Business Law Report: Evaluation of the WTO Dispute Resolution System

This report provides a detailed analysis of the World Trade Organization's (WTO) dispute resolution system. It begins with an introduction to the importance of the WTO in stabilizing the global economy through resolving trade disputes. The report outlines the key processes, including consultation, panel hearings, and the role of the Dispute Settlement Body (DSB) and the Appellate Body. It explains the Dispute Settlement Understanding (DSU), the procedures for establishing panels, and the confidentiality of proceedings. The report also discusses the advantages and disadvantages of the WTO's dispute resolution system, including the time-consuming nature of the process and the lack of compensation for economic losses or legal fees. The report concludes by examining alternative dispute resolution methods like arbitration, conciliation, and consultation. The paper offers a comprehensive overview of the WTO's dispute resolution mechanisms, offering insights into the challenges and strengths of the system.

Running head: BUSINESS LAW
Business Law
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Introduction
The system for resolution of dispute forms the one of the most important part of the
system of multilateral trading as considered by World Trade Organisation. The main contribution
of the World Trade Organisation is to ensure the stability prevailing in global economy by
resolving the disputes arising out of the system of multilateral trading. The chief source of the
dispute is the adoption of a particular policy for trading activities or any measure related to the
trading activities that has been undertaken by a member which has been considered as
contravention of the agreements of the World Trade Organisation or as a inadequacy in abiding
by the obligations by the members. The members who have joined the World Trade Organisation
has undertaken an implied agreement that in case any fellow member has been found by them to
have violated the rules of trading, the members finding the violation would pursue multilateral
dispute resolution system and will not undertake any unilateral action. The members of the
World Trade Organisation is to ensure the adherence to the procedures agreed with respect to the
trading activities and addressing any discrepancy with respect to the same by using the dispute
settlement process referring to judgements delivered by the Dispute Settlement Board (DSB),
WTO organs and other bodies responsible for the adjudication of the disputes1. This paper would
strive to present explanation and critique of the dispute resolution system along with processes
undertaken by the World Trade Organisation. It would present and analysis with respect to the
working of the dispute resolution system of WTO. It would also strive to analyse the problems if
any with the working of the system of dispute resolution.
1 World Trade Organization. A handbook on the WTO dispute settlement system. Cambridge University Press,
2017.

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Discussion
The process of settlement of dispute implemented by the World Trade Organisation is
mainly based upon the dispute settlement board (DSB). The DSB has the membership similar to
that of General Council. The board has been concerned with the administration rules and
processes of Dispute Settlement Understanding (DSU). The processes include consultation as per
article 4 of the DSU, mediation, good offices along with conciliation that is required to be
administered by the Director General order article 5 of DSU. Article 7 of the DSU also include
proceedings for arbitration with the review of administration by the board. The procedure also
included a process of appeals. As per the Article 17 is concerned the appellate body has been
denoting permanent body. The powers of the appellate body are concerned with investigation,
conducting findings along with the production of the report which the parties are required to
follow2.
The members belonging to the WTO has reached an agreement with respect to the
Dispute Settlement Understanding (DSU) in the year 1994. As per the rules enumerated in DSU,
the member states of the w t o has the option of engaging into consultations for the purpose of
resolving disputes arising out of the trading activities with respect to the agreements that have
been covered. In case the settlement of the dispute arising from the trading activities has failed
by the use of consultation, there is a WTO panel for the purpose of all the answers successful
dispute resolution hearings3. However, the WTO dispute settlement system requires the members
states to adhere to the process of consultation for the dispute resolution to the extent possible and
prioritise the same. The process of hearing by the panel is only to be resorted to where the
2 Baldwin, Richard. "The World Trade Organization and the future of multilateralism." Journal of Economic
Perspectives 30.1 (2016): 95-116.
3 Allee, Todd, Manfred Elsig, and Andrew Lugg. "The ties between the world trade organization and preferential
trade agreements: A textual analysis." Journal of international economic law 20.2 (2017): 333-363.

