Law

It is established that the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards famously known as the New York convention plays a key role in arbitration processes. Drafted under the auspices of the United Nations and ratified by over one hundred and forty countries, its applicability is almost universal. The New York convention demands that all countries, which have ratified the convention, recognize and implement international arbitral agreements.  The New York convention is primarily behind the international legal regime.

In practice, the convention requires the contractual states to implement awards reached on this basis irrespective of the place where the award is made.  International arbitral awards thus hold more legal force when viewed in comparison with domestic led arbitration. For example if a party brings an issue decided by an international arbitral process to court, such a court is expected to hold a stay to the proceedings.

The ICC rules of arbitration remain universal across nations, which have ratified the international law on arbitration. However, most states run their own national arbitration programs as reflected by the various institutions plying business in the different countries. Apart from few exceptions, most national arbitral processes and institutional mechanisms, the ICC wording of requirements appears to be the dominant reference point. In ICC arbitral proceedings, parties making reference to ICC Arbitration are required to stipulate the arbitration clause they require to use, the number of arbitrators, the language, and the location of the process.

Article 7 of the ICC Arbitral process clearly stipulates the need to have a fair, independent and impartial conduct from arbitrators. Towards this end, before an arbitral tribunal commences proceedings, it is required that the arbiters sign a form where they disclose any information, which might lead to questioning of impartiality and independence. On the basis of Article 22, when the arbitral panel is satisfied that the parties have had a far opportunity to present their cases, the arbitral tribunal closes proceedings. After this, no party is allowed to make further submissions unless the arbitral tribunal requests for additional information.

IBA has offered important guidelines regarding the conduct of arbitration. This is especially the case in reference to commercial issues. As indicated by the 2003 draft of rules, IBA considers conflict of interest as a serious cause for concern affecting impartiality and independence of arbitral processes. In 2004, IBA Council approved the guidelines for use across the globe. Towards universalizing   the guidelines, they were translated to major world languages.

The ABA rules have also paid close attention to the need for fairness in terms of exercising of good faith while arbitrating on issues. Towards this end, parties are allowed free determination of arbitrators and procedures, arbiters are expected to be impartial, and independent, and the arbitral process is require to be carried on confidentially. However, in the recent past, it emerged that the 1997 code was irresponsive to emerging needs in arbitration necessitating a review on the Code of Ethics for Arbitrators in Commercial Disputes. The revised code clearly indicates who decides which dispute can be arbitrated, what should be disclosed, the remedies available to parties, and how arbitration is initiated.

The 1985 UNCITRAL Model Law on International Commercial Arbitration was designed to offer assistance to states towards introducing reforms and modernizing laws and arbitral procedures with a view to incorporating the needs and features of arbitration in international commercial. The law coves all the stages in arbitration from the time of commencement to the moment of conclusion. The law is a big step on international arbitration as it captures consensus on a host of issues. Its acceptance y all states which have different economic systems is testament to this.  

The different national laws develop to assist arbitration processes heavily follow the international ones. However, there are instances, which necessitated the adoption of deviations from the international norms. As this paper proceeds, it is found that countries like Singapore run two regimes of arbitration one caters for domestic issues while the other addresses international disputes.  Such deviations do not serve as a red flag since the choice of the regime to use in the determination of a case rests with the parties to a dispute.

Background
Arbitration has gained prominence thanks to the increasing nature of close border associations between countries. With an exception of few countries or business entities, the preferable choice to deal wit emerging disputes remains arbitration. This is primarily the case due to the fact that there are certain variations from country to country which may undermine the achievement of a deal agreeable to parties to a dispute. It is also a fact that with the much touted discrepancies or variations in law, suing another party may not be addressed adequately by a given country code of conduct.  This, coupled with other reasons underlies why arbitration offers the best avenue to conflicting parties over various aspects. In a nutshell, the uncertainty in law, legal and business cultures, and language differences sum up the difficulties which may serve to undermine settlement of dispute through the use of the court normal process. On the converse, arbitration offers the benefits of a relatively affordable and expeditious mechanism to solve a dispute in a neutral location in which case proceedings are carried out in a manner familiar to established arbitration rules. Further to this, the arbitration route accords parties to a dispute the chance to select the arbitrators, the arbitration tribunal, and in some instances the arbitrations rules and regulations.  

Ad hoc arbitration has grown in stature partly due to the many benefits associated with the mode of arbitration. The fact that parties to a dispute are expected to decide several aspects concerning the composition and the running of the tribunal leads to the likelihood of having certain disagreements. In such an event, parties to a dispute can agree to designate an institutional provider to act as the appointing authority. The parties to an ad hoc process also remain at liberty to seek the services of institutional arbitration shall need arise in the course of the arbitration process.

Introduction
The world has undergone many changes due to globalization and its effects. The growth of trade and commerce between states is a pointer to this phenomenon. This has meant that different nationals from separate countries may interact either at a personal or professional level. Such interaction may further lead to transactions of a business nature. From such business transactions, issues are bound to rise. Due to differences in country judicial and dispute settlement mechanisms, it is in the interests of the arties involved to find a cheaper and convenient option to tackle their problem. It is not surprising that arbitration emerges to account for these demands. It should also be noted that states as entities or companies are fond in similar situations leading to the need for arbitration processes.
Arbitration is carried out according to different codes of conduct. Most of the different institutions and national arbitral mechanisms borrow from the New York Convention on arbitration in the way the arbitral process is conducted. This paper examines the different institutional frameworks of arbitration, different countries arbitration procedures, and the obligations of arbitrators. The paper finally concludes that there are no major differences in the codes of conduct and remarks that the need to have a uniform arbitral code of conduct is of insurmountable value. However, this should apply to international arbitration.

Sources of Arbitrators obligations
There are different sources, which offer prescriptions on the ethical obligations. In the recent times, various groups which offer expert services in the field have come up with different codes of conduct. These codes of conduct have been supplemented by the development of arbitral rules governing the selection and procedural matters. Complication emerges due to the fact that different sources lack uniformity in terms of procedural issues as provided for by different codes. This implies that there are a good number of sources of obligations, ranging from institutional to national sources consequently, this paper examines the different institutional and national sources of arbitration conduct.  

Ethical codes
All arbitration institutions have adopted certain codes governing their ethics in regards to the arbitral process. The AAAABA Code of Ethics comes to the fore. A number of institutions and nations in guiding the arbitral process have adopted this code.  For instance, Singapore International Arbitration Centre, the Milan Chamber of National and International Arbitration have appended these codes into their arbitral guides. Some institutions demand compliance to the obligations set their codes while others leave it to the parties to a dispute to decide.  Codes are wide ranging and may be adopted by institutions, national laws, international conventions and courts.

Institutional Arbitration Rules
All institutions have codes of ethics, which govern arbitral procedures however, some institutions may not have the codes fully developed though they have rules upon which they anchor their processes. Most of the institutional rules require that impartiality be maintained. Arbitration institutions are required to enforce all arbitral rules.

The ICC Ethics
The ICC Court made a decision that from august of 2009 all prospective arbiters should disclose information regarding their availability. Further, the arbitrators should comply with the revised ICC Arbitrator Statement of Acceptance, Availability and Independence. In this regard, arbitrators are expected to give an outline of their schedule capturing all their pending cases in the current or future time. This should equally reflect the position held whether, as counsel, as co-arbitrator, as sole arbitrator, as a chair, or as an assistant in any professional capacity, which holds the potential of influencing the proposed arbitral process.

In addition to the above requirements, it is a requirement that prospective arbitrators confirm, beside other issues, that they will commit time to the arbitral process. They should also guarantee diligent and efficient execution of duties assigned in accordance with the set time lines as stipulated by the ICC Rules. This indicates that the ICC aims at offering encouragement to prospective arbitrators to be more considerate on their availability before committing or accepting offers to officiate in dispute resolution. This underscores the pursuit of ensuring speedy and expeditious handling f arbitration process in the dispensation of justice.

The ICC is requires timely executions of disputes. On this basis, it sets time limits, which if not followed fines are imposed. The potential to be penalized is presented to arbitrators as a measure to underscore the severity of the offence.  This new measure is of great value is so far as it allows for a timely execution of cases.

ICSID on arbitrator independence
Arbitrator independence in reference to ICSID proceedings require that arbitrators are free to exercise impartiality and independence in drawing conclusions. The ways in which these principles vary from the rest remain rather ambiguous as they basically, underscore the same requirements. This view is taken in reference to the principle of impartiality and independence. The disclosure requirement applies through the requirement of passing information, which may undermine the impartiality of the arbitral process. This principle is as the ICC Rule and all the other institutions captured in this paper. In reference to the removal of an arbitrator, the ICSID Convention requires that circumstances must indicate a manifest lack of necessary qualifications to continue serving the arbitral process. The ICSID Convention runs into criticism based on the fact that, arbiter challenges are determined and resolved by the other remaining arbitrators. This may lead to the influence of cronyism in arbitral processes.

London Court of International Arbitration Rules (LCIARules)
     Article 14 provides that parties to a dispute may make an agreement on how to conduct their arbitral proceedings. The article further gives encouragement to the parties to do this. However, consistency to arbitral tribunal general guidelines is to be followed at all times. The requirement to remain fair by acting impartially and independently must for instance be observed. Equal opportunity is to be given to parties to a dispute to submit their cases. He decision on the procedures to e used during the arbitration process should reflect the prevailing circumstances in reference to arbitration. Towards this end, delay and other engagements, which may derail the process, must be discouraged. Agreements by parties concerning the arbitration procedures and the rules governing operations of the arbitral process must be written down and be availed to relevant authorities when demanded.

The Internal Rules of the European Court of Arbitration

Sole arbitrator
Traditionally, in any arbitration process, it is usually required that three arbitrators are appointed. In cases of two parties to a dispute, the contending parties appoint one arbitrator each and the chairing body appoints the remaining. This implies that this mechanism is limited to cases, which involve only two parties. This implies that when there are more parties than two, a given group must agree to appoint one arbitrator among them if the tribunal is to take off. However, the parties may decide to appoint more than the set number. In case of a disagreement, the European Court of Arbitration has the responsibility of appointing a sole arbitrator. 

Time to decide
Time is of great value in arbitrating cases and the European Court of Arbitration has taken note of this fact. Time is important for the innocent party. The set rules require that the arbitrator must give a decision within nine months from the time of commencement of the arbitration process. This term can only be extended two times only for a maximum period of three months. It should be noted that the extension must be warranted and justified if it is to be given. However, in cases of more complex issues, the arbitration time may receive a further extension to facilitate an amicable conclusion of the matter. Ay arbitration process conducted based on these rules is referred as A Sole Arbitrator who issues an award in duration of nine months. 

Constructive Dialogue
While conducting the arbitral process, the rules demand that the arbitrator should avoid distancing the self from the parties to a dispute. This calls on the arbitrator to initiate dialogue among or between parties. This is achieved through presenting questions before the parties with a view to getting a clarification of the submissions and allegations from the disputing parties. Submissions and allegations should be taken and documentary or other acceptable forms of evidence may be presented.Rules of Evidence

The rule on evidence allow parties to a dispute to be informed how evidence will be presented and heard before the arbitral pane. This is done way ahead before an arbitral process begins so as to allow the parties time to decide whether to engage the services of arbitration or not. This primarily outlines how evidence is used in detail. In cases where there is a three member panel, the chairman has the opportunity to make a ruling concerning procedural issues in advance with prior consent of the other two arbiters. The Arbitration Act of 1996 of the UK, section 33 makes it clear that the circumstances surrounding arbitration shall play a key role in procedure determination. 

National law
National arbitration laws also make a useful contribution to the arbitral process in regards to the obligations of arbiters. There are minor discrepancies, which comes out clearly as discussed below. Towards the application of the various national provisions, the courts have been playing a great role in developing international arbitration. Just as in the case of institutional focus, national law as also zeroed in on the independence and the impartiality principle.

Singapore
In Singapore, two legal regimes guide the conduct of arbitral processes. In case the arbitration seat is in Singapore, the Arbitration Act (Cap. 10) or the International Arbitration Act (Cap. 143A) regulates the conduct of arbitration proceedings. On the other hand, Domestic Arbitration is under the governance of the Arbitration Act, which took effect on 1 March 2002. The Act applies in any arbitral process taking place in Singapore and in place where the International Commercial Arbitration Act does not apply. The Arbitration Act was repealed to strike alignment with the UNCITRAL Model Law on International Commercial Arbitration. However, IAA applies to all international matters or disputes whose parties are foreigners. 

The main distinction between the two regimes rests on the degree to which courts can intervene in the arbitration processes. In reference to the international arbitration cases, courts can only interfere in a restricted and limited nature to instances expressly captured by the law. On the other hand, the arbitration law gives allowance to the parties to revert to courts if need arises to appeal against an award. The Act equally allows for seeking court guidance on sticky issues wile the arbitration process is in progress. This affects the rights of the parties in substantial ways. However, parties to a dispute remain free to make choices regarding the regime preferable to them and may select between the two depending on their agreement. 

Conduct of Arbitration
Arbitration in Singapore is open to both ad hoc and institutional arbitral processes. The Singapore Arbitration Centre (SIAC) carries out its arbitral processes using its own rules relating to arbitration. These rules are however adopted by parties engaged in a dispute. The UNICTRAL Rules are the ones, which in most instances take precedence in arbitral processes.

The SIAC has a panel of arbitrators who are accredited. These arbitrators are a composition of a regional panel made up of experts. It is from this panel that arbitrators are appointed to spearhead arbitral cases.  For ad hoc processes, the SIAC appoints the arbiters to aid the process. The SIAC also guide the management of finances, administration, and provision of logistic facilities towards aiding arbitral processes.

In cases where SIAC rules of conduct apply, parties to the dispute are required to pay management fees. However, no separate fee is paid in regards to the appointment of arbiters. In reference to cases, which fall outside the SIAC rules, in which case SIAC is only requested to appoint arbiters, an appointment fee applies. Management fees are pegged on the level of a claim or counterclaim. The management fees are fixed and do not depend on the claim level.

Parties remain at liberty to decide the number of arbitrators, in the event that there is disagreement on the number of arbitrators, a sole arbiter shall be appointed. There is no limit on the number of arbiters however like having odd or even numbers.  In cases of any disagreements on matters relating to procedure, the Deputy Chairman of SIAC may assist upon request by the parties involved.   
Orders and directions issued by a tribunal whether under the Arbitration Act or the International Arbitration Act, their enforceability rests with the permission of the High Court. Whenever lave is granted by the court, judgment is entered in reference to the orders or directions. This implies that the powers conferred on arbitrators by the Arbitration Act or the IAA is exercised by the High Court. This means that parties demanding an expeditious implementation of an order or direction can make an application to either the court or the tribunal. Certain orders like injunctions should ideally be sought from the courts. In cases dealt earlier by the court but under a tribunal, the arbitral orders take precedence.

    The statutory time limit a tribunal is required to take in arriving at an award is not specified. This is the case both in regards to the arbitration Act and in the International Arbitration Act. In reference to the Arbitration Act, the court may extend the arbitration time depending on the requests of the concerned parties. This, however is done if all available avenues of the arbitration process have been used towards finding additional time. Further, the court ca only grants extra time if it is satisfied that by denying such a request, great injustice may occur. On the other hand, the SIAC Rules demand that a tribunal concludes its proceedings and delivers an award before the lapse of forty-five days.  The only exception to this time limit can only be made if parties agree in favor of an extension. Just as it is the case in most instances, the arbitral award must be in writing with appended signatures by the arbitrators. in reference to the International Arbitration Act the requirement is that the majority of the arbitrators sign the award. Reasons for omitting other arbitrators signatures must however be clarified. Te award should be specific and details like time of agreement and place of arbitration must be pointed out.  In instances where the SIAC Rules are used, the award is delivered to the office of the registrar of the SIAC body. The SIAC designs authentic copies of the award and transmits them to each party in a dispute. This transmission is done after the parties have made all payments due to the process. Once made, an award remains valid and binding to the parties involved. As thus, no further action is required to give effect to it. However, the law offers an avenue to aggrieved parties to challenge awards if they think injustices has been committed.  However, parties are expected to voluntarily adhere to the award, if a party fails the award is enforced by the courts in Singapore.

