P ROBABLY MORE THAN any other international dispute settlement organs, WTO Panels and the Appellate Body have resorted to the rules of interpretation under the Vienna Convention on the Law of Treaties (VCLT) 1 (mainly Articles 31 and 32) as ‘customary rules of interpretation of public international law’, 2 in examining the cases brought to the WTO dispute settlement procedures. This chapter explores first the VCLT rules of treaty interpretation and then how the WTO Panels and Appellate Body have understood them. The WTO dispute settlement organs have taken a textualist, consensus-forming and formalistic approach to treaty interpretation, probably to a greater degree than Articles 31 and 32 VCLT stipulate. Possible reasons for the particular WTO interpretative discipline are also explored in this chapter.
According to Article 64 of the TRIPS Agreement, the WTO rules and procedures for disputes apply to consultations and disputes under the TRIPS Agreement, except when this Agreement itself provides special provisions. The WTO rules and procedures were established under Articles XXII and XXIII of GATT 1947, and further elaborated and modified in the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).
Article 3.7 of the DSU provides that the aim of the dispute settlement mechanism is to secure a positive solution to a dispute, and lists such solutions in order of preference: first, a solution mutually acceptable to the parties to a dispute and consistent with the covered agreements; secondly, withdrawal of the measures concerned, if these are found to be inconsistent with the provisions of any of the covered agreements; 3 thirdly, compensation; and, finally, the suspension of concessions or other obligations under the covered agreements on a discriminatory basis vis-à-vis the other Member, subject to authorisation by the Dispute Settlement Body (DSB) 4 of such measures. According to Article 23 of the DSU, when seeking the redress of a violation of obligations or other nullification or impairment of benefits under the covered agreements, or an impediment to the attainment of any objective of the covered agreements, Members shall abide by the rules and procedures of the DSU and not make a determination to the effect that a violation has occurred.
Article 3.2 of the DSU states that ‘the dispute settlement system of the WTO serves to preserve the rights and obligations of Members under the covered agreements . . . [and] to clarify the existing provisions of those agreements . . . in accordance with customary rules of interpretation of public international law’. The reference to customary rules of interpretation was included so that the WTO dispute settlement organs would interpret relevant provisions with a common discipline in public international law.
Unlike GATT panels, which often resorted to negotiating history or preparatory works, the WTO dispute settlement organs are directed by ‘customary rules of interpretation of public international law’. Thus the Appellate Body in US–Gasoline 5 stated what subsequent Panels repeated: ‘the General Agreement is not to be read in clinical isolation from public international law’. 6 Article 3.2 further binds the WTO dispute settlement organs to the text of the treaty provisions by adding that ‘recommendations and rulings of the Dispute Settlement Body (DSB) cannot add to or diminish the rights and obligations provided in the covered agreements.’
Article 31 of the VCLT is entitled ‘general rule of interpretation’. According to Article 31.1, ‘a treaty shall be interpreted in good faith in accordance with ‘the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose’. 7 Article 31 of the VCLT does not specifically mention well-known axioms of treaty interpretation, such as ut res magis valeat quam pereat (the ‘effectiveness’ principle, which means that treaties must not be interpreted in a way that would reduce any part of a treaty to redundancy or inutility), exceptio est strictissimae interpretationis (exceptions should be interpreted narrowly), or lex specialis derogat legi generali or lex posterior derogat legi priori provisions (specific subject matter overrides general matters, or later, specific treaty provisions override earlier general ones). 8
Article 31 of the VCLT provides a method of interpretation, rather than specific principles, which relies mainly on the wording, its context and the object and purpose of the treaty, and makes it possible for the treaty interpreter to resort to these principles, if they are helpful for interpreting the provisions in question and not incompatible with the analysis based on Article 31. 9 The ‘effectiveness’ principle, for example, has been recognised by many dispute settlement systems today as one of the fundamental principles of treaty interpretation. WTO Panels and the Appellate Body have referred to the effectiveness principle as ‘the fundamental tenet of treaty interpretation flowing from the general rule set out in Article 31 of the VCLT’. 10 During the drafting process of the VCLT by the International Law Commission (ILC), 11 the principle of effectiveness was proposed as part of the ‘general rule of interpretation’. 12 However, the explicit reference to this principle was removed from the draft because it was considered to make Article 31.1 of the current version of the VCLT redundant. 13
For treaty interpretation, the WTO dispute settlement organs have emphasised the importance of the wording of treaty provisions in its textual context. The axiom of strict interpretation of exceptions ( exceptio est strictissimae interpretationis ) does not seem to be included in the VCLT rule of interpretation. For the WTO dispute settlement organs, the interpretation of the covered agreements depends primarily on the wording of any provision concerned, including those words phrased as ‘exceptions’, read in its context and in light of the treaty’s ‘object and purpose’. This method may not result in a narrow interpretation of exceptions. It could lead to interpretations that strike a balance between two policies, depending on the treaty language. This question will be further examined in the chapter 7, which examines how exceptions in the TRIPS Agreement have been interpreted by the WTO dispute organs.
