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REVISTA LATINOAMERICANA DE DERECHO COMERCIAL INTERNACIONAL
V. 1, NMERO 2, DICIEMBRE 2013V. 1, ISSUE 2, DICIEMBRE 2013
LATIN AMERICAN JOURNAL OF INTERNATIONAL TRADE LAW
V. 1, No. 2, III/2013
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Second PartengliSh
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179
contentSVolume 1, iSSue 2, 2013
11 First Part. Spanish
179 Second Part. EnglishSection on international economic
law
a. general articleS Graham Cook 181 Reasonableness in WTO
Law
Jan Wouters, Bregt Natens &
David DHollander211 EU-Brazil Relations at the World Trade
Organization: Dispute Settlement as Leverage
Vera Thorstensen, Daniel Ramos,
Carolina Muller & Fernanda Bertolaccini233 WTO Market and
Non-Market Economies: the
hybrid case of China
Natividad Martnez Aguilar 267 Motions in the Procedures of a
Bi-national Panels review under Article 1904 of the North American
Free Trade Agreement
b. caSe-law reViewSIshita Das 287 Balancing Act: The Clove
Cigarettes Dispute
c. book reViewSJos Caiado & Luis Montilla 295 Investment Law
Within International Law -
Integrationist Perspectives
Section on international arbitrationa. general articleS
Attila Tanzi 299 Reducing the Gap Between International
Investment Law and Human Rights Law in International Investment
Arbitration?
Manuel Conthe &Antonio Delgado 313 Could awards on remand
tackle the inefficiencies of ICSID annulments?
-
181
Reasonableness in WTo laW
Graham Cook*
Abstract. Reasonableness tests are pervasive in the law of the
World Trade Organization (WTO). The term reasonable (including its
variants unreasonable, reasonably, unreasonably, reasonableness,
unreasonableness) appears more than 200 times in the legal texts
that comprise the WTO Agreement, and more than 8,000 times in WTO
jurisprudence. WTO jurisprudence relating to the notion of
reasonableness can be usefully categorized according to the
following distinctions. First, reasonableness can function as a
legal test that WTO adjudicators are expressly mandated to apply by
virtue of the WTO treaty provision at issue. Second, as reflected
in the many other cases in which WTO adjudicators have assessed
whether certain conduct was reasonable even in the absence of any
express reference to the term in the WTO provision at issue,
reasonableness also functions as an unwritten legal test that WTO
adjudicators may apply to decide certain issues when the provisions
of the WTO Agreement are silent or lacking in detail. Third, as
reflected in the many cases in which WTO adjudicators have rejected
a particular interpretation of a WTO provision on the grounds that
it would lead to an unreasonable result, reasonableness functions
as a general legal test under the customary rules of treaty
interpretation that WTO adjudicators apply when interpreting
provisions of the WTO Agreement.
Keywords. World Trade Organization; treaty interpretation;
reasonableness test; reasonableness; reasonable interpretation;
reasonable administration of laws; reasonable period of time;
reasonable rates; reasonable efforts; reasonable expectations;
reasonableness in fact finding; reasonable exercise of discretion;
reasonable relationship between ends and means.
* Legal Affairs Division, WTO Secretariat. The views expressed
herein are the personal views of the author, and do not represent a
position, official or unofficial, of the WTO Secretariat or WTO
Members.
i. inTRoducTion
the precise definition of terms and their application to facts
is at the core of international adjudication. The meaning of words
that international adjudicators work with can be elusive. Such is
the case with the word reasonable, and so it is not surprising that
some writers have sought to clarify its meaning and function in the
context of public international law.1
1 See generally O. Corten, The Notion of Reasonable in
International Law: Legal Discourse, Reason and Contradictions
(1999) 48(3) International and Comparative Law Quarterly 613;
Reasonableness in International Law in
secTion on inTeRnaTional economic laW
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182
Latin American Journal of International Trade LawVol. 1, Issue
2, Year 2013
The word reasonable appears in many treaties and other
international legal instruments. For example, Article 9.3 of the
International Covenant on Civil and Political Rights guarantees
that anyone arrested shall be entitled to a trial within a
reasonable period of time; Article 41.1 of the UNCITRAL Arbitration
Rules instructs that the fees of an arbitral tribunal shall be
reasonable in amount; Article 57.4 of the First Additional Protocol
to the Geneva Conventions requires that all reasonable precautions
be taken to avoid losses of civilian life or damage to civilian
objects; Article 98.1(b) of the United Nations Convention on the
Law of the Sea requires that a ship master proceed with all
possible speed to the rescue of persons in distress, insofar as
such action may reasonably be expected of him.
