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2PARTICIPATION OF THE WORLD TRADE ORGANIZATION IN THE CONSIDERATION OF INVESTMENT DISPUTES AND UZBEKISTAN'S
MEMBERSHIP ISSUES Akhunov Sherzod Adkhamovich
Assistant of the department of "Humanitarian science and law"Tashkent state agrarian university
https://doi.org/10.5281/zenodo.10871333
Abstract. This article covers the issue of resolving investment disputes within the framework of an international organization with the participation of states. In particular, within the framework of the World trade organization, the stages of dispute review, negotiations, discussions will be discussed. At the same time, scientific opinions were expressed by the author. In addition, the legal issues of the interests of the Republic of Uzbekistan in this organization are reflected.
Keywords: investment, WTO, investment disputes, dispute resolution, arbitration, negotiations, international law.
The idea of creating a system of settlement of investment disputes based on the international legal institutional regime is not a new proposal in the international community. The establishment of the World Trade Organization in the 40s of the 20th century was considered the first step in this direction, and these processes were completed by the International Monetary Fund and the International Bank for Reconstruction and Development, which were established as a result of the Bretton Woods agreement in 1944.
In January 1996, the transformation of the GATT into the World Trade Organization (WTO) and the introduction of a more improved dispute resolution mechanism involving states led to its widespread use today. As of may 2016, the number of member states of the organization is 162, with about 30 states holding observer status. The organization is the basis of the international economic organization and practically regulates 90-95% of the world foreign trade turnover.
In the organization, decisions are made by the Ministerial Conference, which meets at least once every two years by consensus by all member states. The general council, subordinate to the Ministerial Conference, is considered responsible for organizing day-to-day affairs and meets several times a year at its headquarters in Geneva, which includes representatives of the organization's members, ambassadors and delegation leaders of the member states. The general council is responsible for the trade policy analysis and Dispute Resolution Authority.
Ensuring the most favorable regime in trade, providing mutual national regime for goods and services imported from abroad, regulating trade by tariff methods, rejecting the use of quantitative and other restrictions, transparency of trade policy and settlement of trade disputes through consultations and negotiations are the main principles and rules of the organization.
The main tasks of the organization are to help regulate the trade process within the system, objectively resolve trade disputes between governments and organize trade negotiations.
The activities of the World Trade Organization rely on 60 agreements - the basic legal norms of international trade and trade policy. The principles on which these agreements are based include non-discrimination (favorable regime and national regime regulations), free trade conditions, competition incentives, and additional regulations for less developed countries. At the same time, one of the main goals of the organization is the fight against protectionism.
According to A.Y.Korochkin in his book, Annex 2 of the agreement on the establishment of the World Trade Organization signed in Morocco on April 15, 1994 "Agreement on rules and procedures for Dispute Resolution" is the legal basis of the dispute resolution procedure.
In our opinion, it is not possible to directly consider disputes between investors and countries within the framework of the study of documents of the World Trade Organization. However, individuals and legal entities of states being the main earners within this organization, they may become the first victims of illegal measures implemented by another state. In relation to such measures arising within the framework of joining the organization, each country shall protect the interests of the affected sector of domestic industry or agriculture.
The system of settlement of investment disputes within the organization is resolved within the framework of international law. Since the main principle of international public law is the equality of sovereign states, both parties have equal rights and obligations within the organization.
In addition, due to the existence of the ACWL (Advisory Center on WTO Law), developing and less developed countries have the right to receive legal assistance in preparing for and conducting disputes, which will lead to the complete elimination of all problems related to horizontal defects.
T.P. Hansel said that since the establishment of the organization, due attention has not been given to mediation and other methods that help to resolve disputes under Article 5 of the agreement.
In our opinion, the main reason for this is that the relations within the organization have not reached the conflict process and more attention is being paid to bilateral contracts.
