WORLD TRADE  
ORGANIZATION  WT/BFA/W/109 
18 March 2004 
 (04-1222) 
Committee on Budget, Finance and Administration Original:   English 
  
 
 
LETTER FROM THE CHAIRMAN OF THE APPELLATE BODY 
 
 
The attached letter addressed to the Chairm an of the Committee on Budget, Finance and 
Administration, from the Chairman of the Appella te Body was circulated to the Committee in 
November 2003 under the symbol CRP(03)50.  Th e Committee decided that, in view of time 
constraints, the question would be taken up in 2004. WT/BFA/W/109 
Page 2  
 
 
  
Centre William Rappard Rue de Lausanne 1 54 Case postale CH - 121 I Gen~ve 21  
Teléphone: (+4122) 739 51 11 Fax: (+4122) 731 42 06 Internet: http://www.wto.org
 
  
James Bacchus  
Chairma n 
Appellate Body Geneva, 17 November 2003
 
Direct line: (+4122) 739 5130  
Direct fax: (+4122) 739 5786 Mr. Joshua C.K. Law 
 Permanent Re presentative 
 Hong Kong Economic and Trade Office 
 All6e David-Morse 5
 1202 Geneva 
Reference:  
 
Dear Mr. Law, 
 
I am writing to you on behalf of my colleague s on the Appellate Body. The purpose of this 
letter is to request that the Budget Committee consider adjusting the compensation provided to Appellate Body Members. This w ould be the first such adjustment since the establishment of the 
Appellate Body over eight years ago. 
As you may know, I will finish my second and last  term with the Appellate Body next month 
and thus my interest in this relates solely to my conviction that the WTO and the Appellate Body are vital institutions and that their future viability must be supported and preserved. 
As you know, the Appellate Body was establ ished in 1995 pursuant to Article 17.1 of the 
Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU").  Some of 
the details regarding the operation of the Appell ate Body are set out in Article 17 of the DSU. 
Additional details are found in the document entitled  "Recommendations by the Preparatory Committee 
for the WTO"
t1 ("Recommendations"), which was approved by  the Dispute Settlement Body ("DSB") an 
10 February 1995. 
Paragraphs 10 - 12 of the "Recommendations" address the "conditions of employment" of 
Appellate Body Members. Paragraph 10 refers to the requirement in Article 17.3 of the DSU that 
"persons serving on the Appellate Body shall be avai lable at all times and on short notice." Thus, it is 
1. stated that Appellate Members "have a priority wo rking relationship with the WTO", and that they 
"may have other activities." 
Paragraph 11 sets out the approa ch to compensation as follows: 
 
The contractual basis of members of the Appellate Body should 
reflect the overriding concern that candidates are of a high enough calibre to ensure the integrity and authority of decisions taken by the 
Appellate Body. The requirement that high-calibre members be 
available at all times could be met, on a flexible basis, by offering 
Appellate Body members contracts based on a monthly retainer plus 
a fee for actual days worked. This contractual arrangement could also lead to a wider range of candidates being available, since members could continue to pursue other activities where they were resident. This arrangement could be kept  under review by the DSB, and 
                                                     
