China’s View of International Litigation: Is the WTO Special?

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Yesterday, Geraldo Vidigal put up a really interesting post looking at recent patterns of use of the World Trade Organization’s dispute settlement system. One thing that was particularly striking to me was the extent to which China has participated in the WTO dispute settlement system given its previous position on resolution of disputes by international tribunals. Geraldo’s chart of the latest 100 disputes at the WTO shows that only the United States, the EU and Japan have initiated more cases at the WTO in recent years than China (with Japan initiating just one more case than China in this period). Given that the WTO system is the most widely used inter-state dispute settlement system, it might not even be an exaggeration to say that: in terms of numbers of cases brought before international tribunals by states, China is one of the most enthusiastic state users of international tribunals! Of course, that enthusiasm is only before one particular system.

In October 2010 I posted here on EJIL:Talk a piece titled “Is China Changing its View of International Tribunals?“in which I noted that China’s view on international tribunals more broadly seemed to be changing. At the time, I noted China’s participation in the Kosovo Advisory Opinion at the ICJ, which was the first time that the People’s Republic appeared in oral hearings before the ICJ. I also pointed out China’s participation, around the same time, in the written and oral phases of International Tribunal for the Law of the Sea’s (ITLOS) first advisory proceedings –  the Responsibilities and obligations of States sponsoring persons and entities with respect to activities in the Area (Request for Advisory Opinion submitted to the Seabed Disputes Chamber). In 2014, China submitted a substantial written statement in the Request for an advisory opinion submitted by the Sub-Regional Fisheries Commission (SRFC) though it did not take part in the oral hearings.

Of course, we have non-participation by China with respect to the United Nations Convention on the Law of the Sea Annex VII arbitration initiated by the Philippines (in respect of which the tribunal issued an award on jurisdiction a couple of weeks ago). However, perhaps we should be cautious into reading too much from the Chinese attitude to that particular case to the general Chinese attitude to international tribunals – especially as it took part in ITLOS proceedings just last year. [Incidentally, that strategy of non-appearance in one case while taking part in another is not dissimilar to the US not appearing at the merits stage of the Nicaragua case at the ICJ but then instituting proceedings in the ICJ in the ELSI case just months after delivery of the judgment in the Nicaragua Case].

Without a doubt, we should also be cautious into reading too much from the Chinese attitude to WTO dispute settlement to Chinese attitude to international tribunals more generally. Apart from isolated (though significant) appearances before the ICJ and ITLOS, which were only in advisory opinions, there has been no broader use of international tribunals by China (no broader than the WTO that is).

Nonetheless, there are intriguing questions as to why China feels so comfortable with engaging in WTO litigation given its historical stance with respect to international tribunals. In beginning to think about the answers to that question, it would be important to separate out the question of Chinese desire to become a member of the WTO from its use of the dispute settlement system. Clearly, being a part of the WTO not only gives China access to benefits of the WTO treaties, but also gives it a seat in the WTO rule making process (to the extent that any new WTO rule making is still happening these days). However, while the WTO dispute settlement system entails compulsory jurisdiction, there is no compulsion to bring cases or initiate complaints within the system. But not only is China is being sued in the system, it is actively suing too! That is significant. This appears to suggest that China takes the view that where use of litigation is useful/helpful/essential in securing the benefits that it thinks are guaranteed by that treaty regime it has no objection to doing so. The question may then be asked why does it not do so elsewhere? It may that the compulsory jurisdiction feature of the WTO Dispute Settlement system, coupled with the fact that China is regularly sued in that forum  [Geraldo’s figures indicate that only the US has, in the last 100 disputes been respondent more than China] makes a difference to the views of China as to whether it should also act as complainant.  If it is locked into a system which is regularly being used against it, then why not use the system against others as permitted by that system. Or it could just be the stakes with regard to disputes in the WTO are sufficiently high for China to seek adversarial settlement but not thought to be so high as to preclude handing over settlement to a third party.  Thoughts from readers on these issues would be welcome.  As an aside, the same questions posed here about the use of international tribunals may be asked of the US, the most active complainant in the WTO system, but which today rarely initiates litigation in other international tribunals not dealing with trade.

