trade and environmental law use different mechanisms and instruments for its Member States (MSs) to comply with the obligations of the different agreements. A State will be in compliance with an agreement when this State shows ‘respect for the obligations’ and acts accordingly.10 Therefore, when referred to non-compliance mechanisms, this refers to how an agreement has provisions that are designed to correct a State’s behaviour and making it conform its obligations. Nevertheless, it is possible that States have a different understanding of what is exactly part of its obligations. When this results in ‘a disagreement on a point of law or fact’ it is, following the Permanent Court of International Justice (PCIJ), possible to speak of a ‘legal dispute’.11 Therefore, agreements ideally also need to provide for dispute-settlement procedures in order to decide upon the interpretation and application of the agreement. Thus, these procedures are to be seen as a part of the non-compliance mechanisms, rather than a replacement.12

Throughout this thesis, it will be discussed how international trade law’s prime instrument to maintain its Members conformity to their obligations is the compulsory jurisdiction of the WTO’s Dispute Settlement Body (DSB).13_{This jurisdiction will only be}

used if a political settlement turns out to be insufficient and foresees in a binding legal decision. The environmental agreements follow a course in which diplomacy and other forms of informal settlement are guiding when issues on the compliance of Members arise. Dispute settlement by adjudication does not occur often. Therefore, it is argued that IEL functions on the basis of cooperation, rather than on the basis of dispute.

This might also be a reason why direct confrontations between the two systems are in general absent. There is one exception in the form of the EC – Chile (Swordfish)

8

Tanaka 2015, pp. 3-5.

9

Agenda 21, para. 17.1; Birnie, Boyle and Redgwell 2009, pp. 384-386.

10

Broggiato calls this form ‘legal effectiveness’. See: Broggiato 2008, p. 71.

11

Mavrommatis Palestine Concessions (1924), para. 19. See also Treves 2009, p. 512.

12

See also: Treves 2009, p. 507; Pauwelyn 2003, p. 178.

13

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6 Case. This case was discussed in both the DSB and the International Tribunal for the

Law of the Sea (ITLOS) – the permanent court of the LOSC. However, in the end the dispute ended with a settlement between the disputing Parties. There has been no direct confrontation, so far, between the DSB and a MEA.

1.2 – Problem Statement and Structure

In this context, the question rises how the international trade regime and the international environmental regime increasingly become intertwined in the absence of direct confrontations and disputes on the application and interpretation of the regimes vis-à-vis the other regime. However, as will be seen, the regimes internally have to deal with numerous disputes. Therefore the question is, how the regimes interact when the regimes show substantive overlap, and how they, when this occurs, maintain that their Member States remain in compliance with each individual regime.

This thesis argues that while compulsory jurisdiction is a strong and important tool for trade law, it also limits the potential of IEL. Therefore, the current systems are in need of institutional changes. At the same time, it has to be kept in mind that States have different interests considering their decisions on the institutional structure of the regimes.

This thesis is a study on the procedural parts of international trade and environmental law with regard to their non-compliance and dispute settlement – or avoidance – mechanisms. To study this, Chapter II will start with an explanation of how the chosen structures for the different fields of law are subject to different political interests. While, at the same time, these decision say something about the obligations the Parties impose upon themselves. Thereafter, in Chapter III, a more general outline of the different regimes and the interests these seek to protect is needed, before the role of compliance and dispute settlement can be discussed more extensively in Chapter IV.

Subsequently, these views are used as context to analyse the functioning of the dispute settlement bodies of the regimes throughout Chapter V and VI. This analysis will also make clear why disputes between the regimes are absent and what this entails for the integration of international law. Towards the conclusion in Chapter VIII, Chapter VII will be used to combine this in a plea for more compulsory dispute settlement in order to connect the different branches of law.

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Ch. II – Legal Instruments

2.1 – A Legal Instrument as a Policy Decision

International law making is ‘primarily political in character’. 14 Therefore, the roles of compliance mechanisms and dispute settlement procedures have to be seen as the output of political considerations and diplomatic processes. When States decide that an international agreement is needed to regulate an issue, this agreement will result in certain responsibilities for the Parties.

Applying this to trade and the environment, this means that the States have an ‘international responsibility’ to adhere to the text. However, many States connect ‘responsibility’ with the notion of ‘criminal responsibility’.15 Therefore, the term ‘international obligation’ is better suited.16_{While this term does not directly put weight}

on obligations itself, it does indicate that the Parties comprehend the urgency of the issue. Otherwise, a political agreement would have been a more logical, and less time consuming, alternative, since these agreements can hardly be legally enforced.17 Subsequently, this means that the issue of compliance starts to play a role once States have chosen for a legal instrument.

Environmental agreements are argued to constitute one of the weakest legal branches and the lowest common denominator possible. Strong compliance mechanisms and incentives for other States to force non-complying States into conformity with the Agreements are therefore lacking.18 According to former UN Rapporteur on State Responsibility Arangio-Ruiz, this is a consequence of how environmental law falls under the scope of ‘general’ or ‘collective interests’, therefore escaping the ‘pattern of bilateralism’.19_{Consequently, this means that IEL cannot be}

directly compared to the economically assessable rights and interests underneath the Multilateral Trade System (MTS).

The economic implications that non-compliance with economically assessable rights and duties might have make that other States have a direct incentive to take

14

Boyle & Chinkin 2007, p. 98.

15 Sicilianos 2002, p. 1130. 16 Ibid., p. 1131. 17 Chinkin 2000, pp. 26-27 18

Dunoff 1995, pp. 270-271; Birnie, Boyle & Redgwell 2009, p. 239.

19

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8 action. Therefore, strong compliance mechanisms can be expected to be part of the more economically assessable agreements – like the WTO Agreements. However, these incentives are also argued to be nothing more than ‘normative assumptions’.20 This means that the reason why other States closely supervise how other States comply with their obligations under international economic law is a direct consequence of the weight the States themselves put on the economic impact of policies. The lack of incentives behind the enforcement of ‘collective interests’ can therefore be seen as a lack of direct economically assessable consequences for individual States that follows out of non-compliance with these obligations.

In Chapter V it will be further discussed how the ‘increased interdependence of the global economy’ makes that States have more interest in the enforcement of WTO rules.21_{Even though this has as a consequence that compliance of other States with}

‘collective rights’ is of less importance.

