C. Evidentiary and Other Matters

1. Burden of Proof and Fact-finding concerning Domestic Law

4.82  The European Communities argues that according to the Appellate Body's decision in United States - Measure Affecting Imports of Woven Wool Shirts and Blouses from India,

"The foundation of dispute settlement under Article XXIII of the GATT 1994 is the assurance to Members of the benefits accruing directly or indirectly to them under the GATT 1994.  This was true as well of dispute settlement under the GATT 1947.  If any Member should consider that its benefits are nullified or impaired as the result of circumstances set out in Article XXIII, then dispute settlement is available.   With respect to complaints of violation of obligations pursuant to Article XXIII:1(a) of the GATT 1994, Article 3.8 of the DSU codifies previous GATT 1947 practice:

'In cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment.  This means that there is normally a presumption that a breach of the rules has an adverse impact on other Members parties to that covered agreement, and in such cases, it shall be up to the Member against whom the complaint has been brought to rebut the charge'.

Article 3.8 of the DSU provides that in cases where there is an infringement of the obligations assumed under a covered agreement – that is, in cases where a violation is established – there is a presumption of nullification or impairment.  Article 3.8 then goes on to explain that "the Member against whom the complaint has been brought" must rebut this presumption.  However, the issue in this case is not what happens after a violation is established;   the issue in this case is which party must first show that there is, or is not, a violation. …

In addressing this issue, we find it difficult, indeed, to see how any system of judicial settlement could work if it incorporated the proposition that the mere assertion of a claim might amount to proof.  It is, thus, hardly surprising that various international tribunals, including the International Court of Justice, have generally and consistently accepted and applied the rule that the party who asserts a fact, whether the claimant or the respondent, is responsible for providing proof thereof. Also, it is a generally-accepted canon of evidence in civil law, common law and, in fact, most jurisdictions, that the burden of proof rests upon the party, whether complaining or defending, who asserts the affirmative of a particular claim or defence.  If that party adduces evidence sufficient to raise a presumption that what is claimed is true, the burden then shifts to the other party, who will fail unless it adduces sufficient evidence to rebut the presumption". ⁶⁷

4.83  The European Communities considers that in the India - Patents (US) case, the Appellate Body refined its above-mentioned milestone decision by addressing the specific issue of the authority of Panels and the Appellate Body when interpreting India's municipal law (i.e. a domestic law of a Member) as follows:

"In public international law, an international tribunal may treat municipal law in several ways. Municipal law may serve as evidence of facts and may provide evidence of state practice.  However, municipal law may also constitute evidence of compliance or non-compliance with international obligations.  For example, in Certain German Interests in Polish Upper Silesia, the Permanent Court of International Justice observed:

It might be asked whether a difficulty does not arise from the fact that the Court would have to deal with the Polish law of July 14th, 1920.  This, however, does not appear to be the case.  From the standpoint of International Law and of the Court which is its organ, municipal laws are merely facts which express the will and constitute the activities of States, in the same manner as do legal decisions and administrative measures.  The Court is certainly not called upon to interpret the Polish law as such;  but there is nothing to prevent the Court's giving judgment on the question whether or not, in applying that law, Poland is acting in conformity with its obligations towards Germany under the Geneva Convention. (original emphasis)

In this case, the Panel was simply performing its task in determining whether India's 'administrative instructions' for receiving mailbox applications were in conformity with India's obligations under Article 70.8(a) of the TRIPS Agreement.  It is clear that an examination of the relevant aspects of Indian municipal law and, in particular, the relevant provisions of the Patents Act as they relate to the 'administrative instructions,' is essential to determining whether India has complied with its obligations under Article 70.8(a).  There was simply no way for the Panel to make this determination without engaging in an examination of Indian law.  But, as in the case cited above before the Permanent Court of International Justice, in this case, the Panel was not interpreting Indian law 'as such';  rather, the Panel was examining Indian law solely for the purpose of determining whether India had met its obligations under the TRIPS Agreement.  To say that the Panel should have done otherwise would be to say that only India can assess whether Indian law is consistent with India's obligations under the WTO Agreement.  This, clearly, cannot be so".

