means of settling disputes, the rules-based system would be worthless
because the rules could not be enforced.
The WTO’s procedure underscores the rule of law, and it makes the
trading system more secure and predictable. The system is based on
clearly-defined rules, with timetables for completing a case.
WTO publication Trading
Into the Future
This note provides information on the World Trade Organization’s Dispute Settlement Mechanism (DSM) in order to facilitate access to and use of these services. It covers:
members have agreed that if they believe fellow-members are violating
trade rules, they will use the multilateral system of settling disputes
instead of taking action unilaterally. That means they should abide by the
agreed procedures, and respect judgments.
The WTO’s dispute settlement agreement is formally known as the
Understanding on Rules and Procedures Governing the Settlement of Disputes
(DSU). The DSU provides the
primary legal means of settling trade related conflicts in the WTO.
Settlement of disputes is the responsibility of the Dispute
Settlement Body (composed of all Members of the WTO). The Dispute
Settlement Body (DSB) has the sole authority to establish “panels” of
experts to consider the case, and to accept or reject the panels’
findings or the results of an appeal. It monitors the implementation of
the rulings and recommendations, and has the power to authorize
retaliation when a country does not comply with a ruling.
a dispute arises when a country adopts a trade policy measure or takes
some action that another member considers to be a violation of a WTO
agreement. A dispute may also
arise if a member feels that, as a result of another country’s action,
it has been denied WTO benefits to which it is entitled.
A third group of countries can also declare that they have an
interest in the case and, when that is the case, they enjoy some rights as
procedure for settling disputes existed under the General Agreement on
Tariffs and Trade (GATT), which preceded the WTO, but it had no fixed
timetables, rulings were easier to block, and many cases dragged on for a
long time inconclusively. The DSU introduced a more structured process
with more clearly defined stages in the procedure and times limits for
these stages. The agreement
emphasizes that prompt settlement is essential if the WTO is to function
effectively. It sets out in considerable detail the procedures and the
timetable to be followed in resolving disputes. A case that runs its full
course should normally take no more than about one year to a first ruling
and15 months if there is an appeal. If the case is considered urgent (e.g.
if perishable goods are involved), then the allowed time is shorter.
the DSU the country losing a case cannot unilaterally block the adoption
of the ruling. Under the
previous GATT procedure, rulings could only be adopted by consensus,
meaning that a single objection (including from the country which lost the
case) could block the ruling. Under the DSU the situation is now reversed;
rulings are automatically adopted, unless there is a consensus to reject a
ruling. Any country that wants
to block a ruling has to persuade all other WTO members (including its
adversary in the case) to share its view.
much of the procedure resembles a court or tribunal, the preferred
solution is for the countries to settle the dispute by themselves. Before
a country can request the formation of a dispute settlement panel, it must
consult with the other side for a minimum period of 60 days after it first
requests a formal consultation. Therefore, formal consultations invoked
under the specific provisions of the DSU are the first stage of the
process. Even when the case
has progressed to other stages, consultation, negotiation and mediation
remain an option for resolving the issue.
Whether to bring the case
of the approaches in the WTO to resolving disputes, including
consultations and panels, involve some variant on the negotiation process.
As a consequence, they will require careful preparation, including
verification of facts and analysis of the validity of legal arguments.
For this reason, a party must undertake much of the research and
analysis that is required for preparing a panel brief before it gets to
the point of making a final decision whether or not to request a panel.
There is also a practical reason to begin the brief preparation work early in the process of resolving a dispute. As result of the Uruguay Round, the time frame for panels is so tight that a party cannot normally do an adequate job in a short period of time, especially given the limited resources available to most governments. Nevertheless, limited governmental resources also means that it is unlikely that a full-scaled brief, which can runs to several hundred pages or more, will be completely prepared before a decision is made to request a panel.
deciding whether to request a panel, parties should also carefully
consider that the panel process raises the profile of the dispute and
normally generate increased media and public attention.
Such developments sometimes make it more difficult to settle the
matter by negotiation.
WTO negotiators were very cognizant that formal dispute settlement through
litigation is not always the best outcome.
