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The Dispute Settlement Mechanism under the African Continental Free Trade Area


The Dispute Settlement Mechanism under the African Continental Free Trade Area

The Dispute Settlement Mechanism under the African Continental Free Trade Area

African Governments do not litigate against each other in trade matters. Will it be different under the African Continental Free Trade Area? We do not know. What we do know is that this possibility is adequately covered. The settlement of disputes under the AfCFTA will be administered in terms of the Protocol on Rules and Procedures of the Settlement of Disputes. It is to a considerable extent based on the Dispute Settlement Understanding (DSU) of the World Trade Organization.

This Protocol has not entered into force but is part of the instruments that were signed together with the AfCFTA Agreement and the Protocols on Trade in Goods and Trade in Services in March 2018 in Kigali. The Protocol creates a Dispute Settlement Body (DSB) which will administer all issues relating to dispute settlement when the AfCFTA Agreement enters into force after 22 ratifications.[1] The DSB will have the powers to interpret and apply all AfCFTA legal instruments (Protocols, Annexes, and Appendices) and determine State Parties’ rights and obligations under those legal instruments.

The DSB will only hear disputes from State Parties to the AfCFTA Agreement. Since the AfCFTA is a single undertaking,[2] such disputes could be over the application or interpretation of any of AfCFTA legal instruments. Article 1 of the Agreement defines the “Agreement” to mean the Agreement Establishing the African Continental Free Trade Area and its Protocols, Annexes and Appendices which shall form an integral part thereof. Where private parties are of the opinion that a State Party to the AfCFTA has breached an obligations, the only available option is to have their countries of take up the dispute to the DSB.

When a State Party has declared a dispute against another State Party, the first recourse is hold confidential consultations to find an amicable solution. A party which requests to hold consultations will notify the DSB in writing and reasons for the complaint and identify the specific violations.

There are also timelines that parties should respect when a dispute is declared. For instance, a party (respondent) which has been requested to participate in consultations must respond to the request within 10 days after receiving the request and enter into consultations within 30 days. In cases of perishable foods and urgent matters, the timeframes are limited to cater for the needs of the affected party. A party will also not have an option to avoid dispute settlement mechanism and frustrate the complaining party.

An important feature of the AfCFTA is the provision of reverse consensus in Article 19(4) which stipulates that within sixty days from the date the final Panel report is circulated to the State Parties, the report shall be considered, adopted and signed at a meeting of the DSB convened for that purpose, unless a Party to the dispute formally notifies the DSB of its decision to appeal or the DSB decides by consensus not to adopt the report. This means that even if an aggrieved Party votes against the adoption of the report, the DSB will still adopt the report unless if there is consensus not to adopt it. It is important to note that the decisions of the DSB will be final.

It should be noted that Parties to a dispute will also have an option for arbitration, conciliation, good office and mediation if they prefer such mechanisms. The bottom line is that whatever option they chose, the DSB should be notified in writing through the AfCFTA Secretariat. However, when the consultations fail to resolve the dispute, any party to the dispute will after notifying other party(ies) to the dispute, request the Chairperson of the DSB to establish a formal Panel. Within 15 days after receiving the request, the DSB will then convene a meeting to establish the Panel. The Panel will consist of independent and impartial international trade experts experience in dispute settlement involving integrational agreements. It is important to note that the DSB’s decisions to establish a Panel and other decision-making processes are done by consensus except the reverse consensus which applies to the adoption of Panel’s or Appellate Body’s reports.

After the Panel has been established, the parties will make their submissions and arguments before the Panel within agreed timelines. If a third Party with substantial interest in the matter, it should notify the DSB and will also be allowed to participate by making written submissions before the Panel. A third Party is defined in the Protocol as a State Party with a substantial interest in the dispute. This means that a third party should be State Party not private parties. The main functions of the Panel will be to make an objective assessment of the matter before it, assessment of the facts of the case and the applicability of and conformity with the relevant provisions of the Agreement and make findings to assist the DSB in making recommendations and rulings.

The Panel will strive to give the parties an adequate opportunity to develop a mutually satisfactory solution. The Panel will have the right to seek further information or technical advice to determine the dispute and arrive at an objective finding. After the determination of the matter, the Panel will issue a draft report citing if a solution has been found or not. Parties to the dispute will be allowed to make further submissions and arguments on specific contentious issues before the final report is issued.

It should be noted that when the final Panel report has been circulated to the Parties, the DSB will consider the report, adoption and sign it unless if any party to the dispute wants to appeal to the Appellate Body (AB) or if there is consensus not to adopt the report. The AB will hear appeals from parties to the dispute if they decide to appeal against the Panel’s final report.

Appeals will be limited to questions of law covered in the Panel report and legal interpretations developed by the Panel. Similarly, Third Parties with substantial interests will also participate in the appeal proceedings. After submissions and arguments have been made, the AB may uphold, modify or reverse the legal findings and conclusions of the Panel and produce a single report reflecting the views of the majority of its members as provided in terms of Article 22.

When the AB has issued its final report, the DSB should adopt the AB’s report in terms of Article 22(9). Again, the AB’s report is adopted by the DSB unless if there is consensus not to and it should be accepted unconditionally by the Parties. The report becomes final and binding and the relevant party must comply with the findings and recommendations bringing the complained measures into conformity with the Agreement. If a party fails to comply with the recommendations of the DSB, the aggrieved party may temporarily suspend concessions and obligations. The compliance with rulings and recommendation is monitored in terms of Article 44 of the Protocol. The concerned Party should inform the DSB of its intention to respect and implement the recommendations and rulings of the DSB. However, where a State Party finds it impracticable to comply immediately with the recommendations and rulings of the DSB, the State Party concerned shall be granted a reasonable period in which to comply.

[1] Art 23 AfCFTA Agreement.

[2] Art 8 AfCFTA Agreement.

About the Author(s)

Obert Bore

Obert Bore is a legal researcher at the Centre for Applied Legal Research in Harare. He holds a Master of Laws (LLM) degree (cum laude) in International Trade Law from the University of Cape Town and a Bachelor of Laws (LLB) degree (cum laude) from the University of Venda. His research areas include international trade law, regional integration, competition law, Sino-African investments and regional dispute settlement. Obert is also a tralac alumnus.

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