Appeal Against the Award
An appellate tribunal is in place to receive appeals based on awards by tribunals. Legally, all parties are entitled to an opportunity to appeal if unsatisfied with the outcome of the arbitral process.  However, the absence of such an institution in Singapore implies that other options like going to court must be considered. Only appeals arising from proceedings under the Arbitration Act can be reviewed in Singapore. The right to appeal may however be excluded by an agreement. An appeal can only take place if parties consent to such or the court grants leave. The time limit requires that the appeal should be concluded within twenty-eight days from the moment of the award.  

Before a court grants leave for an appeal, the following conditions must be satisfied. The conclusion of the issue will have a substantial effect on the rights of a party or other parties in dispute.  The issue is must be one handled by the arbitral tribunal, based on the findings of award facts, the decision arrived at the tribunal if wrong, or the decision is of public value, and if the court has a moral obligation to intervene. However, appeals are only made after all possible avenues have been exhausted.
 
Hong Kong
In Hong Kong, there are a good number of arbitration centers, which offer guidance to operations in various issues whenever disputes arise. The Hong Kong Arbitration Ordinance which encompasses the United Nations Commission on International Trade Law (UNCITRAL) Model Law as an attachment, and the Hong Kong International Arbitration Centre (HKIAC)  has solved over one thousand six hundred disputes since is setting up in 1985.

Given the ratification by Britain and later by chinas of the New York Convention in the year 1977 in place of Hong Kong, convention awards reached in any contracting state is enforceable in Hong Kong.  However, this is subject to refusal in Article five of the Convention. Since the handover, awards arrived at in china are no longer enforceable in Hong Kong. Reciprocal recognition is derived from Ordinance 2000 in reflection of the New York Convention.

Peoples Republic of China
The China International Economic and Trade Arbitration Commission (CIETAC), which was established in 1956, under the confines of the Chinese Council for the Promotion of International Trade is charged with the responsibility of  handling disputes emerging due to foreign or internationally linked trade  or economic transactions. The CIETAC is headquartered in Beijing from where it runs sub-commissions at Shanghai and Shenzhen. The Chinese centre remains among the busiest in the world. The centre has both Chinese and foreign arbitrators from which parties to a dispute are free to select. The arbitration law offers guidance on how arbitration is carried out in the country and it came into effect in 1995. However, the arbitration law discourages ad hoc arbitration, as it requires parties to specify recognized arbitration institution in the final agreement. 
Article 269 of Chinas Civil Procedure Law allows a party pursuing enforcement of an international related local award to make an application to the Intermediate Peoples Court in the respective province where the assets in question are situated. However, the court cannot review substantive merits of such cases. In reference to foreign awards, China has follows the New York Convention, though its enforcement record has been unpredictable.

Japan
The Japan Commercial Arbitration Association (JCAA) reflects the major international arbitration law. This is the only permanent arbitral institution in the country and thus holds the responsibility of dispensing justice in both internal and external disputes brought before it. The law allows parties to a dispute to adopt the UNCITRAL Rules though it sets out its own which are applicable. Parties equally have the freedom to choose the arbitrators they wish to enlist in the dispute resolution. However, Japan has not adopted the UNCITRAL Rules and as a result, there is was no specific international law relating to arbitration in the state as at November 2002. Japan ratified the New York Convention in 1961 and consequently foreign awards are enforceable. However, this is subject to reciprocity reservations as articulated in Article 1 Section 3 of the convention. The refusal standards as set by Article 5, also applies. Awards made in Japan are just as binding as judgment. A of 2002, there was no moment when a Japanese court failed to enforce an arbitral award.

USA The Code of Ethics for Arbitrators in Commercial Disputes
The United States relies on the ABA code of conduct in arbitral processes. The Code of Ethics for Arbitrators in Commercial Disputes was approved by the American Bar Association in 2004. Originally, prepared in1977, the code off conduct is pivotal in the settlement of disputes relating to business issues. The code of conduct of conduct offers guidance in several areas though it does not extend to the labor aspect f commerce.

Neutrality
Appointed arbitrators are expected to be neutral. However, this applies to international matters in most cases as reflected by the United States internal conduct, which does not require arbitrators to be neutral. On the converse, other ethics apply in place of the neutrality note.

The code demands that arbitrators appointed by parties to a dispute disclose all information, which may affect their independence and impartiality irrespective of whether they are neutral. The code of conduct further requires the arbitrators to ensure and confirm by disclosing the soonest possible if the parties intended to have them act independently or not. In case there is doubt regarding arty appointed arbitrators, they are required to serve as neutrals until the existing doubt is shed off.

    The bottom-line of an arbitration process as envisaged by this code demands that integrity and fairness is reflected throughout the process.

Construction
Arbitral processes are subject to rules. Various aspects relating to the conduct of arbitrators may however be subject to agreements as set by the parties to a dispute, borrowed from certain laws, or other relevant arbitration ethics. The rules set by parties do not however supersede or undermine the relevant ones as set by arbitration or national laws. However, this code does not impose an obligation on an arbitrator to act in a manner in which the integrity of an arbitration process is put to doubt in reference to integrity and fairness regarding the arbitral process. 

The need to uphold integrity and fairness
The code of conduct holds that an arbitrator is not only responsible to the appointing parties but also to the arbitral process. This in effect means that an arbitrator must observe high standards while carrying out his or her duties. In this regard, integrity and fairness must be held accordingly. The responsibility towards the public, to the disputing parties, and to every participant must be taken into account.

On accepting the appointment to serve as an arbitrator, one must be satisfied that she is in a position to offer impartial services.  She is able to offer services independently without recourse to party, witness, and or other arbitrators leanings.  She should be convinced of being competent enough to handle the case at hand, and on another note, an arbitrator should be available to initiate arbitration in reference to the procedural requirements and be available throughout the process up-till its rightful conclusion. Having accepted the position of an arbiter, one should not engage in any other business either personal or professional, or acquire any kind of financial or material interest likely to influence impartiality in the proceedings. After an award has been made, arbitrators should not join positions that draw a close relationship with the case they were resolving as such may present a false impression of an interest of expectation. However, continued extension of other or related services by an arbitrator to a party should not be construed to mean partiality since personal or professional associations cannot be affected by an engagement in the past, which does not bear on the present events. This is however, unethical if in future professional engagements disclosure of associations is made as descried earlier.

Arbitrators are expected to conduct themselves in a manner that reflects fairness to all parties and resist the temptation of being swayed by pressure emanating from outside sources like public clamor, and the fear of being criticized, or self-interest. Arbitrators should avoid issuance of statements, which reflect impartiality.

At instances whereby the authority of arbitrators is derived from the agreement between or among parties, the arbitrators in question should not exceed such authority nor should they exercise less of that which is due to them. In reference to cases in which the agreement sets out the procedural guidelines to be followed, the arbitrators have the duty to follow such as clearly spelt out without getting out of the demarcations. However, the arbitrators are under no obligation to follow or adhere to procedures, which may be unlawful in any way. Other procedural requirements, which may be contrary to this code based on an arbitrators judgment, should be rejected.   

It is the duty of an arbitrator to conduct the arbitral process in the best possible way to come up with an efficient and fair resolution regarding a dispute. Further, the arbitrator should put up effort geared to prevent or block any delaying tactics employed by parties to a dispute. Towards this, the arbitrator has the obligation of ensuring that there is no harassment to parties or participants, or any form of abuse, which may lead to the disruption of an arbitral process. The arbitral obligations of an arbitrator begin immediately an individual accepts to serve in such positions. It is unethical for an arbitrator to abandon an arbitration process upon appointment. The only excuse to abandonment is only premised on compelling circumstances necessitating one to quit. On another instance where an arbitrator is supposed to be given compensation and parties default in making payment, then an arbitrator is at liberty to terminate his or her services to the process. An arbitrator who leaves the process before completion is under an obligation to ensue that reasonable steps are taken to offer protection to the interests of the parties involved. This includes giving back any confidential information held without disclosing it to unintended parties.

Disclosure of interest
All individuals interested in serving as arbitrators should make public any direct or indirect personal or financial interest in the issue under arbitration. The potential arbitrator should also disclose any past or present business, financial personal or professional association which might arise to have a bearing on the impartiality and the independence of the arbitration process. The disclosure of information relating to an arbitrators relationship with a party or a partys lawyer, a co-arbiter or a key witness is of insurmountable importance.   Further to this, any arbitrators family links to parties or any individual involved in the arbitration process likely to bear on the course of proceedings should be tabled. The arbitrators are required to disclose prior knowledge, which they possess regarding the case in question. The arbitrator may further disclose any other information, which may be required by the appointing parties, or the law regulating arbitral disclosure. All the above disclosure is expected to be done in a practically reasonable time to preserve the urgency of dispute resolution. Disclosure further demands that all arbitrators should be made aware of what is disclosed before the commencement of proceedings or as soon as such, disclosure is made. If a party or parties to a dispute are informed on the interests of a potential arbitrator oppose the appointment, such an arbitrator may serve. However, if all parties to a dispute demand that an arbitrator steps aside, then the arbitrator in question is under an obligation to quit.

If an arbitrator is asked to step aside by a majority of the parties, then such arbitrator should do so unless the following is in place a deal between or among parties or as set by arbitration rules or relevant law establishing procedures which determine the challenges faced by arbitrators, in this case such shall prevail. However, in the absence of such procedures, if an arbitrator arrives at a decision that the challenge to remain impartial and independent cannot be achieved, then stepping aside may be an option. If the code requires the disclosure of privileged or confidential information, the aspiring arbitrator should secure consent before disclosing the information from the source of information on the other hand, the arbitrator can withdraw altogether from the arbitration process.


Communication
Normally, parties to a dispute, establish the communication protocol in the absence of such determination, relevant rules concerning arbitration communication apply. The arbitrators are under the obligation to follow the set rules while conducting the arbitration exercise. In this regard, arbitrators are not allowed to discuss arbitration proceedings with any party while the other party or parties are absent except in certain circumstances. Such may include at a time when the appointment of arbitrators is being put into consideration in this instance, the arbitrator is free to enquire about the identity of the parties, witnesses, counsel, and the nature of the case. The arbitrator may also respond to issues raised by parties or counsel geared towards the determination of the availability and suitability of the arbitrator. However, this does not warrant a discussion on the merits of the case.

     In an event where appointed arbitrators need to appoint another arbitrator, the expectation is that they should consul with their respective appointing parties before making a choice. In reference to payment settlement, the arbitrators are required to agree with the appointing parties. Routine requests indicating demands for anything should be submitted to all parties. Any information relating to the arbitration process ready for furnishing should be relayed to all parties to dispute at the same time.

The fair and diligence requirement
This demands that arbitrators conduct the proceedings of an arbitration process in a levelheaded manner. While handling the task, the arbitrator should remain courteous and patient to the disputing parties, representatives, and witnesses. At the same time the arbitrators should encourage all participants in an arbitral process to exhibit decorum. The arbitrator is further obliged to accord adequate and reasonable time to allow disputing parties the chance to air their sides of the issue being resolved. The arbitrator is expected never to deny any party the chance to be represented by a counsel in the arbitration process. In an event, that a party fails to appear and present their case after a prior notice is issued according to the procedural requirements as set by law, and then the arbitrators can proceed without any concern in reference to the absconding party. However, this is only done after ensuring that an appropriate notice was issued at the right time to the party in question.

After an arbitrator ascertains that the information delivered before the arbitral tribunal is sufficient enough, it is necessary to decide to call witnesses and pose questions deemed right for the process. The arbitrator can demand documents and any other evidence necessary to resolve the issue. At such a stage, even expert input is welcome. It is never improper for an arbitrator to propose to the parties on how to go about the case like resorting to mediation or using other possible resolution settlements though the arbitrator should desist from putting pressure on the parties to adopt a certain course of action. An arbitrator is not expected to participate in the settlement discussions nor should she act in a mediation capacity unless the parties to a dispute agree to it.  Co-arbitrators are expected to avail to each other the opportunity to fully participate in the proceedings of an arbitral process.          

The decision-making requirement
After a careful determination of the issues tabled before an arbitrator, a decision is made regarding them and not on any other from unknown quarters. This means that a case should be determined based on available evidence only.  Towards this end an arbitrator is expected to remain unaffected by outside influence in making a ruling. The duty to decide is vested on the arbitrator and at no point in time shall such a responsibility be delegate to any other person.  If the disputing parties agree and reach a decision to embody a settlement and request the arbitrator to get involved, in tendering an award, the arbitrator is free to do so if satisfied with the deal. Any time an arbitrator is charged with the responsibility of embodying a settlement, the arbitrator is suppose to state in the award that it rests on the agreement of the parties.

The trust of obligation
It is important to note that dispute settlement is of value if trust is embodied both in the process and in the integrity of arbitrators. An arbitrator while accepting to arbitrate effectively enters a relationship of trust, which requires them, not too use any information gained from the arbitral process in a manner aimed at benefiting the self at the expense of the arbitration process. The process should not be used in a way also aimed at exacting gain for a certain section or selected individuals. In this regard, the arbitrator is required to keep information regarding the process confidential and only lease such to only intended arties. The arbitrators are free to get help from associates, research assistants, or any other individual towards reaching decisions. However, the arbitrator should notify all parties of this intention to erase any doubts. After reaching an award, the arbitrators involved should not assist in enforcement proceedings or in challenging the award. Unless requested by the conflicting parties, an arbitrator is under an obligation not to appoint himself or herself to any other office associated with the dispute. The arbitration panel cannot appoint any of its members to such office either. 

The UK
The major principles underpinning the operation of arbitral processes in the UK rest on the following the arbitration object should obtain a fair outcome from a dispute carried out by an independent and impartial tribunal without unwarranted delays or expenses. The parties to a dispute should enjoy the freedom necessary towards agreeing on how the issue of dispute is solved. However, this is subject to safeguards necessary in reference to public interest. Finally, matters governed by arbitral processes should be subject to court intervention unless indicated otherwise by the same. The parties to a dispute have the freedom to decide the time an arbitral process is regarded as commenced.  This is useful in reference to the Limitations Acts. Secondly, the absence of such calls for the following in instances whereby an arbitrator is designated or named in the arbitral agreement, arbitral proceedings  commence in reference to the issue matter in which case, parties serve the others with written notices informing them to submit their issues to the designated or named person.

In instances where an arbitrator is appointed by parties, arbitration proceedings are commenced in reference to the issue when one of the parties serve the others with a written notice on demanding that they appoint an arbitrator or confirm the appointment made in that respect. In cases where arbiters isare supposed to get appointed by an individual instead of a disputing party, arbitral proceedings commence in reference to the issue the moment one party issues a written notice to the individual requesting that she makes the appointment.

The arbitral tribunal
The contending parties have the freedom to agree on the number of arbitrators required to resolve a case. The tribunal formed can be under a chairman or umpire. Unless agreed by parties to a dispute, a deal which requires the appointment of an even number of arbitrators would imply that an additional arbiter to chair the tribunal. In case of a disagreement concerning to the number of arbitrators, the tribunal shall b led by a sole arbitrator. The parties are free to agree on the procedures to be used in the selection of arbiters and the chair to the tribunal. In case there is no such agreement in place, the tribunal is made up of one arbiter, the sole arbiter is appointed by the parties taking a period of not more than twenty eight days in the process after receiving a request from either party to do this. On case the arbitration panel is to be composed of two arbiters, the parties must appoint one arbiter each taking not more than fourteen days in the process. In an event that three arbitrators are o be appointed, each party appoints one, the appointed two then goes ahead to appoint the third party who acts as the chair of the arbitral process. 

