WTO DISPUTE SETTLEMENT PROCEEDINGS

In WTO dispute settlement proceedings four separate stages can be

distinguished:

* consultations;

* panel proceedings;

* appellate review proceedings; and

* implementation and enforcement of the recommendations and rulings of the panel and/or
the Appellate Body, as adopted by the DSB.

Consultations

The DSU expresses a clear preference for resolving disputes amicably rather than through
adjudication. Proceedings always start with consultations (or, at least, an attempt to have
consultations) between the parties to the dispute. In Mexico – Corn Syrup (Article 21.5 –
US), the Appellate Body stressed the importance of consultations in WTO dispute settlement
as follows:

Through consultations, parties exchange information, assess the strengths and weaknesses of
their respective cases, narrow the scope of the differences between them and, in many cases,
reach a mutually agreed solution in accordance with the explicit preference expressed in
Article 3.7 of the DSU. Moreover, even where no such agreed solution is reached,
consultations provide the parties an opportunity to define and delimit the scope of the dispute
between them. Clearly, consultations afford many benefits to complaining and responding
parties, as well as to third parties and to the dispute settlement system as a whole.

As already noted above, the resolution of disputes, through consultations, is obviously more
cost-effective and more satisfactory for the long-term trade relations with the other party to
the dispute than adjudication by a panel. consultations can serve as an informal pre-trial
discovery mechanism.
Initiation of consultations

Any WTO Member considering that a benefit accruing to it under the WTO Agreement is
being impaired or nullified by measures taken by another WTO Member may request
consultations with that other Member. WTO Members are required to accord sympathetic
consideration to, and afford adequate opportunity for, consultations. A request for
consultations, giving the reasons for the request, must be submitted in writing and must
identify:

* the measure at issue; and

* the legal basis for the complaint.

Conduct of consultations

The consultation process is essentially a political-diplomatic process, ‘without prejudice to

the rights of any Member in further legal proceedings’. Unless otherwise agreed, the Member
to which a request for consultation is made must reply to the request within ten days of the
date of its receipt, and enter into consultations within a period of no more than thirty days
after the date of receipt of the request. It must enter into consultations in good faith and with
a view to reaching a mutually satisfactory solution. If the Member does not respond within
ten days after the date of receipt of the request, or does not enter into consultations within a
period of no more than thirty days (or a period otherwise mutually agreed), then the Member
that requested the consultations may proceed directly to request the establishment of a panel.
As the Appellate Body noted in Mexico – Corn Syrup (Article 21.5 – US), in such a case the
respondent, by its own conduct, relinquishes the potential benefits that could be derived from
consultations.

While the request for consultations is notified to the DSB, the consultations themselves are
confidential. Generally, consultations are held in Geneva and involve Geneva-based
diplomats as well as capital-based trade officials of the parties to the dispute. The WTO
Secretariat is neither present, nor in any other way associated with, the consultations.

Consultations can be requested:

* pursuant to Article XXII of the GATT 1994, or the corresponding provisions in other
covered agreements; or
* pursuant to Article XXIII of the GATT 1994, or the corresponding provisions in other
covered agreements.

Only in the context of consultations pursuant to Article XXII or corresponding provisions can
a Member other than the consulting Members be allowed to participate in the consultations.
A Member that considers that it has a ‘substantial trade interest’ may notify the consulting
Members and the DSB of such interest within ten days after the date of the circulation of the
request for consultations. Provided that the respondent to the dispute agrees the claim of
substantial interest to be well founded, this Member shall join in the consultations. If
consultations are conducted pursuant to Article XXIII, or corresponding provisions, it is not
possible for other Members to join in the consultations. The Panel, in Korea – Alcoholic
Beverages, ruled in this respect that it was not for panels to assess the ‘adequacy’ of
consultations.

Consultations are a matter reserved for the parties and nobody but the parties is to be
involved in the consultations. What takes place in these consultations is not the concern of
panels. Panels may only ascertain whether consultations were held or at least were requested.

Outcome of consultations

If consultations are successful and lead to a mutually agreed solution to the dispute, these
solutions must be notified to the DSB and other relevant WTO bodies. Any Member may
raise any point relating to these notified solutions at meetings of the DSB or other WTO
bodies. Note that mutually agreed solutions must be consistent with WTO law.36If
consultations between the parties fail to settle the dispute within sixty days of the receipt of
the request for consultations, the complainant may request the DSB to establish a panel to
adjudicate the dispute. For consultations involving a measure taken by a developing-country
Member, Article 12.10 of the DSU explicitly provides that the parties may agree to extend
the sixty-day period. If, after the sixty-day period has elapsed, the consulting parties cannot
agree that the consultations have concluded, the Chairman of the DSB shall decide, after
consultation with the parties, whether to extend this period and, if so, for how long.

