WORLD TRADE
ORGANIZATIONG/SCM/19
10 June 1998
(98-2366)
Committee on Subsidies
and Countervailing Measures
PROCEDURES FOR ARBITRATION UNDER ARTICLE 8.5 OF THE
AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES
Adopted by the Committee on 2 June 1998
Introduction
The Committee on Subsidies and Countervailing Measures has discussed at length the
provisions contained in Article 8.5 of the Agreem ent on Subsidies and Countervailing Measures.  In
view of the importance of these provisions, as well as the limited time specified in Article 8.5 for the
completion of arbitration proceedings and the absence of detailed guidance for their conduct, the
Committee has developed the following procedures with the aim of facilitating the operation of
arbitration proceedings and enhancing transparency and predictability for all Members with respect to
the application of Article 8 of the Agreement.  The Committee affirms that because arbitration underArticle 8.5 determines the status of a notified pr ogramme or individual cases of subsidization under
Article 8, the results of any such arbitration proceeding are equally applicable to all Members.  This is
without prejudice to the right of any Member to request arbitration.
The Committee notes that the provisions of Article 8.5 cannot be viewed strictly in isolation,
insofar as they form an integrated part of the whole of Part IV of the Agreement.  In this regard, the
Committee recognizes the importance of the review procedure under Article 8.4 and the seriousness
with which Members are expected to treat it.  In particular, to the extent that Members may havequestions about the consistency of a notified programme with the conditions and criteria provided for
in the provisions of Article 8.2, the Committee would expect Members to make full and substantive
use of the procedures under Article 8.4 in order to clarify all relevant questions regarding a notified
programme.  In the same vein, the Committee notes that, pursuant to Article 8.3, a Member which is
notifying a programme is required to provide sufficiently precise information to enable otherMembers to evaluate the consistency of the programme with the relevant conditions and criteria of
Article 8.2.  The Committee would, therefore, expect notifying Members to cooperate as fully as
possible in responding to the questions of other Members in the course of the Article 8.4 review
procedure.
In short, the Committee exhorts all Members to participate constructively and in good faith in
the notification and review process provided for in paragraphs 3 and 4 of Article 8 so as to resolve any
questions and concerns about notified programmes at the earliest opportunity.  Where appropriate, it
is recognized that such efforts encompass the po ssibility of concerned Members consulting informally
prior to requesting arbitration in order to avoid unnecessary arbitration requests.  Finally, without
prejudice to Members’ rights as provided for under Article 8.5, the Committee notes that: (i) theinterests of clarity, predictability and greater legal certainty would be best served if arbitration
requests involving Committee determinations under Article 8.4 (or the failure of the Committee to
make a determination) were made as soon as practicable following the conclusion of the procedure setG/SCM/19
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forth in Article 8.4; and (ii) arbitration procedures would be facilitated if requesting Members fully
identify and describe those issues which were not raised during the Article 8.4 procedure.
Procedures
The Committee on Subsidies and Countervailing Measures hereby decides, pursuant to the
decision of the General Council of 31 January 1995 (WT/GC/M/1), to adopt the following proceduresfor use in binding arbitration conducted pursuant to Article 8.5 of the Agreement on Subsidies and
Countervailing Measures.  These procedures shall not add to or detract from the existing rights and
obligations of Members under the Agreement on Subsidies and Countervailing Measures or under any
other WTO Agreement.
I. REQUESTS FOR ARBITRATION
1. Any Member wishing to request arbitration under Article 8.5 shall address a written request to
that effect to the Chairman of the Committee on Subsidies and Countervailing Measures ("theCommittee").  The request shall include:
(a) the basis for the request, i.e. a determination by the Committee under Article 8.4,  a
failure by the Committee to make such a determination, and/or the violation in
individual cases of subsidization of the conditions set out in a subsidy programme
notified under Article 8.3;
(b) the specific questions to be addressed by the arbitration body, as related to
requirements under the provisions of Article 8.2, and a statement of the position taken
by the Member requesting the arbitration with respect to each such question;
(c)  a brief summary of the information on which the request is based.
2. Any request for arbitration shall be circulated immediately to the Members.3. Without prejudice to the right of any Member to request arbitration, Members should take
into account the need to avoid undue multiplication of arbitration proceedings in respect of the same
programme, and should therefore avail themselves of the procedures under paragraph 4 for becoming
Parties, or the procedures under paragraph 17 for becoming Third Parties, to an arbitration.
4. In order to become Parties to the arbitration proceeding, other Members shall have a period of
15 days after the date of circulation of the request for arbitration to provide the Chairman of the
Committee with a communication which shall conform with the requirements for requests for
arbitration set forth in paragraph 1.  Any such co mmunication shall be circulated immediately to the
Members.
