DisputeSettlementunderGATTandWTO

Understanding on Rules and Procedures Governing the

Settlement of Disputes

The main components of the WTO dispute settlement system

are as follows:

DisputeSettlementBody(DSB)

GoodOffices oftheDirectorGeneral

ExpertReviewGroup(ERG)
DisputesPanel
TheAppellateBody.

DisputeSettlementBody
The DSB is the body that has overall charge of the dispute
settlement
mechanism.ItisineffecttheGeneralCouncilinadifferentguise,andconsis
ts of arepresentative fromeachmember.
ItistheDSBwhichmustultimatelydecide
whetherornotaMemberhasbrokenanyrulesgoverningtheWTOAgreeme
nt oroneofthe
MultilateralTradeAgreements.Incarryingoutthisrole,theDSBis
variouslyassistedbythegoodoffices oftheDirector General
,theDisputesPanel andtheAppellateBody.

GoodOfficesoftheDirector

General

Thedisputingpartiescanaskforhisintervention.But,theadviceoftheDire
ctor Generalandhisassistantsisnotbindingandcannotbecitedin
alaterDisputes Panelreport.

DisputesPanel

independent panellists,

three to five

The Dispute Panel is established by the DSB, and consists of

with a sufficiently diverse background and a wide

spectrum of experience. ( they could be government or non

government

individuals)

The task of the Disputes Panel

istoinvestigatethoroughlythefactsofthe

dispute,takingintoaccountthetermsoftheparticularagreementallegedt
obe
nthe

breached. Itmustconsultwithbothpartiestothedisputeinordertogai

fullest understanding possible of the problem and should encourage

them to reachamutuallyacceptable
solution,ifatallpossible.Wherethetwopartiestoa
disputehavefailedtoreachanacceptableagreementduringtheinvestigatio
n,

the Dispute s Panel will present a written report to the DSB

settingoutits

findingsoffactbasedonrelevantagreementprovisionsanditsreasoningb
ehind

ExpertReviewGroup

itsrecommendations.

icalnature

WhereaDisputePanel isconsideringamatterofaparticularlytechn

it may, with the consent of both parties to the dispute, establish an

ERG to provide it with assistance.
TheERGsreportisofanadvisorynatureonly,
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although it will obviously carry considerable weight when it comes

to the DisputePanelpre sentingitsoverallfindingstotheDSB.
TheAppellateBody
WhereapartytoadisputedisagreeswithaDisputePanelrecommendation
,it can appeal to a standing Appellate Body, established by the DSB.
The appeal, however,islimitedtoissuesoflawcover
edintheDisputesPanelreportandthe
legalinterpretationdevelopedbytheDisputesPanel.
TheAppellateBodyiscomposedofsevenpeoplewhowillserveforafourye
ar
Body

term. Only three of the seven will serve on any one case. The
Appellate

representatives must be people of recognized standing in the field of

law and

internationaltradeandnotbeaffiliatedtoanygovernment.Theyareappoi
nted

on the basis of a joint proposal forwarded by the Director

General, the DSB

ChairmanandtheChairmanof
theGeneralCouncilandtheTradeCouncils.

Its proceedings will be confidential, based on information already

provided in

thedisputeandwithoutthepresenceofeitherparty
.Afterhavingreviewedthe

evidence,theAppellateBodyreportstotheDSB.Its
findingsmustbeacceptedby

thepartiestothedisputeunlesstheDSBdecides,byconsensus,nottoadop
tthe report.1

Proceduresof WTOdisputesmechanism
Step1

The aggrieved Member should make a request for consultation with

the offendingMember.Ther equestmustbesenttotheDSBinwriting.

Step2

A reply should be made by the offending Member within 10 days

unless otherwisemutuallyagreed.
Consultationsshouldcommencewithin30daysof theoriginalrequest.
Inurgentsituationinvolvingperishabl egoodsthereplyand
commencementofconsultationsshouldtakeplacewithin10daysoftheori
ginal request.

Step3

WherebothpartiesagreethecasecanbebroughtbeforetheDirector
General andthegoodofficesproceduremaycontinuewhiletheDisputes
Panelprocessis inprogress,providedbothpartiesagreetoit.

TheUruguayRoundagreementhas madeitimpossibleforthecountrylosinga
casetoblockthe adoptionoftheruling.
UnderthepreviousGATTprocedure,rulingscouldonlybeadoptedby
consensus,meaningthatasingleobjectioncouldblocktheruling.Now,rulingsareautom
atically adoptedunlessthereisaconsensustorejecta ruling
anycountrywantingtoblockaruling
hastopersuadeallotherWTOmembers(includingitsadversaryinthecase)toshareitsvie
w.

