Standard of review and discretion in trade remedy investigations
OK, I admit that this is not the sexiest topic for a website blog! But this is a blog focusing on trade remedies so sometimes it is going to be heavy, nerdy material!!
This post was prepared as background to the post containing my analysis of the new call-in provisions. New UK legislation on 'call-in' of trade remedy investigations
Two other posts also provide background to the analysis of the call-in legislation:
Is there objective truth to be discovered in a trade remedy investigation?
Standard of review and deference
In considering the discretion that investigating authorities have in trade remedy investigations in general terms, it is necessary to consider the standard of review that will be used by courts in judicial review of trade remedies In reviewing a decision, the legal standard of review is the amount of deference given by the reviewing court to the lower decision-making body.
The standard of review that will be applied by the Upper Tribunal will determine how much deference will be given to the TRA’s discretion in trade remedy determinations. The subject is also of relevance because it goes to the heart of the US objections to Appellate Body rulings in the area of anti-dumping and a belief that the AB has overreached itself in not giving sufficient deference to investigating authorities.
Before considering what standard of review might be applied in the UK, it is useful to consider some of the background to this issue in a broader context e.g. US, WTO, EU.
US Agencies and Chevron Deference
In a non-trade remedy context, a significant US Supreme Court case in 1984 established principles for courts reviewing agency decisions that definitely influenced WTO dispute settlement, particularly in relation to trade remedies.
In the case Chevron USA Inc v Natural Resources Defence Council Inc 467 US 837, the US Supreme Court established the doctrine of so-called ‘Chevron Deference’. In this case, the Court set out a legal test relating to situations where courts should defer to the findings or interpretation of an administrative agency. It held that judicial deference is appropriate when the agency’s findings were not unreasonable, as long as Congress had not spoken directly to the precise issue at question. The scope of the doctrine is that, when legislative delegation to an administrative agency is implicit rather than explicit (i.e. implicit delegation of the authority to fill in any statutory gaps), a court may not substitute its own interpretation for that of the administrative agency. The key question is whether the action of the agency was based on a permissible interpretation of the statute.
The question of how much deference should be given to an administrative agency, of course, has an impact on the amount of discretion that the agency has in its decision-making so it is worth digging a little deeper into this. The way in which this has developed in the context of WTO and EU trade remedy challenges is set out next.
Standard of review relating to WTO trade remedy disputes
The general standard of review in WTO disputes is set out in Article 11 of the WTO Dispute Settlement Understanding (DSU). A panel has to
....make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements
In relation to establishing the facts in a case, the Appellate Body has confirmed that this “objective assessment” has been understood as mandating neither a de novo review (i.e. undertaking a new analysis of the facts) nor total deference to domestic authorities (i.e. the simple acceptance of their determination). The Appellate Body has said:
So far as fact-finding by panels is concerned, their activities are always constrained by the mandate of Article 11 of the DSU: the applicable standard is neither de novo review as such, nor "total deference", but rather the "objective assessment of the facts". Many panels have in the past refused to undertake de novo review, wisely, since under current practice and systems, they are in any case poorly suited to engage in such a review. On the other hand, "total deference to the findings of the national authorities", it has been well said, "could not ensure an 'objective assessment' as foreseen by Article 11 of the DSU". (para 117, DS26 EC - Hormones).
In relation to trade remedies, jurisprudence has evolved as to how this should be applied in practice. A panel must assess whether the national authorities have examined all the relevant facts and provided a reasoned explanation of how the facts support their determination. Examples of where this was confirmed by the Appellate Body are as follows:
SAFEGUARDS - To determine whether the safeguard investigation and the resulting safeguard measure applied by Argentina were consistent with Article 4 of the Agreement on Safeguards, the Panel was obliged, by the very terms of Article 4, to assess whether the Argentine authorities had examined all the relevant facts and had provided a reasoned explanation of how the facts supported their determination. (para 121, DS121 Argentina - Footwear (EC))
SUBSIDIES (CVD) - ....we are of the view that the "objective assessment"....will be informed by an examination of whether the agency provided a reasoned and adequate explanation as to: (i) how the evidence on the record supported its factual findings; and (ii) how those factual findings supported the overall subsidy determination.....The explanation provided by the investigating authority.....should also address alternative explanations that could reasonably be drawn from the evidence, as well as the reasons why the agency chose to discount such alternatives in coming to its conclusions......A panel may not reject an agency's conclusions simply because the panel would have arrived at a different outcome if it were making the determination itself.....a panel may not conduct a de novo review of the evidence or substitute its judgement for that of the investigating authority. (paras 186 & 187, DS296 US — Countervailing Duty Investigation on DRAMs)
Whilst the above also applies to anti-dumping, there are additional standard of review provisions in the WTO anti-dumping agreement. Article 17.6 of the WTO anti-dumping agreement sets out the standard of review that panels set up under the WTO dispute settlement understanding must use in assessing compliance of anti-dumping measures with the provisions of the agreement.
(i) in its assessment of the facts of the matter, the panel shall determine whether the authorities’ establishment of the facts was proper and whether their evaluation of those facts was unbiased and objective. If the establishment of the facts was proper and the evaluation was unbiased and objective, even though the panel might have reached a different conclusion, the evaluation shall not be overturned;
(ii) the panel shall interpret the relevant provisions of the Agreement in accordance with customary rules of interpretation of public international law. Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities’ measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.
As an interesting aside, it was the US insisted on the Chevron doctrine being explicitly incorporated into the AD agreement during the Uruguay Round Negotiations (see Bown page 3 and Alford page 200). This is one of the major problems that is causing the current US attitude towards the AB is the view that the AB has made issues of fact, although members only authorised it to address legal issues i.e. that they have not shown enough deference to trade remedy authorities in line with Article 17.6.