5. During the 30-day period referred to in paragraph 10, Parties also may agree, subject to the
provisions of Section VI, to any supplemental or alternative procedures for arbitration under
Article 8.5 to those specified herein, provided that such supplemental or alternative procedures are notincompatible with Article 8.5.  Any such supplemental or alternative procedures shall be promptly
notified to the Members.  In the event that there is no agreement by all Parties on such supplemental
or alternative procedures, the procedures specified herein shall apply exclusively and in full.G/SCM/19
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II. REFERRAL TO ARBITRATION
6. As soon as the composition of the arbitration body has been decided, a notice to that effect
shall be circulated promptly to the Members.
7. For purposes of Article 8.5, the date of circulation of the notice under paragraph 6 shall be
deemed to be the date on which the matter is referred to the arbitration body.
III. PARTIES TO THE ARBITRATION PROCEEDING1
8. The Parties to the arbitration proceeding shall be the Member which has notified the subsidy
programme in question, the Member which requests the arbitration, and any other Member which has
become a Party to the arbitration in accordance with paragraph 4.
IV. COMPOSITION OF THE ARBITRATION BODY
9. The arbitration body shall consist of three arbitrators, unless the Parties agree to a different
uneven number.
10. The members of the arbitration body and its president shall be appointed by agreement of the
Parties.  If the Parties do not reach agreement within 30 days after the date of circulation of the
request for arbitration, unless the Parties agree on a longer period, any Party may request the Director-
General of the WTO to appoint, in consultation with the Chairman of the Committee, the arbitrator or
arbitrators not yet appointed.  Such appointment shall be made, after consultation with the Parties,within 10 days of the request to the Director-General.
11. Except as the Parties otherwise agree, the arbitrators shall not be citizens of any of the Parties
or Third Parties to the arbitration proceeding.
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12. The arbitrators shall be chosen from among persons with relevant legal, economic, financialor technical expertise, including expertise in the Agreement on Subsidies and CountervailingMeasures,  with respect to the matter referred to the arbitration body.
13. Based upon nominations put forward by delegations and approved by the Committee, the
Secretariat shall maintain an indicative list of qualified persons from which arbitrators may be
selected. This list shall include an identification of each person's academic and/or professional
background and qualifications.
14. Where a Party to an arbitration is a developing country Member, the arbitration body shall, if
the developing country Member so requests, include at least one arbitrator from a developing country
Member.
V. TERMS OF REFERENCE OF THE ARBITRATION BODY
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15. If a request for arbitration pertains to a determination of the Committee under Article 8.4, or a
failure of the Committee to make such a determinat ion, the arbitration body shall determine, in light
of the specific questions raised under paragraphs 1 and 4 by the Parties to the arbitration, whether thesubsidy programme notified under Article 8.3 does not meet the conditions and criteria of Article 8.2.
                                                     
1As used throughout this text, the terms "Party" and "Parties" do not encompass the terms "Third Party"
and "Third Parties" provided for in Section VI, infra.
2In the case where a customs union or a common market is a Party or Third Party to an arbitration, this
provision applies to citizens of all members of that customs union or common market.
3These terms of reference apply equally to re quests for second or later arbitrations.G/SCM/19
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16. If a request for arbitration pertains to alleged violation in individual cases of the conditions set
out in a subsidy programme notified under Article 8.3, the arbitration body shall determine, in light of
the specific questions raised under paragraphs 1 and 4 by the Parties to the arbitration, whether or not
individual cases of subsidization violate the conditions set out in the subsidy programme notified
under Article 8.3.  If a Party so requested under paragraph 1 or 4, the arbitration body also shalldetermine whether the programme in question does not meet the conditions and criteria of Article 8.2.
VI. THIRD PARTIES
17. A Member not wishing to become a Party to the arbitration, but wishing instead to participate
in the arbitration on a limited basis, shall have a period of 20 days after the date of circulation of the
request for arbitration to inform the Chairman of th e Committee in writing that it wishes to become a
Third Party to the arbitration proceeding.  A Third Party may intervene only with respect to specific
questions raised by Parties.
18. A Member that has informed the Committee under paragraph 17 of its interest to participate
as a Third Party in the arbitration proceeding shall have the right to make a written submission to the
arbitration body and to receive copies of writte n submissions of the Parties to the arbitration
proceeding, shall have an opportunity to be heard at meetings of the arbitration body, and shall
otherwise have the right to participate in the arbitration proceeding as specified elsewhere in theseprocedures.  A Third Party may not participate in the selection of arbitrators or in the establishment of
the arbitration body's working procedures.
VII. WORKING PROCEDURES
19. The arbitration proceedings shall be conducted on the basis of written submissions and
documents.  The Parties and Third Parties to the arbitration proceedings shall make writtensubmissions within time periods to be determined by the arbitration body after consultation with the
Parties.  The arbitration body shall decide whether further written submissions are necessary and shall
fix a period of time for such submissions after consulting the Parties.
20. The arbitration body also may hold meetings with the Parties and shall hold one such meeting
if any Party so requests at an appropriate stage of the proceedings.  Any such meeting normally shallinclude Third Parties.  If in exceptional circumstances the arbitration body holds a meeting with
Parties only, the arbitration body also shall, upon request of a Third Party, hold one session for Third
Parties to present their views, at which Parties shall have the right to be present.  Written texts of the
oral statements made by Parties and Third Parties shall be submitted to the arbitration body, and shall
consist only of the information and views actually presented orally.
