Article 13.2. Scope of Application
1. Except as otherwise provided in this Agreement, the dispute settlement provisions of this Chapter shall apply:
(a) the prevention or settlement of disputes between the Parties concerning the interpretation or application of this Treaty; or
(b) where a Party considers that an existing or proposed measure (6) of the other Party is or may be inconsistent with the obligations of this Agreement, or that the other Party is otherwise in breach of its obligations under this Agreement; or
(c) where a Party considers that an existing or proposed measure of another Party causes nullification or impairment within the meaning of Annex 13.2 (Nullification or impairment).
2. In accordance with Article 13.3 (Choice of forum), this Chapter is without prejudice to the rights of the Parties to resort to existing dispute settlement procedures under other agreements to which they are parties.
Article 13.3. Forum Option
1. Disputes arising under the provisions of this Agreement, the WTO Agreement, and any other trade agreement to which the Parties are party, may be submitted to the dispute settlement mechanisms of any of those fora, at the option of the complaining Party.
2. The complaining Party shall notify the other Party in writing of its intention to bring a dispute to a particular forum before doing so.
3. Once the complaining Party has initiated dispute settlement proceedings in accordance with Article 13.6, under the WTO Agreement or another trade agreement to which the Parties are party (7) , the forum selected shall be exclusive of others.
Article 13.4. Consultations
1. Either Party may request in writing consultations with the other Party with respect to any existing or proposed measure that it considers inconsistent with this Agreement, or with respect to any other matter that it considers may affect the operation of this Agreement.
2. All requests for consultation shall state the reasons for the request, including identification of the existing or proposed measure or matter at issue and the legal basis for the complaint.
3. The Party to whom the request for consultations was addressed shall respond in writing within 7 days from the date of receipt of the request.
4, The Parties shall enter into consultations within 30 days of the date of receipt of the request or within 15 days of the date of receipt of the request in urgent matters including those involving perishable goods.
5. During the consultations, the Parties shall make every effort to reach a mutually satisfactory resolution of the matter submitted for consultations. To this end, the Parties shall:
(a) provide sufficient information to permit a full examination of how the existing or proposed measure, or any other matter, may affect the operation and implementation of this Treaty; and
(b) treat confidentially any information exchanged in the consultation process. 6. With a view to reaching a mutually agreed solution to the matter, the Party which requested the consultations may make representations or proposals to the other Party, which shall give due consideration to such representations or proposals made.
Article 13.5. Commission - Good Offices, Conciliation and Mediation
1. A Party may request in writing a meeting of the Commission if the Parties are unable to resolve a matter pursuant to Article 13.4 within
(a) 60 days after the submission of a request for consultations;
(b) within 15 days of the delivery of a request for consultations on matters pertaining to perishable goods; or
(c) any other period they may agree. 2. A Party may also request in writing a meeting of the Commission where consultations have been held pursuant to Article 6.4 (Committee on Sanitary and Phytosanitary Matters) and Article 7.8 (Committee on Technical Barriers to Trade).
3. The requesting Party shall indicate in the request the measure or other matter that is the subject of the complaint and shall deliver the request to the other Party.
4. Unless it decides otherwise, the Commission shall meet within 10 days of the delivery of the request and shall endeavour to resolve the dispute without delay. The Commission may:
(a) convene such technical advisors or set up such working groups or expert groups as it deems necessary;
(b) use of good offices, conciliation, mediation or other dispute resolution procedures; or
(c) make recommendations;
that may assist the Parties in reaching a mutually satisfactory resolution of the dispute.
Article 13.6. Establishment of an Arbitral Tribunal
1. If the Parties fail to resolve the matter within:
(a) 25 days from the date of the meeting of the Commission convened in accordance with Article 13.5;
(b) 70 days from the date of receipt of the request for consultations, where the Commission has not met in accordance with Article 13.5.4;
(c) 30 days from the date of receipt of the request for consultations with respect to urgent matters including those relating to perishable goods, where the Commission has not met in accordance with Article 13.5.4; or
(d) such other period as the Parties may agree;
either Party may request the establishment of an arbitral tribunal.