4.84   In the view of the European Communities, more specifically on the issue of which of the parties bore the burden of determining the interpretation of India's domestic law in order to assess its conformity with the TRIPs Agreement, the Appellate Body then added the following:

"The Panel states:

'As the Appellate Body report on Shirts and Blouses points out, 'a party claiming a violation of a provision of the WTO Agreement by another Member must assert and prove its claim'.  In this case, it is the United States that claims a violation by India of Article 70.8 of the TRIPS Agreement.  Therefore, it is up to the United States to put forward evidence and legal arguments sufficient to demonstrate that action by India is inconsistent with the obligations assumed by India under Article 70.8.  In our view, the United States has successfully put forward such evidence and arguments.  Then, ... the onus shifts to India to bring forward evidence and arguments to disprove the claim.  We are not convinced that India has been able to do so (footnotes omitted)'.

This statement of the Panel is a legally correct characterization of the approach to burden of proof that we set out in United States - Shirts and Blouses. However, it is not sufficient for a Panel to enunciate the correct approach to burden of proof;  a Panel must also apply the burden of proof correctly.  A careful reading of paragraphs 7.35 and 7.37 of the Panel Report reveals that the Panel has done so in this case.  These paragraphs show that the United States put forward evidence and arguments that India's 'administrative instructions' pertaining to mailbox applications were legally insufficient to prevail over the application of certain mandatory provisions of the Patents Act.  India put forward rebuttal evidence and arguments.  India misinterprets what the Panel said about "reasonable doubts".  The Panel did not require the United States merely to raise "reasonable doubts" before the burden shifted to India.  Rather, after properly requiring the United States to establish a prima facie case and after hearing India's rebuttal evidence and arguments, the Panel concluded that it had 'reasonable doubts' that the 'administrative instructions' would prevail over the mandatory provisions of the Patents Act if a challenge were brought in an Indian court".

4.85  The European Communities finally points out that in the context of the Argentina – Textiles and Apparel (US) panel procedure, the United States submitted its views on how the burden of proof should be shared between the parties to the dispute when considering the interpretation of a Member's domestic law:

"The United States contended that, by any standard, the evidence submitted by the United States was sufficient to establish a presumption of a violation of Article II.  In fact, the Panel needed look no further than the face of the Argentine resolutions and decrees imposing the specific duties that were the subject of this dispute. … Previous GATT jurisprudence had made clear that this potential, in and of itself, was a sufficient basis for the Panel to find that Argentina had violated Article II.

The United States also argued that a Panel could condemn Argentina's mandatory minimum specific import duties even if they were not yet being applied". ⁶⁸

4.86  The European Communities further argues that the panel in the Argentina – Textiles and Apparel (US) case assessed the legal situation as follows:

"We consider that when the Appellate Body refers to the obligation of the complainant party to provide sufficient evidence to establish a "presumption", it refers to two aspects: the procedural aspect, i.e. the obligation for the complainant to present the evidence first, but also to the nature of evidence needed.  In the present case, we consider that it was for the United States to raise a presumption that Argentina did violate the provisions of Article II of GATT.   Then, it is for Argentina to provide sufficient evidence to rebut the said presumption.  When, however, Argentina is claiming a specific affirmative defense, such that its national challenge procedure can be used to correct any alleged violation of GATT rules, it is for Argentina to raise first a presumption that such system operates in a way that there is, in effect, no infringement of GATT/WTO rules". ⁶⁹

4.87 In the view of the European Communities, it appears from the above mentioned quotations from earlier Panel and Appellate Body reports that, in the specific case at hand, the European Communities is subject to the burden of proving the existence of the attacked US domestic legislation (i.e. Sections 301-310).  Moreover, the European Communities bears the burden to establish the existence of a prima facie violation of the provisions of the covered agreements invoked in its request for establishment of this Panel.

4.88  The European Communities contends that the Appellate Body therefore concluded that, while panels cannot interpret domestic law as such, they can examine it to determine whether the WTO Member has met its obligations.  Otherwise, so the Appellate Body ruled, only the defendant itself would be able to assess whether its law is consistent with its obligations. This could clearly not be so.  The Appellate Body noted that GATT/WTO panels had conducted a detailed examination of domestic law to determine its conformity with GATT/WTO obligations. The Appellate Body cited, ⁷⁰ as an example, the GATT panel on United States - Section 337 of the Tariff Act of 1930⁷¹ which conducted a detailed examination of the relevant United States' legislation and practice to determine whether Section 337 was consistent with Article III.4 of the GATT 1947.

