Resolving Potential Jurisdiction Conflicts in ACFTA: The Principle of Res Judicata

• Author: Yang Songling
• Pages: 336-371

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336 TSINGHUA CHINA LAW REVIEW [Vol. 3:335

RESOLVING POTENTIAL JURISDICTION CONFLICTS IN

ACFTA: THE PRINCIPLE OF RES JUDICATA

YANG Songling*

Abstract

The article discusses potential jurisdiction conflicts of the newly created ACFTA and its

possible resolution method, the Res Judicata principle. The article points out that

jurisdiction conflicts have the possibility to break out in ACFTA based on theoretical analysis

and case study in other similar RTA(Regional Trade Agreement)’s, such as NAFTA and

MERCOSUR. According to the opinion of this article, principles of Forum non Conveniens,

Lis Alibi Pendens, Lex Posterier and Lex Specialis, and Comity are not suitable for resolving

the problem at the current stage. The article concludes that the Res Judicata doctrine is

more suitable to settle potential jurisdiction conflicts in ACFTA. However, the Res Judicata

principle is just able to partially resolve the potential jurisdiction conflicts of ACFTA even

with help of the Asian legal culture. It will come across difficulty if jurisdiction conflicts are

between ACFTA and the WTO. The article finally indicates that the full resolution of this

matter requires the WTO to integrate the principle of Res Judicata into its DSU (Dispute

Settlement Understanding) and to put more attention on the “operating” stage of RTAs, which

needs support from the development of a uniform legal system for international trade.

I. INTRODUCTION

In 2010, the negotiation on economic co-operation between China

and the Association of Southeast Asian Nations (“ASEAN”) came to

an end. As a result, the ASEAN-China Free Trade Area

(“ACFTA”) was established. The ACFTA covers eleven countries,

mainly China and ten other ASEAN member states. The

negotiation, formulation, and finally the establishment of the ACFTA

have drawn the attention of legal academia. Among others, the

dispute settlement mechanism of ACFTA is one of the key issues of

academic research.

For a regional arrangement like ACFTA, where member states

are concurrent members of other international organizations like

ASEAN and the WTO, jurisdictions occasionally overlap and

conflicts resulting from a multiplicity of memberships have always

been a concern of academic research. The Mexico Soft Drink case1

between the World Trade Organization (“WTO”) and the North

America Free Trade Area (“NAFTA”), the Argentina Poultry case2

between the WTO and Mercado Común del Sur, (Southern Common

* JSD Candidate, City University of Hong Kong. Chinese practising lawyer.

1 Panel Report, Tax Measures on Soft Drinks and Other Beverages, WT/DS308/R (Oct. 7, 2005).

2 Panel Report, Argentina — Definitive Anti-Dumping Duties on Poultry from Brazil,

WT/DS241/R (Apr. 22, 2003).

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2011] RESOLVING JURISDICTION CONFLICTS IN ACFTA 337

Market in English, “MERCOSUR”) and the Brazil Tyres case3

between the WTO and MERCOSUR, as discussed below, will

explore jurisdictional conflicts between the WTO and the Regional

Trade Agreements (“RTA’s”). Besides ACFTA and ASEAN,

Brunei Darussalam, China, Indonesia, Malaysia, Philippine,

Singapore, Thailand and Vietnam are also member states of the

WTO. 4 There are more complicated potential jurisdictional

conflicts covering three regional and international arrangements in

this region, namely the ACFTA, the ASEAN, and the WTO. As a

result, there will be a conflict of jurisdictions if the disputants bring

their claims under different jurisdictions.

The Agreement on Dispute Settlement Mechanism of the

Framework Agreement on Comprehensive Economic Co-operation

between China and ASEAN (“ACFTA DSM Agreement”) touches

briefly on the possibility of overlapping jurisdictions. Article 2 of

the ACFTA DSM Agreement stipulates the horizontal allocation of

jurisdiction between the DSM of ACFTA and those under any other

treaties. According to the Agreement, the DSM of the ACFTA

does not require compulsory jurisdiction if another jurisdiction is

available.5 However, the ACFTA’s DSM jurisdiction is exclusive

once the dispute settlement proceeding is initiated under the DSM

according to the disputant’s choice under the ACFTA DSM

Agreement.6 The Agreement also brings the possibility for the co-

existence of more than one DSM for a particular dispute if the parties

consent.7 Similarly, the ASEAN framework also accommodates the

possible co-existence of multiple dispute settlement fora among

member states.8

3

Panel Report, Brazil--Measures Affecting Imports of Retreaded Tyres, WT/DS332/R (Jun. 20,

2005).