2.2 – A Legal Instrument as a Self-Imposed Obligation

The establishment of a treaty therefore does not mean that all States have an interest in complying with the treaty, or see the incentive to make sure that other States comply. This only happens, most of the times, when an obligation is ‘bilateralizable’.22

However, this line of reasoning works against the conjunction of trade and the environment. That environmental interests are more difficult to apprehend in terms of ‘individual rights’ is the exact reason why all States should start to take an interest in how other States are adhering to their obligations. The international community increasingly recognizes how a breach of environmental obligations can ‘radically change’ the situation for the international community as a whole, therefore interests and incentives should change accordingly.23

It should not be the question how a State can make an individual or economically assessable rights out of an environmental agreement. Nor should is be how a State can, to speak in terms of ‘responsibility’, be entitled to invoke a non-complying State’s responsibilities for an ‘international wrongful act’.24_{The question is}

20

Nollkaemper 1996, p. 246.

21

EC – Bananas III (1997) (AB), para. 136.

22 Sicilianos 2002, p. 1133. 23 Sicilianos 2002, p. 1135. 24 Ibid., p. 1138.

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9 how States that have decided that an issue is important enough to make an international agreement around it can be brought to compliance with the legal obligations that they themselves have agreed upon.

To this end and to attach a sense of urgency to these norms – since a ‘legal obligation’ is more demanding than a ‘political obligation’ – these obligations will be coined ‘self-imposed obligations’. This makes that throughout the Chapters it remains clear that the States themselves decided to make their obligations legally binding. This is something that will turn out to seem in contradiction with how States often only see diplomacy as the proper instrument when there are difficulties with their own compliance, or the compliance of other Parties.

2.3 – A Legal Instrument with a Diplomatic Solution?

From the perspective of international trade law, hard legal remedies, such as the suspension of rights and duties are an important pressure mechanism in the case of non-compliance. IEL, on the other hand, is argued to be more effective when it is built and enforced within a ‘culture of cooperation’, instead of ‘an atmosphere of rivalry’ or adversarial procedures.25 That States see disagreements on compliance with their self-imposed environmental obligations preferably solved through diplomacy can also be found in the 1992 Rio Declaration. Here Principe 12 reads that: “[e]nvironmental measures addressing transboundary or global environmental problems should, as far as possible, be based on an international consensus.”26 In this light the decision of the International Court of Justice (ICJ) in the Gabčíkovo-Nagymaros case (1997) is also

illustrative. The essence of this decision is that the environment is not directly served by confrontations and disputes since this can lead to ‘disturbing implications’ for the environment once obligations are suspended.27

The non-confrontational nature of environmental compliance mechanisms is argued to make them appropriate instruments for the protection of the environment.28

In this way the UNEP, as an overarching and supervisory Programme, attracts jurisdiction and influence over a broad range of environmental issues and fits this into

25

Broggiato 2008, p. 73; Stoll & Vöneky 2002, p. 35.

26

1992 Rio Declaration, available through:

http://www.unep.org/Documents.Multilingual/Default.asp?documentid=78&articleid=1163 (accessed July 15th 2015).

27

Gabčíkovo-Nagymaros Case, para. 114.

28

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10 non-confrontational formats. However, this practice will also limit the possibility to integrate trade and environmental law.

This becomes clear when the lex specialis rule, which will be discussed in more detail in Chapters V and VI, is applied to the dichotomy. Following Section 3 of the Vienna Convention on the Law of Treaties (VCLT) and the commentary on art. 55 ARSIWA29, a treaty cannot easily override another agreement by making use of the lex

specialis rule. Special Rapporteur Crawford argued that for this rule to apply “it is not

enough that the same subject matter is dealt with by two provisions; there must be some actual inconsistency between them, or else a discernible intention that one provision is to exclude the other.”30

The application of this rule has two consequences for the integration of trade and environmental law. First of all, for the specialised treaties it is difficult, or even impossible, to make use of the possibilities offered by the non-compliance and dispute settlement mechanisms of more general treaties. This will be seen by how the WTO itself argues – gives it intent – that conflicts on the interplay between the WTO and a MEA need to be solved inside the MEA (Chapter IV). This gives a clear intention on how an MEA, and its informal mechanisms, are excluded by the WTO and its strict DSB. Here, one legal regime argues to the exclusion of the other regime.

Second, States can also use the argument that a specialised treaty has preference over the compulsory dispute settlement mechanism of a general treaty. Even when this has as a consequence that the dispute will then be moved outside the scope of judicial settlement. This argument was used in the MOX Plant Case (Chapter III) in order to circumvent the compulsory jurisdiction of the ITLOS.

This has as a consequence that as long as the possibility to refer environmental non-compliance disputes solely to diplomacy remains intact, the possibility to develop, or use, one strong and comprehensive international regime out of both branches of law will be limited. Diplomacy remains to be seen as the most important form of dispute settlement, since this gives the involved Parties ‘ownership’ over the issue.31 However, diplomatic settlement will only be a sufficient instrument when all interests of States, whether economic of environmental, can be taken into account. This is best possible

29

International Law Commission Articles on the Responsibilities of States for Internationally Wrongful Acts (2001).

30

ILC 2001, p. 358.

31

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11 when the interests of a specific legal branch finds itself supported by a strong non-compliance and subsequent dispute settlement regime. This gives the State the guarantee that its interests, once diplomacy fails, can be pursued through the judiciary.

Without this possibility, the self-imposed environmental obligations of States will remain weak obligations that stand close to political agreements. This Chapter was used to make clear how policy decisions eventually shape the possibilities the different legal regimes have. However, as the interaction of trade and the environment become increasingly important, States also have to ask themselves whether these policy decisions remain the proper instrument. Therefore, the next two Chapters will discuss how this interplay is perceived inside the individual branches, since a real cooperation can only take place when the separate branches are willing and able support this.

Ch. III – Different Perspectives

3.1 – The International Trade Perspective

The MTS stands for a world in which as many barriers to trade as possible are removed.32_{However, environmental issues increasingly find their way into the sphere}

of international trade. The subsequent environmental policies are nevertheless mostly judged on how these influence economic relationships, instead of being judged upon their impacts on the environment.33

States often perceive environmental issues as a domestic affair. Because of that international environmental policies are argued to display “the fundamental tension between the juridical reality of states’ territorial sovereignty over their national resources and the physical reality of ecological interdependence.”34_{Therefore, the}

question in this Chapter is how the WTO takes notice of this tension.

3.1.1 – The World Trade Organization

While the environment was not on the agenda during the GATT Uruguay Negations (1986-1994), the Round resulted in the reconstitution of the Committee on Trade and

32

Van den Bossche & Zdouc 2014, p. 21; Lamy 2001.

33

Dunoff 1995, p. 258; Hahn & Stavins, p. 464.