Australia
Australia is a stable political system, which enjoys a high quality legal practice. The availability of arbitrators and judges with the necessary expertise in handling international issues and a broad range of dispute settlement avenues present a good ground for arbitration. Bodies like the Australian Centre for International Commercial Arbitration (ACICA), the Institute of Arbitrators and Mediators (IAMA), and the Australian Commercial Disputes Centre (ACDC) augment the position.
International Arbitration in Australia is governed by 1974 Act, which offers procedures on how arbitration is carried out. The 1974 Act provides that UNCITRAL Model Law on International Commercial Arbitration is applicable to all aspects of commercial arbitration taking place in Australia. However,, this may not apply if parties to a dispute decide to pull out of the Model Law. In the case of opting out of the model, the relevant Commercial Acts of Arbitration shall apply with reference to the state in which the issue is taking place. There is a limited nature of intervention approaches by courts in arbitration processes. This is reflected in the way in which parties have complete control of the issues relating to their cases and hold the freedom of engaging foreign counsels in disputes. They are also at liberty to make a choice regarding the procedure and the law governing the arbitral process. The 1974 International Arbitration Act adopts the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The Act also adopts the Washington Convention relating to International Convention on the Settlement of Investment Disputes between States and Nationals of Other States. This means that enforcing arbitral awards in Australia remains subject to limited grounds as set out by the New York Convention.

International conventions
The international conventions play an important role in the area of arbitration. However, the international conventions do not expressly have provisions prescribing the obligations of arbitrators. The lack of arbitrator obligations implies that parties to a dispute are charged with the responsibility of making decisions concerning the issue. In most cases, reference has been made to the New York Convention in the absence of obligations.

National Bar Associations
National Bar Associations form another group, which has immensely contributed to the arbitral procedure. These associations impose obligations on their members regarding the conduct of the arbitral process. However, this presents an emerging trend as exemplified by the proposed Model Rule for Lawyers to act as Third Party Neutrals.

IBA Ethics
The (International Bar Association) IBA code offers an international framework within which arbitrators conduct their activities. The fact that IBA brings together members of the bar, it is important to examine the provisions it stipulates for arbitrators. The universal nature of the institutions membership makes it a good choice for examination.

International arbitrators should remain independent, impartial, diligent, competent, and discreet. The ethic requirements remain abstract and assessing them becomes a difficult prospect. As opposed to being rigid rules and regulations, the ethic requirements are a reflection of internationally agreed upon ways of conduct by all parties, which subscribe to international law. The objective of any instituted process remains the attainment of a just and fair result in any dispute.  However, the rules of conduct are not enforceable by anybody. This means that compliance to the rules is a subject of good faith.

The fundamental rule governing arbitration clearly underscores the need to carry proceedings diligently and in an efficient manner to reach a resolution free from bias. When appointments of arbitrators are being done, the prospective arbiters should accept   such appointments only if they are satisfied that they are equal to the challenge of discharging the duties at had without bias.  Further, a prospective arbiter shall accept an appointment on condition that she is competent to offer help in determining the issues of a dispute based on possession of adequate knowledge on the dispute and the language used in the arbitration process.  While accepting the appointment as an arbiter, aspiring arbitrators are under an obligation to commit their time to the arbitration exercise as entitled and expected.  It should be noted also that aspirants to arbitral positions should never canvass while looking to be appointed as arbiters.

Element of Bias
The element of bias is a critical aspect considered in relation to the arbitration process. While assessing questions referring to bias, impartiality and independence come into the fray. Te element of partiality is witnessed when an arbitrator is perceived to be leaning to one side or sympathetic to one disputing partys position.  The case may also arise in instance where an arbitrator holds a prejudice against a given subject matter on a dispute.  On the other hand, dependence emerges in reference to an arbiters relationship with one of the disputing parties or with individuals closely connected to a party to a dispute. Other issues like considering other arbiters as dependent on others before ascertaining such a position may be a representation of bias. In other case scenarios f an arbitrator holds a material or any other kind of interest in an issue relevant to the case at or at one point taken a position regarding such dispute, and then the element of bias arises.  To overcome the element of bias, it is necessary that all parties to an arbitral process get to fully disclose their association with the issue of dispute.

As pointed out, any links, either direct or indirect especially of a business nature between an arbiter and a party to a dispute or a close ally of either or both presents an element of suspicion in reference to bias. As a result, such individuals should not be considered for appointment and if considered for appointment they should honorably reject the positions in order to safeguard the independence and impartiality of a tribunal. However, if parties agree to proceed having known the facts concerning this, then there shall be no issue relating to this at a later stage in the proceedings.  As an illustration, if members of a prospective arbiters family, firm, or business partners have any form of association to a party in dispute, then such creates an element of possible impartiality. However, past business links cannot act in absolute terms when it comes to acceptance, instead the nature and magnitude of the association poses a danger to the arbitration process.

Substantial continuous professional or social relationships between a party to a dispute and a potential arbitrator should be viewed keenly. This also applies to individuals who would be potential witnesses in the arbitral process. To avoid any shreds of doubt, individuals of this nature should be disqualified or disqualify themselves if appointed if independence and impartiality are to be maintained.

Duty of disclosure
Any aspiring arbitrator is under the obligation to fully disclose all facts relating to the issue at hand or circumstances, which may necessitate or lead o justifiable doubts regarding the degree of impartiality andor independence of the character in question. If such a disclosure is not made at the right time, then this may affect both the impartiality and independence of a tribunal. In such cases, disqualification is used to remedy the situation.  It is worth noting at this stage that disclosure of great value as without such, even the least of concealed information, which would otherwise have no impact on the bearing of the arbitral process can, lead to disqualification.

In reference to disclosure, a prospecting arbitrator must reveal
Any business relationship whether past or present, and whether direct or indirect including earlier appointments to serve as an arbitrator should be examined. In relation to current associations, the potential arbitrator should disclose all that applies to the issue regardless of the magnitude but rather depending on the triviality connected. Only issues related to the professional conduct are put into perspective in reference to the current association between a party to a dispute and a potential arbiter. Failure to disclose an indirect association unknown to an aspiring arbitrator does not constitute a ground for disqualification. In this case, disqualification can only be instituted if it emerges that there was an attempt to conceal certain information.

Other factors like the nature of the relationship and the duration taken with any party to a dispute or a key witness in the arbitration case must be examined.  The nature of association between a potential arbitrator and other arbitrators is also critical in as far as impartiality and independence pursuit are concerned.  Such association may include past execution of similar or related work together.  The level of prior knowledge held by the potential arbitrator must also be disclosed.  The arbitral hopefuls must also outline other commitments likely to deny them ample chance to tend to matters relating to the arbitration process.  As the arbitration process proceeds, arbiters are required to continue disclosing any emerging issues regarding the conduct of the case in question with a view to shading new facts on various circumstances.  Any form of disclosure is expected to be made in writing and be communicated to other parties to the dispute at the earliest possible opportune moment.  It is further required tat when an arbitrator is appointed previous disclosures availed to the parties should also be passed to the arbitrators.

Communication with parties
When approached for appointment to the arbitration process, the potential arbitrator should consider whether she is capable of remaining independent and impartial throughout the arbitral process. At the same time, the candidate should gauge his or her competency in reference to the matter at hand. The arbitrator must be able to decide his or her availability and be in a position to respond to questions regarding his or her suitability for the arbitral position. However, at this stage the idea of discussing the merits of the case should not crop up.  In the unlikely event that a presiding or an aspiring sole arbiter is approached by a single party alone, it is prudent that the arbitrator ascertains that the other party or parties to the case hashave given consent for the process.  In this case, the arbiter should pass information to the other parties detailing the approach made for his or her services orally or through writing.  The substance of the case should also be shared to the contending parties or opposition arbiters.  In cases where an arbitrator may be required to participate in the selection of an additional arbiter, then it is expected that the arbitrator consult with the appointing party before making a decision. As proceedings take place, the arbiters must desist from taking unilateral actions relating to relaying information on the case without the consent of the parties involved.  Shall an arbiter become aware that one of them has engaged in unilateral disclosure of information regarding the case in question, she may take the opportunity to inform the other remaining arbiters and determine together the best cause of action against the offender.  In most instances, the ideal initial measure involves requesting the culprit to refrain from such events. In an event that the offending arbitrator fails to toe the line, the arbiters should pass information to the parties to the case so that a decision regarding the offender can be deliberated.  Arbitrators are expected not to accept any substantial present handed by a party to a dispute, in the same line of thought, hospitality both direct and indirect to an arbiter is unacceptable. All arbiters must steer clear of getting significant professional or social contact with parties to an arbitral process.

Duty of diligence
Arbitration is a time consuming exercise which require the sacrifice of all arbiters taking party in a dispute resolution. Consequently, all arbiters are expected to assign a good amount of time and largely remain committed to the dispute resolution from the word go until the end. This will help avoid a dispute resolution dragging and thus leading to additional costs. This underscores the need to resolve issues in a timely manner. 

Involvement in settlement proposals
If the parties to a dispute had agreed to allow arbiters to take part in proposing the settlement of the dispute, then the arbiters have the right to go ahead and offer a proposal regarding how the case should be rested.  While discussing the agreement terms, it is worthy to ensure that all concerned parties are invited to witness such as discussion in the absence of a key party would amount to contempt of party rights. Arbitrators who get involved in discussing arbitration proposals in the absence of a contending party are normally disqualified from future cases pertaining to arbitration.

Confidentiality of deliberations
An arbitral tribunal is always expected to reach certain agreements. The deliberations as exhibited by the contents of the award must remain confidential until or unless released by the disputing parties. Arbitrators are required not to participate in the release of settlements or giving information for the purposes publicity. The only time an arbitrator is allowed to go public is only when fraud or misconduct emerges on the part of fellow arbiters.

Presumption of neutrality
The neutrality presumption is applicable to all arbitrators irrespective of who the appointing authority is. This implies that even party appointed authorities are under an obligation to observe the neutrality principle by avoiding leaning to positions, which may compromise their duties as arbitrators. This presents a reversal of what the 1977 code provided for as then non-neutrality was accepted on the part of party appointed arbitrators. This concept, neutrality captures both the aspect of impartiality and independence. In instances where non-neutral arbitrators are used, the new code demands that ethical obligations must be maintained.

Party appointed arbiters are expected to ascertain and inform the arbitral panel and parties whether they are acting as neutral or non-neutral arbiters. This should be done well way ahead at the earliest possible time. In any event that doubt arises regarding the acting nature of arbitrators the expectation is that the arbitrators act non-neutrally until such doubt is erased.   

Comparison between IBA and ICC
The IBA Rules of Ethics for International Arbitration of 1987 requires arbitrators to diligently conduct the arbitration proceedings and only accept appointments if they are sure of completing the tasks at hand. National arbitration laws equally expect arbitrators to remain diligent and compliant to the commitment requirement by sticking to the set time limits o arbitration processes. ICC Rules empower the ICC Court to strike out the names of arbitrators who do not fulfill their functions given the agreed time, a feature also captured by the LCIA Rules.

Whereas the ICC is moving towards more disclosure in reference to arbitrator availability, the ABA seems to have done away with the issue. On the contrary, the ABA has developed a checklist detailing the disclosure requirements with a particular focus on the principle of independence and impartiality. The major focus was on checking the discrepancies attributable to difference in statutes, standards, arbitrator disclosure, ethics and cases codes, etc.

In the initial stages of the drafting and presentation of these changes by the ABA, criticisms were leveled against the group especially from international arbitration quarters as being overly deterministic, prescriptive, and demanding excess disclosure. The overall effect was perceived as being unsupportive of the arbitral process. Further, the perception was that the ABA regulations served to undermine the finality of arbitration agreements as they encouraged post award challenges. The international law wing of the ABA group was concerned that the adopted rules would be in contradiction with international arbitration believing that such would instead of add to the confusion surrounding the field.  A major concern rested on the possibility of difference between the US and the European arbitral process. This was viewed also as a possible avenue for reducing the potential of the United States being selected as a host of international arbitration cases. Even f this new set of guidelines is adopted a new sticking point would arise concerning the discrepancy between the United States and other countries.  It should remain clear that this checklist is a proposed code of conduct, which has not been formalized in the United States.

Obligations
The idea of impartiality and judicial independence were originally developed to guide the conduct of both national and international judges offering services in permanent courts. However, at times problems arise in reference to the application of these principles especially on an international level. This is especially the so as adjudicators, ad hoc judges, and arbitrators are appointed by parties to case in international disputes. This position is held because individuals appointed by a party to a dispute would be expected to protect the interests of the appointing authority. It requires great sacrifice for appointed arbitrators to remain objective and avoid leaning towards the appointing side. The idea of selecting arbiters who have served individuals to a dispute in the past further complicates the whole process. Entrusting one individual to a case implies that the arbiters philosophy tallies with the appointing individuals. Simply put, disputing parties are least interested on the partiality or objectivity and fairness of the judicial process, their major concern is to reach a ruling favorable to their interests. 

Adjudication of cases is thus thrust into an arena, which confounds the foundations of justice. This puts ethics of arbitration into perspective. It is very clear that in arbitration there are two sets of competing interests. In the first instance, there is the need to protect the interests of the appointing party and on the other there is the need to take care of the interests of justice. The nomination of adjudicators underscores the level of control wielded by appointing parties in reference to the adjudicators. This clearly entails the sacrifice of a certain degree of judicial impartiality and judicial independence of the appointed arbiters in favor of improved trust and confidence in the arbitration process. However, in the case of international judges serving permanent terms, this is not the case.    

Examining cases to determine the application of obligations
In October 2007, the Brussels Court of Appeal gave a ruling, which nullified an early award by a lower court. The ruling dismissed a request by the polish government aimed at having Judge Stephen Schwebel a former ICJ President, disqualify himself from taking party in the UNCITRAL arbitration tribunal. This tribunal was listening to a case brought by a Dutch company  Eureko BV, against the Poland government.  The dispute was about unilateral decisions by Poland which bore a lot of changes on the operational terms of privatized insurance which had been acquired by Eureko on august 2005. The UNICITRAL tribunal made public its award holding that Poland had acted in expropriatoy terms, and in the process had violated a bilateral agreement the Bilateral Investment Treaty obligations requiring a fair treatment of all investments. The arbitral panel further held that the act by Poland was a breach of specific government undertakings against the Eureko Company. Poland commenced proceedings before a Belgian Court of First Instance.  The proceedings aim was to have judge Schwebel disqualified from taking part in the second phase of the proceedings whereby the quantum of remedies would be assessed.

Poland was specific that in the 2005 that judge Schwebel had become a member of the International Litigation Department of Sidney. Schwebel with Austin, brown and wood were to serve as co-counsel in representing a law firm in an investment dispute between Cargill Inc. and Poland. This case was also premised upon the US  Polish BIT agreement. It should be recalled that this is the same agreement, which Eureko was using in launching its complaints against the Polish government. Schwebel vehemently denied any links between the two cases though Poland argued that there was a cloud of doubt t emanating from the early engagement between Schwebel and Eureko. In addition to Polands objection, it was alleged that Schwebel who had been enlisted as an arbiter in the case between Vivendi and Argentina could use previous knowledge against the country. The country argued that the case put Schwebel in vertical conflict with Eureko proceedings.  The court dismissed Polands allegations and let judge Schwebel become a member of the UNCITRAL tribunal. The court held that though Scwebel ad held a form of professional association with SABW but this did not affect his independence from the firm and that there was no truth in believing that he could be influenced while exercising his arbitral duties by the firms litigation aims. The idea that Schwebel ad worked with SAWB did not create dependence relations. 

Suez v. Argentina
The case Suez v. Argentina concerned the state of a foreign investment program in Argentina. The project was on water distribution and the treatment of waste concessions. On August 2007, Argentina made demands that the claimants appointed arbiter Prof. Gabrielle Kaufmann-Kohler, be disqualified on the basis of having worked in the same capacity in the past for another party in the CAA  Vivendi v. Argentina. This case also related to water issues in Argentina.  On the basis of Argentina, the award by CAA was flawed in particular reference to the treatment of   factual information. This raised doubts over the impartiality of Gabrielle Kaufmann-Kohler as he supported the earlier decision. The other two adjudicators held that Argentinas case lacked substance and failed the promptness test. The litigants failed to persuade the tribunal that participation by an arbiter in past proceedings on an issue can influence future decisions. Simply put, such cases do not brew up bias in ay way whatsoever.

