A. Participation of Private Lawyers

4.1 On 25 November 1997, Indonesia provided to the Panel a list of its delegation to the first meeting of the Panel with the parties. On 28 November 1997, the United States, in a letter to the Chairman of the Panel, noted that Indonesia's delegation list included several private lawyers, and objected to the participation of these non-governmental employees in meetings of the Panel. On 1 December 1997 and 3 December 1997, Indonesia submitted letters to the Chairman of the Panel, responding to the objection raised by the United States. At its first substantive meeting with the parties, the Panel heard arguments of the parties and made a ruling on this issue.²⁵

1. Objection of the United States

4.2 The following are the arguments of the United States in support of its objection:

4.3 The issue of the participation of private lawyers in panel meetings was addressed by the panel in the Bananas case (WT/DS27/R/USA, adopted 25 September 1997, para. 7.10-7.12). In that case, following the objections of the complainants, the panel limited attendance at panel meetings to members of governments. In so ruling, the panel made the following observations, among others:

• Past practice in GATT and WTO dispute settlement has been not to admit private lawyers to panel meetings if any party objected to their presence.
• Because private lawyers may not be subject to disciplinary rules such as those that applied to members of governments, their presence in panel meetings could give rise to concerns about breaches of confidentiality.
• The admission of private lawyers to panel meetings, if it became a common practice, would not be in the interest of small Members as it could entail disproportionately large financial burdens for them.
• The panel had concerns about whether the presence of private lawyers would change the intergovernmental character of WTO dispute settlement proceedings.
• Limiting attendance at panel meetings to members of governments would not in any respect adversely affect the right of parties or third parties to meet and consult with their private lawyers in the course of panel proceedings, nor to receive legal or other advice in the preparation of written submissions from non-governmental experts.

4.4 These observations of the Bananas panel are equally applicable to this Autos dispute. Moreover, while the Appellate Body ruled that private lawyers could participate in the Appellate Body hearing in Bananas, the Appellate Body carefully limited its ruling to proceedings of the Appellate Body, not panels, and took pains to note that it was not dealing with an appeal of the panel's ruling in Bananas concerning the participation of private lawyers in panel meetings. (WT/DS27/AB/R, adopted 25 September 1997, para. 11). While the United States does not agree with the Appellate Body's limited ruling, that ruling is distinguishable from the present case in that the entire Appellate Body process is a new process for which prior GATT practice, arguably, does not provide an appropriate guide.

4.5 However, the panel process is not new, and there is no basis at this time for the WTO to change its established practice in this area. If a change is to be made in WTO dispute settlement practice, such a change must be negotiated and agreed in the context of the review of the WTO dispute settlement rules and procedures scheduled to be completed by the end of 1998. A change of this magnitude would entail a fundamental alteration of the premises underlying WTO dispute settlement and its operation, and would erode the control of governments over what has been a well-functioning government-to-government process for the peaceful settlement of disputes.

4.6 Moreover, the fact that the private lawyers in question attended the consultations in the Autos dispute is neither relevant nor dispositive for purposes of this panel proceeding. Indonesia conditioned its agreement to consult on the presence of these individuals. Even then, however, there was an understanding between the United States and Indonesia that the private lawyers would not address the United States delegation, and that should they do so, the United States delegation would not respond. As a result, the private lawyers were limited to the role of communicating with their client.

4.7 Therefore, the United States objects to the participation of non-governmental employees in meetings of the Panel in the Autos dispute and requests the Panel to make a finding with respect to this matter prior to the 3 December 1997, meeting of the Panel with the parties.

2. Response of Indonesia

4.8 In its letter dated 1 December 1997, Indonesia made the following arguments:

4.9 The Government of the Republic of Indonesia has the sovereign right to determine the composition of its delegations to, and select its spokesmen at, all meetings of WTO bodies and organs. This sovereign right is based on the customary international law principle of the sovereign equality of states.

4.10 Moreover, it is recognized in the practice of international dispute tribunals, including the Appellate Body of the WTO. In upholding the right of Saint Lucia to include non-government legal counsel on its delegation for the Appellate Body hearing and to allow counsel to speak at the hearing in the EU Bananas proceeding, the Appellate Body stated:

4.11 On 15 July 1997, the Appellate Body notified the participants and third participants in this appeal of its ruling that the request by Saint Lucia would be allowed. The Appellate Body said the following:

4.12 Thus, the Appellate Body fully rejected the bases and logic of the underlying panel report, upon which the United States bases its objection. In this regard, my Government wishes to reiterate, first, that the individuals in question are retained by the Government of the Republic of Indonesia and, obviously, are completely subject to its direction, not the other way around. Thus, the "intergovernmental character" of the panel process will not be disturbed by their participation. Indeed their participation is required to preserve the "intergovernmental character" of the process by helping to ensure that my Government is able to achieve its goals in the process. Second, as the United States well knows, these individuals are subject to the strict confidentiality requirements set forth under the United States legal system. Moreover, they are contractually bound to my Government to maintain the confidentiality of the proceeding. Will any of the other participants in the proceeding be so bound? If anything, the inclusion of respected private attorneys will reduce the breaches of confidentiality that occur in panel proceedings. Third, the Government of the Republic of Indonesia is perfectly capable of making independent financial decisions regarding contracting legal or other experts and any attempt by the United States to insert itself into this area is insulting and misplaced. This point, in particular, highlights the inappropriateness of the United States, as Indonesia's opponent in this proceeding, having any say whatsoever in Indonesia's composition of its defence team. Finally, the decision of the Appellate Body emphasizes the importance of full - not partial - participation by accredited counsel.