Article 7 of the DSU states that
bringing a case, a Member shall exercise its judgment as to whether action
under these procedures would be fruitful. The aim of the dispute
settlement mechanism is to secure a positive solution to a dispute. A
solution mutually acceptable to the parties to a dispute and consistent
with the covered agreements is clearly to be preferred. In the absence
of a mutually agreed solution, the first objective of the dispute
settlement mechanism is usually to secure the withdrawal of the measures
concerned if these are found to be inconsistent with the provisions of any
of the covered agreements. The provision of compensation should be
resorted to only if the immediate withdrawal of the measure is
impracticable and as a temporary measure pending the withdrawal of the
measure which is inconsistent with a covered agreement.
The last resort which this Understanding provides to the
Member invoking the dispute settlement procedures is the possibility of
suspending the application of concessions or other obligations under the
covered agreements on a discriminatory basis vis-à-vis the other Member,
subject to authorization by the DSB of such measures.
to 60 days)
are not always followed by a request for a panel.
Since sometimes the threat of action is more potent than the action
itself, consultations may provide information and leverage for
negotiations that lead to a successful resolution of the dispute. On
occasion, a complaining party may learn from the consultation process
about weaknesses in its arguments or damaging facts; either situation
could lead to a decision not to press the matter.
to 45 days for a panel to be appointed, plus 6 months for
the panel to conclude).
consultations fail, the complaining country can ask for a panel to be
appointed. The country against whom a case has been brought can block the
creation of a panel once, but when the DSB meets for a second time, the
appointment can no longer be blocked (unless there is a consensus against
appointing the panel). All
Parties are involved in selection of the Panel from a list of qualified
the panel is helping the DSB make rulings or recommendations. But because
the panel’s report can only be rejected by consensus in the DSB, its
conclusions are difficult to overturn. The panel’s findings have to be
based on the agreements cited.
panel’s final report should normally be given to the parties to the
dispute within six months. In cases of urgency, including those concerning
perishable goods, the deadline is shortened to three months.
role of the WTO Secretariat during the dispute settlement process is to
assist panels. In particular,
the Secretariat assists with legal, historical and procedural aspect of
the case and provides secretarial and technical support.
In particular, the Secretariat researches issues and prepares draft
report language. The
Secretariat also assists WTO members regarding dispute settlement
questions by answering technical questions regarding the process and the
WTO agreements. Because
developing country members may need special legal advice, the Secretariat
can upon request assign a qualified legal expert from its staff to work
with a country. Such
assignments are on made in a manner that ensures the Secretariat ‘s
panels can differ in composition, outlook and expertise, prospective
panelists are scrutinized closely and parties can reject prospective
panelists in advance. Panelists
may have decided prior cases in ways that might influence the present one,
they may have very little expertise in the subject matter, they may come
from countries known not to be neutral on the subject, or they may have
personalities that are not disposed to neutrality.
Given the role the WTO Secretariat staff plays, if the matter is
one on which the Secretariat is known to have an opinion, a party may
decide it wants a panel composed of independent minders individuals.
Despite its status as a global institution, the WTO is really a
rather small community, and reputations are always accessible as in a
local court. Parties chose
their presenters with care since panel proceedings involve small numbers
of people, can be relatively informal and personalities do count.
Standing and Assessments of damage,
economic injury or harm
under Article 4.11 of the DSU, a Member wishing to join in multiple
consultations must have "a substantial trade interest", and
under Article 10.2 of the DSU, a third party must have "a substantial
interest" in the matter before becoming a third party in a panel
the ability of a complaining party to show economic harm is important in
negotiating compensation or taking retaliatory measures in the event a
country fails to withdraw a WTO inconsistent measure after an unfavorable
panel ruling. Article 22.3
requires the complaining party to take into account the trade involved,
the importance of such trade to it, and the broader economic elements or
consequences. Article 22.4 of
the DSU requires that the level of retaliation authorized by the DSB must
be equivalent to the level of WTO benefits denied the complaining party.
In the WTO context retaliation takes the form of suspension of
trade concession the complaining party has provided in the past.
The role of experts in establishing economic harm or injury is
noted below. The issue is of
course even more important in cases involving the subsidies, dumping or
…the burden of proof rests upon the party, whether complaining or
defending, who asserts the affirmative of a particular claim or defence.
