Multidisciplinary Practice under the World Trade Organization's Services Regime


MULTIDISCIPLINARY PRACTICE UNDER THE
WORLD TRADE ORGANIZATION'S SERVICES

REGIME

George C. Nnona*

ABSTRACT

This article isolates and addresses one of the key arguments made in
support of lifting the ban on multidisciplinary practice (MDP) between lawyers
and other professionals in the United States. This is the argument that U.S.
obligations under the World Trade Organization's (WTO) General Agreement
on Trade in Services (GATS) constrain the regulation of MDP in the United
States. Such constraints have been stated to take the form of GATS restrictions
on domestic rules that impede trade in legal services between the United States
and other WTO members, the lawyers' rules of professional conduct that
prohibit MDP being cited as examples of such domestic rules. This article
challenges this view of the U.S. prohibition on MDP through an analysis of the
structure of the GATS, the contours of U.S. treaty obligations under the GATS
and the jurisprudence of the WTO Appellate Body and panels on the subject. It
reaches the conclusion that GATS obligations leave the United States largely
unfettered in its capacity to prohibit MDP.

I. INTRODUCTION

The age we currently characterize as the post-industrial, or the
information-age, may well be ultimately characterized as the age of
convergence. Not only are we witnesses to the great convergence of peoples
and cultures inherent in globalization, we are also privy to rivulets of
convergence in several discrete areas ranging from technical standards to
corporate governance doctrine. The professions have not been immune to this
phenomenon as moves have long been afoot in quest of professional
combinations and convergence. In the medical field for instance, we see
attempts to fuse hitherto discrete professions, as developments in technology
have brought the question into the limelight among medical specialties such as
surgery and radiology, not only with regard to their relationship inter se, but
also with regard to their relationship to non-medical disciplines like computer
science and robotics.'

* Associate Professor, Roger Williams University School of Law. The ideas explored in this

article have benefited from discussions with Professors Ed Eberle, Detlev Vagts, William Alford
and David Wilkins to all of whom I remain grateful. I am also indebted to participants at the
Graduate Colloquia Series of the Harvard Law School where some of the ideas explored here
were first presented. Any errors and omissions are mine alone.



IND. INT'L & COMP. L. REv.

While many physicians have expressed angst at the convergence of
medical disciplines in circumstances in which the professional primacy of
physicians would likely be undermined, their angst seems like a storm in the tea
cup when juxtaposed with the anguish shown by lawyers at the prospect of
convergence of the legal profession and other professions. Perhaps this
difference is explained by the fact that physicians, unlike lawyers, have already
been professionally humbled and undermined, at least since the 1990s, by the
mighty Health Maintenance Organizations (HMOs). The influence of HMOs
and big pharmaceutical companies on modem medical practice is so much that

1. For instance, developments in Magnetic Resonance Imaging (MRI) now hold, clear
prospects of dispensing with the traditional surgeon's scalpel in the bloodless execution of
delicate surgery, using only high-energy precision beams in a non-invasive way. See Harbour
Fraser Hodder, Bloodless Revolution, HARVARD MAGAZINE, Nov.-Dec. 2000, at 36-47. This has
brought issues of turf war between different specialties and disciplines to the fore. Id. Such a
technology threatens the surgeon with replacement by the specialty traditionally in charge of
radioactive and related energy sources, i.e., the radiologist. Id. The radiologist is, in turn,
threatened by other non-medical disciplines that are generally as knowledgeable in this and
other relevant areas. Id. The latter includes robotics, which could actually be deployed to
displace both surgeon and radiologist in the administration of high-energy precision beams, thus
ultimately enthroning the robotics engineer, computer scientist and related fields at the head of
precision surgery. Id. Aspects of this piece are instructive. On page 38, it quotes one of the
major propagators of the new technology, Ferenc Jolesz, who speaks of "the inevitable
restructuring of medicine and surgery that demolishes the traditional boundaries between
specialties... [T]oday we have this sharp distinction between different specialties of surgeons
and radiologists... But what we do here is multidisciplinary and interdisciplinary- we are
working as a team. We're working not only with clinicians, but with computer scientists,
physicists, engineers, and also multispecialty doctors." Id. Mirroring the MDP debate in
relation to the legal profession, the article, at page 46 posits that, "one-stop cancer diagnosis and
treatment at a radiologist's office would eliminate the need for operating rooms -or surgeons-
which brings" up the question of threatened turf. Id. Ferenc Jolesz's ultimate response (on page
47) is most revealing: "My feeling is that in the operating room of the future the doctors will be
different... Maybe there won't be radiologists and surgeons, but there will be a new type of
specialty." Id.

2. See Lawrence Fox, Written Remarks of Lawrence Fox: You've Got the Soul of the
Profession in Your Hand, Written Testimony before the ABA MDP Commission (February 4,
1999), available at http://www.abanet.org/cpr/foxl.html. Fox's words are instructive:

First, look at our colleagues in the medical profession. A decade ago they
relaxed the rules on physicians working for non-physicians. Suddenly a flood
gate of pseudo-prosperity opened up and a tidal wave of cash spread across the
land, offering the docs thousands, even millions for their practices. I remember
myself looking longingly at my physician friends as they cashed out their patient
lists. Why did I decide I hated the sight of blood, I thought.
But where are the physicians today? Can you find a happy doc? Of course not
and why would one expect to? Having sold out to Mammon they now find
themselves acting as supplicants in endless phone calls with high school clerks
who decide for the physicians which medicine to prescribe, which procedures to
undertake and how soon their patients are thrown out of their hospital beds. If
this is what happens to a vulnerable value -- professional independence -- when
literally matters of life and death are on the line, can we expect a different result
when the issue is the preservation of important, if less cosmic values like loyalty,
confidentiality and client autonomy?

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a significant number of physicians are finding disillusionment in their
profession. 3 Beyond the HMOs, the increasingly capital-intensive nature of
medicine, especially cutting-edge medical practice, has made inevitable the
incursion of high finance into medical practice which has accordingly become
subjected to the imperatives of the market, just like engineering before it.

The legal profession in the United States has had to confront its anxieties
over professional convergence, in the context of the recent debate regarding the
propriety of permitting multidisciplinary practice in the United States. The
term "multidisciplinary practice" (MDP) may be defined as joint practice by
lawyers and members of other professions, where their professional activities in
pursuit of that joint practice involve the offer of legal services to the public.
Depending on its context, the term may also mean the professional grouping or
entity under which, or through which, such joint practice is undertaken, such as
a multidisciplinary partnership. 4

MDP is prohibited in the United States by Rule 5.4 of the American Bar
Association (ABA) Model Rules of Professional Conduct and its ancillary
provisions. This rule has been adopted with modifications by various states,
regulatory power over the professions primarily residing in states rather than the
federal government. 6 The rule prohibits lawyers from sharing fees with non-
lawyers, forming law partnerships with non-lawyers, and practicing law in a
professional corporation owned or controlled by a non-lawyer. Although some
states, such as New York, still use the predecessor of the Model Rules, the
Model Code of Professional Responsibility, which was adopted by the ABA in
1969, the contents of the relevant provisions are, for the purposes of MDP,

3. Lawrence Fox, a major opponent of MDP between lawyers and other professions,
considered this a major factor in his opposition to MDPs, given the potential for other
professions, both established and pip-squeak, to control lawyers' discretion in such a setting.
See Fox, supra note 2. See also Lawrence Fox, Written Comments of Lawrence J. Fox, Written
Testimony before the ABA MDP Commission (July 8, 1999), available at
http://www.abanet.org/cpr/fox4.html.

4. The term would be used in this article in these two senses only, even though generally,
it can also encompass joint practice by persons belonging to any two or more professions, none
of whom is a lawyer, as for instance the sort of medical practice referenced in note 1.

5. MODEL RuLES OFPROF'LCONDUcT R. 5.4 (1983). The basic prohibition in Rule 5.4 is
reinforced by several other provisions that ensure lawyer independence and fidelity to client
interests. These include Rule 1.6 on Confidentiality of Client Information; Rules 1.7, 1.8 and
1.9 on Conflicts of Interest; Rule 1.10 on Imputed Disqualification; and Rule 5.7 on
Responsibilities Regarding Law-Related Services.

6. The District of Columbia is the only jurisdiction in the United States whose version of
Rule 5.4 permits fee-sharing and partnership between lawyers and non-lawyers subject to certain
restrictions. See DC MODEL RULES OF PROFESSIONAL CONDUCr R. 5.4 (b) (1991). MDP is thus
technically permitted in the District of Columbia, though in practice this has not given any fillip
to the formation of MDP in the United States primarily because of restrictions in other states
that constrain the establishment of branch offices by law firms with non-lawyer partners. On
some of ramifications of the DC Rules see George C. Nnona, Multidisciplinary Practice in The
International Context: Realigning the Perspective on the European Union's Regulatory Regime,
37 CORNELL INTERNATIONAL LAW JOURNAL, 115, 145-146 (2004).

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IND. INT'L & COMP. L. REv.

practically the same.7 MDP must be distinguished from a situation involving an
individual with dual professional qualifications who is accordingly licensed to
practice law as well as one or more other professions.8

Proponents and opponents of MDP, including the "Big 5" global
accounting firms, have attempted to buttress their positions through arguments
that draw on various sources of legitimacy. Central to both sides, for instance,
has been an appeal to consumer interests and their protection. Each side has
argued that its regulatory recipe is the optimal one for consumers of legal
services.10 Peculiar to MDP proponents, however, is the argument canvassing
the de-proscription of MDP by reference to regulatory constraints imposed by
the international trading system. By casting the opposition in trade-restrictive
terms, this argument broadly seeks to tap into the legitimacy enjoyed by the
liberal trade regime in regulatory circles. More specifically, this argument
presents the ban on MDP as contrary to the disciplines emanating from the
world trading system, -ostensibly the disciplines imposed by the WTO via the
General Agreement of Trade in Services (GATS).

While the value of convergence in many aspects of modern life can
hardly be gainsaid, the case for MDP as an instance of that convergence within

7. See particularly MODEL RuLEs OFPROF'L CONDUCT R. 5.4(a), R. 5.4(b) and R. 5.4(d)
(1983). These rules correspond respectively to MODEL CODE OFPROF'LREsPDR 3-102(A), DR
3-103(A) and DR 5-107(C) (1969).

8. Model Rule 5.7, dealing with a lawyer's responsibilities regarding law-related
(ancillary) services, substantially governs such a professional; this rule is distinct from MDP,
which primarily implicates Model Rule 5.4. See MODEL RULES OF PROF'L CONDUCT, R. 5.4, R.
5.7 (1983).

9. The term "Big 5," or "Big Five," has traditionally been used to refer to the five largest
accounting firms: Arthur Andersen, Deloitte & Touche, Ernst & Young, KPMG and
PricewaterhouseCoopers. The functional demise of Arthur Andersen LLP since 2002, in the
wake of the Enron Corporation accounting scandals, has meant a reduction in this class of firms,
now referred to as the "Big 4." This notwithstanding, the term "Big 5" will be used throughout
this Article to refer collectively to the major global accounting firms, in order to maintain
terminological continuity and consistency between this class of firms and the existing literature
on them, which largely identifies them as the Big 5 rather than the Big 4, the latter term not
having as having as yet become pervasive.

10. See Peter C. Kostant, Paradigm Regained: How Competition From Accounting Firms
May Help Corporate Attorneys to Recapture the Ethical High Ground, 20 PACE L. REV. 43, 51
(1999); James C. Moore, Lawyers and Accountants: Is the Delivery of Legal Services Through
the Multidisciplinary Practice in the Best Interest of Clients and the Public? 20 PACE L. REv.
33, 35 (1999); New York Bar Association, Report of The Special Committee on Multi-
Disciplinary Practice and The Legal Profession, sec. I, para. 5 (January 8, 1999); Bruce A.
Green, The Disciplinary Restrictions on Multidisciplinary Practice: Their Derivation, Their
Development, and Some Implications for the Core Values Debate, 84 MINN. L. REv. 1115, 1158
(2000). But see the statement of Professor Neil W. Hamilton to the Minnesota State Bar
Association, quoted in Lowell J. Noteboom, Professions In Convergence: Taking The Next Step,
84 MINN. L. REv. 1359, 1376 n.90 (2000): "I urge you to make the decision regarding MDP not
on the basis of what 'customers' want. Make it on the basis of how we can preserve one [of] the
great learned professions that is committed (albeit imperfectly) to serving justice." Id.

11. See references infra note 12.

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the broader system of professions is less than persuasive, to the extent that it
rests on the imperatives of the WTO regime for trade in services. Indeed,
whatever may otherwise be the merit of the position that MDP be legalized in
the United States, the argument seeking to support that position by reference to
the WTO regime for services is flawed. The aim of this article is to show the
shortcomings of that argument by exploring the WTO regime for services
especially as it applies to the United States and its prohibition of MDP.

This article therefore challenges the premise that United States
obligations under the WTO regime for trade in services, including the
jurisprudence of the WTO dispute settlement system, constrain it in its
regulatory choices regarding MDP. In relation to this premise, arguments by
MDP proponents typically assert or suggest that the rules of professional
conduct prohibiting MDP (principally Rule 5.4 of the Model Rules) constitute
barriers to trade in legal services between the United States and other countries,
and thus contravene arrangements under the WTO agreements that are
primarily aimed at trade liberalization between the United States and other
nations. Interestingly, the exact manner in which the rules of professional
conduct contravene the WTO services regime and the manner in which such
contravention constrains regulators within the United States in their regulatory
choice regarding MDP are hardly ever articulated in any detail by MDP

12. See for instance Ward Bower, Multidisciplinary Practices - The Future, GLOBAL LAW
IN PRACTICE 155, 162 (J. Ross Harper ed., 1997).

The worldwide proliferation of MDP activity (de facto and de jure) is further
confused by the apparent legal authority of the World Trade Organization (WTO)
in Geneva to exert regulatory control over 'professional services' (including
lawyers) as a result of the adoption of the Uruguay Round of the GATS (General
Agreement on Trade in Services) in 1993. Even the most casual WTO observer
recognizes an apparent bias against regulation, for laissez-faire, caveat emptor
and free trade in everything emanating from the rule-making and dispute-
resolution activities of that body. Protectionist regulation is anathema to the
WTO and even regulation in the public interest is subject to severe scrutiny.