The DSU Article 11 general standard of review could be argued to incorporate at least some of the provisions in Article 17.6 of the anti-dumping agreement. There is not a clear line between the general standard of review and the anti-dumping-specific standard of review. Even in the jurisprudence, there appears to be some overlap between the two. This is actually a really interesting issue but is beyond the scope even of this nerdy post! It doesn't really matter for the purposes of my points here, the key point is that the WTO agreements allows trade remedy authorities considerable discretion meaning that that it is implicit that there is likely to be more than one legitimate outcome of a determination.
Key points here are that a panel, whilst undertaking an in-depth, critical and searching examination of the issues, must not conduct a de novo review of the evidence or substitute its judgment for that of the investigating authority. There is no contradiction between conducting an in-depth, critical and searching examination of the issues while avoiding a de novo review of the evidence or substituting its judgment for that of the investigating authority. The fully accepted standard(s) of review for WTO trade remedy disputes recognise that anti-dumping authorities have considerable discretion in making their determinations.
In the case of the EU, a similar principle applies. A recent judgement of the European Court of Justice sets out the standard of review:
....in view of the broad discretion enjoyed by the EU institutions in the field of trade defence measures, the EU Courts must confine themselves to reviewing, in proceedings concerning trade defence measures, which are characterised by the complexity of the economic and political situations which must be examined, whether the rules of law have been complied with, whether the relevant procedural rules have been complied with, whether the facts on which the contested choice is based have been accurately stated, whether there are any manifest errors of assessment of those facts and whether there has been a misuse of powers. (Para 149 Case T-254/18 19 May 2021 China Chamber of Commerce for Import and Export of Machinery and Electronic Products and Others v European Commission 19 May 2021)
The EU Courts recognise that trade remedies are characterised by the complexity of economic and political situations and that the EU institutions have broad discretion. The Court considers whether laws/procedures have been followed and whether the facts have been accurately stated. In terms of any analysis, it does not check every detail of the European Commission's work. Rather, it looks for 'manifest errors of assessment'.
The European Courts would never conduct an analysis re-doing some of the European Commission's dumping calculations or injury analysis in light of the standard of review it sets out in every case. As under WTO law, EU law allows the European Commission considerable discretion in trade remedy investigations.
What will be the standard of review in the UK?
Obviously there are no cases in the UK as yet where the Upper Tribunal has reviewed a contested TRA finding. However, the legislation does set out the standard of review in Regulation 18 of The Trade Remedies (Reconsideration and Appeals) (EU Exit) Regulations 2019.
In determining an appeal made under regulation 16 (appeals to the Upper Tribunal in relation to a decision made by the TRA) or 17 (appeals to the Upper Tribunal in relation to a determination made by the Secretary of State), the Upper Tribunal must apply the same principles as would be applied by a court on an application for judicial review.
I am not an expert yet on the UK legal system as I am still adjusting from working for many years with EU law on trade remedies. Others will know better than me what principles are applied by a court on an application for a judicial review (please feel free to comment below if you have anything to add!). However, I did find that the Courts and Tribunals Judiciary website provides some information on 'judicial review':
Judicial review is a type of court proceeding in which a judge reviews the lawfulness of a decision or action made by a public body. In other words, judicial reviews are a challenge to the way in which a decision has been made, rather than the rights and wrongs of the conclusion reached. It is not really concerned with the conclusions of that process and whether those were ‘right’, as long as the right procedures have been followed. The court will not substitute what it thinks is the ‘correct’ decision.
Also the Law Society states that:
…judicial review cannot be used to challenged the substance (or merits) of the decision taken by a public authority. It’s limited to ruling on whether the decision was made following the proper process.
This would appear to confirm that a similar standard of review will be applied by the Upper Tribunal as is applied under the US Chevron doctrine and by WTO panels and the European Courts. The Upper Tribunal will not be assessing the rights and wrongs of the conclusion reached neither will it substitute what it thinks is the 'correct' decision.
In doing a bit of research on the difference between a judicial review and a merits review this starts to get into a complex area of legal debate which looks really interesting but is beyond the scope of this post. This is not least because the Judicial Review and Courts Bill will amend UK judicial provisions when it is enacted. The long title of the bill states:
A Bill to Make provision about the provision that may be made by, and the effects of, quashing orders; to make provision restricting judicial review of certain decisions of the Upper Tribunal; to make provision about the use of written and electronic procedures in courts and tribunals; to make other provision about procedure in, and the organisation of, courts and tribunals; and for connected purposes.
It appears that this bill will have an impact on the Upper Tribunal’s review of UK trade remedy determinations but, again, this is a nerdy step too far to be covered in this post!
In simple terms, my understanding is that a full merits review would involve the reviewing body being able to re-examine the whole case on its merits with the possibility of changing the outcome of the final decision i.e. a full rehearing or de novo review of the case.
One reason why this is a complex area of legal debate is that it does appear that there is not an unambiguous distinction between judicial and full merits review. Depending on the particular legal system involved, some would argue that judicial review still gives the reviewing body an extensive basis to review the facts and legal findings of the decision-making body.
There are many interesting issues to look into further here. However, the key point is that all of this suggests that the TRA has considerable discretion in interpreting the UK law and its analysis of data and conclusions reached in UK investigations. For example, the UK legislation does not fully set out the dumping calculation methodology that the TRA must follow. Therefore, the TRA must interpret what the UK law requires in relation to particular aspects of the calculation where there is more than one permissible interpretation of the wording.