RESTRICTED
WORLD TRADE G/SCM/W/417
1May1998
ORGANIZATION(98-1761)
Committee onSubsidies
andCountervailing Measures
PROCEDURES FOR ARBITRATION UNDER ARTICLE 8.5OFTHE
AGREEMENT ONSUBSIDIES AND COUNTERVAILING MEASURES
Adopted adreferendum 24April 1998*
Introduction
TheCommitteeonSubsidiesandCountervailingMeasureshasdiscussedatlengththeprovisions
contained inArticle 8.5oftheAgreement onSubsidies andCountervailing Measures. Inviewofthe
importance ofthese provisions, aswellasthelimited timespecified inArticle 8.5forthecompletion
ofarbitration proceedings andtheabsence ofdetailed guidance fortheirconduct, theCommittee has
developed thefollowing procedures withtheaimoffacilitating theoperation ofarbitration proceedings
andenhancingtransparencyandpredictabilityforallMemberswithrespecttotheapplicationofArticle8
oftheAgreement. TheCommittee affirms thatbecause arbitration under Article 8.5determines the
status ofanotified programme orindividual cases ofsubsidization under Article 8,theresults ofany
sucharbitration proceeding areequally applicable toallMembers. Thisiswithout prejudice tothe
rightofanyMember torequest arbitration.
TheCommittee notes thattheprovisions ofArticle 8.5cannot beviewed strictly inisolation,
insofar astheyformanintegrated partofthewhole ofPartIVoftheAgreement. Inthisregard, the
Committee recognizes theimportance ofthereview procedure under Article 8.4andtheseriousness
withwhich Members areexpected totreatit.Inparticular, totheextent thatMembers mayhave
questions about theconsistency ofanotified programme withtheconditions andcriteria provided for
intheprovisions ofArticle 8.2,theCommittee would expect Members tomake fullandsubstantive
useoftheprocedures under Article 8.4inorder toclarify allrelevant questions regarding anotified
programme. Inthesame vein, theCommittee notes that,pursuant toArticle 8.3,aMember which
isnotifying aprogramme isrequired toprovide sufficiently precise information toenable otherMembers
toevaluate theconsistency oftheprogramme withtherelevant conditions andcriteria ofArticle 8.2.
TheCommittee would, therefore, expect notifying Members tocooperate asfully aspossible in
responding tothequestions ofother Members inthecourse oftheArticle 8.4review procedure.
Inshort, theCommittee exhorts allMembers toparticipate constructively andingood faith
inthenotification andreview process provided forinparagraphs 3and4ofArticle 8soastoresolve
anyquestions andconcerns about notified programmes attheearliest opportunity. Where appropriate,
itisrecognized thatsuchefforts encompass thepossibility ofconcerned Members consulting informally
prior torequesting arbitration inorder toavoid unnecessary arbitration requests. Finally, without
prejudice toMembers ’rights asprovided forunder article 8.5,theCommittee notesthat:(i)theinterests
ofclarity, predictability andgreater legalcertainty would bebestserved ifarbitration requests involving
Committee determinations under Article 8.4(orthefailure oftheCommittee tomake adetermination)
weremade assoonaspracticable following theconclusion oftheprocedure setforth inArticle 8.4;
and(ii)arbitration procedures would befacilitated ifrequesting Members fullyidentify anddescribe
those issues which were notraised during theArticle 8.4procedure.
*Thisdecision shallbecome finalonemonth from thedateofcirculation ofthisdocument, unless before thatdateany
Member communicates totheSecretariat itsobjection.G/SCM/W/417
Page2
Procedures
TheCommittee onSubsidies andCountervailing Measures hereby decides, pursuant tothe
decision oftheGeneral Council of31January 1995(WT/GC/M/1), toadopt thefollowing procedures
foruseinbinding arbitration conducted pursuant toArticle 8.5oftheAgreement onSubsidies and
Countervailing Measures. These procedures shallnotaddtoordetract from theexisting rights and
obligations ofMembers under theAgreement onSubsidies andCountervailing Measures orunder any
other WTO Agreement.