The notion of reasonable also appears in the judgments and
advisory opinions of the International Court of Justice. For
example, the International Court of Justice has stated that in the
field of diplomatic protection as in all other fields of
international law, it is necessary that the law be applied
reasonably2; that it was appropriate to consider whether the
reaction of a State in the context of what it regarded as
self-defence was continued after the period in which any attack
could reasonably be contemplated3; that as part of its analysis of
whether the requisition of a factory was arbitrary, within the
meaning of a bilateral investment treaty, it would consider with
that conduct was unreasonable4; and that insofar as possible, the
line of maritime delimitation should allow the coasts of the States
concerned to produce their effects, in terms of maritime
entitlements, in a reasonable and mutually balanced way5.
The present article examines the concept of reasonableness in
WTO law. Like most6 other fields of public international law, the
notion of reasonable is used in WTO law. In fact, the term
reasonable (including its variants unreasonable, reasonably,
unreasonably, reasonableness, unreasonableness) appears more than
200 times in the legal texts that comprise the WTO Agreement, and
the same term appears more
the Max Planck Encyclopedia of Public International Law,
available online at ; A. Adinolfi, The Principle of Reasonableness
in EU Law in G. Bongiovanni, Giorgio, G. Sartor, and V.C. Giovanni
(Eds.), Reasonableness and Law (Springer: 2009), pp. 383-403.
2 International Court of Justice, Case Concerning The Barcelona
Traction, Light and Power Company, Limited, Judgment, 1970, para.
93. All ICJ decisions cited in this article are available online
at
3 International Court of Justice, Case Concerning Military and
Paramilitary Activities in and against Nicaragua (Nicaragua v.
United States of America), Judgment, 1986, para. 237.
4 International Court of Justice, Case Concerning Elettronica
Sicula S.p.A. (ELSI) (United States v. Italy), 1989, paras. 127,
129.
5 International Court of Justice, Territorial and Maritime
Dispute (Nicaragua v. Colombia), Judgment, 2012, para. 215.
6 According to one writer, it is somewhat difficult to track
down an explicit reference to reasonableness in the caselaw of the
European Court of Justice. A. Adinolfi, The Principle of
Reasonableness in EU Law in G. Bongiovanni, Giorgio, G. Sartor, and
V.C. Giovanni (Eds.), Reasonableness and Law (Springer: 2009), pp.
383-403, at 383.
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183
Reasonableness in WTO LawGraham Cook
than 8,000 times in over 300 WTO dispute settlement reports,
awards, and decisions.7 Notwithstanding its pervasive nature in WTO
law, there appear to be no book chapters or journal articles on the
concept of reasonableness in the context of WTO law.8 The remainder
of this article is divided into four main parts: (i) an exposition
of the various references to the term reasonable in the legal texts
comprising the WTO Agreement; (ii) an exposition of various issues
in respect of which reasonableness functions as a legal test that
WTO adjudicators are expressly mandated to apply by virtue of the
wording of the provision at issue; (iii) an exposition of how
reasonableness may function as an unwritten legal test that WTO
adjudicators may apply to decide certain issues when the provisions
of the WTO Agreement are silent or lacking in detail; and (iv) an
exposition of how WTO adjudicators have applied the general
principle that treaties should be interpreted so as to avoid
unreasonable results.
