NON-IMPLEMENTATION OF WTO DISPUTE SETTLEMENT DECISIONS AND LIABILITY ACTIONS

Abstract

The World Trade Organization was established in 1995 and the European Community and its Member States became thereby bound by an overwhelming number of international obligations in the field of international trade. The entering into force of the WTO Agreements has been followed by a flood of cases to the European Court of Justice where the applicants have attempted to challenge Community law provisions on the basis of the international obligations imposed on the Community by virtue of the provisions of the WTO Agreements and the decisions made in the framework of the WTO dispute settlement mechanism. The case law of the ECJ concerning the effect of WTO law in the Community legal order has been characterised by ‘judicial self-restraint’ and deference to the discretion of the political and executive institutions of the Community. As a general rule, the possibility of private parties to challenge Community measures on the basis of WTO law has been ruled out. Under some circumstances WTO provisions, however, may become available to private parties. The reluctance of the Court to let private parties to rely on WTO law may, however, sometimes lead to situations the acceptability of which can be questioned from the point of view of effective judicial protection of the rights of individuals. The transatlantic disputes concerning the banana import regime of the EC and the Community’s ban on importation of beef from cattle treated with hormones are notorious. The WTO dispute settlement organs condemned the Community measures in the Bananas1 and Hormones2 cases but the EC failed to amend its legislation to comply with WTO law. As an European, one might to sympathise with the EC for protecting the health of its citizens and refusing to lift the ban on importation of hormone-treated meat. There is, however, more at stake than the respect of international commitments. The non-compliance by the Community also causes damage to private businesses operating within the Community. Most tangibly the consequences of the Community’s WTO-illegal behaviour have affected the Community businesses that have suffered heavy losses in face of the retaliatory measures resorted to by the United States under the authorisation of the WTO Dispute Settlement Body (DSB). Article 288(2) EC provides that in the case of non-contractual liability, the Community shall be held liable for the damage caused by its institutions or by its servants in the performance of their duties. Recently, several actions for damages under this Article have been brought by private parties in order to claim compensation for the damage they have suffered due to the WTO-illegal behaviour of the Community. These cases are connected to the non-implementation of the international obligations imposed on the Community in the Bananas and Hormones cases by the WTO dispute settlement organs. Only a few of the cases have led to a judgement so far, and these are the first cases dealing with the issue of whether private entities can invoke WTO law in the context of actions for damages. These cases and their chances of success are the main subject of this article. The Court has rejected all the actions it has dealt with so far and the chances of success of the future actions do not seem very high. First, we are dealing with WTO law and the Court has been very reluctant to let private parties to rely on it. Second, it has been extremely rare that actions for damages under Article 288(2) EC have succeeded. The problem is, however, worth discussing. First of all, an Advocate General recently suggested that individuals should be allowed to rely on WTO law in liability actions under some circumstances where non-implementation by the Community of DSB decisions is involved3. The ECJ did not explicitly accept or reject such a suggestion but the question remains an open one. Moreover, there have recently been some signs of relaxation of the extremely strict criteria for Community liability.