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ROLE OF THE
IN DISPUTE RESOLUTION
INTRODUCTION............................................................................................................................. 4
ORIGIN............................................................................................................................................................... 7
Establishment.............................................................................................................................................. 10
MEMBERSHIP................................................................................................................................................. 11
Types............................................................................................................................................................... 12
Accession Process....................................................................................................................................... 12
Current Membership................................................................................................................................ 13
Withdrawal.................................................................................................................................................. 14
STRUCTURE.................................................................................................................................................... 14
Ministerial Conference............................................................................................................................. 15
General Council........................................................................................................................................... 15
Plurilaterals................................................................................................................................................. 16
Secretariat.................................................................................................................................................... 17
FUNCTIONS..................................................................................................................................................... 17
DISPUTE SETTLEMENT............................................................................................................. 18
MECHANISM................................................................................................................................................... 19
Consultation................................................................................................................................................. 22
Establishment of Panel............................................................................................................................ 23
Report of Panel........................................................................................................................................... 24
Appellate Review........................................................................................................................................ 25
Implementation.......................................................................................................................................... 25
LEGAL BASIS................................................................................................................................. 26
FUNCTIONING................................................................................................................................................. 32
APPELLATE BODY.......................................................................................................................................... 34
INDIA AS COMPLAINANT............................................................................................................................... 38
INDIA AS RESPONDENT................................................................................................................................. 39
References........................................................................................................................................................ 39
INTRODUCTION
One of the most noteworthy achievements of the establishment of the WTO was the
introduction of its binding dispute settlement system. Building upon GATT dispute
settlement practice, the Understanding on the Rules and Procedures Governing the
Settlement of Disputes ('DSU') contains innovations that resulted in a paradigm shift
from a system based on economic power and politics to one based on the rule of law.
The resulting increased legality of the WTO has been hailed to benefit considerably
smaller countries, of which many are developing countries and least-developed
countries ('LDCs'). As Steger and Hainsworth comment, the shift 'is particularly
beneficial for smaller countries, as without the rules and procedures of the DSU...
they would not have the necessary bargaining power vis--vis the larger powers.'1
1
D. Steger and S. Hainsworth, 'World Trade Organization Dispute Settlement: The First Three Years' 1998
JIEL
1(2) 199, at 225.
Similarly, Weiler notes the advantages of the legalised WTO model, 'especially for the
meek economically and politically unequal.'2
Despite these perceived benefits, the vast majority of developing countries have not
participated actively in the WTO dispute settlement system. This raises concerns that
they are not benefitting fully from the WTO legal regime. As Bown and Hoekman
observe, 'a systemic pattern of missing dispute settlement activity calls into question
whether the full public good and positive externality benefits of the trading system are
sufficiently exploited.'3 Davey also has commented that 'only an effective dispute
settlement system can ensure rule enforcement, which in turn provides predictability
and stability in trade relations.'
According to Article 181.3 of the WTO Agreement, dispute settlement is one of the
key functions of the WTO. Dispute settlement is administered by a Dispute
Settlement Body (DSB) that consists of the WTO's General Council. The Dispute
Settlement Body has the authority to "establish panels, adopt panel and Appellate
Body reports, maintain surveillance of implementation of rulings and
recommendations, and authorize suspension of concessions and other obligations."
The Dispute Settlement system aims to resolve disputes by clarifying the rules of the
multilateral trading system; it cannot legislate or promulgate new rules.
2
J. Weiler, 'The Rule of Lawyers and the Ethos of Diplomats Reflections on the Internal and External
Legitimacy of WTO Dispute Settlement' 2001 Journal of World Trade 35(2) 191, at 192.
3
J. Weiler, 'The Rule of Lawyers and the Ethos of Diplomats Reflections on the Internal and External
Legitimacy of WTO Dispute Settlement' 2001 Journal of World Trade 35(2) 191, at 192.
UNDERSTANDING THE WTO
The World Trade Organization is the only global international organization dealing
with the rules of trade between nations. The main aim of the WTO is to help the
producers of goods and services, exporters, and importers conduct their business.
Its functioning pivots around the WTO agreements, which are negotiated and signed
by the bulk of the worlds trading nations and ratified in their parliaments.
