4.3 The European Communities and their member States disagreed with India on the interpretation of Articles 9 and 10 of the DSU and advanced the following arguments in this regard:

• Article 9 addressed a situation where there was more than one complainant in a dispute settlement procedure. It did not, however, contain any obligation on WTO Members to make a complaint at a given point in time. Nor did it address the situation of a WTO Member that had requested to be a third party in a given dispute settlement procedure. This situation was addressed exclusively in Article 10. Article 10.4, which was relevant for the present case, specifically provided that a third party might become a complainant on the measure already the subject of a panel proceeding. It was obvious from this language that Article 10.4 addressed a situation with successive panel proceedings, like in the present case, since a WTO Member could not possibly be a complainant and a third party in one and the same procedure. Moreover, there was no provision in Article 10.4, neither explicit nor implied, which would prevent a third party from requesting the establishment of a panel after the conclusion of the earlier panel proceeding.

• There might be good reasons why a WTO Member wished to become a complainant with regard to a measure already the subject of a panel proceeding after having been a third party to that earlier panel.¹⁹ The procedural rights of third parties were much more limited than those of complainants. In particular, pursuant to Article 10.3 of the DSU, third parties shall receive the submissions of the (other) parties to the dispute to the first meeting of the panel. This implied that third parties did not have access to any other submission of the parties to the dispute. Pursuant to paragraphs 6 and 12(b) of Appendix 3 to the DSU, third parties were heard in a separate session, but did not participate otherwise in the meetings of the panel with the parties to the dispute. Pursuant to Article 17.4 of the DSU, only parties to the dispute, not third parties, may appeal a panel report. Finally, pursuant to Article 22.2 of the DSU, under the conditions set out in that provision, "any party having invoked the dispute settlement procedures may request authorization from the DSB to suspend the application to the Member concerned of concessions or other obligations under the covered agreements". As was apparent from this provision, the DSB could not grant such authorization to a third party, since it had not "invoked the dispute settlement procedures". If a third party wished to be released from these limitations, its only option was to become a complainant in its own right.

• Moreover, contrary to India's position in the present dispute, the DSU did not contain any obligation for a WTO Member to request dispute settlement procedures at a given point in time, at least as long as the measures at issue giving rise to the dispute continued to apply. Article 3.7 of the DSU specifically provided that "[b]efore bringing a case, Members shall exercise their judgement as to whether action under these procedures would be fruitful". On the basis of this provision, the Appellate Body had found in European Communities - Regime for the Importation, Sale and Distribution of Bananas²⁰ that WTO Members enjoyed broad discretion whether to bring a case against another Member under the DSU. This discretion necessarily also included the choice of the appropriate timing of a complaint. Launching a dispute settlement procedure was an important policy decision that was influenced by a large number of factors. The WTO was a Members-driven organization where Members enjoyed discretion whether or not to resort to a particular form of action under the covered agreements. Members might follow different strategies concerning the appropriate action in case of violations of WTO obligations by other Members. On this basis, a Member might choose a different timing of a complaint under the DSU for a measure already the subject of an earlier panel proceeding. This possibility was specifically addressed and recognized in Article 10.4 of the DSU, which would be stripped of any useful meaning if India's approach, according to which Members had an obligation to join a complaint under Article 9 if they wanted to bring a dispute on measures on which another Member was already complaining, were correct. As the Appellate Body had found in United States - Standards for Reformulated and Conventional Gasoline²¹, one of the corollaries of the "general rule of interpretation" contained in Article 31 of the Vienna Convention on the Law of Treaties was that "interpretation must give meaning and effect to all terms of a treaty. An interpreter was not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility".

• Contrary to India's allegations, the present case could not be compared with cases in which other WTO Members had been acting as multiple complainants rather than third parties. Moreover, by contrast to the situation in the Bananas dispute, where Panama had attempted to get involved in the implementation of the DSB recommendations and rulings of a dispute settlement procedure in which it had not participated, the EC did not claim to be entitled to a particular role with regard to the implementation of the recommendations and rulings of the DSB in the earlier dispute launched by the United States in which they were a third party (WT/DS50). The present case was in fact as yet without precedent in WTO practice. However, this situation was specifically addressed and resolved in Article 10.4 of the DSU.

