Dispute Settlement under North American Free Trade Agreement

Article excerpt

Report of the joint ABA/CBA/BM working group on dispute settlement.

A Report by a Joint Working Group of the American Bar Association, the Canadian Bar Association, and the Barra Mexicana

January 27, 1992

[This Report represents the collective view of the members of the Joint Working Group (Group) on the necessary features of a dispute settlement regime for a North American Free Trade Agreement. It has been submitted to the appropriate officers of the respective bar associations for consideration and endorsement. If a draft Agreement were to be made available in future, the Report could subsequently be revised and updated.]

Introduction
General Considerations
   The New Dimension
   The Old Precepts
   Relationship to the GATT
   Treaty Architecture
Dispute Management
Adjudication Regime
   Treaty Interpretation
   Constitution of the Tripartite Tribunal
   Powers of the Tripartite Tribunal
   Binding Arbitration and the Panel System
   Decisions
   Review of Domestic Processes
Private Party Issues
   Domestic Proceedings
   Before the Tripartite Tribunal
Summary of Recommendations

Introduction

This report represents an attempt by the three bar associations to give some guidance from the perspective of lawyers on the dispute settlement aspect of the proposed North American Free Trade Agreement (the "Agreement"). (1) The extension of the rule of law to international trade-related disputes is important both to the Parties of the proposed Agreement and to the many private parties whose interests may be affected in the course of its application.

The development of a dispute settlement regime involves a careful balancing of many factors. These include many political and economic considerations, not all of which can be taken into account by the Joint Working Group since its members are not privy to the current negotiations. (2) To make a more precise assessment, a draft of the new Agreement embodying their impact would be required.

However, the Group is concerned to produce a report which not only will represent a considered approach by the three bar associations but also will be of assistance to the negotiators. It has sought, therefore, to take into account obvious practical limitations as well as known political and legal constraints. It is hoped, in consequence, that the recommendations in this Report, representing as they do the views of legal practitioners in the three countries, will be helpful and will merit close attention by those charged with the elaboration of the Agreement.

The recommendations are concerned with three broad components of an effective dispute settlement formula: first, the management of disputes; second, a regime for the settlement of disputes; and, third, private party involvement in the dispute resolution process. (3) Following a review of a number of general considerations which have influenced the Group in arriving at its conclusions, the various considerations beating on these subjects and related aspects are examined and are summarized. While they form a considered and composite approach to the dispute resolution component of the Agreement, the major recommendations are also capable of individual adoption.

General Considerations

The New Dimension:

The addition of a third Party to the existing Canada-United States free trade framework adds a whole new dimension to the trading relationship. The interpretation of the Agreement will be important to all three Parties even though a particular issue may involve only two states or a private party and one state administration. The management of the Agreement to ensure its smooth functioning will be of concern to all three.

Moreover, the very fact of extending the formalized trade relationship to a third party and its citizens will increase substantially the difficulties involved in framing an adequate regime of dispute resolution. …