There are a number of ways of looking at the WTO. Its an organization for
liberalizing trade. But the WTO is not just about liberalizing trade, and in some
circumstances its rules support maintaining trade barriers for example to protect
Its a forum for governments to negotiate trade agreements. Its a place for them to
settle trade disputes. It operates a system of trade rules. Above all, its a negotiating
forum; The WTO was born out of negotiations, and everything the WTO does is the
provide the legal ground-rules for international commerce. They are essentially
contracts, binding governments to keep their trade policies within agreed limits.
goods and services, exporters, and importers conduct their business, while allowing
governments to meet social and environmental objectives. The bulk of the WTOs
current work comes from the 198694 negotiations called the Uruguay Round and
earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The
WTO is currently the host to new negotiations, under the Doha Development Agenda
launched in 2001.
The third important side to the WTOs work is its dispute settlement function, which
is the main focus of this project. Trade relations often involve conflicting interests and
agreements often need interpreting. The most harmonious way to settle these
This is the purpose behind the dispute settlement process written into the WTO
agreements.
background, structure and functions, which has been dealt with in this section.
Origin
The WTO commenced functioning on 1 January 1995, but its trading system is half a
century older. Since 1948, the General Agreement on Tariffs and Trade (GATT) has
It did not take long for the General Agreement to give birth to an unofficial, de facto
international organization, also known informally as GATT. Over the years, GATT
The last and largest GATT round, was the Uruguay Round which lasted from 1986 to
1994 and led to the creation of the WTO. Whereas GATT had mainly dealt with trade
in goods, the WTO and its agreements also covers trade in services and intellectual
property.
The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), was
established after World War II in the wake of other new multilateral institutions
specialized agency and would address not only trade barriers but other issues
practices, and commodity agreements. But the ITO treaty was not approved by the
U.S. and a few other signatories and never went into effect.
In the absence of an international organization for trade, the GATT assumed the
The WTOs creation on 1 January 1995 marked the biggest reform of international
trade since after the Second World War. It also brought to reality the failed attempt in
Much of the history of those 47 years was written in Geneva. But it also traces a
journey that spanned the continents, from that hesitant start in 1948 in Havana (Cuba),
via Annecy (France), Torquay (UK), Tokyo (Japan), Punta del Este (Uruguay),
During that period, the trading system came under GATT, salvaged from the aborted
attempt to create the ITO. GATT helped establish a strong and prosperous multilateral
trading system that became more and more liberal through rounds of trade
negotiations. But by the 1980s the system needed a thorough overhaul. This led to the
From 1948 to 1994, the General Agreement on Tariffs and Trade (GATT) provided the
rules for much of world trade and presided over periods that saw some of the highest
growth rates in international commerce. For almost half a century, the GATTs basic
legal principles remained much as they were in 1948. There were additions in the
(i.e. with voluntary membership) in the 1970s, and efforts to reduce tariffs further
liberalization have come through these rounds, which were held under GATTs
auspices.
The eighth, the Uruguay Round of 198694, was the last and most extensive of all. It
GATT was provisional with a limited field of action, but its success over 47 years in
Continual reductions in tariffs alone helped spur very high rates of world trade growth
during the 1950s and 1960s around 8% a year on average. And the momentum of
trade liberalization helped ensure that trade growth consistently out-paced production
growth throughout the GATT era, a measure of countries increasing ability to trade
with each other and to reap the benefits of trade. The rush of new members during the
Uruguay Round demonstrated that the multilateral trading system was recognized as
But all was not well. As time passed new problems arose. The Tokyo Round in the
1970s was an attempt to tackle some of these but its achievements were limited. This
GATTs success in reducing tariffs to such a low level, combined with a series of
economic recessions in the 1970s and early 1980s, drove governments to devise other
forms of protection for sectors facing increased foreign competition. High rates of
unemployment and constant factory closures led governments in Western Europe and
embark on a subsidies race to maintain their holds on agricultural trade. Both these
The problem was not just a deteriorating trade policy environment. By the early 1980s
the General Agreement was clearly no longer as relevant to the realities of world trade
as it had been in the 1940s. For a start, world trade had become far more complex and
important than 40 years before: the globalization of the world economy was
underway, trade in services not covered by GATT rules was of major interest to
more and more countries, and international investment had expanded. The expansion
of services trade was also closely tied to further increases in world merchandise trade.
