International Judicial Monitor
Published by the American Society of International Law and the International Judicial Academy
April 2008 Issue

International Tribunal Spotlight:
The World Trade Organization Dispute Settlement System

Gabrielle Marceau of the Legal Affairs Division of the World Trade Organization, asserted in a paper she prepared for a meeting of African Trade Ministers in the year 2000 (Libreville 2000) that “the dispute settlement procedure [of the WTO dispute settlement system] is the WTO’s most original contribution to the stability of the world economy.” She might also have added that the WTO Dispute Settlement System (DSS) itself is now the most successful international dispute settlement “body” in the world. No other tribunal or system comes close to matching the number of cases before WTO Dispute Resolution Panels and the WTO Appellate Body, or the compliance by parties to a dispute with the rulings of the two tribunals that exist within the DSS.

One hundred and fifty two countries have been admitted to the WTO since it was created in 1995. With admission comes a requirement that trade disputes be resolved within the framework of what is known as the DSU (Dispute Settlement Understanding). In the seven years of the existence the DSS, 40 WTO members have initiated 369 disputes (a huge number by international standards, and 45 WTO members have been the object of complaints. The disputes have been peaceably resolved, and compliance with the decisions and decrees of the WTO panels and the Appellate Body has been very close to 100 percent.

In the aftermath of World War II, along with the creation of the United Nations and the Bretton Woods Agreements, the International Monetary Fund and the World Bank, world leaders hoped to create a world trading organization whose purpose would be to reduce tariff and non-tariff barriers and also provide for a permanent mechanism for resolving trade disputes. That proved not to be possible, and those countries promoting such an organization had to be satisfied with the General Agreement on Tariffs and Trade (GATT), which existed as the sole international trading understanding for almost fifty years. Finally at the completion of the Uruguay Round of trade negotiations in the early 1990s, the World Trade Organization came into existence and with it the DSS.

The specific institutions that came into existence for the DSS when the WTO was created were:

  1. The Dispute Settlement Body – this is a political body composed of all of the Member States, that “oversees operation of the dispute settlement system, including formation of panels, adoption of panel/Appellate Body reports, authorization of retaliatory measures, and surveillance of cases for which compliance is not yet achieved.”

  2. Dispute settlement panels – these are ad hoc three-person adjudicatory bodies established for each dispute.

  3. The WTO Secretariat – this body assists in the composition and operation of the panels and provides any needed technical assistance.

  4. Appellate Body (AB) – this tribunal is composed of seven members, each of whom serves a four year term.

  5. Appellate Body Secretariat – this institution provides administrative and technical assistance to the AB.

All of these bodies operate or exist at the WTO headquarters in Geneva, Switzerland.

Trade disputes under the DSS are only between governments, and do not involve private corporations, organizations or individuals.

There are four stages to the WTO dispute settlement process: consultation, panel, Appellate Body, and implementation/compliance.

Upon the filing of a complaint, there is a requirement that the parties to the dispute attempt to settle their differences within a 60 day consultation period. If during the consultation stage the dispute cannot be resolved, then the complaining party is entitled to have the dispute resolved by an ad hoc panel. Panels make findings of fact and conclusions of law. They are supposed to complete their work and render a decision within six to nine months from the date of hearing. In reality the process now takes 10-12 months, which is still a “fast track” in the international tribunal world.

A panel report may be appealed to the Appellate Body, which hears only issues of law and legal interpretation. Its options are to affirm, reverse or modify a panel decision. An AB judgment must be issued within 90 days of the appeal. The AB has consistently been able to meet this somewhat strenuous time requirement.

Ad hoc panels are made up of individuals with international trade experience. As of January, 2008, almost 200 international trade experts from 47 different countries have served on the 135 panels which have been “composed” since 1995. Nearly 70 per cent of these persons have been government officials, and 30 per cent have come from the private sector.

The countries currently represented on the Appellate Body are Brazil, India, Egypt, Italy, South Africa, United States, and Philippines. The terms of the members from India and Egypt expire in May, 2008 and their replacements will come from China and Japan.

After a panel has rendered its decision the responding (losing) party is given a reasonable period of time to bring itself into compliance with WTO requirements, usually between six and 15 months. Compliance issues can be adjudicated before a compliance panel. Failure to comply can result in the authorization of retaliatory measures. WTO Legal Affairs Division Director Bruce Wilson reported in January, 2008 that “ as a result of the generally good compliance of Members, there have been only six WTO cases to date where retaliation has been requested and authorized, and only four cases where retaliatory measures have actually been imposed,” a truly remarkable record.

Of the 80 rulings of the Appellate Body as of 2007, only one decision was not complied with.

The United States has been the most frequent litigant in the WTO panels, being involved in “a little over 60% of all panel proceedings.” The European Community is the second most frequent party in WTO disputes. Other Members who frequently appear in WTO disputes are Argentina, Australia, Brazil, Canada, Chile, India, Japan, Korea, Mexico and Thailand. Only 29 Members have been involved in Appellate Body proceedings.

The record of the WTO DSS, after its thirteen years of existence, is an enviable one. One of its greatest contributions to world peace and stability can be to serve as a model for dispute resolution in other areas of international relations.

By James G. Apple, Writer, International Judicial Monitor and President, International Judicial Academy


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Editors: James G. Apple, Veronica Onorevole and Andrew Solomon.
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