2 How were disputes settled under the GATT 1947? Articles XXII and XXIII of the GATT 1994Nearly 50 years of dispute settlement under the GATTPositive consensus in the GATT Council to refer a dispute to a Panel, and to adopt a Panel reportVan den Bossche, the Law and Policy of the World Trade Organization, p. 169: Between 1948 and 1994, a total of 132 GATT dispute settlement reports were issued.Possible discussion: Success of dispute settlement under the GATT 1947?HISTORIC DEVELOPMENT OF THE WTO DISPUTE SETTLEMENT SYSTEMThe WTO dispute settlement system is often praised as one of the most important innovations of the Uruguay Round. This should not, however, be misunderstood to mean that the WTO dispute settlement system was a total innovation and that the previous multilateral trading system based on GATT 1947 did not have a dispute settlement system. On the contrary, there was a dispute settlement system under GATT 1947 that evolved quite remarkably over nearly 50 years on the basis of Articles XXII and XXIII of GATT Several of the principles and practices that evolved in the GATT dispute settlement system were, over the years, codified in decisions and understandings of the contracting parties to GATT The current WTO system builds on, and adheres to, the principles for the management of disputes applied under Articles XXII and XXIII of GATT 1947 (Article 3.1 of the DSU).Articles XXII and XXIII and emerging practicesThe rudimentary rules in Article XXIII:2 of GATT 1947 provided that the contracting parties themselves, acting jointly, had to deal with any dispute between individual contracting parties. Accordingly, disputes in the very early years of GATT 1947 were decided by rulings of the Chairman of the GATT Council. Later, they were referred to working parties composed of representatives from all interested contracting parties, including the parties to the dispute. These working parties adopted their reports by consensus decisions. They were soon replaced by panels made up of three or five independent experts who were unrelated to the parties of the dispute. These panels wrote independent reports with recommendations and rulings for resolving the dispute, and referred them to the GATT Council. Only upon approval by the GATT Council did these reports become legally binding on the parties to the dispute. The GATT panels thus built up a body of jurisprudence, which remains important today, and followed an increasingly rules-based approach and juridical style of reasoning in their reports.The contracting parties to GATT 1947 progressively codified and sometimes also modified the emerging procedural dispute settlement practices. The most important pre-Uruguay Round decisions and understandings were:The Decision of 5 April 1966 on Procedures under Article XXIII;The Understanding on Notification, Consultation, Dispute Settlement and Surveillance, adopted on 28 November 1979;The Decision on Dispute Settlement, contained in the Ministerial Declaration of 29 November 1982;The Decision on Dispute Settlement of 30 November 1984. BISD 14S/18. BISD 26S/210. BISD 29S/13. BISD 31S/9.Source: DS Handbook
3 Challenges under the GATT 1947 dispute settlement system Rule of positive consensusReferring a dispute to a panel, adopting a panel report, authorizing countermeasuresRisk of vetoDiplomatic characterYet, good results101 adopted reports / 132 issued reportsEmpirical researchAdopted panel reports within the framework of GATT 1947: / Van den Bossche: The Law and Policy of the World Trade Organization, footnote 2, page 169: “Between 1947 and 1994, a total of 132 GATT dispute settlement report were issued”Some key principles, however, remained unchanged up to the Uruguay Round, the most important being the rule of positive consensus that existed under GATT For example, there needed to be a positive consensus in the GATT Council in order to refer a dispute to a panel. Positive consensus meant that there had to be no objection from any contracting party to the decision. Importantly, the parties to the dispute were not excluded from participation in this decision‑making process. In other words, the respondent could block the establishment of a panel. Moreover, the adoption of the panel report also required a positive consensus, and so did the authorization of countermeasures against a non-implementing respondent. Such actions could also be blocked by the respondent. One might think that such a system could not possibly have worked. Why would a respondent not use its right to block the establishment of a panel if it thought that it might lose the case? Why would the losing party not block the adoption of the panel report? How could a party refrain from using its veto against the authorization of countermeasures, from which it would suffer economically? If domestic judicial systems were to operate on the basis of such a consensus rule, they would probably fail in most instances. Quite surprisingly, this was generally not the experience of the dispute settlement system of GATT Individual respondent contracting parties mostly refrained from blocking consensus decisions and allowed disputes in which they were involved to proceed, even if this was to their short-term detriment. They did so because they had a long-term systemic interest and knew that excessive use of the veto right would result in a response in kind by the others. Accordingly, panels were established and their reports frequently adopted, albeit often with delays (even though the authorization of countermeasures was only granted once).On the basis of empirical research, it has been concluded that the GATT 1947 dispute settlement system brought about solutions satisfying the parties in a large majority of the cases. However, it must be noted that, by their nature, such statistics can only cover complaints that were actually brought. Certainly, there were a significant number of disputes that were never brought before the GATT because the complainant suspected that the respondent would exercise its veto. Thus, the risk of a veto also weakened the GATT dispute settlement system. In addition, such vetoes actually occurred, especially in economically important or politically sensitive areas such as anti-dumping. Finally, there was a deterioration of the system in the 1980s as contracting parties increasingly blocked the establishment of panels and the adoption of panel reports. Even when panel reports were adopted, the risk of one party blocking adoption must often have influenced the panels' rulings. The three panelists knew that their report had also to be accepted by the losing party in order to be adopted. Accordingly, there was an incentive to rule not solely on the basis of the legal merits of a complaint, but to aim for a somewhat "diplomatic" solution by crafting a compromise that would be acceptable to both sides. (“something for everyone”)Source: DS Handbook[...] There was no judicial arm that acted independently under its own authority. Rather, all matters, including dispute resolution, were within the powers of the GATT contracting parties. In a sense, then, the original GATT system was relatively informal, mainly because, at the time, dispute settlement was viewed as much more a matter of diplomacy, rather than a matter of law alone. Over time, this system evolved through practice. The CONTRACTING PARTIES to the GATT delegated the examination of disputes to specialist sub-committees, known, first as working parties, and then later called panels. Gradually, procedures became more formal and panels began to base themselves on the legal rules contained in the GATT and in subsequent agreements, and to build up a body of interpretative guidance for the parties. Dispute settlement was based on an independent examination of particular problems by trade specialists.
4 Structure of the WTO Agreement Marrakesh Agreement Establishingthe World Trade Organization (WTO Agreement)Annex 11A: MTAson goods(GATT + 12)1B: GATS1C: TRIPsAnnex 2DisputeSettlementUnderstandingAnnex 3Trade PolicyReviewMechanismAnnex 4PlurilateralAgreementsPlease note that the covered agreements are illustrated on slide 16 by the same image.
