Council Decision of 13 May 2011 on the conclusion of an Agreement between the European Union and the Kingdom of Morocco establishing a dispute settlement mechanism

The Agreement between the European Union and the Kingdom of Morocco establishing a Dispute Settlement Mechanism (‘the Agreement’) is hereby approved on behalf of the Union. The text of the Agreement is attached to this Decision.

The President of the Council shall give, on behalf of the Union, the notification provided for in Article 23 of the Agreement .

This Decision shall enter into force on the date of its adoption.

The objective of this Agreement is to avoid and settle any trade dispute between the Parties with a view to arrive at, where possible, a mutually agreed solution.

1 The provisions of this Agreement apply with respect to any dispute concerning an alleged violation of the provisions of Title II (with the exception of Article 24) of the Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part (hereinafter ‘the association Agreement’) or of the Agreement in the form of an Exchange of Letters between the European Union and the Kingdom of Morocco concerning reciprocal liberalisation measures on agricultural products, processed agricultural products, fish and fishery products, the replacement of protocols 1, 2 and 3 and their Annexes and amendments to the Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part. The procedures of this Agreement shall apply if, 60 days after a dispute has been referred to the Association Council pursuant to Article 86 of the Association Agreement, the Association Council has failed to settle the dispute.

2 Article 86 of the Association Agreement applies to disputes relating to the application and interpretation of other provisions of the Association Agreement.

3 For the purposes of paragraph 1, a dispute shall be deemed to be resolved when the Association Council has taken a decision as provided for in Article 86.2 of the Association Agreement, or when it has declared that there is no longer a dispute.

1 The Parties shall endeavour to resolve any difference regarding the interpretation and application of the provisions referred to in Article 2 by entering into consultations in good faith with the aim of reaching a prompt, equitable and mutually agreed solution. In these consultations, the Parties will also discuss the impact that the alleged breach would have on their trade.

2 A Party shall seek consultations by means of a written request to the other Party, copied to the subcommittee ‘industry, trade and services’, identifying any measure at issue and the provisions of the agreements referred to in Article 2 that it considers breached.

3 Consultations shall be held within 40 days of the date of receipt of the request and take place, unless the Parties agree otherwise, on the territory of the Party complained against. The consultations shall be deemed concluded within 60 days of the date of receipt of the request, unless both Parties agree to continue consultations. Consultations, in particular all information disclosed and positions taken by the Parties during these proceedings, shall be confidential, and without prejudice to the rights of either Party in any further proceedings.

4 Consultations on matters of urgency, including those regarding perishable or seasonal goods shall be held within 15 days of the date of receipt of the request, and shall be deemed concluded within 30 days of the date of receipt of the request.

5 If the Party to which the request is made does not respond to the request for consultations within 20 working days of the date of its receipt, or if consultations are not held within the timeframes laid down in paragraph 3 or in paragraph 4 respectively, or if consultations have been concluded and no agreement has been reached on a mutually agreed solution, the complaining Party may request the establishment of an arbitration panel in accordance with Article 5.

1 If consultations fail to produce a mutually agreed solution, the Parties may, by mutual agreement, seek recourse to a mediator. Any request for mediation must be made in writing to Party complained against and the subcommittee ‘industry, trade and services’ and state any measure which has been the subject of consultations as well as the mutually agreed terms of reference for the mediation. Each Party undertakes to accord sympathetic consideration to requests for mediation.

2 Unless the Parties agree on a mediator within 10 working days of the date of receipt of the request for mediation, the chairpersons of the subcommittee ‘industry, trade and services’, or the chairpersons’ delegate, shall select by lot a mediator from the pool of individuals who are on the list referred to in Article 19 and are not nationals of either Party. The selection shall be made within 15 working days of the date of receipt of the request for mediation. The mediator will convene a meeting with the Parties no later than 30 days after being selected. The mediator shall receive the submissions of each Party no later than 15 days before the meeting and may request additional information from the Parties or from experts or technical advisors as she or he deems necessary. Any information obtained in this manner must be disclosed to each of the Parties and submitted for their comments. The mediator shall notify an opinion no later than 45 days after having been selected.

3 The mediator’s opinion may include one or more recommendations on how to resolve the dispute consistent with the provisions referred to in Article 2. The mediator’s opinion is non-binding.

4 The Parties may agree to amend the time limits referred to in paragraph 2. The mediator may also decide to amend these time limits upon request of any of the Parties, given the particular difficulties experienced by the Party concerned or the complexities of the case.