Role of arbiters
The cases highlighted bring about the element of tension, which characterizes the principle of impartiality and judicial independence, and the notion of professional disposition and personal trust, which underlie the selection of arbiters. It may be difficult to prove that a party appointed arbiter or an ad hoc judge is chosen to protect certain interests but the doubt remains. It is possible and highly likely that litigants to a case would select individuals who they believe is in a position to secure a specific award. In this regard, judges or arbiters who have been able to obtain awards favorable to specific positions especially in the past stand a preferred chance in the selection process.  It is further discernable that personal contact based on experiences with certain arbiters in a dispute may play a significant role as this creates a certain degree of trust among the involved individuals. Such trust may form a basis upon which disputing parties find it necessary to submit cases to an arbitration process. It is thus little surprise that in most cases, the appointed arbiters remain the same as ones appointed earlier.

Appointed adjudicators serve a delegated function on behalf of an appointing authority. These individuals are authorized to arrive at amicable settlements. They are charged with the task of monitoring to ensure a fair and proper conduct of the arbitral process. Secondly, they make sure that the interests and positions of parties are well-understood and put into consideration by an arbitrating tribunal. In modest terms, they help in the maintenance of confidence of the parties to a dispute by preserving a certain degree of control over the arbitration process. However, this only presents a partial picture as parties appoint arbiters to an arbitral process based on their position on the issue in question. The adjudicators must be sympathetic to the appointing authority in order to secure the position. It is ignorant to assume that such is not the case since disputing parties look for victory in any kind of dispute. On assumption that this is not the case, parties to a dispute in most instances feel that the opposing party will go for individuals favorable to their position this kind of fear leads the parties into making choices of arbiters friendly to positions desired by the disputing  parties.
Fair handling or treatment of cases is a major issue in international arbitration. On investment matters, good faith is a key attribute which always crops up. On the basis of the Vienna Convention, Article 31(1) makes reference to good faith in the interpretation of treaties. A fair interpretation implies that impartiality is the goal of while settling international disputes. Good faith is used in regards to interpreting treaty obligations. This underlies the idea that fairness and equitable treatment of matters before a tribunal. The minimum requirements of customary international provides for this. States accused of reneging on treaty agreements point to acting in good faith in instances of dispute.
Various issues of misconduct have bordered on the aspect of good faith. Issues of investor misconduct have arose as pointed out by Inceysa Vallisoletana S.L. v. El Salvador, Fraport v. Philippines, Phoenix Action, Ltd. v. Czech Republic, and Plama v. Bulgaria. While listening to cases concerning good faith, tribunals are under the obligation of safeguarding the integrity of the process. Parties to an arbitral process are equally required to observe the principle of good faith and fairness. Any tribunal has the obligation of ensuring that the fairness requirement is upheld. The fair principle is applicable in reference to the arbitration process, investment arbitration, parties to a dispute, and the arbiters.

When parts draw a draft of an arbitration agreement they posses wide freedom in the construction of a dispute resolution mechanism they like. In this regard, they can commence institutional or ad hoc arbitration processes.  At this stage, the parties can also decide the number of arbiters, the required credentials and all relevant matters regarding the procedural preferences.  For instance, the time limit can be decided by earmarking the period of the arbitration process. Further to this, after the arbitration process, the parties can modify the agreement to reflect any desired changes. Before commencement, the number of arbitrators can be changed,    the appointment procedure altered, and other issues relating to pleading sequence and time limits can be reset. Despite this, the parties freedom to make choices regarding arbitrators appointment and matters of procedure, there are few limitations however. For instance, despite these freedoms, the final agreement must be valid that is, the award must be in accordance to the law, which creates the process. The arbitral procedure should also comply with all the rues and regulations governing international disputes settlement.  

Findings
Various national laws augment the arbitration process requirements as exhibited by the demand that all disclosure regarding known facts be made by arbitrators. For instance the French Code of Civil Procedure demands that an arbitrator discloses any personal cause which can lead to disqualification of which the individual is aware of. The international arbitration law of Switzerland requires that arbitrators disclose any circumstances which may cast doubts over their independence.  Further afield, in the United States, Supreme Court decided that arbiters should disclose any issues or dealings which may cast aspersions or create impressions of bias in arbitration proceedings.
There is a certain degree of discrepancies, which emerge in reference to the different standards, statutes, cases, and ethics, which govern the arbitral processes. Impartiality and independence are the two principles which however seem to play a dominant role in arbitration proceedings. It clearly emerges that despite the discrepancies, there is a certain degree of congruence across the various institutions, which offer governance and guidance on arbitration issues. However, based on latest development, wit particular reference to the ABA case, it is too premature to purport the existence of a close-knit connection between countries while referring to arbitration processes. However, in Europe and the rest of the world, common sense is taking an influential role in arbitral processes. The nature through which overly prescriptive and restrictive formalistic approaches are done away with or reduced to the minimum reflects this. The move by ICC to demand disclosure on availability of arbitrators serves as a clear pointer that arbitration is emerging as an important avenue of dispute resolution as this ensures a speedy resolution of disputes.   

Conflict of interest is major problem in both international and domestic arbitration. The demand that some information be disclosed presents a difficult challenge as arbitrators are left unsure about which information to share. It is also discernable that arbitrators facing the same scenario will not disclose the same depth of information to the arbitral tribunals. This raises a serious question regarding the extent to which disclosure is useful. This does not however present an attempt to dilute the value of disclosure in the arbitral processes.  

Growth and development in international business has expounded the limits on international relations. Arbitration is thus a good response to help address issues arising from this phenomenon. However, the growth as witnessed interlocking of corporate responsibilities, this intensifies the conflict of interest as most international institutions are related in a way or another. Disclosing a relationship whether minor in nature may serve as an excuse to lock out an arbitrator. In other instances, challenges to the suitability of an arbitral candidate may serve to derail the arbitration process. In case the opposing party secures the removal of the arbitrator in question, further time may be required and this stands to cost the process in unnecessary ways.

On the basis of the above finding, institutions, courts, arbitrators and parties face the challenge of having to deal with complex decisions regarding to the appropriate standards useful in arbitration. A further complication is inherent if an objection is raised after a party has made a disclosure. It emerges that there is tension on the one hand, concerning parties rights to disclosure of scenarios, which can potentially influence the independence of the arbitrator, and on the other hand, there is the right of the parties to arbitrator selection. There is no doubt that there are laws and standards governing the situation the standoff concerns the detailing of the guidance to bring about uniformity in the application of the rules. It is thus little surprise that international arbitrators employ the use of different    standards in coming up with decisions regarding challenges, objections, and disclosure.

Commonalities
The duty to disclose is applicable to all institutions and the various rules adopted by arbitration rules. It emerges that all rules require that arbitrators remain impartial and independent while executing their duties.  With little focus on the intent of the rule, it is clear that it is at the disposal of the arbitrator to select which facts or in formation to table before the tribunal. However, the arbitrator is expected t act in good fait by disclosing all that appertains to the dispute before a tribunal. Another emerging trend in arbitration is premised on availability to serve. Due o rising commitments and the need for expeditious resolutions, it has becomes onus upon the arbitrator to declare their availability to save arbitral processes from unwarranted delays.

The unanimity of the rules on independence and impartiality is spot on.  The issues, which may deter the achievement of these principle requirements, must be disclosed. The current AAA Rules directly refer to ICC Rules in reference to disclosure. However, LOA Rules differ in approach, as they require prospective arbitrators to offer an evaluation of the facts and circumstances, which may raise suspicion regarding impartiality. The arbitrator based on information then either declines the appointment or executes a declaration indicating the absence of circumstances likely to occasion any justifiable impartiality. 

The different national laws also impose the independence and the impartiality principle in arbitral processes. However, the rules imposed y national laws remain discretionary in nature just as the ones adopted by the various arbitral institutions. For example, the French Code of Civil Procedure puts a requirement on arbitrators to make disclosure-detailing reasons, which may lead to their disqualification fro arbitrating. In the United States, the Supreme Court has made it clear that an arbiter ought to disclose any issues, which may bring bout bias. It is thus held that generally national laws mirror arbitral rules regarding the rule of disclosure. 

The emergence that most countries are signatories of the New York convention implies a limitation on the part of national laws in reference to the way in which they can the influence arbitral processes.   However, in most countries as pointed by the case of Singapore, there are options to choose from that is between a local and an international based arbitral process. In case parties opt for the local based tribunal, then the international rules may not apply. However, the local or domestic based arbitral processes do not present a big deviation in terms of procedure and rules. However, domestic arbitration may be subject to national rules and there are chances arbitral awards may be subject to challenges instituted through the court processes.

The presence of a lot of flexibility underscores a major talking point concerning arbitration. It emerges that in various institutions just as in different states, there are minute differences concerning arbitral procedures. For example in Singapore, the deputy chair of SIAC holds wide-ranging powers. This is not the case in other institutions. However, there is agreement that discrepancies in the different states and the various states is due to environmental and to some extent cultural differences. The most notable finding however rests on the fact that most institutions engaged in arbitration follow heavily from the New York convention guides.  This brings a lot of uniformity in the way arbitral processes are dealt with. For example, the requirement based on the principle of impartiality and independence holds in every institution and all countries. The duty to determine arbitral procedures and the nature arbitration is carried, the timing of making a conclusion, among other important aspects appear uniform albeit on the evidence presented in this paper.

Enforcing international arbitral awards may run into problems though this is limited in nature.  Some countries may fail to enforce an arbitral award.  The peoples republic of china is an example whose implementation of awards track record remains unpredictable. However, other countries as indicated in this study (for example Hong Kong and Japan) implement international awards any time required to.  This indicates a problem in the execution aspect of awards. However, the fact that it is only china which holds the record, it is ideally to take measures aimed at making the republic toe the line and join the rest of other nations in universalizing international arbitration.

The obligations imposed on arbitrators handling cases are relatively similar. This is irrespective of the location of an institution or of a state. However, it was found in this paper that IBA was on the verge of introducing new measure aimed at aligning the arbitral process and the state laws. This may be a plausible move if it helps towards the improvement of the arbitral process in general. But while carrying out changes, care should be exercised so as to maintain compliance to the international convention on the arbitral process. Changes of this nature may present discrepancies on arbitral processes and bring about confusion.

Another difference which emerges on the basis of the paper is premised on the disclosure requirement. Whereas all the institutional set ups require parties to disclose any information regarding personal relationships, which can lead to an element of impartiality on their part while carrying the arbitration, exercise, it is clear that the ICC rules go a step further. Apart from demanding the routine disclosure, the ICC Code further requires that prospective arbitrators disclose their availability during the arbitral process. This is aimed at ensuring that the arbitrators fully commit to the arbitration process to guarantee a timely completion of dispute resolution. This code presents a departure from the other arbitral institutional codes. It is a good measure which if universalized can help a great deal in ensuring timely conclusions of arbitral disputes.
The different codes of conduct in arbitration as clearly demonstrated in this paper do not hinder the arbitration process in any way.  This rests on the fact that over one hundred and forty states are signatories to the New York Convention. After ratifying the arbitration convention, countries and various institutions are bound to practice arbitral proceedings in a manner that conforms to the convention.  This implies that the differences are never fundamental in nature as a result, they do not pose a serious danger to the arbitral process at the international stage.  It is concluded that the codes of conduct do not vary fundamentally. However, such a variation could lead to a plethora of issues regarding international arbitration as differences between countries could pose dangers to the whole idea of arbitration. It is thus in the interests of everybody that arbitral processes at the international stage be conducted under one uniform code of conduct. Nonetheless, this should not necessarily apply to domestic arbitration.  Due to the differential nature of countries, each country should have the freedom of running its own arbitral processes according to codes preferable to citizens.  This should follow the Singapore models of arbitration. However, the choice of the model to use in solving an issue should remain in the hands of the parties to a dispute.

    The study focussed on the analysis of energy Subsidies in World Trade Organizations agreements. The study focussed on the definition of a subsidy with reference to production and consumption. Then the analysis explores the size, impact and effects of an energy subsidy. Moreover, the analysis focuses on the legal analysis of subsidies in the energy sector with reference to World Trade Organization (WTO) laws. These cover fossil fuel and renewable energy, which includes a WTO Agreement on agriculture. Finally, the study explores the designing and Reforming Energy Subsidies where it covers grounds for Subsidising Energy, reforming Harmful Energy Subsidies such as fossil fuels subsidies and finishes with the implications of phasing out subsidies on global energy and climate trends.