5 DSU builds on Articles XXII and XXIII of the GATT 1947 Article 3.1 of the DSUMembers affirm their adherence...To the principles for the management of disputes applied under Articles XXII and XXIII of GATTAnd the rules and procedures as further elaborated and modified in the DSU
6 Main actors in the WTO Dispute Settlement System Art 2 DSU, The Dispute Settlement Body (DSB)Administers the WTO Dispute Settlement SystemEstablishes panelsAdopts panel and Appellate Body reportsMaintains surveillance of implementationNon-implementation? Authorizes retaliatory measuresThe panel3 – 5 panelists, ad hoc bodyDSB:Article 2 of the DSUAdministration1.The Dispute Settlement Body is hereby established to administer these rules and procedures and, except as otherwise provided in a covered agreement, the consultation and dispute settlement provisions of the covered agreements. Accordingly, the DSB shall have the authority to establish panels, adopt panel and Appellate Body reports, maintain surveillance of implementation of rulings and recommendations, and authorize suspension of concessions and other obligations under the covered agreements. With respect to disputes arising under a covered agreement which is a Plurilateral Trade Agreement, the term "Member" as used herein shall refer only to those Members that are parties to the relevant Plurilateral Trade Agreement. Where the DSB administers the dispute settlement provisions of a Plurilateral Trade Agreement, only those Members that are parties to that Agreement may participate in decisions or actions taken by the DSB with respect to that dispute.2.The DSB shall inform the relevant WTO Councils and Committees of any developments in disputes related to provisions of the respective covered agreements.3.The DSB shall meet as often as necessary to carry out its functions within the time-frames provided in this Understanding.4.Where the rules and procedures of this Understanding provide for the DSB to take a decision, it shall do so by consensus. The DSB shall be deemed to have decided by consensus on a matter submitted for its consideration, if no Member, present at the meeting of the DSB when the decision is taken, formally objects to the proposed decision.Article IV.3 of the WTO AgreementThe General Council shall convene as appropriate to discharge the responsibilities of the Dispute Settlement Body provided for in the Dispute Settlement Understanding. The Dispute Settlement Body may have its own chairman and shall establish such rules of procedure as it deems necessary for the fulfilment of those responsibilities.The Appellate BodyStanding body of 7 members, 4-year termWTO and AB SecretariatAssist panels and the AB
7 How the Dispute Settlement System works The Dispute Settlement Body,All MembersEstablishesNo appeal? DSB adopts the reportDSB adopts the reportsPanelFunctions and composition of the DSBThe General Council discharges its responsibilities under the DSU through the DSB (Article IV:3 of the WTO Agreement). Like the General Council, the DSB is composed of representatives of all WTO Members. These are governmental representatives, in most cases diplomatic delegates who reside in Geneva (where the WTO is based) and who belong to either the trade or the foreign affairs ministry of the WTO Member they represent. As civil servants, they receive instructions from their capitals on the positions to take and the statements to make in the DSB. As such, the DSB is a political body.The DSB is responsible for administering the DSU, i.e. for overseeing the entire dispute settlement process.The DSB has the authority to establish panels, adopt panel and Appellate Body reports, maintain surveillance of implementation of rulings and recommendations and authorize the suspension of obligations under the covered agreements (Article 2.1 of the DSU). A later chapter on the stages of the dispute settlement procedure will explain exactly what all these actions mean. In less technical terms, the DSB is responsible for the referral of a dispute to adjudication (establishing a panel); for making the adjudicative decision binding (adopting the reports); generally, for supervising the implementation of the ruling; and for authorizing "retaliation" when a Member does not comply with the ruling.The DSB meets as often as is necessary to adhere to the time‑frames provided for in the DSU (Article 2.3 of the DSU). In practice, the DSB usually has one regular meeting per month. When a Member so requests, the Director-General convenes additional special meetings. The staff of the WTO Secretariat provides administrative support for the DSB (Article 27.1 of the DSU).Role of the chairpersonThe DSB has its own chairperson, who is usually one of the Geneva-based ambassadors, i.e. a chief of mission of a Member's permanent representation to the WTO (Article IV:3 of the WTO Agreement). The chairperson is appointed by a consensus decision of the WTO Members. The chairperson of the DSB has mainly procedural functions, that is, passing information to the Members, chairing the meeting, calling up and introducing the items on the agenda, giving the floor to delegations wishing to speak, proposing and, if taken, announcing the requested decision. The chairperson of the DSB is also the addressee of the Members’ communications to the DSB.In addition, the chairperson has several responsibilities in specific situations. For instance, the chairperson determines, upon request by a party and in consultation with the parties to the dispute, the rules and procedures in disputes involving several covered agreements with conflicting "special or additional rules and procedures"  if the parties cannot agree on the procedure within 20 days (Article 1.2 of the DSU). The chairperson can also be authorized by the DSB to draw up special terms of reference pursuant to Article 7.3 of the DSU. The DSB chairperson is further entitled to extend, after consultation with the parties, the time-period for consultations involving a measure taken by a developing country Member, if the parties cannot agree that the consultations have concluded (Article 12.10 of the DSU). In dispute settlement cases involving a least-developed country Member, the least-developed country can request the DSB chairperson to offer his/her good offices, conciliation and mediation before the case goes to a panel (Article 24.2 of the DSU). Lastly, the DSB chairperson is to be consulted before the Director-General determines the composition of the panel under Article 8.7 of the DSU, and before the Appellate Body adopts or amends its Working Procedures (Article 17.9 of the DSU).  See above the section on A single set of rules and procedures on page 14. See further below in the section on the Composition of the panel on page 44.Source: DS HandbookReportAppellate Body
8 Novelties in the DSU Standing Appellate Body DSB establishes panels and adopts panel reports by negative or reverse consensusDifference from dispute settlement under the GATT 1947?Under the GATT 1947: positive consensusSurveillance of implementation
9 Recourse to WTO dispute settlement: Who? Only WTO Members (153 as of November 2009)NOT NGOs, individuals (although may lobby governments – indirect access)Right to bring claimsAppellate Body:No DSU provision requiring “legal interest”Members have a broad discretion whether or not to bring a caseWho can use the DS system? The only participants in the dispute settlement system are the Member governments of the WTO, which can take part either as parties or as third parties. The WTO Secretariat, WTO observer countries, other international organizations, and regional or local governments are not entitled to initiate dispute settlement proceedings in the WTO. The DSU sometimes refers to the Member bringing the dispute as the "complaining party" or the "complainant". No equivalent short term is used for the "party to whom the request for consultations is addressed". The DSU sometimes also speaks of "Member concerned". In practice, the terms "respondent" or "defendant" are commonly used; this guide mostly uses the term "respondent". [...] private individuals or companies do not have direct access to the dispute settlement system, even if they may often be the ones (as exporters or importers) most directly and adversely affected by the measures allegedly violating the WTO Agreement. The same is true of other non-governmental organizations with a general interest in a matter before the dispute settlement system. They, too, cannot initiate WTO dispute settlement proceedings. Of course, these organizations can, and often do, exert influence or even pressure on the government of a WTO Member with respect to the triggering of a dispute. Indeed, several WTO Members have formally adopted internal legislation under which private parties can petition their governments to bring a WTO dispute. There are divergent views among Members on whether non-governmental organizations may play a role in WTO dispute settlement proceedings, for example, by filing amicus curiae submissions with WTO dispute settlement bodies. According to WTO jurisprudence, panels and the Appellate Body have the discretion to accept or reject these submissions, but are not obliged to consider them.See also Appellate Body Report on US – Shrimp, WT/DS58/AB/R, para. 101:It may be well to stress at the outset that access to the dispute settlement process of the WTO is limited to Members of the WTO. This access is not available, under the WTO Agreement and the covered agreements as they currently exist, to individuals or international organizations, whether governmental or non-governmental. Only Members may become parties to a dispute of which a panel may be seized, and only Members "having a substantial interest in a matter before a panel" may become third parties in the proceedings before that panel. See Articles 4, 6, 9 and 10 of the DSU.StandingIn EC – Bananas III (para. 132), the Appellate Body considered that there is no DSU requirement for a complainant to have a "legal interest" as a prerequisite for requesting the establishment of a panel in a dispute. Indeed, complainants have already been allowed to bring complaints against violations of the WTO Agreement, even though such violations were to the detriment of other Members (Appellate Body Report, US – Section 211 Omnibus Appropriations Act, paras , 309; Appellate Body Report, US – Line Pipe, paras , ) However, the issue of standing (the right to bring a complaint) was not specifically raised in those disputes. In EC – Bananas III, (paras ) where the respondent specifically challenged the complainant's standing to bring a violation claim under GATT 1994, the Appellate Body was satisfied with the fact that the complainant was a producer and potential exporter of the product in question. Moreover, the claims in that case were interwoven with claims under other covered agreements, for which the complainant's standing had not been challenged. The Appellate Body also relied on a Member's interest in enforcing WTO rules due to the possible direct or indirect economic effects of a WTO violation.Appellate Body Report on EC – Bananas III, WT/DS27/AB/R, paras. 132, 135:132. [...] neither Article 3.3 nor 3.7 of the DSU nor any other provision of the DSU contain any explicit requirement that a Member must have a ‘legal interest’ as a prerequisite for requesting a panel". We do not accept that the need for a "legal interest" is implied in the DSU or in any other provision of the WTO Agreement. It is true that under Article 4.11 of the DSU, a Member wishing to join in multiple consultations must have "a substantial trade interest", and that under Article 10.2 of the DSU, a third party must have "a substantial interest" in the matter before a panel. But neither of these provisions in the DSU, nor anything else in the WTO Agreement, provides a basis for asserting that parties to the dispute have to meet any similar standard. Yet, we do not believe that this is dispositive of whether, in this case, the United States has "standing" to bring claims under the GATT Panel Reports, para Standing, or locus standi, is generally understood to mean the right to bring an action in a dispute. See B. Garner, A Dictionary of Modern Legal Usage (Oxford University Press, 1987), p. 347; L.B. Curzon, A Dictionary of Law, 4th ed. (Pitman Publishing, 1993), p Article 1.1 of the DSU states that: "The rules and procedures of this Understanding shall apply to disputes brought pursuant to the consultation and dispute settlement provisions of the agreements listed in Appendix 1 to this Understanding ...". (emphasis added)135. [...] we believe that a Member has broad discretion in deciding whether to bring a case against another Member under the DSU. The language of Article XXIII:1 of the GATT 1994 and of Article 3.7 of the DSU suggests, furthermore, that a Member is expected to be largely self-regulating in deciding whether any such action would be "fruitful".As of January 2010:Complaints notified to the WTO: 402. Panel Reports adopted: 122 (This category does not include the reports of Article 21.5 compliance panels, which are 27 to date). (AB Reports adopted: 77).
