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Dispute settelment in world trade organisation copy
Dispute settlement final presentation
1. Dispute Settlement
Mukhdoom Waseem Qureshi
Attorney-At-Law (LLM)
University Of South Asia Lahore Pakistan.
IDEAL LEGAL CONSULTANTS PAKISTAN
CONTACT: +92-334-9990969
E-mail; waseem_qureshi@hotmail.com,www.ideallegalconsultants.org
2. Historical development of the WTO dispute
settlement system
The (WTO) dispute settlement system is often praised as one of the most
important innovations of the Uruguay Round (1986-1994). 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 1947. 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
1947. 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). Of course, the Uruguay Round brought
important modifications and elaborations to the previous system.
3. How Dispute Arises & Settle
Dispute settlement is regarded by the World Trade Organization (WTO) as
the central pillar of the multilateral trading system, and as the
organization's "unique contribution to the stability of the global economy".
A dispute arises when one member country adopts a trade policy measure
or takes some action that one or more fellow members considers to a
breach of WTO agreements or to be a failure to live up to obligations. By
joining the WTO, member countries have agreed that if they believe fellow
members are in violation of trade rules, they will use the multilateral
system of settling disputes instead of taking action unilaterally — this
entails abiding by agreed procedures (Dispute Settlement Understanding)
and respecting judgments, primarily of the Dispute Settlement Body (DSB),
the WTO organ responsible for adjudication of disputes. A former WTO
Director-General characterized the WTO dispute settlement system as "the
most active international adjudicative mechanism in the world today.
4. Dispute Settlement underGATT,1947
Shortcomings of the GATT DSS
Appointment of panel, adoption of rulings, imposition of sanctions: done
through positive consensus
No detailed procedures
No fixed timetable
Rulings easier to block
Cases dragged on for years
Very limited rules
Overall an inefficient system; not very popular
5. Dispute Settlement under WTO: Instruments
Article XXII and XXIII of GATT,1947
Understanding on Rules and Procedures Governing the Settlement of
Disputes
Few specific rules in other WTO agreements
6. Dispute Settlement under WTO: Improvements
over GATT, 1947
It remedies the inherent defects of the GATT DSS
Introduces the negative consensus rule
Resulting in automatic establishment of panel & appellate body (AB), automatic
adoption of panel/ AB reports and automatic authorization of countermeasures
against the non-complying party
Integrated framework applying to all agreements with only minor variations
Provides more detailed procedures for each stage of dispute
Establishes specific time frames and deadlines for prompt settlement of
disputes
Provision for appellate review
Overall an efficient system
Effectively used by members to settle more than 300 disputes in the last 12
years.
7. Structure of the WTO DSS
Ministerial Conference: top most decision making body of the WTO
The DSB is the administrative body which handles Day-to-day work of
dispute settlement and comprises of all WTO member countries.
The DSB reports to the Ministerial Body.
DSB comprises of ad hoc Dispute Panels and a standing Appellate Body (AB)
8. Methods of WTO dispute settlement:
Consultation or negotiations
Adjudication by panel and the Appellate body
Arbitration
Good office, conciliation and Mediation
9. Legal Effect Panel/Appellate Body Reports
Report becomes binding after adoption by the DSB
Reports binding only on the Parties to the dispute
Since reports relate to specific matters in the dispute between the Parties
to the dispute:
Reports have no precedent value
However Panels and Appellate Body accord due deference to previous
Reports for the purposes of:
Enhancing the “security and predictability” of the multilateral trading
system (Art. 3.2, DSU)
Upholding the “legitimate expectations” created among the WTO Members
from previous adopted Reports (AB Report, Japan Alcoholic Beverages II
10. Dispute Settlement Panel:
Function and Composition
Quasi-judicial body, similar to domestic tribunals
Adjudicates disputes in the first instance
No permanent panel at the WTO; different panel composed for each
dispute
Normally composed of three( in some cases five) experts on an ad hoc basis
Selected by the DSB in consultation with the disputing parties, possibly from
the indicative list maintained by the WTO Secretariat
Preferably one member is from a developing country and the other two
from countries not party to dispute.
Panel reviews the factual and legal aspects of the case, records its findings
and makes recommendations
On acceptance by the DSB, the Panel report becomes binding on the parties
11. Dispute Settlement AB:
Functions and Composition
Unlike Panel, AB is a permanent body of seven members
Reviews legal aspects of reports issued by the Panel.
AB members appointed by the DSB by consensus(Art.2.4 DSU) for a four
years term and can be reappointed once (Article 17.2 DSU)
AB members to be persons of recognized authority, with demonstrated
expertise in law, international trade and the subject matter of the covered
agreements generally, and they must not be affiliated with any government
(Art. 17.3 DSU)
AB members to be broadly representative of the membership of the WTO
(Art. 17.3 DSU)
12. Legal Basis for a Dispute
Violation
The DSU is primarily concerned with settlements of disputes that involve an
infringement of an obligation assumed under one or more of the WTO
agreements.