Investment disputes between member states of the organization are first initiated by bilateral negotiations, and with their consent, other interested members of the organization may join the negotiations as a third party.
Three executive bodies participate and work closely together in the organization's dispute resolution system. They include the General Council, which acts as the main institution in the resolution of disputes, the Dispute Resolution Body (consisting of a list of international experts in the field of commercial law for each case, who are not interested in the dispute) and the Appellate Body (which agrees with the conclusions of the report of the arbitration panel formed from the members of a permanent institution at the request of one of the disputing parties). All three bodies work in accordance with the dispute resolution sequence established in the Agreement.
Disputes between member states of the organization are resolved by the Dispute Resolution Body, whose functions are performed by the General Council of the organization.
P. Van den Bossche said that the jurisdiction of the dispute resolution body within the organization is mandatory and irrevocable.
Agreement "On rules and procedures for dispute resolution" Article 23.1 prohibits unilateral determination of violations of WTO agreements. If any benefit payable to a Member State is lost or reduced, that State shall have the right to apply to a dispute settlement authority and the respondent State shall have no alternative but to accept jurisdiction and become a party to the dispute.
According to S.Y. Kazachenok, when disputes arise between the members of the organization, it is considered necessary to resolve them through consultations at the first stage, and they should report this to the Dispute Resolution Body. At the same time, you can ask for advice
from the members of the organization. Consultations make it possible to understand the dispute, its relation to legal requirements and to resolve the matter without other procedures.
According to G.G. Shinkaretskaya, the agreement on the rules and procedures for resolving disputes does not specify any rules for consultations, which should be conducted in good faith and the duration should be at least 60 (sixty) days. During this period, parties come or simply lose importance.
The request for consultation comes from the claimant through diplomatic channels. The request specifies the nature of the complaint and the offer to the potential defendant to cancel the measure taken to restrict the plaintiff's trade. The party to whom the request is made presents its own arguments in defense and in rare cases may immediately agree to the plaintiff's offer. Then it's time to arrange a meeting between the conflicting parties. In the terms of the contract, the potential defendant is advised to respond positively to it.
In our opinion, from a legal point of view, this means recognizing the fact that the member countries of the international organization have equal rights in their relations with each other.
In order to make the potential respondent's participation in bilateral negotiations mandatory and constructive, 10 (ten) days are given to respond and 30 (thirty) days to initiate them. In order to increase the effectiveness of consultations, the parties to the dispute can apply for a reasonable service procedure by the management of the organization.
In addition, the general powers of the Dispute resolution body include the establishment of arbitration panels, the adoption of reports of arbitrations and the Appellate Body, the monitoring of the implementation of decisions and recommendations, as well as the authorization of the suspension of benefits and other obligations arising from contracts.
It is worth noting that the dispute resolution system within the organization, as a rule, includes a number of rules of a procedural nature, ensuring the same treatment for everyone.
According to I. Zenkin, the supreme executive body of the organization regulates the entire process of dispute resolution, from the beginning of the dispute review to the conclusion by the implementation of its decision by the country that violated it. This body is entrusted with the implementation of the contract, which demonstrates the great importance of the organization's members in the fair resolution of disputes.
Bilateral negotiations are given 60 (sixty) days. In the event of a negative result, the plaintiff can apply to the dispute resolution authority with a request to establish an arbitration group. The application is sent by the government, but the initiator will usually be an Industrial Association of entrepreneurs with primary knowledge of the problem that has arisen.
Therefore, the resolution of the dispute goes to the second stage, which begins with the statement of the position of the claimant and the potential defendant.
Arbitration teams will consist of highly qualified experts from countries that are not parties to the dispute. The members of the group are selected from the general list of several dozen potential candidates prepared by the Secretariat of the organization. The panel usually consists of 3 members (or 5 members as agreed by the disputing parties) and investigates the dispute in its individual capacity.
Arbitration groups will have rights such as seeking information and technical advice from any person or organization under the member's jurisdiction, and consultation on scientific and technical issues put by the party in dispute.