Id. This general declaration on the deregulatory impact on MDPs of the WTO system is not
anchored on any specific provision of a covered agreement or pronouncement of a WTO body,
but rather on vague notions of WTO as a harbinger of a laissez-faire trade environment for
services. See also John H. Matheson & Edward S. Adams, Not "If' but "How": Reflecting on
the ABA Commission's Recommendations on Multidisciplinary Practice, 84 MINN. L. REV.
1269, 1300-01 (2000). Here, the authors state cursorily that "the GATT" treaty, which governs
most international trade matters claims jurisdiction over these professions through the World
Trade Organization-an organization historically biased against self-interested regulation." Id.
That the writers speak of the GATT when they apparently intend to refer to the GATS is perhaps
further indication of the perfunctory character of these and similar assertions. For other
suggestive remarks and allusions to the WTO/GATS disciplines, see American BarAssociation
Commission on Multidisciplinary Practice, Reporter's Notes (1999), available at
http://www.abanet.org/cpr/mdpappendixc.hml (last visited Nov. 13, 2005) especially in Section
I(A), and the related notes 8-17; Laurel S. Terry, German MDPs: Lessons to Learn, 84 MINN. L.
REV., 1547, 1550 (2000); CHRISTOPHER ARUP, THE NEW WORLD TRADE ORGANIZATION
AGREEMENTS: GLOBALIZING LAW THROUGH SERVICES AND INTELLECTUAL PROPERTY, 168-69
(2000).

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IND. INT'L & COMP. L. REv.

proponents. The assertions are often near-perfunctory in nature. 13 The
perfunctory nature of these assertions and suggestions necessitates, by itself, a
closer examination of the WTO regime for trade in legal services to ascertain its
regulatory contours. Beyond that, however, such an examination is also
apposite because the WTO is the largest multilateral trade arrangement in the
world, whose regime potentially has tangential, if not direct, impact on other
smaller regimes, especially by means of the operation of its now-famous dispute
settlement system and the resultant jurisprudence. This article essentially
argues that nothing in the WTO services regime requires the de-proscription of
MDP, and the regime, as such, does not meaningfully constrain the regulatory
authorities of the United States legal profession in their response to the MDP
question.

Part I of this Article introduces the WTO' s General Agreement on Trade
in Services (GATS), the basic instrument covering trade in services. Part 11
explores the United States (U.S.) schedule of specific commitments under the
GATS in order to shed light on the extent and limit of U.S. obligations. Part III
analyzes the General Exceptions under the GATS, consistent with the existing
jurisprudence of the WTO Appellate Body on the subject, the aim to show that
these general exceptions can sustain derogation from the trade disciplines that
are potentially applicable to the MDP issue. Part IV examines the GATS
provisions on non-nullification violation for their potential to act as disciplines
on the regulation of MDP, as well as their relationship to the General
Exceptions. Part V embodies concluding remarks.

II. GENERAL AGREEMENT ON TRADE IN SERVICES

The basic WTO instrument regulating trade in services is the General
Agreement on Trade in Services (GATS), introduced as Annex 1B to the
Agreement Establishing the WTO of April 15, 1994. It establishes the basic
structure for regulating trade in services by adopting a framework similar to that
for trade in goods under the General Agreement on Tariff and Trade (GATT).
Articles XVII and II respectively establish broad National Treatment and Most-
Favored-Nation (MFN) obligations, subject to rather substantial rights of
derogation under each country's Schedule of Specific Commitments and List of
MFN Exemptions, respectively drawn up in line with further stipulations in
Article XX of the GATS and the GATS Annex on Article II (MFN)
Exemptions. Article XVI establishes a market access obligation somewhat akin
to the provision on quantitative restrictions in Article XI of the GATT, which
obligation is also subject to derogations under the Schedule of Specific
Commitments. Despite these basic disciplines, the GATS is very much an
inchoate agreement. In several respects, it is no more than an agreement to

13. See references supra note 12.

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enter into further negotiations with reference to specific issues treated therein, 14

and more generally with reference to progressive liberalization under Article
XIX thereof. This makes it, in several respects, a difficult agreement to
enforce, since several of the provisions effectively end up as expressions of
intent to liberalize despite their not being worded as such. Beyond this,
however, the negotiating technique adopted in drawing up the GATS further
weakens it as a means of effectively constraining states' behavior in the services
sector. 15 Unlike the GATT, which involves a negative list approach under
which any item or sector not included in a schedule is deemed to be
automatically covered by the agreement, the GATS involves a positive list
approach, under which only those items specifically scheduled by a contracting
party are covered. The latter approach is inherently more restrictive, since only
those commitments and sectors which the parties have expressly considered are
covered. This approach excludes, for instance, newly-emerged services that no
one contemplated at the time of the negotiations. 16

It is not surprising, therefore, that the GATS is viewed in many quarters
as merely enthroning a standstill commitment - an obligation on the part of
WTO members not to introduce more restrictive rules on the flow of services,
thus preserving the degree of access provided under current domestic
regulations. Even this assessment may be unduly sanguine given that a
meaningful standstill depends on the level of commitments undertaken in each
member's Schedule of Specific Commitments, as modulated by the MFN
exemptions. Following the scheme of Article XX, commitments in different
service sectors on both market access (under Article XVI) and national
treatment (under Article XVII) are inscribed in the schedule with such
limitations and derogations as the inscribing contracting party deems necessary.
These specific commitments effectively form the crux of the obligations

currently undertaken by contracting parties under the GATS, since they
determine the incidence of the wider, more general disciplines under the
agreement. A GATS signatory is hardly constrained by the agreement if it has
taken the broadest possible exemptions as to MFN and inscribed wide
limitations on national treatment and market access in its schedule. This is true
in spite of the existence of a few sectoral arrangements and disciplines in areas
such as telecommunications, financial services and accountancy; which
arrangements and disciplines are ostensibly aimed at achieving greater
liberalization in these specific sectors by defining and facilitating the
assumption of more robust commitments by the contracting parties in relation to

14. See Article VII(2) on recognition of qualifications, Article XV on subsidies, Article
XVIII on additional commitments.

15. See Geza Feketekuty, Assessing and Improving the Architecture of GATS, in GATS
2000: NEW DmEcTIONS IN SERvicEs TRADE LIBERALIZATION 85, 111 (Pierre Sauve & Robert M.
Stem eds., 2000).

16. See id. at 87.
17. See id. at 97.

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IND. INT'L & COMP. L. REV.

such sectors. Indeed, it has been stated in relation to the commitments that "the
substance of the GATS depends to a very large extent on the specific
commitments which WTO Members have actually offered. In the absence of
substantive commitments, the GATS, although in principle embracing the
entire services industry, remains more or less an empty shell."18

I. SPECIFIC COMMITMENTS

It is clear from the foregoing that to determine the extent to which the
GATS constrains the United States or any other country in its regulation of the
legal services market generally, and MDP in particular, an examination of the
country's schedule of commitments is imperative. In the Uruguay Round, fifty-
five members included legal services in their schedules of commitments. 19 The
United States was one of them. A look at the U.S. schedule of commitments
shows that it inscribed horizontal commitments and related limitations on
market access and national treatment in relation to four areas: temporary entry
and stay of natural persons, acquisition of land, taxation measures, and
subsidies. None of these areas, however, are of exceptional importance to legal
services, especially in the MDP context. With regard to sector-specific
commitments, the U.S. split its commitments in the area of legal services into
two broad categories: (1) practice as or through a qualified U.S. lawyer, which
is clearly the more substantive and important category and therefore the focus
of the discussions herein unless it is indicated otherwise, and (2) practice as a
foreign legal consultant. Regarding the former category, the United States
inscribed, for all states of the Union, market access limitations for all the four
modes of services supply. Notably, the United States restricted the supply of
legal services through any of the modes to natural persons, thus precluding
supply through artificial entities. Instructively, in relation to supply of legal
services through commercial presence, the United States inscribed a market
access limitation stipulating that partnership in law firms is limited to persons
licensed as lawyers. The United States also inscribed a national treatment
limitation in relation to the territory of some of the states: a requirement of in-
state or U.S. residency for licensure in Hawaii, Iowa, Kansas, Massachusetts,
Michigan, Minnesota, Mississippi, Nebraska, New Jersey, New Hampshire,
Oklahoma, Rhode Island, South Dakota, Vermont, Virginia and Wyoming.
With regard to practice as a foreign legal consultant, the United States defined
such consultancy to exclude court appearances, conveyances pertaining to real
property located in the United States, preparation of trust or testamentary

18. See Robert F. Taylor & Philippe Metzger, GATT and its Effect on the International
Trade in Legal Services, 10 N.Y. INT'L L. REv. 1, 23 (1997).

19. SYDNEY CONE, INTERNATIONAL TRADE IN LEGAL SERVICES, 2:20 (1996) (tbl. I gives a
listing of these countries with an indication of the limitations in their respective schedules).

20. Under Article 1(2) a-d of GATS, the modes include cross-border supply, consumption
abroad, commercial presence, and presence of natural persons.

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instruments pertaining to real estate located in the United States that is owned
by a U.S. resident, and preparation of instruments pertaining to marital or
parental relations/rights of a U.S. resident. For all states within its territory, the
United States indicates the supply of foreign legal consultants' services through
presence of natural persons to be unbound, this being the most Fpervasive and
important mode of supply of such services in the United States. For sixteen
states22 and the District of Columbia, the United States inscribed additional
commitments in relation to foreign legal consultants, permitting them to
practice international law at the minimum and, depending on the state, practice
third country law, associate with local lawyers, and use the home-country firm
name. For the more liberal states, including Alaska, Hawaii, New Jersey, New
York, Ohio, Oregon and the District of Columbia, the additional commitments
permit a foreign legal consultant to practice host-country (U.S.) law, provided
the practitioner involves a local lawyer in one form or another. The MFN
exemption list of the United States stipulates exemptions of indefinite duration
in relation to movement of persons, banking and other services (excluding
insurance), and transport services. The list also includes MFN exemptions for
all sectors in relation to taxation measures and land use. 23

By far the most important of the U.S. commitments in the context of
MDP are those on market access. This is because MDP is fundamentally about
the form of association or organization permissible within a jurisdiction for
purposes of legal practice, an issue directly touched upon by Article XVI(2)(e)
of the GATS on market access. This provision prevents a WTO member from
adopting or maintaining, in sectors where market access commitments are
undertaken, "measures which restrict or require specific types of legal entity or...... ,,24
joint venture through which a service supplier may supply a service. This
obligation applies to measures adopted or maintained by the government of the
member, as well as governments of regions, states or other sub-divisions of the
member. MDP is not primarily an issue hinged on discriminatory treatment
between U.S. providers of legal services and providers from other countries,
nor is it about discrimination between service providers of third countries inter

21. A market access limitation is inscribed for thirty-five states, indicating that supply of
the foreign legal consultant's services through commercial presence is also unbound.

22. Alaska, California, Connecticut, Florida, Georgia, Hawaii, Illinois, Michigan,
Michigan, Minnesota, New Jersey, New York, Ohio, Oregon, Texas and Washington.

23. There is some difficulty in understanding the sense in which some of the scheduled
items qualify as sectors or sub-sectors for scheduling purposes, both by their very nature and
also by virtue of the Services Sector Classification List, GAIT Secretariat, Services Sector
Classification List, MTN.GNS/W/120 (March 10, 1991), which was published by the GATT
Secretariat for use by contracting parties in scheduling commitments. While banking and
transport services clearly qualify as sectors or sub-sectors under the classification list, movement
of persons, taxation measures, and even land use hardly qualify as sectors for classification
purposes. This sort of situation contributes to the difficulty of assessing the GATS schedules, a
difficulty noted even by those well-acquainted with trade issues. See HAMISH ADAMSON, FREE
MOVEMENT OF LAWYERS, 182 (1998).

24. GATS Art. XVI(2)(e).

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IND. INT'L & COMP. L. REv.

se, these being fundamental forms of discrimination at which the national
treatment and MFN obligations are respectively aimed. As such, in the absence
of an express provision such as that in Article XVI(2)(e) of the GATS, one
would be hard-pressed to find a directly applicable GATS provision potentially
impinged upon by the MDP prohibition, in the context of the overall GATS
scheme. The foregoing aside, the market access obligations are conceptually
antecedent to the MFN and national treatment obligations, the latter two being
considerably hinged on the market access obligations undertaken. Market
access obligations embody substantive undertakings to open up a countr y's
services industry to outside competition in readily quantifiable or determinable
ways. MFN and national treatment on the other hand embody essentially
procedural obligations to avoid discrimination between service providers of
different countries in the administration of the sectors to which market access
has been granted. That the scheduling scheme of GATS obligations did not
conform to this distinction, often listing in the national treatment column the
same limitations as are listed in the market access column, does not detract
from the validity of this distinction. This is even more so considering that as
important as the inscribed market access limitations are, they are but detractions
from (i.e. limitations on) broad, substantive market access obligations
automatically undertaken pursuant to Article XVI of the GATS upon the
addition of a service sector to a country's schedule of commitments. They are
not the commitments themselves; rather they are limitations thereto. Thus,
national treatment and MFN, fundamental as they are to questions of
international trade regulation generally, have a relatively circumscribed
importance to the MDP question.

