DisputeSettlementunderGATTandWTO

Understanding on Rules and Procedures Governing the Settlement of Disputes

The main components of the WTO dispute settlement system are as follows:

1. DisputeSettlementBody(DSB)

2. GoodOffices oftheDirectorGeneral

3. ExpertReviewGroup(ERG) 4. DisputesPanel 5. TheAppellateBody.

DisputeSettlementBodyThe DSB is the body that has overall charge of the dispute settlement mechanism.ItisineffecttheGeneralCouncilinadifferentguise,andconsists of arepresentative fromeachmember. ItistheDSBwhichmustultimatelydecide whetherornotaMemberhasbrokenanyrulesgoverningtheWTOAgreement oroneofthe MultilateralTradeAgreements.Incarryingoutthisrole,theDSBis variouslyassistedbythegoodoffices oftheDirector General ,theDisputesPanel andtheAppellateBody.

GoodOfficesoftheDirectorGeneralThedisputingpartiescanaskforhisintervention.But,theadviceoftheDirector Generalandhisassistantsisnotbindingandcannotbecitedin alaterDisputes Panelreport.

DisputesPanel

independent panellists,three to five

The Dispute Panel is established by the DSB, and consists of

with a sufficiently diverse background and a wide

spectrum of experience. ( they could be government or nongovernment

individuals)

The task of the Disputes Panel istoinvestigatethoroughlythefactsofthe

dispute,takingintoaccountthetermsoftheparticularagreementallegedtobenthe

breached. Itmustconsultwithbothpartiestothedisputeinordertogai

fullest understanding possible of the problem and should encourage them to reachamutuallyacceptable solution,ifatallpossible.Wherethetwopartiestoa disputehavefailedtoreachanacceptableagreementduringtheinvestigation,the Dispute s Panel will present a written report to the DSBsettingoutits

findingsoffactbasedonrelevantagreementprovisionsanditsreasoningbehind

ExpertReviewGroup

itsrecommendations.icalnature

WhereaDisputePanel isconsideringamatterofaparticularlytechn

it may, with the consent of both parties to the dispute, establish an ERG to provide it with assistance. TheERGsreportisofanadvisorynatureonly,

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although it will obviously carry considerable weight when it comes to the DisputePanelpre sentingitsoverallfindingstotheDSB.

TheAppellateBodyWhereapartytoadisputedisagreeswithaDisputePanelrecommendation,it can appeal to a standing Appellate Body, established by the DSB. The appeal, however,islimitedtoissuesoflawcover edintheDisputesPanelreportandthe legalinterpretationdevelopedbytheDisputesPanel.TheAppellateBodyiscomposedofsevenpeoplewhowillserveforafouryearBody

term. Only three of the seven will serve on any one case. The Appellate

representatives must be people of recognized standing in the field of law and

internationaltradeandnotbeaffiliatedtoanygovernment.Theyareappointed

on the basis of a joint proposal forwarded by the DirectorGeneral, the DSB

ChairmanandtheChairmanof theGeneralCouncilandtheTradeCouncils.

Its proceedings will be confidential, based on information already provided in

thedisputeandwithoutthepresenceofeitherparty.Afterhavingreviewedthe

evidence,theAppellateBodyreportstotheDSB.Itsfindingsmustbeacceptedby

thepartiestothedisputeunlesstheDSBdecides,byconsensus,nottoadoptthe report.1

Proceduresof WTOdisputesmechanismStep1

The aggrieved Member should make a request for consultation with the offendingMember.Ther equestmustbesenttotheDSBinwriting.

Step2

A reply should be made by the offending Member within 10 days unless otherwisemutuallyagreed. Consultationsshouldcommencewithin30daysof theoriginalrequest. Inurgentsituationinvolvingperishabl egoodsthereplyand commencementofconsultationsshouldtakeplacewithin10daysoftheoriginal request.

Step3

WherebothpartiesagreethecasecanbebroughtbeforetheDirector General andthegoodofficesproceduremaycontinuewhiletheDisputes Panelprocessis inprogress,providedbothpartiesagreetoit.

1 TheUruguayRoundagreementhas madeitimpossibleforthecountrylosinga casetoblockthe adoptionoftheruling. UnderthepreviousGATTprocedure,rulingscouldonlybeadoptedby consensus,meaningthatasingleobjectioncouldblocktheruling.Now,rulingsareautomatically adoptedunlessthereisaconsensustorejecta ruling anycountrywantingtoblockaruling hastopersuadeallotherWTOmembers(includingitsadversaryinthecase)toshareitsview.