I. REQUESTS FOR ARBITRATION
1. AnyMember wishing torequest arbitration 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,andastatement oftheposition taken bytheMember
requesting thearbitration withrespect toeachsuchquestion;
(c) abriefsummary oftheinformation onwhich therequest isbased.
2. Anyrequest forarbitration shallbecirculated immediately totheMembers.
3. Without prejudice totheright ofanyMember torequest arbitration, Members should take
intoaccount theneedtoavoid undue multiplication ofarbitration proceedings inrespect ofthesame
programme, andshould therefore availthemselves oftheprocedures under paragraph 4forbecoming
Parties, ortheprocedures under paragraph 17forbecoming Third Parties, toanarbitration.
4. Inorder tobecome Parties tothearbitration proceeding, other Members shallhaveaperiod
of15daysafterthedateofcirculation oftherequest forarbitration toprovide theChairman ofthe
Committee withacommunication which shallconform withtherequirements forrequests forarbitration
setforthinparagraph 1.Anysuchcommunication shallbecirculated immediately totheMembers.
5. During the30-day period referred toinparagraph 10,Parties alsomayagree, subject tothe
provisions ofSection VI,toanysupplemental oralternative procedures forarbitration under Article
8.5tothose specified herein, provided thatsuch supplemental oralternative procedures arenot
incompatible withArticle 8.5. Anysuchsupplemental oralternative procedures shallbepromptly
notified totheMembers. Intheevent thatthere isnoagreement byallParties onsuchsupplemental
oralternative procedures, theprocedures specified herein shallapply exclusively andinfull.G/SCM/W/417
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II. REFERRAL TOARBITRATION
6. Assoonasthecomposition ofthearbitration body hasbeendecided, anotice tothateffect
shallbecirculated promptly totheMembers.
7. Forpurposes ofArticle 8.5,thedateofcirculation ofthenotice under paragraph 6shallbe
deemed tobethedateonwhich thematter isreferred tothearbitration body.
III. PARTIES TOTHE ARBITRATION PROCEEDING1
8. TheParties tothearbitration proceeding shallbetheMember which hasnotified thesubsidy
programme inquestion, theMember which requests thearbitration, andanyother Member which has
become aParty tothearbitration inaccordance withparagraph 4.
IV. COMPOSITION OFTHE ARBITRATION BODY
9. Thearbitration body shallconsist ofthree arbitrators, unless theParties agree toadifferent
uneven number.
10. 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 totheDirector-General.
11. Except astheParties otherwise agree, thearbitrators shallnotbecitizens ofanyoftheParties
orThird Parties tothearbitration proceeding.2
12. Thearbitrators shallbechosen fromamong persons withrelevant legal, economic, financial
ortechnical expertise, including expertise intheAgreement onSubsidies andCountervailing Measures,
withrespect tothematter referred tothearbitration body.
13. Based upon nominations putforward bydelegations andapproved bytheCommittee, the
Secretariat shallmaintain anindicative listofqualified persons fromwhich arbitrators maybeselected.
Thislistshallinclude anidentification ofeachperson 'sacademic and/or professional background and
qualifications.
14. Where aParty toanarbitration isadeveloping country Member, thearbitration body shall,
ifthedeveloping country Member sorequests, include atleastonearbitrator fromadeveloping country
Member.
1Asusedthroughout thistext,theterms "Party" and"Parties" donotencompass theterms "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/417
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V. TERMS OFREFERENCE OFTHE ARBITRATION BODY3
15. Ifarequest forarbitration pertains toadetermination oftheCommittee under Article 8.4,
orafailure oftheCommittee tomake suchadetermination, thearbitration body shalldetermine, in
lightofthespecific questions raised under paragraphs 1and4bytheParties tothearbitration, whether
thesubsidyprogrammenotifiedunderArticle8.3doesnotmeettheconditionsandcriteriaofArticle8.2.