Step4

Ifnoresponsetoarequestforconsultationsisreceivedwithin10daysor,ifth
e
consultationsfailtoachieveasolutionafter60days,thecomplainantcana
skthe DSBtoestabli shaDisputesPaneltoexaminethecase.

Step5

A Dispute Panel is to be constituted within 20 days of the DSBs

decision to
establishit.Wherethepartiestothedisputecannotagree,within20days,o
nthe panellistsnominatedbytheSecretariat ,theDi rector
Generalinconjunctionwith
theChairmanoftherelevantCouncil/Committee,willdecidetheappointm
ents.

Step6

TheDPshouldcompleteitsexaminationofthecaseandproduceafinalrepo
rt within six months and for urgent cases such as those relat ing to
perishable goods,within threemonths.
Itshouldnevertakemorethanninemonths.

Itshallthroughoutthecourseofitsinvestigations,toencouragetheparties
to
thedisputetosettlethemattervoluntarily.

Step7

AftertheDPhasconsideredthe
writtenandoralevidenceofbothpartiestothe
disputeitwilldistributethefactualandargumentsectionsofitsreporttoth

e partiesfortheirperusal . Theparties
willthensubmittheirwrittencomments
withinaprescribedtimeperiodsetbythepa nel.

Step8

The DP shall provide the Interim report of its findings and conclusions
to the
partiesandthepartiescanrespondtotheinterimreport.Ifnoresponse,thenit
willbeconsideredasthefinalreport.

Step9

Thefinalreportissubmittedtoth eDSBwhoshouldadoptit within60days

of
issuanceunlesseitheroneofthepartiestothedisputeindicatesthatitinten
dsto appeal or a consensus emerges in the DSB against adoption. It
involves circulationofreporttotheotherMembers ,discusseda
ndadopted.

Step10

ProvidednoappealhasbeenlodgedagainsttheDPreportandthatthereisn
o consensus against adoption, the DSB will automatically approve
the Panels recommendationsattheadoptionmeeting.

Step11

Appeal to the standing Appellate B ody. The Appellate Body will

review the
existingevidenceandshouldaimtoreporttotheDSBwithitsfindingswithi
n 60 daysandnotmorethan 90days.

Step12

TheDSBmustadopttheAppellateBodyreportwithin30daysofissuance,u
nless there is conse nsus against adoption. Bothpartiestothe dispute
are bound to
accept,unconditionally,therecommendationsoftheAppellateBody.

Step13

AftertheadoptionoftheAppellateBodysrecommendation,theoffending
party must state its intentions in respect of the implementation of
the DSBs recommendation.

Step14

The DSB will allow the offending party a reasonable period of time to
implementtherecommendations,whichshouldnotnormallyexceed15mont
hs.

Step15

itmust

enter in to negotiations with the complainant inordertodecideona

mutuallyacceptablelevelofcompensation.

Ifapartyfailstocomplywiththerecomm
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endationwithinthesett ime,

Step16 (retaliatoryaction)

to suspend concessions or obligations

If no acceptable level of compensation has been agreed, the complainant may

dueto theoffendingparty

request authorization from the DSB

Step17
undertheparticularagreementinquestion.

TheDSBshouldgranttherequestforsuspensionofconcessionsorobligati
ons, within30daysunlessth ereisaconsensusagainstdoingso.

Step18(Arbitration)

Iftheoffendingpartyobjectstothelevel
ofsuspensiongranted bytheDSB,itcan
request that the matter be sent to arbitration
(consistingoforiginalDispute

Panelsmembersoranarbitrator appointedbyDirector
General).Thearbitration processshouldbecompletedwithin
60daysanditsdecisionisfinal.

Step19

Onrequestfromthecomplainant,theDSBwillthenauthorizethesuspensi
onof concessions as recommended by the arbitration board , unless
there is a consensusagainstsodoing.

TheWTO
hasnolegalpowerstoforcetheoffendingpartytoimplementtherecommendations

of the Dispute Pa nel or the Appellate Body party by any means like sanctions or
penalty .
Ultimately,theWTOsenforcementpowersrestinpersuasionandinmor
alforceofits argument,

orthestrengthoftheMemberadoptingretaliatoryaction.

Inprinciple,theDSB(orarbitrationbody)shouldauthorizeorrecommend
the

suspensionofconcessions,inthesamesectorofanagreement.However,
ifthisis
not practicable or does not produce the desired
effect, authorization may be
grantedtosuspendconcessionsinadifferentsectorofthesameagreeme
ntor, wherethecircumstancesareseriousenough
,underanotheragreement.