 
1 WT/DSB/1, 19 June 1995. A copy is attached for ease of reference.  WT/BFA/W/109 
Page 3 
 
 
 considered at the latest at the first Ministerial Conference, to 
determine whether a move to full-time employment was warranted. 
Paragraph 12 refers to the elements of the compensation package: 
The amount of a retainer/fee package would have to be large enough to 
offset a member's opportunity cost  of work foregone because of 
potential conflicts of interest, or in compatibility with sporadic trips to 
Geneva. This cost would also incl ude the disruption of a member's 
career due to the uncertain but li mited length of the Appellate Body 
assignment (two or four years initially, with a possibility of a one [sic] further period of four years) and the uncertainty of the total 
remuneration actually received. Further, the compensation should be 
high enough to provide an incentive fo r a member not to take on work 
which might create a conflict of in terest. Accordingly, it would appear 
that the retainer should be set at a minimum of SF 7,000 per month, plus 
a fully-adequate daily fee, travel expenses and a per diem. The actual 
amounts should be set on the basis of  further research on current rates 
for equivalent services under si milar conditions. The contractual 
conditions for each member of the Appellate Body should be the same, reflecting the principle that all th e members should have equal status. 
It was subsequently decided by WTO Members th at, in addition to the monthly retainer of 
SF 7000, the following compensation would be  paid to Appellat e Body Members: 
• a daily fee of SF 600 for each day th e Member is required to be in 
Geneva on official business of the Appellate Body and for every day that 
the Member is required to work on an appeal in a place other than Geneva; 
• a daily allowance to cover meals and accommodation of SF 435; 
• an allowance for administrative expenses of SF 300 per month. 
This compensation package has not been adjusted in over eight years. 
It is evident in paragraph 11 of the "Recommenda tions", quoted earlier, that the compensation 
package was designed to permit Appellate Body Memb ers to "continue to pursue other activities where 
they were resident". Para graph 12 refers to the need  to establish a compensation package that is "large 
enough to offset a member's opportunity cost of work foregone because of potentia l conflicts of interest, 
or incompatibility with sporadic trips to Geneva." However, the objective of pursuing "other activities" has often proved to be unrealistic, and members' trip s to Geneva are frequent and regular, rather than 
"sporadic." Although it was originally envisaged that  the workload of Appell ate Body Members would 
be light, it is now generally recognized that the wo rkload is very demanding. The average number of 
days per year spent by Appellate Body Members working on appeals is 174, with a high of 231 in 2001 
2 The bulk of that work is conducted in Geneva; the av erage number of days spent per year in Geneva 
is 117, with a high of 170 in 2001. It is anticipated th at the workload will continue to be significant over 
the next two years at a minimum, du e to the fact that more panels ha ve been established in 2003 than 
ever before, and the fact that 71 percent of panel reports have been appeal ed since 1995. There is no 
reason to assume that the workload will de cline significantly in the years to follow. 
The nature of the work makes it very difficult,  if not impossible, for Appellate Body Members 
to take on other work. The fact th at Appellate Body Members must be "available at all times and on 
short notice" interferes significantly with Members' being available for other work, especially if it is time-sensitive, because they have no control over their schedules working on Appellate Body matters. 
The Appellate Body does not have ad vance notice of whether or when appeals will be filed. Moreover, 
                                                     
 
2 This covers 1997 through 2002, the only years for which such average data are available . WT/BFA/W/109 
Page 4  
 
 
  
Centre William Rappard Rue de Lausanne 1 54 Case postale CH - 121 I Gen~ve 21  
Teléphone: (+4122) 739 51 11 Fax: (+4122) 731 42 06 Internet: http://www.wto.org
 
 the requirement in the DSU to comple te appeals within 90 days from the filing of the Notice of Appeal 
leaves little flexibility in scheduling appeals, especi ally given that two weeks of that 90 day period is 
devoted to translation of the Appellate Body Report. 
 WTO Members recognized, as set out in para graph 11 of the "Recommendations", that it was 
important, in designing the compensation package, to "reflect the overriding concern that candidates are 
of a high enough calibre to ensure the integrity and authority of decisions taken by the Appellate Body" 
and that the "requirement that high-calibre members be available at all times." The Members also noted, in paragraph 12, that the daily fee, travel expenses and per diem should be set with reference to "current 
rates for equivalent servi ces under similar conditions." With this in mind, it may be useful to compare 
the compensation packages of those providing similar services in othe r bodies. I attach, for information, 
a copy of excerpts from a proposal submitted by Canada, in the context of the negotiations on 
improvements and clarifications to the DS U, where Canada calls for adjusting the per diem 
remuneration provided to WTO panelists, which Canada describes as "very low". (The per diem fee for 
Appellate Body Members is the same  as that for panelists.) The anne x to Canada's proposal sets out 
various per diem rates for services similar to those carri ed out by Appellate Body Members, ranging 
from a low of SF 719 per day paid to NAFTA pane lists other than those deciding investor-State 
disputes, to a high of SF 5842 per day paid for some London Court of Arbitration cases. 
I have also attached information on compensa tion paid for similar services performed in 
institutions not included in Canada's list. 
 
The Appellate Body will complete consideration of its 60'
h appeal at the end of 2003. The first 
appeals having been heard in 1996, this would mean a workload of an average of 7.5 appeals per year. 
The International Court of Justic e, by contrast, has rendered 61 j udgments and 23 advisory opinions 
since 1947 (an average of 1.5 decisions per year). 
 
