Protocol on Enhanced Dispute Settlement Mechanism (EDSM)

18/06/2010    10

PROTOCOL

Protocol on Enhanced Dispute Settlement Mechanism (EDSM)

SUMMARY OF DISPUTE SETTLEMENT MECHANISM IN ASEAN

1. General introduction

The ASEAN Protocol on Enhancing Dispute Settlement Mechanism (hereinafter referred to as EDSM) was signed by ASEAN countries on November 29, 2004 and took effect from the date of signing. The EDSM consists of 21 Articles and 2 Annexes, providing for the dispute settlement process and procedures in the Framework Agreement on Enhancing ASEAN Economic Cooperation and ASEAN Economic Agreements specifically listed in the ADSM, unless these Agreements provide otherwise.

Compared to the dispute settlement mechanism in the WTO, the ASEAN dispute settlement mechanism under the EDSM has a similar step-by-step process as the WTO but in a much shorter time frame than that of the WTO. Therefore, the time to settle disputes in ASEAN will be faster than in WTO.

2. Dispute Resolution Process under EDSM

Step 1: Consultation

When a dispute arises regarding the implementation, interpretation or application of the provisions of the Framework Agreement on Enhancing ASEAN Economic Cooperation or any of the ASEAN Agreements listed in Annex I of the EDSM, then ASEAN countries must first settle through consultations. The consulted Party shall respond to the Consulting Party within 10 days after the date of receipt of the Request for Consultations. The two sides will conduct consultations within a period of 30 days after the date of receipt of the Request for Consultations.

Step 2: Broker, Mediation or Conciliation

At any stage of the dispute resolution process, the parties can use mediation or conciliation to resolve, and if an agreement is reached, the case will immediately stop there.

Step 3: Establishment of a Panel

A Panel shall be established at the request of the Requesting Party if:

i) Within 10 days after the date of receipt of the Request for Consultations, the consulted party does not respond to the consulting party, or

ii) Within 30 days after the date of receipt of the Request for Consultations, the parties do not initiate consultations, or

iii) Within 60 days after the date of receipt of the Request for Consultations, the parties cannot reach an agreement

The decision to establish the Panel shall be taken at the ASEAN Senior Economic Officials Meeting (SEOM) or through circulation with the Member States within 45 days of receipt of the Request for Establishment of a Panel

The Panel shall be composed of three people selected by the ASEAN Secretariat and shall not be of the nationality of one of the disputing parties unless agreed by the parties.

The function of the panel is to make an objective assessment of the case, including to consider the facts of the case and to determine its compliance with the relevant Agreements, and to draw conclusions and recommendations related to the lawsuit.

Step 4: Activities of the Panel

Within 60 days of its establishment (with an extension of 10 days in exceptional cases), the Panel must complete the Panel Report and submit it to the SEOM. However, the Panel must first permit the parties to access and comment on the Report.

Step 5: Adoption of Panel Report

The Panel Report will be adopted by SEOM within 30 days of its submission to SEOM unless a disputing party formally notifies SEOM of its appeal, or SEOM agrees to veto the Report.

Step 6: Appellate Procedure

When a formal appeal is requested by a disputing party, an Appellate Body shall be established by the ASEAN Economic Ministers (AEM). The function of the Appellate Body is solely to review the legal issues and legal interpretations contained in the Panel Report.

The Appellate Body report shall be issued within 60 days (with an extension of not more than 30 days) from the date of a formal appeal request by a party. The Appellate Body Report may support, modify or oppose the findings of the Panel Report

The Appellate Body Report shall be adopted by the SEOM within 30 days of its publication, unless the SEOM has unanimously vetoed it. The report will be unconditionally accepted by the disputing parties.

Step 7: Execution

If the Report of the Panel or Appellate Body finds that a party's measure is not in compliance with a relevant Agreement, the Panel or Appellate Body shall make a recommendation requiring the offending party to amend the measure to comply. The Panel or the Appellate Body may also make recommendations on how to amend the measure to comply.

The losing party shall comply with the recommendations of the Panel or Appellate Body Report within 60 days of its adoption by the SEOM, unless requested and authorized in a longer period of time to perform.

Step 8: Compensation and Retaliation

In the event that the losing party fails to amend the breach measure to ensure compliance with the relevant Agreement or the amendment is not made within 60 days from the date of adoption of the Panel or Appellate Body Report, then the winning party can ask the losing party to negotiate together to agree on a level of compensation. If the two parties fail to reach an agreement on the amount of compensation within 20 days from the expiration of the above 60-day period, the winning party (one or all of the Petitioner) may ask SEOM for permission to suspend an obligation or a concession under the relevant Agreement to the other party.