In other respects, GATT had been found wanting. For instance, in agriculture,
loopholes in the multilateral system were heavily exploited, and efforts at liberalizing
agricultural trade met with little success. In the textiles and clothing sector, an
exception to GATTs normal disciplines was negotiated in the 1960s and early 1970s,
leading to the Multifibre Arrangement. Even GATTs institutional structure and its
These and other factors convinced GATT members that a new effort to reinforce and
extend the multilateral system should be attempted. That effort resulted in the
Uruguay Round, the Marrakesh Declaration, and the creation of the WTO.
Establishment
deficiencies, spill-over impacts of certain countries' policies on world trade, the eighth
GATT round -known as the Uruguay Round - was launched in September 1986, in
It was the biggest negotiating mandate on trade ever agreed: the talks were going to
extend the trading system into several new areas, notably trade in services and
intellectual property, and to reform trade in the sensitive sectors of agriculture and
textiles; all the original GATT articles were up for review. The Final Act concluding
the Uruguay Round and officially establishing the WTO regime was signed April 15,
1994, during the ministerial meeting at Marrakesh, Morocco, and hence is known as
The GATT still exists as the WTO's umbrella treaty for trade in goods, updated as a
Membership
The WTO is member-driven, with decisions taken by consensus among all member
governments In this respect, the WTO is different from some other international
organizations such as the World Bank and International Monetary Fund - in the WTO,
power is not delegated to a board of directors or the organizations head. All members
have joined the system as a result of negotiation and therefore membership means a
balance of rights and obligations. They enjoy the privileges that other member
countries give to them and the security that the trading rules provide. In return, they
had to make commitments to open their markets and to abide by the rules. Such
There are two types of members; original and acceded. The original members include
the members to the GATT as on the date of entry into force of the agreement. Besides
the original members, States which have acceded to this agreement and the
Accession Process
The process of becoming a WTO member is unique to each applicant country, and the
terms of accession are dependent upon the country's stage of economic development
and current trade regime. The process takes about five years, on average, but it can
last more if the country is less than fully committed to the process or if political issues
interested parties.
Council, and has to describe all aspects of its trade and economic policies that have a
Members.
After all necessary background information has been acquired, the working party
focuses on issues of discrepancy between the WTO rules and the applicant's
international and domestic trade policies and laws. The working party determines the
terms and conditions of entry into the WTO for the applicant nation, and may consider
transitional periods to allow countries some leeway in complying with the WTO rules.
The final phase of accession involves bilateral negotiations between the applicant
nation and other working party members regarding the concessions and commitments
on tariff levels and market access for goods and services. The new member's
commitments are to apply equally to all WTO members under normal non-
When the bilateral talks conclude, the working party sends to the general council or
working party meetings, the Protocol of Accession (a draft membership treaty), and
conference approves of the terms of accession, the applicant's parliament must ratify
Current Membership
The WTO has 153 members and 26 observers. In addition to states, the European
Union is also a member. WTO members do not have to be full sovereign nation-
members. Instead, they must be a customs territory with full autonomy in the conduct
of their external commercial relations. Thus Hong Kong (as "Hong Kong, China"
since 1997) became a GATT contracting party, and the Republic of China (Taiwan)
Iran is the biggest economy outside the WTO. Fourteen states and two territories so
Any member may withdraw from this agreement by giving a written notice to the
Director General of the WTO. The withdrawal takes effect upon the expiry of six
Structure
The structure of the WTO is depicted in the diagram below and further explained.
Ministerial Conference
The topmost decision-making body of the WTO is the Ministerial Conference, which
usually meets every two years. It brings together representatives of all members of the
WTO. The Ministerial Conference can take decisions on all matters under any of the
Singapore in 1996.
The General Council, The Dispute Settlement Body and The Trade Policy Review
Body.
All three are in fact the same the Agreement Establishing the WTO states they are
all the General Council, although they meet under different terms of reference. Again,
all three consist of all WTO members and they report to the Ministerial Conference.