4.4 India, in response, recalled that it had explicitly recognized that Members had the right to decide whether and when to bring a complaint, including Members that had been a third party in a previous proceeding. However, India's argument had been that the purpose of the second sentences of Articles 9.1 and 10.4 of the DSU was to ensure that different Members with similar complaints submit them concurrently to the same panel and that this purpose could not be achieved if these provisions were interpreted as addressing only the situation in which such Members had already decided to submit their complaints concurrently. The EC did not respond to this point at all. It also did not explain why it could not bring its complaint jointly with the United States. It merely stated that it had made different procedural choices. Implicit in the EC's contention was the claim that Articles 9.1 and 10.4, notwithstanding the explicit wording of their second sentences, were no bar to the institution of a successive complaint in respect of a measure which had been the subject-matter of an earlier proceeding. However, it was India's contention that this claim of the EC in respect of Articles 9.1 and 10.4 would encourage unnecessary and avoidable litigation, which the present complaint of the EC clearly did. The EC attempted to distinguish the case of the successive complaint by Panama on the EC's banana r�gime from the present case by claiming that Panama "had attempted to get involved in the implementation of the DSB recommendations and rulings of a dispute settlement procedure in which it had not participated". However, was this not precisely what the EC was trying to do in the present case? The EC's attempt to distinguish Panama's course of action from its own could not hide the fact that in this case the EC was submitting India to a legal harassment to which the EC would not wish to be submitted itself.

4.5 India further made the following points in relation to Article 9.1 of the DSU:

• The first sentence of Article 9.1 of the DSU authorized the DSB to establish a single panel to examine multiple complaints. As far as the present case was concerned, this sentence made clear that the DSB would have had the authority to establish a single panel if the United States and the EC had submitted their requests for the establishment of a panel contemporaneously. The second sentence of Article 9.1 went further and stipulated the referral of multiple complaints to a single panel whenever feasible. Since the DSB could establish a single panel to examine multiple complaints related to the same matter only when these were submitted contemporaneously, the second sentence implied the duty to bring such complaints contemporaneously whenever feasible.

• Articles 9 and 10 balanced two conflicting objectives: on the one hand, each complainant must have the right to bring its own case, make its own claims and develop its own arguments; on the other hand, each defendant and the WTO must be protected against completely unnecessary re-litigation. The compromise the drafters had found was logical and based on common sense: when complaints could be joined, they must be joined; when a third party could submit its complaint about a measure to a panel that examined the same measure, it must do so.

4.6 Addressing the points that India had made with regard to Articles 9.1 and 10.4 of the DSU, the European Communities and their member States stated the following:

• India claimed that Article 9.1, second sentence, of the DSU created a duty to submit disputes regarding the same matter by different WTO Members simultaneously to the same panel. This reading of Article 9.1 of the DSU was clearly wrong. Article 9 dealt, in accordance with its title, with a situation in which more than one complainant requested the establishment of a panel on the same matter. Paragraph 1 of that provision was concerned with situations in which such requests were made simultaneously by several complainants. The first sentence of that paragraph allowed several WTO Members to request a single panel in such situations, while the second sentence encouraged the DSB to resort to the establishment of a single panel whenever feasible. Paragraph 3 dealt with a situation in which requests for the establishment of a panel on the same matter were made successively, but at a time when the first panel had not yet completed its work. In such situations, more than one panel would have to be established. This provision clearly demonstrated that there could be no obligation for WTO Members to request the establishment of a single panel on the same matter, since otherwise Article 9.3 would be superfluous. In WTO practice, Article 9.3 had already been used on several occasions, specifically in two disputes concerning the EC.²² These disputes demonstrated that there was no obligation for several Members to submit their requests for the establishment of a panel on the same matter simultaneously.

• In any case, the present dispute was governed by the procedural rule laid down in Article 10.4 of the DSU. That provision explicitly dealt with the situation at hand and required the dispute to be referred to the original panel. The term "original panel" was a term of art used elsewhere in the DSU, namely in Articles 21.5 and 22.6, where it clearly dealt with procedures which by their very nature could not be simultaneous with the procedure which the "original panel" had been handling in the first place. The procedures referred to in these latter provisions only occurred at the implementation stage of a dispute in which the "original panel" by necessity had already circulated its report on the substance of the case. In other words, the term "original panel" was used where the DSU referred to a panel having already dealt with the same issue in an earlier procedure in which it had already completed its work. India submitted that its interpretation of Article 9.1, which created a duty on WTO Members to submit disputes simultaneously to the same panel, applied mutatis mutandis to Article 10.4. The EC did not agree with India's interpretation of Article 9.1. To seek to apply this interpretation in addition to Article 10.4, which had a different purpose, was obviously far-fetched.