It is of course arguable that formally identical measures applied uniformly
to domestic and foreign service suppliers can sometimes result in less favorable
treatment of foreign suppliers, thus leading to defacto discrimination contrary
to the national treatment obligations of the GATS. In the present context, this
would mean in effect that the prohibition of MDP within the United States,
though applied uniformly to foreign as well as domestic suppliers of legal
services has a disproportionately unfavorable impact on the former. This could
be a valid argument in the context of WTO/GATT jurisprudence, and would
give national treatment primacy in and of itself as an obligation potentially
precluding the prohibition of MDP. However, it would be a less direct and
hence weaker argument, very dependent on the hermeneutic inclinations of
WTO judicial bodies, when juxtaposed to the more express and direct
provisions of Article XVI(2)(e) of the GATS on requirements of organizational
and association forms as market access constraints. Furthermore, the success
of such an argument would be dependent on side-issues, the judicial resolution
of which has never been easy. Notably, a key component in arriving at a
conclusion that the national treatment obligation has been breached in the
context of Article XVII of the GATS would be a prior determination that the
domestic supplier in question and the foreign supplier both supply "like
services" and also that they both can be categorized as "like service suppliers,"

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Ignoring the possible ramifications of determining who qualifies as "like service
suppliers" and focusing on the concept of "like services," the issue arises
whether legal services provided by domestic U.S. lawyers practicing
independently of other professionals in the context of stricter ethical rules and
constraints of the legal profession are alike to legal services offered by
professionals (be they U.S. or foreign) working collaboratively in the MDP
context under manifestly different ethical rules and cultures. This readily
implicates distinctions and arguments akin to those made in relation to the
vexed issue of production-and-process-method (PPM) in relation to trade in
goods: Is the method of production of a service or range of services to be
considered a characteristic of such a service or range of services? Whatever the
answer to the foregoing question, how do we distinguish between production
methods for services and intrinsic constituents of such services, given the
intangible nature and general characteristics of services? More specifically,
should the attorney-client privilege (and the benefits flowing therefrom) be
classified for instance, as intrinsic elements of lawyer-provided services or as a
PPM? Are the broad ethical and professional contexts to be considered aspects
of the production method, or should the definition of production method be
more narrowly drawn and restricted to, for instance, the requirements for the
completion of a particular piece of transactional legal work at the government
agency having regulatory control of such transactions. The problems of PPM
seem even more daunting in this context, given the peculiarities of services. 25

Unlike an argument founded on breach of national treatment obligations,
a claim founded on breach of market access obligations stands on seemingly
firmer footing. The provisions of Article XVI(2)(e) apply to preclude the
United States, in the context of the market access obligations it undertook in its
schedule of specific commitments, from introducing or maintaining measures
which "restrict or require specific types of legal entity or joint venture through
which a service supplier may supply a service."26 A requirement that precludes
legal services from being rendered through an MDP ordinarily qualifies as such
a restriction. Even if MDP as a vehicle for offering legal services does not
qualify as a specific type of legal entity sui generis, it very much qualifies as a
form of joint venture under the express language of Article XVI(2)(e).

25. An indication of the intricacies of the PPM issue in the GATT context is given in
MICHAEL J. TREBILCOCK & ROBERT HOWSE, THE REGULATION OF INTERNATIONAL TRADE, 412-19
(1999) (particularly on page 413). The WTO Appellate Body in the Japanese Alcohol case has
instructively noted, while construing Article I1I(2) of the GATT on National Treatment, that the
concept of like products should "be construed narrowly so as not to condemn measures that its
strict terms are not meant to condemn." Appellate Body Report, Japan -Taxes on Alcoholic
Beverages, WT/DS 8/R, WT/DS 10/R, WT/DS I 1/R, AB-1996-02 at 19-20 (Oct. 4, 1996)
(quoted in TREBILCOCK & HOWSE, supra, at 413). While this is clearly not dispositive, it does
denote the precariousness of an argument dependent on the MDP prohibition qualifying as a
national treatment violation under GATS.

26. GATS, Art. XVI(2)(e).

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IND. INT'L & COMP. L. REV.

The clarity and apparent strength of the market access obligations
notwithstanding, chinks exist in its armor. Such chinks are worthy of
consideration as a possible first line of defense for the United States against
claims that the state rules prohibiting MDP constitute measures which violate
U.S. market access obligations. One such chink is the limitation that services
must be supplied by a natural person with respect to all four modes of supply of
services, as expressly inscribed in the U.S. schedule of specific commitments
relating to practice as or through a qualified U.S. lawyer. An immediate issue
that arises in connection with this limitation is whether it does not contemplate
and exempt from the market access commitments, the U.S. rules prohibiting
MDP, at least in a situation where a foreign MDP seeking to supply legal
services in the United States is a juridical entity and not just a grouping (say, a
partnership) of natural persons. (An MDP need not necessarily be constituted
as a juridical entity, but could be a partnership of individuals or ajoint venture
of such partnerships.).

In the above scenario, with juridical personality present, the MDP would
be distinct from the constituent individuals and thus would not qualify as a
natural person supplying legal services for purposes of the requirement in the
U.S. schedule that such legal services be supplied by natural persons. While
such an argument may be sustainable in specific contexts with regard to MDPs
that are structured as juridical entities, it clearly does not provide general, over-
arching support for the U.S. prohibition on MDP. However, such support as it
provides becomes considerably enhanced, when taken together with an oft-
ignored provision inscribed as part of the U.S. limitations on practice as or
through a U.S. lawyer through the third mode of supply of services, i.e. supply
through commercial presence. 27 Here, the United States inscribed an additional
limitation that "partnership in law firms is limited to persons licensed as
lawyers."'28 This provision invites a conclusion that the United States can
validly maintain a prohibition on MDPs, as partnerships that include persons
who are not lawyers. The cumulative effect of these provisions would be that
MDP, whether in the form of juridical entities or natural persons/partnerships,
can be validly prohibited by the United States, relying on the limitations as to
market access in its GATS schedule. The scope of these provisions would,
however, obviously not cover the prohibition of MDP in relation to foreign
MDPs structured as partnerships seeking to supply legal services into the
United States through a mode of supply other than commercial presence.29

27. This is by far the most important mode of supply for international trade in legal
services, not just because it gives the foreign-country entity involved a "permanent"
establishment - and hence a foothold - in the host country, but also because it is the mode of
supply which the host country has the greatest interest in regulating, given the higher level of
intrusiveness involved. Thus, both the foreign country and the host country have a heightened
interest in the regulation of this mode of supply.

28. The US Schedule of Sector- Specific Commitments paragraph I(A) (a).
29. While countries have traditionally sought to control the consumption of foreign

services supplied through such modes, their claim to jurisdiction and control over cross-border

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Besides, a question can be raised as to whether the term "law firms" in the
market access limitation under discussion encompasses MDP firms. In essence,
is the term to be construed strictly in line with its traditional usage so as to
encompass only firms of lawyers offering legal services, or construed broadly to
include any firm that offers legal services to the public, even if the firm is, for
instance, one made up exclusively of investment bankers30 or an MDP
comprising investment bankers and lawyers.? Unless it can be construed in the
latter, broader fashion -which is clearly not certain- the market access
limitation in question may not go as far as completely excusing the U.S.
prohibition of MDP in relation to supply of legal services through commercial
presence. This is because, if it is construed in the strict traditional sense, the
limitation that partners in law firms be only licensed as lawyers would be
inapplicable to MDPs, which would then not qualify as law firms for purposes
of the limitation.

A closer examination would indicate, however, that the term "law firms"
covers MDPs rather than merely traditional law firms. This flows from the
requirement that the term be given an interpretation which does not render the
provision, i.e. the limitation, absurd or largely inutile.3 1 An interpretation that
limits the term "law firms" to traditional law firms would have this effect. It
would be absurd to adopt an interpretation preventing non-lawyers from acting
as partners in a firm that renders legal services if that firm is characterized as a
law firm, while permitting them to act as such partners merely by virtue of the
firm's characterization as an MDP or some other sort of entity. The difference
between a law firm in which lawyers are engaged in practice with non-lawyer
partners (something expressly prohibited by the market access limitation in
question) and an MDP involving lawyers in joint practice with non-lawyer
partners is one of form, not substance. Indeed, the difference is less than one of
form; a difference borne of mere semantics. 32 Because there is no substantive

supply and consumption abroad has in the information age not been, from both logistical and
legal bases, as strong or important as the claim for jurisdiction and control over supply through
commercial presence and presence of natural persons. Unlike jurisdiction over the supply of
services through commercial presence and presence of natural persons, questions of the
extraterritoriality of jurisdiction, for instance, weaken the claim of states to jurisdiction over the
other modes. Similarly, the immense logistical difficulties implicated in reaching foreign
service providers and in controlling emigration logistically constrain control over these modes
of supply. Hence, supply through commercial presence is not only the most important mode of
supply of services into a jurisdiction in terms of legitimate state interests implicated, but also the
most amenable to state regulation.

30. In some countries it is permissible for non-lawyers to render legal advisory services to
clients, provided they do not designate themselves as lawyers or hold themselves out as being
lawyers; the United Kingdom provides an example of this scenario. See ADAMSON, supra note
23.

31. See Shrimp/Turtle case, infra note 47, at para. 121.
32. It may be argued in this regard that a substantial difference exists between the two

situations because in one - the situation in which non-lawyers are permitted to be partners with
lawyers in an MDP - what is involved is not just the offer of legal services to the public, but
rather the offer of a composite or blend of services of which legal services form but one element.
Such composite services justify a rule permitting the partnership of lawyers with non-lawyers.

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IND. INT'L & COMP. L. REv.

difference between these two scenarios, it would be absurd to have an
interpretation that excludes one but not the other. Besides, such interpretation
reduces the efficacy of the limitation and renders it largely without force, since
all that is needed to evade it is for one to claim that the firm involved is an
MDP rather than a law firm.

Beyond the foregoing, a robust interpretation, one that gives effect to the
spirit and context of the provision, would be broad enough to capture all firms
that offer legal services to the public in whatever form since the offer of such
services is the essence of a law firm. Such interpretation would be in line with
the injunction in Article 31(1) of the Vienna Convention on the Law of
Treaties 33 which requires that a treaty provision be interpreted in accordance
with the ordinary meaning to be given to its terms in their context and "in the
light of its object and purpose." The object and purpose of the limitation on
market access under consideration is to ensure that-foreigners who supply legal
services via commercial presence in the United States do so on the same terms
and under the same restrictions as U.S. suppliers of such services, i.e. U.S.
lawyers; one of those restrictions being notably that in Model Rule 5.4
prohibiting U.S. lawyers from sharing profits or forming partnerships with
non-lawyers. The broader context of this market access limitation is the
insistence of the U.S. judicial system on lawyer independence, of which Rule
5.4 is but one expression. Taken together, the purpose and context of this U.S.
market access limitation dictate the inclusion of all firms that render legal
services within the ambit of the phrase "law firms", the result being that any
firm, such as an MDP, the structure of which renders it incapable of meeting
the terms of the limitation, cannot offer legal services via commercial presence
in the United States.

IV. GENERAL EXCEPTION

The general exceptions in Article XIV of the GATS constitute perhaps
the most resilient defence against claims that the rules prohibiting MDP violate
U.S. obligations. Article XIV of the GATS provides, in pertinent part, as
follows:

Subject to the requirement that such measures are not applied
in a manner which would constitute a means of arbitrary or

A response to that argument would be that the fact of joint practice by lawyers and non-lawyers
does not by itself assure us of a composite or blend of services. The essence of partnership is
the sharing of profits and the concomitant mutual influence of partners on one another.
Composite services would not necessarily be the result of a partnership arrangement between
lawyers and non-lawyers. The lawyers may well continue to render their services from a
discrete branch or department within the same firm while the non-lawyers continue to work
separately in their own branch or department. They may actually share few, if any, joint clients
thus further attenuating the possibility of delivering blended services, which is truly present only
when they serve the same clients on the same matter contemporaneously.

33. See infra note 35.

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unjustifiable discrimination between countries where like
conditions prevail, or a disguised restriction on trade in
services, nothing in this Agreement shall be construed to
prevent the adoption or enforcement by any Member of
measures:

(a) necessary to protect public morals or to maintain public
order;

34

Article XIV, borrowed from Article XX of the GATT, embodies the
general exceptions under the GATS, the excerpted portion mirroring the
chapeau and paragraph (a) of Article XX of the GATT. The notable difference
between paragraph (a) of Article XX of the GAT'r and paragraph (a) of Article
XIV of the GATS is the additional phrase "or to maintain public order" tagged
on to the latter. This phrase is novel, not having been employed in any of the
other provisions of the GATT or any other WTO agreement. Given its novelty,
its interpretation should proceed through the use of general interpretative tools,
giving ordinary meaning to the words of the treaty provision in their context
and in the light of their object and purpose.35 A note to this phrase (note 5)
states that "[t]he public order exception may be invoked only where a genuine
and sufficiently serious threat is posed to one of the fundamental interests of
society. 36 While this note does not give the meaning of the new phrase, it does
indicate that not just one but several "fundamental interests of society" can
sustain the invocation of the "public order" exception, thus eliminating the
possibility of a narrow construction of the exception that is limited to, for
instance, situations where there is a breach (or threat of breach) of public law
and order in the sense of civil strife or disorder. Indeed, the limited dimension
of law and order in this narrow sense potentially excludes it from the ambit of
the exception since it is arguable that threats to law and order in the narrow
sense do not pose a serious threat to a fundamental societal interest. Adopting
this expansive view of the term, it is clear that the fundamental interests that

34. GATS, Art. XIV(a).
35. Article 31(1) of the Vienna Convention on the Law of Treaties, 8 ILM 679 (1969),

enunciates this rule of interpretation: "A treaty shall be interpreted in good faith in accordance
with the ordinary meaning to be given to the terms of the treaty in their context and in the light
of its object and purpose." This general rule has now attained the status of a rule of customary
or general international law. See OPPENHEIM'S INTERNATIONAL LAW 1271-75 (Sir Robert

Jennings & Sir Arthur Watts eds., 9th ed. 1992); International Court of Justice decision in
Territorial Dispute Case (Libyan Arab Jamahiriya v. Chad), 33 I.L.M. 571, 581-82 (1994).
The rule thus forms part of the "customary rules of interpretation of public international law,"
which the WTO Appellate Body has been directed by Article 3(2) of the Dispute Settlement
Understanding to apply in seeking to clarify the provisions of the GAT and the other covered
agreements of the Marrakesh Agreement Establishing the World Trade Organization (the "WTO
Agreement"), dated April 15, 1994.

