Legal Alert | The AFCFTA Dispute Settlement Mechanism

Introduction

Article 20 of the Africa Continental Free Trade Area (AfCFTA) Agreement establishes a Dispute Settlement Mechanism (the DSM) that will be administered by the Protocol on Rules and Procedures on the Settlement of Disputes (the Protocol). The Protocol entered into force on 20 May 2019 together with the AfCFTA Agreement, the Protocol on Trade in Goods, and the Protocol on Trade in Services. Notably, the wording of the Protocol borrows heavily from the World Trade Organisation (WTO) Dispute Settlement Understanding (DSU).

The AfCFTA DSM is central to providing security and predictability to the African regional trading system. It is limited to disputes between State parties concerning rights and obligations emanating from the provisions of the AfCFTA Agreement. It is important to note that the AfCFTA Agreement is a single undertaking[1]; therefore, the definition of ‘Agreement’ is construed to include the AfCFTA Agreement, its protocols, its annexes, and its appendices.[1] The significance of this construction is that disputes can arise from an impairment or nullification of the rights and obligations captured in any of these instruments and not just the AfCFTA Agreement.  In this way, the AfCFTA DSM aims to preserve the rights and obligations of the State parties under the AfCFTA Agreement, its protocols, its annexes, and its appendices.

The AfCFTA DSM Organs 

The AfCFTA DSM primarily comprises of three organs: the Dispute Settlement Body (DSB), the Dispute Resolution Panels (the Panels), and the Appellate Body. Below, we briefly analyse the role played by each of these organs.

The DSB

The DSB is established by Article 20 (3) of the AfCFTA Agreement to administer the provisions of the Protocol. It comprises of State party representatives and is headed by the DSB Chairperson. Going by WTO practice[2], these representatives will consist of ambassadors or persons of equivalent ranking from each State party. Additionally, decisions of the DSB are taken by consensus. The functions of the DSB, include;
a) establishing the Panels and an Appellate Body;
b) adopting Panel and Appellate Body reports;
c) maintaining surveillance of implementation of rulings and recommendations of the Panels and Appellate Body; and
d) authorising the suspension of concessions and other obligations under the Agreement.

The Panels     

The Panels are primarily tasked with carrying out an objective assessment of the matters before them. Notably, a recommendation of the Panels only becomes binding on the State parties through adoption by the DSB which is why the Panels are said to assist the DSB in discharging its functions.

Once a dispute arises and a Panel is established, the panelists are selected by the AfCFTA Secretariat. The State parties to the dispute may only reject the panelists nominated to the dispute where there are compelling reasons. Additionally, the number of panelists depends on the number of State parties to the dispute. In a dispute with two State parties there shall be three panelists, and where there are more than two State parties the panel shall comprise of five panelists.

The Appellate Body   

The Appellate Body is established to hear appeals from Panel cases which can only be made by the State parties to the dispute. A notice of appeal suspends the adoption of the Panel report by the DSB until the appeal is concluded. Furthermore, an appeal shall be limited to issues of law covered in the Panel report and legal interpretations developed by the Panel as per Article 21 (3) of the Protocol.

The Appellate Body members will be appointed by the DSB for a four-year term with the possibility of a single reappointment. The appointment will be on a rolling basis to fill vacancies as they arise. These vacancies will be filled within a period of two months after arising. Article 20 (6) of the Protocol appears to respond to the WTO Appellate Body crisis[3], where a single State has successfully blocked the appointment of new members to the Body, because the Protocol provides for an alternative route to appointment of Appellate Body members by the DSB through consensus; thus, state parties are prevented from unilaterally blocking Appellate Body member appointments. This alternative route provides for appointment by the DSB Chairperson in consultation with the Secretariat within one month of the two-month period lapsing.


Should you have any queries or need any advice with respect to international trade law, please do not hesitate to contact Atiq Anjarwalla, Daniel Ngumy, Luisa Cetina, or the A&K International Trade Law Team at InternationalTradeLawTeam@africalegalnetwork.com.

Atiq S. Anjarwalla
Senior Partner
ALN Kenya | Anjarwalla & Khanna
asa@africalegalnetwork.com
Daniel Ngumy
Partner
ALN Kenya | Anjarwalla & Khanna
dng@africalegalnetwork.com
Luisa Cetina
Director
ALN Kenya | Anjarwalla & Khanna
lhc@africalegalnetwork.com

Contributors: Ahmed Jelle, Principal Associate; Jade Makory, Trainee Lawyer and Kelly Nyaga, Legal Intern

Sources:

[1] Robert Wolfe, The WTO Single Undertaking as Negotiating Technique and Constitutive Metaphor, Journal of International Economic Law, 2009.

[2] World Trade Organisation, Dispute Settlement Body

[3] On 10 December 2019, the WTO Body went into crisis when two out of its three remaining members’ four-year terms came to an end and the United States of America blocked the appointment of new members to the Appellate Body. This resulted in the WTO Appellate Body lacking the requisite number of members to hear appeals. Aditya Rathore and Ashutosh Bajpai, The WTO Appellate Body Crisis: How We Got Here and What Lies Ahead? Available at: https://www.jurist.org/commentary/2020/04/rathore-bajpai-wto-appellate-body-crisis/.

 


The content of this alert is intended to be of general use only and should not be relied upon without seeking specific legal advice on any matter.

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