4

WTO (July 23, 2008), http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm.

5

Agreement on Dispute Settlement Mechanism of the Framework Agreement on Comprehensive

Economic Co-operation, ASEAN-China, art. 2, para. 5, opened for signature Nov. 4, 2002, ASEAN.T.S

(entered into force Jan.1, 2005) (“Subject to paragraph 6, nothing in this Agreement shall prejudice any

right of the Parties to have recourse to dispute settlement procedures available under any other treaty to

which they are parties.”).

6

See id. art. 2, para. 6 (“Once dispute settlement proceedings have been initiated under this

Agreement or under any other treaty to which the parties to a dispute are parties concerning a particular

right or obligation of such parties arising under the Framework Agreement or that other treaty, the

forum selected by the complaining party shall be used to the exclusion of any other for such dispute.”).

7

See id. art. 2, para. 7 (“Paragraphs 5 and 6 above shall not apply where the parties to a dispute

expressly agree to the use of more than one dispute settlement forum in respect of that particular

dispute.”).

8

Protocol on Enhanced Dispute Settlement Mechanism, Nov. 20, 1996, ASEAN.T.S [hereinafter

ASEAN Protocol] (“The provisions of this Protocol are without prejudice to the rights of Member

States to seek recourse to other fora for the settlement of disputes involving other Member States. A

Member State involved in a dispute can resort to other fora at any stage before a party has made a

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338 TSINGHUA CHINA LAW REVIEW [Vol. 3:335

It appears that the ACFTA and ASEAN frameworks are adequate

to deal with the issue of conflicting jurisdiction. However,

problems arise when they overlap with the jurisdiction of the WTO.

The Panels of the WTO usually use indirect stipulation, such as

Article 11 Function of Panels, to clarify the matter of jurisdiction

conflict.9 The WTO Panel would not concede their jurisdiction

whether the case is undergoing proceedings or is adjudicated.

Therefore, the absence of relevant regulations in the WTO

Understanding on Rules and Procedures Governing the Settlement of

Disputes (“DSU”) may cause jurisdiction conflicts between the WTO

and ACFTA in the future. This will be deduced through

comparative analysis with other similar RTAs, such as NAFTA and

MERCOSUR.

These problems will be illustrated through the utilization of cases

and by conducting theoretical analysis in the following four sections.

The first section discusses the issue of potential jurisdiction conflicts

in ACFTA. The second section explains the non-applicability of

four legal doctrines, namely Forum non Conveniens, Lis Alibi

Pendens, Lex Posterier and Lex Specialis, and the Comity doctrine,

which are often used to deal with jurisdiction conflicts.

Subsequently, the third section points out that the principle of Res

Judicata is more suitable in settling the jurisdiction conflicts of

ACFTA based on its practice in the international community and its

legal environment in East and Southeast Asia. The article tries to

apply this principle in three distinguished stages, the initial, ongoing

and afterward stages respectively. However, the Res Judicata

principle is unable to be used to fully resolve the problem of

jurisdiction conflicts ; a further solution is needed to enhance the

consummation of international legal systems, that is, a uniform legal

system for international trade as discussed in the fifth section This

research paper aims at providing a solution to potential jurisdiction

conflicts involving ACFTA. This will be tremendously beneficial

to the field if this solution proves viable.

II. POTENTIAL JURISDICITON CONFLICTS IN ACFTA

Since ACFTA is a relatively new free trade area, there is no

dispute arising under the DSM of ACFTA. Therefore, there is no

specific case that illustrates the problem of jurisdiction conflicts

under this specific context. However, it can be found that the

request to the Senior Economic Officials Meeting (“SEOM”) to establish a panel pursuant to paragraph

1 Article 5 of this Protocol.”).

9

See Undestanding on Rules and Procedures Governing the Settlement of Disputes, art. 11, Apr.

15,1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, 1869 U.N.T.S.

401 [hereinafter DSU].