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dispute resolution by consultation becomes impossible. In the year 2008 during the month of
January, only 136 of the disputes out of the 369 total disputes has been admitted towards the
panel for hearing purposes. The process of dispute settlement by the WTO operates involving the
parties to the dispute along with third parties to the disputes4. It may also involve several DSB
panels, WTO Secretariat, the arbitrators, appellate body, numerous specialised institutions along
with independent experts. The responsibilities as per the DSU that has been conferred upon the
General Council is generally discharged by it through DSB. The board is composed in a similar
manner as that of the general counsel which contains representatives from all the member states
of the WTO. The responsibility of the administration of the DSU has been conferred upon the
DSB. The board has been concerned with the supervision of the entire process of dispute
settlement5. The board has been authorised for the purpose of establishing panels along with
adopting a panel and preparing reports of appellate body. The DSB has also been authorised for
the maintenance of the surveillance pertaining to implementation of recommendations and
rulings. It has also been made the source of authorisation with respect to suspension pertaining to
obligations as covered under the agreements. The meetings of the DSB are conducted quite often
for the purpose of adhering towards the provided timeframes as inculcated in the DSU6.
In case any member state has been under the contention that the measure undertaken by
any other member states resulted in depriving the former from accessing any benefits that has
been accrued to it as per any of the agreements covered, it has the option of invoking the process
of consultation with that member state who has been alleged to have contravened or infringed
upon rights of the former. The consultation process would be resorted to for a period of 60 days
4 Bolle, Mary Jane. "Overview of labor enforcement issues in free trade agreements." (2016).
5 Bown, Chad P. "Mega‐Regional Trade Agreements and the Future of the WTO." Global Policy 8.1 (2017): 107-
112.
6 Winham, Gilbert R. "The World Trade Organisation: institution-building in the multilateral trade system." Global
Trade. Routledge, 2017. 393-412.

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and after the elapsing of 60 days if the dispute has not been resolved with the process of
consultation, the state bringing the complaint has the option of requesting for the establishment
of the panel for hearing the case7. The respondent does not have any authority to delay or prevent
the applicant to carry out the panel to be established. However the establishment of such a panel
on the application of the applicant can be prevented or delayed if it has been decided by the DSB
with the help of a consensus to delay such a panel from being established. The panel concerned
consist of 3 members who are appointed as ad hoc members with the help of the secretariat. The
panel is authorised to receive submissions in oral or written form from the parties concerned8.
The submissions thus lodged by each of the parties would be investigated and examined by the
panel for making findings and drawing conclusions to present the same to DSB. The proceedings
involved in the dispute resolution system under WTO would be kept confidential. In the
proceedings held in such panels, although private parties has a direct connection but they will not
be allowed to attend or even make submissions separately from the concerned member states.
The disputes concerned can also be said to have arisen from the non violation nullification of the
benefit claims9.
Initially, the panel distributes final version of the report to the parties involved. After the
elapse of two weeks the normal circulates the report to every member belonging to the WTO.
The report then requires adoption by the DSB in a meeting within a period of 60 days after its
circulation. The adoption can be rejected if it has been decided by the DSB with the help of a
consensus to not undertake adoption of the report. The report arising from the dispute may also
7 Howse, Robert. "The World Trade Organization 20 years on: global governance by judiciary." European Journal of
International Law 27.1 (2016): 9-77.
8 Allee, Todd, and Manfred Elsig. "Why do some international institutions contain strong dispute settlement
provisions? New evidence from preferential trade agreements." The Review of International Organizations 11.1
(2016): 89-120.
9 Johns, Leslie, and Krzysztof J. Pelc. "Fear of Crowds in World Trade Organization Disputes: Why Don’t More
Countries Participate?." The Journal of Politics 78.1 (2016): 88-104.

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be halted from being adopted if the party against whom the report has been circulated has given
proper notice with respect to his intention to pursue an appeal10. Any panel report prepared may
be appealed by a party against whom it has been delivered towards standing appellate body.
However, such appeals can only be preferred by a party with respect to issues concerning law
and issues concerning the interpretations of the law that has been developed by the panel. The
appeal thus preferred is required to be heard by 3 of the members belonging to the 7 permanent
member of the body which has been established by the board. This 3 out of the seven permanent
members represent the range of the membership of WTO11. The appellate body members are
required to have a four year term. The individuals involved are required to have a recognised
standing among the legal field along with the international trade. The should not have any
affiliation with any of the governments. The appellate body has the authority to agree with, make
modifications or even reverse the findings in relation to legal aspect provided by the panel along
with the drawn conclusions. However, the time span for the existence of the appeal should not
exceed the period of 60 days. The maximum number of days for which an appeal can stay is a
period of 90 days. Among all other dispute resolution system prevailing in international law, the
judicial processes followed by the WTO for resolving disputes are unique12.
The members belonging to the WTO may present their opinion with respect to the report
released by the appellate body. However, the members does not have the authority to derail it. It
has been inculcated within the DSU that the report delivered by the appellate body is required to
be adopted unconditionally by the board along with the parties. However, in case there has been
a decision arrived by the board within 30 days of the circulation of the report by a consensus, it
10 Merrills, John Graham. International dispute settlement. Cambridge university press, 2017.
11 Kim, In Song, et al. "Firms’ preferences over multidimensional trade policies: Global production chains,
investment protection and dispute settlement mechanisms." PEIO Conference (January 12–14, 2017). Bern. 2016.
12 Bechtel, Michael M., and Thomas Sattler. "What is litigation in the world trade organization worth?."
International Organization 69.2 (2015): 375-403.

