Annex 13.2. Implementation of Commission Approved Modifications
The Parties shall implement the decisions of the Commission referred to in Article 13.2.2, in accordance with their domestic law, in accordance with the following procedure:
(a) With respect to Chile, by means of implementing agreements, in accordance with its Political Constitution; and,
(b) With respect to Ecuador, depending on the type of decisions of the Commission, by Executive Decree, Ministerial Agreement, COMEXI Resolution, or any other administrative act provided by the Foreign Trade Law.
Chapter 14. DISPUTE RESOLUTION
Article 14.1. General Provision
The Parties shall at all times endeavour to reach agreement on the interpretation and implementation of this Agreement and shall make every effort, through cooperation and consultations, to reach a mutually satisfactory resolution of any matter that might affect its operation.
Article 14.2. Scope of Application
1. Except as otherwise provided in this Agreement, the dispute settlement provisions of this Chapter shall apply:
(a) to the prevention or settlement of disputes between the Parties concerning the interpretation or application of this Agreement;
(b) where a Party considers that an existing or proposed measure 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 such instruments; or,
(c) where a Party considers that an existing or proposed measure of the other Party causes nullification or impairment of benefits it could reasonably have expected to receive from the application of this Agreement, by virtue of the application of a measure that does not contravene those instruments.
2. Parties may not have recourse to the dispute settlement mechanism on the basis of paragraph 1(c) where:
(a) the measure in question is covered by a rule of exception provided for in Chapter 15 of this Agreement; and
(b) the measure in question relates to Chapter 6 of this Agreement.
Article 14.3. Choice of Forum
1. Disputes arising with respect to the same matter that is governed by this Agreement, the WTO Agreement, and any other trade agreement to which the Parties are parties 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 under Article 14.6 of this Agreement, under the WTO Agreement or another trade agreement to which the Parties are party (12), the forum selected shall be exclusive of others.
4. Where there is more than one dispute concerning the same subject matter under this Agreement, they shall, to the extent possible, be heard by the same arbitral tribunal, if the Parties so agree.
Article 14.4. Consultations
1. Either Party may request in writing consultations with the other Party with respect to any existing or proposed measure that it considers to be 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 consultations shall state the reasons for the request, including identification of the existing or proposed measure or matter at issue, as well as the legal basis for the complaint.
3. The Party to which the request for consultations was addressed shall respond in writing within seven days of the date of receipt of the request.
4. The Parties shall hold consultations within 30 days of the date of receipt of the request. For matters relating to perishable goods, consultations shall be held within 15 days of the date of receipt of the request.
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 Agreement; and
(b) treat as confidential any information exchanged in the consultation process.
6. With a view to reaching a mutually agreed solution to the matter, the Party that requested the consultations may make representations or proposals to the other Party, which shall give due consideration to such representations or proposals.
Article 14.5. Economic-Commercial Commission. Good Offices, Conciliation and Mediation.
1. A Party may request in writing a meeting of the Commission, in the event that the matter cannot be resolved in accordance with Article 14.4, within
(a) within 60 days of submitting a request for consultation;
(b) within 15 days of delivery of a request for consultations on matters relating to perishable goods; or,
(c) any other term that may be agreed upon.
2. The requesting Party shall indicate in the request the measure or other matter that is the subject of the complaint and deliver it to the other Party.
3. Unless the Parties decide otherwise, the Commission shall meet within 10 days of the delivery of the request and shall endeavour to resolve the dispute without delay.
4. The Commission may:
(a) convene such technical advisers or establish such working groups or panels of experts 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 14.6. 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 14.5;
(b) 70 days from the date of receipt of the request for consultations, if the Commission has not met in accordance with Article 14.5.3;
(c) 30 days from the date of receipt of the request for consultations on matters relating to perishable goods, where the Commission has not met in accordance with Article 14.5.3; or,
(d) such other period as the Parties may agree; any 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 therein:
(a) the specific measure before it;
(b) the legal basis for the request, including the provisions of this Agreement that are allegedly being violated and any other relevant provisions; and
(c) the factual basis of the application.
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 draft measure.