10 Recourse to WTO dispute settlement: Regarding what? Appendix 1 to the DSUDisputes under the following agreements (so-called covered agreements, “CA”), must be resolved pursuant to the DSUWTO AgreementMultilateral Trade Agreements (GATT other agreements on trade in goods)GATSTRIPSDSU(Plurilateral Trade Agreements)The "covered agreements"The WTO dispute settlement system applies to all disputes brought under the WTO agreements listed in Appendix 1 of the DSU (Article 1.1 of the DSU). In the DSU, these agreements are referred to as the "covered agreements". The DSU itself and the WTO Agreement (in the sense of Articles I to XVI) are also listed as covered agreements. In many cases brought to the dispute settlement system, the complainant invokes provisions belonging to more than one covered agreement.The covered agreements also include the so-called Plurilateral Trade Agreements contained in Annex 4 to the WTO Agreement (Appendix 1 of the DSU), which are called "plurilateral" as opposed to "multilateral" because not all WTO Members have signed them. However, the applicability of the DSU to those Plurilateral Trade Agreements is subject to the adoption of a decision by the parties to each of these agreements setting out the terms for the application of the DSU to the individual agreement, including any special and additional rules or procedures (Appendix 1 of the DSU). The Committee on Government Procurement has taken such a decision, but not the Committee on Trade in Civil Aircraft for the Agreement on Trade in Civil Aircraft. Two other plurilateral agreements, the International Dairy Agreement and the International Bovine Meat Agreement, are no longer in force.
11 Integrated system for Dispute Settlement Article 23 of the DSU ... A single set of rules for all disputesArticle 1.2 of the DSU, Appendix 2 to the DSU … Only a few special or additional rules in the covered agreements which prevail over the DSU. For example: Article 4.4 of the SCM Agreement ... Consultation period 30 days rather than the standard 60 daysSee Appellate Body Report on Guatemala – Cement I, WT/DS60/AB/R, para. 64:Article 1.1 of the DSU establishes an integrated dispute settlement system which applies to all of the agreements listed in Appendix 1 to the DSU (the "covered agreements"). The DSU is a coherent system of rules and procedures for dispute settlement which applies to "disputes brought pursuant to the consultation and dispute settlement provisions of" the covered agreements. DSU, Article 1.1.A single set of rules and proceduresBy applying to all these covered agreements, the DSU provides for a coherent and integrated dispute settlement system. It puts an end to the former "GATT à la carte", where each agreement not only had a different set of signatories but also separate dispute settlement rules. Subject to certain exceptions, the DSU is applicable in a uniform manner to disputes under all the WTO agreements. In some instances, there are so‑called "special and additional rules and procedures" on dispute settlement contained in the covered agreements (Article 1.2 and Appendix 2 of the DSU). These are specific rules and procedures "designed to deal with the particularities of disputes under a specific covered agreement". They take precedence over the rules in the DSU to the extent that there is a difference between the rules and procedures of the DSU and the special and additional rules and procedures (Article 1.2 of the DSU). Such a "difference" or conflict between the DSU and the special rules exists only "where the provisions of the DSU and the special or additional rules and procedures of a covered agreement cannot be read as complementing each other" because they are mutually inconsistent such that adherence to the one provision would lead to a violation of the other provision. Only in that case and to that extent, do the special additional provisions prevail and do the DSU rules not apply.  Notification Under Appendix 1 of the DSU, Communication from the chairman of the Committee on Government Procurement, WT/DSB/7, 12 July 1996 See below the section on Dispute settlement under the Tokyo Round "codes" on page 17. Appellate Body Report, Guatemala – Cement I, paras. 65 and 66.APPENDIX 2SPECIAL OR ADDITIONAL RULES AND PROCEDURESCONTAINED IN THE COVERED AGREEMENTSAgreement Rules and ProceduresAgreement on the Application of Sanitaryand Phytosanitary Measures 11.2Agreement on Textiles and Clothing 2.14, 2.21, 4.4, 5.2, 5.4, 5.6, 6.9,6.10, 6.11, 8.1 through 8.12Agreement on Technical Barriers to Trade 14.2 through 14.4, Annex 2Agreement on Implementation of Article VIof GATT through 17.7Agreement on Implementation of Article VIIof GATT through 19.5, Annex II.2(f), 3, 9, 21Agreement on Subsidies and Countervailing Measures 4.2 through 4.12, 6.6, 7.2 through 7.10, 8.5,footnote 35, 24.4, 27.7, Annex VGeneral Agreement on Trade in Services XXII:3, XXIII:3Annex on Financial Services 4Annex on Air Transport Services 4Decision on Certain Dispute Settlement Procedures for the GATS 1 through 5An example of an additional rule: Article 11.2 of the SPS AgreementConsultations and Dispute Settlement2. In a dispute under this Agreement involving scientific or technical issues, a panel should seek advice from experts chosen by the panel in consultation with the parties to the dispute. To this end, the panel may, when it deems it appropriate, establish an advisory technical experts group, or consult the relevant international organizations, at the request of either party to the dispute or on its own initiative.
12 Nature Compulsory jurisdiction Exclusive jurisdiction Members obliged to bring disputes under the Covered Agreements to WTO dispute settlementAccession: Consent to accept jurisdictionExclusive jurisdictionNo other foraNo unilateral actionArticle 23 of the DSUCompulsory jurisdictionThe dispute settlement system is compulsory. All WTO Members are subject to it, as they have all signed and ratified the WTO Agreement as a single undertaking (meaning that the WTO Agreement had to be signed in its totality (except for plurilateral agreements) and thus signatories were not allowed to sign only individual parts of the entire package) of which the DSU is a part. The DSU subjects all WTO Members to the dispute settlement system for all disputes arising under the WTO Agreement. Therefore, unlike other systems of international dispute resolution, there is no need for the parties to a dispute to accept the jurisdiction of the WTO dispute settlement system in a separate declaration or agreement. This consent to accept the jurisdiction of the WTO dispute settlement system is already contained in a Member's accession to the WTO. As a result, every Member enjoys assured access to the dispute settlement system and no responding Member may escape that jurisdiction.Exclusive jurisdictionBy mandating recourse to the multilateral system of the WTO for the settlement of disputes, Article 23 of the DSU not only excludes unilateral action, it also precludes the use of other fora for the resolution of a WTO‑related dispute.Source: DS Handbook
13 Objectives Article 3.2 of the DSU Security and predictability in international tradePreserving Members’ rights and obligationsClarifying the existing provisions of the CAProviding security and predictability to the multilateral trading systemA central objective of the WTO dispute settlement system is to provide security and predictability to the multilateral trading system (Article 3.2 of the DSU). Although international trade is understood in the WTO as the flow of goods and services between Members, such trade is typically not conducted by States, but rather by private economic operators. These market participants 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. 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 Agreement. By reinforcing the rule of law, the dispute settlement system makes the trading system more secure and predictable. Where non‑compliance with the WTO Agreement has been alleged by a WTO Member, the dispute settlement system provides for a relatively rapid resolution of the matter through an independent ruling that must be implemented promptly, or the non-implementing Member will face possible trade sanctions.Preserving the rights and obligations of WTO MembersTypically, a dispute arises when one WTO Member adopts a trade policy measure that one or more other Members consider to be inconsistent with the obligations set out in the WTO Agreement. In such a case, any Member that feels aggrieved is entitled to invoke the procedures and provisions of the dispute settlement system in order to challenge that measure.If the parties to the dispute do not manage to reach a mutually agreed solution, the complainant is guaranteed a rules-based procedure in which the merits of its claims will be examined by an independent body (panels and the Appellate Body). If the complainant prevails, the desired outcome is to secure the withdrawal of the measure found to be inconsistent with the WTO Agreement. Compensation and countermeasures (the suspension of obligations) are available only as secondary and temporary responses to a contravention of the WTO