  I. Energy Subsidy
    An energy subsidy is any government action that influences energy market outcome by lowering the cost of energy production, raising the price received by energy producers or lowering price paid by energy consumers. Production subsidy therefore is any government intervention such as the direct cash payment by a government to an energy producer to stimulate production by keeping the prices for producers above market levels or by reducing costs to producers. Consumption subsidy is any government intervention such as direct cash payment by a government to an energy consumer to use a particular fuel or form of energy thereby reducing costs to consumers. An economic definition of a subsidy is a government directed market distortion intervention, which decreases the cost of producing specific good or service, or increases the price.  From the definition, one can conclude that economic definition of a subsidy is directly related to the central environmental principle of full cost pricing. Legal definition of a subsidy is responsive to the politics of national and international trade. Subsidies include within its scope any government intervention that has the effect of altering the cost of production and thus affecting the price of a good.
    The subsidies are based on their direct or indirect effect on price. These energy subsidies are direct financial transfers such as grants, preferential tax instruments such as rebates, trade instruments, energy related services provided directly by government at less than full cost, and regulation on energy sector. Furthermore, the diverse reasons for energy subsidies are outlined by defending local producers and encouraging employment creation locally. Secondly is to remove the excessive imports and thus enhance internal security. Thirdly, subsidies are used to manage risks and thus making energy accessible, cheap specifically for certain social groups. In addition, subsidies are used to protect the environment by supporting the switching to renewable energy in terms of use and production.
The Size of Energy Subsidies
    Energy subsidies vary greatly in import and type according to the fuel and amongst countries and they fluctuate over time. Energy subsidies size assessment is very complex due to the difference in defining, methodologies, and the transparency of the fiscal systems adopted by the different countries. Studies undertaken reveal that globally energy subsidies are large and are mostly accounted for by the non-OECD countries. The studies show that world fossil fuel subsidies at around 133 billion per annum. Similarly, producer subsidies usually in the form of direct payments or support for research and development with the fossil fuel and nuclear industries are rampant.  
    In measuring the size of an energy subsidy, the following measures can be used. To start with there is the effective rate of assistance (ERA) which is the fundamental measure of a subsidy in that it covers all the aspects of a subsidy be they direct or indirect action that affects the price of the good under consideration. It captures the full extent of the subsidy and thus it requires information on subsidies to industries upstream making it difficult sometimes to practically use. The producer subsidy equivalent (PSE) developed by OECD in another measure that has been used to quantify subsidies especially coal. The price gap approach encompasses actual end user prices of energy products with prices that will prevail in an undistorted market without any subsidy. The difference between the two is called the price gap.
Impact of energy subsidies
    Energy subsidies in the non-OECD countries benefits consumers by enabling them pay lower prices and enabling producers receive higher prices for the energy they generate. Energy subsidy to producers greatly affects the funds available for investment in other essentially important sectors and thus lowers the rate of economic growth in developing countries. Moreover, the benefits may not trickle benefits to the intended poor because their consumption levels might not rise, as it will for the middle and high-income levels that therefore benefits with the energy subsidy. Economic, Social and Environmental Effects
Economic
    Subsidies diminish incentives to use energy efficiently, act as a drain on government finances and hold back economic development. Moreover, energy subsidies are associated with high economic costs. Energy subsidies that reduce the price received by producers undermine the energy providers return on investment and their ability to invest in new infrastructure therefore continued reliance on outdated and dirtier technology.  Production energy subsidies that cushion producers against competitive market pressures reduce incentive to minimize costs resulting in less efficient plant operation thus hampering efforts to improve productivity. Fuel subsidies encourage illegal trade of fuels to neighbouring countries where selling prices are higher. Moreover, subsidies to specific energy technologies inevitably weaken the development and commercialization of other technologies that are promising to become more economically attractive.
    Economic changes because of energy subsidies result in the worsening of social conditions as a result energy-sector workers are made redundant. However, an increase in public investment in health care or education that could result from a redirection of public expenditures from energy subsidization leads to improvements in well-being, both in the present and in the future of the citizens.
Social effects
    Subsidies to modern cooking and heating fuels such as kerosene, liquefied petroleum gas (LPG), and natural gas as well as electricity in developing countries improve the poor households living standards by making those fuels accessible and affordable. Other benefits include less indoor pollution, time reduction for children and women in gathering fuel and therefore more time for productive activities. However many energy subsidies intended to benefit the poor households by boosting their purchasing power or improving their access to modern energy may leave they worse off. This is because they consume very small amount or they may be very far from the national grid in electricity subsidies or diversion to the black market due to price caps.  Additionally there are widespread social impacts that encompass the loss of employment due to reduced demand for the less subsidized energy thereby increasing hardships and reducing living standards. Moreover, education standards are affected due to the availability or non-availability of sufficient light for doing the homework. Likewise, there are increased problems of cold among the poor and mostly the poor elderly especially during winter season.
Environmental effects
    Energy subsidies encourage production and use of fossil fuels, which inevitably have consequences to the environment both positive and negative. Energy subsidies that encourage more consumption due to lower price of respective fuels increase the emissions of noxious and greenhouse gases. Higher fossil-fuel production also damages the environment by polluting the water supplies and spoiling the landscape because of mining. Furthermore, subsidies on bio fuels trigger intensive farming increasing in the use of fertilizers and pesticides, which damage the local ecosystems increasing water and soil pollution.
    Nevertheless, energy subsidies also have benefits as it reduces deforestation in poor and developing countries increasing carbon sinks and potentially offsetting the emissions from fuel combustion. In addition, energy subsidies reduce indoor pollution as consumers change from traditional energies to the subsidized ones.
II. Legal analysis of current agreements.
WTO Law
    With the increased levels of international trade in both goods and services, rules to regulate the working of the market were needed in order to ensure that producers are faced with similar costs of production and that none was placed at a disadvantage due to the lack of support from local government. In addition, consumers were to have similar or equal market conditions prevailing. Given that the concentrated efforts of producers command a greater political support than the diffuse interest of the consumers, governments find it much easier to emulate the vices of protectionism rather than the virtues of free trade. This has therefore prompted the international trading community to set guidelines that distinguishes acceptable and non-acceptable subsidies measure codified in bilateral treaties and multilateral agreements such as GATTWTO. In the present era of increased interdependence among countries operating different markets, any government intervention by any one particular country has effects, which are felt in other countries or market segments. This has formed the basis for entering into international treaties to define governments obligations ensuring efficiency and equity in resource allocation and gains achievement. This led to a series of negotiation to come up with generally accepted rules to govern the operations of production and distribution. These round talks in Uruguay and other countries culminated in the formation of World Trade Organization (WTO), which had the mandate of formulating rules acceptable by all member countries to direct the operation of the market between member states and outlining the relationship with the non-member states.
    Among the major functions of WTO law has been to provide structures and rules for the negotiated reduction of tariffs on goods and services under both General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade and Services (GATS). For purposes of attaining sureness, transparency and non-discrimination in international WTO law, WTO members are advised to communicate their devotion with respect to tariffs in terms of bound rate to be applied on an unconditional most favoured nation (MFN) basis. Unconditional MFN dealing means that this legal obligation extends equally to imports from all WTO Members regardless of their own tariffs or other trade policies.
The Subsidies and Countervailing Measures (SCM) agreement
    The Subsidies and Countervailing Measures agreement forbids export of subsidies and subsidies contingent upon the use of domestic products over imported products. WTO law permits countervailing duties to be imposed only where the country imposing the duties can show that the subsidy has caused or threatened hurt to its domestic industry through the import of competing subsidized products.
    According to SCM Article 1.1 (see appendix), the measure must fulfil the definition of a subsidy in the SCM agreement, which stipulates that there, should be a financial contribution by government that should confer a benefit to the recipient. The WTO Appellate Body asserts that to identify a benefit and whether it exists can be a complex matter in situations where the market conditions themselves have extensively been influenced by government intervention, and therefore a meaningful market benchmark for benefit should be established. Biofuels market has extensively been shaped in all the major producer nations by a variety of government interventions. Concerning this the question raised by the Appellate Body, in the event of a case being brought before it, would be whether there is a workable market benchmark against which one can isolate a given instance of financial support and determine whether a competitive benefit has been passed on, that is an advantage in relation to normal market conditions.
    According to SCM agreement apart from meeting the requirements of financial contribution and benefit, in order to be actionable, a subsidy must also be specific whereby the terms of the government support program must target the subsidy to some definite or limited class of users, be they particular industries or firms. On one end, there are obviously specific subsidies such as the bailout of a single enterprise while at the other end there are obviously non-specific subsidies, such as government provision of universal health care, which are used throughout the entire economy. In addition, SCM agreement states that a subsidy must cause certain unpleasant effects in order to be successfully disputed as actionable in the WTO. Articles 5 of the SCM Agreement list some of the adverse effects and include injury to domestic producers of a similar product in competition with the imported subsidized product, nullification or damage of benefits accruing directly or indirectly under the GATT Agreement, in particular tariff concessions, or serious injustice to the interests of another Member.
    SCM Agreement Article 6.3 further explains that to show serious unfairness the complaining WTO Member must show that the effect of the subsidy is to dislocate imports of a similar to product into the market of the subsidizing Member or to relocate exports of the complaining Member to a third country market, or significant price repression or price reduction in the same market with respect to like products, or finally the effect of the subsidy is an increase in the world market share of the subsidizing Member in a particular subsidized primary product or commodity as compared to the average share it had during the previous period of three years and this increase follows as a steady trend over a period when subsidies have been granted.
    An additional important issue in the biofuels context is that of upstream and downstream subsidies. One firm or industry may receive the financial contribution but it is the benefit that flows to an upstream or downstream industry that is the source of concern. For instance, a subsidy paid to domestic feedstock producers might be disputed by foreign producers of biofuels on the basis that the subsidy results in a lower price of feedstock to domestic producers of biofuels. In the Canada-Lumber case, the Appellate Body held that while a subsidy may be actionable where the financial contribution and the competitive benefit are not received by the same entity or even the same industry, the Appellate Body suggested that it could not be simply assumed that the reduction of costs to a downstream industry would result in a benefit in terms of lower prices of inputs to the upstream industry rather the benefits have to be shown.
Evolution of the subsidies
    Before the Uruguay Round of negotiations, the international trading system had no legally enforceable discipline on local subsidies (government support) including subsidies on energy. However while acknowledging the ability of a subsidy to distort trade and cause material injury to domestic industry in one way or another self-help policy were permitted in form of countervailing duties. The Uruguay Rounds Subsidy and countervailing Measures (SCM) Agreement placed export subsidies and domestic content requirements in the category of prohibited measures. Any subsidy meeting the definition of a subsidy in the SCM Agreement was challengeable in a WTO dispute settlement where it could be remedied by removal after showing the existence of certain adverse effects. These adverse effects as listed in Article 5 (see appendix) of the SCM Agreement are injury to the domestic producers of similar products, nullification of benefits accruing either directly or indirectly, and serious prejudice to the interest of another member. Serious prejudice according to the Agreement is further elaborated as that which displaces imports of similar products into the market of the subsidizing member, displaces the exports of the complaining member to a third country market, suppresses the prices in the same market with respect to like products and increases the market share of the subsidizing member. Article 8 of SCM Agreement had non-actionable subsidies such as that on research and development and environmental protection which were applied for the first five years that the SCM Agreement was in force but currently there are no non-actionable subsidies.
    Critical analysis of the subsidies indicate that they are used to correct market failures or to reflect positive externalities that occur to the society due to reduced emissions in the case of renewable energy subsidies. In many energy markets today the existing networks for the distribution and retailing of energy whether electricity grids or chains of service stations are largely designed to favour fossil fuels and thus placing the production of renewable energy at a disadvantage. Moreover, tax systems and subsidies schemes distort the choices among energy sources and reduce incentives for energy efficiency by relieving the users from paying the full cost. Thus, a better solution is suggested as the removal of subsidies to allow efficiency in the market operations. Although even after the elimination of some energy subsidies the environmental harm and market distortion cannot be eliminated at once due to past investments their future term benefits should motivate subsidies elimination measures. Similarly, the social cost of emissions must be analyzed so as to attain the full benefits in elimination of harmful energy subsidies and optimal allocation of energy productive resources.
    Energy subsidies are sometimes hard to determine because energy is classified as a good and a service. Therefore, subject to the different agreements of the WTO. In addition, there is also energy produced from fossil fuels, (some form of electrical energy) and another one from renewable sources (Biofuels). Critics of each source will therefore view the application of subsidies rules differently. In addition, each energy source has different policies application in the different domestic markets thus confounding the issue of energy subsidy when analysed in the multilateral setting of WTO. Taxes, mandates, support of input sources are just but to name a few of ways in which these different governments are promoting and discouraging energy production in their jurisdictions. Discussed herein are their operations and relationship with the WTO Agreements.
Non-Tariff measures on electrical energy
    In times gone by, electrical energy has not been traded across borders except for a few countries and states such as Canada, United States and in the European Union. However, non-tariff measures that regulate goods and services that are inputs in the production, distribution, transmission. Sale of electrical energy usually arises from the regulatory framework in the inputs that is of great concern. Some regulatory framework for electricity require that a certain amount of electricity being fed into the grid be renewable energy and that only  certain sources and methods of generation meet the requirements. This among other reasons affect the competitive opportunities of goods, their technologies, equipment and the services involved in the production, distribution of renewable energy. With the demonopolization of electricity in an increasing number of countries and the building of functions such as production, grid operation, transmission and retailing as well as the development of complex financial tools such as futures and options contracts for energy which is changing the structure of the entire market WTO laws analysis is becoming difficult and complicated. 
    This being said, electrical energy differs from other, or most other, traded commodities in that it cannot be stored and production and consumption of electricity must be instantaneous. Hence, to distinguish between the process of producing energy and some separate commodity that is consumed appears to be at odds with the physical characteristics of electricity itself. Moreover energy is considered a process and thus in considering physical characteristics in the context of determining whether renewable energy is like or unlike non-renewable energy, the WTO arbitrator would automatically, be required to consider the physical nature of a process. The WTO law does not have any definite provisions on electricity. Given the lack of disciplines on services under GATT 1947, electricity was defined as a good despite its peculiar physical properties in the Harmonized System (HS) Nomenclature12 on the codification of commodities. Electrical energy qualifies as a good under WTO law and is therefore subject to the rules of the GATT as formulated in 1994. In the Almelo case in 1994 the European Court of Justice (ECJ) explicitly stated that the rules on the free circulation of goods also applied to electricity.
Renewable (Biofuels) energy
    Renewable energy comprise of a very wide range of energy sources such as biomass, hydro, geothermal, wind, solar, marine commonly known as ocean energy. It also encompasses conversion processes and applications such as combustion, thermal, electromagnetic, chemical and photovoltaic processes. The total potential of generating renewable energy keeping in mind the challenges, available resources, manpower, technologies and losses in the generation process is very high even to fit the present energy demand. This leads to the inquiry why do not we embark on generation of renewable energy for sustainable development instead of subsidizing fossil fuel generated energy, which is harmful to the environment and at the same time depletes funds in the economy.
    The recent rapid growth in the generation of Biofuels, considered a renewable fuel, in both the developed and developing countries has been encouraged by the government incentives and mandates. This has in turn increased trade of feedstocks and finished Biofuels within and across borders necessitating the creation of regulating framework to govern the trade of Biofuels with the main aim of ensuring optimum use of resources without overlooking sustainable development. Moreover the inclusion of the rules governing biofuels trade in the international trade on the Doha round agreement were propelled by the tension existing between some major producers over subsidies. According to WTO rules, Biofuels are agricultural or chemical products covered within rules regarding agricultural products. Bio-diesel is an industrial good governed by the WTO Agreement on Subsidies and Countervailing Measures (SCM). Subsidies on production of biofuel feedstocks, the biofuels themselves and their by-products encourage domestic production but being agricultural products they are subject to limits, which will not apply if they were considered environmental products. Moreover, the Subsidies and Countervailing Measures Agreements for non-agricultural products prohibit subsidies for the use of domestic products rather than imported one.