General Council
The General Council acts on behalf of the Ministerial Conference on all WTO affairs.
It can meet as many times as necessary and appropriate. The General Council has the
As their names indicate, the three are responsible for the workings of the WTO
agreements dealing with their respective areas of trade. These councils may establish
subsidiary bodies and subject to the approval of their respective councils, these
body is empowered to have its own chairman and to frame rules of procedure as it
deems necessary for the discharge of its responsibilities. The functioning of this body
The General Council convenes the Trade Policy Review Body. It may appoint its own
chairman and frame such rules of procedure as are necessary for the discharge of its
responsibilities.
Plurilaterals
Plurilaterals are those bodies that are provided for under the Plurilateral Trade
Agreements. These bodies shall carry out the functions provided to them under those
agreements and shall operate within the institutional framework of the WTO. The
These committees were established by the General Council to carry out the functions
assigned to them by the Agreement and by the Multilateral Trade Agreements. The
General Council may establish such additional committees with such functions as t
may deem appropriate. The representatives of all members shall be the members of
these committees.
Secretariat
appointed by the Ministerial Conference. The Ministerial Conference shall also adopt
regulations setting the powers, functions, conditions of services and terms of office of
the Director General. The members of the staff of the Secretariat shall be appointed by
the Director General who shall also lay down their duties and conditions of service in
Functions
Article III of the Marakkesh Agreement lays down the functions of the WTO as listed
below:
their multilateral trade relations in matters dealt with under the agreements and
(IMF) and with the International Bank for Reconstruction and Development
DISPUTE SETTLEMENT
For the global peace and prosperity, an open, rule based trading system, based on the
could be of great help. Obviously, once the international obligation and rights and
duties of member states have been defined, the question of how those obligations,
rights and duties are to be enforced specially in the arena of international trade,
ITO, the concept of balancing the rights and duties was incorporated by providing for
compensatory adjustment in case a member has not obligated itself of the rights and
duties which it had agreed upon while acceding to the ITO. After the ITO failed to
4
Kenneth W. Dam. The GATT and international Economic Organisation 352 (1977)
come into existence, almost similar provisions were incorporated in Articles XXII and
XXIII of GATT 1947. The management of disputes in the WTO is structured on the
same basis of the Articles of GATT, and the rules and procedures as further elaborated
and modified therein. Therefore, it will not be out of place to briefly survey the
January, 1995.
Mechanism
Article 3 of the Dispute Settlement Understanding (DSU) sets out the general
WTO;
3. Promptness of settling situations where a member considers that his
shall be notified to the DSB and the relevant Councils and Committees,
manner which would most effectively enhance it. The WTO rules are
endless and ever changing ebb of real facts in real cases in real world.
The WTO provides for a Dispute Settlement Body (DSB) which consists of
disputes. The Dispute Settlement Body may establish panels for specific investigation,
may constitute appellate body, may adopt reports of panels and Appellate Body and
may exercise surveillance to ensure compliance with rules and recommendations and
of recommendations.
For the purpose of investigation, the DSB has four subsidiary bodies-
1. Working groups
2. Panels
3. Permanent Expert Group
4. Arbitration
The main stages in the dispute settlement process, under the WTO, are explained
below.
Stages in the Dispute Settlement Procedure
Consultation
The first stage in the settlement of disputes is consultation among the members of
consultation between the member nations of WTO under Article XXII of GATT 1947,
the consultation mechanism was further strengthened and reaffirmed in the Tokyo
Round. The WTO, DSU affirms in the effectiveness of the consultation and provides
Trade Agreements taken within the territory of the former. Such consultations occur
regularly at the official level and can be raised at the Ministerial level as appropriate. 5
solution. The holding of consultation does not prejudice the rights of the members.
The request for consultation is to be notified to DSB and to the relevant Councils and
Committees. Any request for consultation ought to be notified to the DSB in writing,
specifying the reason for the request. The request for consultations should specify the
measures at issue and the identification of legal basis for the complaint. It is necessary
that the request for consultations should be broad in scope as far as possible, both in
identifying the measure and in indicating the legal basis for such complaint, as these
will limit the scope of any eventual panel request and that in turn, will limit the scope
5
Article 4 of the DSU
of the terms of reference of the panel.6 A measure that is not subject of consultations
has to be replied promptly within ten days and to hold consultation within 30 days
from the date of the request by the other member. Many disputes are thus settled in
this initial stage. However, if a dispute is not solved through consultation within 60
days from the date of request, the party may request the DSB for the establishment of
a panel.