According to L.I. Zaitseva, the claimant states parties, if the request for consultation is not answered within 10 (ten) days after the request is sent, then the state to which the complaint was filed must provide consultation within 30 (thirty) days. If the parties do not initiate the procedure, the consultations do not lead to the expected results, and both parties recognize the ineffectiveness of the consultations in resolving the dispute, they may request the formation of Arbitration (arbitration) groups.
The state applying to the arbitration group can detail its arguments that a particular measure does not comply with the relevant agreements. In particular, China's request to form an arbitration group (on the anti-dumping duties on European Union Chinese shoes) outlined the grounds for revoking and reducing benefits arising from the 1994 GATT Article IV application agreement, as well as the protocol "On China's accession to the Moroccan agreement".
Arbitration groups continually consult with the parties in dispute and contribute to the provision of opportunities for the parties to develop a satisfactory solution.
Prepares a short report by the arbitration team to find a positive solution for the parties. The report details factual material and provides recommendations. The duration of the arbitration Group report is 6 (six) months, and in some cases it should not exceed 9 (nine) months.
The arbitration group also gradually informs the parties in dispute about the progress of the work on the report. At the first stage, it is explained by facts and evidence, and then indicates the preliminary conclusions. At the final stage, a final report is drawn up, taking into account the reviews, but without the participation of the parties to the dispute.
At the first meeting of the arbitration group, the plaintiff is heard first, and then the defendant, at the second meeting, attention is paid to the fact that it is in reverse order. It emphasizes the objectivity of the process and respect for both sides of the dispute.
The final report of the arbitration authority sent to the members of the organization will be considered and accepted by the dispute resolution authority within 60 (sixty) days. The conclusions of the arbitration group can be confirmed, modified or invalidated.
The third stage of dispute resolution begins with an appeal to the Appellate Body. This stage usually lasts 60 (sixty) days, in exceptional cases it lasts up to 90 (ninety) days. The appellate body is limited to the study of legal issues and legal interpretation of reporting provisions. Proceedings are conducted without the participation of the disputing parties. The opinions expressed in the report are anonymous.
D.V. Skrinka and A.N. Brovkonig noted that the decisions of the organization's appellate body are consistent in their interpretation and application of the organization's law and therefore have a high degree of credibility.
The appellate body consists of 7 permanent members, 3 representatives are elected by rotation to study the specific report of the arbitration panel and adopt a conclusion. This body will consist of recognized competent persons who have proven their competence in the field of law and international trade and will be established by the dispute resolution body.
I.M. Makhniboroda said that the report of the Appellate Body will be accepted by the Dispute Resolution Body and recognized by the parties to the dispute. A reasonable period of time will be provided for agreement between the parties. In the event that an agreement is not reached, the dispute resolution body will issue a decision that is binding on the parties, and a period of up to 15 months will be provided for its implementation.
The dispute resolution body monitors the implementation of the decision: it regularly includes this issue in the agenda of the meetings and requests information from the respondent about the progress of the implementation before the meeting.
One of the important features of the organization's dispute resolution system is the confidentiality of negotiations between the disputing parties, and it is repeatedly indicated in Articles 4, 5, 13, 14, 18 of the Charter and the attached document.
Confidentiality covers the entire process of negotiations - from bilateral cooperation to the Appellate Body. This limits the possibility of getting to know the tactics and other aspects of negotiations. But confidentiality allows the parties to compromise.
The appellate body deals with cases in judicial order, in contrast to arbitration groups. Parties in dispute and third parties involved in the dispute are given time to present their evidence. The appellate body hears the sides and asks clarifying questions. The appellate body was given a period of 60 to 90 days to review each dispute. This procedure is a specific rule that ensures the confidence of the Appellate Body as a Hollis, independent quasi-judicial body.