16. Ifarequest forarbitration pertains toalleged violation inindividual cases oftheconditions
setoutinasubsidy programme notified under Article 8.3,thearbitration body shalldetermine, in
lightofthespecific questions raised under paragraphs 1and4bytheParties tothearbitration, whether
ornotindividual cases ofsubsidization violate theconditions setoutinthesubsidy programme notified
under Article 8.3. IfaParty sorequested under paragraph 1or4,thearbitration body alsoshall
determine whether theprogramme inquestion doesnotmeettheconditions andcriteria ofArticle 8.2.
VI. THIRD PARTIES
17. 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.
18. AMember thathasinformed theCommittee under paragraph 17ofitsinterest toparticipate
asaThird Party inthearbitration proceeding shallhavetherighttomake awritten submission tothe
arbitration bodyandtoreceive copies ofwritten submissions oftheParties tothearbitration proceeding,
shallhaveanopportunity tobeheard atmeetings ofthearbitration body, andshallotherwise have
theright toparticipate inthearbitration proceeding asspecified elsewhere inthese procedures. A
Third Party maynotparticipate intheselection ofarbitrators orintheestablishment ofthearbitration
body'sworking procedures.
VII. WORKING PROCEDURES
19. Thearbitrationproceedingsshallbeconductedonthebasisofwrittensubmissionsanddocuments.
TheParties andThird Parties tothearbitration proceedings shallmake written submissions within time
periods tobedetermined bythearbitration body afterconsultation withtheParties. Thearbitration
bodyshalldecide whether further written submissions arenecessary andshallfixaperiod oftimefor
suchsubmissions afterconsulting theParties.
20. Thearbitration bodyalsomayholdmeetings withtheParties andshallholdonesuchmeeting
ifanyParty sorequests atanappropriate stage oftheproceedings. Anysuchmeeting normally shall
include Third Parties. Ifinexceptional circumstances thearbitration bodyholds ameeting withParties
only, thearbitration bodyalsoshall, uponrequest ofaThird Party, holdonesession forThird Parties
topresent theirviews, atwhich Parties shallhavetherighttobepresent. Written textsoftheoral
statements made byParties andThird Parties shallbesubmitted tothearbitration body, andshallconsist
onlyoftheinformation andviews actually presented orally.
3These terms ofreference apply equally torequests forsecond orlaterarbitrations.G/SCM/W/417
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VIII. PROCESS
21. Theproceedings ofthearbitration body shall beconfidential. Written submissions tothe
arbitration bodyshallbetreated asconfidential. Thearbitration bodyandallParties andThird Parties
toaproceeding shalltreatasconfidential anyinformation submitted tothearbitration bodywhich the
submitter hasdesignated asconfidential. Nothing intheseprocedures shallpreclude aParty oraThird
Party toanarbitration from disclosing statements ofitsownpositions tothepublic.
22. AParty orThird Party toanarbitration shallmake available toallother Parties andThird
Parties itswritten submissions. AParty oraThird Party shallalso,uponrequest ofaMember, provide
anon-confidentialsummaryoftheinformationcontainedinitswrittensubmissionsthatcouldbedisclosed
tothepublic. When providing anon-confidential summary, aParty orThird Party willdulytakeinto
account theexpeditious nature ofthese proceedings.
23. There shallbenoexparte communications withthearbitration bodyconcerning matters under
consideration bythearbitration body.
24. Before presenting itsconclusions, thearbitration body shallprovide totheParties andThird
Parties awritten summary oftheinformation onwhich itintends tobaseitsconclusions. Thearbitration
body shallprovide anopportunity fortheParties andThird Parties tocomment, within atimeperiod
tobeestablished bythearbitration body, onthewritten summary. Each Third Party shallhavethe
righttocomment onlyonthose sections ofthewritten summary which pertain tothespecific questions
thatthatThird Party hasaddressed.
