GAUTAM BUDDHA UNIVERSITY

Greater Noida, U.P.

SCHOOL OF LAW, JUSTICE AND GOVERNANCE

Course — BA LLB, 4 Year, Section B

Subject :- Trade Law (LB-403)

Topic :- WTO Dispute Settlement

Submitted to :- Mrs. Akanksha Ma’am

Submitted by:- Manisha Pandey

Roll No. :- 18/ILB/046

Introduction:
The World Trade Organization (WTO) is responsible for maintaining the free flow of trade
between its member countries.The dispute generally arises when any member country
violates any provision of WTO agreement which other member countries think
unreasonable.
This dispute settlement process is the outcome of the Uruguay round (1996-1994).
This mechanism provides a speedy resolution of a trade dispute. The Dispute Settlement
Body (DSB) is responsible for DSU to resolve a dispute between parties.
There are two main ways to settle a dispute once a complaint has been filed in the WTO:
(i) the parties find a mutually agreed solution, particularly during the phase of bilateral
consultations; (ii) through adjudication, including the subsequent implementation of the
panel and Appellate Body reports, which are binding upon the parties once adopted by the
DSB.

There are three main stages to the WTO dispute settlement process:
(i) consultations between the parties;
(ii) adjudication by panels and, if applicable, by the Appellate Body; and
(iii) the implementation of the ruling, which includes the possibility of
countermeasures in the event of failure by the losing party to implement the
ruling.

The involvement of the parties and third parties, the primary participants in a
dispute settlement proceeding, has already been outlined here.

The precise tasks and roles of each of the actors involved in the dispute settlement process
will become clear in the later chapter on the stages of the dispute settlement process.
Among the WTO bodies involved in dispute settlement, one can distinguish between a
political institution, the DSB, and independent, quasi-judicial institutions such as panels,
the Appellate Body and arbitrators.

Stages in settlement of trade disputes

Stage 1: Consultations (Article 4 of the DSU)
Before referring any dispute to mediation or taking any other actions, both the WTO
member countries shall affirm to resolve their disputes through consultation.
If a WTO member requests for consultation with another Member concerning measures
affecting the operations of the former member, the latter member must accept such request
within a period 10 days after the date of receipt of such request and shall enter into
consultation within 30 days.

All such requests for consultation and construction shall be notified in writing including
reasons for such requests to the Dispute Settlement Body by the complaining member.

Stage 2: Establishment of Panels (Articles 6, 8 and 11 of the DSU)

If no satisfactory solution is reached through consultation between the member countries,
the complaining member may request for the establishment of panels in writing to the
Dispute Settlement Body including a summary of the case and issues involved.

The panel is established at the second meeting of DSB at which request appears as an
agenda item of the meeting. The function of the Panel is to aid the Dispute Settlement Body
in resolving the matter in dispute.
The panel assesses the entire dispute, including the facts of the case and issues involved
therein and examines whether it conforms with the covered agreement between the member
countries.

Stage 3: Selection of Panelists (Articles 8 of the DSU)

The panellists are selected by the WTO Secretariat. The parties cannot oppose the selection
unless they state reasons satisfactory to the Secretariat.
The panel shall consist of three panellists. The parties can agree to have five panellists on
board if they consider necessary within 10 days from the establishment of the panel.
The WTO Secretariat assists the parties in the selection of panellists by creating a list of all
governmental and non-governmental individuals having certain qualifications from which
panellists may be chosen by the parties.

Members may, at any reasonable time, make an addition to the list of individuals by
suggesting the name of individuals who can assist the parties by providing any information
related to international trade law or any of the matter as covered in the agreement because
of which dispute arose in the first place.

The addition to the list can be made only after the approval of the Dispute Settlement Body.
If panellists are not selected within 20 days after the date of establishment of the panel, the
Director-General, in consultation with the Chairman of Dispute Settlement Body and
Chairman of relevant Council or Committee appoint panellists which they consider
appropriate.

Stage 4: Procedure of Panel (Articles 10 and 12 of the DSU)

The panellists shall, within one week after the composition of the panel fix a timetable for
the panel process.
After this, the panel decides a deadline for written submission to be made by each party.
At the first substantive meeting of the panel, the complaining party shall be the first to
present their case ahead of the responding party.

The third parties who have notified the Dispute Settlement Body having substantial interest
in the subject matter of the dispute are also asked to present their views during the same
meeting.

Any rebuttals between the parties shall be made at the subsequent meeting of the panel.
Here, the responding party shall be the first to respond against the complaining party. The
panel, if they consider necessary, put any questions before the parties to be answered in the
duration of that meeting.

Where the solution has not been found, the panel shall send a written report to the Dispute
Settlement Body mentioning its findings of the case and recommendations, if any, it makes.
The report has to be sent within six months of its examination.
In case of urgency, including the case of perishable goods, the report has to be sent within
three months.
The maximum period during which the report has to send is nine months from the
establishment of the panel.

Stage 5: Interim report (Article 15 of the DSU)

Following the oral arguments and rebuttal that has been performed and examination has
been made, the panel shall issue a draft report to the parties.
The parties have to submit their comments in writing after receiving the draft report within
the period set by the panel. After the expiration of the said period for receiving the
comments from the parties,
the panel shall issue an interim report, including its findings in the draft report and its new
findings and conclusion.

At the request made by the parties, the panel shall call for a further meeting to discuss the
comments made by the parties to the dispute.

If both the parties are satisfied with the solution reached, then such a revised interim report
shall be the final panel report and is circulated among the members.
In case, the parties are not satisfied with the outcome of the report reached then any
objections of the members shall be considered at the meeting of the Dispute Settlement
Body. Such objections have to be reported at least 10 days before the meeting of the
Dispute Settlement Body.