If that party adduces evidence sufficient to raise a presumption
that what is claimed is true, the burden then shifts to the other party,
who will fail unless it adduces sufficient evidence to rebut the
In the context of the
GATT 1994 and the WTO Agreement, precisely how much and precisely
what kind of evidence will be required to establish such presumption will
necessarily vary from measure to measure, provision to provision, and case
to case. (Appellate Report, United States –Measure Affecting Imports
of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R and Corr. 1,
adopted 23 May 1997, at 335.
once a complaining party proves that a measure infringes a WTO Agreement,
Article 8 of the DSU provides that the infringement is presumed to have
harmed the complaining party and deprived it of benefits to which it was
entitled. In WTO terms, the
infringement has nullified and impaired WTO benefits.
In this situation, the burden of proof falls on the defending party
to rebut that presumption. Article
8 of the DSU states that:
In cases where there is an infringement
of the obligations assumed under a covered agreement, the action is
considered prima facie to constitute a case of nullification or
impairment. This means that there is normally a presumption that a breach
of the rules has an adverse impact on other Members parties to that
covered agreement, and in such cases, it shall be up to the Member against
whom the complaint has been brought to rebut the charge.
The DSU process is also available to a
country that feel that a trade measure of another country is denying WTO
benefits to which it is entitled even though the measure itself does not
violate any WTO Agreement. This
situation is called “non-violation nullification and impairment” and
the complaining country has to prove that it is being harmed by the
measure. A party may also
complain if it feels that a general situation rather than a specific
measure is denying it WTO benefits.
The below charts summarizes the
approximate time periods for each of the stages of a WTO dispute
DSU describes in some detail how the panels are to work. The main stages
the first hearing: The
panel will meet for an organizational meeting at which it sets a schedule
for the case. Each side
in the dispute presents its case in writing to the panel. These written
submissions are essentially legal “briefs” in which the parties state
the facts, the findings that they want the panel to make and the legal
arguments supporting their position.
hearing: At the first sustentative meeting of the panel:
the complaining country (or countries), the responding country, and those
that have announced they have an interest in the dispute, make their case.
The complaining party will present its case and make its oral
arguments first, followed by the responding country and then the third
parties. The first hearing may
run two to three days, with panel meeting in several sessions to hear the
Following the first hearing, the parties will usually have two to three
weeks to submit written rebuttals. One
to two weeks later, the Panel will hold a second meeting at which the
parties present oral rebuttal arguments.
The defending party has the right to present its statement first at
this meeting. Third parties
will not participate at the panel’s second meeting.
During oral presentations, the panel may interrupt with questions
for the presenter. The panel also at any time has the right to ask the
parties to submit written answers to questions posed during or outside of
if one side raises scientific or other technical matters, the panel may
consult experts or appoint an expert review group to prepare an advisory
draft: the panel
usually submits within two to four weeks after the second hearing the
descriptive (factual and argument) sections of its report to the two
sides, giving them two weeks to comment. This report does not include
findings and conclusions.
report: The panel then
submits an interim report to the two sides, including its findings and
conclusions. The parties will
have one week to ask for a review.
The period of review must not exceed two weeks. During that time, the
panel may hold additional meetings with the two sides.
To ensure transparency, presentations to the panel are made only in
the presence of both sides and all written submissions, including comments
on the descriptive part of the report and the response to questions, are
given to both sides.
report: A final report
is submitted to the two sides and three weeks later, it is circulated to
all WTO members. If the panel decides that the disputed trade measure is
inconsistent with a WTO agreement or an obligation, it recommends that the
measure be brought into conformity with WTO rules. It does not tell the
Parties exactly how to do this.
This is left to the discretion of the country concerned.
The panel may however suggest how this could be done.
If the panel finds that the trade measure is consistent with the
relevant WTO agreements, but that the measure has denied the complaining
party WTO benefits, it may recommend a solution, but the defending country
cannot be required to withdraw its measure.
report becomes a ruling:
Once Members have had 20 days to consider a circulated report, the report
can be considered for adoption by the DSB, unless it is appealed.
The DSB must adopt the report within 60 days unless there is a
consensus to reject it. The
adopted report with a recommendation to bring a measure into conformity,
if appropriate, becomes the ruling of the DSB.
