IEP~Session 8~Dispute Settlement

7/27/2019 IEP~Session 8~Dispute Settlement

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Amity Business School

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Amity Business SchoolMBA 2013, 3rd Semester

IEP

Amanpreet Kang


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Dispute Settlement, Appeal and

Appellate Procedures


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Structure:

Ministerial Council

General Council Trade Policy Review Body

Dispute Settlement Body

Goods Council

Services Council

IP Council

Specialized committees, working groups, working parties

WTO - Organisation


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The WTOs procedure for resolving trade disagreements under theDispute Settlement Understanding (an agreement) is vital forenforcing the rules and therefore for ensuring that trade flowssmoothly.

A dispute arises when a member government believes anothermember government is violating an agreement or a commitmentthat it has made in the WTO. The authors of these agreements arethe member governments themselves the agreements are theoutcome of negotiations among members. Ultimate responsibilityfor settling disputes also lies with member governments, through

the Dispute Settlement Body.

The Legal Basis

The Dispute Settlement Understanding (DSU) the mainWTO agreement on settling disputes.

Was one of the outcomes of the Uruguay Round negotiations.

Introduction


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The Dispute Settlement Body

Made up of all member governments, usually representedby ambassadors or equivalent. The current chairperson isH.E. Mr. Yonov Frederick AGAH (Nigeria).

The Appellate Body The permanent seven-member Appellate Body is set up by

the Dispute Settlement Body and broadly represents therange of WTO membership.

Members of the Appellate Body have four-year terms.

They have to be individuals with recognized standing in thefield of law and international trade, not affiliated with anygovernment.

Introduction


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Dispute settlement is the central pillar of the multilateraltrading system.

It helps to increase the effectiveness of the rules-basedsystem and helps in the enforcement of rules.

The WTOs procedure for dispute settlement, makes thetrading system more secure and predictable.

Dispute settlement is based on clearly-defined rules, withtimetables for completing a case.

First rulings are made by a panel are endorsed i.e.

accepted or rejected by the WTOs full membership. Appeals based on points of law are possible.

The priority is to settle disputes, through consultations(between nations) if possible.

Majority of cases get settled out of court.

Dispute Settlement


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Disputes in the WTO are about broken promises/agreements.

WTO members have agreed that if they believe fellow-members are violating trade rules, they will use the

multilateral system of settling disputes instead of takingaction unilaterally. That means abiding by the agreedprocedures, and respecting judgements.

A dispute arises when one country adopts a trade policy

measure or takes some action that one or more fellow-WTO members consider to be breaking the WTOagreements, or to be a failure to live up to obligations.

A third group of countries (apart from the 2 parties involved)can declare that they have an interest in the case and enjoy

some rights.

Dispute Settlement


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Under GATT, there was a procedure to settle disputes but it had no fixed timetables,

rulings were easier to block, and

many cases dragged on for a long time inconclusively.

Uruguay Round introduced a more structured process Clearly defined stages in the procedure (Details about the

procedures and the timetable to be followed in resolving disputes.)

Greater discipline for the length of time a case should take to besettled, with flexible deadlines set in various stages of theprocedure.

The agreement emphasizes prompt settlement for effectivefunctioning of the WTO

If a case runs its full course to a first ruling, it should not normallytake more than about 12 15 months if the case is appealed.

The agreed time limits are flexible - if the case is consideredurgent, it is accelerated as much as possible.

Dispute Settlement


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The Uruguay Round agreement made it almost impossible forthe country losing a case to block the adoption of the ruling.

Earlier, under the GATT procedure, rulings could only beadopted by consensus, meaning that a single objection couldblock the ruling.

Now, rulings are automatically adopted unless there is aconsensus to reject a ruling any country wanting to block aruling has to persuade all other WTO members, to share itsview.

The procedure resembles a court/ tribunal, but the preferredsolution is for the countries concerned to discuss their

problems and settle the dispute by themselves. The first stage is consultations between the governments

concerned, and even when the case has progressed to otherstages, consultation and mediation are still always possible.

Dispute Settlement


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Settling disputes is the responsibility of the Dispute SettlementBody (i.e. the General Council), which consists of all WTOmembers.

The Dispute Settlement Body has the sole authority to establishpanels of experts to consider the case, and to accept or rejectthe panels findings or the results of an appeal.

It monitors the implementation of the rulings and

recommendations, and has the power to authorize retaliationwhen a country does not comply with a ruling.

How are disputes settled?


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Panels are like tribunals. The panelists are usuallychosen inconsultation with the countries in dispute. Only if the 2 sidescannot agree does the WTO director-general appoint them.

Panels consist of 3 (to five) experts from different countrieswho examine the evidence and decide who is right and who iswrong.

The panels report is passed to the Dispute Settlement Body,

which can only reject the report by consensus.

Panelists for each case can be chosen from a permanent list ofwell-qualified candidates. They serve in their individualcapacities. They cannot receive instructions from any

government.

Panel members


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First stage: consultation (up to 60 days). Before taking anyother actions the countries in dispute have to talk to each otherto see if they can settle their differences by themselves. If thatfails, they can also ask the WTO director-general to mediate ortry to help in any other way.

Second stage: the panel (up to 45 days for a panel to be

appointed, plus 6 months for the panel to conclude).