Non Violation and Situation Complaints:
GATT Art. XXIII(1)(b): When a benefit under the WTO Agreements, accruing
to a Member directly or indirectly, is nullified or impaired as a result of
another Member country applying a measure, irrespective of whether or
not such measure conflicts with any of the WTO Agreements (Non
Violation)
GATT Art. XXIII(1)(c): extends such nullification or impairment as resulting
from a broader range of circumstances, captured by the phrase ‘existence
of any other situation’. (Situation Complaint)
13. Non-Violation or Situation Complaints
Non Violation
The burden of proof is on the complainant, who must present a “detailed
justification” of the complaint by:
Defining the “benefit” being nullified or impaired
Defining the “measure” responsible
Showing a casual relationship between the measure and the nullification or
impairment Eg. Photographic Paper, Asbestosis
Where the elements of a non-violation complaint are proved, there is no obligation
to withdraw the measure – only that the offending member must make a “mutually
satisfactory adjustment.”
Situation
All other nullification or impairment of benefits are deemed to be impeded by “any
situation.”
14. Basic Stages of Dispute Settlement
The (national) dispute
initiation stage.
Consultation stage
Panel stage
Appellate review stage
Adoption
Implementation and
Surveillance
15. Basic Stages of Dispute Settlement: Dispute
Initiation
Complaints made:
By a particular Business or Industry
To its government
Against trade restrictive measures by a WTO member country
Concerned Government may conduct an internal enquiry to ascertain the
legality of the complained measures
On being satisfied it may decide to challenge the measure of that WTO
member country
16. Basic Stages of Dispute Settlement: Consultations
Request for Consultations:
In writing & state the reasons for request
Forms Legal basis of complaint (Art.4.4 DSU)
Notified to DSB and concerned Councils & committees (Art. 4.4 DSU)
Typically take place in Geneva & are Confidential( Art. 4.6 DSU)
Dispute not resolved: Request DSB for establishment of Panel
17. Basic Stages of Dispute Settlement: Request for
establishment & Constitution of Panel
Request for establishment of panel initiates the adjudication process
Request to be made to the Chairman of the DSB
Indicate whether:
consultations were held,
identify the specific measures at issue,
and provide a brief summary of the legal basis of the complaint (Article 6.2 of the
DSU).
Constitution of Panel:
The WTO Secretariat proposes names, parties either agree or for compelling reasons
oppose( Art.8.6 DSU)
If panel not composed within 20 days of its establishment by this method, either
party may request the Director General (DG) WTO to compose the panel.
The DG 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, within 10 days after sending this request to the chairperson of the DSB.
( Art.8.7 DSU)
18. Basic Stages of Dispute Settlement:
Panel Proceedings
In accordance with working procedures ( DSU appendix III)
Fixing of Terms of references
Oral & written submissions of the parties
Meetings of parties & Panel
Interim Report & review
Final report issued to the parties within 6 months of the terms of reference
Final report submitted to DSB
19. Basic Stages of Dispute Settlement:
Panel Proceedings (Cntd.)
Third parties may also participate, provided they establish “substantial
interest”.
3rd Parties have limited rights of participation & right to seek information
Amicus Curiae briefs may be entertained on Panels discretion.
Expert review groups may be appointed by the Panel ( DSU appendix IV)
Confidentiality to be maintained.
20. Basic Stages of Dispute Settlement:
Appeal
Standing Appellate Body
Only parties to dispute can appeal
Appeal limited to issues of law and legal interpretations developed by the
panel( Art. 17.6 DSU)
AB may uphold, modify or reverse the legal findings & conclusions of the
panel (Art. 17.13 DSU)
21. Basic Stages of Dispute Settlement:
Appeal (Contd.)
Panel report adopted by the DSB within 60 days after the
circulation to members unless:
Party notifies decision to appeal
DSB decides by consensus not to adopt it
AB report adopted by the DSB within 30 days after circulation to
members.
Where violation of WTO Agreements is found, panel/AB may:
(Art.19.1 DSU)
Recommend members to bring the measures in conformity
Suggest ways of implementing the recommendations
22. Dispute Settlement under WTO: Implementation
& Surveillance
Panel/AB report to be adopted within “reasonable period of time” (Art. 21.3
DSU):
RPT proposed by member & approved by DSB,
or mutually agreed by the parties,
or determined through arbitration (15 months)
Compliance review: (Art. 21.5 DSU) must be decided by original panel, if
possible.
Status report by the member on progress in surveillance
23. Remedies for Non- compliance
On failure to bring the measure in conformity within reasonable
period of time, possibility of:
Compensation; or
Suspension of concessions equivalent to the level of
nullification or impairment
Authorization to suspend within 20 days of expiry of reasonable
period of time
24. Remedies for Non- compliance
Compensation: if implementing party fails to achieve full compliance within
a reasonable period of time (Art. 22.2 of DSU):
Has to enter negotiations with the complaining party to ascertain
mutually acceptable compensation
Compensation not in terms of monetary payments
Respondent supposed to offer a benefit (e.g. tariff reduction)
Suspension of concessions in (Art. 22.2 DSU):
Same sector, or
Other sector. Or
Other agreement.