Article 14.7. Composition of Arbitral Tribunal
1. The arbitral tribunals shall be composed of three members.
2. In the notice in writing pursuant to Article 14.6, the claimant party shall designate a member of such arbitral tribunal.
3. Within 15 days after receipt of the request for the establishment of an arbitral tribunal, the respondent shall designate another member of the arbitral tribunal and notify the claimant.
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 form the arbitral tribunal within 30 days from the date of receipt of the request for its establishment, the necessary appointments shall be made, at the request of any of the Parties, by the Secretary General of ALADI, within the following 30 days.
6. The president of the arbitral tribunal may not be a national of any of the Parties, nor have his or her permanent residence in the territories of any of them, nor have any employment relationship with any of the Parties 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 on the basis of their objectivity, reliability and sound judgment; (c) be independent, have no affiliation with, and take no instructions from, the Parties; and
(d) comply with the Rules of Conduct for the Implementation of the Understanding on Rules and Procedures Governing the Settlement of Disputes under the WTO Agreement (document WT/DSB/RC/1).
8. Individuals who have participated in the proceedings referred to in Article 14.5 may not be arbitrators in a dispute.
9. If any arbitrator appointed pursuant to this Article resigns or is unable to serve as arbitrator, a replacement arbitrator shall be appointed within 15 days of the occurrence of the event, according to the election procedure used to select the original arbitrator. The replacement arbitrator shall have all the authority and duties of the original arbitrator. If it has not been possible to appoint him/her within such period, the appointment shall be made, at the request of any of the Parties, by the Secretary General of ALADI, within 30 days thereafter.
10. If a Party considers that one of the arbitrators appointed does not meet the requirements set forth in paragraphs 7 and 8 of this Article, it may challenge him or her, with reasons, before the other Party. If there is no agreement between the Parties regarding the challenge, the challenging party shall request the Secretary General of LAIA to rule on the challenge within five days. If the challenge is admissible, the provisions of paragraph 9 of this Article shall apply. A Party may not challenge the arbitrators appointed on more than two occasions.
11. The date of constitution of the arbitral tribunal shall be the date on which its chairman is appointed.
Article 14.8. 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, the applicability of and compliance with this Agreement. It may also make such other findings as may be necessary for the resolution of the dispute submitted to it.
2. The arbitral tribunal shall regularly consult with the parties to the dispute and afford them adequate opportunity to reach a mutually satisfactory solution.
3. The findings and final report of the arbitral tribunal shall be binding on the parties to the dispute.
4. The arbitral tribunal shall, in addition to those matters covered by Article 14.9, establish, in consultation with the disputing parties, its own procedures regarding the rights of the Parties to be heard and its deliberations.
5. The arbitral tribunal shall reach 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 14.9. Rules of Procedure of Arbitral Tribunals
1. Unless the parties to the dispute otherwise agree, the proceedings of the arbitral tribunal shall be governed by the Model Rules of Procedure for the Conduct of Arbitral Tribunals set out in Annex 14.1.
2. The terms of reference of the arbitral tribunal shall be as follows, unless, within 20 days after the date of dispatch of the request for the establishment of an arbitral tribunal, the Parties agree otherwise:
"To examine, in the light of the relevant provisions of this Agreement, the matter referred to in the request for the establishment of an arbitral tribunal in accordance with the provisions of Article
14.6 and make findings, determinations and decisions as provided in Article 14.11.3 and submit the reports referred to in Articles 14.11 and 14.12".
3. If a complaining party wishes to claim that a matter has caused it nullification or impairment, the terms of reference should so state.
4. Where a disputing party requests that the arbitral tribunal make findings as to the extent of the adverse trade effects that the breach of this Agreement has caused, or has caused nullification or impairment within the meaning of Article 14.2.1(c), the terms of reference shall so state.
5. At the request of a disputing 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 disputing parties for their comments.
6. The expenses associated with the proceedings shall be borne equally by the Parties, unless the arbitral tribunal determines otherwise in view of the particular circumstances of the case.
7. Each disputing party shall bear the expenses and remuneration of the arbitrator appointed by it in accordance with Article 14.7(2), (3) and (5). The expenses and remuneration of the presiding arbitrator shall be borne in equal shares.