Agreement (Article 3.7 of the DSU).Thus, the dispute settlement system provides a mechanism through which WTO Members can ensure that their rights under the WTO Agreement can be enforced. This system is equally important from the perspective of the respondent whose measure is under challenge, since it provides a forum for the respondent to defend itself if it disagrees with the claims raised by the complainant. In this way, the dispute settlement system serves to preserve the Members' rights and obligations under the WTO Agreement (Article 3.2 of the DSU). The rulings of the bodies involved (the DSB, the Appellate Body, panels and arbitrations) are intended to reflect and correctly apply the rights and obligations as they are set out in the WTO Agreement. They must not change the WTO law that is applicable between the parties or, in the words of the DSU, add to or diminish the rights and obligations provided in the WTO agreements (Articles 3.2 and 19.2 of the DSU).Clarification of rights and obligations through interpretationThe precise scope of the rights and obligations contained in the WTO Agreement is not always evident from a mere reading of the legal texts. Legal provisions are often drafted in general terms so as to be of general applicability and to cover a multitude of individual cases, not all of which can be specifically regulated. Whether the existence of a certain set of facts gives rise to a violation of a legal requirement contained in a particular provision is, therefore, a question that is not always easy to answer. In most cases, the answer can be found only after interpreting the legal terms contained in the provision at issue.In addition, legal provisions in international agreements often lack clarity because they are compromise formulations resulting from multilateral negotiations. The various participants in a negotiating process often reconcile their diverging positions by agreeing to a text that can be understood in more than one way so as to satisfy the demands of different domestic constituents. The negotiators may thus understand a particular provision in different and opposing ways.For those reasons, as in any legal setting, individual cases often require an interpretation of the pertinent provisions. One might think that such an interpretation cannot occur in WTO dispute settlement proceedings because Article IX:2 of the WTO Agreement provides that the Ministerial Conference and the General Council of the WTO have the "exclusive authority to adopt interpretations" of the WTO Agreement. However, the DSU expressly states that the dispute settlement system is intended to clarify the provisions of the WTO Agreement "in accordance with customary rules of interpretation of public international law" (Article 3.2 of the DSU).The DSU, therefore, recognizes the need to clarify WTO rules and mandates that this clarification take place pursuant to customary rules of interpretation. In addition, Article 17.6 of the DSU implicitly recognizes that panels may develop legal interpretations. The "exclusive authority" of Article IX:2 of the WTO Agreement must therefore be understood as the possibility to adopt "authoritative" interpretations that are of general validity for all WTO Members – unlike interpretations by panels and the Appellate Body, which are applicable only to the parties and to the subject matter of a specific dispute. Accordingly, the DSU mandate to clarify WTO rules is without prejudice to the rights of Members to seek authoritative interpretations under Article IX:2 of the WTO Agreement (Article 3.9 of the DSU).Source: DS Handbook
14 Outcome Article 3.7 of the DSU Positive solution to a dispute Preferred outcome: Mutually acceptable solutionWithdrawal of measures inconsistent with thecovered agreementsMutually agreed solutionsThe DSU expresses a preference for the parties to settle their disputes through mutually agreed solutions (Article 3.7 of the DSU). However, unlike many other judicial systems, the DSU does not allow the parties to settle their dispute on whatever terms they wish. Solutions mutually acceptable to the parties to the dispute must also be consistent with the WTO Agreement and must not nullify or impair benefits accruing under the agreement to any other Member (Articles 3.5 and 3.7 of the DSU). If the matter has been formally raised in a request for consultations , the mutually agreed solutions must be notified to the DSB and the relevant Councils and Committees (Article 3.6 of the DSU). This is meant to inform the other WTO Members and to give them an opportunity to raise whatever concern they may have with regard to the settlement. Implicit in these rules is an acknowledgement of the danger that the parties to a dispute might be tempted to settle on terms that are detrimental to a third Member not involved in the dispute, or in a way that is not entirely consistent with WTO law. Mutually agreed solutions must therefore be notified to the DSB with sufficient information for other Members.Source: DS Handbook
15 ...and if no mutually agreed solution reached Panel proceedings(Appellate Body review)Inconsistent measures...WithdrawalCompensation / Suspension of concessionsMeasure
16 Adoption of report by the DSB Main StagesConsultations60 daysGood offices,conciliation andmediationpossible at anymomentPanel review6 – 9 monthsAB review60 – 90 daysAdoption of report by the DSBImplementation
17 406 requests for consultations Article 4 of the DSUDiplomatic method of settling the disputeConfidential – No intervention by the Secretariat“Without prejudice to the rights of any Member in further legal proceedings”As of April 2010:406 requests for consultations!
18 Third parties joining consultations Article 4.11 of the DSURequest filed under Article XXII of the GATTSubstantial trade interestNotification to the consulting Parties and the DSBWithin 10 days of the circulation of the original request (WT/DSXXX/1)Respondent decides:Substantial interest? No review, but the Member can separately request consultationsDSB informed about the decision to acceptThird Parties joining consultations:A WTO Member that is neither the complainant nor the respondent may be interested in the matters the parties to a dispute are discussing in their consultations. There are various reasons for such an interest: for example, that other Member may have a trade interest and so feels similarly aggrieved by the challenged measure; it may, on the contrary, benefit from that measure; or it may be concerned about the challenge because it maintains a measure similar to that of the respondent. The Member in question may also have an interest in being present at discussions on any mutually agreeable solution because such a solution may affect its interests.Such other Member may request to join consultations if it has a substantial trade interest in the matter being discussed and if consultations were requested pursuant to Article XXII:1 of GATT 1994, Article XXII:1 of GATS or the corresponding provisions of the other covered agreements. The request must be addressed to the consulting Members and the DSB within ten days after the date of the circulation of the original request for consultations. The responding Member must also agree that the claim of substantial trade interest is well founded. If the respondent disagrees, there is no recourse through which the interested Member can impose its presence at the consultations, no matter how legitimate the invoked substantial trade interest may be. 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.  Requests to be joined in consultations are in almost all cases submitted to the DSB.Source: DS HandbookConsultations under Art. XXIII GATT1994Argentina – Peach Safeguards, WT/DS238; Australia – Leather, WT/DS126Australia – Salmon, WT/DS18; Brazil – Coconut, WT/DS22Canada – Aircraft II, WT/DS222; Canada – Autos, WT/DS139, WT/DS142Canada – Periodicals, WT/DS31; Chile – Agricultural Products (Price Band), WT/DS207EC – Bananas, WT/DS27; EC – Bed Linen, WT/DS141EC – Commercial Vessels, WT/DS301; EC – Pipe Fittings, WT/DS219EC – Poultry, WT/DS69; EC – Tariff Preferences, WT/DS246Egypt – Rebar, WT/DS211; Japan – Agricultural Products, WT/DS76Japan – Apples, WT/DS245; Japan – Film, WT/DS44Japan – Laver Quotas, WT/DS323; Korea – Commercial Vessels, WT/DS273Korea – Dairy Safeguards, WT/DS98; Mexico – HFCS, WT/DS132Mexico – Olive Oil CVD, WT/DS341; Mexico – Steel Pipes and Tubes AD Duties, WT/DS331Mexico – Telecoms, WT/DS204; Turkey – Textiles, WT/DS34US – 1916 Act (EC), WT/DS136; US – Cotton Yarn, WT/DS192US – DRAMS, WT/DS99; US – FSC, WT/DS108US – Section 211 ("Havana Club"), WT/DS211; US – Sheet/Plate from Korea, WT/DS179US – Shirts and Blouses, WT/DS33; US – Textiles Rules of Origin, WT/DS243; US – Underwear, WT/DS24
19 Consultations according to the Covered Agreement invoked As of January 2010
21 Panel establishment Article 6 of the DSU Establishment of a panelEstablished by the DSB by negative consensus (2nd DSB meeting, defendant cannot block ( Article 6.1 of the DSU)Strict requirements for the request for the establishment of a panel (Article 6.2 of the DSU) Article 6 of the DSUMatter not resolved in consultations?