25. Thearbitration proceedings shalltakeplace attheseatoftheWorld Trade Organization.
26. TheWTO Secretariat shallactasSecretariat tothearbitration body, andshallperform all
administrative functions necessary toassist thearbitration body, including thereceipt andcirculation
ofcommunications related toarbitration requests, andthemaintenance ofanorganized permanent record
foreacharbitration proceeding.
IX. INFORMATION BEFORE THE ARBITRATION BODY
27. Thearbitration body shallproceed onthebasis oftheinformation before it,toinclude such
ofthefollowing asexistandarerelevant:
(a) thenotifications ofthesubsidy programme inquestion, andanyyearly updates ofsuch
notifications;
(b) thefindings oftheSecretariat, theminutes oftheCommittee andthedetermination
bytheCommittee, asrecorded during theprocedure under Article 8.4;
(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
ofparagraphs 28,29,and30.G/SCM/W/417
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28. AMember should respond promptly andfullytoanyrequest byanarbitration body forsuch
information asthearbitration body considers necessary andappropriate.
29. Thearbitration body shallhavetherighttoseekinformation andtechnical advice from any
individual orbody which itdeems appropriate. However, before anarbitration body seeks such
information ortechnical advice from anyindividual orbody within thejurisdiction ofaMember it
shallinform theauthorities ofthatMember.
30. TheParties andThird Parties shallhavefullaccess toanyrequests forinformation ortechnical
advice under thisorthepreceding twoparagraphs, aswellastoanyinformation ortechnical advice
obtained thereby. Atthetimethatitrequests information ortechnical advice under thisorthepreceding
twoparagraphs, thearbitration body shallobtain theagreement oftheindividual, body orMember
todisclose totheParties andThird Parties allsuchinformation ortechnical advice. TheParties and
Third Parties shalltreatasconfidential anyinformation ortechnical advice thatanindividual, body
orMember hasdesignated asconfidential. Thearbitration body shallprovide anopportunity tothe
Parties andThird Parties tocomment upon anyinformation ortechnical advice obtained under this
orthepreceding twoparagraphs.
X. RULES OFCONDUCT
31. Asprovided inparagraph IV:1oftheRules ofConduct fortheUnderstanding onRules and
Procedures Governing theSettlement ofDisputes, theRules ofConduct apply toarbitrators acting
pursuant toArticle 8.5,andtothose Members oftheSecretariat called upon toassist inarbitration
proceedings pursuant toArticle 8.5.Inaddition, theRules ofConduct shallapply toanyindividual
from whom anyinformation ortechnical advice issought under paragraphs 28,29and30ofthese
procedures.
XI. CONCLUSIONS OFTHE ARBITRATION BODY
32. Theconclusions ofthearbitration bodyshallconsist ofadetermination, inlightofthespecific
questions raised under paragraphs 1and4bytheParties tothearbitration, ofwhether thesubsidy
programme notified under Article 8.3doesnotmeettheconditions andcriteria ofArticle 8.2,and/or
whether ornottheindividual cases ofsubsidization violate theconditions setoutinthesubsidy
programme notified under Article 8.3.
33. Thearbitration body shallpresent totheMembers itsconclusions andthereasons onwhich
those conclusions arebased intheformofasingle, collegial decision, within 120daysfromthedate
ofcirculation ofthenotice under paragraph 6.
34. These conclusions shallbebinding inaccordance withArticle 8.5.
XII. REVIEW OFTHESE PROCEDURES
35. Without prejudice toArticle 31oftheAgreement onSubsidies andCountervailing Measures,
theCommittee shall, nolaterthanfiveyears aftertheadoption ofthese procedures, review their
operation, andmaydecide atthattimeonanymodifications tothem.
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