Question

Short summary of the U.S.- Antigua gambling WTO case.

Answer 1

On 21 March 2003, Antigua and Barbuda requested consultations with the US regarding measures applied by central, regional and local authorities in the US which affect the cross-border supply of gambling and betting services. Antigua and Barbuda considered that the cumulative impact of the US measures is to prevent the supply of gambling and betting services from another WTO Member to the United States on a cross-border basis.

According to Antigua and Barbuda, the measures at issue may be inconsistent with the US obligations under the GATS, and in particular Articles II, VI, VIII, XI, XVI and XVII thereof, and the US Schedule of Specific Commitments annexed to the GATS.

On 12 June 2003, Antigua and Barbuda requested the establishment of a panel. At its meeting on 24 June 2003, the DSB deferred the establishment of a panel.

Further to a second request by Antigua and Barbuda, the DSB established a panel at its meeting on 21 July 2003. Canada, the EC, Mexico and Chinese Taipei reserved their third-party rights. On 23 July 2003, Japan reserved its third-party rights.

On 15 August 2003, Antigua and Barbuda requested the Director-General to compose the panel. On 25 August 2003, the Director-General composed the panel. On 29 January 2004, the Chairman of the Panel informed the DSB that it would not be possible for the Panel to complete its work in six months because various factors had had an impact on the Panel’s timetable, such as a party’s request for preliminary rulings, the intervention of the holiday season, the heavy agenda of the panelists as well as the complexity of the legal and factual questions which had been raised. The Panel hoped to complete its work by the end of April 2004.

In the context of the negotiations for a mutually agreed solution to the present dispute, the parties requested the Panel to suspend the panel proceedings, in accordance with Article 12.12 of the DSU, until 23 August 2004. On 25 June 2004, the Panel agreed to this request. The parties subsequently requested a continuation of the suspension until 4 October 2004, and the Panel agreed to the request on 18 August 2004. The parties requested a continuation of the suspension until 16 November 2004, and the Panel agreed to the request on 8 October 2004. On 5 November 2004 Antigua requested the resumption of the panel proceedings to the Panel and the United States did not object to this request. The Panel has therefore agreed to resume the panel proceedings as from 8 November 2004.

At the DSB meeting of 19 May 2005, the United States stated its intention to implement the DSB’s recommendations and indicated that it would need a reasonable period of time to do so. As the Antigua and Barbuda and the United States had failed to agree on a reasonable time of period for implementation in accordance with Article 21.3(b) of the DSU, on 6 June 2005, Antigua and Barbuda requested that the reasonable period of time be determined through binding arbitration pursuant to Article 21.3(c) of the DSU. On 30 June 2005, pursuant to the request from Antigua and Barbuda, the Director-General appointed Dr Claus-Dieter Ehlermann to act as arbitrator under Article 21.3(c) of the DSU. On 19 August 2005, the Arbitrator circulated his Award to the Members, determining that the reasonable period of time for implementation was 11 months and 2 weeks from 20 April 2005, expiring on 3 April 2006.

On 24 May 2006, the parties informed the DSB that, given the disagreement as to the existence or consistency of measures taken by the United States to comply with the recommendations and rulings of the DSB, they had agreed on certain procedures under Articles 21 and 22 of the DSU. On 8 June 2006, Antigua and Barbuda requested consultations under Article 21.5 of the DSU. On 6 July 2006, Antigua and Barbuda requested the establishment of an Article 21.5 panel. At its meeting on 19 July 2006, the DSB referred the matter to the original panel, if possible. China, the European Communities and Japan reserved their third party rights. On 16 August 2006, the Panel was composed.

On 20 December 2006, the Chairman of the Panel informed the DSB that due to the parties' schedulng constraints as well as the time required for the completion and translation of the report into French and Spanish, the Panel would not be able to issue its report within the 90-day period foreseen in Article 21.5 of the DSU. The Panel expects to circulate its report to Members by the end of March 2007.

On 30 March 2007, the Article 21.5 panel report was circulated to Members. The Panel concluded that the United States had failed to comply with the recommendations and rulings of the DSB.