Appealing a Panel Decision: Either
side can appeal a panel’s ruling. Sometimes both sides do so.
Appeals have to be based on points of law such as legal
interpretation — they cannot request reexamination of existing evidence
or examination of new evidence.
appeal is heard by three members of a permanent seven-member Appellate
Body set up by the DSB (DSB). Members
of the Appellate Body have four-year terms.
They have to be individuals with recognized standing in the field
of law and international trade, not affiliated with any government.
appeal can uphold, modify or reverse any of the panel’s legal findings
and conclusions. Normally
appeals should not last more than 60 days, with an absolute maximum of 90
days. In other words, the
Appellate Body should normally issue a report within 60 days from the date
the notice of appeal is filed.
DSB has to accept (i.e., adopt) the panel report, as modified by the
ruling of the Appellate Body, within 30 days following circulation of the
Appellate Body’s report unless there is a consensus to reject it.
the DSB Ruling
a losing party fails to act within a reasonable period of time, it has to
enter into negotiations with the complaining country (or countries) in
order to determine mutually acceptable compensation — for instance,
tariff reductions in areas of particular interest to the complaining side.
If after 20 days, no satisfactory compensation is agreed, the
complaining side may ask the DSB for permission to impose limited trade
sanctions (“suspend concessions or obligations”) against the other
side. The DSB should grant this authorization within 30 days of the expiry
of the “reasonable period of time” unless there is a consensus against
the request. If the two sides
cannot agree on what constitutes “a reasonable period of time” or the
level of compensation, the complaining country may request an arbitrator
to decide what a “reasonable period of time” is or the appropriate
amount of compensation/trade retaliation to be authorized by the DSB.
If a country has taken steps to comply with a panel’s findings,
but the complaining party does not feel that they are adequate, the
complaining party can have the original panel review the measures adopted
and rule on whether they are adequate enough to bring the losing country
principle, the sanctions should be imposed in the same sector as the
dispute. If this is not practical or if it would not be effective, the
sanctions can be imposed in a different sector of the same agreement. In
turn, if this is not effective or practicable and if the circumstances are
serious enough, the action can be taken under another agreement. The
objective is to minimize the chances of actions spilling over into
unrelated sectors while at the same time allowing the actions to be
The DSB monitors how adopted rulings and recommendations are implemented. Any outstanding case remains on its agenda until the issue is resolved.
second part of this paper focuses on some considerations that may be
helpful to a person who is involved in the process of preparing a case for
WTO dispute settlement or in the decision to initiate a case.
Structuring a Legal Argument
a presentation of the facts the legal brief should then set out a
statement of the issues before the Panel.
These should be carefully thought out so that they are presented in
a way that highlights and makes clear the legal arguments you will make.
The issues are the legal subject matter of the case and should
clearly reference any laws that are in question.
In some cases it may be preferable to write the issues section last
after having fully analyzed the arguments.
In others you will need a clear understanding of all the issues
before beginning your analysis. In
most cases, issues sections may need to be refined following a full
exploration of facts, analysis and argument by the brief writer.
Identifying the appropriate issues for you case and structuring the
issue statement well can be crucial to increasing the persuasiveness of
and argument bring together the facts and issues in a way that establishes
your claims either as complainant or defendant.
This section should analyze the facts and legal principles involved
and set out clear arguments that support your position.
Arguments based on precedents from similar previous cases are
fundamental to substantiating your claims about the legal issues.
You should also use this section to rebut arguments that you
anticipate from the other side. Legal
analysis should be clear, tightly written and apply the appropriate legal
principles and cases to the facts.
should follow from the arguments and should flow in a natural and logical
progression from the analysis and argument.
Each element of your conclusions should be substantiated by your
analysis and arguments. Conclusions
should give the Panel a clear indication of the findings that you feel it
should make and the logical results of such findings.
Analysis of facts
Using available expertise
WTO, since it is a government-to-government institution, is understandably
reluctant to acknowledge a role for the private sector in the DSM.
However, it is often important and sometimes necessary to be able
to supplement the contributions of government-employed specialists with
those of private-sector experts. Experts
are mostly used to draft legal analyses and to present facts.
In most cases, non-government personnel can be used in almost any
capacity except to present an oral argument before a panel.