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may call off the adoption of the report. However, the time period within which all the process of
establishing the panel along with the consideration of that report delivered by the panel by the
board is to be restricted to a period of 9 months without an appeal being preferred or 12 months
with an appeal being preferred. However this time period can be altered up in the agreement by
the parties pertaining to the dispute13.
However, the members of the WTO are required to give priority to the alternative dispute
resolution methods available for the purpose of resolving the disputes arising between them.
These alternatives include arbitration, conciliation and consultation. The commercial disputes
arising in the international arena generally preferred to be resolved with arbitration. In this
method of dispute resolution, the parties involved in a dispute may appoint a third party for the
purpose of resolving the dispute between them without resorting to litigation14. The authority to
make a choice as to the time, location and appointment of arbitrator along with the rules relating
to the procedure lies with the parties involved. However, the parties are required to make their
choices after giving due regard to the prevailing legal principles. The laws that have been
governing the dispute resolution by way of arbitration are the International Arbitration Act 1974,
UNCTRAL model law on international commercial arbitration, the Washington Convention and
the New York Convention15.
The dispute resolution system followed by the WTO has both advantages along with
disadvantages. As for the weaknesses are concerned, the procedures for the resolution of disputes
followed by the WTO all the has been provided with stringent deadlines but in practice it takes a
considerable span of time for the purpose of resolving the dispute. During this time span dragged
13 Matsushita, Mitsuo, et al. The World Trade Organization: law, practice, and policy. Oxford University Press,
2015.
14 Jones, Kent Albert. Reconstructing the World Trade Organization for the 21st century: an institutional approach.
Oxford University Press, USA, 2015.
15 Rodrik, Dani. "What do trade agreements really do?." Journal of economic perspectives 32.2 (2018): 73-90.

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by the procedural anomaly, the parties to the dispute suffer both economically and with respect
to resources. Moreover in case of inconsistent delivery of Justice the procedure for appeals may
take further time and resources16. During the process of resolving the dispute, there has been no
provision to extend protection to the economic losses and loss to treat interest that has been
occurred to the complainants. Moreover, after the availing of decision by the parties to the
dispute resolution, there has been no compensation available to the complainant who has been
successful in his claim for the losses incurred during the process of dispute settlement. No
reimbursement will also be available to the successful party for the expenses that it has been
incurred in the process of dispute resolution which includes legal fees17. However the success of
this system of dispute resolution is to be assessed as a comparison. In case has been compared
with the dispute resolution system under GATT 1947, it would be regarded as more advanced
and a better system. The quasi-judicial character along with the quasi-automatic character makes
this system of dispute resolution to be efficient in dealing with difficult proceedings. This feature
also provides guarantee towards the members with respect to defending their cases. Moreover
computer other multilateral systems for resolving disputes prevailing in the international legal
arena, the mandatory character and the mechanism of enforcement makes the dispute resolution
system under WTO to be more effective and advanced18.
Conclusion
Hence, it can be concluded that the process of settlement of dispute implemented by the
World Trade Organisation is mainly based upon the dispute settlement board (DSB). The DSB
has the membership similar to that of General Council. The board has been concerned with the
16 McGovern, Edmond. International trade regulation. Vol. 1. Globefield Press, 2018.
17 Elsig, Manfred, and Jappe Eckhardt. "The creation of the multilateral trade court: Design and experiential
learning." World Trade Review 14.S1 (2015): S13-S32.
18 Cottier, Thomas. "The common law of international trade and the future of the World Trade Organization."
(2015): 3-20.

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administration rules and processes of Dispute Settlement Understanding (DSU). the members of
the WTO are required to give priority to the alternative dispute resolution methods available for
the purpose of resolving the disputes arising between them. These alternatives include
arbitration, conciliation and consultation. The commercial disputes arising in the international
arena generally preferred to be resolved with arbitration. In this method of dispute resolution, the
parties involved in a dispute may appoint a third party for the purpose of resolving the dispute
between them without resorting to litigation. However the success of this system of dispute
resolution is to be assessed as a comparison. In case has been compared with the dispute
resolution system under GATT 1947, it would be regarded as more advanced and a better
system. The quasi-judicial character along with the quasi-automatic character makes this system
of dispute resolution to be efficient in dealing with difficult proceedings. This feature also
provides guarantee towards the members with respect to defending their cases.

