Introduction:

The dispute settlement system of the World Trade Organization, which is considered as the
“Jewel in the Crown” of the WTO, is also the busiest of its kind1. To reinforce this statement, in
2017 it was close to six hundred cases which proves it is also probably the busiest. This is due to
it being one of the rare areas of the law where sovereign states have to follow the claims made by
even the third-party adjudications of disputes2. The wide use of the WTO dispute system in a
way heralds the success of this system but in a way undermines the other arms of the
organization. Despite this, the WTO dispute settlement system still has gaps and is not perfect.
This essay will examine the evolution of the dispute settlement system from the GATT 1947 era
to the present, examining the key issues it faced and the strategies it used to become a
centerpiece in the World Trade organization.

Evolution of the system:

The GATT 1947 dispute system was ratified on January 1948 as a multilateral agreement for
reciprocal reductions in tariff barriers, despite its institutional deficiencies such as a proper
coherent structure, the GATT managed to function as a de facto international organization,
sponsoring eight rounds of multilateral trade negotiations3. The long withstanding impact that the
GATT dispute settlement system has created mainly in Articles XXII4 and XXIII5 can be seen as
a ripple effect creating some of the principles and practices of the dispute settlement system of
the WTO.

1
'WTO | 2009 Press Releases - WTO Disputes Reach 400 Mark - Press/578' (Wto.org, 2020)
<https://www.wto.org/english/news_e/pres09_e/pr578_e.htm> accessed 19 May 2020.

2
Ibid
3
'From The GATT To The WTO: A Brief Overview' <https://guides.ll.georgetown.edu/c.php?
g=363556&p=4108235> accessed 20 May 2020.
4
General Agreement on Tariffs and Trade (1947) (10 April 1947) Article XXII
5
General Agreement on Tariffs and Trade (1947) (10 April 1947) Article XXIII
The GATT system was quite successful in dispute resolution despite the fact the GATT was
characterized by temporary measures and ad hoc solutions to emerging problems. The disputes in
the early years were decided by a Chairman from the council that decided the rulings which later
transpired to working parties adopting their reports through consensus decisions, which was then
later replaced by independent experts unrelated to the parties involved in the disputes.6 The
GATT dispute settlement model relied on the reports and ‘appropriate recommendations’7 made
by these experts in order to make legally binding decisions on the issues brought forward by the
parties to the GATT council8. The GATT panel decision process of dispute resolution was
successful despite the GATT being diplomatic in nature when it started off as inferred from
Article XXII, but as more rounds of discussion passed the panels began to take a more rule-
oriented, judicial approach to settling disputes9.

The GATT system was considered fragmented due to its provisional non institutional origins10
prior to Tokyo and due to the lack of general support, the Plurilateral Trade Agreements were
concluded as side agreements only applying to a limited number of GATT parties11. Despite the
success of the GATT panel dispute resolution process it had some serious shortcomings,
including delays in the formation of the panel, blocking the adoption of the Panel reports and

6
World trade organization, ‘Historic development of the WTO dispute settlement
system' (WTO, 2004) <https://www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c2s
1p1_e.htm> accessed 7 May 2020
7
Ernst-Ulrich Petersmann, “The Dispute Settlement System of the World Trade Organization
and the Evolution of the GATT since 1948’ (1994) Common Mkt. L. Rev. 31,1157; Robert E.
Hudec, Enforcing International Trade Law: The Evolution of the Modern GATT Legal System
(Butterworth Legal Publications, 1993)9
8
John H. Jackson, The World Trading System, 2nd edn (Bobbs-Merrill CO., Inc.,1997) 63
9
Mitsuo Matusushita and Thomas J. Schoenbaum, The World Trade Organization: Law,
Practice, And Policy (2020).
10
Protocol of Provisional Application, 30 October 1947, UNTS 55 (1955),308
11
Bhala & Kennedy, 8.
delays in the implementation of Council Recommendations12. Any of the respondent could
exercise their vetoing powers and not adhere to any judgment, this especially used to happen in
cases of the economical or political nature such as anti-dumping13. Politics is said to be the art of
preventing people from taking part in affairs which properly concern them14, this ideology is
reflected in the Baldwin (2010) where it is found that the GATT’s success relied on wealthy
countries transcending their authorities and acting as hegemons by allowing poorer countries to
benefit from their negotiations without making any trade concessions themselves15, this allowed
many developing nations to free ride on the negotiations of the larger developed nations and take
advantage of the Most Favoured Nation status due to them being considered too small. The
Uruguay round succeeded in reversing this deficient situation by establishing the principle of a
single undertaking, the scope of the WTO as discussed in Article II16, is that it is one
organization which administers one treaty that includes the law and only a few exceptions apply
to all members17. The Marrakesh Agreement serves as the textual scope and it contains two parts,
the single undertaking and the Plurilateral Trade Agreement18. The single undertaking is an
amalgamation of the WTO agreement and the three Annexes, which as termed the Multilateral
Trade Agreements. The driving force of the single undertaking mechanism is to overcome the
fragmentation and the freeriding19 that was expanded on in the Tokyo Round20 as being one of