The VCLT rule of interpretation was acceptable to the participating parties in the Vienna Conference probably because this rule allows various principles of treaty interpretation and facilitates broad participation by states. Therefore, many crucial questions for interpretation were left open to the choice of the treaty interpreter. The meaning of the ‘object and purpose’ of the treaty, and its relation to ‘context’, is open-ended.
Under the textualist approach, which was the predominant position in early discussions within the ILC, the intentions of the parties are expressed in the wording of the treaty, which must not be construed in a way that departs from its ordinary meaning. 16 With the teleological approach, however, a treaty is to be interpreted by reference to the leading concept of the treaty (for example, the maintenance of peace, public interest etc), which is not necessarily expressed in its text, but is nevertheless understood by the interpreter as the general and most important purpose of the treaty. 17
A few examples of the teleological approach can also be found in the arguments by Members in WTO disputes cases. Cuba, as a third party in Canada–Pharmaceutical Patents , 18 argued that ‘the TRIPS Agreement, at all times, is to be read and interpreted in such a way that the important objectives and principles it contained were not relegated to the background by the overriding application of any of its other provisions.’
At the ILC in the late 1950s, the attempt by Fitzmaurice 19 to establish a single unified doctrine with the interpretation principles used by the ICJ finally bore fruit and brought together various principles and methods of interpretation into what became Article 31 and Article 32 of the current version of the VCLT. Arriving at a compromise, the textualist and teleological approaches came to occupy a relatively important position, to the detriment of the position valuing the role of preparatory work.
From the textualist perspective, preparatory work should be used only when the application of the general rule of interpretation in Article 31 renders the meaning of a provision in a treaty vague or unclear. Alternatively, from the teleological perspective, it is important for the interpreter to discern the overall purpose of the treaty and give the effect of that purpose.
The role of preparatory work in treaty interpretation, therefore, was marginalised by the fact that both the textualist and the teleological approaches viewed preparatory work only in a secondary sense. At the first session of the Diplomatic Conference which started in Vienna in 1968, the US Delegation led by McDougal 20 argued against a predetermined hierarchy among different elements to be considered for interpretation, and requested that the two Articles, the general rule and the supplementary means of interpretation, be combined into a single Article without establishing a rigid rule. 21 This, however, was not the position adopted at the Diplomatic Conference, 22 and a distinction was made between Article 31(general rule of interpretation) and Article 32 (supplementary means of interpretation).
According to Article 32 VCLT:
recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of Article 31, or to determine the meaning when the interpretation according to Article 31: (a) leaves the meaning ambiguous or obscure; or (b) leads to a result which is manifestly absurd or unreasonable.
Draft Article 70, entitled ‘general rule of interpretation’, did not contain the terms ‘object and purpose’ until 1966. According to the draft, it was necessary to take into account the ‘context of a treaty as a whole’ when determining the ordinary meaning of the terms of a treaty. Thus, Article 70.1 of the ILC draft of 1964 read: ‘The terms of a treaty shall be interpreted in good faith in accordance with the natural and ordinary meaning to be given to each term: (a) in its context and in the context of the treaty as a whole ; and (b) in the context of the rules of international law in force at the time of the conclusion of the treaty’ (emphasis added). 23 Consideration of ‘objects and purposes’ 24 of the treaty, by contrast, was proposed as a supplementary means, and not as part of the general rule of interpretation, to be employed in the second step, only ‘when the natural or ordinary meaning of the terms of the treaty (i) leaves the meaning ambiguous or obscure or (ii) leads to a result which is manifestly absurd or unreasonable’. 25
The phrase ‘ordinary meaning of the terms’ in Article 31.1 VCLT presumes that the intentions of the contracting parties are reflected in the ordinary meaning of the terms of the treaty, and indicates the importance of the wording used in the treaty. 26 However, none of the three elements of interpretation, ‘ordinary meaning of the term’, ‘context’, and a treaty’s ‘object and purpose,’ take precedence over any other, and no interpretative principle is established among them. The meaning of ‘object and purpose’ is particularly unclear and its relationship with ‘context’ not explained. 27
As the teleological approach to interpretation gained strength, so the role of the treaty’s ‘object and purpose’ acquired importance. When Article 31 VCLT was finalised at the Diplomatic Conference in Vienna, the ‘object and purpose’ of the treaty for the purpose of interpreting treaties could still convey at least two different meanings: first, in line with the general structure of the treaty; and, secondly, for the overall purposes of the treaty that the treaty interpreter can philosophically define.