Good Offices, Conciliation and Mediation- If the consultation fails, the members of
the WTO may avail themselves DSUs good offices, conciliation and mediation
services. Article 5 provides for the above services to be voluntarily taken by the
members, if the members to dispute so agree and request for such services to any item
of dispute which can be terminated at any time. Good offices, conciliation and
mediation services are to be entered into within sixty days from the date of request for
Establishment of Panel
If the dispute is not settled through consultations, the member who sought the
consultations may request the DSB to establish a panel. To resolve a dispute, within
60days if the consultation fails (if a member to which a request for consultation is
made agrees within 10days to consult within 30 days, and does so, the complaining
party may not ask for a panel until 60 days have elapsed from the date of original
request, unless the parties agree that further consultations would not be productive), at
the request of the complaining party, a meeting of the DSB shall be convened within
6
United States Denial of MFN treatment as to the Non rubber footware from Brazil, BISD 39S/128,
147-148 (adopted June, 1992)
accompanied with full particulars of the dispute, details of notice of the meeting is
given, and the panel may be established by the DSB to hear the dispute. This request
consultations and the reasons for their failure. After considering the request, the DSB
decides the establishment of a panel. The panel is composed of three or five panelists.
The panel is established in consultation with the parties in dispute. The panel
functions as an expert team to help the DSB to arrive at a finding. If the dispute is
between a developing and a developed country and if the country so desires, one
panelist ought to be from the developing country. The panelists are selected by the
Secretariat. The Panelists serve in their individual position and not in their official
position.
Report of Panel
After examining the complaint, the panel prepares its report containing its findings
and recommendations. The panel has to submit its report within six months and in
case of urgency within three months. In any case, the maximum time which the panel
After examining the complaint, the panel prepares its report containing its findings
and recommendations. The panel has to submit its report within six months and in
case of urgency within three months. In any case, the maximum time which the panel
Appellate Review
The WTO provides for a Standing Appellate Body to hear appeals. Under Article 17
of the DSU, the DSB has been empowered to establish a Standing Appellate Body
with 7 members, three of whom shall serve any one case and shall hear appeals from
Panel cases. The panels decision can be challenged in the SAB by either party to the
dispute. It is provided that the Appeal proceedings must not generally exceed 60 days
and in no case 90 days. The Standing Appellate Body comprises of seven persons who
have distinguished themselves in the field of law and international trade. The DSB
communications with the panel or the appellate body with regard to matters for their
consideration. However, the members to the dispute have a right to access the same.
The Appellate Body may uphold, modify, or reverse the legal proceedings and
Implementation
recommends that the offending member should cease and desist from violations of
GATT rules by either withdrawing the offending measures or suitably amend the
Agreements. Thirty days after the adoption of the report by the panel or the decision
of the Appellate Body, it is the obligation of the party concerned to inform the DSB its
concerned fails to implement within the reasonable time, it is obliged to start the
compensation is not agreed, the complainant may approach the DSB to suspend
concessions or obligations against the other party. This is the last remedy available to
an aggrieved member.
LEGAL BASIS
Disputes in the WTO are essentially about broken promises. WTO members have
agreed that if they believe fellow-members are violating trade rules, they will use the
means abiding by the agreed procedures, and respecting judgements. A dispute arises
when one country adopts a trade policy measure or takes some action that one or more
failure to live up to obligations. A third group of countries can declare that they have
A procedure for settling disputes existed under the old GATT, but it had no fixed
timetables, rulings were easier to block, and many cases dragged on for a long time
with more clearly defined stages in the procedure. It introduced greater discipline for
the length of time a case should take to be settled, with flexible deadlines set in
various stages of the procedure. 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. If a case runs its
full course to a first ruling, it should not normally take more than about one year
15 months if the case is appealed. The agreed time limits are flexible, and if the case
as possible.