2. The request for the establishment of an arbitral tribunal shall be made in writing and shall identify the request:
(a) the specific measure before it;
(b) the legal basis of the request including the provisions of this Treaty that are possibly being violated and any other relevant provisions;
(c) the factual basis of the request; and
(d) the designation referred to in Article 13.7.2.
3. Unless otherwise agreed by the Parties, the arbitral tribunal shall be constituted and perform its functions in accordance with the provisions of this Chapter.
4. Notwithstanding paragraphs 1, 2 and 3, an arbitral tribunal may not be constituted to review a proposed measure.
Article 13.7. Composition of Arbitral Tribunals
1. The arbitration tribunals shall be composed of three members.
2. In the written request under Article 13.6.2(d), the complaining Party shall designate a member of that arbitral tribunal.
3. Within 15 days of receipt of the request for the establishment of an arbitral tribunal, the Party complained against shall designate the second member of the arbitral tribunal.
4. The Parties shall agree on the appointment of the third arbitrator within 15 days after the appointment of the second arbitrator. The member so appointed shall act as chairman of the arbitral tribunal.
5. If it has not been possible to compose the arbitral tribunal within 30 days from the date of receipt of the request for the establishment of the arbitral tribunal, the necessary appointments shall be made, at the request of either Party, by the Director-General of the WTO within 30 days thereafter.
6. The President of the arbitral tribunal may not be a national of either Party, nor have his or her permanent residence in the territories of either Party, nor be employed by either Party or have had any involvement in the case in any capacity whatsoever.
7. All referees shall:
(a) have expertise or experience in law, international trade, other matters covered by this Agreement, or the settlement of disputes arising under international trade agreements;
(b) be chosen strictly on the basis of their objectivity, reliability and sound judgement;
(c) be independent, not connected with, and not receive instructions from, any of the parties; and
(d) comply with the code of conduct for arbitrators set out in the WTO Agreement's "Understanding on Rules and Procedures Governing the Settlement of Disputes" (document WT/DSB/RC/1) (8).
8. Individuals who have participated in the proceedings referred to in Article 13.5.4 may not be arbitrators in a dispute.
9. If any arbitrator appointed under this Article resigns or becomes unable to serve as arbitrator, a replacement arbitrator shall be appointed within 15 days of the occurrence of the event, in accordance with the election procedure used to select the original arbitrator, and the replacement arbitrator shall have all the authority and duties of the original arbitrator. If it has not been possible to appoint the replacement arbitrator within such 15-day period, the appointment shall be made, at the request of either Party, by the Director-General of the WTO within 30 days thereafter.
10. The date of constitution of the arbitral tribunal shall be the date on which the Chairman of the arbitral tribunal is appointed.
Article 13.8. Functions of Arbitral Tribunals
1. The function of an arbitral tribunal is to make an objective assessment of the dispute submitted to it, including an objective assessment of the facts of the case and their applicability and conformity with this Treaty, and to make such other findings as may be necessary for the resolution of the dispute submitted to it.
2. The findings and report of the arbitral tribunal shall be binding on the Parties.
3. The arbitral tribunal shall, in addition to those matters covered by Article 13.9, establish, in consultation with the Parties, its own procedures regarding the rights of the Parties to be heard and its deliberations.
4. The arbitral tribunal shall take its decisions by consensus. If the arbitral tribunal is unable to reach consensus, it shall take its decisions by a majority of its members.
Article 13.9. Model Rules of Procedure of Arbitral Tribunals
1. Unless the parties to the dispute agree otherwise, the proceedings of the arbitral tribunal shall be governed by the rules set out in Annex 13.9 (Model Rules of Procedure).
2. Unless the Parties agree otherwise within 20 days of the date of dispatch of the request for the establishment of an arbitral tribunal, the terms of reference of the arbitral tribunal shall be:
"Examine, in the light of the relevant provisions of the Treaty, the matter referred to in the request for the establishment of an arbitral tribunal under Article 13.6 and make findings, determinations and decisions as provided in Article 13.11.3 and submit the reports referred to in Articles 13.11 and 13.12".
3. If the complaining Party wishes to claim that a matter has caused it nullification or impairment, the terms of reference shall so state.