36. GATS, Art, XIV(a) n. 5.

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IND. INT'L & COMP. L. REv.

can sustain an exception under this provision would be context-specific,
varying from state to state depending on local peculiarities as to culture,
politics, and the like. It then seems safe to assume that given the peculiarities
of the United States as a nation under law, 37 a nation where the rule of law
operating through the auspices of an independent and activist judiciary is
supreme, the society has a fundamental interest in maintaining the institutional
framework that supports the law's reign. Without doubt, the legal profession in
the United States qualifies as a major component in the system of laws operated
by the US, both on its own account and on account of its being fundamentally a
creation and appendage of the judiciary. Any arrangement which threatens to
erode the fundamental precepts upon which the profession is founded poses a
genuine and serious threat to the fundamental interest of the U.S. society in the
maintenance of the rule of law and, hence, the maintenance of public order.
Social order in the United States flows directly from the law in a manner not
replicated elsewhere. (In most other jurisdictions, subterranean codes and
norms of behavior play a substantial role in social ordering, in a way not
applicable to the United States given the different values that underpin the
society.) Any measure designed to meet and contain the aforementioned threat
would be justified under the terms of Article XIV(a) of the GATS as a measure
necessary to maintain public order. The rules prohibiting MDP constitute such
a measure, for they are aimed at maintaining the independence and other
characteristics that are sine qua non for the legal profession's performance of its
functions within the system of social ordering. The whole system of legal
counseling, litigation and general representation, on which U.S. citizens and
institutions rely as no other citizens elsewhere do, stands threatened by the
dilution and erosion of lawyer values. Yet such erosion and dilution is intrinsic
to the proper functioning of the very best MDPs.38

37. Mary Ann Glendon has indicated the pernicious dimensions of an overly law-minded
society. But this criticism, while sound, does not vitiate the central place of law and the lawyers
that are its high priests in the U.S. society. See generally MARY ANN GLENDON, A NATION
UNDER LAWYERS (1994).

38. This is evident from the facts and circumstances surrounding the celebrated decision
of the English House of Lords in Prince Jefri Bolkiah (Appellant) v. KPMG (a Firm) [ 1999] 2
A.C. 222 (U.K). The House of Lords in this case ruled that it was impermissible for KPMG, an
international firm of accountants, to offer forensic accounting services to the Brunei Investment
Agency (BIA) in litigation between BIA and Prince Jefri. This was because KPMG had
previously offered similar forensic services to Prince Jefri for purposes of previous litigation
between him and third parties, in the course of rendering which services KPMG had come into
possession of confidential information pertaining to Prince Jefri's personal affairs. Just as an
English solicitor (attorney) is precluded by the applicable rules of professional conduct from
representing interests adverse to a former client's, where such representation poses a threat to
the confidentiality of information entrusted to him by the former client, so also is an accountant
precluded from doing so when he renders forensic accounting services -as he is permitted to
render under applicable English professional rules- such forensic accounting services being
analogous to services rendered by an attorney. To arrive at this decision, the English House of
Lords had to discount KPMG's argument that its internal procedures, especially its use of
Chinese walls (ethical screens) were such as to ensure the preservation of Prince Jefri's

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Commenting on the peculiar character of the U.S. judiciary,
Abram Chayes writes:

The judicial department established by the framers was unique
among nations in 1787 and, to a large extent, remains unique
today. All modem societies have judges, and an independent
judiciary is a hallmark of liberal democracy. In other
countries, however, the judicial system is regarded primarily
as a service provided by the government, much like
education... with the workaday function of resolving the
disputes that arise in the ordinary course of social and
economic life. The courts in such societies are, of course,
essential organs. Unlike the judicial branch brought to life by
article 111, [of the Constitution] however, they are not thought
to be, nor are they in fact, engaged in the political process.

This statement, by underscoring the place of the U.S. judiciary as an integral
component of government at par with any other organ participating in the

confidential information, even while the firm served BIA in a litigation in which BIA's interests
were diametrically opposed to Prince Jefri's. In so doing, the court showed an uncommon
appreciation of the workaday realities of MDPs, especially of the Big 5 type. The lead
Judgment of Lord Millet showed a keen awareness of the perpetual ebb and flow of personnel in
a Big 5 firm, with employees constantly combining and recombining in an endless possibility of
arrangements. Id. at 238-39. Such flexibility of staff usage plays a key role in the overall
strategy of the Big 5 MDP. By being able to deploy staff flexibly, the Big 5 are able to attain
efficiency levels which they otherwise might not have attained. Employee slack time or down
time is reduced since, with constant rearrangements, it is possible to fit employees into the
nooks where they are most needed, or at least where they can be gainfully occupied at any
particular time. The centrality of such an approach to these organizations' overall strategy is
such that it is bound to trump any other consideration, including questions of lawyers'
confidentiality, in the day-to-day business of the organization, as the very facts of Prince Jefri's
case demonstrate. Any observer who has paid attention to the workaday activities of Big 5
employees would confirm that in the hustle and bustle of their average work day, the
confidentiality concerns and related questions that engage the attention of sedate lawyers are, as
a matter of necessity, relegated to the background if not jettisoned.

Also instructive along these lines are the circumstances surrounding the violation by
one of the Big 5, PricewaterhouseCoopers, in 1999, of auditor independence rules that prevent
an auditor from investing in the securities of an audit client. See Lawrence J. Fox, Accountants,
the Hawks of the Professional World: They Foul Our Nest and Theirs Too, Plus Other
Ruminations on the Issue of MDPs, 84 MINN. L. REv., 1097, 1100-01 (2000). When more than
half of the firm's partners were found to be in violation of this rule, the Securities and Exchange
Commission (SEC) declared that it had discovered widespread non-compliance reflecting
serious structural and cultural problems in the firm. Id. Instructively, the response from some
supporters of the firm was, among other things, a criticism of the very rules breached because
the rules had not kept up "with the firm's evolving push into every market niche under the sun."
Id.

39. See Abram Chayes, How Does the Constitution Establish Justice?, 101 HARv. L. REv.
1026, 1028 (1988).

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IND. INT'L & CoMP. L. REV.

political process, further reinforces the position of the legal profession, not as a
discrete institution essential to the administration of law and maintenance of
order in a relatively narrow sense, but as an element in the broader political
superstructure of which the judiciary constitutes a central player, a political
superstructure without which social order in the broadest sense would be
lacking. Any situation or arrangement that threatens to impair the capacity of
the legal profession to perform its functions in this context poses a threat to the
fundamental interest of society in the maintenance of a viable, respectable
political system, and any measure taken to meet that threat qualifies as a
measure necessary for the maintenance of public order under Article XIV(a) of
the GATS.

Related to the foregoing, but distinct from it, is the extent to which
lawyers and their activities are woven into the general fabric of U.S. society.
This intertwining is as extensive as it is sui generis. Not only are lawyers
engaged in activities cardinal to political and social order in a direct sense, their
activities are additionally relevant in an indirect way to social order through the
pervasive influence on a society of lawyers and their ways. America is perhaps
the only modem state where lawyers and judges are folk heroes by virtue of no
more than their forensic exploits. From Daniel Webster and Oliver Wendell
Holmes to fictional characters in television sitcoms, the American lawyer
evokes inspiration and exercises influence far beyond the ken of lawyers in
other jurisdictions, a point noted quite early by Alexis de Tocqueville. 4 0

40. The penetration of law and lawyers into the social fabric in U.S. society is captured by
Alexis de Tocqueville in a famous passage:

In visiting the Americans and studying their laws, we perceive that the authority
they have entrusted to members of the legal profession, and the influence that
these individuals exercise in the government, are the most powerful existing
security against the excesses of democracy.... The influence of legal habits
extends beyond the precise limits I have pointed out. Scarcely any political
question arises in the United States that is not resolved, sooner or later, into a
judicial question. Hence all parties are obliged to borrow, in their daily
controversies, the ideas, and even the language, peculiar to judicial proceedings.
As most public men are or have been legal practitioners, they introduce the
customs and technicalities of their profession into the management of public
affairs. The jury extends this habit to all classes. The language of the law thus
becomes, in some measure, a vulgar tongue; the spirit of the law, which is
produced in the schools and courts of justice, gradually penetrates beyond their
walls into the bosom of society, where it descends to the lowest classes, so that at
last the whole people contract the habits and the tastes of the judicial magistrate.
The lawyers of the United States form a party which is but little feared and
scarcely perceived, which has no badge peculiar to itself, which adapts itself with
great flexibility to the exigencies of the time and accommodates itself without
resistance to all the movements of the social body. But this party extends over
the whole community and penetrates into all the classes which compose it; it acts
upon the country imperceptibly, but finally fashions it to suit its own purposes.

ALExis DE TOCQUEVILLE, DEMOCRACY IN AMERICA vol. 1, ch. XVI 270, 280 (1835) (Alfred A.
Knopf trans., 1994). Lawyers as a group and the society at large in the United States mutually

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Inherent in such influence is the power to shape and reshape society; a power so
capable of misuse that it ought to be subjected to prophylactic restrictions
through rules such as those that secure lawyer independence by prohibiting
MDP.

While Article XIV(a) of the GATS is sui generis, to the extent that it
provides a general exception for measures necessary to maintain public order, it
nevertheless forms part of a provision, the general contours of which have been
explored by GATT and WTO panels and the Appellate Body. The existing
jurisprudence in this regard merits some examination.

One of the principles enunciated by GATT/WTO panels and tacitly
endorsed by the Appellate Body in relation to the interpretation of the related
provisions in Article XX of the GATT is that the language of "necessity" means
that the state relying on an exception would have to show that it has exhausted
all options less restrictive of trade before resorting to the measure sought to be
justified under the Article XX GATT exceptions. In the panel decision in
United States - Standards for Reformulated and Conventional Gasoline ("U.S.
Gasoline case'), the panel indicated that the United States could not justify,
under Article XX(b) of the GAIT, the environmental measure in issue therein
since there were other "measures consistent or less inconsistent with the
General Agreement that were reasonably available to the United States to
further its policy objectives of protecting human, animal and plant life or
health."'4 2 For such a measure to be justified under the terms of Article XX(b)
of the GATT, the United States was required to show necessity, i.e. that the
measure was "necessary" for the protection of human, animal or plant life. The
language of necessity is similarly key in the GATS Article XIV(a) exception,
since the measure sought to be justified thereunder has to be "necessary.. .to
maintain public order." 43 This means that the United States has to show that
the measure restricting MDP is the least restrictive option open to it in
safeguarding the interests protected through that measure. This test is a factual
one which takes into consideration the context and circumstances of the

shape and interpenetrate each other in a pattern that is as true (if not more so) today as it was in
De Tocqueville's time.

41. See the following GATT/WTO Panel decisions: Canada- Measures Affecting Exports
of Unprocessed Herring And Salmon, March 22, 1998, GAT' B.I.S.D. (35th Supp.) at 12
(1988); Thailand -Restrictions on Importation of and Internal Taxes on Cigarettes, Nov. 7,
1990, GATT B.I.S.D. (37th Supp.) at 21, para. 75 (1990); GAIT Dispute Settlement Panel
Report on United States Restrictions on Imports of Tuna, Aug. 16, 1991, 30 I.L.M., 1594, 1620
(1991) (unadopted) [hereinafter Tuna/Dolphin 1]; United States -Standards for Reformulated
and Conventional Gasoline, WT/DS2/R (Jan. 29, 1996) [hereinafter U.S. Gasoline case]. See
also the WTO Appellate Body decision on appeal in the U.S. Gasoline case, WT/DS2/AB/R
(April 29, 1996).

42. See Panel decision in the U.S. Gasoline case, supra note 41, at para. 6.25. This part of
the Panel's ruling was not appealed by the United States, whose appeal focused instead on
paragraph (g) of Article XX and the "relating to" language therein. Indeed, the Appellate Body
noted the Panel's enunciation of the principle in passing with no indication of disapproval. See
also the Appellate Body decision in U.S. Gasoline case, supra note 41, at parts 11(A) and part
III.

43. GATS, Art. XIV(a).

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IND. INT'L & COMP. L. REV.

measure in question. In the U.S. Gasoline case, the panel rejected the U.S.
measure in question because there were other definite, substantive approaches
through which the United States could have achieved its aim of reducing
gasoline-related emission without adopting a different, discriminatory, and
more onerous standard for assessing the emission capacity of foreign-supplied
gasoline. The United States, reasoned the panel, could for instance have
employed existing systems for tracking the origin of goods in international trade
in determining the source of each supply of gasoline, in order to tie that supply
to a specific baseline reflecting the production history of the facility from which•* 44

the supply originated. The panel also reasoned that the United States could
simply have used for domestic suppliers, the same general baseline it applied to
foreign suppliers, thus obviating the need to set specific baselines for foreign
suppliers while achieving the desired level of emission across the board.

Considering the MDP prohibition in the light of this ruling, it is clear that
the panel's second instance of a less-restrictive measure is inapplicable, since
the prohibition of MDP, unlike the gasoline emission measure, is a facially-
neutral non-discriminatory measure, applied alike to domestic and foreign
suppliers of legal services. 45 This element being absent, a search for other less-
restrictive approaches to safeguarding the interest of the United States in
maintaining social order through a bar that is independent of lay influence is
inherently speculative, potentially inviting a revision of the basic issues and
questions that structure the discourse on MDP: What are the ramifications of
lawyer independence? Are some of the ramifications more fundamental to the
maintenance of social order than others? Given its ramifications, what are the
possible approaches to safeguarding lawyer independence? Would Chinese
walls between the different professions in an MDP suffice in ensuring lawyer
independence? Clearly, these are not questions with simple answers. Howbeit,
the U.S. prohibition of MDP is in the circumstances strengthened by the basic

44. This was in response to the claim of the United States that it could not set individual

baselines for different foreign suppliers as it had done for U.S. suppliers due to the difficulty, if
not impossibility, of determining with confidence, the sources of the gasoline imported into the
United States from different foreign suppliers.

45. That a facially-neutral measure such as this can also sustain a claim of de facto
discrimination under the national treatment provisions does not detract from its sufficiency for
purposes of determining whether the least-restrictive approach has been adopted under Article
XX of the GATT or Article XIV of the GATS. The least-restrictive approach is intrinsically a
less-exacting standard since the focus is not on the prevention of any objective, specific result -
as is the case with national treatment where the focus is on the prevention of discrimination per
se- but rather a comparison of different results or effects in order to determine whether some are
less-trade-disruptive than others. Thus, a measure that has the effect of discriminating between
domestic and foreign suppliers is per se in breach of the national treatment test, but is not so for
the less-restrictive-measure test, since the latter is not an absolute ban on discrimination or any

other negative, trade-inhibiting result, but rather a ban on levels of trade disruption not justified
by the results sought. As significant, national treatment and similar substantive obligations are
conceptually antecedent to the less-restrictive-measure test, since the latter is triggered only in
the context of exploring a general exception to a prior determination or concession that a
substantive breach has occurred.

