DISPUTE SETTLEMENT

IN
WTO

PREPARED BY
CHAN BONNIVOIT
WTO OFFICE
NOTIFICATION AND LEGAL COMPLIANCE DEPARTMENT
MINISTRY OF COMMERCE
 Table of Contents
I. General Aspects
a) Overview
b) Scope
c) Aims and Main Characters
II. Procedural Stages
a) Consultations
b) Panel Review Process
i. Request for Establishment
ii. Composition
iii. Proceedings
c) Appellate Review
d) Implementation
i. Reasonable Period of Time
ii. Implementation Review Process
e) Non-Implementation
i. Compensation
ii. Suspension of Concessions
III. A Government Lawyer’s Perspectives
 Part I

General Aspects
 Dispute Settlement in the WTO:
Dispute Settlement under GATT 1947
Articles XXII and XXIII of GATT:
ƒ nullification and impairment
– "nullification and impairment" of the benefits that should flow
from the agreement.

ƒ Violation (and non-violation)

– Breach of the rules contained in the GATT by one party.
– Have an adverse impact on another GATT party or parties.

ƒ Practice under GATT 1947

– multilateral resolution of disputes.
– dispute settlement was viewed as much more a matter of
diplomacy, rather than a matter of law alone.
– consensus (political consensus).
WTO ‐ Structure
 Dispute Settlement in the
WTO:
Overview
ƒ Who can have Quasi-judicial Nature
recourse to it? ƒ Compulsory jurisdiction
(Members) ƒ Secured access
ƒ Detailed procedures and
ƒ When? (Member deadlines
considers benefits ƒ Automaticity in the
resulting from proceedings
agreements are ƒ Possible appeal
being impaired) – Panel
ƒ Which agreements? – Appellate Body (AB)
 Dispute Settlement in WTO:
Overview

Adoption
WTO Dispute Settlement Body
establishes

Panel
CONSULTATION
Report
PANEL
Dispute Settlement in WTO:
Overview

Political Level (Control)

Judicial Level
 Structure of the WTO Agreement

WTO Agreement

GATT

GATS DSU TPRM

TRIPS

A A A A Plurilateral Agreements:

A A A A •Trade in Civil Air Craft

•Government Procurement
 WTO
GATT
GATS
TRIPS
DSU TPRM • Anti-Dumping
• Rules of Origin
• Valuation
• Agriculture
• Import Licensing
• Sanitary and
Phytosanitary Measures • Subsidies and
Countervailing
• Technical Barriers to Measures
Trade
• Safeguards
• Trade-related Investment
Measures
 Dispute Settlement in the WTO:
Scope
ƒ An integrated ƒ Applies to all the WTO
system: multilateral agreements
(Appendix 1)
ƒ A single set of rules for all
disputes (Art 23)
ƒ Only a few special or
additional rules in some
Covered Agreement (CA)
– WTO Multilateral and
Plurilateral Agreements are
listed as covered agreements
Dispute Settlement in the WTO:
Aims
ƒ DSU:
– Securing compliance with CA
– Providing security and predictability to the multilateral
trading system
ƒ The market participants (private economic operators) need
stability and predictability in the government laws, rules and
regulations applying to their commercial activity, especially
when they conduct trade on the basis of long-term
transactions.
ƒ In light of this, the DSU aims to provide a fast, efficient,
dependable and rule-oriented system to resolve disputes
about the application of the provisions of the WTO
Agreements.
– Preserving the rights and obligations of Members
under the CA
Dispute Settlement in the WTO:
Main Characters

ƒ The Parties: WTO Members only

ƒ The DSB (all the Member States)
ƒ The Panel ( 3 or 5 panelists)
ƒ AB (7 members)
ƒ WTO Secretariat
 Part II

Procedural
Stages
Dispute Settlement in the WTO:
Main Stages
Consultations
(60 days)

Panel established
by DSB Good offices,
conciliation and
mediation
Composition of the panel

Panel review and Report Issued

(6-9 months)

Report issued to the parties Translation in official languages

before
circulated to the Members

Appellate Review and

Report Issued
(60-90 days)