In the light of the above, I would request the Budget Committee to consider adjusting the 
compensation package provided to Appellate Body Members. 
 I will be pleased to discuss this matter with  you and the members of the Budget Committee 
should you find this useful. 
 Yours sincerely, 
 
 
 James Bacchus 
 Chairman  
 Appellate Body 
 
cc: Dr. Supachai Panitchpakdi, Director-General   Mr. Rod Abbott, Deputy Director-General   Mr. Rufus Yerxa, Deputy Director-General   Appellate Body Members
 WT/BFA/W/109 
Page 5 
 
 
  
Excerpt from TN/DS/W/41 dated 24 January 2003, "C ontribution of Canada to the Improvement of 
the WTO Dispute Settlement Understanding: Communication from Canada" (pp. 5 and 14) 
2. Remuneration of Panelists 
In addition, providing an adequate level of comp ensation to panelists will help to ensure that 
sufficient numbers of qualified individuals are willing to advance their candidacy to the Panel Roster 
and that those selected to serve on a panel will not be penalized financially for the time they dedicate 
to this task. 
Canada appreciates the resource constraints f aced by the WTO. However, an adjustment to 
the per diem remuneration of panelists is warranted. Compared against ot her international tribunals, 
the per diem offered to WTO panelists is very low ( see Annex 2). Remuneration accorded to WTO 
panelists must reflect more closely the value of panelist service not only to the individual parties to a 
dispute but also to ensuring the ongoing capacity of the DSU to provi de security and predictability to 
the multilateral trading system to the benefit of all WTO Members. 
[Annex 2 of excerpt continued on next page] WT/BFA/W/109 
Page 6  
 
 ANNEX 2  
REMUNERATION OF WTO PANELISTS COMPARED WITH  
OTHER INTERNATIONAL TRIBUNALS 
 
 
ORGANIZATION REMUNERATION AVERAGE PER DAY
∗ 
(CHF) 
International Centre for Settlement of 
Investment Disputes (ICSDD) US$2,000 per day CHF 2,772 
London Court of International 
Arbitration (LCIA)  £150 -£350 per hour CHF 2,503 - 5,842 
American Arbitration Association 
(AAA) International Centre for Dispute 
Resolution US$250 - US$450 per hour CHF 2,599 - 4,678 
British Columbia International 
Commercial Arbitration Centre 
(BCICAC) CDN $250 - US$400 per hour for 
international arbitrations. CHF 1,687 -4,159 
International Chamber of Commerce 
(ICC) International Court of Arbitration 
 Arbitrators' fees are based on the 
amount in dispute. (For example, if the amount in dispute is US$5,000,000, the arbitrator would 
receive between US$23,750 and 
US $108,500.) N/A 
World Intellectual Property 
Organization (WIPO) arbitrators  The arbitrators' fees are based on the 
amount in dispute. (For example if the amount in dispute is US$5,000,000, a three-person tribunal would receive approximately 
US$271,250.) N/A 
Court of Arbitration for Sport (CAS) Approximately CHF 200 per hour CHF 1,500 
North American Free Trade Agreement 
(NAFTA) Chapter Eleven tribunal members Approximately US$350 - US$450 
per hour CHF 3,639 - 4,678 
NAFTA Chapter Nineteen and Twenty 
panelists CDN $800 per day CHF 719 
World Trade Organization
panelists CHF 600 per day CHF 600 
 
 
                                                      
∗ Based on a working day of 7.5 hours. CHF 1 = 0.449627 GBP; 1.11150 CAD; and 0.721715 USD 
(exchange rates 14.01.2003). WT/BFA/W/109 
Page 7 
 
 
  
 
Compensation Paid for Similar Services  
Performed in Institutions Not Included in Canada's Annex  
 
 
International Court of Justice  
 
The United Nations General Assembly sets the salari es, allowances a nd expenses received by judges of 
the International Court of Justice (ICJ), situated in The Hague. The judges of the ICJ receive $US 
160,000 per annum, travel cost s, assistance  with education costs, and a re tirement pension equal to half 
the annual salary at the time of retirement, prov ided the judge has completed a nine-year term, and a 
proportion of that amount if less than nine year s has been served. The compensation package is 
reviewed every three years, a nd was last revised in 1999. 
International Criminal Court  
 
The full-time members of th e International Criminal C ourt (ICC) receive Euros 180,000 per annum, 
while the non-full-time member s will receive Euros 60,000 per annum, plus travel expenses and a 
remuneration package similar to that  received by judges of the ICJ.  The Court was established in 2002 
and has its seat in The Hague. WT/BFA/W/109 
Page 8  
 
 
  WORLD TRADE  WT/DSB/1  
ORGANIZATION                               19 June 1995 
 (95-1633) 
 
