Dispute Settlement under the Regional Comprehensive Economic Partnership:
Part 4: Panel Appointment Strategies

by Yvette Foo

The final post for this RCEP series continues to look beyond the roles of the Complainant and Respondent, by assessing how panel members are appointed. It briefly goes through the different ways that a panel can be composed under Article 19.11, compares RCEP’s process to existing approaches, and highlights noteworthy provisions. These include, among other things, the use of detailed timelines, and relying on both the WTO’s Director-General and Permanent Court of Arbitration’s (PCA) Secretary-General when parties are unable to agree on panellists.

General Requirements for RCEP Panellists 

Under RCEP, it is generally expected that a panel will consist of three panellists, unless parties agree otherwise.[1] As explained in earlier blog posts, the panel is responsible for adjudicating disputes arising under RCEP that are not otherwise settled by consultations, good offices, mediation, or other means of dispute resolution.

Panellists must meet the requirements set out in Articles 19.11(10) and (11). Article 19.11(10) focuses more so on objectivity and independence, while Article 19.11(11) looks at expertise and skillset. Examples of the latter include requiring the panellist to either have expertise in relevant areas of law or hold an official, policymaking, or teaching position that indicates their expertise in the matter.

Panel Chairs have additional requirements under Article 19.11(11). Where possible, the Chair should have served on a WTO (Appellate Body) panel and have relevant expertise in the subject of the dispute.[2] An additional requirement can be found in Article 19.11(13), which states that the Chair of should not be a national of, or have their usual place of residence in, any of the parties (including third parties). This last requirement can be waived by agreement between the parties to the dispute. 

How RCEP Panel Members are Appointed

Parties can decide how to appoint panel members

There are two ways to compose a panel under Chapter 19. First and foremost, the disputing parties are allowed to decide the method in which panel members should be appointed for the dispute during consultations.[3] The only requirement to consider during consultations is Article 19.11(3), which requires parties to take into account the “factual, technical, and legal aspects of the dispute”. The method chosen by consultation applies to the situations posited in Article 19.11(15), where a successor panellist is needed because someone resigns or is unable to act, and Article 19.11(16), where a panel is reconvened to assess compliance or compensation/suspension of obligations.

Procedure under Article 19.11(5) to (7)

If the disputing parties are unable to come to an agreement through consultations, either party can inform the other of their intent to use the procedure set out in Article 19.11(5) to (7),[4] which mirrors standard arbitrator appointment procedures.[5] Both the Complainant and Respondent will appoint one panellist each. Thereafter, the parties must agree on a third panellist who will serve as the third panellist and Chair. Each party can submit a list of up to three nominees on who the Chair should be.

If the three panellists are still not appointed at this stage, two final escalating steps come into play.

The WTO or PCA can appoint the third panellist 

Under Article 19.11(7), Parties can request for the Director-General of the WTO to appoint any remaining panellists. If the Director-General is unable to/does not appoint the remaining panellists, the same request can be passed on to the Secretary-General of the PCA.[6]

For most other dispute settlement regimes, the responsibility to appoint any remaining panellists is typically delegated to an internal body. Articles 8.4 and 8.6 of the WTO DSU states that the WTO Secretariat shall maintain a roster of qualified panellists, and propose nominations for the panel. Likewise, Articles 8.4, 8.6, and 8.7 of the 2019 EDSM requires the ASEAN Secretariat to maintain a roster and recommend panellist, subject to approval from the Senior Economic Officials Meeting (SEOM), and allows the Secretary-General of ASEAN and SEOM to appoint any remaining panellists.

Comparing Article 19.11 to Other Instruments

Chapter 19 takes inspiration from the four relevant ASEAN+1 FTAs.[7] One commonality between all the four FTAs and RCEP is ability for parties to request the Director-General of the WTO to appoint any remaining panellist members if the parties are unable to agree.