DSB adopts Panel / Appellate Report(s)

Dispute Settlement in the WTO:
Main Stages
ƒ Good offices normally consist primarily of providing
logistical support to help the parties negotiate in a
productive atmosphere.
ƒ Conciliation additionally involves the direct
participation of an outside person in the discussions and
negotiations between the parties.
ƒ In a mediation process, the mediator does not only
participate in and contribute to the discussions and
negotiations, but may also propose a solution to the
parties.
ƒThe parties would not be obliged to accept this
proposal.
 II.a
Consultations
 Dispute Settlement in the
WTO: Consultations
ƒ Who?
ƒ One or more Members (complainants) against
another Member (defendant)

ƒ Confidential process (Art. 4.6)

ƒ No intervention by the Secretariat
 Dispute Settlement in the WTO:
Request for Consultations
ƒ The request for ƒ Indicates the reasons for
consultations: the request:
– identification of the
(Art. 4 DSU) measures
– legal basis for complaint
ƒ Addressed to Defendant
with copy to DSB and
relevant Councils and
Committees
ƒ Circulated to Members as
document “WT/DSxxx/1”
Dispute Settlement in the WTO:
Third Parties -Joining Consultation

ƒ Any Member can ƒ Consultations

request to be joined requested under Article
in the consultations XXII of GATT only (or
Art. 4.11 DSU
corresponding
provision)
ƒ Substantial trade
interest
Deadline: within 10
days of initial request ƒ Notified to parties and
for consultations DSB
Dispute Settlement in the WTO:
Third Parties -Joining Consultation

ƒ If the respondent disagrees, there is no

alternative through which the interested Member
can impose its presence at the consultations, no
matter how legitimate the invoked substantial trade
interest may be.

ƒ However, the interested Member can always

request consultations directly with the respondent
(Article 4.11 of the DSU), which would open a new,
separate dispute settlement proceeding
Dispute settlement in the WTO:
Time frame
Request for Consultations

Requested Member replies within 10 days Requested Member does not reply

Entry into consultations within 30 days They do not enter into consultations within 30 days

Failure to settle the dispute

( 60 days from received
request for consultations)

MUTUALLY AGREED REQUEST FOR THE ESTABLISHMENT

SOLUTION OF A PANEL

Exception!: Urgency procedure under Art. 4.8 DSU

 II.b
Panel Review
Process
Dispute Settlement in the WTO:
Establishment of panels
Article 6 DSU
ƒ Request for establishment of a
panel:
– indicate whether consultations held
– identify the specific measures at issue
– brief summary of the legal basis of the
problem sufficient to present the problem
clearly
ƒ Establishment of a panel
 Dispute Settlement in the WTO:
Terms of reference and
composition of panels
Terms of reference: Panel Composition:
(Article 7 DSU) (Article 8 DSU)
ƒ Standard terms of ƒ “well-qualified government
reference and/or non-governmental
ƒ Special terms of individuals”
reference ƒ secretariat proposals
– members shall not oppose,
except for convincing reasons
ƒ indicative list of panelists
ƒ nomination by DG
– No agreement on the panellists
within 20 days after the date of
the establishment of a panel
Dispute Settlement in the WTO:
Panel Procedures (I)

ƒ Working Procedures (Appendix 3 DSU)

ƒ Submissions and meetings
ƒ Issuance of descriptive part to parties
ƒ Interim review
ƒ Final report issued to parties
ƒ Final report circulated to all Members
ƒ Procedure for suspension of work
Dispute Settlement in the WTO:
Panel Proceedings: Appendix 3 DSU
Receipt of first written submissions of the parties

First substantive meeting with the parties and third parties

Third party session

Receipt of written rebuttals (written negation)

of the parties

Second substantive meeting with the parties

Issuance of descriptive part

of the report to the parties

Receipt of comments by the parties

on the descriptive part of the report

Interim review

Final report issued to parties

Final report circulated to all Members

 Dispute Settlement in the WTO:
Panel Procedures (II)
Function of panels:
ƒ Standard of review: (Art. 11 DSU)
– facts of the case
– the applicability of CA
– conformity with the relevant CA