The Uruguay Round agreement also made it impossible for the country losing a case
to block the adoption of the ruling. Under the previous GATT procedure, rulings
could only be adopted by consensus, meaning that a single objection could block the
ruling. Now, rulings are automatically adopted unless there is a consensus to reject a
ruling any country wanting to block a ruling has to persuade all other WTO
members (including its adversary in the case) to share its view. Although much of the
procedure does resemble a court or tribunal, the preferred solution is for the countries
concerned to discuss their problems and settle the dispute by themselves. The first
stage is therefore consultations between the governments concerned, and even when
the case has progressed to other stages; consultation and mediation are still always
possible.
Article 1.1 of the DSU stipulates that its rules and procedures apply to disputes
brought pursuant to the consultation and dispute settlement provisions of the ...
covered agreements. The basis or cause of action for a WTO dispute must,
those WTO Agreements. In other words, it is not the DSU, but rather the WTO
Agreements that contain the substantive rights and obligations of WTO Members,
Many of these provisions simply refer to Articles XXII and XXIII of GATT 19943, or
have been drafted using Articles XXII and XXIII as a model. Article XXIII deserves
being considered first and given special attention. Obviously, a dispute can be, and
often is, brought under more than one covered agreement. In such a case, the question
of the proper legal basis has to be assessed separately for the claims made under
different agreements. The GATT 1994 contains consultation and dispute settlement
provisions in both Articles XXII and XXIII. However, it is Article
XXIII:1(a) to (c) which sets out the specific circumstances in which a (WTO)
Member is entitled to a remedy. Article XXIII:2 originally specified the form that this
remedy could take, but the consequences of a successful recourse to the dispute
settlement system nowadays are set out in more detail in the DSU. Article XXIII of
GATT 1994 therefore retains its significance chiefly for specifying in paragraph 1 the
conditions under which a Member can invoke the dispute settlement system. Article
XXIII:1 of GATT 1994 states:
Nullification Or Impairment:
c. the existence of any other situation, the contracting party may, with a
view to the satisfactory adjustment of the matter, make written
representations or proposals to the other contracting party or parties
which it considers to be concerned. Any contracting party thus
approached shall give sympathetic consideration to the representations
or proposals made to it.
The first, and by far, the most common complaint is the so-called violation
complaint pursuant to Article XXIII:1(a) of GATT 1994. This complaint requires
nullification or impairment of a benefit as a result of the the failure of another
[Member] to carry out its obligations under GATT 1994. This failure to carry out
obligations is just a different way of referring to a legal inconsistency with, or
violation of, the GATT 1994. There also needs to be nullification or impairment as a
result of the alleged legal inconsistency.
The third type of complaint is the so-called situation complaint pursuant to Article
XXIII:1(c) of GATT 1994. Literally understood, it could cover any situation
whatsoever, as long as it results in nullification or impairment. However, although a
few such situation complaints have been raised under the old GATT, none of them has
ever resulted in a panel report. In the WTO, Article XXIII:1(c) of GATT 1994 has not
so far been invoked by any complainant.
In summary, the WTO dispute settlement system provides for three kinds of
complaints: (a) violation complaints, (b) non-violation complaints and (c)
situation complaints. Violation complaints are by far the most frequent. Only a few
cases have been brought on the basis of an allegation of non-violation nullification or
impairment of trade benefits. No situation complaint has ever resulted in a panel or
Appellate Body report based on Article XXIII:1(c) of GATT 1994
The Dispute Settlement Body (DSB) of the World Trade Organization (WTO) makes
Organization. Its decisions generally match those of the Dispute Panel. It was created
during the Uruguay Round to deal with the disputes arising under any of the WTO
Settlement Understanding (DSU). The DSB has the authority to establish dispute
settlement panels, to adopt panel and appellate body reports, to maintain surveillance
the suspension of the concessions and other obligations under the covered WTO
agreements, if its rulings and recommendations are not acted upon by the members in
a timely fashion.
WTO 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
The DSU provides the primary legal means of settling trade related conflicts in the
Typically, a dispute arises when a country adopts a trade policy measure or takes some
dispute may also arise if a member feels that, as a result of another countrys 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
The DSB is more than a vehicle by which panels are established and reports adopted
are implemented, it also serves as a forum where matters of disputes are discussed.
