Canada-Israel Free Trade Agreement

Part Five - Administrative and Institutional Provisions

Chapter Eight

Article 8.1: Application

1. This Chapter applies with respect to the avoidance or settlement of all disputes regarding the interpretation or application of this Agreement or wherever a Party considers that an actual or proposed measure of the other Party is or would be inconsistent with the obligations of this Agreement or cause nullification or impairment in the sense of Annex 8.1 unless the Parties agree to use another procedure in any particular case.

2. Disputes arising under both this Agreement and the WTO Agreement, including the General Agreement on Tariffs and Trade 1994 (WTO), and its successor agreements, to which both Parties are party, may be settled in either forum, according to the rules of that forum, at the discretion of the complaining Party.

3. Once the dispute settlement provisions of this Agreement or the WTO have been initiated pursuant to Article 8.7 or the WTO with respect to any matter, the procedure initiated shall be used to the exclusion of any other.

Article 8.2: The Commission

1. The Parties hereby establish the Canada-Israel Trade Commission (The Commission) to supervise the implementation of this Agreement, to resolve disputes that may arise over its interpretation and application, to oversee its further elaboration, and to consider any other matter that may affect its operation.

2. The Commission shall comprise representatives of both Parties. The principal representative of each Party shall be the cabinet-level officer or Minister primarily responsible for international trade, or a person designated by the cabinet-level officer or Minister.

3. The Commission shall convene at least once a year in regular session to review the functioning of this Agreement. Regular sessions of the Commission shall be held alternately in the two countries.

4. The Commission may establish, and delegate responsibilities to, ad hoc or standing committees or working groups and seek the advice of non-governmental individuals or groups.

5. The Commission may establish its rules and procedures. All decisions of the Commission shall be taken by consensus.

Article 8.3: Administrative Support to the Trade Commission and Dispute Resolution Panels

1. Each Party shall identify an agency, division or branch of its government ("designated agency") to facilitate the operation of this Chapter and to provide administrative assistance to panels established under this Chapter.

2. Where a Party has requested a Commission meeting under Article 8.7(1), the designated agency of the Party complained against shall be responsible for providing support to any mediator or to any panel established to deal with the dispute.

3. During a panel proceeding the Parties shall exchange documents by sending them to the designated agency to be filed and forwarded to the other Party. The designated agency shall administer the Code of Conduct for panelists established pursuant to Article 8.8, and provide administrative support for panels by arranging for hearing rooms, the production of panel reports and the payment of panelists. The designated agency may also provide administrative support for the Commission if so directed by the Commission.

Article 8.4: Contact Points

Each Party shall designate a central contact point to facilitate communication between the Parties on any matter covered by this Agreement. On the request of the other Party, the contact point shall identify the office or official responsible for the matter and assist, as necessary, in facilitating communication with the other Party.

Article 8.5: Publication, Notification and Provision of Information

1. Each party shall, to the extent possible, publish promptly, all laws, regulations, procedures and administrative rulings of general application respecting matters covered by this Agreement.

2. Each Party shall, to the extent possible, publish, consistent with Article X of GATT 1994, any law, regulation, procedure or administrative ruling of general application that it proposes to adopt respecting the matters covered by this Agreement.

3. Each Party shall, to the extent possible, provide written notice, in an official language of either Party, to the other Party of any proposed or actual measure that might materially affect the operation of this Agreement. The notice shall include, where appropriate, a description of the reasons for the proposed or actual measure.

4. The written notice shall be given as far in advance as possible of the implementation of the measure. If prior notice is not possible, the Party implementing the measure shall provide written notice to the other Party as soon as possible after implementation.

5. On request of the other Party, a Party shall promptly provide information and respond to questions pertaining to any actual or proposed measure, whether or not previously notified.

6. The provision of written notice shall be without prejudice as to whether the measure is consistent with this Agreement.

Article 8.6: Consultations

1. Either Party may request consultations regarding any actual or proposed measure or any other matter that it considers affects the operation of this Agreement, whether or not the matter has been notified in accordance with Article 8.5.