ii. RefeRences To The TeRm Reasonable in The WTo agReemenT
There are more than 200 references to the term reasonable
(including its variants unreasonable, reasonably, unreasonably,
reasonableness, unreasonableness) in the agreements,
understandings, and ministerial decisions that comprise the WTO
Agreement:
GATT 1994: Articles V:4 (reasonable charges and regulations),
VI:1(b)(ii) (reasonable addition), VII:5 (reasonable degree of
certainty), IX:4 (unreasonably increasing their cost), IX:5
(unreasonably delayed), X:3(a) (administer in a reasonable manner),
XI:2 (could reasonably be expected), XII:2(a)(ii) (reasonable
rate), XII:3(c)(ii) (prevent unreasonably), XIII:2(d) (not
reasonably practicable), XV:2 (reasonable rate), XVIII:7(b) (every
reasonable effort), XVIII:9(b) (reasonable rate), XVIII:10 (prevent
unreasonably), XVIII:18(b)
7 These figures are the result on a July 2013 full-text search
of relevant materials, using s full-text search engine. This
article refers to WTO dispute settlement decisions by their
official short titles. All of these decisions are available online,
at . The complete list of official short titles and corresponding
full case title and citation is also available online, at
8 Several book chapters and journal articles have focused on the
application of particular reasonableness tests in the context of
certain WTO law issues, for example the reasonable period of time
under Article 21.3(c) of the DSU to comply with a dispute
settlement ruling. See e.g. W. Zdouc, The Reasonable Period of Time
for Compliance with the Rulings and Recommendations Adopted by the
WTO Dispute Settlement Body in Rufus Yerxa and Bruce Wilson (eds),
Key Issues in WTO Dispute Settlement: The First Ten Years
(Cambridge: CUP, 2005) 8897; MA Qian, Reasonable Period of Time in
the WTO Dispute Settlement System (2012) 15(1) Journal of
International Economic Law 257-285. In contrast, this article
focuses more broadly on the pervasive nature of reasonableness
tests in WTO law and jurisprudence, rather than any one particular
reasonableness test.
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184
Latin American Journal of International Trade LawVol. 1, Issue
2, Year 2013
(all reasonable efforts), XXIII:2 (reasonable time), XXIV:5(c)
(reasonable length of time), XXIV:7(b) (not a reasonable period of
time), XXIV:12 (reasonable measures), XXVIII:4(d) (unreasonably
failed), XXXVII:1(a) (differentiate unreasonably), Note Ad Article
III:2 (reasonable measures), Note Ad Article VI:2 and 3 (reasonable
security), Note Ad Article XVII:4(b) (reasonable margin), Note Ad
Article XVIII:13 and 14 (reasonable period), Note Ad Article
XVIII:19 (reasonable period), Note Ad Article XXIV:1, para. 4
(reasonable period), Note Ad Article XXIV:1, para. 4 (could
reasonably be expected), Note Ad Article XXVIII:4(d) (unreasonably
failed), Understanding on Article XXIV of the GATT, paragraphs 3
(reasonable length of time), 5 (reasonable period), 13 and 14
(reasonable measures).
Anti-Dumping Agreement: Articles 2.2 (reasonable amount), 2.2.1
(reasonable period, reasonably reflect the costs), 2.2.2(iii)
(reasonable method), 2.3 (reasonable basis), 2.4 (unreasonable
burden of proof ), 5.2 (reasonably available information), 6.5.1
(reasonable understanding), 6.8 (reasonable period), 6.10
(reasonable number, percentage which can reasonably be
investigated), 8.4 (reasonable period), 11.2 (reasonable period),
11.3 (reasonable period), Annex II:1 (reasonable time), Annex II:2
(reasonable ability to respond, unreasonable extra burden,
unreasonable additional cost), Annex II:6 (reasonable period), and
footnote 6 (costs which can reasonably be taken into account).
SCM Agreement: Articles 11.2 (reasonable available information),
12.4.1 (reasonable understanding), 12.7 (reasonable period), 13.2
(reasonable opportunity), 13.3 (reasonable opportunity), 18.4
(reasonable period), 19.1 (reasonable efforts), 21.2 (reasonable
period), 21.3 (reasonable period), Annex I(i) (reasonable time
period), Annex II, part II, paragraphs 1 and 2 (reasonable system
or procedure) and 5 (reasonably calculated), Annex III, part II,
paragraphs 2 and 3 (reasonable verification procedures), Annex V,
paragraphs 3 (reasonably available, unreasonable burden), 8
(reasonableness of any requests for information), and 9
(unreasonable non-cooperation), and footnote 44 (reasonable
opportunity).
TRIPS Agreement: Articles 8 (unreasonable restrain), 13
(unreasonably prejudice), 15.5 (reasonable opportunity), 25.2
(unreasonably impair), 26.2 (unreasonably conflict, unreasonably
prejudice), 30 (unreasonably conflict, unreasonably prejudice),
31(b) (reasonable commercial terms, reasonable period of time,
reasonably practicable), 31(l)(ii) (reasonable terms), 34.1(b)
(reasonable efforts), 37.1 (reasonable ground to know, reasonable
royalty), 39.2(c) (reasonable steps), 41.2 (unreasonable
time-limits), 43.1 (reasonably available evidence), 43.2
(reasonable period), 44.1 (reasonable grounds to know), 45.1
(reasonable grounds), 45.2 (reasonable grounds), 50.3 (reasonably
available evidence), 50.4 (reasonable period), 50.6
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(reasonable period), 52 (reasonable period), 53.1 (unreasonably
deter), 53.2 (reasonable period), 55 (reasonable period), 62.1
(reasonable procedures and formalities), 62.2 (reasonable
period).