4.89  The European Communities states that it may therefore be concluded that the United States could not validly claim that only it can interpret its own laws and that the Panel would consequently have to rely on the United States' interpretation of Sections 301-310 to determine whether they are in conformity with WTO law.

4.90  The European Communities maintains that with all these elements in mind, it appears that the interpretation of the burden of proof suggested by the United States itself in the Argentina – Textiles and Apparel (US) case constitutes an appropriate way forward in the context of this particular dispute.

4.91  The European Communities argues that it is thus required

1. to submit the text of the relevant provisions of Sections 301-310 and
2. to indicate how, on their face, their wording is in contradiction with the US WTO obligations.

4.92  According to the European Communities, in particular, it has shown and will further show that the text of Sections 301-310 mandates determinations and actions in violation of Articles 3, 21, 22 and 23 of the DSU and, consequently, of Articles I, II, VIII and XI of the GATT 1994; it has shown and will further show that Sections 301-310 do not provide a sound legal basis for the executive actions necessary to implement US WTO obligations, thus violating the good faith implementation principle under the Vienna Convention on the Law of Treaties and Article 3.2 of the DSU; finally, it has shown and will further show that the text, structure, design and architecture of Sections 301-310 create a pattern of executive practice that undermines the substantial objectives of the WTO thus also violating Article XVI:4 of the Marrakech Agreement.  This already meets the burden of proof of the European Communities and therefore shifts the burden upon the United States as the respondent.

4.93  The European Communities then maintains that in any case, ad abundantiam, it submitted and will submit as further evidence additional contextual documentation and information concerning the official interpretation by the US executive authorities and the Congress. Finally, the European Communities also provided, and will continue to provide, additional proof by submitting contextual evidence concerning the practice followed by the United States in the practical implementation of Sections 301-310.

4.94  In the EC's view, at the end of this procedure, given the particular context of this case and having considered the specific obligations of positive action enshrined in Article XVI:4 of the Marrakech Agreement, a legal uncertainty that might persist with respect to the interpretation of Sections 301-310 should play to the detriment of the respondent, in its capacity of WTO Member on which legally lies the obligation to ensure the compatibility of its internal legislation with WTO obligations as from 1 January 1995.

4.95  The United States responds that as the complaining party, it is the European Communities, not the United States, that bears the burden of proof in this case. ⁷² As a result, the European Communities is obligated to establish a prima facie case with respect to each of the elements necessary to demonstrate the violations alleged.  Establishing a prima facie case requires presenting both sufficient legal arguments and, where factual issues are in dispute, adequate supporting evidence.  The Appellate Body has made this clear, stating that a panel should begin "its analysis of each legal provision by examining whether the [complaining party] has presented evidence and legal arguments sufficient to demonstrate that the … measures were inconsistent with the obligations assumed by the [responding party] under each article of the [applicable] agreement addressed by the Panel". ⁷³

4.96  The United States further argues that to establish a prima facie case, the European Communities must provide evidence and arguments sufficient to establish a presumption that Sections 301-310 violate a provision of a WTO agreement.⁷⁴ In this regard, the Appellate Body has stated, "we find it difficult, indeed, to see how any system of judicial settlement could work if it incorporated the proposition that the mere assertion of a claim might amount to proof . . . [T]he party who asserts a fact … is responsible for providing proof thereof".⁷⁵

4.97  The United States asserts that absent such a showing, the United States, as the responding party, need not rebut the allegations.  The Appellate Body has explained that "[o]nly after such a prima facie determination has been made by the Panel may the onus be shifted to the [responding party] to bring forward evidence and arguments to disprove the complaining party's claim". ⁷⁶ The United States notes that, despite this fact, it has nevertheless rebutted each EC claim.