34

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12 the Environment (CTE).35 This Committee is established ‘to identify the relationship between trade measures and environmental measures’. Besides that, its role is ‘to make appropriate recommendations on whether any modifications of the provisions of the multilateral trading system are required’.36 However, as the WTO makes clear in its own report, the WTO is not an ‘environmental protection agency’ and also does not aspire to become one.37 The protection of the free trade and the removal of barriers remains the core of all actions of the organisation.

More than 20 years after its establishment it is therefore not striking that the CTE has not made a single binding recommendation on its tasks.38 Scholars describe the Committee as one with ‘very little analysis and evaluation’ and a ‘meager output’. This is attributed to the ‘deep division between the most economically developed members (…) and the majority of developing member states’.39_{However, the CTE is still}

believed to be the proper body for conducting environmental negotiations and as the body fit for integrating environmental protection in the WTO’s practice.40

When linking this to Chapter II, this falls in line with how environmental interests are most effectively pursued when they are part of diplomatic processes. The WTO also does not regard the establishment of trade-MEAs as a real danger to the MTS – as ‘the dimension of the problem should not be exaggerated’.41 Thus, it is not surprising that the topic is not officially on the Doha Agenda, and that, at the same time, other negotiations on this topic are presumed to remain ‘elusive’.42

The WTO does not seem to be willing to let the self-imposed environmental obligations of States find their effect inside the MTS. It will be discussed in Chapter 5.1 how an environmental agreement can only be used as a possible defence of a violation of the WTO and how the WTO is not allowed to make a decision of the application of the agreement itself. This is to a great extent a consequence of the ‘institutional reality’ of the organisation. Seeing as the WTO was established to raise the standards of living

35

See for information about the history of the CTE: WTO Secretariat 2004, pp. 2-3.

36

WTO Decision on Trade and Environment, 15 April 1994.

https://www.wto.org/English/docs_e/legal_e/56-dtenv_e.htm (accessed May 10th 2015).

37

WTO Secretariat 2004, p. 6.

38

See the WTO on the CTE via: https://www.wto.org/English/tratop_e/envir_e/cte00_e.htm (accessed May 10th 2015).

39

Birnie, Boyle & Redgwell 2009, p. 763.

40

Supra note 38.

41

WTO Secretariat 2004, p. 36

42

WTO UNEP 2009, p. 80. See for the Doha Agenda:

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13 by conducting trading and other economic endeavours, economic reasoning predominates in the decision-making processes.43_{In combination with the WTO’s}

practice that all decisions are taken by consensus, this makes it hard to change the established principles and basic assumptions towards the environment.44 These principles are primarily rooted in the assumption that environmental policies can either be used as to protect a State’s own domestic interests and industries, or otherwise that the environment is used as a ‘hegemonic objective of the developed world’ to limit the sovereign right of States to ‘select the most pressing problem on its own political agenda.45

Consequentially, the system as a whole cannot act in a flexible way. Therefore, the current trading regime is expected to remain more or less the unchanged. 46 While flexibility, as has been seen, is in theory needed to adjust environmental law to the rapidly changing scientific knowledge. However, the next Chapter will show that this flexibility is in practice less dominant than desirable.

3.2 – The International Environmental Perspective

The aim of IEL, with the UNEP as the UN’s main Programme, is ‘to promote international co-operation in the field of the environment (…) [and] to provide general policy guidance’.47 In this capacity, the UNEP is seen as an important catalyst of environmental action that seeks to promote a ‘coherent implementation’ throughout all environmental agreements.48

Therefore, the UNEP is an important player in international law and subsequently also the programme that is best equipped to emphasise the importance of the development of IEL as a whole. Besides that, this overarching view is needed in order to take a strong stance on how to integrate environmental interests with other (economic) interests. The Programme’s first Director, Maurice Strong, argued that an

43

Preamble of the Agreement Establishing the WTO (WTO Agreement 1994); Jackson 1998, p. 46.

44

Art. IX:1 WTO Agreement 1994. See for more on the decision-making processes: Van den Bossche & Zdouc 2014, pp. 136-138.

45

Esty 1994, pp. 23-24; Chimni 2000, p. 1760; Stone 1993, p. 35.

46

Hoekman & Kostecki 2001, p. 57.

47

UNGA Res. 2997 (1972).

48

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14 organisation with this role is needed since it is the lack of cross-sectorial action that causes many environmental problems in the first place.49

Throughout the next Chapters it will be discussed how the motives and structures behind the environmental agreements are of a different nature than the ones behind the MTS. The UNEP itself is also aware of the difficulties this constitutes. The WTO is even placed ‘at the top of the pyramid’ and with ‘far-reaching implications for environmental sustainability’.50_{This statement can even be interpreted as one that}

makes IEL as a whole of less importance than international trade law. Therefore, the question on how to integrate the States’ self-imposed obligations with the environment remains as one of the most important questions, as the increased importance of environmental issues in international affairs as a whole can hardly be denied.

3.2.1 – The Basel Convention

The first MEA that will be used to argue in favour of changes in the current relationship between IEL and trade law is the Basel Convention. Basel seeks to transform environmental concerns on the control of transboundary movements of hazardous waste and the disposal of these substances into a detailed, concrete, and enforceable mechanism. The instruments established to achieve this are rooted in the principle of ‘sound environmental management’.51 The core of this principle lies in how States are not allowed to import or export the substances covered by the Convention when they are not convinced that this is possible without creating adverse effects for the environment. The decision to import or export has to be based on a case-by-case – or waste-by-waste – analysis and decision.52_{This approach answers to the MEAs need for}

flexibility, as each assessment offers the possibility to implement new insights in the decision to allow trade.

Therefore, the State’s ‘sovereign right to ban the entry or disposal of foreign hazardous wastes and others wastes in its territory’ is the Convention’s main instrument.53_{Herewith, the Convention aims at controlling and regulating waste, rather}

49

Strong in Birnie, Boyle & Redgwell 2009, p. 65.

50

UNEP 2006, p. 12.

51

This concept is mentioned throughout the Convention, see especially art. 2(8), and finds its origin in Decision 14/30 of the UNEP’s Governing Council of June 1987.

52

Arts. 2(8); 3(1); 4(2)(e), (g) and 4(8) Basel Convention. See for more on this principle: Birnie, Boyle & Redgwell 2009, pp. 479-481.

53

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15 than prohibiting it.54 This seems to be almost perfectly connected to how a Member’s self-imposed obligation to assess to what extent the actions can be environmentally sound can be materialized. While domestic environmental policies can be used to further shape this States’ environmental interests at the same time.

