THESE DOCUMENTS ARE WRITTEN AND PERIODICALLY UPDATED BY U.S. GOVERNMENT ATTORNEYS, AS TIME AND
RESOURCES PERMIT. PLEASE NOTE THE DATE INDICATED AT THE END OF THE DOCUMENT YOU RETRIEVE AND BE ADVISED
THAT THE INFORMATION CONTAINED THEREIN IS CURRENT UP TO THAT DATE.
DISPUTE SETTLEMENT IN THE WTO
Jean Heilman Grier
I. INTRODUCTION
A. The Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) provides a mechanism for settling disputes that arise under any of the World Trade Organization (WTO), including the Agreement establishing the WTO and the DSU itself. The DSU is set out in Annex 2 to the WTO Agreement.
B. Certain agreements contain special or additional rules that supersede those of the DSU for matters arising under those agreements (listed in Appendix 2 of the DSU). If dispute settlement proceedings involve two or more Uruguay Round agreements with conflicting special rules and the parties cannot agree on which rules will apply, the chairman of the Dispute Settlement Body will decide the issue.
C. The DSU builds on and significantly improves GATT dispute settlement procedures. For example, under the GATT, a defending party could block adoption of a report and the process did not cover all GATT agreements.
D. Under the WTO, there are strict time limits for each step in the dispute settlement process, a party cannot block adoption of a report, and there is one comprehensive dispute settlement process covering all of the Uruguay Round Agreements.
II. INSTITUTIONS
A. Dispute Settlement BodyB. Panels. Panels are established to examine a particular matter and are to be comprised of "well-qualified" individuals with experience relating to the GATT, the WTO or international trade law or policy. Governmental and non-governmental individuals may serve as panelists. Panelists may not be citizens of any of the parties to the dispute without the consent of the parties.1. The WTO's dispute settlement arrangements are supervised by a single Dispute Settlement Body (DSB), on which all WTO Members are represented. The DSB is in fact the WTO's General Council. Only the Members that have signed on to a particular "plurilateral" agreement may participate in DSB decisions concerning that agreement (i.e., a WTO agreement, like the Agreement on Government Procurement, to which not all WTO Members are a party).
2. The DSB has the sole authority to establish panels, adopt panel and Appellate Body reports, oversee the implementation of rulings and recommendations and authorize the retaliation.
3. The DSU provides that progress cannot be blocked unless there is a consensus to do so, e.g., a panel will be established unless the DSB decides by consensus not to establish a panel.
C. Appellate Body. The Appellate Body, which is established by the DSB, consists of persons of recognized authority, with demonstrated expertise in law, international trade and the subject matter of the covered agreements generally, and are unaffiliated with any government. Members are appointed for four years, with staggered terms. Its membership is to be broadly representative of the WTO.
III. DISPUTE SETTLEMENT PROCESS
(For
flowchart, see
WTO website:
http://www.wto.org/english/thewto_e/whatis_e/tif_e/disp2_e.htm)
A. General. The dispute settlement process can be completed within approximately 14 months from the date of a request for consultations, even with an appeal.
B. Complaints.
1. Violation Complaints. Most complaints concern claims by one Member that another has taken a measure inconsistent with specific WTO rules, to the injury of the complaining party.
2. Non-Violation Complaints. A Member may bring a complaint even if there has been no violation of an agreement. It may allege that another Member has taken a measure that nullifies or impairs a benefit that the complaining Member had reason to expect to receive under the provisions of a WTO agreement.
C. Consultations.
A complaining Member must seek consultations with the Member whose measure is in dispute before requesting the establishment of a panel to hear the matter. Consultations are confidential and are to be held without prejudice to the rights of Members in further proceedings.1. Members must respond to requests for consultations within 10 days and enter into consultations within 30 days after receipt of a consultations request. The consultations are notified to the DSB.D. Establishment of Panels
2. In urgent cases, e.g., where perishable goods are concerned, consultations must begin no more than 10 days after receipt of the request, and if not resolved within 20 days after receipt of the request, the requesting Member may request the establishment of a panel.
3. Members other than the consulting parties may participate in consultations if the Member to which the request for consultations was addressed agrees that they have a "substantial trade interest" in consultations.
E. Panel Procedures. The DSU provides guidance on procedures that panels are to follow. Although each panel fixes the timetable for its proceedings, panels are instructed to normally follow procedures set out in a DSU appendix, which include strict time limits for submissions to the panel and provisions for scheduling panel meetings.1. The Member requesting consultations may request establishment of a panel if a Member does not respond within the allotted time period to a request for consultations or, generally, if consultations do not resolve a dispute within 60 days after the request for consultations.