At its meeting on 22 May 2007, the DSB adopted the Article 21.5 panel report.

At the DSB meeting on 24 April 2012, Dominica read a statement on behalf of Antigua and Barbuda which stated that the United States was not in compliance with the ruling of the panel, the Appellate Body and the compliance panel. Antigua and Barbuda had formally notified the United States of its desire to seek recourse to the good offices of the Director-General in finding a mediated solution to this dispute. Antigua and Barbuda requested that this matter remain under the DSB's surveillance.

At the DSB meeting on 28 January 2013, Antigua and Barbuda requested the DSB to authorize the suspension of concessions and obligations to the United States in respect of intellectual property rights. Pursuant to the request by Antigua and Barbuda under Article 22.7 of the DSU, the DSB agreed to grant authorization to suspend the application to the United States of concessions or other obligations consistent with the Decision by the Arbitrator.

• Scope of GATS commitments: The Appellate Body upheld, based on modified reasoning, the Panel's finding that the US GATS Schedule included specific commitments on gambling and betting services. Resorting to “document W/120” and the “1993 Scheduling Guidelines”3 as “supplementary means of interpretation” under Art. 32 of the VCLT, rather than context (Art. 31), the Appellate Body concluded that the entry, “other recreational services (except sporting)”, in the US Schedule must be interpreted as including “gambling and betting services” within its scope.

• GATS Art. XVI:1 and 2 (market access commitment): The Appellate Body upheld the Panel's finding that the United States acted inconsistently with Art. XVI:1 and 2, as the US federal laws at issue, by prohibiting the crossborder supply of gambling and betting services where specific commitments had been undertaken, amounted to a “zero quota” that fell within the scope of, and was prohibited by, Art. XVI:2(a) and (c). However, it reversed a similar finding by the Panel on state laws because it considered that Antigua and Barbuda (“Antigua”) had failed to make a prima facie case with respect to these state laws.

• GATS Art. XIV(a) (general exceptions – necessary to protect public morals): The Appellate Body upheld the Panel's finding that the US measures were designed “to protect public morals or to maintain public order” within the meaning of Art. XIV(a), but reversed the Panel's finding that the United States had not shown that its measures were “necessary” to do so because the Panel had erred in considering consultations with Antigua to constitute a “reasonably available” alternative measure. The Appellate Body found that the measures were “necessary”: the United States had made a prima facie case showing of “necessity” and Antigua had failed to identify any other alternative measures that might be “reasonably available”. With respect to the Art. XIV(c) defence, the Appellate Body reversed the Panel due to its erroneous “necessity” analysis and declined to make its own findings on the issue. The Appellate Body modified the Panel's finding with respect to the chapeau of Art. XIV. The Appellate Body reversed the Panel's finding that the measures did not meet the requirements of the chapeau because the United States had discriminated in the enforcement of those measures. However, the Appellate Body upheld the second ground upon which the Panel based its finding, namely that in the light of the Interstate Horseracing Act (which appeared to authorize domestic operators to engage in the remote supply of certain betting services), the United States had not demonstrated that its prohibitions on remote gambling applied to both foreign and domestic service suppliers,, i.e. in a manner that did not constitute “arbitrary and unjustifiable discrimination” within the meaning of the chapeau.

DSU Art. 21.5 (measures taken to comply): No “measures taken to comply” existed within the meaning of Art. 21.5 because, since the original proceeding, there had been no change to the measures found WTO-inconsistent, nor to their application, their interpretation, or the factual or legal background bearing on them or their effects.

• DSU Art. 17.14 (adoption of Appellate Body reports): In accordance with Art. 17.14, an Appellate Body Report is a final decision on the claims and defences ruled upon in that Report with respect to the measures at issues as they existed at the time of the original panel proceeding. An Appellate Body Report is not simply a final decision on the evidence presented in the original proceeding. A compliance panel may not make a different finding on a claim or a defence already ruled upon without any change relevant to the measures at issue.