However, critics argue that the way in which Basel is designed can also lead to the increase, instead of decrease, of the production and trade in waste.55 This is a consequence of the States’ decision to put the subjective assessment of individual States at the centre of the Agreement. Therefore, international supervision on how each individual State is complying with its obligations is lacking. The effect of this lack of supervision is that a significant part of the international waste trade takes place in illegality as this remains ‘a cost-saving alternative to proper disposal’.56 How this remains possible will be the topic of Chapter 6.2, as this Chapter deals with compliance control and the Basel Convention.

The remainder of this chapter will discuss the interests behind the Convention have contributed to how the Convention is established the way it is. This can be traced back to the, by now familiar, tension between trade and the environment.57 Specialised agreements offer the opportunity to regulate concrete events and actions. As a consequence, Parties will seek to protect their own specific interests in every provision. Therefore, as detailed decision-making will be difficult, will result in a complex agreement with a ‘lack of precision’.58

While it is already argued that MEAs need to be flexible in order to respond adequately, the practice at Basel shows that theory can stand far from reality. To achieve this flexibility and to provide for the possibility to answer to the different interests of the Parties, the Convention is subject to the output of Conferences of the Parties (COPs).59 During these meetings the States can, through diplomacy, further develop the Agreement and concretise their own self-imposed obligations. During these meetings, the ‘most controversial trade restrictive provision’ directly found its

54 Krueger 2001, p. 43. 55 Timbur 2012, pp. 265-266. 56

Schneider 1996, pp. 272-273; Baggs 2009, pp. 3-4. See also: Basel – UNEP 2010.

57

Kummer Peiry 1999, p. 43.

58

Ibid., p. 47.

59

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16 way to the agenda of COP-I (1992) – namely the Ban Amendment.60 Hereafter, the down side of diplomacy vis-à-vis the judiciary became clearly visible. Besides the disagreements on the Amendment itself, the Parties needed seven COPs to agree upon the voting procedure on the Amendment.61 A process that could have been abundant when the text itself would have been more clear, or when the Agreement would have allowed to ask an independent court on the exact meaning of the disputed article.

With regard to the substance of the Amendment there where difficulties as well. During the 10th-COP (2011), almost twenty years later, the Parties came up with the ‘Country-Led Initiative’ to improve the effectiveness of the Convention – and to move towards the implementation of the Ban Amendment.62_{The Initiative seeks to establish}

a discussion ‘in an informal, dynamic and non-dogmatic manner’.63 Keeping diplomacy and the will of States central to the success of the Amendment.64_{However, the total}

number of ratifications is stuck at 83 – while 3/4th of the 183 Parties are needed.65 This puts clear question marks behind the success of the Convention. The implementation and enforcement of the obligations in the Convention has proven to remain dependent on whether or not each individual State choses to answer to its self-imposed obligations in its domestic legal order.

As long as the general stance in IEL remains to be that diplomacy has to offer the solution, Basel is a clear example of how diplomatic practice can put a hold on the aims behind environmental agreements. Besides that, it has to be kept in mind that until the Parties are able to solve everything properly, illegal waste trade remains a valuable alternative. Since the international community as a whole turns out to be unable to sufficiently put pressure on this process.

However, before the compliance mechanisms of the environmental agreements are discussed, Chapter V will discuss how dispute settlement as part of compliance control can play an important role in bridging the gap between the different

60

The Ban Amendment (or art. 4A), adopted at COP-III (1995) prohibits “all transboundary movements of hazardous wastes which are destined for operations (…) to States not listed in Annex VII.” See: Krueger 1999, p. 47.

61

Art. 17(5) Basel Convention; Basel 2011.

62

Basel 2011 COP-10 Decision 10/3.

63

See the Secretariat’s statement on the Country-Led Initiative through: http://www.basel.int/Implementation/LegalMatters/CountryLedInitiative/tabid/1339/Default.asp x (accessed May 25th 2015).

64

Neumayer 2000, p. 8.

65

Art. 17(5) Basel Convention. See for the actual ratification status:

http://www.basel.int/Countries/StatusofRatifications/BanAmendment/tabid/1344/Default.aspx (accessed May 25th 2015).

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17 international regimes. Prior to that, the next part of this Chapter will turn to the LOSC. This regime is known to be one of the most comprehensive regimes in international law.66 This makes the system relevant for the further analysis on how the possibilities and values attached to diplomacy can function when it comes to committing States to their international obligations.

3.2.2 – The Law of the Sea Convention

The main function of the LOSC is to provide ‘a legal framework for ensuring international cooperation in marine affairs’. Therefore, the interest of the Convention lies especially in “safeguarding the common interests of the international community as a whole”.67 Besides that, the Convention has developed itself into a frontrunner in IEL and as a significant actor in the development of customary international law.68 Central to this role is the focus on the prevention, reduction, and control of pollution and misuse of the seas.69 In this regard, the LOSC supports the UNEP in the development towards a integrating the different branches of international law.70

Therefore, the Agreement can be placed at the opposite side of the MTS. This is due to the comprehensive nature of the LOSC and how it can use the ITLOS as its own tribunal in case of non-compliance disputes. The ITLOS has the enhancement of international environmental protection as its prime objective, rather than primarily liberalizing trade, which is the backbone of the MTS.71_{It is therefore not surprising that}

the Convention itself sees the ITLOS as ‘the pivot’ on which the whole Convention is build. 72_{This makes it a ‘distinct deviation’ from the conventional diplomatic approach}

66

A US Secretary of State in a letter to then-President Bill Clinton. Quotation drawn from Galdorisi & Vienna 1997.

67

Tanaka 2015, p. 4.

68

Agenda 21, para. 17.1; Birnie, Boyle and Redgwell 2009, pp. 384-386.

69

Ibid., p. 383.

70

Yankov 1999, p. 272; Birnie, Boyle and Redgwell 2009, pp. 382-384; Klein 2005, p. 22; Guruswamy 1998, p. 291.

71

Guruswamy 1998, p. 293.

72

Memorandum of the President of the Third Conference, Third UN Conference on the Law of the Sea 1973-1982.