VIII. PROCESS
21. The proceedings of the arbitration body shall be confidential.  Written submissions to the
arbitration body shall be treated as confidential.  The arbitration body and all Parties and Third Parties
to a proceeding shall treat as confidential any information submitted to the arbitration body which the
submitter has designated as confidential.  Nothing in these procedures shall preclude a Party or a
Third Party to an arbitration from disclosing statements of its own positions to the public.
22. A Party or Third Party to an arbitration shall make available to all other Parties and Third
Parties its written submissions.  A Party or a Third Party shall also, upon request of a Member,
provide a non-confidential summary of the information contained in its written submissions that could
be disclosed to the public.  When providing a non- confidential summary, a Party or Third Party will
duly take into account the expeditious nature of these proceedings.G/SCM/19
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23. There shall be no ex parte  communications with the arbitration body concerning matters
under consideration by the arbitration body.
24. Before presenting its conclusions, the arbitration body shall provide to the Parties and Third
Parties a written summary of the information on which it intends to base its conclusions.  The
arbitration body shall provide an opportunity for th e Parties and Third Parties to comment, within a
time period to be established by the arbitration body, on the written summary.  Each Third Party shall
have the right to comment only on those sections of the written summary which pertain to the specific
questions that that Third Party has addressed.
25. The arbitration proceedings shall take place at the seat of the World Trade Organization.
26. The WTO Secretariat shall act as Secretariat to the arbitration body, and shall perform all
administrative functions necessary to assist the arbitration body, including the receipt and circulation
of communications related to arbitration requests, and the maintenance of an organized permanentrecord for each arbitration proceeding.
IX. INFORMATION BEFORE THE ARBITRATION BODY
27. The arbitration body shall proceed on the basis of the information before it, to include such of
the following as exist and are relevant:
(a) the notifications of the subsidy programme in question, and any yearly updates of
such notifications;
(b) the findings of the Secretariat, the minutes of the Committee and the determination by
the Committee, as recorded during the procedure under Article 8.4;
(c) the documents and arguments submitted to the Secretariat and the Committee in the
procedure under Article 8.4;
(d) the record(s) of any previous arbitration(s) related to the same programme;
(e) any information provided to the arbitration body by the Parties and Third Parties
under these procedures;
(f) any information or technical advice obtained by the arbitration body under the
provisions of paragraphs 28, 29, and 30.
28. A Member should respond promptly and fully to any request by an arbitration body for such
information as the arbitration body considers necessary and appropriate.
29. The arbitration body shall have the right to seek information and technical advice from any
individual or body which it deems appropriate.  However, before an arbitration body seeks such
information or technical advice from any individual or body within the jurisdiction of a Member it
shall inform the authorities of that Member.
30. The Parties and Third Parties shall have full access to any requests for information or
technical advice under this or the preceding two paragraphs, as well as to any information or technical
advice obtained thereby.  At the time that it request s information or technical advice under this or the
preceding two paragraphs, the arbitration body sha ll obtain the agreement of the individual, body or
Member to disclose to the Parties and Third Partie s all such information or technical advice.  The
Parties and Third Parties shall treat as confidential any information or technical advice that anG/SCM/19
Page 6
individual, body or Member has designated as conf idential.  The arbitration body shall provide an
opportunity to the Parties and Third Parties to comment upon any information or technical advice
obtained under this or the preceding two paragraphs.
X. RULES OF CONDUCT
31. As provided in paragraph IV:1 of the Rules of Conduct for the Understanding on Rules and
Procedures Governing the Settlement of Disputes, the Rules of Conduct apply to arbitrators acting
pursuant to Article 8.5, and to those Members of the Secretariat called upon to assist in arbitration
proceedings pursuant to Article 8.5.  In addition, the Rules of Conduct shall apply to any individual
from whom any information or technical advice is sought under paragraphs 28, 29 and 30 of these
procedures.
XI. CONCLUSIONS OF THE ARBITRATION BODY
32. The conclusions of the arbitration body shall consist of a determination, in light of the
specific questions raised under paragraphs 1 and 4 by the Parties to the arbitration, of whether the
subsidy programme notified under Article 8.3 does not meet the conditions and criteria of Article 8.2,
and/or whether or not the individual cases of subsid ization violate the conditions set out in the subsidy
programme notified under Article 8.3.
33. The arbitration body shall present to the Members its conclusions and the reasons on which
those conclusions are based in the form of a single, collegial decision, within 120 days from the date
of circulation of the notice under paragraph 6.
34. These conclusions shall be binding in accordance with Article 8.5.
XII. REVIEW OF THESE PROCEDURES
35. Without prejudice to Article 31 of the Agreement on Subsidies and Countervailing Measures,
the Committee shall, no later than five years after the adoption of these procedures, review their
operation, and may decide at that time on any modifications to them.
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