In case of an appeal, the report shall deem to be invalid for adoption by the Dispute
Settlement Body unless the Standing Appellate Body provides its Appellate Body Report.

Stage 6: Appeal (Article 17 of the D)

Only parties to the dispute can appeal to a panel report and not the third parties. The
proceeding of the Appellate Body shall not exceed 60 days from the date a party to the
dispute notifies its intention of appealing to the Appellate Body to the Dispute Settlement
Body.
In case of delay, the maximum period granted to the Appellate Body is 90 days. The
Appellate Body has to submit in writing to the Dispute Settlement Body its reasons for the
delay together with the period within which the final decision is notified.

The Appellate Body will not re-examine any shreds of evidence, issues or previous
arguments but its examination shall be limited to laws covered in the panel report or legal
interpretation evolved by the panellists.
The Appellate Body has the power to uphold, modify or reverse the panel report and
provide a conclusive report.

Stage 7: Acceptance of report by Dispute Settlement Body (Article 30 of

the DSU)
The Dispute Settlement Body has to either accept the Appellate Body report or reject DSU
it within a maximum period of 30 days after receiving such a report.

The Director-General
(Article 5.6 of the DSU)
• In a dispute settlement case involving a least-developed country where a
settlement of the dispute through consultation is a failure, such least-developed member
nation may request the Director-general to provide his
good offices, conciliation, and mediation before requesting for establishment
of the panel.
The Director-General, when considered satisfactory, will provide his good offices,
conciliation, and mediation to settle the dispute between the parties.
(Article 24.2 of the DSU)
• When there are no panellists appointed by either of the parties to dispute,
the Director-General, at the request of either party, in consultation with the
Chairman of Dispute Settlement Body and Chairman of the relevant Council
or Committee, appoints panellists as he considers appropriate.
(Article 8.7 of the DSU)

WTO Secretariat (Article 27 of the DSU)

The Secretariat has the responsibility to select panellists for the panel. It must provide a
panel with all the support they need.

The Secretariat also help member countries in dispute by offering legal assistance by
making an available qualified legal expert from the WTO to the members.

The Secretariat also conducts special training courses for members interested in the dispute
settlement mechanism.

Panel:
The panel established in the second meeting of Dispute Settlement Body, are bodies
responsible for adjudicating disputes between the parties.

Composition of the panel:

The panel generally consists of three panellists but can be a maximum of five, if the parties
consider it necessary.(Article 8.5 of the DSU)
The Panel shall consist of well-qualified governmental and non-governmental individuals,
including the persons who have served a panel or presented a case to a panel. It must
provide a panel with all the support they need.

The Secretariat also help member countries in dispute by offering legal assistance by
making an available qualified legal expert from the WTO to the members. The Secretariat
also conducts special training courses for members interested in the dispute settlement
mechanism.

The panellists shall be from amongst the persons who have served as a representative of a
member or a contracting party to GATT, 1947 or as a representative to the Council or
Committee of any covered agreement or its predecessor agreement, or in the Secretariat,
taught or published on international trade law or policy, or served as a senior trade policy
official of a member.

The parties at dispute can select any individual having the above-mentioned qualifications
from the list created by the Secretariat to the panel to resolve their dispute.(Article 8.1 of
the DSU)

Dispute Settlement Body (DSB)

Dispute settlement Body is a body established for resolving the disputes between the
conflicting parties by overseeing the entire dispute settlement mechanism. The General
Council of WTO, which carry out the functions of the Ministerial Conference, renders its
obligations under the Dispute Settlement Understanding through Dispute Settlement
Body.(Article 4.3 of the WTO agreement)
Composition (Article 4.3 of the WTO agreement)
The Dispute Settlement Body consists of a Chairman and representatives of all WTO
members (usually government representatives).

The Chairman is usually a leader of the permanent mission of one of the member countries
of WTO. The Chairman is elected with the consent of all WTO members.

Functions 9 (Article 2 of the DSU)

• The main function of the Dispute Settlement Body is to administer the rules and
procedures which are provided in the Dispute Settlement
Understanding.

• It has the authority to establish a panel for adjudication of the dispute

between the parties in the meeting of Dispute Settlement Body unless it is
decided in that meeting not to establish a panel.

• It has to adopt the panel or Appellate Body reports to make these reports
binding on both the parties to the dispute.

• The parties must comply with the rulings and recommendations of the
Dispute Settlement Body.

If the parties do not comply with these recommendations and ruling within a
prescribed period then measures in the form of compensation and termination of
concessions will be adopted by the Dispute Settlement Body.
If there is a delay on the part of the panel or Appellate Body in providing its report, then
additional period granted will be added to nine months.

Standing Appellate Body (Article 17 of the DSU)

The Dispute Settlement Body shall be responsible for the establishment of the Appellate
Body.
Where the parties are not satisfied with the decision of the panel report, then either of the
parties may appeal to the Appellate Body who shall prove his award in the form of
Appellate Body report which shall ultimately be adopted by the Dispute Settlement Body.

But only three of them shall serve in one case. These three people shall be selected based
on rotation. The appointed person shall be in service for four years and can be re-appointed
once. The persons comprising the Appellate body shall be persons of a recognized authority
having expertise in the field of law, international trade and subject matter of the agreement
in dispute.

The person shall not be part of any governmental service. They shall be made themselves
available till the end of the dispute.

Arbitration (Article 25 of the DSU)

The parties to a dispute can refer a dispute to arbitration as an alternative means for the
settlement of their dispute. Third parties can be a party to a dispute only after the mutual
consent of the parties in arbitration.
The arbitral award shall be notified to the Dispute Settlement Body and the Council or
Committee.