ƒ Report of the Panel shall set out: (Art12.7 DSU)

– the findings of fact
– the applicability of the relevant provisions
– the basic rationale behind any findings and
recommendations that it makes
 Dispute Settlement in the WTO:
Panel Procedures (III)
ƒ Third parties: “substantial interest”
(Article 10 DSU)
– Difference with consultation phase
– Limited rights
ƒ to receive the first written submissions
ƒ to make written submissions to the Panel
ƒ to be heard by the Panel
ƒ Right to seek information (Article 13 DSU)
– Issue: “Amicus Curiae”
ƒ Expert review groups (Appendix 4 DSU)
ƒ Confidentiality (Article 14 DSU)
 Dispute Settlement in the WTO:
Panel Procedures (IV): Deadlines
ƒ As a general rule, 6 ƒ As a general rule, 9
months from months from
composition/terms establishment of
of reference to panel to consideration
issuance of final of report for adoption
report of the panel to (if no appeal)
the parties ƒ 12 months where
(Article 12.8 DSU) report is appealed
(Article 20 DSU)
Dispute Settlement in the WTO:
Panel Procedures: deadlines

Composition of
a panel

Establishment Final Report

of a panel max. 6 months
circulated

max. 9 months
Dispute Settlement in the WTO:
Adoption of Panel Reports
Art. 16 DSU

ƒ Panel reports are not

considered by DSB
for adoption until 20
days after circulation

ƒ Adopted at a DSB
meeting within 60
days of circulation, … Except if
unless negative appealed
consensus….
 II.c
Appellate Review
 Dispute Settlement in the WTO:
Appellate Review (I)
Article 17 DSU
Standing Appellate
ƒ Appeals limited to Body
issues of law and ƒ 7 members
legal interpretations ƒ persons of recognized
developed by the authority and expertise in
panel international trade law
ƒ “unaffiliated with any
ƒ Appeal only open to government”
parties to the dispute
Dispute Settlement in the WTO:
Appellate Review (II)
Report of the Appellate Body:
ƒ “The Appellate Body may encourage,
modify or reverse the legal findings and
conclusions of the panel” (Art. 17.12 DSU)

ƒ Adoption of Appellate Body report:

within 30 days of circulation to Members
 II.d
Implementation
Dispute Settlement in the WTO:
Implementation
DSB adopts report

Implementation within reasonable period of time

Arbitration to determine 'reasonable period of time' if no agreement

Request for review of compliance

(referred to original panel)

Negotiations to agree mutually satisfactory

compensation if no compliance

Request for DSB authorisation for suspension of concessions

if compensation not agreed

Arbitration on level and procedure

DSB authorisation for suspension of concessions

 Dispute Settlement in the WTO:
Implementation (I)
ƒ Recommendations: ƒ Within 30 days of
If violation: adoption of report,
recommendation that Member concerned
the Member bring informs the DSB of its
the measures into intentions in respect of
conformity implementation of the
(Article 19 DSU) recommendations and
rulings
(Article 1 DSU)
Dispute Settlement in the WTO:
Implementation (II)
Determination of “reasonable period of
time” for implementation:

ƒ proposed by Member and approved by DSB, or

ƒ mutually agreed by the parties, or
ƒ determined through arbitration: “guideline for
the arbitrator”: 15 months from the date of
adoption (Article 21.3 DSU)
 Dispute Settlement in the WTO:
Implementation (III)

ƒ Surveillance by the DSB: Status reports on

implementation

ƒ If Member fails to bring measure into

conformity within reasonable period of time,
possibility of temporary measures:
compensation or “suspension of
concessions” (retaliation)
 Dispute Settlement in the WTO:
Implementation (IV)

Compensation:
(Article 22 DSU)
ƒ Voluntary
ƒ Negotiated
ƒ Compatible with WTO Agreements
ƒ If no compensation agreed within 20 days after
expiry of reasonable period of time….
 Dispute Settlement in the WTO:
Implementation (V)