ESTABLISHMENT OF THE APPELLATE BODY 
Recommendations by the Preparatory Committee for the WTO 
approved by the Dispute Settle ment Body on 10 February 1995  
1. The Dispute Settlement Understanding (DSU) pr ovides that a standing Appellate Body shall 
be established by the DSB to hear appeals from panel cases on issues of law covered in the panel 
report and legal interpretations developed by the panel. However, the DSU does not answer all 
questions which must be settled before the Appe llate Body can function effectively. Based on the 
provisions of the DSU, input from delegations, and data from the Secretariat on experience with past 
disputes, this note addresses these issues and makes proposals. 
2. In making these proposals, it is understood that  not all issues connected with the Appellate 
Body require decisions or recommendations at this poi nt. Many issues, such as the size and powers of 
the Appellate Body, are already de termined in the DSLJ and do not therefore require decisions. Of 
those issues requiring a decision, some, such as the selection of the Appellate Body members, clearly 
must be decided before that body can function. Others, such as matters related to the working 
procedures of the Appellate Body, are only to be taken after that body is  established. It is not therefore 
necessary to tie up all loose ends at this stage. 
3. Decisions taken before the entry into for ce of the WTO will have to be taken by the 
Preparatory Committee, and will technically take the form of "recommendations to the WTO".' 
Decisions taken after the entry into force of the WTO may be taken by the General Council (sitting as 
the DSB) or the Appellate Body itself, in cons ultation with the Chairman of the DSB and the 
Director-General.' Proposals put forward here concern the composition of the Appellate Body, 
including conditions of employment of its member s and conflict of interest guidelines for members 
and supporting staff, and the type of  administrative support given to it. 
A. Coninositi_on of the  Annellat _e Body 
4. The DSU provides that the DSB shall appoint seven persons to serve on the Appellate Body.' 
It is to be a standing body, with members servi ng four-year terms, except for three initial appointees 
determined by lot whose terms expire at the end of two years.' Vacancies  are to be filled as they arise 
and, in the case of an unfinished term, last only until the end of that term .' The success of the WTO 
will depend greatly on the proper composition of th e Appellate Body, and persons of the highest 
calibre should serve on it. Issues arise as to its  members' expertise, representative balance, 
impartiality, conditions of employment, a nd the selection procedures to be used. 
1. Expertise of persons serving on the Appellate Body  
5. The DSU provides that the Appellate Body "shall comprise persons of recognized authority, 
with demonstrated expertise in law, internati onal trade and the subject matter of the covered 
agreements generally." The expertise should be of a type that allows Appellate Body members to 
resolve "issues of law covered in the panel report a nd legal interpretations developed, by the panel.' WT/BFA/W/109 
Page 9 
 
 
 WT/DSB/1 
Page 2 
2. Representative balance  
6. While the overriding concern is to provide highly-qualified members for the Appellate Body, 
the DSU also requires that the Appellate Body membership be "broadly representative" of the 
membership in the WTO. Therefore factors such as different geographical areas, levels of development, 
and legal systems shall be duly taken into account. The question of how this  balance is to be achieved is 
best left to be worked out during the ac tual consultation and selection procedures. 
3. Impartiality and confidentiality  
7. The DSU provides that members of the Appell ate Body "shall not be  affiliated with any 
government. "' Members of the Appellate Body sh ould not therefore have any attachment to a 
government that would compromise their independ ence of judgment. This requirement would not 
necessarily rule out persons who,  although paid by a government, serve in a function rigorously and 
demonstrably independent from that government. 
8. The DSU also provides that the members of th e Appellate Body "shall not participate in the 
consideration of any disputes th at would create a direct or i ndirect conflict of interest. "8 It would appear 
desirable to clarify the scope of this requirement through the elaborat ion of high standards of conduct. 
Members of the Appellate Body would adhere to such standards and, in a partic ular case, disclose any 
relevant financial, business and professional interests. 
9. The DSU further provides that "the proceeding s of the Appellate Body shall be confidential. "9 
It would thus be desirable to elaborate rules protec ting the confidentiality of the deliberations of the 
Appellate Body, and ensuring the non-disclosure by  Appellate Body member s and support staff of 
confidential information provi ded by participants in the dispute settlement process. 
4. Conditions of emvloyment of members 
10. The DSU provides that Appellate Body member s "shall be available at all times and on short 
notice."" The first part of this clause suggests that members- of the Appellate Body have a 
priority working relationship with the WTO. The se cond part of the clause suggests that members may 
have other activities. The DSU also provides that all members "shall stay abreast of dispute settlement activities and other relevant activities of the WTO."" 
11. The contractual basis of members of the Appe llate Body should reflect the overriding concern 
that candidates are of a high enough calibre to ensure  the integrity and authority of decisions taken by 
the Appellate Body. The requirement that high-calibre members be availa ble at all times could be met, 
on a flexible basis, by offering A ppellate Body members c ontracts based on a mont hly retainer plus a 
fee for actual days worked. This contractual arrangem ent could also lead to a wider range of candidates 
being available, since members could continue to purs ue other activities where they were resident. This 
arrangement could be kept under review by the DSB, a nd considered at the latest  at the first Ministerial 
Conference, to determine whether a move to full-time employment was warranted. 
12. The amount of a retainer/fee package would have to be large enough to offset a member's 
opportunity cost of work foregone because of potential  conflicts of interest, or incompatibility with 
sporadic trips to Geneva. This cost would also incl ude the disruption of a memb er's career due to the 
uncertain but limited length of th e Appellate Body assignment (two or four years initially, with a 
possibility of a one further period of four years) a nd the uncertainty of the total remuneration actually 
received. Further, the compensation should be high enough to provide an incentive for a member not to 
take on work which might create a conflict of intere st. Accordingly, it would appear that the retainer 
should be set at a minimum of SF 7,000 per month,  plus a fully-adequate daily fee, travel WT/BFA/W/109 
Page 10  
 