22 Request for the establishment of a panel Form?In writingTo whom?Addressed to the DSBIndicate whether consultations were heldIdentify the specific measures at issueBrief summary of the legal basis (claims)Content?Article 6.2 of the DSU and specific dispute settlement provisions of the CAAppellate Body Report on Korea - Dairy, WT/DS98/AB/R, para. 120:When parsed into its constituent parts, Article 6.2 may be seen to impose the following requirements. The request must: (i) be in writing; (ii) indicate whether consultations were held; (iii) identify the specific measures at issue; and (iv) provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly. In its fourth requirement, Article 6.2 demands only a summary – and it may be a brief one – of the legal basis of the complaint; but the summary must, in any event, be one that is "sufficient to present the problem clearly". It is not enough, in other words, that "the legal basis of the complaint" is summarily identified; the identification must "present the problem clearly".Whether consultations were held …Panel Report on Brazil – Desiccated Coconut, WT/DS22/R, para. 290:The Philippines' request for establishment of a panel clearly fulfils the first requirement of Article 6.2, by indicating the Philippines' view that consultations were not held because Brazil refused to consult [...]Appellate Body Report on Mexico – Corn Syrup, WT/DS132/AB/RW, para. 70:In assessing the importance of the obligation "to indicate whether consultations were held", we observe that the requirement will be satisfied by the inclusion, in the request for establishment of a panel, of a statement as to whether consultations occurred or not. The purpose of the requirement seems to be primarily informational – to inform the DSB and Members as to whether consultations took place. [...]Measures?Panel Report on Japan – Alcohol, WT/DS8/R, WT/DS10/R, para. 6.5:The Panel first turned to the United States' claim with respect to the Japanese Taxation Special Measures Law. The Panel noted that Japan argued that the claim of the United States is not part of the terms of reference of the Panel. The Panel further noted that its terms of reference, following from Articles 7 and 11 DSU, are circumscribed in WT/DS8/6, WT/DS10/6 and WT/DS11/3. The Panel noted that no mention of the Japanese Taxation Special Measures Law is included in WT/DS8/6, WT/DS10/6 and WT/DS11/3. The Panel concluded that its terms of reference do not permit it to entertain the claim of the United States with respect to the Japanese Taxation Special Measures Law and it proceeded, therefore, to examine the other claims.Claims?Appellate Body Report on Korea – Dairy, WT/DS98/AB/R, para. 124:Identification of the treaty provisions claimed to have been violated by the respondent is always necessary both for purposes of defining the terms of reference of a panel and for informing the respondent and the third parties of the claims made by the complainant; such identification is a minimum prerequisite if the legal basis of the complaint is to be presented at all. But it may not always be enough [...]. See Appellate Body Report, Brazil – Desiccated Coconut, supra, footnote 21, p. 22; Appellate Body Report, European Communities – Bananas, supra, footnote 13, paras. 145 and 147; and Appellate Body Report, India – Patents, supra, footnote 21, paras. 89, 92 and 93.Appellate Body Report on US – Oil Country Tubular Goods Sunset Reviews, WT/DS268/AB/R, para. 162:[...] in order for a panel request to "present the problem clearly", it must plainly connect the challenged measure(s) with the provision(s) of the covered agreements claimed to have been infringed, so that the respondent party is aware of the basis for the alleged nullification or impairment of the complaining party's benefits. Only by such connection between the measure(s) and the relevant provision(s) can a respondent "know what case it has to answer, and ... begin preparing its defence" .Appellate Body Report, Thailand – H-Beams, para. 88.Legal basis?Distributedto Members as document WT/DSXXX/X
23 Rationale for precision in the request Measure 1Panel requestDefines measures + claims …Which form the panel’s mandate …Appellate Body Report on Brazil – Desiccated Coconut, WT/DS22/AB/R, pages 21-22:A panel's terms of reference are important for two reasons. First, terms of reference fulfil an important due process objective -- they give the parties and third parties sufficient information concerning the claims at issue in the dispute in order to allow them an opportunity to respond to the complainant's case. Second, they establish the jurisdiction of the panel by defining the precise claims at issue in the dispute.We agree, furthermore, with the conclusions expressed by previous panels under the GATT 1947, as well as under the Tokyo Round SCM Code and the Tokyo Round Anti-dumping Code, that the "matter" referred to a panel for consideration consists of the specific claims stated by the parties to the dispute in the relevant documents specified in the terms of reference. We agree with the approach taken in previous adopted panel reports that a matter, which includes the claims composing that matter, does not fall within a panel’s terms of reference unless the claims are identified in the documents referred to or contained in the terms of reference. United States - Denial of Most-Favoured-Nation Treatment as to Non-Rubber Footwear from Brazil, BISD 39S/128, adopted 19 June 1992, para. 6.2; EC - Imposition of Anti‑dumping Duties on Imports of Cotton Yarn from Brazil, ADP/137, adopted 30 October 1995, para. 456; United States - Imposition of Countervailing Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway, SCM/153, adopted 28 April 1994, para. 212; United States - Imposition of Anti-Dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway, ADP/87, adopted April 1994, para. 336.Appellate Body Report on EC – Bananas III, WT/DS27/AB/R, para. 142:We recognize that a panel request will usually be approved automatically at the DSB meeting following the meeting at which the request first appears on the DSB's agenda. As a panel request is normally not subjected to detailed scrutiny by the DSB, it is incumbent upon a panel to examine the request for the establishment of the panel very carefully to ensure its compliance with both the letter and the spirit of Article 6.2 of the DSU. It is important that a panel request be sufficiently precise for two reasons: first, it often forms the basis for the terms of reference of the panel pursuant to Article 7 of the DSU; and, second, it informs the defending party and the third parties of the legal basis of the complaint. DSU, Article 6.1.Appellate Body Report on India – Patents (US), WT/DS50/AB/R, para. 92:The jurisdiction of a panel is established by that panel's terms of reference, which are governed by Article 7 of the DSU. A panel may consider only those claims that it has the authority to consider under its terms of reference. A panel cannot assume jurisdiction that it does not have.Appellate Body Report on US – Carbon Steel, WT/DS213/AB/R, paras :125. There are, therefore, two distinct requirements, namely identification of the specific measures at issue, and the provision of a brief summary of the legal basis of the complaint (or the claims). Together, they comprise the "matter referred to the DSB", which forms the basis for a panel's terms of reference under Article 7.1 of the DSU. Appellate Body Report, Guatemala – Cement I, paras126. The requirements of precision in the request for the establishment of a panel flow from the two essential purposes of the terms of reference. First, the terms of reference define the scope of the dispute. Secondly, the terms of reference, and the request for the establishment of a panel on which they are based, serve the due process objective of notifying the parties and third parties of the nature of a complainant's case.  When faced with an issue relating to the scope of its terms of reference, a panel must scrutinize carefully the request for establishment of a panel "to ensure its compliance with both the letter and the spirit of Article 6.2 of the DSU." 127. As we have said previously, compliance with the requirements of Article 6.2 must be demonstrated on the face of the request for the establishment of a panel. Defects in the request for the establishment of a panel cannot be "cured" in the subsequent submissions of the parties during the panel proceedings.  Nevertheless, in considering the sufficiency of a panel request, submissions and statements made during the course of the panel proceedings, in particular the first written submission of the complaining party, may be consulted in order to confirm the meaning of the words used in the panel request and as part of the assessment of whether the ability of the respondent to defend itself was prejudiced.  Moreover, compliance with the requirements of Article 6.2 must be determined on the merits of each case, having considered the panel request as a whole, and in the light of attendant circumstances. Appellate Body Report, Brazil – Dessicated Coconut, at See also, Appellate Body Report, EC – Bananas III, para. 142.Appellate Body Report, EC – Bananas III, para. 142.Ibid., para. 143.See, for example, Appellate Body Report, Korea – Dairy, para. 127; Appellate Body Report, Thailand – H-Beams, para.95.Appellate Body Report, Korea – Dairy, parasJurisdiction + due process …
24 First element: Identify the measure(s) at issue Definition of a measureAB: “Any act or omission attributable to a WTO Member can be a measure of that Member for the purposes of dispute settlement proceedings”Measures may take the form of...Laws, regulations, administrative instructions, specific application of laws etc (tariffs, quotas, anti-dumping/CVD measures, safeguards ...)Appellate Body Report on US – Corrosion-Resistant Steel Sunset Review, WT/DS244/AB/R, paras. 