The DSB is, in effect, a session of the General Council of the WTO: that is, all of the
a Dispute Panel and on a report from the Appellate Body of WTO, which may have
amended the Panel recommendation if a party chose to appeal. Only the DSB can
make these decisions: Panels and the Appellate Body are limited to making
recommendations.
Functioning
The DSB meets as often as necessary to carry out its functions, normally monthly,
but it may also meet at special sessions at the request of a member. It is presided over
by a chairman, usually the head of one of the permanent missions to Geneva of one of
its members.
'consensus against' that makes it almost certain that the Panel recommendations in a
dispute will be accepted. The process requires that the recommendations of the Panel
(as amended by the Appellate Body) should be adopted "unless" there is a consensus
of the members against adoption. This has never happened, and because the nation
'winning' under the Panel's ruling would have to join this reverse consensus, it is
difficult to conceive of how it ever could. Since consensus requires approval of the
complaining party, those parties, not the DSB, normally will have the last word on
crucial topics.
Although 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
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,
Once it has decided on the case, i.e., whether the complaint had been shown to be
right or wrong, the DSB may direct the 'losing' Member to take action to bring its
laws, regulations or policies into conformity with the WTO Agreements. This is the
only direction that emerges from a WTO dispute. There is no concept of "punishment"
or even restitution. The DSB will give the losing party a "reasonable period of time"
in which to restore the conformity of its laws etc. Any country that wants to block a
ruling has to persuade all other WTO members (including its adversary in the case) to
If the losing party fails to restore the conformity of its laws within the "reasonable
complainant to take retaliatory measures to induce action on the part of the losing
party. This is very rare. Almost all WTO members "voluntarily" implement DSB
decisions in time. Of course, when a losing country brings its laws etc. into
conformity it may choose how to do so; indeed, it may not necessarily make the
Appellate Body
The Appellate Body was established in 1995 under Article 17 of the Understanding on
body of seven persons that hears appeals from reports issued by panels in disputes
brought by WTO Members. The Appellate Body can uphold, modify or reverse the
legal findings and conclusions of a panel, and Appellate Body Reports, once adopted
by the Dispute Settlement Body (DSB), must be accepted by the parties to the dispute.
The Appellate Body is composed of seven Members who are appointed by the DSB to
serve for four-year terms, with the possibility of being reappointed once. The
WTO. The Appellate Body receives administrative and legal support from the
and the Working Procedures for Appellate Review (Working Procedures). The
Working Procedures are drawn up by the Appellate Body in consultation with the
Director-General of the WTO and the Chairman of the Dispute Settlement Body
COUNTRIES
The DSU is administered by the Dispute Settlement Body (DSB), which is the WTO's
General Council meeting to discharge the responsibilities of the DSB under the DSU.
As such, all WTO members are members and may participate in the DSB. The DSB
has the authority to establish panels, adopt panel and Appellate Body reports, maintain
surveillance of implementation of its recommendations and rulings, and authorize
suspension of concessions. The DSU provides that the DSB shall take decisions
provided for in the DSU by consensus.
WTO members are required to submit all WTO-related disputes to the WTO system
and are prohibited from taking unilateral action in respect of such disputes. The
general philosophy of WTO dispute settlement is set out in Article 3 of the DSU.
Among the principles that are enshrined in that article are the following:
First, it is recognized that the system serves to clarify the existing provisions of then
WTO agreements in accordance with the customary rules of interpretation of public
international law. In this regard, it is also noted that the prompt settlement of disputes
is essential to the functioning of the WTO and the maintenance of a proper balance
between the rights and obligations of WTO members.
Second, it is agreed that the results of the dispute settlement process cannot add to or
diminish the rights and obligations provided in the WTO agreements.
Third, several provisions highlight that the aim of dispute settlement is to secure a
positive solution to a dispute and that a solution that is acceptable to the parties and
consistent with the WTO agreements is clearly to be preferred.
law, and procedure, Some countries have established norms for this decision process
(such as the United States with "Section 301" or the European Union with the "Trade
Barriers Regulation"). In many countries, however, there is no publicly-known
decision process.