    The fundamental approach of WTO has been that of equal treatment with no discrimination between domestic products and imported products and among various potential importers. According to WTO regulations import of like products are to be treated with no less favouritism than domestic products for standards and internal tax purposes. For instance, the case where United States disagreed with European Union over its standards for bio-diesel that favours production of rapeseed, which is widely grown in the European Union over soybean oil-based bio-diesel. Furthermore, environmental issues for sustainable development are also becoming a point of concern with European Union aiming at restricting palm oil exports from Indonesia because of their replacing rain forests with palm plantations.
Renewable Energy Fiscal Measures
    Taxes on renewable energy trading can either promote or discourage production of renewable energy and can be viewed as a subsidy when there can be established hat the energy tax confers benefit to either the producers or the consumers. Renewable energy fiscal measures that tax products can be differentiated into several kinds of measures. The first could be described as an excise tax on inputs in the production of energy that occurs in the taxing jurisdiction, which in the European Court context is the most convenient system for taxing energy. When energy is tax during production, apply even at distribution. The early application in the generation process combines the benefit that the number of economic agents performing taxable transactions is small and easily checked and that the tax burden is instantaneously shifted onto all energy consumers by either increasing or reducing the cost of using the energy, thereby directly affecting their behaviour. In a world where there is no synchronization of such taxes, the problem is that consumers in the taxing country can evade the incentive effects of the tax by purchasing imports of energy from another country where inputs into the production of energy are taxed in a different manner such as without any distinction between renewable and fossil fuels.
    Another way of addressing this problem is border tax adjustment (BTA), when the final product that is energy, comes across the border, the importing state levies a tax on the inputs in its production in the foreign jurisdiction equivalent to the tax that would be levied if the energy had been produced domestically. This places imported and local energy at par thereby promoting domestic production and allowing market forces to determine the effective market trading. Moreover, a different way of addressing the problem is by taxing energy itself differently depending on the method of its generation which a very controversial issue given the technological advancement and investments by different countries. Taxing energy generated from fossil fuels higher than that generated from renewable energy plays an important role in promoting the production and consequent use of energy from renewable sources. However, this tax may be a subsidy in that it benefits the producers of renewable energy and takes the market share of the energy produced from fossil fuel.
    Different taxation on fossil fuels as inputs in the production of energy is very likely to be constant with the GATT Agreement. This is because the fuels under consideration are physically quite different from the technologies and materials involved in the generation of renewable energy and the consumers may well care about the environmental consequences that come out from these physical differences of non-renewable energy and renewable energy processes. Furthermore, though it could be argued that the end uses of electrical energy are the same based upon the existing jurisprudence it is impossible that such a common end use would overcome the other evidence pointing to dissimilarity such as that of the sources inputs of production. This idea can be strengthened by a similar examination with respect to whether the products are directly competitive or substitutable to which one can clearly see that environmental conscious individuals will see the two energies as substitutable. In addition, unless somehow the border tax is designed or structured to favour domestic producers, such a tax could not be found to afford favouritism to domestic producers. This observation leads to an important caution of the fact that a tax scheme generally treats renewable inputs more favourably than fossil fuel inputs will not make this scheme run afoul of the GATT Agreement. Nevertheless the legitimacy of favouring renewable through taxation instruments will not save a tax scheme that is inequitable in other respects, for instance, as between different fossil fuels such as oil versus coal. Similarly, the examination of likeness or directly competitive or substitutable might have a different taste were the WTO arbitrators to be faced with a scheme that favours domestic renewable inputs over imports. While issues of intent or motivation are not to influence determinations of likeness or directly competitive or substitutable, practically in a case-by-case and highly related kind of determination and in weighing the relative significance of the various probative factors  such as physical characteristics versus end uses, the arbitrator may well be influenced, at least unknowingly, by the general purpose of National Treatment, in the GATT Agreement, which is to shun protection of domestic products.
    The Excise tax on inputs with border tax adjustment issue was the focus of arbitration in the GATT Superfund case, in which the EC challenged a tax on certain chemical inputs, which, in the case of imported products, were collected as a tax on the final product at the border. According to the EC, such a tax was not permitted under the GATT because the polluting effects to which the tax was aimed at occurred not in the taxing country but the country of generation. The GATT jury held that the intention of the tax was inappropriate to the right to border tax adjustment in GATT practice, and so the United States was permitted to tax inputs based on their polluting effects in the foreign country of production, as long as the amount of the tax did not exceed the amount imposed on like domestic inputs. The Superfund ruling makes it clear that a WTO Member will be able to tax adjust an excise tax on inputs in energy production at the border through imposing the similar tax when the final product, that is energy, is traded across the border. Nevertheless WTO law remains uncertain about the appropriateness of taxes on products for adjustment based on lack of consensus in the 1970 Working Party on Border Tax Adjustment concerning whether certain particular kinds of taxes should be singled out as appropriate for border tax adjustment or not.
    Another kind of tax measure to promote renewables would entail taxing home and imported energy differently, depending on the generation source, whether renewable or non-renewable. In evaluating this kind of measure under the GATT Agreement, the WTO arbitrator have to consider whether electrical energy from a non-renewable source is similar to, or directly competitive or substitutable with, electrical energy from a renewable source. This will go against the idea of GATT Agreement that does not permit differential treatment of products based on their method of production as opposed to their properties as products for consumption. Therefore the Appellate Body has stressed the need for the arbitrator to study all pertinent factors in a given case and context, and to consider all the evidence pointing either in the direction of a finding of likeness or otherwise.
    This being said, electrical energy differs from other, or most other, traded commodities in that it cannot be stored and production and consumption of electricity must be instantaneous. Hence, to distinguish between the process of producing energy and some separate commodity that is consumed appears to be at odds with the physical characteristics of electricity itself. Moreover energy is considered a process and thus in considering physical characteristics in the context of determining whether renewable energy is like or unlike non-renewable energy, the WTO arbitrator would automatically, be required to consider the physical nature of a process.
    Evidence that consumers are concerned whether energy is renewable or not is highly probative of likeness or direct competitiveness or substitutability Finally, while distinguishing in taxation between renewable and non-renewable sources would quite possibly be permitted under the GATT Agreement, some schemes of this character may also contain favouritism against imports, which would run afoul of the GATT Agreement. An example is found in the Finnish scheme that was found unacceptable under the Treaty of Rome policy on free trade by the European Court of Justice because Finland taxed domestic energy under rules that provided for different rates of tax depending on the method of generation. However, Finland also applied the highest of these rates to imported energy, not considering of its production method, on grounds that it was not easy to prove the sources of imported energy. The Court found that European domestic trade law allowed differences in taxation based on production process and raw materials used in the creation of energy, but that the scheme was nevertheless not permitted in that it was not applied evenly to domestic and imported energy. This feature of the Finnish scheme that was found problematic by the European Court because it was also likely direct a WTO adjudicator to find a violation of the GATT Agreement, since imported renewable sourced energy is being taxed at a higher rate than domestic renewable sourced energy.
Other renewable energy subsidies
    Diversified range of subsidy programs are available to address climate change by reducing the cost of producing or consuming energy from non-carbon emitting sources in comparison to carbon emitting sources. To foster Green House Gas reductions, price supports in the production of renewable energy have been set at attractive levels (Intergovernmental Panel on Climate Change, 2007). In addition, significant expansion in the renewable sector in OECD countries is due to price supports and requirements that electric power producer purchase electricity from the renewable sector at favourable prices (Gupta et al., 2007, p. 762).     Biofuels, one of the modern day renewable energy, illustrate the complex relationship between renewable energy subsidies and environmentally damaging impacts. Various subsidies are used to encourage production and consumption of biofuels, which are promoted as a way to simultaneously increase energy security, reduce Green House Gases emissions, and encourage rural development. These subsidies are provided at different points in the supply chain and include support for intermediate inputs and value adding factors, output linked subsidies, subsidies to distribution infrastructure, consumption incentives and high import tariffs. Several countries have also introduced targets and mandatory requirements that encourage biofuel development. However, recent analysis suggests that large-scale expansion of biofuels promoted by subsidies, targets and mandates will likely increase net Green House Gases through direct and indirect land-use change.
    Renewable energy subsidies are used to encourage the development and use of renewable (non-fossil) energy sources in order to fight global warming and achieve long-term energy security. However, these may have other environmental consequences. For instance, hydroelectric dams can result in the loss of wildlife habitat and reduce biodiversity. Batteries for solar home systems can leak toxic heavy metals. Wind farms can have significant biodiversity impacts, especially if inappropriately located. These impacts need to be carefully assessed and considered in decisions on whether and how to support the development and use of renewable energy sources. Many developed and developing countries are attempting to legislate biofuels as evidenced by  their national energy bill andor in specific legislation for instance on blending targets, tax exemption, tax incentives, refunds on Value Added Tax, subsidies and loans.
Bio fuels Output-related subsidies
    Tax credits and reductions associated with biofuels production are prevalent form of government support. Under Subsidies and Countervailing Measures, a financial contribution comprises not only a shift of funds or the providing of goods and services but also foregone revenue by the government that would otherwise be earned. Therefore, a tax measure that reduces the amount of tax owed by a taxpayer is seen on the face as government foregoing revenue that is otherwise due. However, the foregoing of revenue should not be presumed but should be proved. Further more in order to prove that a tax measure is a financial contribution it has to assessed and established against a benchmark and given that WTO does not impose any tax regime the appropriate benchmark will therefore be dependent on the specific tax rules of the individual WTO member.
    Payments designed on the basis of biofuel output can take a number of forms. Among these payments, we have volumetric payments for ethanol and biodiesel production. According to WTO, payments of direct transfer of funds from government to biodiesel producers are likely to meet prerequisites for actionable subsidy. This because there will be a financial contribution, straight forward benefit and that it will be directed towards an industry or industries that are likely to be specific. Moreover, to determine whether an Act is forbidden under Subsidy and Countervailing Measures it must be revealed to have undesirable effects on the interests of another WTO member. This may happen if the subsidy enabled the producers to export ethanol or biodiesel at low cost causing injury to the local industry of the importing WTO member or it had impacted the exports of another WTO member.
    Although a mandate which is a directive or requirement by a government on the working of certain sector do not generally involve any financial contribution as in the SCM meaning, the rules established to implement or enforce a mandate might constitute some form of a subsidy in terms of preferences. For instance, a requirement that 2 of the ethanol sold in a domestic market must emanate from non-crops produced in the domestic market may run the risk of being prohibitive local-content subsidies.
Support for factors of production
    Loans, loan guarantees and other forms of financial assistance to assist with the infrastructural costs are another form of assistance, which unlike tax credit its primary issue is not whether there is a financial contribution but whether a benefit exists. According to the Appellate Body any financial assistance or loan to qualify as a subsidy, either a financial contribution or a benefit, which are separate legal elements, must exist considering whether the benefits are superior to those to be received in the market. According to Article 14 of the SCM, a loan is considered to have benefited the recipients if the amount they have to pay to the government is less that what they would have paid in a similar commercial loan. Regarding a loan guarantee, the guarantee do not have to be invoked before there can be a benefit. Therefore to a certain degree there will be a benefit if there is a difference in the amount the recipient pays on the loan guarantee and the amount that a similar commercial loan would have cost without the guarantee. Thus if there is a benefit and the measure is definite, the subsidy will be actionable and the complaining WTO member have to show that the measure had adverse effect within the definition of SCM.
    For example, when we consider the case on 19th January 2009, Guatemala requested consultations with China regarding certain measures of offering grants, loans and other incentives to enterprises in China. Guatemala indicated that these grants, loans and other incentives were reflected in a number of measures, including the measures relating to the China World Top Brand Programme and the Chinese Famous Export Brand Programme. According to Guatemala these measures provided grants, loans, and other incentives that are dependent upon export performance. For that reason, the measures appeared to conflict with Article 3 of the SCMAgreement on subsidies that are prohibited. In addition, Guatemala stated that the extent that these measures provided subsidies for agricultural products appeared to be inconsistent with the Agreement on Agriculture. The measures also appeared to be inconsistent with Chinas obligations under paragraph 12.1 of Part I of its Accession Protocol, as well as paragraph 1.2 of Part I of its Accession Protocol, which forms part of the terms of accession agreed between China and the WTO and is a central part of the WTO Agreement. Finally, the grants, loans, and other incentives appeared to be not in agreement with the GATT Agreement of 1994 to the level that the measures benefited products of Chinese origin but not imported products.
Subsequentially biofuel feedstocks are a key factor in biofuel productions costs and thus their subsidies are expected to have a significant effect on the cost of the final product that is the biofuel, due to their impact on the production costs. For instance, in another case on 8th January 2007, Canada requested consultations with the United States concerning three different categories of measures. To start with, Canada claimed that the United States provided subsidies to the US corn industry that are specific to US producers of primary agricultural products andor to the US corn industry. Canada stated that the measures at issue are not in agreement with Articles 5(c) and 6.3(c) of the SCM Agreement. Secondly, Canada claimed that the United States made available to its exporters premium rates and other terms more favourable than those which the market would otherwise provide through export credit guarantee programmes under the Agricultural Trade Act of 1978 and other measures such as the GSM-102 programme and SCGP as well as the programmes, legislation, regulations and statutory instruments providing the support. Canada considered that these programmes provide subsidies dependent upon export performance contrary to Article3.1(a) and 3.2 of the SCM Agreement, and they also violate several Articles of the Agreement on Agriculture. Thirdly, Canada claimed that, through the improper exclusion of domestic support, the United States provided support in favour of domestic producers beyond the commitment levels specified in Section I of Part IV of the Schedule, which was contrary to Article3.2 of the Agreement on Agriculture.
Ethanol subsidies and the Aggregate Measurement Support
      The Aggregate Measurement of Support, which is the yearly level of sustenance, expressed in monetary terms whereby the support aims at an agricultural product support or non-product-specific support in favour of the producers of the basic agricultural product. The Agreement on Agriculture provides for a rule in the computation of Aggregate Measurement of Support, which stipulates that measures focussed at agricultural processors shall be included to the degree they help producers of the basic agricultural product. For instance, ethanol is an agricultural product and therefore if a subsidy to ethanol producers had the result of escalating the price of feedstock, which can be subsidized through payment to producers then the subsidy, have to be considered in the Aggregate Measurement of Support computation. 
    Subsidies in the production of biofuels may benefit other industries in the chain as held by the Appellate Body with regards to direct or indirect bestowing of financial contribution and the receiving of benefits. Thus, financial contribution to one industry may benefit another industry. For instance, subsidies to feedstock farmers may be passed to biofuel producers in terms of cheaper prices in what is known as downstream subsidy. Moreover in analysing the likelihood of a downstream subsidy the Appellate Body explained that if the producers in the upstream and downstream subsidy are similar the benefit is assumed to be passed while if they are not similar in that they are unrelated entities such as the farmer growing feedstocks and the ethanol producer then an analysis must be conducted to find out whether a benefit exists and its degree to the ethanol producer. In addition, no Article of the GATT or any provision of the WTO treaties prevents a WTO Member from applying a tariff that is lower than its MFN bound rate. However, a WTO Member must do so on an unreserved MFN basis, by virtue of Article I of the GATT, except in the context of regional or bilateral free trade agreements that are constant with WTO rules on such agreements such as  Article XXIV of the GATT or of preferences for developing countries that are operated consistently with WTO rules. For example if the US MFN bound rate for widgets is 10, it is free actually to apply a tariff of 3 to such imports but it is not free to apply 3 to imports from some WTO Members and a higher or lower rate to those from others.
    The Harmonized Commodity Description and Coding System, or HS classification for ethanol does not distinguish between fuel and non-fuel uses of ethanol therefore its left for the WTO member countries to structure and introduce tariffs based on the knowledge of HS. For instance in 1980 the United States introduced a secondary import tariff of 50 cent a gallon on fuel ethanol added to the tariff stated by the HS for all imported ethanol whether for fuel or non-fuel use. Although this violated its obligation under Article II with respect to applying a higher rate of tariff to some imports of ethanol, its singling out fuel ethanol for lower applied tariff rate counteracted this action. 
Biofuels Subsidies and WTO Law