• The EC was, for these reasons, of the view that India's reading of Articles 9.1, second sentence, and 10.4, second sentence, of the DSU was wrong and should be rejected by the Panel. In this context, the EC had already drawn the attention of the Panel to the first sentence of Article 3.7 of the DSU which - as had been confirmed by the Appellate Body in the Bananas case²³ - gave Members broad discretion whether to launch a dispute settlement case, which necessarily included the discretion to decide on the timing of a dispute settlement procedure.

Normal dispute settlement procedures

4.7 India took the view that, in the alternative, if the Panel were to consider that Article 10.4 of the DSU entitled the European Communities and their member States to bring their complaints, the Panel would be obliged to apply the "normal dispute settlement procedures", as stipulated in Article 10.4, and make an objective assessment of the facts and arguments presented in the present proceedings, as required under Article 11 of the DSU. To support its view that it would have to be given the benefit of the normal dispute settlement procedures, if the EC complaints were found to be consistent with rules of the DSU on multiple complainants, India advanced the following arguments:

• The EC based its right to re-litigation on the first sentence of Article 10.4 of the DSU, which provided:

The EC was thus requesting this Panel to go through the "normal dispute settlement procedures" under the DSU for a purpose for which these procedures had obviously not been designed. The role of a panel was to determine facts, to find the applicable law and to apply the law to the facts. But the EC was not requesting this Panel to perform these functions. It was merely requesting the Panel to perform the mechanical function of formally extending a ruling made in an earlier panel proceeding to the present complaint.

• The EC had conceded that a re-litigation of the case would have systemic and practical problems, when stating that "... a re-examination of the elements of the complaint in all legal detail would go against the very purpose of Article 10.4 of the DSU. It would entail a repetitive exercise of formalistic exchanges of views which would be entirely futile given that the legal situation has already been clarified by the adoption of the earlier panel and Appellate Body reports. It would also amount to a re-hearing of the case and would thus give the parties to the dispute the opportunity of having the equivalent of a further appeal not foreseen in any provision of the DSU ..." This statement was contradictory. The EC first claimed that it had the right to resort to the "normal dispute settlement procedures" referred to in Article 10.4, notwithstanding the fact that its complaint was "in all respects identical, from a legal point of view, with the earlier complaint submitted by the United States"; however, it then claimed that the application of the normal dispute settlement procedures "would be entirely futile", "amount to a re-hearing of the case" and create the opportunity of "having the equivalent of a further appeal". The EC thus interpreted Article 10.4 as conferring upon it a right whose exercise was futile and dangerous for the multilateral trading system.

• The implication of the EC's argumentation was that Article 10.4 should be interpreted as giving the EC the right to bring a new complaint and as barring India from submitting new arguments or new facts. This could not possibly be so. The Panel must either dismiss the complaint "as entirely futile" or re-examine the matter as a new case in accordance with the "normal dispute settlement procedures"; it could not first permit the complaint and then deny the defendant the application of the normal dispute settlement procedures on the ground that this would be entirely futile. The reasons that the EC advanced to deny India the right to normal dispute settlement procedures were the very reasons that called for a dismissal of its complaint. How could the EC reasonably expect any Member of the WTO to cooperate in one-sided procedures violating the most basic principles of procedural justice?

