This memorandum addresses the question of whether and how the panel or the Appellate Body (hereinafter, the “Panel”) in US — Tuna II could address a possible defence of the United States based on Article 2005.4 of the NAFTA.1 According to Article 2005.4 of the NAFTA the responding party may under certain circumstances request that a dispute be settled in the NAFTA instead of the WTO.
Three main possible outcomes have been identified. The most likely outcome would be that the Panel decides that it has jurisdiction on the case and cannot decline to exercise it (Section B.1). This would be consistent with the prevailing conservative interpretation of the WTO jurisprudence: WTO panels are bound by the DSU procedures that embody a system of compulsory jurisdiction where WTO panels cannot decline to exercise jurisdiction on the merits of cases and can only apply WTO covered agreements (which means, in casu, that they cannot consider Article 2005.4 of the NAFTA).
Nevertheless, it cannot be excluded a priori that the Panel, confronted with a defence based on Article 2005.4 of the NAFTA, would decide that the Panel has jurisdiction but that there are “legal impediments” to reach the merits (Section B.2). Among several preliminary questions that the Panel may address in order to analyze this defence, the most noteworthy one is the interpretation of harmony of the NAFTA and the WTO agreements (Section A.5.a). As for the substantial questions, besides Article 2005.4 of the NAFTA itself, there are some legal grounds on the basis of which the Panel may reach this conclusion: the principles of res judicata, estoppel, good faith, lis pendens and comity. Among these general principles, comity appears to be the most significant legal ground. Finally, reference is also made to a rather less likely outcome in which the Panel decides that it has no jurisdiction because such jurisdiction was carved out through the NAFTA (Section B.3).