    Government subsidization has been vital to the economic feasibility of the biofuels industry. For instance, Brazils ethanol industry enjoyed significant government subsidies during its first twenty years beginning in 1975 after the start of the first oil crisis. Facing rapidly escalating oil and import bills, the military dictatorship governing Brazil launched the Brazilian National Ethanol Program, important measures of this program included the building of a national distribution infrastructure for ethanol, low-interest loans to sugar companies for distillery construction, a mandatory blend of 20 ethanol with all gasoline sold and subsidies at the fuel pump to ensure that ethanol blended fuels and later all ethanol fuels remained competitive with, or cheaper than 100 gasoline at the retail pump. In the late 1990s after the end of the armed dictatorship, rising domestic production of oil combined with the arrival of low international oil prices in the international trade led the demand for ethanol to fall and the government of the day discontinued the traditional subsidy programs retaining only subsidized prices at the fuel pump. However, despite an industry shakeout after subsidies stopped, the Brazilian ethanol industry was able to carry on until the return of higher international oil prices brought renewed demand and profitability.
    Similarly in the United States, federal government support for ethanol became established during the time of the second oil shock in the late 1970s, when price and energy security concerns were high first with provisions in the Energy Security Act of 1978 providing for a .40gallon exemption on the federal motor fuels tax and followed by the Energy Tax Act of 1980, which offered insured loans to small producers with under 1,000,000gallonannum producers of ethanol.  Over time other measures have been added for funding for research in renewable fuels, usage mandates and so on. An example of EU support is the energy crop premium it provides to EU farmers in addition to their single farm payments. However, due to the undeveloped states of the technologies involved, and the often-high cost of the relevant feedstocks, the biofuels industry throughout the world has had to rely on subsidies and other public support to grow.
    Subsidization can have multiple purposes and these purposes may be different in their consistency with the underlying norms of world trade law. For example, a government may for environmental or energy security reasons, subsidize consumers to provide them with an incentive to switch from conservative fuel to biofuel by compensating, for the added cost. Moreover, it may attempt to achieve the same objective by subsidizing research and development that can lead to more efficient technologies for the production of biofuels. However, none of these kinds of subsidies need affect the relative competitive position of domestic and foreign producers. On the other hand, a government may subsidize the domestic production of biofuels, a better and cost-efficient way of providing a motivation for consumers to switch from fossil fuels to biofuels, since the lowest-cost, most efficient producers of the biofuels in question may be foreign producers. Therefore, the way in which biofuels are classified is important as far as tariffs are concerned and in determining which set of WTO disciplines on domestic subsidies to apply.  
Agreement on Agriculture - with respect to bioethanol    The WTO Agreement on Agriculture (AoA) divides agricultural support into three categories, or pillars. These are export competition, market access and domestic support with each of them being subject to different disciplines. For example in the case of biofuels, the most appropriate category is that of domestic support which is divided into three categories. These are amber, blue and green which are according to the trade-distorting effects of each payment. The category into which a particular biofuel measure is categorized is crucial in deciding whether that subsidy must be removed or reduced. The amber box covers subsidies that are most trade distorting, such as price supports and production subsidies. Although WTO Members have not agreed to stop providing all amber category support they have agreed to cap their annual total expenditure on domestic support expressed in aggregate measurement of support and have also agreed to reduce this domestic support over time without exceeding their limit.
    The green category covers subsidies that have no trade-distorting or production-distorting effects. Moreover, these subsidies are not counted in a Members Aggregate Measurement of Support and there is no condition for a Member to limit or lessen such payments. However, there are general requirements and policy specific conditions, which must be, met which vary depending on the nature of the payment in question. The general requirements are that a measure must have no trade-distorting effects or effects on production. Moreover the measure must be part of a publicly funded government programme. Furthermore the measure must not involve transfers from consumers and must not have the effect of providing price support. The policy specific requirements cover among other measures food security policies, domestic food aid direct payments to producers, producer and resource retirement programmes, investment aids and environmental programmes.
    In the production of bioethanol subsidies on intermediate inputs such as maize sugar beet, wheat and sugar cane consumed in its generation process should not cause trade distortions, as they will fall under the amber category, which is actionable. Taxes on the production intermediate inputs should conform to WTO members legislation of not favouring their domestic producers. Moreover, bioethanol subsidies on value adding factors such as capital goods land and sometimes labour employed directly in the production process, which comes in form of form of grants, or reduced-cost credit, for the building of ethanol refineries, should not place the domestic producer at an advantage to produce bioethanol at prices that are lower due to their reduced costs. Similarly, in localities where land is being provided for free or at below market prices for biofuel plants should not cause any significant trade distortion within and without the domestic market as well. Most of these types of subsidies lessen both the fixed costs and the investor risks of new plants, improving the return on investment, which is a benefit, conferred upon a targeted producer or investor well within the subsidy principles.
    Output linked support, which has the forms of protection from overseas competition through import tariffs on ethanol, exemptions from fuel-excise taxes and grants, or tax credits related to the volume produced, sold or blended is another form of subsidy that should be analysed to ensure that it is well within the WTO agreement on Agriculture. Moreover credit to help reduce the cost of storing biofuels, which often have to be segregated from fossil fuels until just before blending, grants, tax credits and loans to build dedicated infrastructure for the wholesale distribution and retailing of biofuels supports the generation of biofuels such as ethanol and should not be trade distorting.
III Designing and Reforming Energy Subsidies
    Accessibility to modern kinds of energy like electricity and cooking gas is a key component in attaining economic and social development and improving the living standards of the population. Nevertheless, environmental and climatic change reforms require a clean and efficient production, supply and use of energy. Therefore, subsidy removal and reform on fossil fuels combined with other policies such as taxation should be used to direct development in the correct path. However great consideration should be given to the development of guidelines for the design of new subsidies or reforming the existing ones and to prevent excessive subsidization in terms of the length of the subsidy, lock-in effects of promising technologies and the mis-targeting of beneficiaries effects. Therefore, as times changes the rigid and inactiveness of subsidy plans coupled with institutional and political changes are all indicating the need to redesign the subsidy programmes and reform where necessary. Important design insights for new subsidies or for reform of the existing ones are as follows. The subsidy design should be vindicated by effective and relevant public interest necessitating adequacy and proportionate of those interests. In addition, the subsidy design should be selective, brief and applied within plainly defined time and provisional to participation and compliance with principles by the beneficiaries. Moreover, the subsidy design should only cover part of the polluters costs in tax reductions rather than tax exemptions. Furthermore, the subsidy design should not be for long time rather it should have a natural life with a beginning and a definite end.
    For any design to be successful, the designers must be able to act the role of the recipient and think how they will respond to inducement. Moreover, the designers should be clear concerning the aims of the policy to entrench in a way that will lessen the likelihood of diversion to non-targets beneficiaries. Furthermore the designers need to be definite on the outcomes whether in the environment or in the social arena. Likewise, the designer should incorporate an assessment, regular review, and revision potential till completion during its natural life or lifetime. No design should be undertaken without sufficient supportive data and evidence keeping in mind that subsidization should be a cost-effective choice of allotment of public resources for a specified period of time.Grounds for Subsidising Energy
    On their own energy market do, not function effectively because they do not take into consideration any social and environmental benefits and costs that arises in the use of certain energy sources. Furthermore, it is the role of every government to intervene in energy markets to protect the social welfare and the environmental objectives given that the cost is acting as a hindrance to addressing issues relating to these important aspects of a country. For instance, it is the responsibility of the government to intervene to protect the quality of air, considered to be a public good accessible to all, by regulating the emissions from energy-related and other activities.  Making the polluters pay for the environmental damage they cause. Social considerations for the poor, infirm and the disadvantaged provide another reason for subsidizing energy because society benefits as a whole when everyone has access to modern energy services. Existence of barriers to market entry such as the high up-front costs of developing cleaner energy technologies and the delicate technical and financial risks that discourage investors provide an opportunity for the government to subsidize a particular energy source or technology so as to encourage investment. 
    In some occasions, reforms are propelled by economic and budgetary concerns. Reduction or increase of taxes will either increase or decrease the amount of money in the treasury whereby it reduces the consumers burden or it increases the producers burden forcing him to decrease production. In a similar note subsidies reform have the aim of creating a level playing field, which increases competitiveness while at the same time not unfairly supporting domestic industries. Another propellant of subsidy reform is the demands and requirements from international institutions such as the International Monetary Fund and the World Bank. Also to some extent, subsidy reforms are driven by political and ideological battles with the intentions to reduce power. Subsidy programmes are meant to support several objectives simultaneously. For example, subsidies might be designed to protect jobs, support regional development, to reduce energy import dependence, to contribute to environmental protection, and the protection of domestic energy industries all in the interest of national and social development. Any subsidy can be justified if the benefits and gains in social welfare or environmental improvement it attains exceed the net economic cost. Therefore, if any of the intended purpose and benefit is not achieved due to mis-targeting, corruption or any other vice, reform is necessary. Moreover, if the targeted beneficiaries do not deserve the subsidy such as the subsidy on liquefied petroleum gas used by the middle class and the rich people the subsidy should be reformed. Similarly, when the implementation process cannot clearly alienate the specific beneficiaries and thus cannot target the required beneficiaries reform is essential. Reforms are essentially critical when a better way of conferring benefits to the intended beneficiaries is to increase efficiency in resource utilization and welfare improvement. 
    Similarly, the introduction of renewable energy to protect the environment has come at a better time when countries are advocating the conservation of the environment with the reduction of emissions of noxious and green houses gases. However, the undeveloped systems, mechanisms and technologies are acting as barriers to renewable energy generation and thus translating to high investments costs and high prices to the consumers of renewable energy. Subsidy reform is therefore essential to facilitate shifting of resources from supporting the generation of energy that has harmful effects to the environment and social interactions. 
    Moreover, given the variation level of development of different countries in many aspects such as the amount of energy needed, amount of energy generated, method of generation, policy objectives and priorities, market conditions, economic conditions, available finances and institutional framework subsidy intentions vary. It is however good to note that any energy subsidy plan must be in such a way that producers and suppliers are motivated to provide a service efficiently and the consumers are encouraged to use energy efficiently. 
Reforming Harmful Energy Subsidies (fossil fuels subsidies)
    A good subsidy is one that improves access to sustainable modern energy or has a positive impact on the environment while sustaining incentives for efficient delivery and consumption. Owing to the growing concerns about environmental impacts, the governments are querying the goodness of some kind of energy subsidies regarding their effectiveness in meeting their social objectives and their economic and financial cost. Therefore, the main objective of subsidy reform is to reduce the overall size of the subsidies or eliminate them completely especially, where they harm the environment, bring limited social benefits and carry with them huge economic costs. However, the government have to tread carefully in the reform direction as it entails serious trade-offs between economic, social, and environmental effects. Policy makers have to consider among many other issues the national and local circumstances that will entail the countrys stage of economic progression, market and economic conditions, institutional framework and the state of public finances. Moreover there are basic principles that must be applied when designing subsidies and implementing changes to existing programmes.
    These principles enumerates that subsidies should be well targeted in that they should go to those who are meant to benefit from them and should not clash with other instruments and goals. Secondly, the subsidies should be efficient in that it should not weaken the motivation for suppliers or consumers to provide or use the service efficiently lessening market distortion. Thirdly, the subsidies should be justified by a thorough analysis of all associated costs and benefits. Fourthly, the overall amount of the subsidy should be reasonable and the administration of the subsidy programme has to be at reasonable costs. In addition, the subsidy programme should be transparent allowing transparency of the information on amount spent and recipients. For better results, the subsidy should be limited in time to avoid consumers and producers to be overly dependent on this support making the costs to spiral out of control. Proper mechanisms should be put in place when undertaking a reform of any subsidy because even when analyses show that costs are more than benefits derived there will be hostility from its current beneficiaries of even rioting and demonstrating. The difficulty in clearly demonstrating the economic advantages of reforming a particular subsidy coupled with the desire of the beneficiaries to keep it at the current state due to the obvious benefits they enjoy complicates the process of reforming a subsidy.
    Reforming energy subsidies particularly fossil fuel related requires a strong will to undertake hard decisions that have benefits to the society as a whole rather than for specific individuals. Moreover, to overcome resistance these approaches can be used. Firstly, the reform should be introduced and implanted gradually to lessen the financial pain of those who will lose. Secondly, the relevant authorities can initiate compensating measures if the energy subsidy lessens the purchasing power of a definite social group and if they find out that, the initiation of compensating measures is socially acceptable. Thirdly, clear information should be availed to the public on the overall benefits of any subsidy reform to the economy and the society to counter political inactiveness and resistance.
    Largely, lending institutions, aid providers and international organizations play a vital part in assisting developing countries and transition economies in designing and implementing changes through the transfer of expertise and technical know how and by enforcing well thought conditions for lending and development support. However, the designing of changes should considerate social requirement of the residents.
     Among the harmful subsidies that need to be reformed are those that are environmentally harmful. For instance, subsidies to coal extraction lead to overproduction and thus increasing the amount of green house gases emissions produced through fossil fuel burning and energy consumption. Moreover, energy subsidies inhibit changes in the industry such as the transition to renewable and low pollution energy sources. Furthermore, subsidies to fossil related fuels bring about high costs of environmental damages a drain from the countrys financial resources.
    Although reforming destructive subsidies is difficult and requires a number of drivers and conditions, key lessons to bring about reform can be identified and applied differently depending on the case at hand. These lessons are need for quality information and transparency in any process, the reform package broadness, strong leadership and coalition and a well-managed process. 
 Implications of phasing out subsidies on global energy and climate trends    The phasing out of energy subsidies can have both beneficial effects and harmful effects on the economy and the environment, which is a key player in the climatic changes in the world. This is because the existence of the energy subsidies affect the environment and economy by leading to the utilization of uneconomical levels of resources such as fuels causing unproductive levels of pollution, for example the emission of greenhouses gases. Removing energy subsidies will reduce primary energy consumption and increase the countries Gross Domestic Product through higher economic efficiency. Furthermore removing energy subsidies lowers CO2 emissions and yields domestic environmental benefits, including reduced local air pollution. Moreover, some estimates suggest that changing agricultural practices on 20 of the land could take care of 9 of country reduction commitments under the Kyoto Protocol on the reduction of emission of harmful gases to the environment.  Moreover the OECD estimated that consumer subsidies removal in the 20 largest developing countries would reduce global GHG by 2 in 2020, rising to 10 in 2050. In addition, the degree of any negative effect, which promotes the removal of the energy subsidies, depends on factors such as the details of the subsidy and other policy measures and social-economic characteristics of the subsidized activity. The removal of energy subsidies liberates money for environmentally beneficial investments, which may also generate employment.
    Furthermore the phasing out energy subsidies liberates industries from lock-in to certain technologies and thus opens up avenues for innovation. Similarly, energy subsidy removal will improve resource efficiency of generation and consumption of energy and therefore lessens environmental footprints and facilitates moving towards living within the limits of the planets resources and eco-systems. However to achieve this benefits in the economy and the environment both in the sort-run or in the long-run there must be the existence of proper policy filters and availability of environmentally friendly energy production and consumption technologies and better inputs for these technologies. On this note, gradual introduction of any energy subsidy removal should be undertaken to allow the development of and accessibility of alternatives as well as the socials responsive behaviour and concerns. Instances like the sudden removal of coal subsidy in the UK and the social hardships that ensued strengthen the idea of gradual introduction. The removal of subsidies on the coal industry will bring a reduction in carbon dioxide (CO2) emissions and also reduce acid gas emissions. 
    Eliminating subsidies that are economically costly as well as environmentally harmful is a win-win policy reform that will reduce over-consumption of energy and saving tax revenues, which can be directed to other development, projects and protect the environment. Moreover, the removal of energy subsidies will increase the cost of production and consequently increase what the consumers have to pay affecting their living standards negatively.
    Given that most governments provide financial assistance to boost energy supply or reduce prices energy consumers in the fossil fuels or fossil fuel-based energy industry making them a powerful driver of increased greenhouse gas emissions a solution to this has to be sought. Moreover at a time when governments are trying desperately to reduce climate change, the reduction or complete phasing of fossil fuel subsidies which represent hundreds of billions of dollars worth of acceleration in the wrong direction of heightening climatic changes due to the emission of noxious and harmful green house gases will be a step in the right direction. Research and development and commercial deployment subsidies have well intended basis but are identified as technology transfer impendent. Therefore WTO rules for subsidies on research and developments are to require that such subsidies be consistent with cooperative research and that the recipients of subsidies allow for technology transfer.


