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WT/DS162/R/Add.1 Page 19

3.4

In the view of Japan, this quoted passage reflects the position consistently taken by the Appellate Body and panels that, in order to fulfil the obligation under Article 11 of the DSU to make an objective assessment of the facts and to assess the conformity of the challenged measure with the relevant WTO agreements, a panel must conduct its own examination of the challenged law.61

3.5

Japan considers that it is also very instructive that the Appellate Body in India - Patents cites United States - Section 337 of the Tariff Act of 1930 for the proposition that a panel must conduct "a detailed examination of the domestic law" in order to assess its WTO/GATT conformity.62  Thus, the word "examination" indicates that the Panel must analyse the law to determine its substance and import.  "Examination" encompasses all the aspects of the "objective assessment of the matter" provided in Article 11 of the DSU.  Thus, it falls to the Panel, not the United States, to interpret the 1916 Act and determine whether it is WTO-inconsistent.  The Panel should not accept the US judicial interpretation of the 1916 Act as binding.  Any other position would allow the Member defending against a complaint simply to declare its law WTO-consistent, which would be an absurd result.

3.6

The United States notes that Japan acknowledges that the "characteristics" of the 1916 Act are questions of fact for the present Panel.  The United States agrees.  It is an accepted principle of international law that municipal law is a fact to be proven before an international tribunal.63  In India Patents64 the Appellate Body directly addressed the proper review of municipal law.  In that case, the Appellate Body affirmed the panel's review of India's domestic law as a question of fact, citing the Permanent Court of International Justice (hereinafter "PCIJ") decision in Certain German Interests in Polish Upper Silesia.  The Appellate Body held that it was proper for the panel to conduct an extensive review of the Indian law at issue to determine whether India had met its obligations under the TRIPS Agreement.  The Appellate Body noted approvingly that the panel had not interpreted Indian law as such, but, rather, had reviewed the law to determine whether it was WTOconsistent.

3.7

The United States argues that, likewise, in the present case, the Panel is not called upon to interpret or opine upon the meaning of the 1916 Act itself.  Rather, the Panel must determine the fact of the 1916 Act under US law, which includes US judicial decisions interpreting the Act.  The danger in the Panel interpreting the 1916 Act is that the Panel might adopt an interpretation that does not match the true application of the law in the United States.  To do so would result in a panel report based upon hypothetical facts.  In order to avoid such an outcome, the Panel should deem the case law interpreting the 1916 Act as dispositive for purposes of determining the fact of US law.65           

3.8

The United States recalls that, for example, in the Brazilian Loans case, the PCIJ attached controlling weight to the manner in which French courts had interpreted French legislation.  The PCIJ admonished that a tribunal of international law should "pay the utmost regard to the decisions of the municipal courts of a country, for it is with the aid of their jurisprudence that it will be enabled

61 Japan refers to the Appellate Body Report on European Communities - Hormones, Op. Cit., paras. 110-119; Korea - Safeguards, Op. Cit., paras. 7.26-7.31; Panel Report on Argentina - Safeguard Measures on Imports of Footwear, adopted on 12 January 2000, WT/DS121/R, paras. 8.117-8.121.

62 Japan refers to India – Patents, Op. Cit., para. 67.

63 The United States refers to Case Concerning Certain German Interests in Polish Upper Silesia [1926], PCIJ Rep., Series A, No. 7, p. 19; Case Concerning the Payment in Gold of Brazilian Federal Loans Contracted in France, PCIJ Rep., Series A, No. 21, pp. 12425 (hereinafter "Brazilian Loans").

64 The United States refers to Appellate Body Report on India – Patents, Op. Cit., paras. 6566.

65 The United States refers to Judge Lauterpacht, Case Concerning the Guardianship of an Infant [1958], ICJ Rep., Sep. Op., p. 91.  According to the United States, it is settled practice among States that international judicial bodies should accept, and treat as binding, questions of municipal law and practice decided by competent municipal courts. The United States refers to Case Concerning the Payment of Various Serbian Loans Issued in France [1929], PCIJ Rep., Series A, No. 20, p. 46; Brazilian Loans, Op. Cit., pp. 12425.

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