2. The Parties shall make every attempt to arrive at a mutually satisfactory resolution of any matter through consultations under this Article or other consultative provisions of this Agreement.

3. Each Party shall treat any confidential or proprietary information exchanged in the course of consultations on the same basis as the Party providing the information.

Article 8.7: Initiation of Procedures

1. If the Parties fail to resolve a matter through consultations within 30 days of delivery of a request for consultations under Article 8.6, either Party may request in writing a meeting of the Commission. The request shall state the matter complained of, and shall indicate what provisions of this Agreement are considered relevant. Unless otherwise agreed, the Commission shall convene within 20 days after delivery of a request and shall endeavour to resolve the dispute promptly.

2. The Commission may call on such technical advisers as it deems necessary, or on the assistance of a mediator acceptable to both Parties, in an effort to reach a mutually satisfactory resolution of the dispute.

Article 8.8: Code of Conduct

The Parties shall, by the date of the entry into force of this Agreement, exchange letters establishing a Code of Conduct for panelists appointed pursuant to Article 8.9.

Article 8.9: Panel Procedures

1. Panels shall be established in accordance with the provisions of Annex 8.9.

2. If a dispute has been referred to the Commission under Article 8.7 and has not been resolved within a period of 30 days after the Commission has convened or within such other period as the Commission has agreed, the Commission, on the request of either Party, shall establish a panel of experts to consider the matter and to make findings, determinations and, if requested by either Party, recommendations concerning the removal of a measure found not to conform with the Agreement. A panel shall be deemed to be established from the date of delivery to the other Party of the request of a Party.

3. The panel proceedings commenced at the request of one Party shall take place in the territory of the other Party or in a jointly agreed location.

4. Unless the Parties otherwise agree within 20 days from the date of the delivery of the request for the establishment of the panel, the terms of reference shall be:

"To examine, in the light of the relevant provisions of the Agreement, the matter referred to the Commission (as set out in the request for a Commission meeting) and to make such findings, determinations and recommendations if requested as are provided in this Article."

If the complaining Party, having raised it during the Commission meeting, wishes to argue that a matter has nullified or impaired benefits, the terms of reference shall so indicate.

5. The Commission shall, at its first meeting or shortly thereafter, establish Model Rules of Procedure. The Model Rules of Procedure shall:

(a) assure a right to at least one hearing before the panel and the opportunity to provide written submissions and rebuttal arguments;

(b) permit counsel chosen by a Party to advise that Party during panel proceedings including hearings;

(c) require that a Party's positions be presented by official spokespersons of that Party; and

(d) set out provisions concerning confidentiality of the panel's hearings, deliberations and initial report, and written submissions to and communications with the panel.

Unless otherwise agreed by the Parties, the panel shall conduct its proceedings in accordance with the Model Rules of Procedure and shall base its decision on the arguments and submissions of the Parties.

6. Unless the Parties otherwise agree, the panel shall, within 3 months after its Chairperson is appointed, present to the Parties an initial report containing findings of fact, its determination as to whether the measure at issue is or would be inconsistent with the obligations of this Agreement or cause nullification and impairment in the sense of Annex 8.1, and its recommendations, if any, for resolution of the dispute. Where feasible, the panel shall afford the Parties opportunity to comment on its preliminary findings of fact prior to completion of its report. If requested in the terms of reference for the panel, the panel shall also present findings as to the degree of adverse trade effect on the other Party of any measure found not to conform with the obligations of the Agreement.

7. Within 30 days of issuance of the initial report of the panel, a Party disagreeing in whole or in part may present a written statement of its objections and the reasons for those objections to the Commission and the panel. In such an event, the panel on its own motion or at the request of the Commission or either Party may request the views of both Parties, reconsider its report, make any further examination that it deems appropriate and issue a final report, together with any separate opinions, within 60 days of issuance of the initial report.

8. Unless the Commission agrees otherwise, the final report of the panel shall be published along with any separate opinions, and any written views that either Party desires to be published, within 15 days after it is presented to the Commission.