Out of the four FTAs, RCEP’s procedure is almost identical to AANZFTA’s Chapter 17, Article 11—although there are other procedures that parties can agree to use under the Annex on Optional Procedures for Composing Arbitral Tribunals.[8] There is an additional possibility under Article 11.6 of the AANZFTA which allows the Complainant and Respondent’s appointed arbitrators to appoint the third arbitrator if the disputing parties are unable to decide this within the prescribed time limit. This practice was not included in RCEP.

With the ACFTA and AKFTA, it should be noted that there is an additional penalty under Article 7(2) and Article 6(2) respectively: if either party fails to appoint an arbitrator in time, the other’s nominee will be the sole arbitrator for the dispute. This might not have been included in RCEP due to the complexity and magnitude of the mega-FTA; having three arbitrators or more is generally preferred for more complex cases.[9]

Turning away from the ASEAN+1 FTAs, RCEP’s procedure differs quite significantly from the 2019 EDSM in substance and form. Under the 2019 EDSM, panel appointment is largely controlled by the ASEAN Secretariat, who proposes nominations for the disputing parties which cannot be opposed “except for compelling reasons.”[10] Even then, if there is no appointment within 20 days of the decision to establish a panel, the Secretary-General of ASEAN is able to compose the panel themselves based on who they consider appropriate, after consulting with the parties.[11] Another difference is how the 2019 EDSM has an Appellate Body established by the ASEAN Economic Ministers, composed of seven members who adjudicate cases on a rotational basis.[12]

Novel Aspects of RCEP’s Panel Appointment 

(Some) strict timelines 

Chapter 19 has detailed time frames in which each stage of the appointment process is to be carried out. This is best analysed by comparing RCEP to other instruments’ provisions setting out the timeline for panel appointment, namely:

  • RCEP: Articles to 19.11(3) to (8), 19.11(12)
  • 2019 EDSM: Article 8.7
  • AANZFTA: Articles 11.3 to 11.7
  • ACFTA: Articles 7.2, 7.3
  • AKFTA: Articles 6.2, 6.3
  • AJCEP: Articles 65.2, 65.3
  • WTO DSU: Articles 8.5, 8.7

The following chart sets out the relevant timelines (in days) across the instruments:

Time frame for:

RCEP

2019 EDSM

AANZFTA

ACFTA

AKFTA

AJCEP

WTO DSU

Consultations to decide on panel appointment procedure:

20

N/A

15

N/A

N/A

N/A

N/A

Complainant appoints panellist/ arbitrator*

10

N/A

10

20

30

30

N/A

Respondent appoints panellist/ arbitrator*

20

N/A

20

20

30

30

N/A

Appointed panellists/

arbitrators appoint third/Chair

N/A

N/A

15

N/A

N/A

N/A

N/A

Disputing parties appoint third/Chair

35

20

45

30

30

45

20

WTO/SEOM appoints remaining panellist/Chair

30

10

15

None

30

None

10

PCA appoints the remaining panellist/Chair

None / “Promptly”

N/A

N/A

N/A

N/A

N/A

N/A

Disputing parties review PCA’s list of nominees

15

N/A

N/A

N/A

N/A

N/A

N/A

There are a few exceptions. Similar to how the ACFTA and ACJEP do not set timelines for the WTO to appoint the remaining panellists, Article 19.11(8) leaves it relatively open for the PCA to appoint (save for the amorphous use of “promptly”). This stoppers the appointment process to an extent, although it may be difficult to set a deadline for the PCA to appoint the members.[13]

To compare, the 2019 EDSM, WTO DSU, AANZFTA, and AKFTA (ordered from shortest to longest time frames) have a set number of days for the relevant body to appoint the remaining panellists.

No roster of panel members 

Chapter 19 does not have a roster: members cannot pick a panellist from an existing list of nominees under RCEP. Roster lists are used in other dispute settlement rules. For example, the WTO Secretariat maintains “an indicative list of governmental and non-governmental individuals” from which “panellists may be drawn as appropriate”, and WTO members suggests names to the WTO DSB for approval.[14] This is likewise the case for ASEAN and its 2019 EDSM under its Article 8.4.