Appendices
Part I General Provisions
Article 1 Definition of a Subsidy
1.1 For the purpose of this Agreement, a subsidy shall be deemed to exist if
(a)(1)there is a financial contribution by a government or any public body within the territory of a Member (referred to in this Agreement as government), i.e. where
(i) a government practice involves a direct transfer of funds (e.g. grants, loans, and equity infusion), potential direct transfers of funds or liabilities (e.g. loan guarantees)
(ii) Government revenue that is otherwise due is foregone or not collected (e.g. fiscal incentives such as tax credits
(iii) a government provides goods or services other than general infrastructure, or purchases goods
(iv) a government makes payments to a funding mechanism, or entrusts or directs a private body to carry out one or more of the type of functions illustrated in (i) to (iii) above which would normally be vested in the government and the practice, in no real sense, differs from practices normally followed by governments
or
(a)(2)there is any form of income or price support in the sense of ArticleXVI of GATT1994
and
(b) a benefit is thereby conferred.
1.2 A subsidy as defined in paragraph1 shall be subject to the provisions of PartII or shall be subject to the provisions of PartIII orV only if such a subsidy is specific in accordance with the provisions of Article2.

Article 2 Specificity 2.1 In order to determine whether a subsidy, as defined in paragraph1 of Article 1, is specific to an enterprise or industry or group of enterprises or industries (referred to in this Agreement as certain enterprises) within the jurisdiction of the granting authority, the following principles shall apply
(a) Where the granting authority, or the legislation pursuant to which the granting authority operates, explicitly limits access to a subsidy to certain enterprises, such subsidy shall be specific.
(b) Where the granting authority, or the legislation pursuant to which the granting authority operates, establishes objective criteria or conditions governing the eligibility for, and the amount of, a subsidy, specificity shall not exist, if the eligibility is automatic and that such criteria and conditions are strictly adhered. The criteria or conditions must be clearly spelled out in law, regulation, or other official document, so as to be capable of verification.
(c) If, notwithstanding any appearance of nonspecificity resulting from the application of the principles laid down in subparagraphs (a) and (b), there are reasons to believe that the subsidy may in fact be specific, other factors may be considered. Such factors are use of a subsidy programme by a limited number of certain enterprises, predominant use by certain enterprises, the granting of disproportionately large amounts of subsidy to certain enterprises, and the manner in which discretion has been exercised by the granting authority in the decision to grant a subsidy. In applying this subparagraph, account shall be taken of the extent of diversification of economic activities within the jurisdiction of the granting authority, as well as of the length of time during which the subsidy programme has been in operation.
2.2 A subsidy, which is limited to certain enterprises located within a designated geographical region within the jurisdiction of the granting authority, shall be specific. It is understood that the setting or change of generally applicable tax rates by all levels of government entitled to do so shall not be deemed to be a specific subsidy for the purposes of this Agreement.
2.3 Any subsidy falling under the provisions of Article3 shall be deemed to be specific.
2.4 Any determination of specificity under the provisions of this Article shall be clearly substantiated on the basis of positive evidence.
Part II Prohibited Subsidies
Article 3 Prohibition
3.1 Except as provided in the Agreement on Agriculture, the following subsidies, within the meaning of Article1, should be prohibited
(a) subsidies contingent, in law or in fact, whether solely or as one of several other conditions, upon export performance, including those illustrated in AnnexI
(b) subsidies contingent, whether solely or as one of several other conditions, upon the use of domestic over imported goods.
3.2 A Member shall neither grant nor maintain subsidies referred to in paragraph1.
Article 4 Remedies
4.1 Whenever a Member has reason to believe that a prohibited subsidy is being granted or maintained by another Member, such Member may request consultations with such other Member.
4.2 A request for consultations under paragraph 1 shall include a statement of available evidence with regard to the existence and nature of the subsidy in question.
4.3 Upon request for consultations under paragraph1, the Member believed to be granting or maintaining the subsidy in question shall enter into such consultations as quickly as possible. The purpose of the consultations shall be to clarify the facts of the situation and to arrive at a mutually agreed solution.
4.4 If no mutually agreed solution has been reached within 30 daysof the request for consultations, any Member party to such consultations may refer the matter to the Dispute Settlement Body (DSB) for the immediate establishment of a panel, unless the DSB decides by consensus not to establish a panel.
4.5 Upon its establishment, the panel may request the assistance of the Permanent Group of Experts (referred to in this Agreement as the PGE) with regard to whether the measure in question is a prohibited subsidy. If so requested, the PGE shall immediately review the evidence with regard to the existence and nature of the measure in question and shall provide an opportunity for the Member applying or maintaining the measure to demonstrate that the measure in question is not a prohibited subsidy. The PGE shall report its conclusions to the panel within a time-limit determined by the panel. The PGEs conclusions on the issue of whether or not the measure in question is a prohibited subsidy shall be accepted by the panel without modification.
4.6 The panel shall submit its final report to the parties to the dispute. The report shall be circulated to all Members within 90days of the date of the composition and the establishment of the panels terms of reference.
4.7 If the measure in question is found to be a prohibited subsidy, the panel shall recommend that the subsidizing Member withdraw the subsidy without delay. In this regard, the panel shall specify in its recommendation the timeperiod within which the measure must be withdrawn.
4.8 Within 30 days of the issuance of the panels report to all Members, the report shall be adopted by the DSB unless one of the parties to the dispute formally notifies the DSB of its decision to appeal or the DSB decides by consensus not to adopt the report.
4.9 Where a panel report is appealed, the Appellate Body shall issue its decision within 30 days from the date when the party to the dispute formally notifies its intention to appeal. When the Appellate Body considers that it cannot provide its report within 30 days, it shall inform the DSB in writing of the reasons for the delay together with an estimate of the period within which it will submit its report. In no case shall the proceedings exceed 60 days. The appellate report shall be adopted by the DSB and unconditionally accepted by the parties to the dispute unless the DSB decides by consensus not to adopt the appellate report within 20 days following its issuance to the Members.
4.10 In the event the recommendation of the DSB is not followed within the timeperiod specified by the panel, which shall commence from the date of adoption of the panels report or the Appellate Bodys report, the DSB shall grant authorization to the complaining Member to take appropriate countermeasures, unless the DSB decides by consensus to reject the request.
4.11 In the event a party to the dispute requests arbitration under paragraph 6 of Article 22 of the Dispute Settlement Understanding (DSU), the arbitrator shall determine whether the countermeasures are appropriate.
4.12 For purposes of disputes conducted pursuant to this Article, except for timeperiods specifically prescribed in this Article, timeperiods applicable under the DSU for the conduct of such disputes shall be half the time prescribed therein.
Part III Actionable Subsidies
Article 5 Adverse Effects
No Member should cause, through the use of any subsidy referred to in paragraphs 1 and 2 of Article1, adverse effects to the interests of other Members, i.e.
(a) injury to the domestic industry of another Member
(b) nullification or impairment of benefits accruing directly or indirectly to other Members under GATT1994 in particular the benefits of concessions bound under ArticleII of GATT1994
(c) serious prejudice to the interests of another Member.
This Article does not apply to subsidies maintained on agricultural products as provided in Article 13 of the Agreement on Agriculture.
Article 6 Serious Prejudice
6.1 Serious prejudice in the sense of paragraph (c) of Article5 shall be deemed to exist in the case of
(a) the total advalorem subsidizationof a product exceeding 5per cent
(b) subsidies to cover operating losses sustained by an industry
(c) subsidies to cover operating losses sustained by an enterprise, other than one-time measures which are non-recurrent and cannot be repeated for that enterprise and which are given merely to provide time for the development of long-term solutions and to avoid acute social problems
(d) direct forgiveness of debt, i.e. forgiveness of government-held debt, and grants to cover debt repayment.
6.2 Notwithstanding the provisions of paragraph1, serious prejudice shall not be found if the subsidizing Member demonstrates that the subsidy in question has not resulted in any of the effects enumerated in paragraph3.
6.3 Serious prejudice in the sense of paragraph(c) of Article5 may arise in any case where one or several of the following apply
(a) the effect of the subsidy is to displace or impede the imports of a like product of another Member into the market of the subsidizing Member
(b) the effect of the subsidy is to displace or impede the exports of a like product of another Member from a third country market
(c) the effect of the subsidy is a significant price undercutting by the subsidized product as compared with the price of a like product of another Member in the same market or significant price suppression, price depression or lost sales in the same market
(d) the effect of the subsidy is an increase in the world market share of the subsidizing Member in a particular subsidized primary product or commodity as compared to the average share it had during the previous period of three years and this increase follows a consistent trend over a period when subsidies have been granted.
6.4 For the purpose of paragraph 3(b), the displacement or impeding of exports shall include any case in which, subject to the provisions of paragraph7, it has been demonstrated that there has been a change in relative shares of the market to the disadvantage of the nonsubsidized like product (over an appropriately representative period sufficient to demonstrate clear trends in the development of the market for the product concerned, which, in normal circumstances, shall be at least one year). Change in relative shares of the market shall include any of the following situations (a)there is an increase in the market share of the subsidized product (b)the market share of the subsidized product remains constant in circumstances in which, in the absence of the subsidy, it would have declined (c)the market share of the subsidized product declines, but at a slower rate than would have been the case in the absence of the subsidy.
6.5 For the purpose of paragraph 3(c), price undercutting shall include any case in which such price undercutting has been demonstrated through a comparison of prices of the subsidized product with prices of a non-subsidized like product supplied to the same market. The comparison shall be made at the same level of trade and at comparable times, due account being taken of any other factor affecting price comparability. However, if such a direct comparison is not possible, the existence of price undercutting may be demonstrated on the basis of export unit values.
6.6 Each Member in the market of which serious prejudice is alleged to have arisen shall, subject to the provisions of paragraph3 of AnnexV, make available to the parties to a dispute arising under Article7, and to the panel established pursuant to paragraph4 of Article7, all relevant information that can be obtained as to the changes in market shares of the parties to the dispute as well as concerning prices of the products involved.
6.7 Displacement or impediment resulting in serious prejudice shall not arise under paragraph3 where any of the following circumstances existduring the relevant period
(a) prohibition or restriction on exports of the like product from the complaining Member or on imports from the complaining Member into the third country market concerned
(b) decision by an importing government operating a monopoly of trade or state trading in the product concerned to shift, for non-commercial reasons, imports from the complaining Member to another country or countries
(c) natural disasters, strikes, transport disruptions or other force majeure substantially affecting production, qualities, quantities or prices of the product available for export from the complaining Member
(d) existence of arrangements limiting exports from the complaining Member
(e) voluntary decrease in the availability for export of the product concerned from the complaining Member (including, interalia, a situation where firms in thecomplaining Member have been autonomously reallocating exports of this product to new markets)
(f) failure to conform to standards and other regulatory requirements in the importing country.
6.8 In the absence of circumstances referred to in paragraph7, the existence of serious prejudice should be determined on the basis of the information submitted to or obtained by the panel, including information submitted in accordance with the provisions of AnnexV.
6.9 This Article does not apply to subsidies maintained on agricultural products as provided in Article13 of the Agreement on Agriculture.
Article 7 Remedies
7.1 Except as provided in Article 13 of the Agreement on Agriculture, whenever a Member has reason to believe that any subsidy referred to in Article1, granted or maintained by another Member, results in injury to its domestic industry, nullification or impairment or serious prejudice, such Member may request consultations with such other Member.
7.2 A request for consultations under paragraph1 shall include a statement of available evidence with regard to (a) the existence and nature of the subsidy in question, and (b)the injury caused to the domestic industry, or the nullification or impairment, or serious prejudicecaused to the interests of the Member requesting consultations.
7.3 Upon request for consultations under paragraph1, the Member believed to be granting or maintaining the subsidy practice in question shall enter into such consultations as quickly as possible. The purpose of the consultations shall be to clarify the facts of the situation and to arrive at a mutually agreed solution.
7.4 If consultations do not result in a mutually agreed solution within 60 days, any Member party to such consultations may refer the matter to the DSB for the establishment of a panel, unless the DSB decides by consensus not to establish a panel. The composition of the panel and its terms of reference shall be established within 15 days from the date when it is established.
7.5 The panel shall review the matter and shall submit its final report to the parties to the dispute. The report shall be circulated to all Members within 120days of the date of the composition and establishment of the panels terms of reference.
7.6 Within 30 days of the issuance of the panels report to all Members, the report shall be adopted by the DSBunless one of the parties to the dispute formally notifies the DSB of its decision to appeal or the DSB decides by consensus not to adopt the report.
7.7 Where a panel report is appealed, the Appellate Body shall issue its decision within 60 days from the date when the party to the dispute formally notifies its intention to appeal. When the Appellate Body considers that it cannot provide its report within 60 days, it shall inform the DSB in writing of the reasons for the delay together with an estimate of the period within which it will submit its report. In no case shall the proceedings exceed 90 days. The appellate report shall be adopted by the DSB and unconditionally accepted by the parties to the dispute unless the DSB decides by consensus not to adopt the appellate report within 20 days following its issuance to the Members.
7.8 Where a panel report or an Appellate Body report is adopted in which it is determined that any subsidy has resulted in adverse effects to the interests of another Member within the meaning of Article 5, the Member granting or maintaining such subsidy shall take appropriate steps to remove the adverse effects or shall withdraw the subsidy.
7.9 In the event the Member has not taken appropriate steps to remove the adverse effects of the subsidy or withdraw the subsidy within six months from the date when the DSB adopts the panel report or the Appellate Body report, and in the absence of agreement on compensation, the DSB shall grant authorization to the complaining Member to take countermeasures, commensurate with the degree and nature of the adverse effects determined to exist, unless the DSB decides by consensus to reject the request.
7.10 In the event that a party to the dispute requests arbitration under paragraph 6 of Article 22 of the DSU, the arbitrator shall determine whether the countermeasures are commensurate with the degree and nature of the adverse effects determined to exist.
Part IV Non-Actionable Subsidies
Article 8 Identification of Non-Actionable Subsidies
8.1 The following subsidies shall be considered as non-actionable
(a) subsidies which are not specific within the meaning of Article2
(b) subsidies which are specific within the meaning of Article2 but which meet all of the conditions provided for in paragraphs2(a), 2(b) or 2(c) below.
8.2 Notwithstanding the provisions of Parts III and V, the following subsidies shall be non-actionable
(a)assistance for research activities conducted by firms or by higher education or research establishments on a contract basis with firms if the assistance covers not more than 75percent of the costs of industrial researchor 50 per cent of the costs of pre-competitive development activity and provided that such assistance is limited exclusively to
(i) costs of personnel (researchers, technicians and other supporting staff employed exclusively in the research activity)
(ii) costs of instruments, equipment, land and buildings used exclusively and permanently (except when disposed of on a commercial basis) for the research activity
(iii) costs of consultancy and equivalent services used exclusively for the research activity, including boughtin research, technical knowledge, patents, etc.
(iv) additional overhead costs incurred directly as a result of the research activity
(v) other running costs (such as those of materials, supplies and the like), incurred directly as a result of the research activity.
(b) assistance to disadvantaged regions within the territory of a Member given pursuant to a general framework of regional development and non-specific (within the meaning of Article2) within eligible regions provided that
(i) each disadvantaged region must be a clearly designated contiguous geographical area with a definable economic and administrative identity
(ii) the region is considered as disadvantaged on the basis of neutral and objective criteria, indicating that the regions difficulties arise out of more than temporary circumstances such criteria must be clearly spelled out in law, regulation, or other official document, so as to be capable of verification
(iii) the criteria shall include a measurement of economic development which shall be based on at least one of the following factors
- one of either income per capita or household income per capita, or GDP per capita, which must not be above 85 percent of the average for the territory concerned
- unemployment rate, which must be at least 110per cent of the average for the territory concerned
as measured over a three-year period such measurement, however, may be a composite one and may include other factors.
(c) assistance to promote adaptation of existing facilities to new environmental requirements imposed by law andor regulations which result in greater constraints and financial burden on firms, provided that the assistance
(i) is a one-time non-recurring measure and
(ii) is limited to 20 per cent of the cost of adaptation and
(iii) does not cover the cost of replacing and operating the assisted investment, which must be fully borne by firms and
(iv) is directly linked to and proportionate to a firms planned reduction of nuisances and pollution, and does not cover any manufacturing cost savings which may be achieved and
(v) is available to all firms which can adopt the new equipment andor production processes.
8.3 A subsidy programme for which the provisions of paragraph2 are invoked shall be notified in advance of its implementation to the Committee in accordance with the provisions of PartVII. Any such notification shall be sufficiently precise to enable other Members to evaluate the consistency of the programme with the conditions and criteria provided for in the relevant provisions of paragraph2. Members shall also provide the Committee with yearly updates of such notifications, in particular by supplying information on global expenditure for each programme, and on any modification of the programme. Other Members shall have the right to request information about individual cases of subsidization under a notified programme.
8.4 Upon request of a Member, the Secretariat shall review a notification made pursuant to paragraph3 and, where necessary, may require additional information from the subsidizing Member concerning the notified programme under review. The Secretariat shall report its findings to the Committee. The Committee shall, upon request, promptly review the findings of the Secretariat (or, if a review by the Secretariat has not been requested, the notification itself), with a view to determining whether the conditions and criteria laid down in paragraph2 have not been met. The procedure provided for in this paragraph shall be completed at the latest at the first regular meeting of the Committee following the notification of a subsidy programme, provided that at least two months have elapsed between such notification and the regular meeting of the Committee. The review procedure described in this paragraph shall also apply, upon request, to substantial modifications of a programme notified in the yearly updates referred to in paragraph3.
8.5 Upon the request of a Member, the determination by the Committee referred to in paragraph4, or a failure by the Committee to make such a determination, as well as the violation, in individual cases, of the conditions set out in a notified programme, shall be submitted to binding arbitration. The arbitration body shall present its conclusions to the Members within 120 days from the date when the matter was referred to the arbitration body. Except as otherwise provided in this paragraph, the DSU shall apply to arbitrations conducted under this paragraph.
Article 9 Consultations and Authorized Remedies 9.1 If, in the course of implementation of a programme referred to in paragraph2 of Article8, notwithstanding the fact that the programme is consistent with the criteria laid down in that paragraph, a Member has reasons to believe that this programme has resulted in serious adverse effects to the domestic industry of that Member, such as to cause damage which would be difficult to repair, such Member may request consultations with the Member granting or maintaining the subsidy.
9.2 Upon request for consultations under paragraph1, the Member granting or maintaining the subsidy programme in question shall enter into such consultations as quickly as possible. The purpose of the consultations shall be to clarify the facts of the situation and to arrive at a mutually acceptable solution.
9.3 If no mutually acceptable solution has been reached in consultations under paragraph2 within 60days of the request for such consultations, the requesting Member may refer the matter to the Committee.
9.4 Where a matter is referred to the Committee, the Committee shall immediately review the facts involved and the evidence of the effects referred to in paragraph1. If the Committee determines that such effects exist, it may recommend to the subsidizing Member to modify this programme in such a way as to remove these effects. The Committee shall present its conclusions within 120 days from the date when the matter is referred to it under paragraph3. In the event the recommendation is not followed within sixmonths, the Committee shall authorize the requesting Member to take appropriate countermeasures commensurate with the nature and degree of the effects determined to exist.