 
  WT/DSB/1  
Page 3 
 
expenses and a per diem. The actual  amounts should be set on the basi s of further rese arch on current 
rates for equivalent services under  similar conditions. The contractual conditions for each member of the 
Appellate Body should be the same , reflecting the principle that a ll the members should have equal 
status. 
5. Selection procedure  
13. The DSU provides that "the DSB shall appoint  persons to serve on the Appellate Body."" The 
decision by the DSB to appoint Appellate Body me mbers could be made on the basis of a proposal 
formulated jointly, after appropriate consultations, by the Director-General, the Chairman of the DSB, 
and the Chairmen of the Goods, Services, TRIPS and General Councils. Suggestions for candidates 
could be forwarded by delegations to the Director-G eneral. These suggestions could include candidates 
of nationalities other than that of the forwarding delegation. 
B. Matters Concerning the Internal Procedures of the Appellate Body  
14. The DSU provides that "working procedures shall be drawn up by the Appellate Body in 
consultation with the Chairman of the DSB and the Director-General,. and communicated to the Members for their information. "'
3 Matters such as guaranteeing the rotation required by the DSU and 
facilitating communications, if nece ssary, within the Appellate Body should form part of the working 
procedures. The DSB Chairman, at th e appropriate time, should consult with Members in order to obtain 
their views on the working procedures prior to advi sing the Appellate Body. 
C. Administrative and Legal Support  
15. The DSU provides that the Appellate Body "s hall be provided with appr opriate administrative 
and legal support as it requires. "" The number of support staff needed depends on the anticipated 
workload of the Appellate Body. This in turn will depend largely on the number of new panel cases and 
the anticipated propensity to appeal panel decisions. Under the GATT, there was an average of six new 
panel cases per year during the past five years, with actual annual numbers fluctuating between two and 
ten. At one point during that period, sixteen pane l cases were under way at one time. Two additional 
factors could also lead to much greater dispute settlement activity: the increased scope of review resulting from services and intellectual property di sputes, and the increased attractiveness of a more 
automatic dispute settlement system. 
16. Based on these factors, a reasonable level of support in the initial stages of operation of the 
Appellate Body would be one regist rar, three professional assistants with legal training, and sufficient 
clerical staff. The registrar would be in charge of support to the Appellate B ody, ensuring that there was 
a pool of appropriate legal and trad e policy expertise, and administra tive assistance, available to the 
Body and its members. 
17. The Appellate Body and its support staff s hould be independent from the Secretariat. The 
support staff should be selected by the Director-Gener al, in consultation with the Chairman of the DSB, 
on a competitive basis fo llowing a public advertisement. They should be employed by the WTO, on 
conditions similar to those accor ded secretariat staff of simila r rank, but should otherwise be 
administratively separate from it  and answerable to the Appellate Body. Any movement of support staff 
from the Appellate Body to the WT O Secretariat should be on a competitive basis following a public 
advertisement, and not by simple administrative transfer. The Secretariat shall put aside sufficient space 
to house the Appellate Body. WT/BFA/W/109 
Page 11 
 
 
 WT/DSB/1 
 Page 4   
1. Decision on the Establishment of the Preparatory Committee of the World Trade 
Organization, Article 
7. 
 
2. DSU Article 17:9. 
3. . DSU Article 17:1, 2 
4. DSU Article 17:2, sentence 1 
5. DSU Article 17:2, sentences 3, 4. 
6. DSU Article 17:6 
7. DSU Article 17:3, sentence 2. 
8. DSU, Article 17:3, sentence 5. 
9. DSU, Article 17:10, sentence 10. 
10. DSU Article 17:3, sentence 2. 
11. DSU 17:3, sentence 4. 
12. DSU Section 17:2, sentence 1. 
13. DSU, Article 17:9. 
14. DSU Article 17:7. 
 
 
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