Suspension of concessions:
ƒ same sector/other sector/ other agreement
ƒ level of suspension: “equivalent to the level of
nullification or impairment” (Art. 22.4 DSU)
ƒ authorization to suspend: within 30 days of
expiry of reasonable period of time
ƒ arbitration on level of suspension or principles
of Art. 22.3 DSU
 II.e
Non-
Implementation
Dispute Settlement in the WTO:
Surveillance of Implementation
ƒ Surveillance by the DSB: Status reports
on implementation (21.6 DSU)

ƒ If Member fails to bring measure into conformity

within reasonable period of time, possibility of
temporary measures : compensation or
“suspension of concessions” (retaliation)
 Dispute Settlement in the WTO:
Compensation
Compensation: (Art. 22 DSU)
– voluntary
– negotiated
– compatible with WTO Agreements

If no compensation agreed within 20 days after expiry of

reasonable period of time…. “Suspension of concessions”
Suspension of concessions
Specificity requirements
What should the request contain?
2 minimum specificity requirements

It must specify It must set out a

the Agreement specific level
and sector (s) of suspension
under which it Equivalent to the
will be applied. nullification and
Art. 22.3 impairment
Suspension of concessions
Requirement 1: selection of the sector
General Principle
in the same sector/s in which the inconsistent
measure was found. (Art. 22.3 a)

– Goods: all one sector

– Services: each one of the 11 sectors identified in
services sectoral Classification list (MTN.GNS/W/120)
– Intellectual Property: each one of the 7 Sections
and Parts II, III and IV del TRIPS
Suspension of concessions
Requirement 2: Equivalence
Equivalence
(correspondence, identity or
balance)
Level of (Art. 22.4 del ESD) Level of
concesions to nullification or
be suspended impairment
EC - Bananas III (EEUU) (Art. 22.6) - para. 4.1 WT/DS27/ARB

In addition:
ƒ Suspension of concessions may not have
punitive nature
EC - Bananas III (US) (Art. 22.6) - para. 6.3 WT/DS27/ARB
US – Cotton Yarn, para. 120 WT/DS192/AB/R
 Mandate of the arbitrator
Art. 22.7 DSU

The arbitrator may not review the

nature of the proposed measure
EC – Hormones (Art. 22.6 – CE), para. 18 WT/DS26/ARB

Arbitral award: within 60 of the expiry of the

reasonable period of time
Dispute Settlement in the WTO:
Developing Countries
ƒ Reference to 1966 decision
ƒ Specific provisions: e.g.
– composition of panels (Art. 8.10 DSU),
– consultations (Art. 4. 10 DSU),
– panels procedures (Art. 12. 10 and 12.11 DSU)
ƒ Least -developed countries (Art. 24 DSU):
– particular consideration to special situation,
– moderation in asking for compensation and seeking to
suspend concessions
ƒ Legal assistance (Art. 27.2 DSU)
 III.
A Government
Lawyer’s Perspectives
 How is a government lawyer’s
perspective different?

ƒ Responsibilities are broader.

ƒ Multiple stakeholders in a dispute.

ƒ Context of the dispute is different to private

lawsuit
 How is a government lawyer’s
perspective different?
ƒ Responsibilities are broader
– Government lawyers are responsible for more
than the legal outcome of the case – they are
also responsible for the policy and political
outcomes of the case
ƒ Outcomes include legal, policy and political
outcomes
ƒ Key difference to private lawyer where
responsibility is limited to legal advice
 How is a government lawyer’s
perspective different?
ƒ Multiple stakeholders in the dispute
– Governments of the parties
– Private industry and business
– Ministers
– Third parties
– Non-government organisations
 How is a government lawyer’s
perspective different?
ƒ Dispute settlement context
– WTO disputes take place against the
background of mutual WTO membership and a
continuing trading relationship
– Contrast to private litigation which does not take
place within the context of such relationships
 How is a government lawyer’s
perspective different?

Taken together, these factors enlarge the

concept of a “dispute” for a government
lawyer and add complexity to the
management of the dispute process.
THANKS YOU