4.8 The European Communities and their member States said that they recognized that normal dispute settlement procedures were applicable in the present case. They remained, however, of the view that points dealt with in the earlier dispute on the same subject should not be re-litigated in the present dispute. The referral of this dispute to the original panel served the purpose of ensuring consistency and procedural economy. Why would the parties have to repeat all the factual allegations and legal arguments already submitted in the earlier dispute? The Panel was familiar with them and had already made its findings on them, as much as the Appellate Body in the context of India's appeal in the earlier dispute. The purpose of referring the dispute back to the original panel must be to limit the debate to any new or unknown facts or new arguments on which the Panel had not yet had an opportunity to make any findings, i.e the Panel should concentrate on any new or so far unknown factual allegations and legal arguments. If it were otherwise, the danger of lack of consistency and of a wasting of resources would be inevitable. In any case, panels should recognize earlier panel and Appellate Body reports as relevant for the solution of a subsequent dispute in accordance with the Appellate Body report in Japan - Taxation of Alcoholic Beverages.²⁴

4.9 As regards the approach the Panel should take when applying the normal dispute settlement procedures under Article 10.4 in the present case, India made the following points:

• The ruling in the previous case on Article 70.8 was based on the findings that the evidence submitted by India had not been sufficient to rebut the presumption created by the evidence adduced by the United States that the Indian mailbox system was inconsistent with Indian law. In the present case, India had submitted evidence on the domestic situation that it had not submitted in the previous case and had requested the Panel to engage in further fact-finding. The facts before this Panel were therefore different. It was irrelevant whether or not India had changed in patent r�gime; relevant was only whether the evidence adduced by India in the present proceeding was sufficient to rebut whatever presumption the evidence submitted by the EC had created. As confirmed by the Appellate Body, a panel could not interpret domestic law but must examine the applications of the domestic law. In such an examination an important new element to be considered was the fact that since the initiation of the United States' complaint (WT/DS50) about two years ago not even one attempt had been made to challenge any of the mailbox applications while a total number of over 2,000 applications had been submitted.

• There was a significant difference between being guided "by the Appellate Body�s decision", as the United States suggested in its third party submission in the present dispute, and being guided by the Appellate Body's reasoning in the previous and other cases. If this Panel were to declare that the Appellate Body had already decided the matter and that an independent examination of the facts and arguments in the present case was therefore not necessary, it would effectively declare the matter res judicata and deny India its procedural rights under the normal dispute settlement procedures. The Panel could not logically first admit the complaint and then declare the matter before it to have been decided by the Appellate Body.

• If the Panel were to be guided by the reasoning of the Appellate Body in the previous and other cases, it would proceed as all panels under the normal dispute settlement procedures did, using the reasoning in the previous case as a precedent. India was in fact urging the Panel to use the Appellate Body's reasoning in the previous case as a precedent, in particular as regards the inappropriateness of: (a) using the principle of predictability of conditions of competition as a basis for expanding the scope of Article 70.8 and 70.9; (b) basing a finding of inconsistency with the TRIPS Agreement on an interpretation of Indian law rather than an examination of the application of Indian law; and (c) expanding the obligations under Article 70.9 beyond the terms of this provision.

Article 70.8(a) of the TRIPS Agreement

4.10 The European Communities and their member States argued that, in view of the fact that the Panel and the Appellate Body had already found in the earlier dispute that the present Indian domestic r�gime concerning the patent protection of pharmaceutical and agricultural chemical products was inconsistent with India's obligations under Article 70.8 of the TRIPS Agreement, it followed pursuant to Article 3.8 of the DSU that there was a presumption according to which this breach of the relevant WTO rules by India had an adverse affect on the European Communities and their member States as the other party to this dispute. In these circumstances, the burden was on India to rebut the presumption according to which India's present domestic r�gime for the patent protection of pharmaceutical and agricultural chemical products nullified or impaired benefits accruing to the European Communities and their member States under Article 70.8 of the TRIPS Agreement.

4.11 India argued that the Panel was not called upon to determine whether the mailbox system that India had established was consistent with Indian law but whether India, in applying that law, was acting in conformity with Article 70.8(a) of the TRIPS Agreement.

• The EC was relying on the municipal law of India to prove its claim that a competitor could obtain a judicial order to force the Patent Office to examine and reject a mailbox application and thereby make it ineligible for future patent protection. It was recognized that "'municipal law' has to be proved by the party relying on such a law in an international proceeding".²⁵ It was thus for the EC to demonstrate that the domestic law of India was such as to entail a violation of the obligations under Article 70.8(a). It was also recognized that an international tribunal could not interpret municipal law; it must treat it as a fact to be established by the party relying on it.²⁶

• On this issue the Appellate Body had noted in its report on the previous case²⁷:

• General international law, GATT 1947 precedents and the above ruling of the Appellate Body all pointed in the same direction: the Panel was not called upon to interpret Indian law; it was to give judgement on the question of whether India, in applying that law, had acted in accordance with Article 70.8(a) of the TRIPS Agreement. India submitted that a distinction must be made between: (i) evaluating the application of an Indian statute or regulations to determine whether it violated WTO provisions; and (ii) deciding the purely municipal law issue of whether a measure applied by India was valid under its domestic law. The first was clearly necessary for the WTO to function effectively; the second was the responsibility of the Government of India, namely, upholding India's Constitution and its laws as a sovereign government. In India's view, in its report the Appellate Body had overlooked this central distinction.