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procedural requirement that a party who asserts the existence of a fact has the
onus of proving the same. As such, it would be up to the proponents of MDP
to show alternative measures less restrictive of trade than the current ban on
MDP. The factual speculation entailed would primarily have to be conducted
by such proponents.

A key principle enunciated by the WTO Appellate Body, in relation to
the construction of the preambular portion -the chapeau- of Article XX of the
GATT is cardinal to an interpretation of the same portion of Article XIV of the
GATS, the latter being essentially a reproduction of the former. Appellate
Body jurisprudence on the chapeau indicates a two-pronged approach to its
interpretation. The first prong is a provisional justification of the specific
measure under consideration, by showing it to fall within one or more of the
exceptions specified in the various paragraphs of Article XX of the GATT.
This step has already been followed in relation to the MDP prohibition by
showing above, that the measure falls within the class of measures
contemplated by Article XIV(a) of the GATS. The second prong involves a
further determination that the measure does not "constitute a means of arbitrary
or unjustifiable discrimination between countries where the same conditions
prevail,4 6 or a disguised restriction on international trade." A measure is saved
under the general exception only if it meets the requirements of both prongs. 47

The object of the chapeau is to prevention abuse of the exceptions. As such,
it addresses arbitrariness and absence of justification, both in relation to the
detailed operating provisions of the measure and in relation to the manner in
which the measure is applied. The dimensions are both substantive and
procedural.

49

In interpreting the chapeau in the U.S. Gasoline case, the Appellate Body
noted that "arbitrary discrimination," "unjustifiable discrimination" and
"disguised restriction" on international trade may be read side by side, and that
they impart meaning to one another.50 Thus, "disguised restriction," whatever
else it may cover, may properly be read as extending to restrictions amounting
to arbitrary or unjustifiable discrimination in international trade taken under the
guise of a measure formally within the ambit of the general exceptions. "The
fundamental theme," it said, was "to be found in the purpose and object of

46. The related portion of Article XIV of the GATS differs from this in that instead of
countries where the same conditions prevail," it speaks of "countries where like conditions

prevail." This difference, though generally significant, is not important to the present analysis.
47. See Appellate Body decision in the U.S. Gasoline case, supra note 41, part IV (where

the Appellate Body enunciated this approach to interpreting the chapeau). See also United
States - Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, Oct. 12,
1998, at paras. 118-19 [hereinafter Shrimp/Turtle case] (where the Appellate Body further
confirmed and reiterated the importance of this approach, building generally upon the principles
established in the former decision).

48. See Appellate Body decision in the U.S. Gasoline case, supra note 41, at part IV.
49. Shrimp/Turtle case, supra note 47, at para. 160.
50. See Appellate Body decision in U.S. Gasoline case, supra note 41, at part IV.

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IND. INT'L & COMP. L. REV.

avoiding abuse or illegitimate use of the exceptions to substantive rules
available in Article XX." 51 The Appellate Body having thus indicated a
combined and interactive reading of the terms, proceeded to apply them to the
U.S. measures in question in that case in a manner indicating that the terms
substantially overlapped. While not expressly stating so, the Appellate Body
appeared to depart from this combined reading of the terms in the
Shrimp/Turtles case. There, the Appellate Body approached the terms
separately, attempting to show their distinctiveness by isolating aspects of the
measures that resWectively qualify as "arbitrary discrimination" or "unjustifiable
discrimination." It deemed it unnecessary, however, to similarly consider
"disguised restriction" in the context of the case. 53

Notwithstanding this attempt at separating the two terms, the distinction
is anything but clear given that there was no express delineation of the
conceptual difference between them by the Appellate Body, the focus under its
discussion of both terms being simply the related acts of discrimination by the
United States, especially as between shrimp producers from different countries,
in relation to whom the U.S. measure had been applied differently. It would
appear however that the conceptual difference between "unjustifiable
discrimination" and "arbitrary discrimination" lies in the idea that the latter,
unlike the former, involves something akin to recklessness in the administration
of a measure, such recklessness being reflected for instance in the absence of
consideration for the disparate impact of same measures on different countries.
In this wise, the words of the Appellate Body are instructive:

We next consider whether Section 609 has been applied in a
manner constituting "arbitrary discrimination between
countries where the same conditions prevail." We have already
observed that Section 609, in its application, imposes a single,
rigid and unbending requirement that countries applying for
certification ... adopt a comprehensive regulatory program
that is essentially the same as the United States' program,
without inquiring into the appropriateness of that program for
the conditions prevailing in the exporting countries.
Furthermore, there is little or no flexibility in how officials
make the determination for certification pursuant to these
provisions. In our view, this rigidity and inflexibility also
constitute "arbitrary discrimination" within the meaning of the
chapeau.5

51. See Appellate Body decision in the U.S. Gasoline case, supra note 41, at part IV.
52. Shrimp/Turtle case, supra note 47, at paras. 161-82.
53. Id. at para. 184.
54. Id. at para. 177.

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This apparently implicates the idea that same or similar treatment of different
countries can, in the context of the chapeau, amount to defacto discrimination,
so that what is actually required to avoid such discrimination is dissimilar
treatment. There is, however, a measure of circularity in this line of reasoning,
given that the essence of the chapeau, at least a cardinal dimension thereof, is
that discrimination, whether of the unjustifiable category or of the arbitrary
kind, does not result from the application of a measure "between countries
where the same conditions prevail. ' 55 To proceed then on the assumption that a
country applying a measure should take into consideration such disparate
effects of the measures as result from the different situations or conditions of
the countries does strain somewhat the logic of the chapeau. It is possible,
however, to see the Appellate Body's reasoning here as resting not just on the
fact that the disparate effects of the measure ought to be taken into
consideration for countries where different conditions exist, but also on the fact
that the U.S. measure in question envisaged the adoption by other countries of a
comprehensive regulatory program that is essentially the same as that in the
United States. In promulgating a measure so extraterritorial in nature, the
United States might reasonably be expected to consider the specific conditions
in the other territories affected. Beyond such disparate impact, however, the
Appellate Body further hinged its conclusion as to the arbitrary character of the
discrimination on the absence of due process and transparency in the
administrative implementation of the U.S. measure by the agencies involved,
some essential determinations having been made exparte, for instance, without
regard to basic principles of fair hearing, thus effectively resulting in
discrimination between those shrimp exporting countries who receive benefits,
i.e. certification, under the U.S. measures in question and those who are denied
such benefits. 56 These shortcomings in basic due process provide a firmer
ground for a conclusion that the discrimination is arbitrary, the result of
recklessness as to basic procedures.

Another significant principle enunciated by the Appellate Body in the
U.S. Gasoline case is, that the exercise of applying the general exceptions in
Article XX of the GATT" would be unprofitable, if it involved no more than
applying the same standard used in finding that a measure was inconsistent with
a substantive provision of the GATT, say, by virtue of its being discriminatory
contrary to national treatment obligations of Article III. It stated that, "[t]he
provisions of the chapeau cannot logically refer to the same standard(s) b
which a violation of a substantive rule has been determined to have occurred." /

Thus, while the basic elements of discrimination in the case were the more
onerous requirements imposed on foreign gasoline vis-A-vis domestic gasoline,
the additional elements required to show unjustifiable discrimination and
disguised restriction on international trade for purposes of the chapeau were: (i)

55. GATS Art. XIV.
56. The Shrimp/Turtle case, supra note 47, at paras. 180-81.
57. U.S. Gasoline case, supra note 41, at part IV.

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IND. INT'L & COMP. L. REv.

the omission of the United States to explore in conjunction with other countries
involved (Venezuela and Brazil) cooperative means of mitigating the
administrative problems relied on by the United States as a basis for failing to
permit individual baselines for foreign gasoline suppliers as it had done for
U.S. suppliers, and (ii) U.S. failure to consider the costs for foreign suppliers
that would result from the imposition of across-the-board statutory baselines.58

It is noteworthy however that these additional elements correspond somewhat
to the requirements relevant to a showing that a country has exhausted all
options less restrictive of trade before resorting to the measure sought to be
justified under an Article XX GATT exception in relation to which the
language of "necessity" applies. Thus an element of circularity still dogs the
application of the general exceptions to specific facts, even when the
underlying logic appears clear.

Further application of this WTO/GATT jurisprudence to the question of
MDP in the context of the related provision of Article XIV(a) of the GATS,
requires an examination of the conformity of the MDP prohibition with the
second leg of the two-tiered process prescribed by the Appellate Body. In
essence, this invites a response to the following question: Is the U.S.
prohibition of MDP applied in a manner which would constitute a means of
arbitrary or unjustifiable discrimination between countries where like
conditions prevail or a disguised restriction on trade in services? The claimed
exemption under Article XIV(a) of the GATS can be sustained only if this
question can be answered in the negative.

A significant distinction between the measures in issue in both the U.S.
Gasoline and Shrimp/Turtles cases on the one hand, and the measure
prohibiting MDP on the other hand is the fact that unlike the latter, the former
are, on the whole, complex measures administered by agencies charged with
conferring or denying benefits under the scheme of the measures, thus
necessitating the agencies' active interaction with stakeholders. Thus, they
elicit intricate procedures necessary to determine and delimit the interests of
various stakeholders in the measures. In contrast, the MDP measure is not a
measure that invites such intense administrative activity, being a simple, non-
complex and primary measure under which no benefits are administered or
conferred on any party, irrespective of country of origin. This singular
difference makes the measure less vulnerable to attack on the basis of its
application, since it does not lend itself to the complexity and multiplicity of
circumstances to which the other measures are subject. Indeed, a mechanism
suggested by the Appellate Body in the U.S. Gasoline case, by which the
United States could have eliminated the discriminatory manner in which the
measure in question was applied, is the adoption of the same statutory baseline
for assessing emission both for foreign and domestic gasoline.5 9 The MDP

58. Shrimp/Turtle case, supra note 47, at last paragraph.
59. U.S. Gasoline case, supra note 41, at part IV. See also supra text accompanying note

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measure, as a measure that applies to foreign and domestic lawyers and legal
services alike, meets the parameters indicated by this suggestion. The
requirements of the chapeau are essentially requirements that concern the
application of a measure, and where that application is simple, unlayered and
straightforward, there exists less room for a finding of discrimination, -whether
arbitrary or unjustified- of the sort necessary to sustain a challenge to the
measure under the chapeau. It is important to note that, in line with Appellate
Body jurisprudence on the matter, the discrimination necessary to impugn the
MDP measure, for purposes of the chapeau, must go beyond that initially
necessary to find a substantive violation of the provision of the GATS. Thus,
where the antecedent finding of substantive violation is defacto discrimination
in breach of national treatment obligations under Article XVII of the GATS,60

the same acts or omissions on which defacto discrimination is founded would
not suffice to show that the discrimination is arbitrary or unjustified under the
language of the chapeau. One is however hard-pressed to discover in the
present circumstances the alternative sources of such second-level
discrimination, given the character of the MDP measure as a rather bare
measure with a strict, rigid application; which application would be very
difficult to adjust or render more nuanced without effectively dispensing with
the measure itself altogether.

The strictness and rigidity with which the MDP measure is applied invites
a possible conclusion that in effect, it arbitrarily discriminates between
countries by failing to inquire into the appropriateness of its program for the
conditions prevailing in the exporting countries, as suggested by the Appellate
Body's pronouncement in the Shrimp/Turtles case.6' However, such a
conclusion can only be reached if one were to lose sight of salient differences
between the circumstances of the measure in that case and the MDP measure.
The pronouncement in that case was made in relation to the administrative
machinery put in place to administer the benefits and burdens of the primary
measure by, inter alia, examining the efforts made by various countries to avoid
or minimize sea turtle mortality in the course of commercial shrimp harvesting.
They were not made in relation to the primary measure banning shrimps
harvested with commercial fishing technology harmful to sea turtles. Section
609(b), paragraph (1) of The Department of Commerce, Justice, and State, the
Judiciary, and Related Agencies Appropriations Act of 1990 contained the
primary measure banning the importation of shrimps harvested using
technology harmful to sea turtles. It provided:

IN GENERAL. -- The importation of shrimp or products from
shrimp which have been harvested with commercial fishing
technology which may affect adversely such species of sea

60. See supra paragraph accompanying note 25, for an explanation of the potentials for
such de facto discrimination.

61. See supra text related to note 53.

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IND. INT'L & COMP. L. REv.

turtles shall be prohibited not later than May 1, 1991, except
as provided in paragraph (2).62

Paragraph (2) of the same section, on the other hand, provides:

CERTIFICATION PROCEDURE. -- The ban on importation
of shrimp or products from shrimp pursuant to paragraph (1)
shall not apply if the President shall determine and certify to
the Congress not later than May 1, 1991, and annually
thereafter that -- (A) the government of the harvesting nation
has provided documentary evidence of the adoption of a
regulatory program governing the incidental taking of such sea
turtles in the course of such harvesting that is comparable to
that of the United States; and (B) the average rate of that
incidental taking by the vessels of the harvesting nation is
comparable to the average rate of incidental taking of sea
turtles by United States vessels in the course of such
harvesting; or (C) the particular fishing environment of the
harvesting nation does not pose a threat of the incidental
taking of such sea turtles in the course of such harvesting.63

It was in the details of the certification procedure -details relating to the active
administration of the measure- rather than the primary measure in section
609(b) paragraph (1) that the problem lay in this case. Indeed, the recklessness
that forms the hallmark of arbitrary discrimination can both conceptually and
actually be located in the details of a measure's implementation and
administration, rather than the bare measure itself. The absence of procedural
due process loomed large in the Shrimp/Turtles Appellate Body's conclusion
that the application of the United States' measures was arbitrarily
discriminatory. Procedural due process is however largely irrelevant, where a
primary measure of a narrowly-drawn nature is, without more, in issue. In both
the U.S. Gasoline and Shrimp/Turtles decisions, the Appellate Body based its
determination that the measures in question were arbitrary in application on the
administrative rules and details by which .the measures were applied. This is
quite logical and in concert with the text and character of the chapeau. A
measure such as the MDP measure, which is so structured that it lacks these
elaborate administrative rules in its application, is largely not amenable to
impeachment as being arbitrarily discriminatory. This is not to say that it is

62. Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies
Appropriations Act, Pub. L. No. 101-162, 103 Stat. 988 (1990) (subsequently codified as 16
U.S.C § 1537). Section 609(a) merely mandated the U.S. Secretary of State in consultation with
the Secretary of Commerce to enter into certain broad international negotiations with a view to
the conservation of sea turtles, to encourage international agreements towards same purpose,
and to report back to Congress on certain issues related to such conservation.

