The Dispute Settlement Understanding (DSU) is used by the World Trade Organization (WTO)as one of the supporting pillarsin the multilateral trading system. The efficient resolution of disputes is the organisation’s way to contribute to global economic stability1. The system is the WTO's judicial arm developed to help the member countries solve trade disputes that might arise between them; it also has enforcement mechanisms. When comparedto the previous system, the General Agreement on Tariffs and Trade (GATT 1947), DSSis formal and well designed with clear stages and demands more discipline when settling disputes2. However, despite the paramount success the system has achieved over the twenty-four years of its existence, the DSU has had various problems. This paper will discuss how the DSS works and the Problems the system has been encountering. The paper will also discuss the problems affecting the system including adherence of the DSS to DSU, US domination and criticism, compliance, and constraint of resources.
Dispute Resolution Understandingand Processes of the World Trade Organization
The Dispute Settlement system is a significant element in provision of predictability and protection in the trading system. The system is meant to preserve the obligations and the rights of the members according to the covered agreement. According to article 3.7 the dispute settlement mechanisms is purposed to offer positive solution to the arguing members as per the covered agreement3. The rulings of such cases should not cause any changes to the rights and obligations of the parties. Over the last two centuries, the DSU has had great success. For instance, it has issued more than three hundred rulings, witnessed better compliance rate, and received almost six hundred complaints, which is a major success when compared with other international jurisdictions and adjudicatory bodies like the International Criminal Court which has only handled twenty-seven cases4. The popularity acquired by DSU over the years shows just how effective the strategy has been in solving trade cases and protecting the members. The dispute settlement process of the DSU entails parties' consultation, arbitration, and ruling and reinforcement. The DSU is an integrated system that can be applied to all the agreements and the jurisdiction according to Article 23.1, is naturally compulsory. The parties especially the responding party has no option other than to comply to the jurisdiction of the system, which us not advisory but only contentious5. A dispute in WTO occurs when a member country feels that another member has implemented policies that violate a commitment or that are not consistent withthe requirements of the WTO agreement6. If a dispute occurs, a member state has the authority to use the dispute settlement system to oppose the policy.
The first stage, after a member state has invoked a procedure, involves the parties being given sixty days to consult with each other and mutually develop a solution.7 The DSUprioritises and encourages bilateral agreement; the opportunity to mutually agree is available to the parties throughout the settlement process8.40% of the cases presented to the system do not go beyond the first stage due to an agreement between the parties to settle their disputes, or the complainantt is not interested in pursuing the matter further. The first stage is an important feature of the system as it gives the members a chance to consult facts, have in-depth discussions with each other, and do away with any misunderstanding9 If the complaint is not satisfied, and the party cannot reach a solution, the member state can ask for establishment of a panel to assess and settle the dispute at stage two10. The panel is responsible for hearing the complainant’s claims and aftera thorough assessment and evaluation, it develops a report containing its decision. If there is an appeal, the dispute will proceed to the appellate body. An appeal can be based on the law and not the facts; the body can amend, uphold, or reject the decisions of the panel. The Dispute Settlement Body (DBS) has to adopt, and the parties have to submit to the Appellate Body'sreport by the implementation of a negative consensus strategy.
The final stage in dispute settlement involves the implementation of the decisions made by the Appellate Body and countermeasures in case the implementation is not satisfactory, as dictated in article 21.5 of the procedures11. If a respondent is found guilty of a violation, the body or the panel will advise her to bring "measures in conformity with the relevant WTO agreement" the parties will, therefore, agree on the time duration for implementation12 13. If the parties are not satisfied with the implementation, a compliance panel is developed where the implementation measures are scrutinised and compared with the adopted report. The complainant can settle for implementation of temporary measures in case there is no ‘implementation’ like compensation for the financial loss the prevailing complainant incurred due to the violations. Another measure is suspending trade sanctions. However, there is a requirement to attain DSB authorisation, and the suspension must cost that country as much as the suffering incurred by the complainant. If a dispute arises out of the form of suspension to be invoked, the parties have to go back to the original panel and have to go to arbitration.
Arie Reich, "The effectiveness of the WTO dispute settlement system: A statistical analysis," European University Institute Working Paper LAW 2017/11, November 2011, 6, http://cadmus.eui.eu/bitstream/ handle/1814/47045/LAW_2017_11.pdf? sequence=1.
Article 17.6, Dispute Settlement Understanding
Article 19.9, Dispute Settlement Understanding
Article 21.3, Dispute Settlement Understanding
Article 3.7 and Article 11, Dispute Settlement Understanding
William J. Davey, "The First Years of WTO Dispute Settlement: Dealing with Controversy and Building Confidence" in A History of Law and Lawyers in the GATT/WTO (G. Marceau, Ed.) (Cambridge University Press, 2015) p. 351
World Trade Organization. The process — Stages in a typical WTO dispute settlement case" World Trade Organization, accessed August 12, 2019, https:// www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/ c6s2p1_e.html
1 William J. Davey, “The First Years of WTO Dispute Settlement: Dealing with Controversy and Building Confidence”, in A History of Law and Lawyers in the GATT/WTO (G. Marceau, Ed.) (Cambridge University Press, 2015) p. 351
2 Arie Reich, “The effectiveness of the WTO dispute settlement system: A statistical analysis”, European University Institute Working Paper LAW 2017/11, November, 2011, 6, http://cadmus.eui.eu/bitstream/ handle/1814/47045/LAW_2017_11.pdf? sequence=1.
3 Article 2.7 of the dispute settlement understanding
4 Ibid, 1.
5 Dispute Settlement Understanding
6 William J. Davey, “The First Years of WTO Dispute Settlement: Dealing with Controversy and Building Confidence”, in A History of Law and Lawyers in the GATT/WTO (G. Marceau, Ed.) (Cambridge University Press, 2015) p. 351
7 Article 3.7 and Article 11, Dispute Settlement Understanding
8 World Trade Organization. "The process — Stages in a typical WTO dispute settlement case" World Trade Organization, accessed August 12, 2019, https:// www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/ c6s2p1_e.html
9 Article 3.6
10 Article 17.6, Dispute Settlement Understanding
11 World Trade Organization. The process — Stages in a typical WTO dispute settlement case" World Trade Organization, accessed August 12, 2019, https:// www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/ c6s2p1_e.html
12 Article 19.9, Dispute Settlement Understanding
13 Article 21.3, Dispute Settlement Understanding
- Quote paper
- Winfred Wanjiku (Author), 2019, International Commercial Law. How does the Dispute Settlement System (DSS) Work?, Munich, GRIN Verlag, https://www.grin.com/document/512762