RESTRICTED
WORLD TRADE G/SCM/W/5
11May1995
ORGANIZATION(95-1234)
PROCEDURES FOR ARBITRATION UNDER ARTICLE 8.5OFTHE
WTO AGREEMENT ONSUBSIDIES AND COUNTERVAILING MEASURES
Chairman 'sNote
Theattached paper wasproduced bytheinformal group onprocedures forarbitration under
Article 8.5oftheAgreement onSubsidies andCountervailing Measures ("SCM Agreement"). The
group hasbeenmeeting under theauspices oftheCommittee onSubsidies andCountervailing Measures
("theCommittee"), pursuant tothedecision taken atthe31January 1995meeting oftheGeneral Council
torefertotheCommittee thematter ofprocedures forarbitration under Article 8.5.
Thetextofthepaper reflects theconsensus oftheinformal group, except withrespect to
paragraphs 17,19and32.With respect toparagraph 17,thelanguage beginning with"Any issue"
andending with"other issues" istextsubmitted bytheChairman oftheCommittee onhisown
responsibility. With respect toparagraph 19,theChairman, onhisownresponsibility, hasremoved
thesquare brackets thatwerearound thetext,buthasnotaltered thetextitself. Paragraph 32istext
submitted bytheChairman onhisownresponsibility.
Withrespect toparagraphs 27and33,theinformal group asked theChairman tomake certain
conforming changes tootherwise agreed (orprovisionally agreed) text.Inparagraph 27,theChairman
hasmodified thefirstlinetoconform withtheterminology usedintheheading toSection IX.In
paragraph 33,theChairman hasslightly reworded thetexttoconform withterminology usedin
Article 8.5oftheSCM Agreement.
TheChairman alsowasasked toinsert introductory language intothepaper conveying that
these aretheonlyprocedures thatwillgovern arbitrations under Article 8.5.Theproposed language
issetforth asachapeau tothepaper, immediately preceding theheading toSection I.
Theinformal group hasexpressed concern, andtheChairman recognizes, thatthetimelimits
forCommittee andSecretariat review ofnotified subsidy programmes, setforthinArticle 8.4ofthe
SCMAgreement,inpracticecouldworktoprecludethoroughreview.TheChairmanthereforeproposes
toundertake informal consultations concerning theCommittee 'sworking procedures, withaviewto
preventing anysuchproblem.G/SCM/W/5
Page2
Procedures forArbitration under Article 8.5oftheWTO Agreement
onSubsidies andCountervailing Measures
ArbitrationsunderArticle8.5oftheWTOAgreementonSubsidiesandCountervailingMeasures
shallbeconducted according tothefollowing procedures.
I. Requests forarbitration
1. AnyMember wishing tosubmit amatter toarbitration under Article 8.5shalladdress awritten
request tothateffect totheChairman oftheCommittee onSubsidies andCountervailing Measures
("the Committee"). Therequest shallinclude:
(a) thebasis fortherequest, i.e.adetermination bytheCommittee under Article 8.4,
afailure bytheCommittee tomake suchadetermination, and/or theviolation in
individual cases ofsubsidization oftheconditions setoutinasubsidy programme
notified under Article 8.3;
(b) thespecific questions tobeaddressed bythearbitration body, asrelated torequirements
under theprovisions ofArticle 8.2,andtheposition taken bytheMember requesting
thearbitration withrespect toeachsuchquestion;
(c) abriefsummary oftheinformation onwhich therequest isbased.
2. Requests forarbitration inrespect ofadetermination bytheCommittee under Article 8.4,or
afailure tomake suchadetermination, normally should bemade within sixmonths ofthecompletion
oftheCommittee 'sprocedure under Article 8.4.Where sucharequest ismade more than6months
afterthedateofcompletion ofsuchprocedure, including where therequest isforasecond orlater
arbitration ofaprogramme, therequest shall explain, inlightofnewinformation concerning the
notification orimplementation oftheprogramme, whyarbitration onthespecific question(s) inthe
request wasnotsought earlier, orwhythespecific question(s) wasnotraised during aprevious
arbitration, ifany.