Article 14.10. 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 disputing parties 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 14.11. Preliminary Report
1. The report of the arbitral tribunal shall be drawn up in the absence of the disputing parties and shall be based on the relevant provisions of this Agreement and the submissions and arguments of the disputing parties.
2. Unless the disputing parties agree otherwise, within 120 days after its establishment, or 90 days in cases involving perishable goods, the arbitral tribunal shall submit a preliminary report to the disputing parties.
3. The preliminary report shall contain:
(a) findings of fact;
(b) the arbitral tribunal's determination as to whether a disputing party has breached its obligations under this Agreement, or whether the respondent's measure causes nullification or impairment within the meaning of Article 14.2(c), 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 120 days, or within 90 days in cases involving perishable goods, it shall inform the disputing 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 shall the period of delay exceed an additional 30 days, unless the disputing parties agree otherwise.
5. One of 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 disputing party may submit written comments on the preliminary report, including the request referred to in Article 14.13.3, to the arbitral tribunal within 15 days after the submission of the preliminary report, unless the disputing 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 14.12. Final Report
1. The arbitral tribunal shall submit to the disputing parties a final report, including dissenting opinions, if any, within 30 days after the submission of the preliminary report, unless the disputing parties agree otherwise. The disputing 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 respondent has failed to comply with its obligations under this Agreement, the decision shall be, whenever possible, to eliminate such failure.
3. Where a measure has been found to nullify or impair benefits under this Agreement, or to jeopardize the attainment of objectives of this Agreement, without violation of its provisions, there shall be no obligation to revoke the measure. However, in such cases, the arbitral tribunal shall recommend that the respondent party make a mutually satisfactory adjustment for the benefit of the complaining party.
Article 14.13. Implementation of the Final Report
1. The final report of the arbitral tribunal shall be final and binding on the disputing parties and shall not be subject to appeal.
2. Unless the disputing parties agree otherwise, the disputing parties shall immediately implement the decision of the arbitral tribunal contained in the final report.
3. If the respondent is unable to comply immediately, it shall so inform the arbitral tribunal and the claimant within 30 days after the public disclosure of the final report, in which case the disputing parties may agree on a reasonable period of time within which to bring the measure into conformity. If there is no agreement within 15 days of the initiation of discussions to define the time period, any of the disputing parties may refer the matter to the arbitral tribunal, which shall, in consultation with the disputing parties, determine the reasonable period of time within 30 days of the request.
Article 14.14. Divergence on Compliance
1. In the event of disagreement as to the existence or implementation of measures to comply with the decision or the compatibility of such measures with this Agreement taken by the respondent within the reasonable period of time referred to in Article 14.13, such dispute shall be resolved in accordance with the dispute settlement procedure of this Chapter, with the intervention, whenever possible, of the same arbitral tribunal that initially heard the case.
2. The arbitral tribunal shall notify the disputing parties of its report within 60 days of the date on which the matter was referred to it. Where the arbitral tribunal considers that it cannot issue its report within that period, it shall inform the disputing parties in writing of the reasons for the delay, including 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 14.15. Compensation and Suspension of Benefits
1. If:
(a) the reasonable period of time has expired and the defendant fails to give notice that it has complied; or,
(b) the arbitral tribunal, pursuant to Article 14.14 concludes that there are no measures designed to comply with the decision, or such measures are inconsistent with this Agreement,
the complaining party may suspend, vis-a-vis the responding party, concessions or other obligations under this Agreement equivalent to the level of nullification or impairment as a result of a measure contrary or inconsistent with the provisions of these instruments. For this purpose, it shall give written notice of such intention to the responding party at least 60 days prior to the entry into force of the measures.
2. At any time after the delivery of the final report of the arbitral tribunal, the disputing parties may agree to enter into negotiations with a view to finding mutually acceptable compensation on a temporary basis until the measure in dispute is brought into conformity. Unless the disputing parties agree otherwise, such negotiation shall not suspend proceedings already initiated, in particular those referred to in Articles 14.14, 14.15.7 and 14.16, nor shall it preclude the complaining party from availing itself of the right set forth in 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 disputing parties have reached a mutually satisfactory solution.