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18 towards compliance management and dispute settlement.73 This conventional approach, its consequences, and its damaging effect on State’s self-imposed obligations have been seen in the previous Chapter. Therefore, the ITLOS was, at the time of its establishment, a promising instrument for solving compliance issues through dispute settlement. At the same time, the LOSC is, partly as a consequence of its long and difficult negotiation process74, rooted in the thought that the provisions have to answer to the Parties’ needs for flexibility.75_{While flexibility is a assumed to be a}

general prerequisite of a well functioning environmental agreement, in the context of the LOSC it means that the LOSC has to be seen ‘as guiding or interpretive’, rather than ‘standard setting’.76_{This entails that the functioning of the LOSC depends on the}

assumption that the Parties develop ‘standards, rules and practices’ that stand and operate separately from the LOSC itself.77_{When comparing this with the WTO, where}

the provisions are eminently standard setting, this means that the LOSC is comprehensive in a different fashion. The Convention is not to be seen as comprehensive in the sense that it is equipped to regulate the entire process from rule setting to enforcement, compliance and dispute settlement all the issues it regulates. This has as a consequence that the LOSC’ obligations are to be seen as less strong and rigid than the ones the WTO uses and protects in guarding the MTS. Something that will have its effect when it comes to the functioning of the non-compliance mechanisms of the regime. This will be further discussed and compared from Chapter V towards the Conclusion.

The flexibility of the text of the LOSC was discussed in the MOX Plant Case. In this case Ireland argued that other environmental treaties had to be used to guide the interpretations of the LOSC. Since the Convention ‘was not drafted in a vacuum’, it has to be assumed that, during the drafting of the text, there was “no intention that the terms in UNCLOS should bear a meaning that was markedly different from meaning which they are given in other relevant treaties.”78 Therefore, Ireland was of the opinion that the London Dumping Convention, as being a more specialised treaty, had be used

73

Klein 2005, p. 2.

74

See for example Friedheim 1993 for a reconstruction of the negotiation process of the LOCS.

75

Noyes 1998, pp. 163-164.

76

McConnell & Gold 1991, p. 88.

77

Idem.

78

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19 as an ‘aid to the interpretation’ of the LOSC.79 This argument fits with the nature of MEAs in the sense that these are agreements that need to be constantly responding to the development of knowledge.80 Ireland argued that the LOSC could not be dynamic and flexible “if the precise content of the obligation were elucidated in its text, fixed and incapable of development without formally negotiated amendment.”81

Ireland found that the UK was not complying with the text and, seeing as bilateral settlement had failed, the decision to ask for adjudication was made.82

Moreover, in this case adjudication was used to preclude that the LOSC could only be developed by ‘formally negotiated’ amendments. Ireland saw dispute settlement both as an instrument to pursue compliance and as an instrument to prevent that the functioning of the LOSC is left to diplomacy.

The UK responded that the LOSC does not allow that other agreements can be used as interpretative tool in applying the Convention. While recognizing that some of the LOSC substantive provisions do refer to other international agreements, this does not mean that ‘every far-flung rule of customary or conventional international law’ has to be incorporated in the LOSC.83 According to the UK, allowing all these sources access to the LOSC would ‘push’ the dispute settlement provisions of the Convention beyond what the Parties agreed upon. When this would happen this would have a damaging effect on the ‘universal participation’ of the Agreements.84

Ireland and the UK represent two interesting views on both the LOSC, and on the body of international law as a whole. Ireland tried to connect the LOSC with more specialized treaties, while the UK found the LOSC to be more isolated. At the same time, the UK made an important point with regard to dispute settlement and the importance of these procedures. To protect the comprehensive nature and the functioning of the text the UK argued that the possibility the restore wrongful claims or interpretations by judicial adjudication is crucial. However, when keeping in mind how the LOSC has to be seen as a Convention laying down guidelines, rather than standards, this leaves the question how these standards have to be explained and further developed. This indistinctness was not solved by this case. The Arbitral Tribunal left this

79 Ibid., p. 40. 80 Charney 1995, p. 735. 81

MOX Plant Case, Reply of Ireland (PCA), para. 5.25.

82

MOX Plant Case, Request for Provisional Measures (ITLOS), paras. 1-3.

83

MOX Plant Case, UK’s Rejoinder (PCA), para. 5.15.

84

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20 issue undecided, as it only ruled that when claims “arise directly under legal instruments other than the Convention, such claims may be inadmissible.”85_{This has as a}

consequence that the door to the possibility to use other MEAs when interpreting the LOSC is neither opened, nor closed.86 Therefore, the role of dispute settlement as a tool for compliance and the further development of the Convention remains undecided.

3.3 – Different Perspectives, Same Concerns?

This Chapter started with the question whether the international trade and environmental regimes can be argued to have the same concerns underneath their mechanisms. Throughout the different paragraphs it was discussed how the WTO seeks to liberalize trade and how barriers towards this are being removed, and how the Basel Convention tries to establish a system of sound environmental management. While, at the same time, the functioning of the Convention, and flexibility that is needed in order to do so, rests almost completely on informal and non-confrontational measures. The LOSC, has to be understood as an important comprehensive regime, both for the law of the sea as well as for the development of international law as a whole. However, in this capacity the LOSC is closely tied to the existence of subsequent ‘standards, rules and practices’ that function outside the scope of the LOSC. The MOX Plant Case has shown that the LOSC itself is indecisive in this regard.

To argue that the same concerns are behind these three different agreements would be a meaningless exercise. The more interests need to be taken into account, the more difficult it will be to establish detailed and concrete provisions. Therefore, negotiations will also become increasingly difficult and once a treaty is concluded, it will be hard to make substantive adjustments to the text.87 Consequently, the use of different specialised and general agreements makes perfect sense.

Therefore, the next Chapter will look further into how procedural backup mechanisms can be used to prevent that flexibility degenerates into indecisiveness and the ability to integrate the different branches of law. However, if the environmental regimes remain the way they are, the conclusion will be that the agreements compromise on effect since they cannot be sufficiently integrated with the other

85

MOX Plant Case, Order No. 3 (PCA), para. 19. Italics added.

86

Klein 2005, p. 151.

87

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21 regimes. Besides that, this will force the regimes to continue to function solely inside their own legal branch – limiting the development of international law as a whole.88

Ch. IV – Compliance and Dispute Settlement

4.1 – Compliance and Effect

In Chapter II it was shown how policy considerations stand at the roots of the treaty regimes that where discussed in the previous Chapter. Here it became clear how the current designs of the regimes are barely equipped to contribute to the integration of international trade and environmental law. The solution – that lies in the need to provide for ‘greater clarity, certainty and coherence’ in the agreements – is hindered by the political realities behind the agreements.89 Besides that, there is no ‘one-size-fits-all’ prescription to create appropriate policies that serve all interests at the same time.90

Attempts to do so will result in endless diplomatic procedures, with, as a consequence, that the effect of the agreement eventually will be at risk.