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Bibliography
"Wto Dispute Resolution System Images - Google Search", Google.Com (Webpage, 2019)
https://www.google.com/search?
q=wto+dispute+resolution+system+images&tbm=isch&source=univ&sa=X&ved=2ahUKEwjm
q5eEjJTlAhUB148KHXKxAAMQsAR6BAgEEAE&biw=1366&bih=657#imgdii=X1QA2yFNe
I8HTM:&imgrc=H3Swr2g59hQw9M:
"Wto Dispute Resolution System Images - Google Search", Google.Com (Webpage, 2019)
<https://www.google.com/search?
q=wto+dispute+resolution+system+images&tbm=isch&source=univ&sa=X&ved=2ahUKEwjm
q5eEjJTlAhUB148KHXKxAAMQsAR6BAgEEAE&biw=1366&bih=657#imgrc=cIGAH263Ng
KpKM:>
Allee, Todd, and Manfred Elsig. "Why do some international institutions contain strong dispute
settlement provisions? New evidence from preferential trade agreements." The Review of
International Organizations 11.1 (2016): 89-120.
Allee, Todd, Manfred Elsig, and Andrew Lugg. "The ties between the world trade organization
and preferential trade agreements: A textual analysis." Journal of international economic law
20.2 (2017): 333-363.
Baldwin, Richard. "The World Trade Organization and the future of multilateralism." Journal of
Economic Perspectives 30.1 (2016): 95-116.
Bechtel, Michael M., and Thomas Sattler. "What is litigation in the world trade organization
worth?." International Organization 69.2 (2015): 375-403.

10BUSINESS LAW
Bolle, Mary Jane. "Overview of labor enforcement issues in free trade agreements." (2016).
Bown, Chad P. "Mega‐Regional Trade Agreements and the Future of the WTO." Global Policy
8.1 (2017): 107-112.
Cottier, Thomas. "The common law of international trade and the future of the World Trade
Organization." (2015): 3-20.
Elsig, Manfred, and Jappe Eckhardt. "The creation of the multilateral trade court: Design and
experiential learning." World Trade Review 14.S1 (2015): S13-S32.
Howse, Robert. "The World Trade Organization 20 years on: global governance by judiciary."
European Journal of International Law 27.1 (2016): 9-77.
Johns, Leslie, and Krzysztof J. Pelc. "Fear of Crowds in World Trade Organization Disputes:
Why Don’t More Countries Participate?." The Journal of Politics 78.1 (2016): 88-104.
Jones, Kent Albert. Reconstructing the World Trade Organization for the 21st century: an
institutional approach. Oxford University Press, USA, 2015.
Kim, In Song, et al. "Firms’ preferences over multidimensional trade policies: Global production
chains, investment protection and dispute settlement mechanisms." PEIO Conference (January
12–14, 2017). Bern. 2016.
Matsushita, Mitsuo, et al. The World Trade Organization: law, practice, and policy. Oxford
University Press, 2015.
McGovern, Edmond. International trade regulation. Vol. 1. Globefield Press, 2018.
Merrills, John Graham. International dispute settlement. Cambridge university press, 2017.

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Rodrik, Dani. "What do trade agreements really do?." Journal of economic perspectives 32.2
(2018): 73-90.
Winham, Gilbert R. "The World Trade Organisation: institution-building in the multilateral trade
system." Global Trade. Routledge, 2017. 393-412.
World Trade Organization. A handbook on the WTO dispute settlement system. Cambridge
University Press, 2017.

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Appendix
19 "Wto Dispute Resolution System Images - Google Search", Google.Com (Webpage, 2019)
<https://www.google.com/search?
q=wto+dispute+resolution+system+images&tbm=isch&source=univ&sa=X&ved=2ahUKEwjmq5eEjJTlAh
UB148KHXKxAAMQsAR6BAgEEAE&biw=1366&bih=657#imgdii=X1QA2yFNeI8HTM:&imgrc=H3Swr2g5
9hQw9M:>

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20
20 "Wto Dispute Resolution System Images - Google Search", Google.Com (Webpage, 2019)
<https://www.google.com/search?
q=wto+dispute+resolution+system+images&tbm=isch&source=univ&sa=X&ved=2ahUKEwjmq5eEjJTlAh
UB148KHXKxAAMQsAR6BAgEEAE&biw=1366&bih=657#imgrc=cIGAH263NgKpKM:>