TBT Agreement: Articles 2.9.4 (reasonable time), 2.12 (a
reasonable interval), 3.1 (reasonable measures), 4.1 (reasonable
measures), 5.3 (reasonable spot checks), 5.6.4 (reasonable time),
5.9 (reasonable interval), 7.1 (reasonable measures), 8.1
(reasonable measures), 9.2 (reasonable measures), 10.1 (reasonable
enquiries), 10.1.4 (reasonable information), 10.3 (reasonable
measures, reasonable enquiries), 10.3.3 (reasonable information),
10.4 (reasonable measures), 11.3 (reasonable measures), 11.4
(reasonable measures), 12.5 (reasonable measures), 12.6 (reasonable
measures).
SPS Agreement: Articles 4.1 (reasonable access), 5.7 (reasonable
period), 6.3 (reasonable access), 13 (reasonable measures), Annex
B:2 (reasonable interval), Annex B:3 (reasonable questions), Annex
B:5(d) (reasonable time), Annex C:1(e) (reasonable requirements)
Annex C:3 (reasonable inspection), and footnote 3 (reasonably
available).
DSU: Articles 21.3 (reasonable period of time), 21.3(c)
(reasonable period of time), 21.4 (reasonable period of time), 21.6
(reasonable period of time), 22.1 (reasonable period of time), 22.2
(reasonable period of time), 22.6 (reasonable period of time), 22.9
(reasonable measures), 23.2(b) (reasonable period of time), 23.2(c)
(reasonable period of time).
GATS: Articles I:3(a) (reasonable measures), V:1(b)(ii)
(reasonable time-frame) VI:1 (administered in a reasonable manner),
VI:3 (reasonable period), VI:5(a)(ii) (not reasonably expected),
XXIII:3 (could reasonably have expected), Annex on
Telecommunications, paragraphs 5(a) (reasonable terms and
conditions), 5(g) (reasonable conditions on access).
Agreement on Customs Valuation: Articles 1.2(a) (reasonable
opportunity), 2.1(b) (reasonableness of the adjustment), 3.1(b)
(reasonableness of the adjustment), 7.1 (reasonable means),
Interpretative Note to Article 2, paragraph 5 (reasonableness of
the adjustments), Interpretative Note to Article 3, paragraph 5
(reasonableness of the adjustment), Interpretative Note to Article
5, paragraph 12 (unreasonable difficulty), Interpretative Note to
Article 7, paragraphs 2 and 3 (reasonable flexibility),
Interpretative Note to Article 8.1(b)(ii), paragraph 1 (reasonable
manner), Annex II:3 (reasonably short period of time).
Agreement on Government Procurement: Articles V:11 (reasonable
requests), VIII(d) (a reasonably short time), XI:1(a) and XI:4
(reasonable needs), XII:3(a), (b), and (c) (any reasonable
request), XV:1(b) (reasonable alternative), XX:5 (reasonably should
have been known).
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Agreement on Rules of Origin: Articles 2(e) (administered in a
reasonable manner), 3(d) (administered in a reasonable manner),
9.1(e) (administrable in a reasonable manner), Annex 1:3
(reasonably short period of time).
Agreement on Import Licensing Procedures: Articles 1.6
(reasonable period), 3.5(g) (of reasonable duration), 3.5(j)
(ensuring a reasonable distribution).
Agreement on Safeguards: Articles 3.1 (reasonable public
notice), 5.2(a) (not reasonably practicable).
Agreement on Preshipment Inspection: Articles 2.15 (unreasonable
delays), 4 (reasonable measures).
Agreement on Aircraft: Articles 4.2 (unreasonable pressure), 6.2
(reasonable expectation of recoupment).
Agreement on Agriculture: Footnote 6 (reasonable prices).