4.98  According to the United States, the EC's statements in this case with respect to whether Sections 301-310 mandate determinations and actions violating DSU Article 23 have consisted of mere assertions, a fact exemplified by the statement of the European Communities that it had met its burden simply by providing a copy of the text of Sections 301-310.  The United States reiterates that the EC's case rests on numerous unsupported, erroneous assumptions.  To meet its burden, the European Communities must in fact prove why, under US law, each and every one of the EC assumptions identified by the United States is correct, and why, under US law, the interpretations of Sections 301-310 put forward by the United States are incorrect.

4.99  The United States points out that in meeting its burden in this dispute, the European Communities may not rely on "mere assertions".⁷⁷ The European Communities claims that it may meet its burden merely by submitting the text of Sections 301-310, because the statute on its face mandates a violation.  It cites Argentina – Textiles and Apparel (US) for this proposition. However, in Argentina – Textiles and Apparel (US), the issue was whether Argentina's law provided for a tariff in excess of bound rates, and the United States demonstrated that the law did, in fact, provide for such a tariff.  Moreover, contrary to the impression the European Communities attempts to leave, the United States made its case not only through an analysis of the law, but also through submission of data and charts relating to average prices and specific transactions.  As a result, the burden shifted to Argentina.⁷⁸

2. Relevance of the US Statements before the Panel and Statement of Administrative Action

4.100  The European Communities indicates the International Court of Justice has, in a limited number of cases, considered unilateral declarations made by high State representatives as internationally binding on that State. Moreover, some GATT 1947 panels have attached legal value to declarations made by a party to a panel procedure concerning the future exercise of the discretionary power conferred to it domestically by a legislative act.

4.101  In the view of the European Communities, in the East Greenland case, ⁷⁹ the declaration at issue was made by the Minister of Foreign Affairs of Norway in a bilateral meeting with a representative of Denmark. The declaration had to do with a dispute over the territorial sovereignty with regard to certain parts of Eastern Greenland.

4.102  According to the European Communities, it is clear that this situation is not comparable with the present situation, because while the Permanent Court of International Justice considered that such a declaration was binding on Norway, this declaration had a recipient and was made in a context similar to that of the conclusion of an international agreement.

4.103  The European Communities considers this case irrelevant for present purposes, because in the East Greenland case the issue of the application and correct interpretation of a piece of domestic legislation was not at stake. This could never have been achieved by a declaration made in private during a bilateral contact between governments. The situation described in the judgement does not in fact resemble a unilateral declaration of the executive branch of the Norwegian government, but was made in bilateral contacts aimed at settling a dispute over territorial sovereignty.

4.104 The European Communities argues that in the Nuclear Tests case,⁸⁰ the International Court of Justice dealt with unilateral public declarations of high representatives of France, including the President of the French Republic concerning the termination of atmospheric nuclear tests. In this context, the ICJ states the following:

"When it is the intention of the State making the declaration that it should become bound according to its terms, that intention confers on the declaration the character of a legal undertaking, the State being thenceforth legally required to follow a course of conduct consistent with the declaration. An undertaking of this kind, if given publicly, and with an intent to be bound, even though not made within the context of international negotiations, is binding".

It appears from the judgement that the ICJ considered the intent of being bound, the public character of the declaration and the rank of the representatives of France decisive for its finding that the declaration created international obligations for France.

4.105  The European Communities asserts that in the circumstances of the present case, the situation is quite different, because the European Communities is confronted with the issue of the application and correct interpretation of a piece of domestic US law, i.e. Sections 301-310 of the US Trade Act of 1974.

4.106  According to the European Communities, even if it were demonstrated (quod non) that the executive branch of the US government has broad discretion on how to apply Sections 301-310 in individual cases, it must be recalled that, as a matter of fact, the United States has already made an official and public declaration by its President concerning the way in which it intends to apply Sections 301-310 in cases of disputes under the procedures instituted by the WTO in form of the Statement of Administrative Action.

4.107  The European Communities states that the Statement of Administrative Action was approved by the US Congress together with the Uruguay Round Agreements and is thus domestically binding on the executive branch of the US government. As the United States has explained itself, the Statement of Administrative Action is "an authoritative expression by the Administration concerning its views regarding the interpretation and application of the Uruguay Round agreements, both for purposes of U.S. international obligations and domestic law".⁸¹

4.108  The European Communities points out that as the Panel is aware, the Statement of Administrative Action contains the following portion:

"There is no basis for concern that the Uruguay Round agreements in general, or the DSU in particular, will make future Administrations more reluctant to apply section 301 sanctions that may be inconsistent with U.S. trade obligations because such sanctions could engender DSU-authorized counter-retaliation. Although in specific cases the United States has expressed its intention to address an unfair foreign practice by taking action under section 301 that has not been authorized by the GATT, the United States has done so infrequently. In certain cases, the United States has taken such action because a foreign government has blocked adoption of a GATT panel report against it.