12
Ibid (n9)
13
Peter Van den Bossche and Denise Prévost, Essentials of WTO Law (1st edn, Cambridge
University Press 2016)

14
Paul Valéry, Tel Quel (1943)

15
Sudeshna Roy, Dana Cooper and Brian Murphy, Transatlantic Relations And Modern
Diplomacy: An Interdisciplinary Examination (2020).
16
WTO Secretariat, 'WTO: World Trade Report 2006—Executive Summary' (2006) 41 Foreign
Trade Review.
17
Rüdiger Wolfrum and Peter Tobias Stoll, WTO- Institutions And Dispute Settlement (Brill
2020).
18
Ibid (n9)
19
Hudec, Cottier & Mavroidis (eds), 101, 109
the main reasons for the inefficiency of the GATT 1947. The inability to free ride has made
developing nations more active participants in the negotiation process within the WTO21.

Strategies derived from GATT 1947 System

- Negative Consensus Model: The desire for change was due to the perception of
member states to avoid ‘compliance’ with decisions they did not agree upon because the
GATT’s dispute settlement system was not compulsory and could not authorize sanctions
against a party in breach22. The new WTO DSS system still incorporates the GATT legal
framework and its precedent therefore owing to the disposed system that the evolution in
the credibility and enforcement of new decision would not have happened without it.

- Seeking Redress: Article XXIII23 of the GATT is used by the WTO rules to define the
conditions which permit Members to seek redress and defines the conditions for the
violations. Under Article XXIII, Members of the WTO are allowed to bring forth a
complaint under three conditions, the first one which is the standard case where a
violation of the WTO rules by a member country adversely affects other members24, the
second one is ‘non violation’ where harm is caused but it cannot be specified what GATT
provision was violated. Finally, the last provision is the ‘catch all’ provision, the scope of
the article covers all of the component multilateral agreements of the WTO. Any member
country may seek redress in regard to any violations of the WTO rules made by another
without having to demonstrate a violation has occurred as all Members are legally
obliged to conform to the WTO rules25.

20
Brazil- Desiccated Coconut, WS/DS22/AB/R, 18-19; Jackson, Jurisprudence of GATT and
WTO, 401: Berrod & Fournier, in: Bourgeois et al. (eds) 25, 27.
21
Ibid (n9)
22
Ibid (n19)
23
Ibid (n5)
24
William A Kerr and James Gaisford, Handbook On International Trade Policy (2020).
25
Ibid (n24)
 - The complaints procedures of the WTO: The primary objective of the WTO dispute
settlement system is to settle trade disputes between its Members by using means of
alternative dispute resolution like mediation and negotiation in the first instance and
recourse to the establishment of a formal dispute panel is intended as a last resort when
all other avenues of conciliation have been exhausted. Furthermore, third parties with a
‘substantial trade interest’, other members countries and the WTO secretariat can also
take part in the consultations and mediate in the dispute under the provisions provided.26

Key challenges faced:

- The role of lawyers and the law making power of the Appellate Body in the WTO
settlement system: One of the main issues that the WTO dispute settlement system poses
is the fact that the WTO panels and the Appellate Body are not formally endowed with an
adjudicative function, they do not issue ‘judgements’ endowed with the res judicata
effect; their reports are merely recommendations to the parties and to the WTO Member
governments, not binding and final. But at the same time, they have to apply various
WTO agreements, interpreting them to check whether the measure of a WTO member
challenged by another member is or is not consistent, in law, with such agreements. The
second issue is that the standard recommendation in the reports of the Appellate Body is
that only the member that is in question of the issue bring the measure into conformity
with that agreement27. The content of their reports are usually legal reasonings and
findings, and the system is framed in such a way that even though the reports are not
compulsory they are ‘automatically’ adopted as a rule by the political organ of the
WTO’s the Dispute Settlement Body and that the member involved are supposed to
conform with those recommendations28. The function performed by the Appellate body
and the panels look to be that of international arbitration panel and actual governing
bodies such as permanent tribunals. It is not surprising then that early on the Appellate
26
Ibid (n24)