The difficulties with diplomatic decision-making at Basel and the indistinctness on the usage of other (environmental) treaties at the LOSC are illustrative in this regard. However, how are the parties under the circumstances brought into compliance with the obligations they imposed upon themselves? Since the Parties decided that a legal regime is the proper format for dealing with the issues they see, compliance is in the end the goal of the agreements. This question will be central to Chapter V and VI. To place this analysis in perspective, the remainder of this Chapter will be about the role and importance of compliance in general and the differences between stronger and weaker regimes.

The compliance and enforcement of environmental agreements does not belong to ‘the strong suit of international law’.91 While the WTO is well equipped to act strongly against its Members that are in non-conformity with their obligations. The DSB system is described as ‘positive and encouraging’ and as a compliance system that

88

Stoll & Vöneky 2002, p. 35.

89 Schrijver 2005, p. 130. 90 WTO Secretariat 2011, p. 9. 91 Bodansky 2009, p. 226.

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22 ‘works’.92 However, why different compliance-measures are chosen, and thus why the outcomes differ, depends on what the States can gain from complying and what can be gained from ‘punishing’ the non-complying Parties.93 In Chapter 2.2, it was already argued how especially ‘bilateralizable’ obligations provide States with the incentive to take an interest in how other Parties are complying with their obligations. These obligations can be seen as more ‘demanding’ ones. Consequently, States might be willing to get non-complying States back in conformity with their obligations ‘through the threat of sanctions’.94 ‘Collective interests’, like environmental ones, currently lack these incentives. Here, self-imposed obligations are merely seen as ‘shallow commitments’, which are mainly supported by ‘facilitative approaches’.95_{Thus, most of}

the times, the environmental agreements inhabit compliance mechanisms that ‘encourage’, rather than ‘coerce’.96_{Direct bilateral confrontations – in the form of a}

Party-to-Party trigger – where a State can directly address questions on compliance to the alleged non-complying State are also seen as adversarial rather than encouraging – and are therefore believed to be more suited in the context of the MTS.97

However, as Chapter II made clear, environmental agreements are established to regulate issues that in the case of non-compliance can ‘radically change’ the position and possibilities of the international community as a whole. Therefore, all States have an interest in how the treaty Parties comply with their obligations. The culture of cooperation in IEL, together with the lex specialis rule, limits the possibilities for States to do so, as this can result in the situation in which questions of compliance and other disputes can be brought outside the reach of the judicial branch. Consequently, the course of diplomacy can limit the development of law and subsequently limits the flexibility that environmental agreements need.

It has by now been extensively discussed how States can pursue their interests through diplomatic needs, and what kind of difficulties are accompanied by doing this. In order to change this, the next Chapter will discuss the possibility to restore to judicial settlement as a tool to get non-complying States in compliance with their obligations.

92

Van den Bossche & Zdouc 2014, p. 199.

93 Barrett 2003, p. 219. 94 Bodansky 2009, p. 228. 95 Idem. 96 Bodansky 2009, p. 250. 97 Jacur 2009, pp. 375-376.

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4.2 – Dispute Settlement by Adjudication

The judicial settlement of international disputes is far from a new concept in international law. Following the Mavrommatis ruling of the PCIJ, there is a legal dispute in the case of “a disagreement on a point of law or fact, a conflict of legal views or of interests between two persons.”98 Judicial institutions are in this regard to be seen as the ‘main guarantors’ of a meaning and functioning of an agreement, as only a judge can provide for independent checks of claims, as well as the denial of these.99_Besides

that, as also follows out of Mavrommatis, the absence of these checks is ‘incompatible with the flexibility which should characterise international relations’. When States are obliged to continue with diplomacy and other forms of negotiations when these find themselves in ‘deadlock’, this will harm the development of law.100

Therefore, the more courts and tribunals are absent in the functioning of treaties and other legal agreement, the more difficult it will become to guarantee the proper interpretation and application of these agreements.101_{However, it already}

became abundantly clear how States think differently about applying these possibilities. Nevertheless, the possibility to make use of judicial dispute settlement remains an important element in balancing the trade and environmental legal regimes, and these therefore constantly need to be brought to the attention of the international community.

Especially with regard to the flexibility of agreements, judicial settlement can be a valuable additive. Its worth is, as an instrument of last resort, under WTO law, proven to be one of the strongest sticks possible in international law.102 Since as diplomatic process on the application and interpretation of an agreement can be a difficult and lengthy process, a tribunal can be of use to make decisions when the Parties cannot agree upon themselves.

At the same time, this stick is seen as a ‘deal-breaker’ in MEA negotiations.103

This entails that when drafting the agreements, and later on in the COPs, the Parties seek to prevent conflicts with the WTO, and thus the MTS. First of all, this indicates how

98

Mavrommatis Palestine Concessions (1924), para. 19. See also Treves 2009, p. 512.

99

Birnie, Boyle & Redgwell 2009, p. 257.

100

Mavrommatis Palestine Concessions (1924), paras. 23 and 27.

101

Sinclair 1984, p. 235.

102

Arts. 3(7) and 22 DSU.

103

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24 States are reticent to place environmental issues and obligations next to their obligations under the international trading regime. Second, this indicates how ‘the potential for conflict’ with the WTO keeps the Parties away from writing provisions that can interfere with the MTS. States, nevertheless, argue that keeping the status quo intact is “sufficient to deal with the problems of potential conflict.”104_{Therefore, the}

absence of adjudication will have as a consequence that the issues on the trade-environment dichotomy remain within diplomatic spheres.

This approach fits inside the total absence of judicial disputes between the DSB and MEAs. An absence that in a shared WTO-UNEP report is interpreted as the success of the cooperation.105_{The WTO itself is also not at all interested in such disputes and is}

even willing to loose its far-reaching and compulsory jurisdiction when it comes to conflicts with MEAs. In 1996 the CTE recommended that “if a dispute arises between WTO members [and] parties to a MEA, over the use of trade measures they are applying between themselves pursuant to the MEA, they should consider trying to resolve it through the dispute-settlement mechanisms available under the MEA.”106

What is argued is that the current systems are sufficient and working properly and that the different branches do not need to become further integrated. However, the previous chapters should suffice in support of the statement that this is not the case. It is exactly the absence of the stick of compulsory dispute settlement in the case of non-compliance the WTO has at its disposal that restricts from placing the environmental agreements next to the MTS. The current structure will eventually result in a situation where there is a ‘two class society’ between rights that can and that cannot be properly enforced.107 While keeping the increase of environmental concerns in mind, this enforcement will become more and more important.

4.3 – Compulsory Dispute Settlement by Adjudication

Compulsory jurisdiction is thus one of the strongest possible and yet also most needed mechanisms. Otherwise, no matter how ‘strongly worded’ or comprehensive, the agreements face the risk to remain mere ‘gestures’.108

104

UNEP & IISD 2000, p. 62.