Panel Proceedings
When consultations are unsuccessful, the complainant may request the establishment of a
panel. The DSB will usually establish the panel by reverse consensus at the meeting
following that at which the panel request first appeared on the DSB’s agenda. Subsequently,
the parties will agree on the composition of the panel or, if they fail to do so, the composition
of the panel will be decided on by the WTO Director-General.

Establishing panels is one of the functions of the DSB and is one of the three situations in
which the decision of the DSB does not require a consensus. In the first DSB meeting in
which such a request is made, the responding Member can still block the panel’s
establishment, as was the case in the dispute settlement system under GATT 1947. At the
second DSB meeting where the request is made, however, the panel will be established,
unless the DSB decides by consensus not to establish the panel (i.e. the “negative” consensus
rule applies (Article 6.1 of the DSU)). This second meeting usually takes place around one
month later, but the complainant can also request a special meeting of the DSB within 15
days of the request, provided that at least ten days’ advance notice of the meeting is given.

The rule of negative (or reverse) consensus means that the complainant ultimately has a
guarantee that the requested panel will be established if it so wishes. The only possibility to
prevent the establishment is a consensus in the DSB against establishment, but this will not
happen as long as the complainant is unwilling to join in that consensus. In other words, as
long as the complainant, even alone and against the opposition of all other WTO Members,
insists on the establishment of the panel, it is impossible for the DSB to reach a consensus
against establishment. Therefore, one speaks of a virtually automatic DSB decision to
establish a panel.

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). Panelists may be selected from
an indicative list of governmental and non-governmental individuals nominated by WTO
Members, although other names can be considered as well. The WTO Secretariat maintains
this list (Article 8.4 of the DSU) and periodically revises it according to any modifications or
additions submitted by WTO Members. 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.

The request for the establishment of a panel defines and limits the scope of the dispute and
thereby the extent of the panel’s jurisdiction. Only the measure or measures identified in the
request become the object of the panel’s review and the panel will review the dispute only in
the light of the provisions cited in the complainant’s request. In addition to determining the
panel’s terms of reference, the request for establishment of the panel also has the function of
informing the respondent and third parties of the basis for the complaint

Article 12.1 of the DSU directs a panel to follow the Working Procedures contained in
Appendix 3 to the DSU, while at the same time authorising a panel to do otherwise after
consulting the parties to the dispute.

Written submissions and substantive panel meetings

Each of the parties to a dispute submit two written submissions to the panel:

* a ‘first written submission’; and

* a ‘rebuttal submission’.

In their first written submissions, the parties present the facts of the case and their arguments.
In their rebuttal submissions, they reply to the arguments and evidence submitted by the other
party. The first written submission of the complainant is usually filed two to three weeks in
advance of the first written submission of the respondent. The rebuttal submissions are filed
simultaneously. As the Appellate Body ruled in US – Shrimp, the parties have a legal right to
make the above-mentioned submissions to the panel, and the panel in turn is obliged in law to
accept and give due consideration to these submissions.

After the first written submissions of the parties have been filed, the panel holds its first
substantive meeting with the parties. At this meeting, the panel asks the complainant to
present its case. At the same meeting, the respondent is also asked to present its point of
view. The panel holds a second substantive meeting with the parties after the rebuttal
submissions have been filed. At this meeting, the respondent party is given the right to take
the floor first, to be followed by the complainant.

Rights of third parties

Any WTO Member having a substantial interest in a matter before a panel and having
notified its interest in a timely manner to the DSB shall have an opportunity to be heard by
the panel and to make written submissions to the panel. These third parties to the dispute are
invited by the panel to present their views during a special session of the first substantive
meeting. Third parties, however, only receive the first written submissions of the parties.

Use of experts

Article 13 of the DSU gives panels the authority to seek information and technical advice
from any individual or body which it deems appropriate

Protection of confidential business information

Panel proceedings are confidential. However, the Panels in Canada – Aircraft and Brazil –
Aircraft considered that parties have a legitimate interest in additional protection for sensitive
business information submitted to a panel. Thus, special procedures governing this
information were adopted.

Under the Procedures Governing Business Confidential Information adopted by the Panel in
Canada – Aircraft, the confidential business information was to be stored in a safe in a locked
room at the premises of the relevant Geneva missions, with restrictions imposed on access.
The Procedures also provided for either party to visit the other party’s Geneva mission and
review the proposed location of the safe and suggest any changes. Finally, the Procedures
provided for the return or the destruction of the confidential business information after
completion of the panel process.

