The second chapter on a national security exception in WTO law: the panel report in Saudi Arabia – Protection of IPR

Introduction

For many decades, national security exceptions had been dealt with only in rare instances, under the GATT 1947 regime as well as under the law of the WTO. The scope and design of the national security exception of Art. XXI GATT 1947 which served as a model for Art. XIV bis GATS and Art. 73 TRIPS has been vividly discussed right from its creation. Characterised as “trump card” or “catch 22 situation”, WTO members have prevented any binding panel report on Art. XXI GATT or Art. XIV bis GATS and Art. 73 TRIPS in any dispute settlement proceedings under the DSU. Instead, they regularly pursued alternative strategies or lines of argumentation to settle situations in which national security (could have) played a role in GATT 1947 or under WTO law. Times have tremendously changed, though, with now two adopted panel reports involving the GATT and TRIPS national security exception and a third one on national security underway. The beginning of this new era in which the WTO dispute settlement has to deal with national security exceptions was marked by the Russia – Traffic in Transit case (see here, here, and here.)

The second chapter on national security: Saudi Arabia – Protection of IPR

The recently adopted panel report in Saudi Arabia – Protection of IPR marks the second chapter on national security as it involves another national security exception, namely Art. 73 TRIPS. In this IP-focused case, Qatar inter alia challenged Saudi Arabia’s acts that prevented “beIN”, a Qatari-based media group, from obtaining Saudi legal counsel to enforce its IP rights through civil enforcement procedures in Saudi Arabia (para 7.42). Further, Qatar challenged a measure which prevented criminal procedures and penalties against a broadcasting entity named “beoutQ” which streamed and broadcasted beIN’s content in Saudi Arabia, thereby infringing IP-rights (para 7.43). In the following, three pertinent issues of the Saudi Arabia –Protection of IPR case concerning the national security exception of Art. 73 TRIPS will be elaborated on: (1) the transferability of the findings of the panel in Russia –Traffic in Transit on Art. XXI GATT to the interpretation of Art. 73 TRIPS; (2) the delineation between the measure at issue and an “emergency in international relations” and (3) the use of Twitter as an official legal source in WTO dispute settlement procedures.

1. The transferability of the Art. XXI GATT interpretation to Art. 73 TRIPS

The very first question arising in the context of the national security exception was whether the analytical framework developed for Art. XXI GATT could be transferred to Art. 73 TRIPS. This question is to be examined in terms of a comparison of both provisions that may be guided by Art. 31 VCLT, confirmed as a “customary rule of international law” under Art. 3.2 DSU by the Appellate Body in US – Gasoline. One may argue that, if Art. XXI GATT and Art. 73 TRIPS are comparable by their ordinary meanings, their contexts as well as their objects and purposes, the interpretation of Art. XXI GATT as presented by the panel in Russia – Traffic in Transit may be appropriate to be transferred to Art. 73 TRIPS.

As first point of reference, the identical language of Art. XXI GATT and Art. 73 TRIPS in principle point towards a transferability of Art. XXI GATT’s interpretation to Art. 73 TRIPS. Strong indicators to answer this question in the negative, however, follow both from the different context of the GATT and the TRIPS. As the panel in EC – Trademarks and Geographical Indications (Australia) noted, “the TRIPS Agreement does not generally provide for the grant of positive rights to exploit or use certain subject matter, but rather provides for the grant of negative rights to prevent certain acts.” (para. 7.246) The GATT, in turn, contains positive rights. On top, the GATT includes both a general exception clause (Art. XX GATT) and all-embracing exception clauses, among them the national security exception of Art. XXI GATT. So, the TRIPS agreement deviates from the GATT insofar as it is alien to such exceptions, as all other exceptions contained in TRIPS are tied to specific rights – except for the national security exception of Art. 73 TRIPS. For this reason, Art. 73 TRIPS holds quite an exposed position in the TRIPS.