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    Huang-chih CHIANG says

    November 13, 2015

    Dear Professor Akkande:
    Thank you very much for an interesting article.
    Just as you correctly point out that “Or it could just be the stakes with regard to disputes in the WTO are sufficiently high for China to seek adversarial settlement but not thought to be so high as to preclude handing over settlement to a third party.” It appears reasonable to assume that as long as any disputes involve “sovereignty” issues as claimed or “felt” by China, then they will be ipso facto precluded from submitting to a third party peaceful settlement procedures. And thus, the dispute s of South China Sea, the Pinnacle islands (Daiyutai Islands) and Taiwan are not issues subject to third party peaceful settlement procedures, in particular legal or qusai-legal institutions. China prefers to take all these sensitive sovereignty issues under its own control despite the fact that China will, from time to time, refer to international law to justify its actions as well attitude.
    The WTO is of course special.

    Gregory Messenger says

    November 13, 2015

    An interesting point, Dapo (and previous analysis by Geraldo!). I wonder how much of this is a specific WTO phenomenon: similar claims are traditionally made of Japan which, on the WTO front, has been extremely active.

    There seem to be a couple of factors that are relevant here also. The role of individuals seems to play a part: there are some interesting observations made by Liyu and Gao (in Shaffer & Melendez-Ortiz, Dispute Settlement at the WTO, CUP 2010) on the role of government-sponsored legal training from noted US and Japanese practitioners in China. And once training has begun, and litigation initiated, it seems to encourage further cases (Nicaragua's experiences at the ICJ being the paradigmatic example).

    As you identified, the effectiveness of the WTO dispute settlement system itself also seems to play a role. Here I'm thinking about subsidies and anti-dumping disputes in particular where China has really played the game very well. What's interesting is how other members have then picked up the baton (still on subsidies and thinking of India). All of which makes things pretty interesting - and considerably different to other areas of international litigation.

    I suppose one of the big questions will be how the traditionally dominant players respond to this new dynamic - hiding away in TTIP - or stepping back - or reengaging...

    Geraldo Vidigal says

    November 13, 2015

    Good reflection, Dapo. I agree that the WTO is 'special' not only to China but also to other states in the sense that WTO litigation has become 'normalised' in a way that most international litigation hasn't. Submitting to WTO adjudication is not considered to threaten sovereignty. This has allowed WTO adjudicators to examine policies that countries could be uncomfortable submitting to adjudications elsewhere, including EU farm subsidies, the US embargo on Cuba, and China's policy of controlling the content of audiovisual materials. In all three cases the result was a condemnation of the relevant measures, without a backlash comparable to what we see when states lose key cases in other international jurisdictions (or even not so key cases like Japan's Whaling case - I don't think anyone would go as far as stating that not killing whales threatens Japan's sovereignty or essential security interests).

    If we want to picture this WTO normalcy in a positive light, we can point out that the mere existence of adjudication like this is something international relations realists such as Morgenthau and Aron thought chimerical half a century ago (both mentioned economic sovereignty specifically as something that would be too 'high politics' for states to allow compulsory jurisdiction on). A more sceptical view would concentrate on two other points. First, in practice WTO law mostly requires losing states to change accessory aspects of their policies, so that outcomes if not issues are limited to 'mid-level' politics. Second, there is a lingering sense that WTO decisions do not 'really' have to be complied with, but can in fact be negotiated on and one can ultimately just accept retaliation - the way a defender in football can commit a foul and allow the other side a penalty if that's what she thinks is best for her team.

    As regards the latter aspect, a hardcore sceptic could of course say as much of all of international adjudication, in the sense that implementation requires voluntary acquiescence and there is no international police. But the perception that in the WTO non-compliance is part of the rules rather than a violation of the rules creates an atmosphere in which states, even great powers, are happy to accept to lose some battles and continue to play the game.

    Dapo Akande says

    November 14, 2015

    Dear all,

    Thanks for those replies. However, we all have a sense that WTO litigation must be seen as special by states. And indeed the numbers demonstrate this. However, I am still left wondering precisely why this is so.