4. At the request of a Party or on its own initiative, the arbitral tribunal may request scientific information and technical advice from experts as it deems appropriate. Any information thus obtained shall be provided to the Parties to the dispute for their comments.
5. The expenses associated with the proceedings, including the expenses of the members of the arbitral tribunal, shall be borne equally by the Parties, unless the arbitral tribunal determines otherwise in view of the particular circumstances of the case.
Article 13.10. Suspension or Termination of Proceedings
1. The Parties may agree that the arbitral tribunal may suspend its work at any time for a period not exceeding 12 months from the date of such agreement. If the work of the arbitral tribunal has been suspended for more than 12 months, the establishment of the arbitral tribunal shall be terminated unless the parties to the dispute agree otherwise.
2. The Parties may agree to terminate the proceedings as a result of a mutually satisfactory resolution of the dispute. Notwithstanding the foregoing, the complaining Party may, at any time, withdraw the request for the establishment of the arbitral tribunal and the arbitral tribunal shall immediately terminate its work.
Article 13.11. Preliminary Report
1. The report of the arbitral tribunal shall be drawn up in the absence of the Parties and shall be based on the relevant provisions of this Agreement and the submissions and arguments of the Parties.
2. Unless the Parties agree otherwise, within 90 days of its establishment, or 60 days in matters relating to perishable goods, the arbitral tribunal shall submit a preliminary report to the Parties.
3. The preliminary report shall contain:
(a) findings of fact;
(b) the arbitral tribunal's determination as to whether a Party is in breach of its obligations under this Agreement or whether that Party's measure causes nullification or impairment within the meaning of the Annex 13.2 (Nullification or impairment) or any other determination called for in the terms of reference; and
(c) the decision of the arbitral tribunal.
4. In exceptional cases, where the arbitral tribunal considers that it cannot issue its preliminary report within 90 days, or within 60 days in cases of urgency, it shall inform the Parties in writing of the reasons for the delay and shall include an estimate of the period of time within which it will issue its report. In no case may the period of delay exceed an additional 30 days, unless otherwise agreed by the Parties.
5. The arbitrators may give dissenting opinions on issues on which there is no consensus decision.
6. No arbitral tribunal may, either in its preliminary report or in its final report, disclose which arbitrators voted with the majority or with the minority.
7. A Party may submit written comments on the preliminary report, including the request referred to in Article 13.13.3, to the arbitral tribunal within 15 days after the submission of the preliminary report, unless the Parties agree otherwise.
8. After considering the written observations on the preliminary report, the arbitral tribunal may reconsider its report and conduct any further examination it deems appropriate.
Article 13.12. Final Report
1. The arbitral tribunal shall submit a final report, including dissenting opinions if any, to the Parties within 30 days after the submission of the preliminary report, unless the Parties agree otherwise. The Parties shall publicly disclose the final report within 15 days thereafter, subject to the protection of confidential information.
2. If in its final report the arbitral tribunal determines that the Party complained against has failed to comply with its obligations under this Agreement, or that a measure of that Party causes nullification or impairment within the meaning of Annex 13.2 (Nullification or impairment), the decision shall, whenever possible, be to eliminate the non-compliance or the nullification or impairment.
Article 13.13. Implementation of the Final Report
1. The final report of the arbitral tribunal shall be final and binding on the Parties and shall not be subject to appeal.
2. Unless otherwise agreed by the Parties, the Parties shall immediately implement the decision of the arbitral tribunal contained in the final report.
3. If the Party complained against is unable to comply immediately, it shall comply within a reasonable period of time. Such reasonable period of time may be fixed by the arbitral tribunal at the request of either Party together with the observations referred to in Article 13.11.7, taking into account the complexity of the legal and factual issues involved and the nature of the final report. In the absence of agreement by the Parties and in the absence of a prior determination by the arbitral tribunal, any Party may, within 30 days after the public disclosure of the final report, refer the matter to the arbitral tribunal, which shall, in consultation with the Parties, determine the reasonable period of time within 30 days of the request. Such reasonable period of time should not exceed 90 days.