Just as the United States may now choose to take section 301 actions that are not GATT authorized, governments that are the subject of such actions may choose to respond in kind. That situation will not change under the Uruguay Round agreements. The risk of counter-retaliation under the GATT has not prevented the United States from taking action in connection with such matters as semiconductors, pharmaceuticals, beer, and hormone-treated beef".⁸²

4.109  The European Communities further contends that it is obvious that this portion of the Statement of Administrative Action provides for an authoritative interpretation of the Uruguay Round Agreements Act that undermines the security and predictability of international trade relations. Moreover it announces in very clear terms a policy: the United States will not feel impeded by its international obligations to have recourse to retaliatory action.

4.110  The European Communities maintains that in the presence of these explicit indications on the political intentions and the legal texts as they stand, the explanation given by the United States⁸³ is by no means reassuring.

4.111  In this context, the European Communities recalls that, after the entry into force of the Uruguay Round agreements, the United States has as a matter of fact resorted to retaliatory action without having recourse to WTO dispute settlement procedures or without awaiting the result of the relevant WTO dispute settlement procedure in at least two well-documented cases (Japan - Autos and EC – Bananas III).⁸⁴ The assertions made by the United States therefore give rise to the additional concern that the US administration apparently considers itself to be judge and jury also with regard to the applicability of the WTO dispute settlement procedures ratione materiae. ⁸⁵

4.112  The European Communities goes on to state that it appears thus obvious that the statements made so far by the US representatives in the present procedure are of a completely different nature from the declaration considered binding by the ICJ in the Nuclear Tests case.

4.113 The European Communities further argues that this legal assessment would not change even if those statements were incorporated into the Panel report. In fact, the statements made in the present case by the US representatives were not made with the intent to create an international obligation by a person empowered to undertake a substantial legal commitment on behalf of the United States.⁸⁶ It is thus obvious that none of the conditions on which the judgement of the ICJ in that case was based is fulfilled in the present case.

4.114  According to the European Communities, in any event, the problem of the present case is not the absence of a clearly defined international commitment, because that already exists in the form of Article 23 of the DSU which clearly was accepted by the United States as part of the Uruguay Round agreements. Rather, it is the subsequent implementation of that international obligation into the US legislation by the United States legislature, compounded by the Statement of Administrative Action, that runs counter to the United States obligation to respect its international commitments.

4.115  The European Communities further notes that at the same time, US executive determinations and actions add to the uncertainty as to the willingness of the United States to respect its international obligations in future.

4.116  The European Communities claims that given the importance of the United States in the multilateral trade relations and within the institutional framework of the WTO, this situation is the source of uncertainty and unpredictability, which is unacceptably detrimental to the multilateral trading system.

4.117  The European Communities further states that, looking at the panel findings in the Superfund case,⁸⁷ it must be recalled that in that case the panel accepted the statement of the United States only because it considered that the United States had discretion to act in accordance with its statement. In addition, that decision was adopted in a legal situation where the strict interpretation of mandatory legislation under the PPA had a decisive influence on the examination of domestic legislation.

TO CONTINUE WITH UNITED STATES – SECTIONS 301-310 OF THE TRADE ACT OF 1974

⁶⁷ WT/DS33/AB/R, chapter IV, page 12 and following.

⁶⁸ Panel Report on Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items ("Argentina – Textiles and Apparel (US)"), adopted 22 April 1998, WT/DS56/R, paras. 3.199-3.200.

⁶⁹ Ibid., para. 6.37.

⁷⁰ Appellate Body Report on India – Patents (US), op. cit., para. 67.

⁷¹ Panel Report on United States - Section 337 of the Tariff Act of 1930 ("US – Section 337"), adopted on 7 November 1989 , BISD 36S/345.