    Greg mentions the role that training by state officials may have had on Chinese inclinations to initiate WTO disputes. Also, Nicaragua's repeated use of the ICJ is indeed a good example of how a state's initial success in international litigation might encourage it to become a repeat player. However, it must be the case that many states have training on the use of the ICJ, ITLOS or international arbitration and also that many states have had success in international litigation or arbitration, without those states going on to become repeat players in the system of inter-state litigation or arbitration.

    Geraldo points to cases where examination of sensitive policies within the WTO is not regarded as threatening to sovereignty, but the question is why not? The challenge to the US Helms Burton Act 1996 (imposing sanctions on Cuba) in the WTO demonstrates that in some cases states do consider that WTO dispute settlement is inappropriate as the US was poised to invoke the GATT national security clause before the EU, which had initiated complaint, dropped the case (see this NY Times piece ). But its still unclear why states have not, in general, regarded WTO dispute settlement to be inappropriate.

    Patricia's point may well be true in distinguishing China's WTO cases from the UNCLOS case. However, I would suspect that China has other disputes with equal powers that it chooses not to submit to adjudication.

    I do find Geraldo's last point to be very interesting. In a sense, the point seems to be that we should be looking not so much as participation in the litigation but rather at compliance. That is a good thought. However, it doesn't quite explain why a state like China (or Japan or the US) initiate complaints in the WTO when they don't do it elsewhere.

    Alas, I have no answers, only questions! Perhaps there is research on this already but it does seem that it would make an interesting area of study.

    Patricia Jimenez Kwast says

    November 13, 2015

    Building on the ‘lingering sense’ of implementation-by-negotiation-or-retaliation aspect of WTO dispute settlement mentioned by Geraldo, I wonder to what extent the difference between China's WTO dispute settlement engagement and its approach to other dispute settlement regimes (thinking of UNCLOS here) is influenced by its negotiating power vis-à-vis the other parties in the disputes it faces.

    I'm no WTO expert, but I think that the great majority of China's WTO cases concerns disputes with other big players (esp. the US and EU). Here the negotiating powers of the disputing parties seem to be much more equal than in the disputes involving the Chinese claims in the South China Sea.

    China has been exceptionally fierce in its rejection of the UNCLOS Annex VII arbitration brought by The Philippines, even though the settlement of such disputes through litigation is not that unusual. It is admittedly not as ‘normalised’ as WTO dispute settlement, but it is difficult to escape the impression that sovereignty (incl. jurisdictional exceptions meant to protect it) is not the only issue here. Negotiating power matters too and is clearly in China’s favour. Presumably it sees that it has little to gain and much to lose by accepting litigation of such claims under UNCLOS, which brings us back to Dapo’s formulation that (only) ‘where use of litigation is useful/helpful/essential in securing the benefits that it thinks are guaranteed by that treaty regime it has no objection to doing so’.

    But of course this consideration would not be unique to China (as The Netherlands also recently experienced in the Arctic Sunrise UNCLOS arbitration against a non-participating Russia).

    Dale says

    November 19, 2015

    Dear Professor Akande,

    It is a really interesting article. As a Chinese student studying international law, I would also like to contribution my personal observation to this topic.

    As far as I have learned, the WTO dispute settlement mechanism was not what China desired or aimed at. Before it's accession, the governmental presses had consistently advertised the advantage of joining the WTO. They were focusing on the reduction of tariff, the MFN treatment and all the benefit that China could get from it. The compulsory dispute settlement was rarely mentioned and was more like a trade-off for those benefits. I also had the chance to talk to a Chinese diplomat who had worked in the China WTO cases. From what was discussed during the conversation, I would assume that it was out of China's expectation to be sued so frequently. And only after that did it realise it should also utilise the tool to fight for its interest, that's why it also filed request for consultation later.

    As to its participation in the advisory proceedings that you mentioned, I am not quite sure to what extent it reflects China's attitude toward interstate litigation. Advisory proceedings are, as they are defined in the statutes and conventions, non-binding procedure that is used for clarifying the law. It would be a good chance for States to express their views on international law (even influence the formation of CIL rules) without getting their own rights or responsibility determined, especially for a country like China whose perception is very different from the Western countries'.