4. In considering which benefits to suspend pursuant to 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 Article 14.2; 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 notice announcing such a decision shall state the reasons on which the decision is based.
5. Failure to comply with the mutually agreed compensation will be considered as an aggravating factor in setting the amount of the suspension of benefits.
6. Upon written request by the respondent, 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 which the claimant wishes to suspend is not equivalent to the level of nullification and impairment in accordance with paragraph 1, or whether the procedures and principles of paragraph 4 have been followed.
7. The arbitral tribunal shall circulate its report to the disputing parties within 45 days of the date on which the matter was submitted in accordance with paragraph 6. The arbitral tribunal's decision, which shall be made publicly available, shall be final and binding and the disputing parties shall endeavour not to obtain a second arbitration.
Article 14.16. Review of Compliance
1. If the responding party considers that it has eliminated the non-conformity or the nullification or impairment found by the arbitral tribunal, it shall inform the other disputing party of the compliance measure adopted. In the event of a well-founded disagreement as to the compatibility of such measure with this Agreement, the responding party may submit the matter to the procedure set out in Article 14.14.
2. The complaining party shall promptly reinstate the concessions or other obligations it has suspended in accordance with article 14.15 if it does not express its disagreement with the respondent's measure of performance 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 respondent has eliminated the disagreement.
Article 14.17. Other Provisions
1. Any time limit or performance specified in this Chapter may be modified by mutual agreement between the Parties.
2. In cases of urgency, including those referred to in Article 14.4.4, the Parties and the arbitral tribunals shall make every effort to expedite the proceedings to the maximum extent possible.
Article 14.18. 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 14.1. MODEL RULES OF PROCEDURE FOR THE FUNCTIONING OF ARBITRAL TRIBUNALS
Article 1. General Provisions
For the purposes of this Chapter and this Annex: disputing parties means the Parties in dispute pursuant to this Chapter; party complained against means a Party that has been sued in accordance with Article 14.6;
complaining party means the Party requesting the establishment of an arbitral tribunal under Article 14(6); and
arbitral tribunal means the arbitral tribunal established under Article 14.6.
Article 2. Notifications
1. Any request, notice, writing or other document shall be delivered by a Party, by the Secretary- General of LAIA, or by the arbitral tribunal, by delivery against receipt, by registered mail, courier or express courier company, facsimile transmission, telex, telegram or any other means of telecommunication that allows a record of the delivery to be kept.
2. The disputing parties shall provide a copy of each of their written submissions to the other disputing party and to each of the arbitrators. A copy of the relevant document shall also be provided in electronic form.
3. All notifications shall be made and sent to each disputing party.
4. 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.
5. If the last day for delivery of a document falls on a public holiday in one of the disputing parties, the document may be delivered on the next working day.
Article 3. Cancellation or Impairment
1. The burden of proof, where non-violation nullification or impairment is claimed, is on the complaining party, for which the complaint shall be supported by a detailed justification of any claim relating to a measure that is not inconsistent with this Agreement.
2. Where a measure has been found to nullify or impair benefits under this Agreement or to jeopardize the attainment of the objectives of this Agreement, without violation of its provisions, there shall be no obligation to revoke that measure. However, in such cases, the arbitral tribunal shall recommend that the respondent party make a mutually satisfactory adjustment.
3. At the request of either disputing party, the arbitral tribunal may include a determination of the level of benefits nullified or impaired and may also suggest means of arriving at a mutually satisfactory adjustment.
4. Notwithstanding the preceding rule, set-off may be part of a mutually satisfactory adjustment as a final settlement of the dispute.
Article 4. Commencement of Arbitration
Unless the disputing parties agree otherwise, they shall meet with the arbitral tribunal within seven days of the date of the establishment of the arbitral tribunal to determine such matters as the disputing parties or the arbitral tribunal consider relevant, including the remuneration and expenses to be paid to the chairman of the arbitral tribunal, which shall generally conform to the standards of the Understanding on Rules and Procedures Governing the Settlement of Disputes under the WTO Agreement.