Having a roster list could be beneficial. With Article 19.11(5) and (6), which allows each disputing party to select one panellist, each disputant has a ‘stake’ in the dispute simply by having a ‘choice’ in their ‘representative’.[15] Random selection from a roster of panellists could depoliticise the decision.[16] It also ensures that there is fair chance for all panellists to gain experience.[17] 

No central dispute settlement body

Currently, the RCEP Secretariat takes on a coordinating role between the fifteen-member states in order to manage the agreement.[18] It is lacking other responsibilities, such as maintaining a roster of panellists, or suggesting applicable panellists to disputing parties. If the RCEP Secretariat had these additional roles, certain stages of the panel appointment process could be expedited.

This is not set in stone, however, as the RCEP may take a more formalised role with additional responsibilities in the future.[19] The presence of a Secretariat alone is a promising sign that its members want a strong institutional structure to oversee RCEP’s trade commitments,[20] which argues in favour of the Secretariat becoming more involved in the panel appointment process.

Delegation to two external bodies – creating a failsafe system?

RCEP contemplates the possibility of the Director-General of the WTO being unable or unwilling to appoint the remaining panellists by installing the Secretary-General of the PCA as the ‘back-up’. While it is quite common to have an external body appoint any remaining panellists for a dispute in ASEAN’s FTAs, it is less common to have a ‘back-up’ body on standby.[21] It should be noted that in August 2020, just before the RCEP was signed, then Director-General Roberto Azevêdo announced that he was stepping down for the position.[22] He was not succeeded until February 2021 by current Director-General Ngozi Okonjo-Iweala.[23] For half a year, the WTO did not have a Director-General. Should this happen again, RCEP members would at least be able to delegate the decision to the PCA to avoid further delaying the dispute. 

The idea of RCEP being shaped by existing issues in the WTO dispute settlement system was raised previously in Part 1 of this RCEP series, which discussed the WTO’s frozen Appellate Body which may be why RCEP removed appeals entirely from Chapter 19. In the same way, having the PCA under Article 19.11 serves to create a ‘fail-safe’ panel appointment system by ensuring RCEP is not solely dependent on the WTO.

— 

Article 19.11 borrows time-tested aspects of existing panel/arbitrator appointment procedures to provide an expedient step-by-step process. This was done alongside the option for parties to rely on two external bodies to appoint panellists: an uncommon but welcome inclusion in Chapter 19 to ensure panel appointment proceeds smoothly.

Generally speaking for Chapter 19, it is evident that its drafters took inspiration from existing WTO and ASEAN instruments, and were also contemplative of present-day concerns with existing dispute settlement structures. RCEP provides a refreshing take on how international trade disputes can and should be resolved, although certain concerns remain—such as those relating to special and differential treatment, third parties, and the exclusion of the Secretariat from the panel appointment process. From here, only a practical exercise of Chapter 19 will show whether its drafters have achieved their goal of creating an “effective, efficient and transparent process for consultations and dispute resolution.”[24]