Ministerial Decisions on Customs Valuation9, paragraph 1
(reasonable
doubts, reasonable opportunity); on WTO-ISO Standards10,
paragraph 4 (reasonable fee); and on the Agriculture Reform
Programme11, paragraph 2 (reasonable terms and conditions).
For reasons of practicality, this list of references to the term
omits two categories of instruments that are both legally part of
the WTO Agreement. The first category consists of Members schedules
to the GATT, GATS, or other agreements comprising the WTO
Agreement. The term reasonable is sometimes used therein.12 The
second category consists of the accession protocols of Members that
acceded to the WTO after 1994. Again, these instruments are
integral parts of the WTO Agreement, and the term is sometimes used
therein.13 The list of references above also omits references to
reasonableness in various other texts that have been agreed to by
WTO Members.14
9 Full title: Decision regarding Cases where Customs
Administrations Have Reasons to Doubt the Truth or Accuracy of the
Declared Value
10 Full title: Decision on Proposed Understanding on WTO-ISO
Standards Information System11 Full title: Decision on Measures
Concerning the Possible Negative Effects of the Reform Programme
on
Least developed and Net Food-Importing Developing Countries12
For example, the Panel in Mexico Telecoms interpreted the meaning
of the term reasonable in Sections 2.1
and 2.2 of the Reference Paper on telecommunications services
inscribed in Mexicos Schedule of Commitments under the GATS. See
Mexico Telecoms, paras. 7.5 and 7.178-7.183.
13 For example, see Paragraphs 2(A)2, 2(C)2, and 16(5) of Part I
of Chinas Accession Protocol (WT/L/432).14 For example, on 14
November 2001, WTO Members adopted the Doha Decision on
Implementation-
Related Issues and Concerns. Among other things, this text
defines the phrase reasonable interval for the purpose of Annex B:2
of the SPS Agreement and Article 2.12 of the TBT Agreement. Doha
Decision on Implementation-Related Issues and Concerns,
WT/MIN(01)/17, 14 November 2001, Paragraphs 3.2 and 5.2. The
Appellate Body has ruled that Paragraph 5.2 of the Doha Decision on
Implementation-Related Issues and Concerns qualifies as a
subsequent agreement between the parties regarding the
interpretation of the treaty or the application of its provisions
within the meaning of Article 31(3)(a) of the Vienna Convention on
the Law of Treaties. Appellate Body
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Reasonableness in WTO LawGraham Cook
The following observations can be made about the references to
the term reasonable in the WTO Agreements: (i) the word reasonable
(and its variants) appears more than 200 times in the legal texts
that comprise the WTO Agreement; (ii) these references appear
throughout the WTO Agreement, in a wide range of provisions dealing
with disparate subjects; (iii) rather than serving as an
independent and self-standing concept, the term generally appears
as an adjective or adverb, connected to another, immediately
neighbouring term or phrase; and (iv) as with other international
legal instruments, the term reasonable is frequently used in
connection to time periods such references represent about one
quarter of the references to reasonableness contained in the WTO
Agreement.
iii. Reasonableness as a WRiTTen legal TesT in paRTiculaR WTo
pRovisions
a. inTRoducTion
The preceding section identified the references to the term
reasonable in the WTO Agreement. Many of these references have been
interpreted and applied by WTO adjudicators in the context of WTO
dispute settlement. WTO adjudicators are required to objectively
and independently interpret provisions of the WTO Agreement in
accordance with customary rules of interpretation of public
international law.15 This applies to any terms of the WTO
Agreement, including general legal standards such as reasonable.16
This section of the article will provide an exposition of selected
issues in respect of which WTO adjudicators are expressly mandated
to apply a reasonableness test, by virtue of the wording of the
provision at issue. The issues reviewed here include the following,
as illustrative examples: (i) the obligation to administer laws in
a reasonable manner under Article X:3(a) of the GATT; (ii)
references to a reasonable period of time in Article 21.3(c) of the
DSU, Article 6.8 of the Anti-Dumping Agreement, Article 5.7 of the
SPS Agreement; (iii) obligations referring to reasonable terms and
conditions in the GATS; and (iv) obligations to take reasonable
measures to ensure that certain entities comply with WTO
obligations, reflected in Article XXIV:12 of the GATT, and Article
3 of the TBT Agreement.
Report, US Clove Cigarettes, paras. 241-275.15 See Article 3.2
of the DSU. 16 In this regard, the approach of WTO adjudicators is
no different from that describ