105

WTO – UNEP 2009, p. xvi.

106 CTE 1996, para. 178. 107 Pauwelyn 2003, p. 442. 108 Guruswamy 1998, p. 293.

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25 States’ interests are increasingly intertwined with the possibility to get a non-complying or free-riding State back into conformity with the agreement. According to the WTO AB, it is the ‘increased interdependence of the global economy’ that makes that States have more interest in the enforcement of WTO rules. Since ‘any deviation from the negotiated balance of rights and obligations is more likely than ever to affect them’.109 With this ruling, the AB points at the importance of protecting the functioning of the MTS by making use of dispute settlement vis-à-vis the interests that States can otherwise have (see Chapter 3.1). Environmental scholars also see a trend in which compliance with MEAs is gaining importance.110 That the WTO encourages States to take an interest in the protection of the MTS, should be a wake up call for the environmental regimes, and other regimes as well, to look at the possibilities to secure their underlying interests deeper inside the international legal order.

However, when a regime is only equipped with non-confrontational compliance mechanisms this is not sufficient to make the provisions and obligations of the agreements stand against the provisions that are backed by strong enforcement mechanisms – like the WTO. Since non-binding forms are a ‘less frightening method’ than the threat with mandatory instruments is, the main strength of compulsory dispute settlement lies in its ability to pressure diplomacy.111 Therefore, ‘any obligatory nature of the non-compliance procedure relates more to the duty of Parties to participate’. When procedures become mandatory this entails that the Parties are obliged to go beyond their mere duty to participate and cooperate in good faith.112

The task ahead is thus to reshape compliance mechanisms in such a way that these point more at the duties and self-imposed obligations of the States. Easier said, there should be less doubt about how the provisions are binding and how these have to be interpreted. Mere diplomacy is not sufficient enough to achieve this and, as the

Mavrommatis Case has shown, asking this from diplomacy will also damage the

development and integration of international law as a whole. Besides that, as compulsory judicial settlement guarantees an outcome of a dispute – even when the Parties during the process decide to settle outside court – this will also contribute to

109

EC – Bananas III (1997) (AB), para. 136.

110 Sands 1993b, pp. 50-51. 111 Treves 2009, pp. 503-504. 112 Milano 2009, p. 417.

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26 confidence and trust in the system.113 When confidence is lacking this is an indicator of the weak judicial powers of a regime.114

A reason why States are reluctant to make use of compulsory jurisdiction when it comes to environmental disputes is that legal precedents can threaten the interests of States. While a dispute in front of a tribunal will provide for a clear answer on the compatibility of a MEA and the MTS, the political pressure not to challenge is expected to prevent this from happening.115_{It is argued that “once a challenge is brought to the}

WTO, the undesirable precedent of submitting policy decisions taken in MEAs to a trade dispute panel will be set.”116 This can have as a consequence that this ruling will establish ‘a hierarchy’ between trade and environmental agreements. Besides that, it will contribute to further reluctance to regulate trade-related measures in MEAs, where integration is argued to be further limited.117

Within this line of thinking, the UNEP stressed during its 20th GC Meeting (1999), that the first choice in choosing a method in the event of a non-compliance dispute should be to take recourse to ‘less confrontational approaches’, rather than to confrontational ones.118 However, when these confrontational alternatives are not available, this will further contribute to the limited ability to cooperate between the different international realms. Besides that, it allows the discussed ‘normative assumptions’ of the vested economic interests to be guiding in international affairs.119 This will limit the development of a system of ‘deep cooperation’ of law the different branches of law, wherefore it is necessary that all branches are of equal importance and thus also provided with the same legal mechanisms – for which strong enforcement mechanism are thus needed.120

4.3.1 – The Swordfish Case

The argument that a hierarchy between the different branches of law needs to be prevented makes perfectly sense when the MSs accept that only the WTO is equipped

113 Montini 2009, p. 404. 114 Ibid., p. 393. 115 Krueger 1999, p. 77. 116 Ibid., p. 78. 117 Ibid., pp. 78-79. 118

As discussed in Fritzmaurice 2010, para. 22.

119

Supra., note 20.

120

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27 with a compulsory and strong judicial mechanism. Because then, as scholars argue, the system can easily triumph the conflict mechanisms of MEAs. This can have as a consequence that both domestic and international environmental politics and interests will erode under the pressure of the MTS regime.121

However, on what happens when the MEA is also empowered with a strong mechanism to counter pressure the MTS, only one case is available, the EU – Chile

(Swordfish) Case. While the case was eventually withdrawn from the WTO in 2007 and

from the ITLOS in 2009, the case can be used to study what will happen when two compulsory mechanisms face each other.122 Therefore, this case is illustrative for the argument that environmental law is in need of strong compliance mechanisms.

At the basis of the dispute stands how the EU decided to submit the case to the DSB on the basis of a violation substantive trade law.123_{While Chile, on the other hand,}

decided to turn to the ITLOS, and rooted its argument on the need to conserve swordfish and the sovereignty to impose its conservation laws within its own Exclusive Economic Zone (EEZ).124_{When doing this, Chile argued that the LOSC had to be seen}

as lex specialis over the WTO. However, both the LOSC and the DSB did not accept that this argument excluded the other system. With the DSB’s inability to interpret the LOSC125 and while it at the same time it did not allow the LOSC to interpret substantive trade law, the lex specialis-argument did not succeed. Therefore, both tribunals had arguably the jurisdiction to make a binding decision upon the matter.126

While this offered the ‘opportunity to add a different perspective to the environment versus free trade quandary’, others warned for the ‘risk of rendering contradictory and incompatible judgments’.127 When States have the opportunity to make use of more than one judicial mechanism, this means that they can also make a more deliberate decision on which system is the most coherent with their own policies. During the Swordfish case, the EU saw the need to protect their trade interests, while

121

Schoenbaum 1997, pp. 282-283; Khalilian 2009, p. 10.

122

ITLOS 2009, Press Release 141; see the WTO’s record on the case (DS193) through: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds193_e.htm (accessed June 20th 2015).

123

The prohibition of non-tariff trade barriers and quantitative restrictions, prohibited by art. V and IX General Agreement on Tariffs and Trade 1994.

124

Rooted in art. 165 of the Chilean Fishery Law via arts. 116-119 UNCLOS. See for a detailed discussion of the substantive part of the dispute Shamsey 2002, pp. 523-528; Stoll & Vöneky 2002, pp. 23-26.

125

Necessary to trigger art. 282 UNCLOS.