5 The proceedings involving mediation, in particular the mediator’s opinion and all information disclosed and positions taken by the Parties during these proceedings, shall be confidential, and without prejudice to the rights of either Party in any further proceedings.

6 If the Parties agree, procedures for mediation may continue while the arbitration procedure proceeds.

7 Replacement of a mediator shall take place only for the reasons and according to the procedures detailed in rules 18 to 21 of the Rules of Procedure.

1 Where the Parties have failed to resolve the dispute by recourse to consultations as provided for in Article 3, or by recourse to mediation as provided for in Article 4, the complaining Party may request the establishment of an arbitration panel.

2 The request for the establishment of an arbitration panel shall be made in writing to the Party complained against and the subcommittee ‘industry, trade and services’. The complaining Party shall identify in its request the specific measure at issue, and it shall explain how such measure constitutes a breach of the provisions referred to in Article 2. The establishment of an arbitration panel shall be requested no later than 18 months from the date of receipt of the request for consultations, without prejudice to the rights of the complaining Party to request new consultations on the same matter in the future.

1 An arbitration panel shall be composed of three arbitrators.

2 Within 10 working days of the date of receipt by the Party complained against of the request for the establishment of an arbitration panel, the Parties shall consult in order to reach an agreement on the composition of the arbitration panel.

3 In the event that the Parties are unable to agree on its composition within the time frame laid down in paragraph 2, either Party may request the chairpersons of the subcommittee ‘industry, trade and services’, or the chairpersons’ delegate, to select all three members by lot from the list established under Article 19, one among the individuals proposed by the complaining Party, one among the individuals proposed by the Party complained against and one among the individuals selected by the Parties to act as chairperson. Where the Parties agree on one or more of the members of the arbitration panel, any remaining members shall be selected by the same procedure.

4 The chairpersons of the subcommittee ‘industry, trade and services’, or the chairpersons’ delegate, shall select the arbitrators within five working days of the request referred to in paragraph 3.

5 The date of establishment of the arbitration panel shall be the date on which the three arbitrators are selected.

6 Replacement of arbitrators shall take place only for the reasons and according to the procedures detailed in rules 18 to 21 of the Rules of Procedure.

The arbitration panel shall issue an interim report to the Parties setting out the findings of fact, the applicability of relevant provisions and the basic rationale behind any findings and recommendations that it makes, not later than 120 days from the date of establishment of the arbitration panel. Any Party may submit a written request for the arbitration panel to review precise aspects of the interim report within 15 days of its notification. The findings of the final panel ruling shall include a discussion of the arguments made at the interim review stage.

1 The arbitration panel shall notify its ruling to the Parties and to the subcommittee ‘industry, trade and services’ within 150 days from the date of the establishment of the arbitration panel. Where it considers that this deadline cannot be met, the chairperson of the arbitration panel must notify the Parties and the subcommittee ‘industry, trade and services’ in writing, stating the reasons for the delay and the date on which the panel plans to conclude its work. Under no circumstances should the ruling be notified later than 180 days from the date of the establishment of the arbitration panel.

2 In cases of urgency, including those involving perishable or seasonal goods, the arbitration panel shall make every effort to notify its ruling within 75 days from the date of its establishment. Under no circumstance should it take longer than 90 days from its establishment. The arbitration panel shall give a preliminary ruling within 10 days of its establishment on whether it deems the case to be urgent.

3 The arbitration panel shall, at the request of both Parties, suspend its work at any time for a period agreed by the Parties not exceeding 12 months and shall resume its work at the end of this agreed period at the request of the complaining Party. If the complaining Party does not request the resumption of the arbitration panel’s work before the expiry of the agreed suspension period, the procedure shall be terminated. The suspension and termination of the arbitration panel’s work are without prejudice to the rights of either Party in another proceeding on the same matter.

Each Party shall take any measure necessary to comply with the arbitration panel ruling, and the Parties will endeavour to agree on the period of time to comply with the ruling.

1 No later than 30 days after the receipt of the notification of the arbitration panel ruling to the Parties, the Party complained against shall notify the complaining Party and the subcommittee ‘industry, trade and services’ of the time it will require for compliance (reasonable period of time), if immediate compliance is not possible.

2 If there is disagreement between the Parties on the reasonable period of time to comply with the arbitration panel ruling, the complaining Party shall, within 20 days of the receipt of the notification made under paragraph 1 by the Party complained against, request in writing the arbitration panel to determine the length of the reasonable period of time. Such request shall be notified simultaneously to the other Party and to the subcommittee ‘industry, trade and services’. The arbitration panel shall notify its ruling to the Parties and to the subcommittee ‘industry, trade and services’ within 30 days from the date of the submission of the request.