81, 82:81. We first examine whether there is any basis for holding that non-mandatory measures cannot, as such, be subject to dispute settlement under the Anti-Dumping Agreement. In so doing, we start with the concept of "measure". Article 3.3 of the DSU refers to "situations in which a Member considers that any benefits accruing to it directly or indirectly under the covered agreements are being impaired by measures taken by another Member". (emphasis added) This phrase identifies the relevant nexus, for purposes of dispute settlement proceedings, between the "measure" and a "Member". In principle, any act or omission attributable to a WTO Member can be a measure of that Member for purposes of dispute settlement proceedings. The acts or omissions that are so attributable are, in the usual case, the acts or omissions of the organs of the state, including those of the executive branch.82. In addition, in GATT and WTO dispute settlement practice, panels have frequently examined measures consisting not only of particular acts applied only to a specific situation, but also of acts setting forth rules or norms that are intended to have general and prospective application. In other words, instruments of a Member containing rules or norms could constitute a "measure", irrespective of how or whether those rules or norms are applied in a particular instance. This is so because the disciplines of the GATT and the WTO, as well as the dispute settlement system, are intended to protect not only existing trade but also the security and predictability needed to conduct future trade. This objective would be frustrated if instruments setting out rules or norms inconsistent with a Member's obligations could not be brought before a panel once they have been adopted and irrespective of any particular instance of application of such rules or norms. It would also lead to a multiplicity of litigation if instruments embodying rules or norms could not be challenged as such, but only in the instances of their application. Thus, allowing claims against measures, as such, serves the purpose of preventing future disputes by allowing the root of WTO-inconsistent behaviour to be eliminated.Appellate Body Report on US – Oil Country Tubular Goods Sunset Reviews, WT/DS268/AB/R, paragraph 187We note the argument of the United States that the SPB is not a legal instrument under United States law. This argument, however, is not relevant to the question before us. The issue is not whether the SPB is a legal instrument within the domestic legal system of the United States, but rather, whether the SPB is a measure that may be challenged within the WTO system. The United States has explained that, within the domestic legal system of the United States, the SPB does not bind the USDOC and that the USDOC "is entirely free to depart from [the] SPB at any time". However, it is not for us to opine on matters of United States domestic law. Our mandate is confined to clarifying the provisions of the WTO Agreement and to determining whether the challenged measures are consistent with those provisions. As noted by the United States, in US – Corrosion-Resistant Steel Sunset Review, the Appellate Body indicated that "acts setting forth rules or norms that are intended to have general and prospective application" are measures subject to WTO dispute settlement. We disagree with the United States' application of these criteria to the SPB. In our view, the SPB has normative value, as it provides administrative guidance and creates expectations among the public and among private actors. It is intended to have general application, as it is to apply to all the sunset reviews conducted in the United States. It is also intended to have prospective application, as it is intended to apply to sunset reviews taking place after its issuance. Thus, we confirm—once again—that the SPB, as such, is subject to WTO dispute settlement.Appellate Body Report on EC – Computer Equipment, WT/DS62AB/R, WT/DS67/AB/R, paras. 65, 67, 68, 70:65. We consider that "measures" within the meaning of Article 6.2 of the DSU are not only measures of general application, i.e., normative rules, but also can be the application of tariffs by customs authorities. Since the request for the establishment of a panel explicitly refers to the application of tariffs on LAN equipment and PCs with multimedia capability by customs authorities in the European Communities, we agree with the Panel that the measures in dispute were properly identified in accordance with the requirements of Article 6.2 of the DSU.67. We note that Article 6.2 of the DSU does not explicitly require that the products to which the "specific measures at issue" apply be identified. However, with respect to certain WTO obligations, in order to identify "the specific measures at issue", it may also be necessary to identify the products subject to the measures in dispute.68. LAN equipment and PCs with multimedia capacity are both generic terms. Whether these terms are sufficiently precise to "identify the specific measure at issue" under Article 6.2 of the DSU depends, in our view, upon whether they satisfy the purposes of the requirements of that provision.70. The European Communities argues that the lack of precision of the term, LAN equipment, resulted in a violation of its right to due process which is implicit in the DSU. We note, however, that the European Communities does not contest that the term, LAN equipment, is a commercial term which is readily understandable in the trade. The disagreement between the European Communities and the United States concerns its exact definition and its precise product coverage. We also note that the term, LAN equipment, was used in the consultations between the European Communities and the United States prior to the submission of the request for the establishment of a panel and, in particular, in an "Information Fiche" provided by the European Communities to the United States during informal consultations in Geneva in March We do not see how the alleged lack of precision of the terms, LAN equipment and PCs with multimedia capability, in the request for the establishment of a panel affected the rights of defence of the European Communities in the course of the panel proceedings. As the ability of the European Communities to defend itself was not prejudiced by a lack of knowing the measures at issue, we do not believe that the fundamental rule of due process was violated by the Panel.Law1Law2
25 Second element: Identify the claims Definition of a claimAB: “A claim that the respondent party has violated, or nullified or impaired the benefits arising from, an identified provision of a particular covered agreement.”How to identify the claimsAB: “Provide a summary – and it may be a brief one – of the legal basis of the complaint that is ‘sufficient to present the problem clearly’.”CLAppellate Body Report on Korea – Dairy, WT/DS98/AB/R, paragraph 120When parsed into its constituent parts, Article 6.2 may be seen to impose the following requirements. The request must: (i) be in writing; (ii) indicate whether consultations were held; (iii) identify the specific measures at issue; and (iv) provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly. In its fourth requirement, Article 6.2 demands only a summary – and it may be a brief one – of the legal basis of the complaint; but the summary must, in any event, be one that is "sufficient to present the problem clearly". It is not enough, in other words, that "the legal basis of the complaint" is summarily identified; the identification must "present the problem clearly".Appellate Body Report on Korea – Dairy, WT/DS98/AB/R, WT/DS98/AB/R/Corr.1, paragraph 127[...] we consider that whether the mere listing of the articles claimed to have been violated meets the standard of Article 6.2 must be examined on a case-by-case basis. In resolving that question, we take into account whether the ability of the respondent to defend itself was prejudiced, given the actual course of the panel proceedings, by the fact that the panel request simply listed the provisions claimed to have been violated.IM
26 148 panels composed (88 by the DG) Panel composition Article 8 of the DSUNo permanent panels / panelists, ad hocIndicative list of panelistsSecretariat proposes nominations, parties can oppose for compelling reasonsWell-qualified government and/or non-governmental individualsIf disagreement: Nomination by DG(at the request of complainant)Even after a panel has been established by the DSB, it still must be composed because there are no permanent panels nor permanent panelists in the WTO. Instead, panels must be composed ad hoc for each individual dispute, with the selection of three or five members, pursuant to procedures laid down in the DSU (Article 8 of the DSU). Panels are composed of three persons unless the parties to the dispute agree, within ten days from the establishment of the panel, to a panel composed of five panelists (Article 8.5 of the DSU). The Secretariat proposes nominations for the panel to the parties to the dispute (Article 8.6 of the DSU). Potential candidates must meet certain requirements in terms of expertise and independence (Articles 8.1 and 8.2 of the DSU). The WTO Secretariat maintains an indicative list of names of governmental and non-governmental persons, from which panelists may be drawn (Article 8.4 of the DSU) although other names can be considered as well. WTO Members regularly propose names for inclusion in that list, and, in practice, the DSB almost always approves their inclusion without debate. As noted, it is not necessary to be on the indicative list in order to be proposed as a potential panel member in a specific dispute. Citizens of a party or a third party to a dispute may not serve as panelists without the agreement of the parties (Article 8.3 of the DSU). When a dispute is between a developing country Member and a developed country Member the panel must, upon request by the developing country Member, include at least one panelist from a developing country Member (Article 8.10 of the DSU). Traditionally, many panelists are trade delegates of WTO Members or capital-based trade officials, but former Secretariat officials, retired government officials and academics also regularly serve on panels. These individuals perform the task of a panelist on a part-time basis, in addition to their usual professional activity.When the Secretariat proposes qualified individuals nominations as panelists, the parties must not oppose these nominations except for compelling reasons (Article 8.6 of the DSU). In practice, many Members make quite extensive use of this clause and oppose nominations very frequently. In such cases, there is no review regarding whether the reasons given are truly compelling. Rather, the Secretariat proposes other names. If, according to this method, there is no agreement between the parties on the composition of the panel within 20 days after the date of its establishment by the DSB, either party may request the Director-General of the WTO to determine the composition of the panel. Within ten days after sending this request to the chairperson of the DSB, the Director-General appoints the panel members in consultation with the chairperson of the DSB and the chairperson of the relevant Council or Committee, after consulting with the parties (Article 8.7 of the DSU). The availability of this procedure is important because it prevents a respondent from blocking the entire panel proceeding by delaying (forever) the composition of the panel, which is what sometimes happens in other systems of international dispute resolution. Of course, the parties are always free to devote more than 20 days attempting to agree on the composition of the panel as long as none of them requests the Director-General to intervene.The selected panelists must fulfil their task in full independence and not as representatives of a government or other organization for which they might happen to work. Members are prohibited from giving panelists instructions or seeking to influence them with regard to matters before the panel (Article 8.9 of the DSU).Source: DS HandbookSpecial rules on compositionThe Ministerial Decision on Certain Dispute Settlement Procedures for the General Agreement on Trade in Services, adopted in Marrakesh on 15 April 1994, and paragraph 4 of the GATS Annex on Financial Services expressly provide for the selection of panelists to ensure that panels have the relevant specific expertise in the sector that is the subject of the dispute.As of April 2010:148 panels composed (88 by the DG)!