Article 13.14. Divergence on Compliance
1. Within 5 days after the expiry of the reasonable period of time set by the arbitral tribunal, the Party complained against shall inform the other Party of the measures it has taken to comply with the report.
2. In the event of disagreement as to the existence of measures to comply with the decision or as to the compatibility of such measures with this Agreement taken within the reasonable period of time, the dispute shall be resolved in accordance with the dispute settlement procedure of this Chapter, with the intervention, whenever possible, of the arbitral tribunal which initially took cognizance of the matter.
3. The arbitral tribunal shall circulate its report to the Parties within 60 days of the date on which the matter was referred to it. Where the arbitral tribunal considers that it is unable to issue its report within that period, it shall inform the Parties in writing of the reasons for the delay and shall include an estimate of the period of time within which it will issue its report. In no case may the period of delay exceed an additional 30 days.
Article 13.15. Compensation and Suspension of Benefits
1. If:
(a) the reasonable period of time has expired and the Party complained against has not given notice that it has complied; or
(b) the arbitral tribunal, pursuant to Article 13.14 concludes that there are no measures intended to comply with the decision or that such measures are inconsistent with this Agreement,
the complaining Party may suspend, vis-a-vis the Party complained against, concessions or other obligations under this Agreement equivalent to the level of nullification or impairment. For this purpose, it shall give written notice of such intention at least 60 days before the entry into force of the measures.
2. Without prejudice to paragraph 1, the complaining Party may, at any time after the delivery of the final report of the arbitral tribunal, request the Party complained against to enter into negotiations with a view to finding mutually acceptable compensation. Unless otherwise agreed by the Parties, such negotiation shall not suspend proceedings already initiated, in particular those referred to in Articles 13.14, 13.15.6 and 13.16, nor shall it prevent the complaining Party from availing itself of its right under paragraph 1.
3. Compensation and suspension of concessions or other obligations are temporary measures and in no case preferable to the full implementation of the arbitral tribunal's decision to bring the measure into conformity with this Agreement. The compensation and suspension of benefits shall only apply until the measure found to be inconsistent with this Agreement has been removed, or the Parties have reached a mutually satisfactory solution.
4. In considering which benefits to suspend in accordance with paragraph 1, the complaining Party:
(a) shall first seek to suspend benefits in the same sector or sectors affected by the measure found by the arbitral tribunal to be inconsistent with this Agreement or to cause nullification or impairment in accordance with Annex 13.2 (Nullification or Impairment); and
(b) if the complaining Party considers that it is not practicable or effective to suspend benefits in the same sector(s), it may suspend benefits in other sectors. The communication announcing such a decision shall state the reasons on which the decision is based.
5. At the written request of the Party complained against, within 15 days of the communication referred to in paragraph 1, the arbitral tribunal initially seized of the matter shall determine whether the level of concessions or other obligations that the complaining Party wishes to suspend is not equivalent to the level of nullification or impairment in accordance with paragraph 1, or whether the procedures and principles of paragraph 4 have been followed.
6. The proceedings before the arbitral tribunal constituted for the purposes of paragraph 4 shall be conducted in accordance with the rules set out in Annex 13.9 (Model Rules of Procedure), unless the parties agree otherwise. The arbitral tribunal shall circulate its report to the Parties within 45 days of the date on which the matter is referred to it pursuant to paragraph 5. The decision of the arbitral tribunal, which shall be made publicly available, shall be final and binding and the Parties shall not seek a second arbitration.
Article 13.16. Review of Non-Compliance
1. If the Party complained against considers that it has eliminated the non-conformity or the nullification or impairment found by the arbitral tribunal, it shall notify the other Party of the measure of compliance adopted. In the event of a well-founded disagreement as to the compatibility of such measure with this Agreement, the Party complained against may submit the matter to the procedure set out in Article 13.14.
2. The complaining Party shall promptly reinstate the concessions or other obligations it has suspended pursuant to Article 13.15 if it does not express its disagreement with the measure of compliance taken by the Party complained against within 15 days after receipt of the notice under paragraph 1, or if it expresses its disagreement without substantiating it, or if the court decides that the Party complained against has eliminated the disagreement.
Article 13.17. Other Provisions
Any time limit specified in this Chapter may be modified by mutual agreement between the Parties.