3 The reasonable period of time may be extended by mutual agreement of the Parties.

1 The Party complained against shall notify the other Party and the subcommittee ‘industry, trade and services’ before the end of the reasonable period of time of any measure that it has taken to comply with the arbitration panel ruling.

2 In the event that there is disagreement between the Parties concerning the existence or the consistency of any measure notified under paragraph 1 with the provisions referred to in Article 2, the complaining Party may request, in writing, the arbitration panel to rule on the matter. Such request shall identify the specific measure at issue and it shall explain how such measure is inconsistent with the provisions referred to in Article 2. The arbitration panel shall notify its ruling within 90 days of the date of the submission of the request. In cases of urgency, including those involving perishable or seasonal goods, the arbitration panel shall notify its ruling within 45 days of the date of the submission of the request.

1 If the Party complained against fails to notify any measure taken to comply with the arbitration panel ruling before the expiry of the reasonable period of time, or if the arbitration panel rules that the measure notified under Article 1(1) is inconsistent with that Party’s obligations under the provisions referred to in Article 2, the Party complained against shall, if so requested by the complaining Party, present an offer for temporary compensation.

2 If no agreement on compensation is reached within 30 days after the end of the reasonable period of time or of the arbitration panel ruling under Article 11 that a measure taken to comply is inconsistent with the provisions referred to in Article 2, the complaining Party shall be entitled, upon notification to the other Party and to the subcommittee ‘industry, trade and services’, to suspend obligations arising from any provision referred to in Article 2 at a level equivalent to the nullification or impairment caused by the violation. The complaining Party may implement the suspension 10 working days after the date of receipt of the notification by the Party complained against, unless the Party complained against has requested arbitration under paragraph 3.

3 If the Party complained against considers that the level of suspension is not equivalent to the nullification or impairment caused by the violation, it may request, in writing, the arbitration panel to rule on the matter. Such request shall be notified to the other Party and to the subcommittee ‘industry, trade and services’ before the expiry of the 10 working day period referred to in paragraph 2. The arbitration panel, having sought, if appropriate, the opinion of experts, shall notify its ruling on the level of the suspension of obligations to the Parties and to the institutional body responsible for trade matters within 30 days of the date of the submission of the request. Obligations shall not be suspended until the arbitration panel has notified its ruling, and any suspension shall be consistent with the arbitration panel ruling.

4 The suspension of obligations shall be temporary and shall be applied only until any measure found to be inconsistent with the provisions referred to in Article 2 has been withdrawn or amended so as to bring it into conformity with those provisions, as established under Article 13, or until the Parties have agreed to settle the dispute.

1 The Party complained against shall notify the other Party and the subcommittee ‘industry, trade and services’ of any measure it has taken to comply with the ruling of the arbitration panel and of its request for an end to the suspension of obligations applied by the complaining Party.

2 If the Parties do not reach an agreement on the compatibility of the notified measure with the provisions referred to in Article 2 within 30 days of the date of receipt of the notification, the complaining Party shall request, in writing, the arbitration panel to rule on the matter. Such request shall be notified simultaneously to the other Party and to the subcommittee ‘industry, trade and services’. The arbitration panel ruling shall be notified to the Parties and to the subcommittee ‘industry, trade and services’ within 45 days of the date of the submission of the request. If the arbitration panel rules that any measure taken to comply is in conformity with the provisions referred to in Article 2, the suspension of obligations shall be terminated.

The Parties may reach a mutually agreed solution to a dispute under this Agreement at any time. They shall notify the subcommittee ‘industry, trade and services’ and the arbitration panel of any such solution. Upon notification of the mutually agreed solution, the panel shall terminate its work and the procedure shall be terminated.

1 Dispute settlement procedures under Chapter III of this Agreement shall be governed by the Rules of Procedure annexed to this Agreement.

2 Any meeting of the arbitration panel shall be open to the public in accordance with the Rules of Procedure, unless the Parties agree otherwise.

At the request of a Party, or upon its own initiative, the arbitration panel may obtain information it deems appropriate for the arbitration panel proceeding. In particular, the arbitration panel also has the right to seek the relevant opinion of experts as it deems appropriate. The arbitration panel shall consult the Parties before choosing such experts. Any information obtained in this manner must be disclosed to each of the Parties and submitted for their comments. Unless the Parties agree otherwise, interested natural or legal persons established in the Parties are authorised to submit communications in writing to the arbitration panels in accordance with the Rules of Procedure. Such communications shall be limited to the factual aspects of the dispute and shall not address points of law.