27 Third Parties Article 10 of the DSU “Substantial interest” No DSU deadlineIn practice Members notify their “substantial interest” at the DSB meeting at which the Panel is establishedLimited rightsRight to receive the first written submissionsRight to make written submissions to the panelRight to be heard by the panelEnhanced third-party rights? Granting within the“sound discretion of the panel”Substantial interestSee Appellate Body Report on EC – Bananas III, WT/DS27/AB/R, para. 132 and fwd: It is true that under Article 4.11 of the DSU, a Member wishing to join in multiple consultations must have "a substantial trade interest", and that under Article 10.2 of the DSU, a third party must have "a substantial interest" in the matter before a panel. But neither of these provisions in the DSU, nor anything else in the WTO Agreement, provides a basis for asserting that parties to the dispute have to meet any similar standard. Yet, we do not believe that this is dispositive of whether, in this case, the United States has "standing" to bring claims under the GATT 1994.Enhanced third party rightsAppellate Body Report on US – 1916 Act, WT/DS136/AB/R, WT/DS162/AB/R, para. 150:A panel's decision whether to grant "enhanced" participatory rights to third parties is thus a matter that falls within the discretionary authority of that panel. Such discretionary authority is, of course, not unlimited and is circumscribed, for example, by the requirements of due process. In the present cases, however, the European Communities and Japan have not shown that the Panel exceeded the limits of its discretionary authority. We, therefore, consider that there is no legal basis for concluding that the Panel erred in refusing to grant "enhanced" third party rights to Japan or the European Communities.Appellate Body Report on EC – Hormones, WT/DS26/AB/R, WT/DS48/AB/R, para. 154:Regarding the participation of the United States in the second substantive meeting of the Panel requested by Canada, the Panel states: ...[This decision was, inter alia, based on the fact that our second meeting was held the day after our joint meeting with the scientific experts and that the parties to this dispute would, therefore, most likely comment on, and draw conclusions from, the evidence submitted by these experts to be considered in both cases. Since in the panel requested by the United States the second meeting was held before the joint meeting with scientific experts, we considered it appropriate, in order to safeguard the rights of the United States in the proceeding it requested, to grant the United States the opportunity to observe our second meeting in this case and to make a brief statement at the end of that meeting.]The explanation of the Panel appears reasonable to us. If the Panel had not given the United States an opportunity to participate in the second substantive meeting of the proceedings initiated by Canada, the United States would not have had the same degree of opportunity to comment on the views expressed by the scientific experts that the European Communities and Canada enjoyed. Although Article 12.1 and Appendix 3 of the DSU do not specifically require the Panel to grant this opportunity to the United States, we believe that this decision falls within the sound discretion and authority of the Panel, particularly if the Panel considers it necessary for ensuring to all parties due process of law. In this regard, we note that in European Communities ‑ Bananas, the panel considered that particular circumstances justified the grant to third parties of rights somewhat broader than those explicitly envisaged in Article 10 and Appendix 3 of the DSU. We conclude that, in the case before us, circumstances justified the Panel's decision to allow the United States to participate in the second substantive meeting of the proceedings initiated by Canada.Enhanced third-party rights granted for example in EC – Hormones (parallel procedure US/Canada concerning the same measure, see WT/DS26/R, para. 8.15, WT/DS48/R, paras ), EC – Tariff Preferences (WT/DS246/R, para. 1.10).Enhanced third-party rights refused for example in US – Upland Cotton (WT/DS267/R, see paras The EC, a third party, had requested: (a) to have sight of the oral statements of the main parties at the first substantive meeting, (b) that the Panel ask the parties to provide third parties with copies of their oral statements and responses to the Panel's questions, and (c) that the Panel confirm that it would make the 5 September 2003 views of the Panel available to the third parties.
28 Panel proceedings 1. First written submissions of the parties Appendix3 DSU –Generalworkingprocedures1. First written submissions of the parties2. [Third party submissions]3. First substantive meeting with the parties and third parties - Third party session4. Written rebuttals of the parties5. Second substantive meeting with the parties6. Descriptive part of the report to the partiesNote: Appendix 3 timetable has substantially developed over the years.In accordance with the panel's calendar, the substantive panel process may start with an exchange of submissions between the parties on any preliminary issue raised by the respondent. (For example: the request for the establishment of the panel in the light of Article 6.2). In such cases, the panel may issue a preliminary ruling, but it can also reserve its ruling for the final panel report (In the latter case, the parties might have to present some of their arguments in the alternative, if they do not know whether a certain claim forms part of the panel's terms of reference). When there are no such preliminary issues, the parties start by exchanging a first set of written submissions. The complainant normally is the first to file its submission, to which the respondent replies in its first submission (Article 12.6 of the DSU). The third parties usually file their submissions after the parties have filed theirs. The third parties, who are entitled to receive the parties' first written submissions (Article 10.3 of the DSU), often side with the positions taken by one of the parties. The parties' written submissions [...] clarify the facts of the case and contain legal arguments, which often rely substantially on prior jurisprudence of panels and the AB. [...] In contrast to the parties' submissions, third party submissions are usually a lot shorter, often only a few pages long, and comment on the parties' factual and legal arguments.After the exchange of the first written submissions, the panel convenes a first oral hearing, called the first substantive (as opposed to "organizational") meeting.[...] Contrary to practice in many domestic judiciaries, this oral hearing is not public. Only the parties and third parties to the dispute, the panelists, the Secretariat staff supporting the panel, and the interpreters are entitled to attend this meeting. [...] Approximately four weeks after the first panel meeting, the parties simultaneously exchange written rebuttals, also called the second written submissions. In these submissions, which are not provided to the third parties, the parties respond to each other's first written submissions and oral statements made at the first substantive meeting. Thereafter, the panel holds a second substantive meeting with the parties (panels have the power to schedule a third (or more) meetings in a dispute).Source: DS HandbookPlease note that certain revisions to Appendix 3 has been put forward in DSU review proposals. See for example JOB(07)/66 on time savings: Accelerated timeframes for disputes on safeguard measures, by halving time-frames set out in DSU Appendix 3, unless a developing country part requests otherwise.Appellate Body Report on US – Shrimp, WT/DS58/AB/R, para. 101:Thus, under the DSU, only Members who are parties to a dispute, or who have notified their interest in becoming third parties in such a dispute to the DSB, have a legal right to make submissions to, and have a legal right to have those submissions considered by, a panel. Correlatively, a panel is obliged in law to accept and give due consideration only to submissions made by the parties and the third parties in a panel proceeding.7. Parties’ comments on the descriptive part8. Interim review9. Final report issued to parties10. Final report circulated to all Members