2. Requests. A party must submit a written request for the establishment of a panel, and indicate whether consultations were held, identify the measures at issue and summarize the legal basis of the complaint.3. Composition of Panels. Panels normally consist of three persons, but the parties to the dispute may agree to five panelists. If within 20 days of establishment of a panel, the parties to the dispute cannot agree on the panelists, the WTO's Director-General appoints panelists after consulting with the disputing parties.
4. Multiple Complainants. The DSU reflects a strong preference for the formation of a single panel to hear complaints of multiple parties with regard to the same measure.5. Third Parties. Third parties with a substantial interest in a matter before the panel are given an opportunity to make written submissions and oral presentations to the panel.
1. Panels must submit written reports, which are to include findings of fact, a statement regarding how the pertinent WTO agreements apply to the disputed matter and the reasons for any findings and recommendations.
2. Panels must provide parties to a dispute with a draft report and allow them to provide written comments on it. Generally, the final report must be issued within six months of the panel's establishment (maximum time is nine months). The draft is not made public.
3. Panels may seek advice from relevant experts, and may establish an "expert review group" to provide an advisory report on any factual issue concerning scientific or other technical matters.4. Panel deliberations and documents submitted to it are confidential, but a party to a dispute may disclose its submissions to the public.
F. Adoption of Panel Reports. The DSB must adopt panel reports within 60 days after issuance, unless a party to the dispute appeals the decision or the DSB decides by consensus to reject the report.
G. Appellate Review. Parties to a dispute may appeal legal issues in panel reports to the standing Appellate Body. Three-person appellate panels will be drawn from an the seven-person Appellate Body.
1. The Appellate Body may uphold, modify or reverse the legal findings and conclusions of a panel.H. Recommended Remedies. Where a panel or Appellate Body finds that a measure is inconsistent with a WTO agreement, it must issue a recommendation directing the Member to bring the offending measure into conformity with the agreement, and it may make non-binding suggestions as to ways the recommendation could be implemented.2. As a general rule, the Appellate Body must make its findings within 60 days (and at most 90 days) after a party files an appeal.
3. The DSB must adopt an Appellate Body report within 30 days after it is issued, unless there is a consensus to not do so.
I. Implementation
1. The Member concerned must state its intentions on implementation of the recommendations of a panel or the Appellate Body at a DSB meeting held within 30 days after the adoption of the report.J. Compensation and Retaliation. If a Member fails to implement a panel or Appellate Body recommendation to bring a measure into conformity with a WTO agreement, the Member must enter negotiations, on request, with the complaining party to reach agreement on mutually acceptable compensation.
2. Where the Member cannot comply immediately with the rulings and recommendations, it will be given a "reasonable period of time" to do so. A reasonable period of time may be: a period suggested by the Member and approved by the DSB; a period agreed on by the parties to the dispute; or a period determined through binding arbitration within 90 days after the adoption of the recommendations and rulings.
1. Implementation of a recommendation to bring a measure into conformity with the agreement is preferred to compensation or the suspension of concessions or other obligations. Compensation is voluntary and must be consistent with the WTO agreements.K. Arbitration. As an alternative means of dispute settlement, Members may seek arbitration within the WTO in situations where the issues in conflict are "clearly defined" by both parties to a dispute. The parties must agree to arbitration and the procedures to be followed. Where the parties decide to arbitrate, they must agree to abide by the arbitration award. All Members must be given prior notice of the arbitration. Third parties may join the arbitration only with the consent of the parties that have agreed to arbitration.2. If agreement on compensation is not reached within 20 days after expiration of the period for implementing the panel or Appellate Body decision, a party may request the DSB to authorize retaliation (suspension of concessions).
3. As a general principle, a complaining country must first consider taking retaliatory action in the sector affected by the measure in question. Cross-retaliation is permissible, i.e., across agreements and sectors.
For further information, please contact:
John Cobau
Senior Counsel
Office of the Chief Counsel for International Commerce
U.S. Department of Commerce
Tel: 202-482-0937
Fax: 202-482-4076
E-mail: occic@doc.gov
Websites:
Office of the Chief Counsel
for International Commerce: www.osec.doc.gov/ogc/occic
WTO: www.wto.org/
March 2005
Contact Us
About OCC-IC
OGC
Privacy
Statement
U.S.
Department of Commerce |
International Trade Administration