63. Id.

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impossible for such a primary measure to sustain a charge of discrimination in
other respects, for instance, with regard to basic national treatment or MFN
obligations. Rather, it is to say the primary measure is factually incapable of
sustaining a claim of arbitrary discrimination under the chapeau, given the
detailed principles enunciated by the Appellate Body. This is more so given
that Appellate Body jurisprudence indicates that in principle, a different, extra
element of discrimination is necessary to prove that a measure in its application
offends the chapeau. "The provisions of the chapeau cannot logically refer to
the same standard(s) by which a violation of a substantive rule has been
determined to have occurred." 64 The same facts, i.e. the primary measure,
justifying an initial finding of substantive discrimination under the GATT or
GATS would not suffice for a finding of discrimination under the chapeau.

The MDP measure is primarily embodied in Rule 5.4(b) and 5.4(d) of the
American Bar Association's Model Rules of Professional Conduct of 1983 (as
adopted by various state judiciaries) and the corresponding provisions in
Disciplinary Rules (DR) 3-103(A) and 5-107(C) of the American Bar
Association's Model Code of Professional Responsibility of 1969. The Model
Rules provide in paragraphs (b) and (d) as follows:

(b) A lawyer shall not form a partnership with a nonlawyer if
any of the activities of the partnership consist of the practice
of law.

(d) A lawyer shall not practice with or in the form of a
professional corporation or association authorized to practice
law for a profit, if:

(1) a nonlawyer owns any interest therein, except that a
fiduciary representative of the estate of a lawyer may hold the
stock or interest of the lawyer for a reasonable time during
administration;

(2) a nonlawyer is a corporate director or officer thereof or
occupies the position of similar responsibility in any form of
association other than a corporation ; or

64. See supra text accompanying note 57.

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IND. INT'L & COMP. L. REV.

(3) a nonlawyer has the right to direct or control the
professional judgment of a lawyer.65

These provisions have no elaborate administrative mechanisms, if any.
Arguably, the procedural rules of the bar disciplinary bodies in the various
states of the United States may qualify as the administrative mechanisms for
these rules. However, even if they are accepted to be so, they provide no
advantages to lawyers within the United States. They effectively make for
stricter enforcement of the blanket MDP prohibition against U.S. lawyers vis-A-
vis foreign lawyers in respect of whom such disciplinary bodies have and claim
no jurisdiction over their non-U.S. activities.66 Putting aside substantive
adequacy, and focusing on operative or procedural adequacy, it is clear that the
approach actually used by the bar authorities in administering the MDP
measure does not implicate arbitrary or unjustifiable discrimination. The U.S.
measure prohibiting MDP as embodied in the provisions is, by virtue of the
provisions' structure, not amenable to application in a manner which would
constitute a means of arbitrary or unjustifiable discrimination between countries
where like conditions prevail. The provisions simply provide no room for such
application.

The existence of operating provisions is a cardinal element in assessing
the substantive adequacy of a measure for purposes of determining whether
arbitrary or unjustifiable discrimination exists. Recall that in the Shrimp!

65. The recent revision of the rules by the ABA's Ethics 2000 commission did not change
these provisions. While other provisions of the Model Rules and Model Code aim at the
protection of lawyer independence from lay interference, these are the rules that do so by way of
prohibiting MDP. Rule 5.4(a) prohibiting the sharing of legal fees with non-lawyers is
effectively covered by Rule 5.4(b) since the legal essence of a partnership is the sharing of
profits and loss from a joint enterprise. Rules 1.7-1.8 on conflict of interest and a variety of
other rules also seek to reinforce and protect lawyer independence, though not primarily by
means of prohibiting joint practice with non-lawyers. The American Bar Association,
promulgator of the model rules and model code, has no legislative authority. However, the rules
and code are influential and have been adopted in one form or another in most of the states
within the United States, jurisdiction over professional regulation lying primarily within the
legislative competence of the states. The District of Columbia is the only U.S. jurisdiction that
has modified Model Rule 5.4 to permit, in limited circumstances, partnership with non-lawyers
in the practice of law. MODEL RuLES OF PROF'L CONDUCT R. 5.4 (Discussion Draft 1933).

66. The possibility exists, however, for such a claim where "foreign" lawyers are also
licensed to practice within a U.S. state. Such a state potentially has disciplinary jurisdiction
over the out-of-state activities of the "foreign" lawyers. (See in this wise, Rule 8.5 of the ABA
Model Rules of Professional Conduct, dealing with disciplinary authority and related choice of
law issues.) In this scenario, however, it becomes debatable whether the state is indeed
exercising jurisdiction over foreign lawyers, given that a jurisdiction's definition of "foreign
lawyer" would not ordinarily encompass any lawyer admitted to its own bar, irrespective of his
national origin. See MODEL RULES OF PROF'L CoNDucT R. 8.5 (Discussion Draft 1933).

A review of the intricacies of multi-state jurisdiction over lawyers in their cross-
jurisdictional activities may be found generally in: Detlev Vagts, Professional Responsibility in
Transborder Practice: Conflict and Resolution, 13 GEo. J. OF LEGAL ETHIcs 677 (2000).

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Turtles case, the Appellate Body emphasized the substantive and procedural
dimensions of the chapeau, noting:

that the application of a measure may be characterized as
amounting to an abuse or misuse of an exception of Article
XX not only when the detailed operating provisions of the
measure prescribe the arbitrary or unjustifiable activity, but
also where a measure, otherwise fair and just on its face, is
actually applied in an arbitrary or unjustifiable manner. The
standards of the chapeau, in our view, project both substantive
and procedural requirements.

67

It would seem that the potency of the substantive dimensions of this
requirement is circumscribed in the context of the MDP measure, given the
leanness of the provisions embodying the measure and its operative parts, if an
operative part can be said to actually exist. Nor is the situation much different
in relation to the actual manner of application of the measure, given the
transparency and uniformity that has attended the MDP prohibition over the
decades.

A cardinal aspect of the chapeau is the requirement that the arbitrary or
unjustified discrimination, necessary to disqualify a measure that otherwise falls
within the specific exceptions listed in the paragraphs of Article XIV of the
GATS, occur between countries where like conditions prevail.68 In both the
U.S. Gasoline and Shrimp/Turtles cases, the Appellate Body failed to examine
the concept in any meaningful depth beyond its ruling -with the acquiescence
of the parties themselves- that the phrase "between countries where the same
conditions prevail" contemplates the conditions in the domestic jurisdiction vis-
A-vis other countries, as well as the conditions in such other countries vis-A-vis
one another. Since it is axiomatic that effect should be given to this portion of
the chapeau, it is indisputable that any party intent on showing that the MDP
measure in the United States does not qualify as a general exception under
Article XIV of the GATS has the onus of showing that the conditions in the
United States, for purposes of this measure, are like those in any other country
in respect of which the claim of arbitrary or unjustifiable discrimination is
made. Conceptually, there could be a claim that such discrimination has been
effected by the United States as between one foreign country and another where
like conditions exist. However, this scenario is largely irrelevant for present
purposes, since that is not how the MDP measure has been designed as a
provision, nor does it reflect the way it has actually been implemented. Proving
that conditions related to the production and consumption of legal services in

67. See Shrimp/Turtle case, supra note 47, para. 160.
68. The related portion of Article XX of the GATr chapeau actually speaks of countries

where "the same" conditions prevail. This difference is, however, not material to the present
discussion.

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IND. INT'L & COMP. L. REv.

the United States, are alike to those in other countries is predictably a difficult
task, given the sharp peculiarities of the U.S. legal and political processes.69

In both the U.S. Gasoline and Shrimp/Turtles cases, the Appellate Body
did not clearly indicate the elements of the term "disguised restriction on
international trade" either by conceptually delineating its contours or by specific
examples drawn from the facts of the cases: In U.S. Gasoline, the Appellate
Body, reflecting its belief that the key operative terms of the chapeau impart
meaning to one another, interpreted "disguised restriction on international
trade" to include disguised discrimination in international trade, as well as
concealed or unannounced restriction or discrimination. For the Appellate
Body, "the kinds of considerations pertinent in deciding whether the application
of a particular measure amounts to 'arbitrary or unjustifiable discrimination,'
may also be taken into account in determining the presence of a 'disguised
restriction' on international trade." 70 The Appellate Body in its decision in
ShrimpTurtles, as already indicated, declined to rule on this element of the
dispute, even though there is indication in the structure of its judgment that the
element was to be treated distinctly from the others. However, aspects of the
ruling in ShrimpTurtles provide insight into the construction of this element.
In that case, the Appellate Body declared that "[t]he chapeau of Article XX is,
in fact, but one expression of the principle of good faith. This principle, at once
a general principle of law and a general principle of international law, controls
the exercise of rights by states."'71 This good faith requirement in the
construction of the chapeau suggests that the term "disguised restriction," as an
element of the chapeau, is amenable to meaningful application only through an
examination of the circumstances of a case with the mind-set of a court of
equity rather than a court of law. No rigid principle seems applicable in this
wise. For, in the words of the Appellate Body:

The task of interpreting and applying the chapeau is ...
essentially the delicate one of locating and marking out a line
of equilibrium between the right of a Member to invoke an
exception under Article XX and the rights of the other
Members under varying substantive provisions (e.g., Article
XI) of the GATT.... The location of the line of equilibrium,
as expressed in the chapeau, is not fixed and unchanging; the
line moves as the kind and the shape of the measures at stake
vary and as the facts making up specific cases differ.72

69. See supra text accompanying notes 33-35.
70. U.S. Gasoline case, supra note 41, at part IV; see also supra text accompanying note

47.
71. See Shrimp/Turtle case, supra note 47, at paragraph 158.
72. Id. at para. 159.

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In this connection, whether a measure qualifies as a disguised restriction on
international trade in services or not is largely a contingency, and attempts at
prediction would be largely speculative. Notions of fairness and equity
implicate a high level of indeterminacy. That said, aspects of the MDP measure
make a strong case for it as a bona fide measure applied with no intent on trade
restriction. These aspects include its pedigree as a measure -whether in the
form of provisions in the earlier ABA Model Code of Professional
Responsibility of 1969, the ABA Canons of 1908, or antecedent common law
principles- substantially predating the current concern with the liberalization of
trade in services. Equally included is the absence of covert extraterritoriality in
the application of the measure. In ruling against the United States in the U.S.
Gasoline case, the Appellate Body, after reviewing two possible approaches
that the United States could have adopted to mitigate the impediments claimed
to justify the discriminatory application of the measure in issue, concluded that
"[t]he resulting discrimination must have been foreseen, and was not merely
inadvertent or unavoidable." 73  This suggests that the existence of an
opportunity for forward planning in the design of a measure to achieve
disguised restriction is an important consideration in determining the good faith
of a measure and its application. Where a measure is one of reasonable vintage,
the possibilities for a conclusion that such an opportunity existed becomes
considerably attenuated. Likewise, the extraterritorial dimension seemed
cardinal in the Appellate Body's decision in the Shrimp/Turtles case, where it
deprecated the extraterritoriality manifest in the application of the U.S. measure
under review in the case.74 This measure appeared, from the conclusions
drawn by the Appellate Body, to be essentially a unilateral attempt to deal with
a global issue -in this case the mortality of migratory sea turtles- thus
implicating impermissible extraterritoriality. The MDP measure is quite
different, being a more narrowly-drawn measure that lacks any element of
extraterritoriality in its design and implementation. It embodies no expressed or
covert policy objective of getting other countries to effect policy (or even
isolated structural) changes within their jurisdictions as did the measures in the
Shrimp/Turtles and U.S. Gasoline cases.

73. U.S. Gasoline case, supra note 41, at part IV.

74. See Shrimp/Turtle case, supra note 47, paras. 164-165, where the Appellate Body
declared:

It is not acceptable, in international trade relations, for one WTO Member to use
an economic embargo to require other Members to adopt essentially the same
comprehensive regulatory program, to achieve a certain policy goal, as that in
force within that Member's territory, without taking into consideration different
conditions which may occur in the territories of those other Members.... This
suggests to us that this measure, in its application, is more concerned with
effectively influencing WTO Members to adopt essentially the same
comprehensive regulatory regime as that applied by the United States to its
domestic shrimp trawlers. ...

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IND. INT'L & COMP. L. REV.

V. NON-VIOLATION NULLIFICATION OR IMPAIRMENT

The GATS provision on non-violation nullification is embodied in Article
XXIII(3), which provides:

If any Member considers that any benefit it could reasonably
have expected to accrue to it under a specific commitment of
another Member under Part III of this Agreement is being
nullified or impaired as a result of the application of any
measure which does not conflict with the provisions of this
Agreement, it may have recourse to the DSU. If the measure
is determined by the DSB to have nullified or impaired such a
benefit, the Member affected shall be entitled to a mutually
satisfactory adjustment on the basis of paragraph 2 of
Article XXI, which may include the modification or
withdrawal of the measure. In the event an agreement cannot
be reached between the Members concerned, Article 22 of the
DSU shall apply. 75

This provision is reinforced by the transitional provisions of Article VI(5) of the
GATS, which provide as follows:

5. (a) In sectors in which a Member has undertaken
specific commitments, pending the entry into force of
disciplines developed in these sectors pursuant to paragraph 4,
the Member shall not apply licensing and qualification
requirements and technical standards that nullify or impair
such specific commitments in a manner which:

(i) does not comply with the criteria outlined in
subparagraphs 4(a), (b) or (c);76 and

75. GATS Art. XXH(3).
76. Sub-paragraphs 4(a), (b) and (c) of Article VI provide:

With a view to ensuring that measures relating to qualification requirements and
procedures, technical standards and licensing requirements do not constitute
unnecessary barriers to trade in services, the Council for Trade in Services shall,
through appropriate bodies it may establish, develop any necessary disciplines.
Such disciplines shall aim to ensure that such requirements are, inter alia:

(a) based on objective and transparent criteria, such as competence and the
ability to supply the service;

(b) not more burdensome than necessary to ensure the quality of the service;
(c) in the case of licensing procedures, not in themselves a restriction on the

supply of the service.
GATS Art. VI(5).

