Institutions of WTO Settlement, WTO dispute settlement Proceedings

All the various stages through which a dispute can pass in the (WTO) dispute settlement system. There are two main ways to settle a dispute once a complaint has been filed in the WTO:

(i) The parties find a mutually agreed solution, particularly during the phase of bilateral consultations

(ii) Through adjudication, including the subsequent implementation of the panel and Appellate Body reports, which are binding upon the parties once adopted by the DSB.

There are three main stages to the WTO dispute settlement process:

(i) Consultations between the parties

(ii) Adjudication by panels and, if applicable, by the Appellate Body

(iii) The implementation of the ruling, which includes the possibility of countermeasures in the event of failure by the losing party to implement the ruling.

Dispute resolution process

A WTO Member may initiate a dispute where it considers that another Member has adopted measures that breach WTO obligations and that these measures impair benefits accruing to it under the WTO agreements (DSU article 3).

Request for consultations

The first stage of the dispute settlement process is for the complaining WTO Member to request consultations with the other Member in an attempt to resolve the complaint. WTO members may also choose to use other diplomatic dispute settlement methods such as good offices, conciliation, or mediation at this stage (DSU articles 4 and 5).

Panel proceedings

If the consultations do not resolve the matter, and the complaining Member elects to proceed with dispute settlement proceedings, it may request the establishment of a panel to hear the dispute. A request for the establishment of a panel must identify the specific measures about which the Member is complaining and provide a summary of the legal basis of the complaint. (DSU article 6).

The panel is made up of three members who are nominated by the WTO Secretariat and (in theory) appointed by the disputing parties. The Director-General of WTO may appoint panellists if the disputing parties cannot agree on the panellists. The role of the panel is to examine the relevant measures in light of the relevant provisions of the WTO agreements and to make recommendations to the DSB as to whether the measures at issue comply with relevant WTO rules (DSU articles 7, 8 and 11).

Other WTO Members (apart from the complaining Member/s and the responding Member) with a substantial interest in a matter may apply to become a third party to the dispute during the panel process. Third parties receive the submissions of the disputing parties and have the opportunity to make written and oral submissions to the panel (DSU article 10).

After a panel report has been issued and has been placed on the DSB’s agenda for consideration, the DSB will adopt it unless all of the Members agree by consensus not to adopt the report (which has never happened). The panel report ‘takes effect’ once it has been adopted by the DSB (DSU article 16).

Appellate Body

Parties may appeal a panel report. Appeals are heard by the WTO’s standing Appellate Body, consisting of seven permanent members who sit in benches of three. They are limited to issues of law covered in the panel report and legal interpretations developed by the panel. Third parties may participate in appeals, although only parties may initiate them. The Appellate Body may uphold, modify or reverse the legal findings and conclusions of the panel (DSU article 17).

Like panel reports, after an Appellate Body report has been issued, the report will be adopted by the DSB unless the DSB decides by consensus not to adopt it (which has never happened) (DSU article 17.14).

Remedies

The responding WTO member decides means of compliance if a violation is found

Where a panel or in the case of an appeal the Appellate Body concludes that a measure is inconsistent with a covered WTO agreement, it may suggest ways in which the Member could implement the recommendations.(DSU article 19.1) However, generally speaking, it is up to the responding WTO Member to determine how it will bring its measure into compliance. The DSB is responsible for maintaining surveillance of the implementation of its rulings and recommendations (DSU article 21).

If it is impracticable for the responding Member to comply immediately with the ruling, the Member will be given a ‘reasonable period of time’ in which to comply; this period of time may, in the absence of agreement between the parties, be determined by arbitration (DSU article 21.3). Should the parties disagree about whether the measures have been brought into compliance, a panel may be established to determine this question (DSU article 21.5).

Remedies are prospective

The recommendations of the DSB operate prospectively, meaning that the complaining Member is not entitled to a remedy in respect of harm suffered before the expiry of the ‘reasonable period of time’ to comply with the decision of the panel or Appellate Body.

Where there has been a failure to comply, the DSB may authorise ‘suspension of concessions’. If this happens, the complaining WTO Member may temporarily cease to perform some of its WTO obligations towards the other Member (such as by raising tariffs on goods produced by that Member). A member may only suspend concessions up to the level of nullification or impairment suffered since the expiry of ‘the reasonable period of time’ (DSU article 22)

Unlike the system of remedies in international investment law, monetary compensation for loss or damage that has been suffered is not an available remedy.