Interestingly, much later, in the WTO US–Shrimp I , 28 the WTO Appellate Body Report, quoting the following passage from Sinclair, 29 adhered to the ILC draft version of 1964 which attributes to the ‘object and purpose’ of the treaty a mere ‘supplementary’ role for the purpose of interpretation:
A treaty interpreter must begin with, and focus upon, the text of the particular provision to be interpreted. It is in the language constituting a particular provision, when read in context, that the object and purpose of the states which are parties to the treaty must first be sought. Where the meaning imparted by the text itself is equivocal or inconclusive, or where confirmation of the correctness of the reading of the text itself is desired, it might be useful to refer to the object and purpose of the treaty as a whole for further clarification. 30
While the term ‘object and purpose’ of the treaty in the VCLT was left undefined, the VCLT delineated, in detail, those agreements and instruments to be taken into consideration as the ‘context’ (Article 31.2(a)(b) VCLT) and the subsequent agreements, practices and relevant rules of international law to be taken into account, together with the context (Article 31.3(a)(b)(c) VCLT) for the purpose of the treaty interpretation. The scope of these elements in Articles 31.2(b) and 31.3(c) was left wide open.
Article 31.2 of the VCLT stipulates that ‘the context for the purpose of the interpretation of a treaty’ includes not only ‘the text, including its preamble and annexes’, but also: (a) any agreement relating to the treaty which was made between all the parties in connection with the conclusion of the treaty; and, (b) any instrument which was made by one or more parties in connection with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty (emphasis added).
However, there are no specific provisions in the VCLT which describe whether these agreements or instruments need to have any connection with the treaty in dispute (for example, whether the agreement or instrument, which is referred to in Article 31.2(a) and 31.2(b) of the VCLT, is related to interpretation or is a condition of participation in the treaty to be interpreted). 31
Article 31.3 of the VCLT adds that, together with the context, the following must be taken into account: (a) any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions; (b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation; and (c) any relevant rules of international law applicable in the relations between the parties.
Article 31.2(a) of the VCLT stipulates that all the parties should participate in an agreement if it is to be considered part of the ‘context’ for the purpose of interpreting a particular provision in a treaty. However, Article 31.3(b) is silent on the issue of whether ‘all the parties’ must participate for the subsequent practice to be considered as establishing the agreement of the parties regarding its interpretation. Article 69.3(b) of the 1964 draft of the ILC (Article 31.3(b) of the VCLT) originally referred to, as a factor to be taken into consideration together with the context for the purpose of treaty interpretation, ‘[a]ny subsequent practice in the application of the treaty which clearly establishes the understanding of all the parties regarding its interpretation’(emphasis added). However, the terms ‘clearly’ and ‘all’ were eventually deleted. 32 This was based on the idea that it is sufficient if ‘all parties’ at least passively accept the treaty, even if they do not actively apply it. This resulted in a broadening of conditions required to consider subsequent national practices for the establishment of the understanding between the parties for the purpose of interpreting the treaty. 33 The draft required agreements or practices ‘among all the parties’ for ‘subsequent practice’ to be considered as establishing an agreement among parties to the treaty.
Article 31.3(c), by contrast, refers to ‘the parties’, but not to ‘all the parties’. Therefore, relevant rules of international law between the disputing parties could be taken into account, together with the context, for interpretative purposes. In other words, when interpreting a provision of a treaty, a treaty interpreter could refer to a very broad range of agreements and instruments together with the context and be selective about which materials to use. The 1964 ILC draft text stated in Article 69.3(c), which later became Article 31.3 (c) VCLT that: ‘There shall also be taken into account, together with the context, (a) any agreement between the parties regarding the interpretation of the treaty. 34 The scope of ‘relevant rules of international law’ in Article 31.3(c) is interpreted to encompass a broad range not only of treaties but also of customary rules and general principles of international law. 35
Article 69 of the 1964 ICL draft, which was later adopted as a general rule of interpretation in Article 31 of the VCLT, specified that a treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to each term: (a) in the context of the treaty and in the light of its objects and purpose; and (b) in the light of the rules of general international law in force at the time of its conclusion. 36 However, in certain disputes over treaty provisions, involving subject matter such as human rights, it may be appropriate to interpret treaty provisions according to the meaning of terms and criteria at the time of interpretation, rather than at the time of the conclusion of the treaty. 37 In some cases concerning environmental protection, science or technology, it may also be appropriate to consider the standards at the time of interpretation. 38
The question of how to handle changes in international law from the time of the conclusion of the treaty until the time of its interpretation remained unresolved in the 1964 ILC draft, 39 and the phrase, ‘at the time of its conclusion’, was deleted subsequently. From the reading of Article 31.3(c) VCLT, therefore, it is possible to determine the ordinary meaning of terms using the concepts and criteria at the time of the conclusion of the treaty, or by those which prevail at the time of interpretation of the treaty. The VCLT rule of interpretation, as adopted in 1969, became so flexible that it came to include a broad range of various methods of interpretation.
Later, in 2006, the Study Group of the International Law Commission, in ‘Fragmentation of International Law’, 40 stated that:
the appeal of Articles 31 and 32 of the VCLT may be attributable to the fact . . . that they adopt a set of practical considerations . . . general and flexible enough to provide a reasonable response to most interpretative problems. The Articles adopt both an “ordinary meaning” and a “purposive” approach; . . . It is in fact hard to think of any approach to interpretation that would be excluded from Articles 31–32. 41