Arbitration on the level of suspension (Art. 22.6 DSU)
25. Rules of Interpretation
WTO Agreement points two sources of law:
The covered agreements
The international agreements incorporated in the covered agreements
In addition, the decisions, procedures and customary practice followed by
the GATT Contracting Parties throughout the GATT years shall also be
followed( Art. XVI.1, WTO Agreement)
WTO adjudicating bodies have identified the following interpretative
elements:
Panel/Appellate Body reports
Decisions & recommendations by various WTO organs
International agreements not reflected in the WTO agreement
Customary international law (e.g. Art. 31 of the Vienna Convention on
Law of Treaties)
The travaux preparatoires of the WTO Agreement
26. Amicus Curiae Briefs
Acceptance of amicus curiae briefs from third parties- A
controversial issue
Recent rulings of Appellate Body-Clearly show that the power of
Panels/Appellate Body to accept amicus curiae briefs is an
established principle
Shrimp-Turtle Case: Appellate body stated that:
Art. 13.1 of the DSU confer power to “seek” information from
any individual/body
Power to “seek” shall be interpreted to include the power to
accept and consider amicus curiae briefs.
Two methods for submission & consideration of amicus curiae
briefs( EC-Sardines):
An amicus curiae brief can be submitted to Panel/Appellate
Body with the consent of participating WTO Members.
Private organizations/individuals can submit amicus curiae
briefs directly to the Panel (Art. 13.1) & to the Appellate Body
(Art. 17.9, DSU)
Whether to accept/consider amicus curiae is up to the
Panels/Appellate Body’s discretion.
27. Standard of Review
Art. 11 of DSU:
Panel should make an objective assessment of matter before it
Including and objective assessment of the facts of the case; and
The applicability & conformity with the relevant covered agreements.
Panel must observe due process of law ( Appellate Body in Chile Price –
Bands Case)
Art. 17.6(i) of Antidumping Agreement-Special standard of review for
antidumping proceedings:
Panel not to overturn the proper establishment of facts and unbiased &
objective evaluation made by national antidumping authorities
Art. 17.6(ii) of Antidumping Agreement-National Deference principle:
If in Panel’s view a relevant provision admits two permissible
interpretation, it shall accept the interpretation which supports the
finding of the concerned national antidumping authority.
Art. 17.6 of the Antidumping Agreement is supplementary to Art. 11 of DSU
(Appellate body in US-Hot-rolled steel)
28. Characteristics of an Ideal DSM
Clear procedure
Effective administration
Impartial, Speedy, Transparent, Inexpensive
Upholding principles of Pvt. and Public International Law
Develops coherent jurisprudence
29. WTO DSS: India’s Experience
India is one of the leading developing country users of the WTO DSS
Involved in total of 84 cases at the WTO DSS:
As complainants in 17 cases
As respondents in 19 cases
As third party in 48 cases
Mixed success at the DSS:
India-QRs Case: India forced to dismantle QR regime on complaint from US
India-Patents Case: India forced to change its IPR law regime and bring it in
consonance with the TRIPS on complaint from EC
EC-Bed Linen Case: India’s claim that practice of “zeroing” while establishing
the existence of margins of dumping was inconsistent with Anti-Dumping
agreement was held to be correct and EU was forced to change its
measures.
EU-GSPs Case: No clear benefit to India, even though the measure
complained against was held to be WTO non-compliant
30. WTO DSS: India’s Experience
Ongoing Dispute
India is presently involved in a dispute with the USA (WT/DS360) concerning the
imposition of “Additional Duties” on imports of alcoholic beverages and certain
identified industrial & agricultural products
Initial complaint was brought by the European Communities against levy of
“Additional Duties” on imports of Alcoholic Beverages under Section 3(1) & 3(5)
of the Customs Tariff Act,1975(WT/DS356); USA joined as a complainant later
on
Following consultations India removed the “Additional duties” on alcoholic
beverages levied under Section 3(1), Customs Tariff Act,1975
Thereafter EC requested the Panel to suspend the proceedings
USA decided to continue with the Panel proceedings
In substance the dispute now concerns the “Additional Duties” imposed under
Section 3(5) of the customs Tariff Act,1975
31. Ongoing Review of the WTO DSS
Broad consensus that DSS has worked reasonably well
Nevertheless review is desirable
As agreed by the Members during the Uruguay Rounds, review of the DSU
started in 1997-not part of Doha Round “Single Undertaking”
Has not resulted in any agreed outcome
Doha Ministerial Declaration contained a mandate for “negotiations on
improvements and clarifications” of the DSU.
No results till date, though countries have made their submissions on
desired changes in the system.