On top, previous panel and Appellate Body findings suggest that Art. 73 TRIPS is to be interpreted differently than Art. XXI GATT. Regarding identical terms in the same agreement, the Appellate Body in Japan – Alcoholic Beverages held that such provisions are not necessarily subject to uniform interpretation. With regard to similar obligations of different agreements, the panel in EC – Trademarks and Geographical Indications (Australia) found that the national treatment obligation of TRIPS “differs from that (…) of GATT 1994 (…).” (para. 7.247)

Despite the conceptual and functional differences between the GATT and the TRIPS, neither of the parties nor the panel in Saudi Arabia – Protection of IPR was in favour of deviating from the interpretative approaches towards Art. XXI GATT advanced by the panel in Russia – Traffic in Transit. Instead, Saudi Arabia and Qatar based their arguments on the analytical framework of Art. XXI GATT provided by Russia – Traffic in Transit (para 7.231) and the panel did not present any reason, either, for why not to follow that guiding approach. So, the current dispute settlement practice seems to treat Art. 73 TRIPS and Art. XXI GATT alike (para 7.241). Whether this confirms that that both provisions are indeed to be treated the same or that the panel was just merely persuaded by the interpretative approach presented by the panel in Russia – Traffic in Transit remains to be seen.

2. Delineation between a measure at issue and an “emergency in international relations”

The second controversy in Saudi Arabia – IPR, especially among third parties, was about the measure qualifying as “emergency in international relations”. Saudi Arabia claimed that its “severance of economic and diplomatic ties” would constitute in itself an emergency and at the same time was the measure it adopted to protect its essential security interests. This, as pointed out by Japan, was a “circular reasoning”. In other terms, the measure itself, which is supposed to be justified under Art. XXI GATT cannot constitute the trigger to claim an “emergency in international relations”. Other third parties such as the EU likewise argued that only the facts underlying the severance of mutual diplomatic and economic ties could be viewed as the emergency in international relations (para 7.238). The panel did not dig deeper into this interesting legal question. It found that it was only obliged to review Saudi Arabia’s actions/omissions in the context of beIN and beoutQ (para 7.264). This approach might indeed be viewed as a reasonable act of self-restraint (para 7.268). Nevertheless, the underlying question has remained unanswered and might pose difficulties in further disputes.

3. The role of Twitter

The third element to be highlighted here is a little “revolution”: the panel’s reference to Twitter as a relevant source of evidence (para 7.114). This seems to be a novelty, since Twitter has not been cited in an official and binding report of a panel or the Appellate Body so far. The panel justified its recourse to Twitter by the fact that the majority of the tweets in question stem from an official, governmental source (para 7.161) and noted that “under general international law principles of state responsibility, actions at all levels of government (…) are attributable to the State.” (para 7.161). Even further, for non-governmental tweets, the panel considered a recourse to Art. 11 ILC Articles on State Responsibility. Bearing in mind that the third dispute settlement procedure involving Art. XXI GATT includes the US as respondent party and that presidential tweets will play an important role in this case as tweets are the preferred way of communication of US President Trump and are considered official statements, the panel’s finding on the role of Tweets in the Saudi Arabia – IPR case is highly instructive and maybe even relevant beyond WTO law.

Conclusion

The panel report in Saudi – Arabia confirms the analytical framework on national security exceptions developed by the panel in Russia – Traffic in Transit and extends it to the Art. 73 TRIPS. The panel report was adopted at a time when the Appellate Body has lost its functioning and the US is severely considering to leave the WTO for good. In contrast with much of the criticism, it appears that the first two cases dealing with the WTO’s national security exceptions were resolved in a consistent way. One may consider this as a success, on the one hand, by the panels which managed to develop a workable framework, and on the other hand, for the WTO Members involved which were willing to accept the panel’s findings. For this reason, it seems that the system has resisted when being confronted with the sensitive issue of national security. However, the real test on “national security” is yet to come with third dispute on the US’s additional tariffs on steel and aluminium.