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MULTI DISCIPLINARY PRACTICE UNDER WTO

(ii) could not reasonably have been expected of
that Member at the time the specific commitments in those
sectors were made.

(b) In determining whether a Member is in conformity
with the obligation under paragraph 5(a), account shall be
taken of international standards of relevant international
organizations 77 applied by that Member.78

In the context of the broader MDP debate, these GATS provisions provide a
possible avenue for challenging the prohibition of MDP in the United States.
In this regard, a credible case can be made that notwithstanding its facial
neutrality and conformity with the substantive provisions of the GATS, the
measure prohibiting MDP leads to nullification or impairment of WTO
members' expectations of enhanced access to the U.S. market for legal services,
both generally and in the light of specific commitments undertaken. These
provisions thus merit an examination in the light of the related GATT
provisions and jurisprudence.

The provisions of Article XXIII(3) of the GATS broadly reflect those of
Article XXIII(I)b of the GATT. Though the former appears more peremptory,
its scheme is effectively the same as the latter's. Both provisions essentially
reflect the need felt by trade regime designers to provide avenues for the
management of trade-distorting impact of measures that are otherwise formally
within the scope of the respective agreements. They envisage the use of some
consultative or conciliatory means either after a formal finding of non-violation
nullification or impairment, but before the adoption of retaliatory or punitive
counter-measures by the aggrieved party -as is the case with Article XXIII(3)
of the GATS- or before (or as part of) such a formal finding -as is the case
with Article XXIII(I)&(2) of the GATT.

Non-violation nullification or impairment under Article XXIII of the
GATT and the GATS is the most direct application of the reasonable
expectations principle (also referred to as "reasonable assumptions" or
"reasonable anticipation" principle) first enunciated by the GATT Panel in The
Australian Subsidy on Ammonium Sulphate decision. 9 Although the principle

77. Footnote 3 to Article VI(5)(b) provides: "The term 'relevant international
organizations' refers to international bodies whose membership is open to the relevant bodies of
at least all Members of the WTO." GATS Art. VI(5)(b) fn 3.

78. GATS Art. VI(5).
79. The Australian Subsidy on Ammonium Sulfate, April 3, 1950, GATT B.I.S.D. (2d

Supp.) at 188, para. 12 (1950). See Adrian T.L. Chua, Reasonable Expectations and Non-
Violation Complaints in GA7T/WTO Jurisprudence, J. WORLD TRADE, April 1998, at 29, 30.
See also Joel P. Trachtman, The Domain of WTO Dispute Resolution, 40 HARV. INT'L L.J. 333,
374 (1999) (noting that in applying the concept of non-violation nullification or impairment in
the recent case of Japan-Measures Affecting Consumer Photographic Film and Paper,

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IND. INT'L & COMP. L. REv.

is not contained in the text of the GATT or the interpretive notes adopted by the
GATT contracting parties, it has been persuasively put forward as arguably an
intrinsic part of the GATT, capable of being distilled from the provisions and
structure of the GATT. In a detailed analysis examining GATT jurisprudence
on non-violation nullification or impairment, Adrian Chua, attempts an
isolation of the elements of such a complaint, as they have evolved
incrementally through judicial legislation by the panels. Three elements are
isolated as being essential for a successful non-violation complaint:8 1

(a) The existence of benefits accruing under the GATF, which
benefits are alleged to have been impaired or nullified;

(b) Nullification or impairment of such benefits through some
governmental measure;

(c) Reliance-inducing conduct by the respondent.

Regarding the requirement that benefits accruing under the GATT be impaired
or nullified, a substantial preponderance of benefits alleged in the cases to have
been so impaired or nullified "have been bound tariff concessions under Article
II" of the GATT.82 In the services context, these concessions correspond
roughly to the market access commitments undertaken pursuant to Article XVI
of the GATS. While such a tariff concession or market access commitment is
not necessarily implicated in non-violation complaints, their preponderance in
GATT non-violation jurisprudence and the centrality of market access
commitments to the GATS framework, justify an examination of the essential
requirements of a possible claim that the U.S. measure prohibiting MDP
impairs or nullifies market access benefits accruing under the GATS, given the
obligations undertaken by the United States in its schedule of specific
commitments. Apart from the existence of a benefit, the second element
essential for a successful non-violation complaint is the actual nullification or
impairment of benefits by means of a governmental measure. Concerning this,
three requirements are delineated: (i) that the measure upset the balance of
concessions as between the parties, (ii) that the measure be not reasonably
foreseeable by the complainant at the time expectations of better market access

WT/DS44/R (98-0886) of March 31, 1998, the WTO Panel followed earlier GAIT
jurisprudence in applying the concept conservatively seeking "evidence of what one might call
in domestic law 'actual reliance' to find legitimate expectations").

80. Chua, supra note 79, at 30.
81. Six "elements" (numbered A-F) are actually listed. See Chua, supra note 79, at 37-48.

However, only these three are in the nature of substantive requirements; the rest being either in
the nature of procedural characteristics (rather than requirements per se) or adjuncts of the
substantive three. Id. See also Trachtman, supra note 79, at 370, 373.

82. See Chua, supra note 79, at 39-40.

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MULTI DISCIPLINARY PRACTICE UNDER WTO

arose, and (iii) that there occur a frustration of the complainant's reasonable
expectations of enhanced market access arising out of any of several possible
sources of such expectation.83 The third element essential for a successful non-
violation complaint is reliance-inducing behavior by the country against which
a complaint is filed. It seems that such behavior, while not necessary for
purposes of the broader principle of reasonable expectations -for which
purpose other sources of reasonable expectations would suffice- is essential for
that principle in the specific context of non-violation nullification or
impairment.84  No doubt, a measure of overlap is involved in these
requirements as analyzed. This is not surprising, given that the effort towards
isolating and sorting the various elements and related requirements of the non-
violation complaints is quite nascent.

The three requirements pertaining to the element of actual nullification or
impairment of benefits seem central to a successful non-violation claim and,
thus, merit the greatest attention, a fortiori, since they subsume the third
element of reliance-inducing conduct. Along these lines, can it be said that the
MDP measure in question has upset the balance of concessions as between
WTO members, that it was not reasonably foreseeable by them at the time
GATS negotiations on legal services were conducted, and that it has frustrated
their reasonable expectations of enhanced market access arising out of U.S.
statements, conduct or agreements with third countries? It is immediately seen
that these are questions better answered on a case-by-case basis in the context
of specific actual non-violation nullification or impairment complaints or
disputes. This notwithstanding, certain well-known facts concerning MDP and
the state of competition in the international market for legal services, as well as
the U.S. approach to negotiating market access concessions in the legal services
sector, indicate that the odds are very much against a finding of non-
nullification violation or impairment by the United States vis-A-vis other WTO
members who may file such complaints. First is the fact that the international
market for legal services is one in which, competitively speaking, U.S.
suppliers were dominant in the years leading up to the conclusion of GATS and
have remained dominant thereafter. 85 Nothing in the concessions made by the

83. The sources of such expectations are open-ended, but the most significant ones are:
a) Assurances and statements made in the course of trade negotiations;
b) Established negotiation practice of the parties
c) Conduct of respondent government's policy
d) Provisions of GAT negotiated between the respondent and a third party
e) Pre-existing competitive conditions

See Chua, supra note 79, at 32-36. It seems from the cases that only complainant's expectations
of improved market access arising out of negotiated agreements or statement or conduct of the
respondent are relevant for this requirement. Id. at 41.

84. See Chua, supra note 79, at 47.
85. In 1993, the year immediately before GATS became operative, the United States

provided $1.453 billion worth of legal services to other countries, as against $326 million worth
of legal services purchased by the United States from other countries. The major importers of
U.S. legal services were the European Union ($765 million) and Japan ($335 million). See U.S.

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IND. INT'L & COMP. L. REV.

United States indicated an intention to disrupt this competitive state
substantively. The aim was to provide other countries with an equal opportunity
to compete, rather than an assurance of absolute improvements in their legal
services export to the United States. Equal opportunity in the context in which
the negotiations were carried out in the late 1980s and early 1990s cannot
logically be dependent on the availability or acceptance of a specific, hitherto-
unrecognized, if not inexistent, vehicle for delivering legal services - the MDP.
A claim that there has occurred an upset in the balance of concessions can thus

not be readily substantiated, whether such a claim is dependent on the
resistance of the U.S. legal services market to exports from abroad by regular
law firms and MDPs established in those countries, or is dependent on the
denial of opportunity to such foreign entities in the notional sense of
disallowing their use of the vehicle best suited to effective competition and
optimal performance by them.

It is widely acknowledged that the core of the U.S. approach in
negotiating and inscribing its GATS schedule of specific commitments
involved offers to bind the professional rules of the various states, especially
those states which had made appropriate provisions for foreign access to their
legal services market, by way of foreign legal consultancy.8 6 This indeed
reflected a general approach in the broader GATS negotiation towards
preserving, rather than expanding, the levels of liberalization existing in the
various countries 87 and granting limited concessions, as implicit in the positive
list approach used in scheduling commitments. Even though the United States
Trade Representative (USTR), working in conjunction with the ABA,
encouraged some states to adopt appropriate legislation permitting foreign legal
consultants, there was no impetus for an expansion of the degree of access

Department of Commerce, Economics and Statistics Admin., Bureau of Economic Analysis,
Survey of Current Business, Vol. 74, no. 9 (September, 1994) 132-133 (cited with some critical
but non-fundamental commentary in CONE, supra note 19.at 1:19). The trend continues to be
the same. The United States Trade Representative (USTR) reports that "[flor the United States,
balance of payments receipts for legal services amount to roughly $3.2 billion annually." Press
Release,U.S. Proposals for Liberalizing Trade in Services: Executive Summary (July 1, 2002),
available at http://www.ustr.gov/assetslDocumentLibrary/PressReleases/2002/July/asset
upload-file224_2009.pdf

86. See CHRISTOPER ARuP, THE NEW WORLD TRADE ORGANIZATION AGREEMENTS:
GLOBALIZING LAW THROUGH SERVICES AND INTEL'CIAL PROPERTY 167 (2000). Sydney Cone
notes:

[Tihe U.S. Schedule of Specific Commitments on legal services consists of two
parts: Part (1) is a two-page summary of state law on admission to the bar; Part
(2) is an 18-page summary of legal- consultant rules in 16 U.S. jurisdiction ....
Part (2) is thus a commitment that those 16 jurisdictions will respect a 'standstill'
as regards legal consultancy....

See CONE, supra note 19, at 2:44-2:45.
87. See Feketekuty, supra note 15, at 87.

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MULTI DISCIPLINARY PRACTICE UNDER WTO

granted by each U.S. state beyond an emphasis on the avoidance of reciprocity
requirements. 88 In this regard, Cone writes:

It was thus not a task of awesome proportions for a state to be
responsive to USTR policy during this period; as long as a
state steered clear of reciprocity, it could respect that policy
while indulging in any substantive restriction it found
expedient for lulling into tolerable quiescence the local bar
examiners and other guardians of the public interest.89

Being an established element of the various states' regulation of law practice,
the continued existence in the circumstances of the measure prohibiting MDP
cannot reasonably be said to frustrate any party's expectations. There were
three main parties involved in the negotiations, 9° and every party knew of its
existence and could reasonably anticipate that it would not be amenable to
repeal.

Concerning possible expectations arising from U.S. statements or conduct
in the course of negotiations, it must be acknowledged that there exists a
general perception that the U.S. Government was prepared to lay down legal
services like a sacrificial lamb in the Uruguay Round of trade negotiations. 91

But whatever the concessions that may have been made by the United States in
that regard, it did not extend to promises -or conduct indicating a readiness- to
de-proscribe MDP. Indeed, indications are that the sacrifices were in the area of
foreign legal consultants' practice within the United States, in relation to which
the United States bound unconditionally, i.e. without requiring reciprocal
treatment, the liberalized provisions of the various states that had already
adopted appropriate legislation permitting such practice. 92  U.S. trade
negotiators, however high their enthusiasm may have been for facilitating trade
in other sectors through offers in the legal services sector, were aware of
limitations and difficulties implicit in making promises of liberalization that

88. For example, requirements which predicate the availability of the concessions granted
by a country on the existence of reciprocal concessions in a country whose service suppliers
seek to take advantage of the granted concessions.

89. See CONE, supra note 19, at 4:29. See also CONE supra note 19, at 2:7.
90. Japan was represented by Japanese Government officials and the Japanese Bar

Federation (known by its Japanese acronym "Nichibenren"), the European Union was
represented by the European Commission and CCBE, and the United States was represented by
the USTR and ABA.

91. THE GATT URUGUAY ROUND: A NEGOTIATING HISTORY (1986 - 1992), Commentary
(Terence P. Steward ed., 1993), cited in ARuP, supra note 86, at 167. Sydney Cone reports that
some sort of side deal may have been made by the U.S. negotiating team, involving a trade-in of
U.S. liberalization of legal services with regard to practice by foreign legal consultants, for trade
concessions to the United States in areas other than legal services, possibly Japanese Semi-
conductor markets covered by the TRIPS Agreement. See CONE, supra note 19, at 2:3, 2:12-
2:13.