27
Articles 3.2 and 19.1 of the DSU

28
Articles 21.1 and 21.3 of the DSU
 Body ruled explicitly that a government could be represented by private lawyers,
including in appearing and orally pleading at hearings on its behalf. This enables small
countries to seek competent legal services, when they do not possess them in order to
protect their interest and have an equal footing with the country in question. Most
countries, since that ruling, have resorted to private lawyers as their counsel, in turn these
lawyers have contributed to the emphasis of procedural correctness of this proceedings.
The issue in question is that these disputes are technically between sovereign
governments and there is no jus stand for private parties before panels and the Appellate
Body despite this the cautious admission of amicus curiae briefs by judicial interpretation
of the DSU is done. Some disputes are known by the names of the firms involved or
directly affected such as the Boeing-Airbus dispute between the US and the European
Community29. There is also a way that private claims may be done under diplomatic
protection, if the national government of the affected domestic enterprise decides to
pursue the case under the WTO system, for example, an enterprise that is object of an anti
dumping proceeding in a foreign country may elect to seek judicial review of the
substantive and procedural legality of the measure used in that country, or may instead or
even at the same time request its government to challenge the same measure within the
WTO for discrepancy with the relevant WTO trade agreement30. The fact that WTO
agreements cannot be invoked domestically as a rule, to challenge the domestic
legislation of the country increases the likelihood that an alleged WTO discrepancy as
applied in the case by the country will be brought to the WTO dispute settlement system.
This leads to a lot of cases that require the resources of a domestic court to be carried out
to the international dias therefore wasting the time and resources of which was
determined to be for high profile cases truly requiring the attention of the WTO. This also
means that the proceedings at the WTO appear as a kind of continuation of the domestic

29
A. Alemanno, Private Parties and WTO Dispute Settlement System, Cornell Law School LLM
Paper Series 1 (2004); Giulio Peroni, La tutela degli interessi privati nel sistema OMC e il
possibile concorso di giurisdizione con altri sistemi ad esso estranei, 18 Diritto Commercio
Internazionale 723 (2004)
30
US – Countervailing Duties on Certain EC Products, proceedings against the same US
countervailing duties were pending before the US Court of International Trade, see Report
fn.334
 dispute in the multilateral framework. Since the government most of the time feels as
they might as well leave the matter of dispute to the private enterprise or company, WTO
litigation directly or indirectly becomes part of the legal services that the international
trade lawyers are expected to provide or offer to their clients, the intention is not only
handing this case before the domestic authorities of both countries but also in order to
convince the international and national to abide and comply with the WTO remedies

- Confidentiality issues under the DSU: The Dispute Settlement Understanding is one of
the most fundamental achievements31 of the Uruguay Round, it has been referred to as the
‘crown jewel’ of the WTO32. The advancement in the system was based on the fact that
legal rules and procedures finally can serve as precedent for disputes, such a
transformation was applauded and welcomed in comparison to the GATT 1947 system
which was textually weak and seriously flawed33. Under Article 3.2 of the DSU, the
efficiency and the reliability of the dispute settlement mechanism is the central element in
providing security and predictability of the multilateral trading system. The system is not
perfect as among some of the issues are, the improvement of the transparency of the
DSU, the implementation of the WTO rulings34 and the improvement of the protection of
confidential information. There is a ‘dilemma’ that arises between fact-finding and
confidentiality and that arises from the necessity to satisfy five contradictory principles,
the first principle is that members have an obligation to supply the information required
by the panel to make an objective assessment of the facts for the case. The WTO has yet
to develop a full body of rules dealing with the methods of proof, fact-finding,