4.13 The United States ignores the logic of this decision and attempts to avoid its application to the instant proceeding, even though every rationale noted by the Appellate Body applies here in full. Moreover, the Appellate Body noted that the issue of private counsel participation before the Panel had not been appealed by a party to the EU Bananas dispute because the Member state which included the private attorney in its delegation, Saint Lucia, was a third party to the dispute and the issue had not been directly appealed by the Respondent. (The respondent in the EU Bananas dispute was, in any case, the European Communities which, like the United States and Japan, maintains an army of attorneys with WTO expertise and thus has no need for private assistance to defend its interests before the WTO.) The decision of the Appellate Body in the EU Bananas proceeding therefore should guide the Panel in rejecting the United States' objection.

4.14 The right to determine the composition of delegations to meetings with the Panel in dispute settlement proceedings is particularly important for developing countries like Indonesia. These WTO members do not have at their disposal specially trained and highly experienced corps of WTO legal experts. The only way Indonesia can obtain full and effective representation in this dispute is by retaining outside legal experts, which it has done. Effective legal representation, chosen by the party participating in the dispute is as necessary for the legitimacy of the WTO dispute settlement process as it is for the legitimacy of any dispute settlement process. The United States' arguments to the contrary are absurd.

4.15 The United States cannot deny that under customary international law Indonesia has the sovereign right to compose its delegation to panel meetings in this dispute. The United States does not and cannot cite anything in the Marrakesh WTO Agreement, the DSU or the Working Procedures of this Panel that limits this sovereign right. Nor does or can the United States cite to any Panel decision or recommendation that limits the right and permits challenges to the credentials or qualifications of accredited delegates. All that the United States can do is to point to past GATT practice. The mere fact that previously no country has formally maintained its opposition to challenges to its sovereign right to compose its delegation cannot be the basis for extinguishing Indonesia's insistence on the exercise of that right now. This is particularly true because, unlike the old GATT regime, decisions by Panels (and the Appellate Body) under the DSU are legally binding and the basis for retaliation if not implemented. In short, Members did not deem the right to counsel so important when they could simply block a negative panel decision and be done with it.

4.16 In its letter dated 3 December 1997, Indonesia made the following arguments:

(a) General principles of international law support Indonesia's sovereign right to select counsel of its choice and organize and present its defence

4.17 The principle of "sovereign equality of states" provides that all states are free to choose representation of their choice before international adjudicatory bodies or subsidiary organs of international organizations. This principle is an accepted rule of customary international law. Thus, Indonesia has an absolute right to compose its own delegations to meetings of international organizations, including WTO dispute settlement proceedings.

4.18 The United Nations International Law Commission (the ILC) expressly recognized the importance of the principle of sovereign equality of states in technical proceedings such as WTO dispute settlement. In his Fifth Report on Relations Between States and International Organizations, the Special Rapporteur explains the rationale for this principle as follows:

4.19 The Report recognizes that a country may need to include outside experts in its delegation in order to deal effectively with the increasingly specialized nature of subject matters addressed by international fora. WTO dispute settlement proceedings are exceedingly specialized and complex proceedings that involve a wide range of technical trade, economic and legal issues that must be litigated under highly technical procedural rules and requirements. This is exactly the type of proceeding where the ILC declared that specialized expertise is indispensable.

(b) Practice before international adjudicatory bodies confirms Indonesia's right

4.20 The principle of sovereign equality of states is fully consistent with the practice of every major international dispute settlement tribunal and international organization. These practices support Indonesia's right to include outside private attorneys in its delegation to the WTO. Each of the following international dispute settlement tribunals and international organizations permits states complete freedom in composing their delegations:

Dispute resolution tribunals

• International Court of Justice;
• International Centre for Settlement of Investment Disputes;
• Permanent Court of Arbitration;
• European Court of Human Rights;
• Inter-American Court of Human Rights;
• United Nations Compensation Commission; and
• Iran-United States Claims Tribunal

Other international organizations

• United Nations;
• Food and Agriculture Organization;
• International Labour Office;
• International Telecommunication Union;
• United Nations Conference on Trade and Development;
• World Intellectual Property Organization; and
• Organization of American States.

4.21 In sum, no tribunal or organization (other than North American Free Trade Agreement in certain proceedings) limits in any way a state's decision to accredit outside counsel as members of its delegation. Nor does any limit the degree of counsel's involvement in a dispute proceeding. The absence of restrictions in all the major dispute resolution tribunals and other organizations is consistent with the general principle of customary international law that recognizes the sovereign right of countries to accredit representatives of their choosing to represent them in international fora.

(c) The WTO Appellate Body supports Indonesia's right

4.22 On 15 July 1997, the Appellate Body in the EU Banana Regime proceeding allowed outside counsel for the ACP States, not only to attend the oral proceedings but also to present the ACP States' legal case. The Appellate Body disagreed with the Panel's reasoning in denying outside counsel's participation in the Panel proceeding and concluded:

4.23 In addition, we note that the Appellate Body recognized the importance of representation by counsel of a government's own choice not only in the Appellate Body proceedings, but also during the entire dispute settlement proceeding, including the Panel proceeding. Moreover, the Appellate Body emphasized the crucial nature of this right for developing countries, such as Indonesia, in particular. According to the Appellate Body:

4.24 The Appellate Body recognizes that each WTO Member may freely compose its delegation to the Appellate Body. We believe that the Appellate Body finding applies to Panel proceedings as well because nothing in the WTO agreements restricts a Member's right to compose its delegation in Panel proceedings.

To Continue with GATT practice does not and cannot circumvent Indonesia's sovereign right .

²⁵See Findings, section XIV.A.1, for this ruling.

²⁶See Yearbook of the International Law Commission, 1970, Vol. II, p. 19 (emphasis added).

²⁷Report of the Appellate Body in the EU Banana Regime, para. 10.

²⁸See Report of the Appellate Body in the EU Banana Regime, para. 12.