3. Given theimportance oftheCommittee review process andtheseriousness withwhich Members
areexpectedtotreatit,MembersshouldmakefullandsubstantiveuseoftheprocedureunderArticle8.4,
andtothemaximum extent possible avoid raising issues inarbitration thathavenotbeenraised in
theprocedure under Article 8.4.
4. Before making arequest forarbitration based onnewinformation under paragraph 2,orbased
onanalleged violation inanindividual caseoftheconditions ofasubsidy programme notified under
Article 8.3,Members should offertheMember maintaining theprogramme inquestion anopportunity
todiscuss thematter, either informally orthrough resort tooneoftheprovisions oftheAgreement.
TheCommittee should bekeptinformed accordingly.
5. Anyrequest tosubmit amatter toarbitration shallbecirculated promptly totheMembers.
6. Members should takeintoaccount theneed toavoid undue multiplication ofarbitration
proceedings inrespect ofthesameprogramme, andshould therefore availthemselves oftheprocedures
under paragraph 7forbecoming Parties, ortheprocedures under paragraph 20forbecoming Third
Parties, toanarbitration, without prejudice totherightofMembers tosubmit arequest forarbitration
atalatertime, asprovided forunder paragraph 2.G/SCM/W/5
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7. Other Members shallhaveaperiod of15daysafterthedateofcirculation oftherequest for
arbitration toinform theChairman oftheCommittee inwriting thattheywishtobecome Parties to
thearbitration proceeding. Anysuchcommunication shallcontain alloftheinformation identified
inparagraph 1and,ifrelevant, paragraph 2,andshallbecirculated promptly totheMembers.
8. Thecomposition ofthearbitration body shallbedecided inaccordance with theprovisions
ofSection IVwithin 40daysafterthedateofcirculation oftherequest under paragraph 5,except where
theParties agree toextend thisperiod.
II. Referral toarbitration
9. Assoonasthecomposition ofthearbitration body hasbeendecided, anotice tothateffect
shallbecirculated promptly totheMembers.
10. Forpurposes ofArticle 8.5,thedateofcirculation ofthenotice under paragraph 9shallbe
deemed tobethedateonwhich thematter isreferred tothearbitration body.
III. Parties tothearbitration proceeding1
11. TheParties tothearbitration proceeding shallbetheMember which hasnotified thesubsidy
programme inquestion, theMember which requests thearbitration, andanyother Member which has
become aParty tothearbitration inaccordance withparagraph 7.
IV. Composition ofthearbitration body
12. Thearbitration body shallconsist ofthree arbitrators, unless theParties agree toadifferent
uneven number.
13. Themembers ofthearbitration bodyanditspresident shallbeappointed byagreement ofthe
Parties. IftheParties donotreach agreement within 30daysafterthedateofcirculation oftherequest
forarbitration (unless theParties agree onalonger period), anyParty mayrequest theDirector-General
oftheWTO toappoint, inconsultation withtheChairman oftheCommittee, thearbitrator orarbitrators
notyetappointed. Suchappointment shallbemade, afterconsultation withtheParties, within 10days
oftherequest.
14. Except astheParties otherwise agree, thearbitrators shallnotbecitizens ofanyoftheParties
orThird Parties tothearbitration proceeding.2
15. Thearbitrators shallbechosen fromamong persons withrelevant legal, economic, financial
ortechnical expertise, including expertise intheAgreement, withrespect tothematter referred tothe
arbitration body.
1Asusedthroughout thistext,theterms "Party" and"Parties" donotencompass thenotions of
"Third Party" and"Third Parties" provided forinSection VI,infra.
2Inthecasewhere acustoms union oracommon market isaParty orThird Party toanarbitration,
thisprovision applies tocitizens ofallmembers ofthatcustoms union orcommon market.G/SCM/W/5
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16. TheCommittee mayestablish anindicative listofqualified persons from which arbitrators
maybeselected. Anysuchlistshall include anidentification ofeachperson 'sacademic and/or
professional background andqualifications.