P. Van den Bosche argues that the Appellate Body is called the International Commercial Court. He concluded that the dispute was created as an insurance body to protect the mistakes of the participants. The opinion of V.M. Shumilov is also considered the same.
Views on the organization have changed since the creation of a permanent dispute resolution body within the World Trade Organization. Of the 188 decisions made by arbitration (arbitration) groups from 1996 to 2014, 121 appeals were heard.
In our opinion, the main task of each body of the organization is to resolve the dispute on a mutually acceptable basis and, as far as possible, to resolve it until the court.
One of the three important features of the organizational dispute resolution process is the division of the entire procedure into several stages in a strict sequence, limited in time (days, months). As a result, the dispute cannot be considered indefinitely or fall into a dead end. Such a process regulates the behavior of the parties in dispute and directs them from the very beginning of the resolution to achieve a reasonable result.
The results of the study show that the total amount of resolution of initiative disputes within the organization increased, approaching about 500 from 1993 to 2013, which had a significant impact on the scale of international trade. Including 218 disputes from 1995 to 2000, 136 from 2001 to 2006, and 98 from 2007 to 2012.
In our opinion, one of the most important advantages of the organization in the dispute resolution system is the mechanism of enforcement of decisions of Arbitration groups and the Appellate Body, which combines legal methods with diplomatic elements and collective observation. In the practice of international law, the enforcement of arbitration decisions was carried out by national judicial systems. If the arbitration decision is not made on a permanent basis, the investor will have to turn to his State for diplomatic protection. When the recommendations of the World Trade Organization dispute resolution authority are not met within the specified period, the defendant is obliged to enter into negotiations with the plaintiff to determine the mutually agreed compensation.
R.H. Nabibullin, L.B. Otajonov and M.S. Boymatova notes that each state lists the following two factors for its entry into the World Trade Organization:
1) for states participating in this integration process, the impact or economic benefit will be considered important and will be of national interest aimed at the far future as the main criterion;
2) it is established that in order to join and participate in the organization, it is possible to provide a condition for the adaptation of the national economy and legislative base to a certain extent to the international uniform norms and requirements of the organization.
In our opinion, the fact that the issue of membership requires deadlines for years of agreements for states, there is no desire to leave the organization by a single state, political relations, the use of the position of economic pressure and to some extent the softening of disputes constitute positive aspects of the organization.
Today, the issue of membership in the organization is considered a day-to-day issue for the Republic of Uzbekistan, initially addressed by the 1994 issue of membership. On this appeal, a working group was formed by the organization.
In recent years, Uzbekistan's financial and economic policy has changed, and since September 2017, the ekrin exchange rate procedure has been introduced. At the same time, after a long break, the issue of membership in the WTO has returned to the agenda of international relations and is considered as one of the most important issues.
The revision issue was mentioned in the decree RP-4947 of February 7, 2017 "On the strategy of action for the further development of the Republic of Uzbekistan".
According to the decree of the President of the Republic of Uzbekistan dated June 22, 2020, DP-4756 "On measures to improve the procedure for fulfilling the obligations arising from international treaties of the Republic of Uzbekistan and membership in international organizations", the Ministry of Investments and foreign trade of the Republic of Uzbekistan is designated as the state body responsible for the implementation.
B.Omonov argues that membership in the organization provides a number of benefits. First, based on economic interests, the exchange of products without barriers is achieved, turnover affects the application and development of high technologies. Secondly, it will be an impetus to raise the standard of living of the population, creating the opportunity for the population to consume quality products. Thirdly, at the expense of export products, the cost of domestic products decreases. Fourth, by increasing the volume of domestic production, it is possible to increase cash revenues to the budget, and to liberalize trade-to increase the income of the country and individual compatriots. Fifth, it has a positive effect on employment.
Membership of the Republic of Uzbekistan is considered important in this organization, since the organization of the majority of the member state, the fact that the states have a great influence on trade and investment relations, conflict resolution issues have been determined.
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