Good Faith in WTO Dispute Settlement

Abstract

[The definition of good faith in international law has been largely elusive, and its indefinite boundaries complicate its use in the World Trade Organization. Nevertheless, good faith is almost certainly a general principle of law and a principle of customary international law. It is also a principle of WTO law that is reflected in several provisions of the Understanding on Rules and Procedures Governing the Settlement of Disputes. WTO Tribunals may use the principle of good faith not merely to interpret WTO provisions, but also in the exercise of their inherent jurisdiction, such as when employing the doctrine of estoppel, which is one particularisation of good faith. However, the use of good faith in WTO dispute settlement entails three important considerations and qualifications. First, the principle should not be used to overwhelm WTO provisions that appear to be based on concepts similar to those underlying the principle of good faith, such as non-violation complaints, which are subject to detailed rules. Second, the principle should not be confused with other principles that may appear to be related, particularly due process. Third, in my view, WTO Tribunals have no legal basis for finding that a Member has violated a principle of good faith independent of a violation of a WTO provision. Some existing reports err in this regard.] CONTENTS I Introduction II Good Faith in International Law outside the WTO A A General Principle of Law B A Principle of Customary International Law C Towards a Definition of Good Faith D Particularisations of Good Faith 1 Performance of Treaties: Pacta Sunt Servanda 2 Interpretation of Treaties: VCLT Article 31(1) 3 Estoppel 4 Abuse of Rights III Using Good Faith in WTO Disputes A Good Faith as a Principle of WTO Law B Procedural Implications of Good Faith 1 Engaging in Dispute Settlement Procedures (DSU Article 3.10). 2 Resorting to Dispute Settlement (DSU Articles 3.7, 23) 3 Good Faith and Inherent Jurisdiction: Estoppel C Substantive Implications of Good Faith 1 Performance of WTO Obligations: Pacta Sunt Servanda 2 Non-Violation Complaints 3 General Exceptions and Abuse of Rights IV Conclusion Men must be able to assume that those with whom they deal in the general intercourse of society will act in good faith. (1) I INTRODUCTION The principle of good faith has a great deal of normative appeal, and most commentators would acknowledge that it plays a role in all legal systems. The ordinary meaning of good faith is 'honesty of purpose or sincerity of declaration' or the 'expectation of such qualities in others'. (2) 'Good faith' is often used interchangeably with 'bona fides', which is defined as 'freedom from intent to deceive'. (3) The touchstone of good faith is therefore honesty, a subjective state of mind, but the principle can also incorporate notions of fairness and reasonableness, both of which concern an objective state of affairs. Unfortunately, terms like honesty, fairness and reasonableness are almost as vague as good faith. This leads Rosenne to ask of good faith: 'Is it a principle and a rule of law, having an identifiable and where necessary enforceable legal content, or is it nothing more than a throw-back to outmoded natural law concepts?' (4) If good faith has no independent legal content, it may be of little use to World Trade Organization Tribunals in resolving disputes: 'one may acknowledge the power and attraction of a general idea but the idea may be so general that it is of no practical utility to the merchant'. (5) In this article, I attempt to clarify the meaning of good faith to the extent relevant to the WTO, by examining good faith as a general principle of law, a principle of customary international law, and a principle of WTO law. Below, I start by considering the existence and meaning of the principle of good faith in international law outside the WTO. …