31
E. Hernandez- Lopez, ‘Recent Trends and Perspectives for Non-State Actor Participation in
World Trade Organisation Disputes’, Journal of World Trade 35 (3), (2001), p. 471.
32
C.-D. Ehlermann, ‘Six Years on the “Bench of the World Trade Court”’, Journal of World
Trade 36 (4), (2002), p. 639
33
B. Mercurio, ‘Improving Dispute Settlement in the World Trade Organization: The Dispute
Settlement Understanding Review – Making it Work?’, Journal of World Trade 38 (5), (2004)
34
W. Weiss/C. Herrmann, Welthandelsrecht (Verlag C.H. Beck, 2003), §10, p. 154
 admissibility and weight of evidence35. Despite this, the DSU imposes upon the WTO
adjucating bodies the obligation to undertake the objective assessment following Article
11 and Article 13, the panel has the right to seek information and technical advice from
any body that it deems appropriate as well as it should make an objective assessment of
the matter, the facts and its conformity with the agreements36. These powers would be of
little use if the WTO had no legal authority to impose these rules and make its members
respond by providing the requested information, therefore the Appellate Body further
justifies this by drawing on Article 3.10 of the DSU which states that, ‘if a dispute arises
all members will engage in this procedures in good faith in an effort to resolve the
dispute.’ However good faith might not prove sufficient enough to guarantee its member
cooperating completely therefore needing more precedent to convince their members to
follow37. The second principle is dilemma defined by the Appellate Body38 as ‘a refusal to
provide information requested by the Panel may lead to inferences being drawn about the
inculpatory character of the information withheld’ meaning that a when a party does not
provide information to the panel, a conclusion can be drawn that the information would
be favorable to the adverse party where previously panels where hesitant to draw
negative inferences. The third principle is that Members cannot invoke confidentiality as
a justification for their failure to submit the evidence required, in Indonesia-Autos39, the
panel warned the parties that their failure to submit the Business Confidentiality
Information(BCI) required will not allow them to invoke Confidentiality as a defence for
reputational damage. The fourth principle is due process and equal access to information

35
J. Waincymer, WTO Litigation Procedural Aspects of Formal Dispute Settlement (Cameron
May, 2002), p. 530
36
J. Waincymer see footnote 10, p. 547, citing the report of the Appellate Body, Canada –
Aircraft, para. 184.

37
Rufus Yerxa and Bruce Wilson, Key Issues In WTO Settlement, The First Ten Years (2020).

38
See footnotes 10 and 11; Appellate Body Report on Canada – Aircraft, para. 204.

39
Panel Report on Indonesia – Autos, para. 14.235
 which requires that the information available and used by one party should be made
accessible to the other party, resulting in disclosure and fair competition40. The fifth is
that members cannot be required to submit confidential business information to WTO
panels without some guarantees. The current DSU provisions on confidentiality were
negotiated in 1994 as a reference for disputes under GATT 1947, the confidentiality
agreement as stated in Article 18.2 of the DSU states that the submissions made to the
Appellate Body be treated as confidential and if something has to be disclosed it can be,
at the request of the Member, as a non-confidential summary of the information. This
also stays true for Panels41 and appeal proceedings42 that they both stay confidential.
Some panels, like the appellate body have allowed the additional procedures be adopted
to safe guard the interests of the parties43. The panels are in no way bound to grant these
proposals, for example, in Canada- Wheat Exports and Grain Imports44, the panels
rejected the additional procedures proposed by Canada because they were too
cumbersome, at the same time they did adopt some procedures for the protection of the
BCI. It is upto the requesting parties to prove to the panels the need for additional
procedures for BCI protection and upto the panels to decide whether they want to adopt
it. Some parties use this framework of additional procedures to delay the proceedings,
therefore the unsatisfactory framework threatens the credibility of the WTO dispute
settlement system. The fact that the Appellate body has outlined the protection of
confidential information and repeatedly called for an adoption of standard rules of
procedure is a clear indication that the DSU needs to be reviewed45. Therefore a standard

40
C.-D. Ehlermann, see footnote 3, p. 605

41
Appendix 3 of the DSU
42
Article 17.10 of the DSU
43
Article 12.1 of the DSU

44
Panel Report on Canada – Wheat Exports and Grain Imports, para. 11.

45
Ibid(n37)
 set of rules will allow the panels to have access to all requested information and their
assessment will be of higher quality which in turn benefit the reputation of the DSU.

Conclusion:

The WTO dispute settlement system is a far better system than that of the GATT 1947, the
progress being obvious is not one that has been taken lightly, many members of different sizes
who would have been disabled if no reform was come to conclusion now take part actively in
discussions and have a say. The system lacks a solid framework when it comes to certain issues,
but the negatives cannot be taken as the anchor that pronounces the progress made as futile, the
WTO system can incorporate, with an open mind, many clauses that would benefit its panels and
decision making processes as well as future governing bodies who can hopefully look at the the
WTO system as a catalyst that has helped make what future generations can call their Crown
Jewel.