Article 13.18. Right of Individuals
Neither Party may grant a right of action under its domestic law against the other Party on the ground that a measure of the other Party is inconsistent with this Agreement.
Annex 13.2. CANCELLATION OR IMPAIRMENT
1. A Party may have recourse to the dispute settlement mechanism under this Chapter where, by virtue of the application of a measure not inconsistent with this Agreement, it considers that the benefits it could reasonably have expected to accrue to it from the application of any of the following provisions are nullified or impaired:
(a) Chapters 3 to 5 (National Treatment and Market Access for Goods; Rules of Origin and Origin Procedures; and Customs Administration);
(b) Chapter 7 (Technical Barriers to Trade); or (c) Chapter 10 (Cross-border trade in services).
2. No Party may invoke paragraph 1(c) with respect to any measure subject to an exception under Article 14.1 (General Exceptions).
Annex 13.9. MODEL RULES OF PROCEDURE FOR ARBITRAL TRIBUNALS
General Provisions
1. For the purposes of this Chapter and this Annex, the following definitions shall apply:
Party complained against means a Party that is a respondent under Article 13.6 (Establishment of an arbitral tribunal);
Claimant Party means the Party requesting the establishment of an arbitral tribunal under Article 13.6 (Establishment of an arbitral tribunal);
Arbitral Tribunal means the arbitral tribunal established under Article 13.6 (Establishment of Arbitral Tribunal).
Notifications
2. Any request, notice, written submission or other document shall be delivered by a Party or by the arbitral tribunal by delivery against receipt by registered post, courier or express courier, facsimile transmission, telex, telegram or any other means of telecommunication that provides a record of the sending thereof.
3. The Parties shall provide a copy of each of their written submissions to the other Party and to each of the arbitrators. A copy of the relevant document shall also be provided in electronic format.
4. All notifications shall be made and sent to each Party.
5. Minor clerical errors in an application, notice, pleading or other document relating to proceedings before an arbitral tribunal may be corrected by sending a new document clearly indicating the changes made.
6. If the last day for delivery of a document falls on a public holiday in one of the Parties, the document may be delivered on the next working day.
Commencement of arbitration
7. Unless the Parties agree otherwise, they shall meet with the arbitral tribunal within 7 days of the date of the establishment of the arbitral tribunal to determine such matters that the Parties or the arbitral tribunal consider relevant, including the remuneration and expenses to be paid to the Chairman of the arbitral tribunal, which shall, in general, be in accordance with WTO standards.
Initial writings
8. The complaining Party shall deliver its initial written submission no later than 20 days after the date of the establishment of the arbitral tribunal. The Party complained against shall deliver its written statement in response no later than 20 days after the date of delivery of the initial written submission.
Functioning of arbitration tribunals
9. All meetings of arbitral tribunals shall be chaired by their chairman.
10. Except as otherwise provided in these rules, the arbitral tribunal may perform its functions by any means, including telephone, facsimile transmission or computer links.
11. Only arbitrators may participate in the deliberations of the arbitral tribunal.
12. The drafting of decisions and awards shall be the sole responsibility of the arbitral tribunal.
13. Where a procedural question arises that is not covered by these rules, the arbitral tribunal may adopt such procedure as it considers appropriate, provided that it is not incompatible with this Treaty.
14. Where the arbitral tribunal considers it necessary to modify any procedural time limit or to make any other procedural or administrative adjustment to the proceedings, it shall inform the Parties in writing of the reason for the modification or adjustment, indicating the time limit or adjustment required.
Hearings
15. The President shall fix the date and time of the hearings after consulting with the Parties and the other arbitrators composing the arbitral tribunal. The President shall notify the Parties in writing of the date, time and place of the hearing. The arbitral tribunal may decide not to convene a hearing, unless a Party objects.
16. Unless otherwise agreed by the Parties, the hearing shall be held in the territory of the Party complained against. The Party complained against shall be responsible for the logistical administration of the dispute settlement procedure, in particular for the organisation of the hearings, unless otherwise agreed.
17. With the consent of the Parties, the arbitral tribunal may hold additional hearings.