[1] Article 19.11(2) RCEP.
[2] Article 19.11(11)(c) RCEP.
[3] Article 19.11(3) RCEP.
[4] Article 19.11(4) RCEP.
[5] See for example the 2021 United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules; 2012 Permanent Court of Arbitration, Arbitration Rules; it should be noted that footnote 3 of RCEP’s Chapter 19 expressly states that the UNCITRAL Rules should not be used to appoint any remaining panelists under Article 19.11(8). For a discussion on RCEP drafters preferring arbitral style appointments over the WTO DSU system, see Massimo Lando, ‘Enhancing Conflict Resolution ‘ASEAN Way’: The Dispute Settlement System of the Regional Comprehensive Economic Partnership’, (2022) 13:1 Journal of Dispute Settlement 98 at p 112.
[6] Article 19.11(8), (12) RCEP.
[7] The 2009 ASEAN-Australia-New Zealand Free Trade Area [AANZFTA], 2004 Agreement on Dispute Settlement Mechanism of the Framework Agreement on Comprehensive Economic Co-Operation between the Association of Southeast Asian Nations and the People’s Republic of China [ACFTA], 2008 Agreement on Comprehensive Economic Partnership among Member States of ASEAN and Japan [AJCEP], and the 2005 Agreement on Dispute Settlement Mechanism Under the Framework Agreement on Comprehensive Economic Cooperation Among the Governments of the Member Countries of the Association of Southeast Asian Nations and the Republic of Korea [AKFTA].
[8] Read together with Article 11.3 of the AANZFTA.
[9] Ben Giaretta, Akshay Kishore, ‘One arbitrator or three?’, Ashurst International Arbitration Update (1 September 2015), <https://www.ashurst.com/en/news-and-insights/legal-updates/one-arbitrator-or-three/> accessed 25 July 2022.
* From the date of the receipt of the notification made to appoint a panellist using the instrument’s composition/appointment procedure.
[10] Article 8(6) 2019 EDSM.
[11] Article 8(7) 2019 EDSM.
[12] See generally Article 14 of the 2019 EDSM.
[13] ‘The PCA Secretary General’s Role as Arbitrator Appointing Authority’ ACERIS Law LLC (14 December 2016), online: <https://www.acerislaw.com/pca-secretary-generals-role-arbitrator-appointing-authority/>
[14] Article 8.4 of the WTO DSU.
[15] This is the case for arbitrator appointment: see Sergio Puig, ‘Blind Appointments and International Arbitrators’, Kluwer Arbitration Blog (25 November 2016) <http://arbitrationblog.kluwerarbitration.com/2016/11/25/blind-appointments-and-international-arbitrators/> accessed 27 July 2022.
[16]  Henry S. Gao, ‘Dispute settlement provisions in ASEAN’s external economic agreements with China, Japan and Korea’ in Pasha L. Hsieh and Bryan Mercurio, eds, ASEAN Law in the New Regional Economic Order, Global Trends and Shifting Paradigms (Cambridge University Press, 2019) 64, at p 81.
[17] Ibid.
[18] See generally Shiro Armstrong, Peter Drysdale, ‘The Economic Cooperation Potential of East Asia’s RCEP Agreement’, (2022) 26 East Asian Economic Review 3.
[19] Sanae Suzuki, ‘Driving factors of ASEAN commitment to RCEP negotiation’ IDE Jetro Policy Brief No. 154 (1 December 2021) <https://www.ide.go.jp/Japanese/Publish/Reports/AjikenPolicyBrief/154.html> accessed 25 July 2022.
[20] Deborah Elms, ‘RCEP: A first look at the texts’ Asian Trade Centre (16 November 2020), <http://asiantradecentre.org/talkingtrade/rcep-a-first-look-at-the-texts> accessed 27 July 2022.
[21] Simon Lester, ‘A Few Interesting Aspects of the RCEP Legal Text’ International Economic Law and Policy Blog (15 November 2020), <https://ielp.worldtradelaw.net/2020/11/some-interesting-aspects-of-the-rcep.html> accessed 25 July 2022. Specifically, see the exchange in the comments between Simon Lester, Jesse G. Krier, and Scott Falls; Krier also suggests the possibility of political sensitivity being a reason why the WTO DG would not select arbitrator.
[22] Emma Farge, Philip Blenkinsop, ‘WTO chief Roberto Azevedo to depart a year early’ Reuters (14 May 2020), <https://www.reuters.com/article/us-trade-wto-idUSKBN22Q191> accessed 25 July 2022.
[23] ‘History is made: Ngozi Okonjo-Iweala chosen as Director-General’ World Trade Organisation (15 February 2021), <https://www.wto.org/english/news_e/news21_e/dgno_15feb21_e.htm> accessed 25 July 2022.
[24] 2012 Guiding 2012 Guiding Principles and Objectives for Negotiating the Regional Comprehensive Economic Partnership Agreement, adopted in Phnom Penh, Cambodia at the 21st ASEAN Summit on 20 November 2012, <https://asean.org/wp-content/uploads/2012/05/RCEP-Guiding-Principles-public-copy.pdf> accessed on 28 July 2022.