Bibliography:

Primary Sources:

General Agreement on Tariffs and Trade (1947) (10 April 1947) Article XXII
General Agreement on Tariffs and Trade (1947) (10 April 1947) Article XXIII
Appendix 3 of the Dispute Settlement Understanding
Article 17.10 of the Dispute Settlement Understanding
Article 12.1 of the Dispute Settlement Understanding

Secondary Sources:

A Alemanno, Private Parties and WTO Dispute Settlement System, Cornell Law School LLM
Paper Series 1 (2004); Giulio Peroni, La tutela degli interessi privati nel sistema OMC e il
possibile concorso di giurisdizione con altri sistemi ad esso estranei, 18 Diritto Commercio
Internazionale 723 (2004)

Appellate Body Report on Canada – Aircraft, para. 204.

Bhala & Kennedy, 8.

Brazil- Desiccated Coconut, WS/DS22/AB/R, 18-19; Jackson, Jurisprudence of GATT and

WTO, 401: Berrod & Fournier, in: Bourgeois et al. (eds) 25, 27

B. Mercurio, ‘Improving Dispute Settlement in the World Trade Organization: The Dispute
Settlement Understanding Review – Making it Work?’, Journal of World Trade 38 (5), (2004)

C.-D. Ehlermann, ‘Six Years on the “Bench of the World Trade Court”’, Journal of World Trade
36 (4), (2002), p. 639

Ernst-Ulrich Petersmann, “The Dispute Settlement System of the World Trade Organization and
the Evolution of the GATT since 1948’ (1994) Common Mkt. L. Rev. 31,1157; Robert E.
Hudec, Enforcing International Trade Law: The Evolution of the Modern GATT Legal System
(Butterworth Legal Publications, 1993)9

E. Hernandez- Lopez, ‘Recent Trends and Perspectives for Non-State Actor Participation in
World Trade Organisation Disputes’, Journal of World Trade 35 (3), (2001), p. 471.

'From The GATT To The WTO: A Brief Overview' <https://guides.ll.georgetown.edu/c.php?

g=363556&p=4108235> accessed 20 May 2020.

Hudec, Cottier & Mavroidis (eds), 101, 109

J. Waincymer, WTO Litigation Procedural Aspects of Formal Dispute Settlement (Cameron

May, 2002), p. 530
J. Waincymer see footnote 10, p. 547, citing the report of the Appellate Body, Canada – Aircraft,
para. 184.

John H. Jackson, The World Trading System, 2nd edn (Bobbs-Merrill CO., Inc.,1997) 63

Mitsuo Matusushita and Thomas J. Schoenbaum, The World Trade Organization: Law, Practice,
And Policy (2020).

Panel Report on Indonesia – Autos, para. 14.235

Peter Van den Bossche and Denise Prévost, Essentials of WTO Law (1st edn, Cambridge
University Press 2016)

Paul Valéry, Tel Quel (1943)

Protocol of Provisional Application, 30 October 1947, UNTS 55 (1955),308

Rüdiger Wolfrum and Peter Tobias Stoll, WTO- Institutions And Dispute Settlement (Brill 2020).

Rufus Yerxa and Bruce Wilson, Key Issues In WTO Settlement, The First Ten Years (2020)

Sudeshna Roy, Dana Cooper and Brian Murphy, Transatlantic Relations And Modern
Diplomacy: An Interdisciplinary Examination (2020)

US – Countervailing Duties on Certain EC Products, proceedings against the same US

countervailing duties were pending before the US Court of International Trade, see Report
fn.334
'WTO | 2009 Press Releases - WTO Disputes Reach 400 Mark - Press/578' (Wto.org, 2020)
<https://www.wto.org/english/news_e/pres09_e/pr578_e.htm> accessed 19 May 2020.

World trade organisation, ‘Historic development of the WTO dispute settlement

system' (WTO, 2004) <https://www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c2s
1p1_e.htm> accessed 7 May 2020

WTO Secretariat, 'WTO: World Trade Report 2006—Executive Summary' (2006) 41 Foreign
Trade Review.

W. Weiss/C. Herrmann, Welthandelsrecht (Verlag C.H. Beck, 2003), §10, p. 154

William A Kerr and James Gaisford, Handbook On International Trade Policy (2020)