Any arbitration panel shall interpret the provisions referred to in Article 2 in accordance with customary rules of interpretation of public international law, including the Vienna Convention on the Law of Treaties. The rulings of the arbitration panel cannot add to or diminish the rights and obligations provided in the provisions referred to in Article 2.

1 The arbitration panel shall make every effort to take any decision by consensus. Where, nevertheless, a decision cannot be arrived at by consensus, the matter at issue shall be decided by majority vote. However, in no case dissenting opinions of arbitrators shall be published.

2 Any ruling of the arbitration panel shall be binding on the Parties and shall not create any rights or obligations to physical or legal persons. The ruling shall set out the findings of fact, the applicability of the relevant provisions of the agreements set out in Article 2 and the basic rationale behind any findings and conclusions that it makes. The subcommittee ‘industry, trade and services’ shall make the arbitration panel ruling publicly available in its entirety unless it decides not to do so in order to ensure the confidentiality of business confidential information.

1 The subcommittee ‘industry, trade and services’ shall, no later than 6 months after the entry into force of this Agreement, establish a list of at least 15 individuals who are willing and able to serve as arbitrators. Each of the Parties shall propose at least five individuals to serve as arbitrators. The two Parties shall also select at least five individuals that are not nationals of either Party and who shall act as chairperson to the arbitration panel. The subcommittee ‘industry, trade and services’ will ensure that the list is always maintained at this level.

2 Arbitrators shall have specialised knowledge or experience of law and international trade. They shall be independent, serve in their individual capacities and not take instructions from any organisation or government, or be affiliated with the government of any of the Parties, and shall comply with the Code of Conduct annexed to this Agreement.

3 The subcommittee ‘industry, trade and services’ may establish additional lists of at least 15 individuals having a sectoral expertise in specific matters covered by the agreements referred to in Article 2. Each of the Parties shall propose at least five individuals to serve as arbitrators. The two Parties shall also select at least five individuals that are not nationals of either Party and who shall act as chairperson to the arbitration panel. When recourse is made to the selection procedure of Article 6(2), the chairpersons of the subcommittee ‘industry, trade and services’ may use a sectoral list upon agreement of both Parties.

1 When a Party seeks the settlement of a dispute concerning an obligation under the WTO Agreement, it shall have recourse to the relevant rules and procedures of the WTO Agreement, which apply notwithstanding the provisions of this Agreement.

2 When a Party seeks the settlement of a dispute concerning an obligation falling within the scope of this Agreement as defined in Article 2, it shall have recourse to the rules and procedures of this Agreement.

3 Unless the Parties otherwise agree, when a Party seeks the settlement of a dispute concerning an obligation falling within the scope of this Agreement as defined in Article 2, which is equivalent in substance to an obligation under the WTO, it shall have recourse to the relevant rules and procedures of the WTO Agreement, which apply notwithstanding the provisions of this Agreement.

4 Once dispute settlement procedures have been initiated, the forum selected in accordance with the paragraphs above, if it has not declined its jurisdiction, shall be used to the exclusion of the other.

5 Nothing in this Agreement shall preclude a Party from implementing the suspension of obligations authorised by the Dispute Settlement Body of the WTO. The WTO Agreement shall not be invoked to preclude a Party from suspending obligations under this Agreement.

1 All time limits laid down in this Agreement, including the limits for the arbitration panels to notify their rulings, shall be counted in calendar days from the day following the act or fact to which they refer, unless otherwise specified.

2 Any time limit referred to in this Agreement may be modified by mutual agreement of the Parties. The Parties undertake to accord sympathetic consideration to requests for extensions of any time limit by reason of difficulties faced by any Party in complying with the procedures of this Agreement. Upon request of a Party, the arbitration panel may modify the time limits applicable in the proceedings, taking into account the different level of development of the Parties.

1 After the entry into force of this Agreement and its Annexes, the Association Council may at any time review their implementation, with a view to decide their continuation, modification or termination.

2 In this review, the Association Council may consider the possibility of creating an Appellate Body common to several Euro-Mediterranean Agreements.

3 The Association Council may decide to modify this Agreement and its Annexes.

This Agreement will be approved by the Parties in accordance with their own procedures. This Agreement shall enter into force on the first day of the second month following the date on which the Parties notify each other that the procedures referred to in this Article have been completed.