Continuation: Article 70.8(a) of the TRIPS Agreement

¹⁹ In response to a question from the Panel, the EC explained that, in 1996 and at the beginning of 1997, the European Communities and their member States were engaged in intensive discussions with India with a view to convince the Indian authorities to take the necessary steps for a correct implementation of its obligations under Article 70.8 and 70.9 of the TRIPS Agreement. Until that time, the EC was confident that India was preparing the necessary steps concerning the implementation of its obligations under these provisions without awaiting the end of the ongoing dispute settlement procedure (WT/DS50). When it became clear that India was not in fact taking the necessary steps to implement the above provisions expeditiously, the EC requested consultations under the DSU. The request for these consultations was submitted to India on 28 April 1997 and was circulated to WTO Members on 6 May 1997 (document WT/DS79/1). Consultations were held on 14 May 1997. While these consultations failed to lead to a mutually acceptable solution, it was felt that the EC's position had been sufficiently clarified so that India could have no doubt that the EC were willing to pursue the dispute settlement procedure further if necessary. Again, it was the impression of the EC that by means of additional informal contacts it would be possible to avoid further steps in the formal dispute settlement procedure. This was based also on the EC's experience, particularly in the TRIPS context, that satisfactory solutions are very often found on the basis of informal contacts before resorting to a formal panel process. In addition, at the time of the EC's formal consultations with India in May 1997, the panel process in the dispute between the United States and India (WT/DS50) was well advanced and it would have been difficult for the EC to join this ongoing dispute as a complainant, since the EC had chosen earlier on to act as a third party in that dispute. The EC does not believe that a party can be a complainant and a third party in the same panel procedure. This reading of the relevant DSU provisions is reinforced by the wording of Article 10.4 which in the view of the EC envisages successive procedures. As becomes clear from the above, the EC did not make the same policy choice as the United States, namely to resort to early dispute settlement procedures once the problem had been identified. Rather, the EC used all available channels in order to come to a mutually satisfactory solution without submitting the matter to WTO dispute settlement. Unfortunately, these efforts failed and the EC was left with no other option than to request the establishment of a panel as a complainant in order to be able to protect its interests in the context of the enforcement provisions of the DSU (Articles 21 and 22), since these provisions require the party seeking implementation of a panel report to have resorted to dispute settlement procedures as a complainant rather than a third party (Article 22.2 DSU).

²⁰ Report of 9 September 1997 (document WT/DS27/AB/R, paragraph 135) 

²¹ Report of 29 April 1996 (document WT/DS2/AB/R, page 23) 

²² Cf. the requests for the establishment of a panel by Canada on the one hand and by Chile and Peru on the other hand in the dispute on European Communities - Trade Description of Scallops (WT/DS7/7 and WT/DS12/7 and WT/DS14/6) and the requests by the United States on the one hand and Canada on the other hand in the dispute on European Communities - Measures concerning Meat and Meat Products (Hormones) (WT/DS26/6 and WT/DS48/5).

²³ Cf. Appellate Body report on European Communities - R�gime for the Importation, Sale and Distribution of Bananas (WT/DS27/AB/R), paragraph 135

²⁴ Report of 4 October 1996 (WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, at page 14)

²⁵ Mojtaba Kazazi, Burden of Proof and Related Issues: A Study on Evidence Before International Tribunals, Kluwer Law International, 1996, page 368 

²⁶ Id. 

²⁷ Document WT/DS50/AB/R, paragraph 65

²⁸ See, for example, I. Brownlie, Principles of Public International Law, 4th ed. (Clarendon Press, 1990), pages 40-42.

²⁹ [1926], PCIJ Rep., Series A, No. 7, page 19