⁷² The United States cites Appellate Body Report on US – Shirts and Blouses, op. cit., p. 14 as stating that "it is a generally-accepted canon of evidence in civil law, common law and, in fact, most jurisdictions, that the burden of proof rests upon the party, whether complaining or defending, who asserts the affirmative of a particular claim or defence".

⁷³ Appellate Body Report on EC – Measures Affecting Meat and Meat Products (Hormones) ("EC - Hormones"), adopted 16 January 1998, WT/DS26/AB/R, WT/DS48/AB/R, para. 109; see also, Appellate Body Report on US - Shirts and Blouses, op. cit., p. 16 ("a party claiming a violation of a provision of the WTO Agreement by another Member must assert and prove its claim"); and Appellate Body Report on India – Patents (US), op. cit., para. 74 (noting that the Panel had "properly requir[ed] the [complaining party] to establish a prima facie case" before proceeding to the next step of its evaluation of the claim at issue).

⁷⁴ Appellate Body Report on US - Shirts and Blouses, op. cit., p. 13.

⁷⁵ Ibid., p. 14. 

⁷⁶ Appellate Body Report on EC - Hormones, op. cit., para. 109; see also, Appellate Body Report on US - Shirts and Blouses, op. cit., p. 14.  

⁷⁷ The United States cites Appellate Body Report on US – Shirts and Blouses, op. cit., p. 14 as stating that "we find it difficult, indeed, to see how any system of judicial settlement could work if it incorporated the proposition that the mere assertion of a claim might amount to proof . . . [T]he party who asserts a fact . . . is responsible for providing proof thereof".

⁷⁸ See Panel Report on  Argentina –Textiles and Apparel (US), op. cit., paras. 6.41-6.65.

⁷⁹ Judgement of the Permanent Court of International Justice of 5 April 1933 on the Legal Status of Eastern Greenland, PCIJ Reports 1933, p. 21 (cf. specifically p. 71 referring to the reply by the Minister of Foreign Affairs of Norway to a request by the representative of Denmark).

⁸⁰ Judgement of the International Court of Justice of 20 December 1974 in the Nuclear Tests Case, ICJ Reports 1974, 253 (cf. specifically para. 43).

⁸¹ The European Communities points out that, according to Section 101(a) of the Uruguay Round Agreements Act of 1994, the US Congress approves (1) the trade agreements resulting from the Uruguay Round of multilateral trade negotiations and (2) the statement of administrative action that was submitted to Congress on 27 September 1994.

⁸² Statement of Administrative Action, op. cit., p. 366 et seq.

⁸³ The European Communities quotes the US following argument: "The last paragraph on page 366 of the Statement of Administrative Action does not relate to a situation in which the United States is seeking redress for the denial of US WTO rights, and thus is not covered by DSU Article 23, nor is it otherwise within the terms of reference of this dispute". The European Communities would also underline that it does not agree with the United States that the terms of reference of this panel include in any way a limitation of the examination of Sections 301-310. With respect to the EC claims of violation of WTO provisions listed in doc. WT/DS152/11, Sections 301-310 are under the scrutiny of this panel in their entirety. The same is also valid for the US  comments on a statement from Korea.

⁸⁴ The European Communities claims that these cases are documented by Japan.

⁸⁵ According to the European Communities, this concern is corroborated by the following paragraph from the Statement of Administrative Action (at the top of p. 366):

"Neither section 301 nor the DSU will require the Trade Representative to invoke DSU dispute settlement procedures if the Trade Representative does not consider that a matter involves a Uruguay Round agreement. Section 301 will remain fully available to address unfair practices that do not violate U.S. rights or deny U.S. benefits under the Uruguay Round agreements and, as in the past, such investigations will not involve recourse to multilateral dispute settlement procedures".

⁸⁶ In the EC's view, this power is generally vested in the Head of State, the Head of Government and the Minister of Foreign Affairs. Any other representative of the State would either have to be specifically accredited or need full powers to be able to make a substantial commitment under public international law (cf. Art. 7 VCLT).

⁸⁷ Panel Report on United States – Taxes on Petroleum and Certain Imported Substances ("US – Superfund"), adopted 17 June 1987, BISD 34S/136, in particular, para. 5.2.9 in fine.