V. Terms ofreference ofthearbitration body3
17. Subject totheprovisions ofthisparagraph, where thematter submitted toarbitration pertains
toadetermination oftheCommittee under Article 8.4,orafailure oftheCommittee tomake such
adetermination, thearbitration body shalldetermine, inlightofthespecific questions raised under
paragraphs 1and7bytheParties tothearbitration, whether thesubsidy programme (orasubstantial
modification ofaprogramme) notified under Article 8.3doesnotmeettheconditions andcriteria of
Article 8.2.Anyissue raised inarbitration thatwasnotraised under theArticle 8.4procedure shall
beconsidered bythearbitration body inlightoftherecommendation inparagraph 3.Inparticular,
thearbitration bodyshallseekanexplanation astowhytheissuewasnotraised under theArticle 8.4
procedure. Ifthearbitration body deems thattheexplanation isinsufficient, aftertaking intoaccount
allrelevant factors andcircumstances, itmayterminate thearbitration withrespect tothatissue, unless
doing sowould impede itsproceedings withrespect toother issues. Where arequest forarbitration
orarequest tobecome aParty isbased onnewinformation, thearbitration body shallnotexamine
specific questions other thanthose arising from thenewinformation referred tointheexplanation
provided under paragraph 2or7.
18. Where thematter submitted toarbitration pertains toanalleged violation inanindividual case
oftheconditions setoutinasubsidy programme notified under Article 8.3,thearbitration bodyshall
determine whether ornotanindividual caseofsubsidization violates theconditions setoutinthesubsidy
programme notified under Article 8.3.
19. Ifthearbitration bodydetermines thatanindividual caseofsubsidization violates theconditions
setoutinthenotified programme, thesame arbitration body shall, upon request, determine whether
theprogramme inquestion doesnotmeettheconditions andcriteria ofArticle 8.2.Anysuchrequest
shallbemade inaccordance withparagraph 1and,ifrelevant, paragraph 2.
VI. Third Parties
20. AMember notwishing tobecome aParty tothearbitration, butwishing instead toparticipate
inthearbitration onalimited basis, shallhaveaperiod of20daysafterthedateofcirculation ofthe
request forarbitration toinform theChairman oftheCommittee inwriting thatitwishes tobecome
aThird Party tothearbitration proceeding. AThird Party mayintervene onlywithrespect tospecific
questions raised byParties. Anycommunication totheChairman indicating thataMember wishes
tobecome aThird Party shallidentify thespecific questions raised byanyParty withrespect towhich
theMember wishes toparticipate asaThird Party, along withageneral statement oftheposition taken
bytheMember regarding eachspecific question identified.
21. AMember thathasinformed theCommittee under paragraph 20ofitsinterest toparticipate
asaThird Party inthearbitration proceeding shallhavetherighttomake awritten submission tothe
arbitration bodyandtoreceive copies ofwritten submissions oftheParties tothearbitration proceeding,
and,ifthearbitration body holds meetings, shallhaveanopportunity tobeheard atsuchmeetings,
3These terms ofreference apply equally torequests forsecond orlaterarbitrations.G/SCM/W/5
Page5
under conditions tobeestablished bythearbitration body. AThird Party maynotparticipate inthe
selection ofarbitrators orintheestablishment ofthearbitration body'sworking procedures.
VII. Working procedures
22. Thearbitrationproceedingsshallbeconductedonthebasisofwrittensubmissionsanddocuments.
TheParties andThird Parties tothearbitration proceedings shallmake anywritten submissions within
timeperiods tobedetermined bythearbitration bodyafterconsultation withtheParties. Thearbitration
bodyshalldecide whether further written submissions arenecessary andshallfixaperiod oftimefor
suchsubmissions afterconsulting theParties.