9. On receipt of the final report of the panel, the Commission shall agree on the resolution of the dispute, which normally shall conform with the report of the panel. Whenever possible, the resolution shall be non-implementation or removal of a measure not conforming with this Agreement or causing nullification or impairment in the sense of Annex 8.1 or, failing such a resolution, agreed compensation.

10. If in its final report a panel has determined that a measure is inconsistent with the obligations of this Agreement or causes nullification or impairment in the sense of Annex 8.1 and the Party complained against has not reached agreement with the complaining Party on a mutually satisfactory resolution pursuant to paragraph 9 within 30 days of receiving the final report if the measure was found to be inconsistent with this Agreement or within 180 days if the measure was found to cause nullification or impairment, the complaining Party may suspend the application to the Party complained against of benefits of equivalent effect until such time as they have reached agreement on a resolution of the dispute.

11. In considering what benefits to suspend pursuant to paragraph 9:

(a) a complaining Party should first seek to suspend benefits in the same sector or sectors as that affected by the measure or other matter that the panel has found to be inconsistent with the obligations of this Agreement or to have caused nullification or impairment in the sense of Annex 8.1; and

(b) a complaining Party that considers it is not practicable or effective to suspend benefits in the same sector or sectors may suspend benefits in other sectors.

12. On the written request of the Party complained against delivered to the complaining Party and to its designated agency, the panel which made the determination shall determine whether the level or extent of benefits suspended by the complaining Party pursuant to paragraph 10 is manifestly excessive.

13. The panel proceedings pursuant to paragraph 12 shall be conducted in accordance with the Model Rules of Procedure. The panel shall present its determination within 60 days of the date the Party complained against made the request or such other period as the disputing Parties may agree.

Article 8.10: Private Rights

Neither Party may provide for a right of action under its domestic law against the other Party on the ground that a measure of the other Party is inconsistent with this Agreement.

Annex 8.1

Nullification and Impairment

1. If a Party considers that the application of any measure, that is not inconsistent with the provisions of this Agreement, causes nullification or impairment of any benefit reasonably expected to accrue to that Party, directly or indirectly under the provisions of this Agreement, that Party may, with a view to the satisfactory resolution of the matter, invoke the consultation provisions of Article 8.6 and, if it considers it appropriate, proceed to dispute settlement pursuant to Article 8.7.

2. Paragraph 1 shall not apply to Article 10.5.

Annex 8.9

1. The Commission shall develop and maintain a roster of individuals who are willing and able to serve as panelists. Wherever possible, panelists shall be chosen from this roster. In all cases, panelists shall be chosen strictly on the basis of objectivity, reliability and sound judgment and, where appropriate, have expertise in the particular matter under consideration. Panelists shall not be affiliated with or take instructions from either Party.

2. The remuneration of panelists, their travel and lodging expenses, and all general expenses of the panel shall be borne equally by the Parties. Each panelist shall keep a record and render a final account of his time and expenses, and the panel shall keep a record and render a final account of all general expenses. The Commission shall establish amounts of remuneration and expenses that will be paid to the panelists.

3. The panel shall be composed of three members, who may be citizens of Canada or Israel. Within 45 days of establishment of the panel, each Party, in consultation with the other Party, shall choose one member of the panel, and the Commission shall endeavour to agree on the third member who shall chair the panel. If a Party fails to appoint its panelists within 45 days, such panelists shall be selected by lot from among its citizens on the roster described in paragraph 1. If the Commission is unable to agree on the Chairperson of the panel then each Party shall nominate a candidate for Chairperson and the Chairperson shall be selected by lot from the nominees agreed upon by the Parties.

4. Panelists may furnish separate opinions on matters not unanimously agreed.

5. No panel may, either in its initial report or its final report, disclose which panelists are associated with majority or minority opinions.

6. Panelists shall be subject to the Code of Conduct established pursuant to Article 8.8. If a Party believes that a panelist is in violation of the Code of Conduct, the Parties shall consult and if the Parties agree, the panelist shall be removed and a new panelist shall be selected in accordance with the procedures of this Annex.

7. If a panelist becomes unable to fulfil panel duties or is disqualified, proceedings of the panel shall be suspended pending the selection of a substitute panelist in accordance with the procedures of this Annex.