However, the Appellant Body has ruled that a government does have
the right to be represented in a proceeding by a private lawyer if it
wants to designate such a person to represent it.
are allowed to choose whether to access non-requested information
submitted to them by private sector and NGO groups, and any other
information they may find relevant. You
will have to judge whether in your particular case it will be useful to
present to Panels a wide variety of information they can view at their
discretion, but you should always focus most on those facts that support
the argument. Panels in
practice may be more ready to consider non-governmental, non-requested
information if a party submits it rather than a non-governmental entity.
Dispute Settlement Jurisprudence
and the Appellate Body also often cite principles of public international
law. In this regard, the
Vienna Convention on the Law of Treaties is frequently referred to as a
guide in interpreting the WTO agreements.
much has been written about whether the GATT, and the succeeding WTO
dispute settlement mechanism, operates on a common law or a civil law
model, it is probably fair to say that it operates as an amalgam of the
two; that is, although each dispute settlement panel has reference to
decisions of other panels in which similar arguments and facts have been
presented, it is authorized to interpret the facts and arguments before it
on its own authority as well as in light of prior, or similar cases.
Thus, while there is no formal agreement that the principle
of stare decisis (the binding nature of previous rulings on
subsequent panels) applies in panels decisions, panelists usually seek to
support their reasoning by citing decisions of prior panels and the
Appellate Body on the same principles.
This has given rise to a series of cases in which panels and the Appellate
Body have generally agreed that broad principles set forth in the WTO
Agreements and GATT 1947 operate in specific ways.
For some of the principles, there is also general agreement on the
analytical approach that should be taken in determining whether a specific
measure is inconsistent with the principle.
Nevertheless, panels are not formally bound by prior decisions or
example, there is virtual agreement that certain principles of
interpretation should be adhered to. The
Appellate Body in a series of cases has set forth the steps to be followed
in analyzing whether a measure is covered by one of the general exceptions
in Article XX of the GATT. The
cases also spell out the order in which the steps are to be taken. As the
various WTO agreements may have slightly different rationales and
procedures, it is necessary to thoroughly understand the procedural rules
of relevant agreements before you begin.
foregoing situation means that the principles of WTO law are evolving
ones. Furthermore, as the WTO
operates by consensus, Members can also agree upon new WTO principles.
With successive rounds of trade negotiations and the WTO’s growth
as an institution, it is likely that the principles developed under GATT
1947, now supplemented and clarified by the Uruguay Round Agreements, will
be even more fully elaborated and new areas added as new negotiations take
place. At the 2001 Doha WTO
Ministerial meeting, WTO members agreed to consider developing principles
and disciplines in several new areas.
Most likely the new principles will be augmentative, but the basic
principles will remain.
to Internet Resources
and Appellate Body reports are retrievable and downloadable from the WTO
website database (see WTO website: http://www.wto.org/)).
The WTO sells a CD-Rom entitled “Guide to GATT Law and Practice:
Analytical Index” which contains analyses of decisions, panel reports
and other document between 1945 and 1994 interpreting the GATT.).
This “Analytical Index” is also available from many public
libraries as reference material. No such document yet exists for the WTO,
but a body of legal analysis has also grown up around WTO dispute
settlement proceedings. Much
of this is also accessible electronically and the appendix includes some
suggested websites. The
website of Worldtradelaw.net at http://www.worldtradelaw.net/ contains a very useful searchable
databank of all WTO panel and Appellate Body reports and WTO agreements as
well as GATT panel reports.
is a large body of legal commentary on WTO dispute settlement issues such
as “forum shopping” and trade sanctions.
Three websites offering access to some of this commentary are: http://www.llrx.com/,
offering general research on the WTO and related trade issues, http://www.gets.org,
offering articles and materials related to trade and environment and,
offering general research materials on related to international trade http://www.law.cornell.edu/topics/international.html.
The International Centre on Trade and Sustainable Development, at http://www.ictsd.org/,
also tracks developments on dispute settlement and other WTO issues.
Discussions are also ongoing in the WTO about the relationship
between its’ Agreements and Multilateral Environmental Agreements (MEAs).
of Conduct for the Settlement of Disputes
Procedure for Appellate Review
Chart of Panel process