23. Thearbitration body alsomayholdmeetings withtheParties andThird Parties atitsown
initiative, andshall holdonesuchmeeting ifanyParty sorequests atanappropriate stage ofthe
proceedings.
VIII. Process
24. Theproceedings ofthearbitration body shall beconfidential. Written submissions tothe
arbitration bodyshallbetreated asconfidential. Members shalltreatasconfidential anyinformation
submitted byanother Member tothearbitration body which thesubmitting Member hasdesignated
asconfidential. Nothing inthese procedures shallpreclude aParty oraThird Party toanarbitration
from disclosing statements ofitsownpositions tothepublic.
25. AParty orThird Party toanarbitration shallmake available toallother Parties andThird
Parties itswritten submissions. AParty oraThird Party shallalso,uponrequest ofaMember, provide
anon-confidentialsummaryoftheinformationcontainedinitswrittensubmissionsthatcouldbedisclosed
tothepublic.
26. There shallbenoexparte communications withthearbitration bodyconcerning matters under
consideration bythearbitration body.
27. Toensure thefactual accuracy oftheinformation onthebasis ofwhich thearbitration body
shallproceed, thearbitration bodyshallprovide totheParties andThird Parties asummary statement
ofthefactsonwhich itintends tobaseitsconclusions. Thearbitration bodyshallprovide anopportunity
fortheParties andThird Parties tocomment, within atimeperiod tobeestablished bythearbitration
body, ontheaccuracy ofthefactsaspresented inthesummary statement.
28. Thearbitration proceedings shalltakeplace attheseatoftheWorld Trade Organization.
29. TheWTO Secretariat shall perform alladministrative functions involving thereceipt and
circulation ofcommunications related toarbitration requests, andshallactassecretariat tothearbitration
body.G/SCM/W/5
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IX. Information onthebasis ofwhich thearbitration body shallproceed
30. Thearbitration body shallproceed onthebasis oftheinformation before it,toinclude such
ofthefollowing asexistandarerelevant:
(a) thenotification ofthesubsidy programme (aswellasofanysubstantial modification
oftheprogramme) inquestion, andyearly updates ofsuchnotifications;
(b) thefindings oftheSecretariat under Article 8.4;theminutes oftheCommittee and
thedetermination bytheCommittee;
(c) thedocuments andarguments submitted totheSecretariat andtheCommittee inthe
procedure under Article 8.4;
(d) therecord(s) ofanyprevious arbitration(s) related tothesame programme;
(e) anyinformation provided tothearbitration bodybytheParties andThird Parties under
these procedures;
(f) anyinformationortechnicaladviceobtainedbythearbitrationbodyundertheprovisions
ofparagraph 31thathasbeendisclosed totheParties.
31. Thearbitration body shallhavetherighttoseekinformation andtechnical advice from any
individual orbody which itdeems appropriate. However, before anarbitration body seeks such
information oradvice fromanyindividual orbodywithin thejurisdiction ofaMember itshallinform
theauthorities ofthatMember. AMember should respond promptly andfullytoanyrequest byan
arbitration body forsuchinformation asthearbitration body considers necessary andappropriate.
Confidential information which isprovided shallnotberevealed without formal authorization from
theindividual, body, orauthorities oftheMember providing theinformation. Thisobligation shall
apply toallthose towhom suchinformation isdisclosed. Thearbitration body shall provide an
opportunitytoPartiestocommentuponanyinformationortechnicaladviceobtainedunderthisparagraph
andwhich hasbeendisclosed totheParties.
X. Conclusions oftheArbitration Body
32. Thearbitration body shallpresent itsconclusions intheform ofasingle, collegial decision.
33. Within 120daysfrom thedateofcirculation ofthenotice under paragraph 9,thearbitration
body shallpresent totheMembers itsconclusions andthereasons upon which those conclusions are
based.
34. Without prejudice totheother provisions ofthese procedures, theconclusions called forin
paragraphs 17,18and19shallbebinding onallMembers.