29 Objective assessment of the matter Standard of reviewObjective assessment of the matterFacts of the caseApplicability of covered agreementsAppellate Body Report on US– Hot-Rolled Steel WT/DS184/AB/R, para. 54:Article 11 of the DSU imposes upon panels a comprehensive obligation to make an "objective assessment of the matter", an obligation which embraces all aspects of a panel's examination of the "matter", both factual and legal. Thus, panels make an "objective assessment of the facts", of the "applicability" of the covered agreements, and of the "conformity" of the measure at stake with those covered agreements. Article 17.6 is divided into two separate sub-paragraphs, each applying to different aspects of the panel's examination of the matter. The first sub-paragraph covers the panel's "assessment of the facts of the matter", whereas the second covers its "interpret[ation of] the relevant provisions" (emphasis added). The structure of Article 17.6, therefore, involves a clear distinction between a panel's assessment of the facts and its legal interpretation of the Anti-Dumping Agreement.Appellate Body Report on US – Cotton Yarn, WT/DS192/AB/R, para. 74:This standard may be summarized as follows: panels must examine whether the competent authority has evaluated all relevant factors; they must assess whether the competent authority has examined all the pertinent facts and assessed whether an adequate explanation has been provided as to how those facts support the determination; and they must also consider whether the competent authority's explanation addresses fully the nature and complexities of the data and responds to other plausible interpretations of the data. However, panels must not conduct a de novo review of the evidence nor substitute their judgement for that of the competent authority."Appellate Body Report on US – Lamb, WT/DS177/AB/R, WT/DS178/AB/R, para. 103:Thus, an "objective assessment" of a claim under Article 4.2(a) of the Agreement on Safeguards has, in principle, two elements. First, a panel must review whether competent authorities have evaluated all relevant factors, and, second, a panel must review whether the authorities have provided a reasoned and adequate explanation of how the facts support their determination. Thus, the panel's objective assessment involves a formal aspect and a substantive aspect. The formal aspect is whether the competent authorities have evaluated "all relevant factors". The substantive aspect is whether the competent authorities have given a reasoned and adequate explanation for their determination.More deferential standard of review in Article 17.6 of the Anti-Dumping Agreement17.6 In examining the matter referred to in paragraph 5:(i) in its assessment of the facts of the matter, the panel shall determine whether the authorities' establishment of the facts was proper and whether their evaluation of those facts was unbiased and objective. If the establishment of the facts was proper and the evaluation was unbiased and objective, even though the panel might have reached a different conclusion, the evaluation shall not be overturned;(ii) the panel shall interpret the relevant provisions of the Agreement in accordance with customary rules of interpretation of public international law. Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities' measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.Conformity of the measures with covered agreements* More deferential standard of review under Art ADA
30 Appellate Body Established in 1995, innovation of the WTO dispute settlement systemA standing body of 7 Members. 4-year term, renewable once, a part-time job.Requirements:Authority and expertise in international trade law“Unaffiliated with any government”Impartiality, broad representativenessAppointed by the DSB on consensus, based on nominations by WTO Members
31 The current members of the Appellate Body Ms Lilia Bautista – PhilippinesMr Peter van den Bossche - Belgium(recently appointed)Ms Jennifer Hillman – United StatesMr Shotaro Oshima – JapanMr Ricardo Ramírez Hernández - Mexico(recently appointed)PRESS/55819 June 2009APPELLATE BODYWTO appoints two new Appellate Body MembersThe WTO Dispute Settlement Body (DSB) appointed on 19 June 2009 the following two new members to the seven-member Appellate Body: Mr Ricardo Ramírez Hernández of Mexico for four years commencing on 1 July 2009 and Mr Peter Van den Bossche of the EC for four years commencing on 12 December 2009.Mr David Unterhalter – South Africa(Chairman)Ms Yuejiao Zhang – China
32 What can be appealed? What can be appealed? Issue of law Article 17.6 of the DSUAppeals limited to“issues of law covered in the panel report and legal interpretations developed by the panel”No factual findings by the Appellate BodyPanels’ factual findings: In principle, outside the scope of appellate reviewObject of an appealAppeals are limited to legal questions. They may only address issues of law covered in the panel report and legal interpretations developed by the panel (Article 17.6 of the DSU). An appeal cannot address the facts on which the panel report is based, for example, by requesting the examination of new factual evidence or by re-examining existing evidence. Evaluating the evidence and establishing the facts is the task of panels in the dispute settlement system. The distinction between legal and factual questions is therefore important in defining the scope of appellate review. In the abstract, it seems easy to distinguish between law and facts: e.g. whether or not a national authority has charged a 30% tariff rather than a 20% tariff on the importation of a certain shipment of goods and whether or not vodka and shochu are being produced through the distillation of fermented starch-containing products are clearly facts. More generally speaking, a fact is the occurrence of a certain event in time and space.In contrast, how the expression of "like products" in Article III:2 of GATT 1994 is to be interpreted is clearly a question of law. However, many of the more complex questions that regularly arise in disputes are mixed questions of law and facts, or, in other words, questions that can be answered only on the basis of both a factual and a legal assessment. For example, the question of whether shochu and vodka are "like products" in the sense of Article III:2 of GATT 1994 is such a mixed legal and factual question. In such cases, the identification of the legal issue that can be subject to appeal hinges upon a more detailed and differentiated analysis of the question involved. The Appellate Body jurisprudence to date gives some guidance in that regard.For instance, the legal appreciation of facts, or, in other words, a panel's application of a legal rule to specific facts, is a legal question and subject to appellate review. As the Appellate Body has stated, "[t]he consistency or inconsistency of a given fact or set of facts with the requirements of a given treaty provision is, however, a legal characterisation issue. It is a legal question".In contrast, the panel's examination and weighing of the submitted evidence, and its establishment of the facts, fall within the panel's discretion as the trier of facts and are normally not subject to appeal. However, there are limits to the panel's discretion, to the extent that the panel's factual examination is subject to legal requirements, the compliance with which is a legal question that can be raised on appeal. Such a legal rule is contained in Article 11 of the DSU which obliges panels to "make an objective assessment of the matter before it, including an objective assessment of the facts of the case". The question of "whether or not a panel has made an objective assessment of the facts before it, as required by Article 11 of the DSU, is a legal question which, if properly raised on appeal, would fall within the scope of appellate review." Thus, the Appellate Body can review the panel's appreciation of the evidence where the panel has exceeded the bounds of its discretion. Where exactly those bounds lie remains to be fully explored. The Appellate Body has already had the opportunity to give several examples, which do not exhaust the universe of possible legal errors in the establishment of facts. The Appellate Body has ruled that for a panel to "disregard", "distort" or "misrepresent" evidence, or a panel's "egregious errors" that would call into question the good faith of a panel, are issues that can be appealed.Article 11 of the DSU is also relevant where the issue is whether the panel applied the correct standard of review. This, however, is clearly a legal question and not one of establishing facts, since it relates to determining what legal standard panels must apply. This in turn determines which facts pertaining to which period of time are relevant to the legal examination.Source: DS Handbook
33 Third participantsOnly those Members that were third parties on the panel stageCannot appealRight to file written submissions and to participate in the oral hearingExcerpt from document JOB(08)/81, Chair’s text in DSU negotiations (18 July 2008)Article 17 Appellate Review Standing Appellate BodyInsertions in bold, deletions underlined4.(a) Only parties to the dispute, not third parties, may appeal a panel report.(b) Each third party, Third parties which have notified the DSB of a substantial interest in the matter pursuant to paragraph 2 of Article 10 [and any other Member having notified to the Appellate Body, the DSB and each party to the dispute its interest to do so no later than 5 days after the date of circulation of the notification of appeal referred to in paragraph 5(a)], may participate [as a third participant] in a proceeding before the Appellate Body.(c) Each third [participant] shall have an opportunity to be heard by and to make a written submissions to, and be given an opportunity to be heard by, the Appellate Body.(d) Each third [participant] shall give its submission to each party to the dispute and to every other third participant. The Appellate Body shall reflect the submissions of third participants in its report.(e) [The Appellate Body shall consider only the submissions of parties and third [participants], and shall not accept or consider any submission beyond those submitted by the parties and the third [participants].]
34 Adoption of Panel / Appellate Body reports The DSB adoptsPanel Report (as upheld/modified/ reversed)Together with the Appellate Body ReportBy negative consensusWithin 30 days from circulation of AB Report(60 days from circulation of Panel Report if no appeal)
35 Order of compliance-related procedures DSB adopts reportImplementation within reasonable period of time (RPT)Arbitration to determine RPT if no agreementRequest for review of compliance(referred to original panel)Negotiations to agree mutually satisfactorycompensation if no complianceRequest for DSB authorization to suspend concessionsif compensation not agreedArbitration on level and procedureDSB authorization to suspend concessions
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