92. See id. at 2:12-2:13, 2:44-2:45, 4:29.

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IND. INT'L & COMP. L. REv.

went beyond the status quo in the various states, regulatory authority over
professions being primarily within the legislative purview of the various states
rather than the Federal Government. They accordingly tailored their offers in
tandem with this reality, and the so-called sacrifice of the U.S. legal services
sector did not go beyond the fact that trade concessions, which the United
States obtained from other countries by binding the existing levels of market
access, did not accrue to the U.S. legal profession, but rather to other sectors of
the U.S. economy, contrary to the high hopes of ABA representatives working
with the USTR.93 The sacrifice did not extend to removing or promising a
removal of the prohibition on MDPs. Indeed, the negotiators took the pains to
indicate that related prohibitions concerning unauthorized practice and
partnership with non-lawyers were reflected in and protected through
appropriate market access limitations for all the states of the Union.94 Sydney
Cone, a close observer of the process leading up to the conclusion of GATS
negotiation on legal services, provides a detailed account of the intricacies of
the negotiations and the jostling leading up to the U.S. commitments in the
legal services sub-sector. 95 There is no indication that the USTR, which had
primary responsibility for the negotiations, and the ABA, which was a de facto
but active participant, made any broad promises beyond a binding of state
positions generally on legal practice as they existed at the time of negotiations,
and the encouragement of states to permit the licensing of foreign legal
consultants. Significantly, Cone writes that, "[iun the case of the United States,
no formal promises were lodged in the schedule subsumed by the GATS, but..
. definite expectations were raised that the ABA and the USTR would promote
the adoption of the Model Rule [on foreign legal consultants] throughout the
United States." 96 Arguments for non-violation nullification or impairment
relying on U.S. negotiating conduct or promises in the course of such
negotiations are, therefore, unavailing.

An important point in relation to non-violation nullification is whether a
measure justified under the Article XIV of the GATS exception would still be
amenable to impeachment under the provisions of Article XXII(3) of the
GATS. In other words, what is the hierarchy, if any, between the general
exceptions and the non-violation provisions? In the present context, would a
finding that the U.S. MDP measure nullifies or impairs expected benefits
override a finding under Article XIV(a) of the GATS that the measure is one
that is necessary to maintain public order, or would it be the other way around?
This is important because Article XIV of the GATS provides what is perhaps

the best defense for the MDP measure, while Article XXII(3) of the GATS

93. See supra note 91 and accompanying text. See also CONE, supra note 19, at 2:42-
2:44.

94. See supra text accompanying notes 19-20.
95. See generally CONE, supra note 19, at chapter 2 (especially at 2:2-213, 2:24-2:34),

Chapter 4.
96. Id. at 2:32-2:33.

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likewise qualifies as the ultimate assault weapon for parties intent on
impugning the measure. Reconciliation is therefore imperative.

It has been argued, in the context of the related provisions of Article XX
of the GATT, that "[i]n principle, there is no objection in allowing a measure
justified under an Article XX exception to be challenged under Article
XXIII(1)(b)." 97 This argument places reliance on certain averments made in
the context of discussions under the emergency exception in Article XXI of the
GATT.98 Clearly, however, this is a question that has not been adjudicated
definitively by any panel. More importantly, it is a question regarding which a
textual approach to interpretation would yield no dividends. This is because by
its very terms, the general exceptions in Article XIV of the GATS (just like
Article XX of the GATT exceptions) seek to subsume and override all other
provisions of the GATS including those of Article XXIII(3), while Article
XXII(3) GATS (just like the corresponding Article XXJH:(1)(b) of the GAIT)
seeks likewise to subsume and override other provisions, including the general
exceptions. They are mutually eliminating. A teleological approach that takes
into consideration the design and purpose of the provisions would be more
auspicious. Along these lines, it would seem that the interests sought to be
protected by the general exceptions - interests such as health and environment,
public order and morality, safety and privacy - transcend those implicated by
the non-violation nullification or impairment provisions, not just in terms of
being values that attract more attention and concern among civil society
currently, but more importantly, in terms of embodying values and concerns in
which all peoples and states possess concurrent vested interests. Unlike these
generic interests, the interests sought to be protected by the non-violation
nullification or impairment provisions are contingent, state-specific interests
without abiding implications for most other states and civil society in general.
It seems in the context of the interests implicated, that the general exceptions
would prevail over the non-violation nullification or impairment provisions,
should the question arise whether a measure saved by the former is condemned
by the latter.

Non-violation nullification or impairment seems ultimately to be a
"discipline" at the cross-roads of law and politics. It simultaneously assumes
legality and illegality -legality in the sense that the there has been no violation
of substantive provisions, and illegality in the sense that there has effectively
occurred an abridgment or loss of expected benefits. Such contradiction is
indicative of the weakness of the WTO legal framework; a weakness resulting
from the organization's character as a grouping of sovereigns where the dictates
of diplomacy, as distinct from legality, remains key, notwithstanding the much-
trumpeted dawn of a rule-based dispute settlement system.

97. Chua, supra note 79, at 46.
98. Id.

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IND. INT'L & COMP. L. REV.

VI. CONCLUDING COMMENTS

The GATS does not oblige or constrain the regulators of the legal

profession to accommodate MDP as a vehicle for the delivery of legal services
in the United States, and this is not likely to change in the course of the current
rounds of WTO negotiations over services. 99 Significant in this regard is the
reality that in the hierarchy of fundamental norms that constrain and shape the
trading system itself, the importance of non-trade values such as that of
maintaining law and order within a nation, is constantly being reaffirmed and

reinforced. ° ° This is especially so in relation to considerations of the long-

term future of the trading regime, whether in respect of goods or services. This
reinforcement further secures the capacity of the United States to maintain, in
the long-run, a prohibition on MDP as an element of a regulatory mechanism
properly tailored to meet legitimate state interests recognized by the WTO itself
through the GATS general exceptions. This is quite separate from the fact that

the United States has inserted in its schedule of commitments appropriate
market access limitations that constrain the capacity of foreign MDPs to claim

access to the U.S. legal services market, especially by way of commercial
presence, such commercial presence being the most dominant mode for the

transnational supply of legal services -at least where such legal services are
supplied by the major institutional providers of legal service.

The ABA went into the negotiations leading to the Uruguay Round

agreements armed with little other than sanguine expectations of better access
to foreign markets. It sustained heavy losses,' 0 1 and the results have since left
it better educated and, thus, better prepared for subsequent rounds. More

attuned to the intricacies of trade negotiations, especially in the light of

government's possible perception of legal services as a relatively insignificant
sector that may be pawned for bigger fish, the ABA should be able to marshal
resources necessary to hold its own among other competing interests.
Therefore, it is not likely that much impetus towards the de-proscription of

MDP would flow from future trade negotiations. Indeed, the primary force
behind the inclusion of legal services in the Uruguay round was the U.S. legal
profession as represented by the ABA, and it still lies within its reach to
influence and shape the obligations assumed by the United States in the current

99. The rounds commenced with the Doha Ministerial Declaration (adopted Nov. 14,
2001) and were slated to end no later than January 1, 2005. See paragraph 45 of the Doha
Ministerial Declaration, Doha WTO Ministerial 2001: Ministerial Declaration, WTO document
# WT/MIN(01)/DEC/1 2001. The rounds have been fraught with much difficulty however and
the rounds have been extended beyond 2005. The expectation is that the rounds will end by the
end of 2006, but this is not certain. See WTO, The Doha Declaration Explained, available at
http://www.wto.org/english/tratop-e/dda-e/dohaexplained_e.htm#services (last visited Jan 16,
2006).

100. See Doha Ministerial Declaration supra note 98 at 6, 7.
101. See CONE, supra note 19, at 2:2-2:14, 2:40-2:45; see also supra note 91.
102. CONE, supra note 19, at 2:2.

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MULTI DISCIPLINARY PRACTICE UNDER WTO

rounds of trade negotiations over services. Nothing in its input to the
negotiations, or that of the USTR, so far indicate an interest in propagating
MDP in the United States. Their focus is the facilitation of transnational
practice involving law firms and practitioners, with basically no attention paid
to MDP. Noteworthy in this regard is the February 3, 2002 resolution of the
ABA section on international law concerning the negotiating position of the
United States with regards to legal services.1 3  The resolution basically
expresses support for access to foreign markets for U.S. lawyers through
permanent establishments consistent with, and as expressed and incorporated
in, the ABA's 1993 "Model Rule for the Licensing of Legal Consultants" in the
United States. These rules are consistent with permanent establishments as a
mode of supply but contain no provisions for MDP. It is also interesting that
the recent offer of commitments by the USTR pursuant to the on-going trade
negotiations, does not contain any adjustments indicating a move towards the
accommodation of MDP. °4 From the foregoing, it is clear that to the extent
that the GATS is the source of the obligations claimed to potentially constrain
U.S. regulatory authorities in relation to MDP, the opportunity for such
regulators to shape the contours of regulation as they deem fit remains ample in
the context of the current trade negotiations.

In relation to professional services, of which legal services constitute a
prominent aspect, some specific initiatives undertaken within the WTO
framework are noteworthy because they shed further light on the current and
future contours of obligations under the GATS. The most prominent appear to
be the initiatives of the WTO Working Party on Domestic Regulation (formerly
known as the Working Party on Professional Services). Established by virtue
of the Decision on Professional Services adopted by the WTO Council on
Trade in Services on March 1, 1995,105 its name was changed to Working Party
on Domestic Regulation by the Decision on Domestic Regulation adopted by
the Council for Trade in Services on April 26, 1999.1°6 The March 1995
decision mandated the working party to develop disciplines in the area of
professional services, in fulfillment of the broader mandate of the Council for
Trade in Services under Article VI(4) of the GATS to ensure that measures
relating to technical standards, licensing requirements, qualification
requirements, and procedures do not constitute unnecessary barriers to trade in
services. Pursuant to this mandate, the Working Party on Professional Services

103. Center for Professional Responsibility, ABA, Materials about the Gats and Other
International Agreements (2005), at http://www.abanet.orglcpr/gats/gats.home.html (last visited
on October 13, 2005).

104. See U.S. initial offers, March 31, 2003, available at
http://www.ustr.gov/sectorslservicesl2003-03-3 1-consolidatedoffer.pdf (last visited Nov. 27,
2005). The offer on legal services, in the form of a proposed schedule of specific commitments,
as updated by the USTR in May 2005 is available at
http://www.abanet.org/cpr/gats/legal-svcs-offer.pdf.

105. Document Symbol: S/L/3.
106. Document Symbol: S/.170.

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IND. INT'L & COMP. L. REv.

produced the "Guidelines for Recognition of Qualifications in the Accountancy
Sector," which was adopted by the Council for Trade in Services on May 29,
1997.107 These non-binding guidelines are meant to assist governments in
effecting negotiations in the accounting sector. It provides procedural standards,
such as transparency, which should attend the making of agreements to provide
recognition between WTO members. More substantive than the Guidelines, are- 108
the Disciplines Relating to the Accountancy Sector, adopted by the Council
for Trade in Services by means of its Decision on Disciplines Relating to the
Accountancy Sector of December 14, 1998. 19 These disciplines are applicable
only to those WTO members who have scheduled specific commitments in
accountancy under the GATS. 110 Besides, Article I of the Disciplines make it
clear that they do not apply to any measures subject to scheduling by virtue of
Article XVI and XVII of the GATS, which measures are to be addressed
through the negotiation of specific commitments. The Disciplines thus restrict
themselves to licensing and qualification requirements under Article VI GATS,
and should remain so restricted even if extended to the legal services sector as
expected under the current round of trade negotiations. Some may be
tempted to argue that the MDP prohibition may qualify in effect as a licensing
requirement -an area where the working party probably has some leeway in
prescribing standards. This would however amount to stretching the words of

107. Press Release, World Trade Organization, WTO Adopts Guidelines for Recognition of
Qualifications in the Accountancy Sector (May 29, 1997), available at
www.wto.org./english/news.e/pres97_e/pr73_.e.htm, for a list of guidelines.

108. Press Release, World Trade Organization, WTO Adopts Discipline On Domestic
Regulation for the Accountancy Sector (Dec. 14, 1998), available at
www.wto.org/english/news-e/pres98_.eprl 18_e.htm.

109. Document Symbol: S/LJ64. The text of the Disciplines is usually annexed to the text
of the Decision.

110. This follows from the use of the positive list approach in scheduling commitments
under the GATS. Under that approach, any member who does not expressly list the accounting
or legal sub-sectors in it schedule of specific commitments is deemed not to have made any
commitments in those areas.

111. Id. Regarding this expectation and its ramifications, see the presentation of the CCBE
(Council of the Bars and Law Societies of the European Union) to the WTO, CCBE Response to
The WTO Concerning the Applicability of the Accountancy Disciplines to the Legal Profession
May 2003, available at http://www.ccbe.org/doc/En/ccberespons._080503_en.pdf. There is
the important issue of the definition of necessity for purposes of the injunction in the Discipline
that WTO members adopt only measures that are not more trade-restrictive than necessary to
achieve certain desired ends. The CCBE has reflected the fears entertained by some lawyers that
necessity or 'necessary' could be defined in such a narrow manner as to impede the Bar's need
to regulate itself in a manner that secures key interests such as that of independence. (See id.
page 4.). Were that to happen, it is not inconceivable that such a narrow definition of necessity
for purposes of the Discipline (and Article VI(4) of the GATS to which it is appurtenant) would
spill over to the construction of the word "necessary" for purposes of the general exception in
Article XIV(a) of the GATS, thus constricting the reach of the exception. The odds are however
higher that the WTO Appellate Body, whose jurisprudence has shown an enhanced robustness
in the protection of non-trade values, would resist such narrowness in the construction of the
language of necessity, at least for purposes of the general exceptions.

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MULTI DISCIPLINARY PRACTICE UNDER WTO

the statute out of their context, licensing requirements being traditionally
distinct from requirements pertaining to practice groupings and vehicles for
service delivery, a distinction maintained in the GATS itself. 112

112. See GATS Article VI, dealing with licensing requirements and related issues,
especially in paragraphs (4), (5) and (6) thereof, as distinct from GATS Article XVI(2)(e)
dealing with vehicles or entities for the delivery of services. For a treatment of these vehicles
and structures, see the paragraph of this article immediately following that in which note 25
supra occurs.

2005]