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Step4

Ifnoresponsetoarequestforconsultationsisreceivedwithin10daysor,iftheconsultationsfailtoachieveasolutionafter60days,thecomplainantcanaskthe DSBtoestabli shaDisputesPaneltoexaminethecase.

Step5

A Dispute Panel is to be constituted within 20 days of the DSBs decision to establishit.Wherethepartiestothedisputecannotagree,within20days,onthe panellistsnominatedbytheSecretariat ,theDi rector Generalinconjunctionwith theChairmanoftherelevantCouncil/Committee,willdecidetheappointments.

Step6

TheDPshouldcompleteitsexaminationofthecaseandproduceafinalreport within six months and for urgent cases such as those relat ing to perishable goods,within threemonths. Itshouldnevertakemorethanninemonths.

Itshallthroughoutthecourseofitsinvestigations,toencouragethepartiestothedisputetosettlethemattervoluntarily.

Step7

AftertheDPhasconsideredthe writtenandoralevidenceofbothpartiestothe disputeitwilldistributethefactualandargumentsectionsofitsreporttothe partiesfortheirperusal . Theparties willthensubmittheirwrittencomments withinaprescribedtimeperiodsetbythepa nel.

Step8

The DP shall provide the Interim report of its findings and conclusions to the partiesandthepartiescanrespondtotheinterimreport.Ifnoresponse,thenit willbeconsideredasthefinalreport.

Step9

Thefinalreportissubmittedtoth eDSBwhoshouldadoptit within60days of issuanceunlesseitheroneofthepartiestothedisputeindicatesthatitintendsto appeal or a consensus emerges in the DSB against adoption. It involves circulationofreporttotheotherMembers ,discusseda ndadopted.

Step10

ProvidednoappealhasbeenlodgedagainsttheDPreportandthatthereisno consensus against adoption, the DSB will automatically approve the Panels recommendationsattheadoptionmeeting.

Step11

Appeal to the standing Appellate B ody. The Appellate Body will review the existingevidenceandshouldaimtoreporttotheDSBwithitsfindingswithin 60 daysandnotmorethan 90days.

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Step12

TheDSBmustadopttheAppellateBodyreportwithin30daysofissuance,unless there is conse nsus against adoption. Bothpartiestothe dispute are bound to accept,unconditionally,therecommendationsoftheAppellateBody.

Step13

AftertheadoptionoftheAppellateBodysrecommendation,theoffendingparty must state its intentions in respect of the implementation of the DSBs recommendation.

Step14

The DSB will allow the offending party a reasonable period of time to implementtherecommendations,whichshouldnotnormallyexceed15months.

Step15

itmust

enter in to negotiations with the complainant inordertodecideona mutuallyacceptablelevelofcompensation.Ifapartyfailstocomplywiththerecomm2

endationwithinthesett ime,

Step16 (retaliatoryaction)

to suspend concessions or obligations

If no acceptable level of compensation has been agreed, the complainant may

dueto theoffendingparty

request authorization from the DSB

Step17undertheparticularagreementinquestion.

TheDSBshouldgranttherequestforsuspensionofconcessionsorobligations, within30daysunlessth ereisaconsensusagainstdoingso.

Step18(Arbitration)

Iftheoffendingpartyobjectstothelevelofsuspensiongranted bytheDSB,itcan

request that the matter be sent to arbitration(consistingoforiginalDispute

Panelsmembersoranarbitrator appointedbyDirector General).Thearbitration processshouldbecompletedwithin 60daysanditsdecisionisfinal.

Step19

Onrequestfromthecomplainant,theDSBwillthenauthorizethesuspensionof concessions as recommended by the arbitration board , unless there is a consensusagainstsodoing.

2 TheWTO hasnolegalpowerstoforcetheoffendingpartytoimplementtherecommendations

of the Dispute Pa nel or the Appellate Body party by any means like sanctions or penalty .Ultimately,theWTOsenforcementpowersrestinpersuasionandinmoralforceofits argument,

orthestrengthoftheMemberadoptingretaliatoryaction.

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Inprinciple,theDSB(orarbitrationbody)shouldauthorizeorrecommendthe

suspensionofconcessions,inthesamesectorofanagreement.However,ifthisis

not practicable or does not produce the desiredeffect, authorization may be

grantedtosuspendconcessionsinadifferentsectorofthesameagreementor, wherethecircumstancesareseriousenough ,underanotheragreement.

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