In short, the WTO Dispute Settlement Understanding provides for a procedure that
starts with mandatory consultations as a diplomatic element. If the disputing
governments cannot agree to a settlement during these consultations within a certain
period, or if the defending party does not respond to the consultations request, the
complainant may request a panel to review the matter. Panels are composed ad hoc
and they consist of normally three specialists who engage in fact-finding and apply
the relevant WTO provisions to the dispute at hand. Their
findings and recommendations are published in a report against which either or both
parties may appeal. Unless there is an appeal, the reports are adopted in a quasi-
automatic adoption procedure by the Dispute Settlement Body (DSB) where all WTO
Members are represented. "Quasi-automatic" adoption means that the reports are
adopted unless the DSB decides by consensus (i.e., including the party that has
prevailed) not to adopt the report.
In case of an appeal, however, the Appellate Body reviews the issues of law and legal
interpretations in the panel report that are subject to the appeal. The Appellate Body is
a standing body composed of seven jurists, three of whom (i.e., a division) work on
each case. The Appellate Body can uphold, modify or reverse the panel's findings.
After this appellate review, no further recourse is possible. The DSB shall then adopt
the report in the quasi-automatic adoption procedure described above.
If it has been found that a trade measure is in violation of WTO law, the defendant
shall bring the measure into compliance with the covered agreements within a
reasonable period of time, normally not exceeding 9 months. If the defendant refuses
to comply, the complainant may ask the defendant to enter into negotiations on
compensation, or may seek authorisation from the DSB to suspend concessions or
other obligations vis a vis the defendant at an amount equivalent to the injury
suffered, If the adequacy of implementation is disputed, the implementation measures
are subject to further review under the DSU.
India as complainant
the EC has not taken into account the special situation of India as a developing
country.
The panel constituted concluded that the EC did not act inconsistently with its
obligations under certain Articles, but found that there was inconsistency with certain
other Articles. India appealed the recommendations of the Panel and after many
7
DS 141
rounds of discussions and consultations, the Appellate Body recommended that the
DSB request the EC to bring its measure into conformity with the Anti-Dumping
Agreement. At its meeting on 24 April 2003, the DSB adopted the Appellate Body
Report and the Panel Report, as modified by the Appellate Body Report.
India as respondent
The United States as complainant and India as respondent submitted a dispute to the
Dispute Settlement Body, of the WTO 8regarding violations of the TRIPS Agreement
On 2 July 1996, the US requested consultations with India concerning the alleged
absence of patent protection for pharmaceutical and agricultural chemical products in
India. Violations of the TRIPS Agreement Articles 27, 65 and 70 were also claimed.
The Panel established by the Dispute Settlement Body found that India has not
complied with its obligations under Article 70.8(a) or Article 63(1) and (2) of the
TRIPS Agreement by failing to establish a mechanism that adequately preserves
novelty and priority in respect of applications for product patents for pharmaceutical
and agricultural chemical inventions, and was also not in compliance with Article 70.9
of the TRIPS Agreement by failing to establish a system for the grant of exclusive
marketing rights. India appealed certain issues of law and legal interpretations
developed by the Panel. The Appellate Body upheld, with modifications, the Panels
findings on Articles 70.8 and 70.9, but ruled that Article 63(1) was not within the
Panels terms of reference. India enacted the relevant legislation and implemented the
recommendations and rulings of the DSB.
REFERENCES
8
DS50, India Patent Protection for Pharmaceutical and Agricultural Chemical Products (Complaint
by the United States)
Settlement, accessed at www.sida.se/publications
S.K Kapoor, International Law and Human Rights, Central Law Agency, 14th
edn. (2008), pp. 318-320.
Uruguay Round Agreement: Understanding on Rules and Procedures Governing
the Settlement of Disputes, accessed at
<http://www.wto.org/english/docs_e/legal_e/28-dsu_e.htm>
David Palmeter and Petros C. Mavroidis, Dispute Settlement in the World Trade
Organization, Practice and Procedur, Cambridge University Press, 2nd edn.
Autar Krishen Koul, Guide to the WTO and GATT Economics, Law and
Politics, Satyam Law International, 2nd edn. (2010)
http://userwww.service.emory.edu/~erein/research/SIDA.pdf