Lecture 8. Rules and Procedures Governing the Settlement of Disputes (DSU)

WTO Dispute settlement system – main definitions

DSU means the Understanding on Rules and Procedures Governing the Settlement of Disputes which is Annex 2 to the WTO Agreement;

DSB means the Dispute Settlement Body established under Article 2 of the DSU, made up of all member governments, usually represented by ambassadors or equivalent. The DSB has the authority to establish panels, adopt panel and Appellate Body reports, maintain surveillance of implementation of rulings or recommendations of panels or of the Appellate Body and authorize suspension of concessions or other obligations under the covered agreements.

Panels and panelists refer to a team of three or five experts or well-qualified governmental or non-governmental individuals to examine a dispute, giving findings and making recommendations. Panelists are nominated by the Secretariat and agreed by the parties to a dispute or appointed by the Director-General of the WTO where there is no agreement within 20 days after the date of establishment of the panel. Panelists are expected to function in their individual capacities and not as representatives of governments or of any organization.

Standard Terms of Reference refer to the legal responsibilities of the DSB panels, i.e., the examination of the issues raised by the complaining Member, and giving findings which will assist the DSB in making recommendations or in giving its rulings on the issues in question.

Consensus a decision is deemed to be made by consensus if no Member formally objects to it, or there is no consensus against it.

Good offices, conciliation and mediation refer to a procedure of the disputer settlement process in which the Director-General of the WTO assists the parties to settle a dispute in a way satisfactory to both parties of the dispute.

Good offices mean that a third party assists the negotiation or consultation between the two parties to a dispute.

Conciliation means that a dispute is submitted to a committee or an organization who will make findings and recommend solutions satisfactory to both parties.

Mediation means a third party is involved directly in the negotiations of concerned parties of a dispute.

Good offices, conciliation and mediation may be requested by any party to a dispute, but can be effectively undertaken only if both parties to the dispute agree to use this procedure. It may begin and be terminated at any time, and it may even be continued while the panel process is on.

Arbitration refers to an alternative course in the dispute settlement process where the dispute issues are clearly defined by both parties. It will be entered into if the parties to the dispute agree to adopt it. The parties have to agree to abide by the arbitration award, which will be notified to the DSB. The implementation process of the award will be along the same lines as that for the recommendation and ruling of a panel.

Appellate Body refers to the permanent seven-member Appellate Body set up by the Dispute Settlement Body and broadly represents the range of WTO membership. Members of the Appellate Body have four-year terms, and can be renewed once. They have to be individuals with recognized standing in the field of law and international trade, not affiliated with any government.

Division means the three Members of Appellate Body who are selected to serve on any one appeal;

appellant means any party to the dispute that has filed a Notice of Appeal or has filed a submission;

appellee means any party to the dispute that has filed a submission;

third participant means any third party that has filed a written submission; or any third party that appears at the oral hearing, whether or not it makes an oral statement at that hearing;

third party means any WTO Member who has notified the DSB of its substantial interest in the matter before the panel.

Dispute settlement system in the WTO – basic concepts

The dispute settlement system of the GATT is generally considered to be one of the cornerstones of the multilateral trade order. The system has already been strengthened and streamlined as a result of reforms agreed following the Mid-Term Review Ministerial Meeting held in Montreal in December 1988. The Uruguay Round Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) further strengthened the existing system significantly, extending the greater automaticity agreed in the Mid-Term Review to the adoption of the panels' and a new Appellate Body's findings. Disputes currently being dealt with by the Council are subject to these new rules, which include greater automaticity in decisions on the establishment, terms of reference and composition of panels, such that these decisions are no longer dependent upon the consent of the parties to a dispute. Moreover, the DSU will establish an integrated system permitting WTO Members to base their claims on any of the multilateral trade agreements included in the Annexes to the Agreement establishing the WTO. For this purpose, a Dispute Settlement Body (DSB) will exercise the authority of the General Council and the Councils and committees of the covered agreements.