Managing conflicts between rulings of the World Trade Organization and regional trade tribunals: reflections on the Brazil – Tyres case

Abstract

Introduction The proliferation of international tribunals in recent decades has given rise to much concern about potential conflicts between judicial decisions and possible ‘fragmentation’ of international law. Most of the discussions have focused on conflicts of jurisdictions and conflicts of norms that may result from competing or overlapping jurisdictions. While some commentators believe that judicial competition can have a positive effect on the development of international law, others worry that different judicial interpretations may create inconsistent rights and obligations for the States. The worst type of conflicts, however, is the conflict of obligations where a State cannot comply with the decisions of two tribunals at once because their separate decisions require the State to act in entirely opposite directions. Unfortunately, such a direct conflict of obligations has occurred, for the first time to the author's knowledge, as a result of the decision of the World Trade Organization (WTO) in the Brazil – Tyres case. The WTO Appellate Body held in this case that, by following the ruling of an Arbitral Tribunal of Mercosur – the regional trade agreement (RTA) between Brazil and several South American countries – Brazil had acted inconsistently with WTO rules. Consequently, Brazil found itself in a legal bind in which it could not comply with its WTO obligations without breaching its obligations under Mercosur. Although as a regional free trade agreement (FTA) Mercosur needs to meet certain WTO requirements – in particular Art.