The reports of panels are drafted without the presence of the parties to the dispute; they are
drafted in the light of the information provided and the statements made during the
proceedings.
Having completed a draft of the descriptive (i.e. facts and argument) sections of its report, the
panel issues this draft to the parties for their comments. Following the expiration of the time
period for comments, the panel subsequently issues an interim report to the parties including
both the descriptive sections and the panel’s findings and conclusions. A party may submit a

written request to the panel to review particular aspects of the interim report. At the request
of a party, the panel may hold a further meeting with the parties on the issues identified in the
written comments. The final panel report must include a discussion of the arguments made at
the interim review stage. The final panel report is first issued to the parties to the dispute, and
some weeks later, once the report is available in the three working languages of the WTO, it
is circulated to the general WTO membership. Once circulated to WTO Members, the panel
report is an unrestricted document available to the public.

Within sixty-days after the date of circulation of the panel report to the Members, the report
is adopted at a DSB meeting unless:

* a party to the dispute formally notifies the DSB of its decision to appeal; or

* the DSB decides by consensus not to adopt the report.

If a panel report is appealed, it is not discussed by the DSB until the appellate review
proceedings are completed and the Appellate Body report – together with the panel report –
comes before the DSB for adoption. When the DSB does consider and debate a panel report,
all Members have the right to comment on the report. In order to provide sufficient time for
the Members to review panel reports, the reports shall not be considered for adoption by the
DSB until twenty days after they have been circulated.

Duration of panel proceedings

The period in which a panel must conduct its examination, from the date that the composition
and terms of reference of the panel have been agreed upon until the date the final report is
issued to the parties, shall, as a general rule, not exceed six months. When a panel considers
that it cannot issue its report within six months, it shall inform the DSB in writing of the
reasons for the delay. In no case should the period from the establishment of the panel to the
circulation of the report to the Members exceed nine months.
Appellate review

Appellate review proceedings commence with a party’s notification in writing to the DSB of
its decision to appeal and the simultaneous filing of a notice of appeal with the Appellate
Body. The notice of appeal must adequately identify the findings or legal interpretations of
the panel which are being appealed as erroneous.

Written submissions and the oral hearing

Within ten days after filing the notice of appeal the appellant must file a written submission.
The written submission sets out a precise statement of the grounds of appeal, including the
specific allegations of legal errors in the panel report, and the legal arguments in support of
these allegations. Within fifteen days of the filing of the notice of appeal, other parties to the
dispute may, by filing ‘other appellant’s submission’, join in the original appeal or appeal on
the basis of other alleged legal errors in the panel report (‘cross appeal’). Within twenty-five
days of the filing of the notice of appeal, any party that wishes to respond to allegations of
legal errors, whether raised in the submission of the original appellant or in the submission(s)
of other appellants, may file an appellee’s submission.

At the hearing, the appellant(s) and appellee(s) first make brief oral presentations focusing on
the core legal issues raised in the appeal. After the oral presentations, the participants answer
detailed questions posed by Members of the Division regarding the issues raised in the
appeal. At the end of the oral hearing, the participants are given the opportunity to make a
brief concluding statement.

In appellate review proceedings, all third parties have a right to file a written submission,
within twenty-five days of the date of the filing of the notice of appeal, containing the
grounds and legal arguments in support of their position. A third party has the right to
participate in the oral hearing when:

* it has filed a written submission; or

* it has notified the Appellate Body Secretariat of its intention to participate in the oral
hearing within twenty-five days of the notice of appeal.

Within thirty days following circulation of the Appellate Body report, the Appellate Body
report and the panel report as upheld, modified or reversed by the Appellate Body, are
adopted by the DSB unless the DSB decides by consensus not to adopt the reports.
Duration of appellate review proceedings

With regard to the appellate review proceedings, the DSU provides that, as a general rule, the
proceedings shall not exceed sixty-days from the date a party to the dispute formally notifies
its decision to appeal to the date the Appellate Body circulates its report. When the Appellate
Body believes that it cannot render its report within sixty-days, it shall inform the DSB in
writing of the reasons for the delay together with an estimate of the period within which it
will submit its report. In no case shall the proceedings exceed ninety days.

Implementation and enforcement

At a DSB meeting held within thirty days of the adoption of the panel and/or Appellate Body
report, the Member concerned must inform the DSB of its intentions in respect of the
implementation of the recommendations and rulings.