126

Stoll & Vöneky 2002; Guruswamy 1998.

127

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28 Chile’s policies where aimed at conserving the environment. When only one system is available, only one sort of interest can be strongly pursued in front of a tribunal, as these are specialised bodies with their own characteristics.

Therefore, two separate rulings will not necessarily be incompatible with the different regimes, nor, lead to ‘judicial anarchy’.128_{On the opposite side, it will help the}

Parties to return to, or to stay, at the negotiation table. Without a legal regime as a stick, the strongest regime is able to more easily dominate the one that can only communicate in voluntary and in a less demanding language. At the same time, as it is possible ‘to take account of other values’, it can be prevented that one branch dominates the other.129_{Therefore, it is the availability of more than one compulsory}

system that prevents the establishment of ‘a hierarchy’ between trade and environmental law.

This far, it has been discussed how international trade and environmental law operate from different perspectives. It has also been seen how this results in a different stance on the availability of compliance mechanisms, and in this regard on the role of compulsory dispute settlement and diplomacy. The next chapters will be used to fit this theory to the actual functioning of the dispute settlement regimes in the WTO, and from an environmental perspective in the LOSC and the Basel Convention.

Ch. V – The Role of and Access to Dispute Settlement in the

WTO

5.1 – The Jewel in the Crown of Free Trade

Inside the WTO, it is the DSB that, as a compulsory and binding system, functions as ‘a jewel in the crown of free trade’ and as the provider of ‘security and predictability’ to the MTS.130_{Therefore, its first objective is ‘to secure the withdrawal of the measures’}

when a Member is decided to be in non-compliance with its obligations under international trade law.131 The MTS, its ‘economic operators’, and their ‘bilateralizable interests’, are protected by a dispute settlement regime that seeks to remove all

128 Noyes 1998, p. 180; Guruswamy 1998, p. 290. 129 Dunoff 1995, p. 287. 130

Guruswamy 1998, p. 287; Art. 3(2) DSU.

131

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29 measures and domestic policies that are inconsistent with free trade.132 In first instance this is done by the Panel and, in appeal, the Appellate Body (AB). The decision of the DSB are, as has been seen in Chapter 3.1.1, being used as to protect a State’s own domestic interests and subsequent industries.

The possibility of the DSB to facilitate security and predictability is a result of its three characteristics: 1) compulsory jurisdiction, 2) exclusive jurisdiction, and 3) contentious rulings. Since the system operates ‘to the exclusion of any other system’, States have no other choice but to accept the jurisdiction of the DSB once they accede to the WTO.133 Moreover, the complaining State does not need to show specific economic or legal interests in its complaint. The Parties have a ‘broad discretion’ to decide whether a DSB procedure will be ‘fruitful’.134 There is also no doubt of the legal implications the DSB will have once diplomacy turn out to be insufficient to solve the dispute. 135 The DSB procedures, nevertheless, always start with confidential consultations.136 This makes that diplomacy is the point of departure and the compulsory dispute settlement a strong alternative that all Parties are very much aware of.137

Another element that makes the DSB distinct from environmental compliance mechanisms is how legal precedents are a fundamental component of trade law and the development thereof. Where from an environmental perspective precedents are seen as dangerous constructs for the development and continuity of the regime, the WTO regards them as necessities to guarantee the ‘security and predictability’ of the system. The dispute settlement panels are not free ‘to disregard the legal interpretations (…) contained in previous Appellate Body reports.”138 Therefore, international trade law keeps developing through its dispute settlement mechanism. In

132

US – Section 301 Trade Act (2000) (Panel Report), paras. 7.75-7.76.

133

Art. 23 DSU; US – Section 301 Trade Act (2000) (Panel), para. 7.43.

134

Art. 3(7) DSU; EC – Bananas III (1997) (AB), para. 135. See also: González-Calatayud & Marceau 2002, p. 277.

135

Mexico – Corn Syrup (Art. 21.5 – US) (AB), para. 36

136

Arts. 3(7) and 4 DSU.

137

There are 496 cases brought in front of the DSB, some of them where however withdrawn prior to a ruling and, which is due o the successes of diplomacy. See:

https://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm (accessed July 12th 2015).

138

US – Stainless Steel (2008) (AB), para. 158-161. See for a detailed analysis of the development of precedents in WTO Law: David 2009.

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30 this process, the system is almost unhindered by the fact that the institutional structure of the WTO as a whole is rigid and difficult to reform.139

However, the DSB cannot take environmental treaties and the Parties environmental obligations into account. Therefore these agreements cannot benefit from the possibilities WTO adjudication offers. In addition to how the WTO is clear on how it is not, nor will become, an environmental protection organization, the Dispute Settlement Understanding (DSU) is also clear on this issue.140_{Agreements that are}

concluded outside the WTO framework cannot be, nor will become, central in a dispute.141

The only opportunity for other regimes is to seek access to the DSB is to make an explicit conflict clause that, in the case of a dispute, makes the Agreement subordinate to the DSB and the agreements covered by the DSU. This happened in

Argentina – Footwear, where an International Monetary Fund (IMF) declaration was

considered in relation to Annex I. This Declaration included a conflict clause in favour of the DSB. Meaning that in the case of a conflict between the regimes, the WTO regime will prevail. Therefore, the IMF rules could not be used to justify a violation of WTO rules.142_{Both Basel and the LOSC do not provide for a conflict clause in favour of the}

DSB. The question is thus what will happen if a dispute between one of these agreements is brought in front of a Panel. Since the Panel will not have jurisdiction on the substantive parts of the agreements, the Panel can only rule on whether the Agreement can be used as a defence for violating the trade law.143

This outcome is equal to what happened in the Swordfish Case – a parallel dispute would be born. This will have as a consequence that the dispute in front of the DSB will be centred on the application of the environmental agreement on trade measures. The decision will as such have nothing to do with how to use and interpret the environmental agreement in itself. This outcome is perfectly in line with how the WTO is reluctant towards allowing environmental disputes a forum inside the MTS – which was discussed in Chapter 3.1. However, while the referral to the dispute

139 Supra note 46. 140 Supra note 37. 141

Annex I WTO Agreement 1994; Arts. 7 and 23 DSU. See also: Pauwelyn 2003, pp. 443-445.

142

Argentina – Footwear (EC) (2000) (AB), paras. 69-74.

143

The agreement can in this case only be used in the procedure under the WTO exception clause (art. XX GATT 1994). See also: Pauwelyn 2003, pp. 480-481.

The Role and Added Value of Compulsory Dispute Settlement in the International Trade Environment Dichotomy