If consultations fail, the complaining country can ask for a

panel to be appointed. The country in the dock can block the creation of a panel

once, but when the Dispute Settlement Body meets for a

second time, the appointment can no longer be blocked

(unless there is a consensus against appointing the panel).



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Second stage: the panel The panel helps the Dispute Settlement Body make rulings

or recommendations.

But because the panels report can only be rejected byconsensus in the Dispute Settlement Body, its conclusions

are difficult to overturn. The panels findings have to be based on the agreements

cited.

The panels final report should normally be given to theparties to the dispute within 6 months.

In cases of urgency, including those concerning perishablegoods, the deadline is shortened to 3 months.



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4. Experts: if one side raises scientific or other technical matters,the panel may consult experts or appoint an expert reviewgroup to prepare an advisory report.

5. First draft: the panel submits the descriptive (factual and

argument) sections of its report to the two sides, giving themtwo weeks to comment. This report does not include findingsand conclusions.

6. Interim report: The panel then submits an interim report,including its findings and conclusions, to the two sides, givingthem one week to ask for a review.

7. Review: The period of review must not exceed two weeks.During that time, the panel may hold additional meetings withthe two sides.

How do panels work?


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8. Final report: A final report is submitted to the two sides andthree weeks later, it is circulated to all WTO members. If thepanel decides that the disputed trade measure does break aWTO agreement or an obligation, it recommends that themeasure be made to conform with WTO rules. The panel maysuggest how this could be done.

9. The report becomes a ruling: The report becomes the DisputeSettlement Bodys ruling or recommendation within 60 daysunless a consensus rejects it. Both sides can appeal the report(and in some cases both sides do).

How do panels work?


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These approximate periods for each stage of a dispute settlement procedure aretarget figures the agreement is flexible. In addition, the countries can settle their

dispute themselves at any stage. Totals are also approximate.

60 days Consultations, mediation, etc

45 days Panel set up and panellists appointed

6 months Final panel report to parties

3 weeks Final panel report to WTO members

60 days Dispute Settlement Body adopts report (if no appeal)

Total = 1 year (without appeal)

60-90 days Appeals report

30 days Dispute Settlement Body adopts appeals report

Total = 1y 3m (with appeal)


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Either side/ both parties can appeal a panels ruling.

Appeals have to be based on points of law such as legal

interpretation they cannot reexamine existing evidence or

examine new issues.

Each appeal is heard by three members of a permanent seven-

member Appellate Body set up by the DSB and broadly

representing the range of WTO membership.

Members of the Appellate Body have four-year terms.

They have to be individuals with recognized standing in the field of

law and international trade, not affiliated with any government.

Appeals


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The appeal can uphold, modify or reverse the panels legal

findings and conclusions.

Normally appeals should not last more than 60 days, with an

absolute maximum of 90 days.

The Dispute Settlement Body has to accept or reject the appeals

report within 30 days and rejection is only possible by

consensus.

One of the central provisions of the DSU reaffirms that Members

shall not themselves make determinations of violations or suspend

concessions, but shall make use of the dispute settlement rules

and procedures of the DSU.

Appeals


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If a country has done something wrong, it should swiftly correct itsfault.

If it continues to break an agreement, it should offer compensation or

suffer a suitable penalty that has some bite.

Once the case has been decided, there is more to do before trade

sanctions (the conventional form of penalty) are imposed.

The priority at this stage is for the losing defendant to bring its policyinto line with the ruling or recommendations.

The dispute settlement agreement stresses that prompt compliance

with recommendations or rulings of the DSB is essential in order to

ensure effective resolution of disputes to the benefit of all Members.

Corrective Action


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If the country that is the target of the complaint loses, it must followthe recommendations of the panel report or the appeals report.

It must state its intention to do so at a Dispute Settlement Body

meeting held within 30 days of the reports adoption.

If complying with the recommendation immediately proves

impractical, the member will be given a reasonable period of time to

do so.

If it fails to act within this period, it has to enter into negotiations with

the complaining country (or countries) in order to determine mutually-

acceptable compensation for instance, tariff reductions in areas of

particular interest to the complaining side.

Corrective Action


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If after 20 days, no satisfactory compensation is agreed, thecomplaining side may ask the DSB for permission to impose limited

trade sanctions (suspend concessions or obligations) against the

other side.

The Dispute Settlement Body must grant this authorization within 30

days of the expiry of the reasonable period of time unless there is a

consensus against the request.

In principle, the sanctions should be imposed in the same sector asthe dispute. If this is not practical or if it would not be effective, the

sanctions can be imposed in a different sector of the same

agreement.

Corrective Action


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In turn, if this is not effective or practicable and if the circumstancesare serious enough, the action can be taken under anotheragreement.

The objective is to minimize the chances of actions spilling over intounrelated sectors while at the same time allowing the actions to be

effective.

In any case, the Dispute Settlement Body monitors how adoptedrulings are implemented. Any outstanding case remains on its agendauntil the issue is resolved.

Corrective Action


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Appeals are conducted according to the procedures establishedunder:

Understanding on Rules and Procedures Governing theSettlement of Disputes (DSU)

Working Procedures for Appellate Review (Working Procedures).

The Working Procedures are drawn up by the Appellate Body inconsultation with the

Director-General of the WTO and

Chairman of the Dispute Settlement Body (DSB)

They have been amended six times since 1995. The most recent amendments were announced on 26 July 2010.

The most recent amendments modify the deadlines for writtensubmissions during an appeal and provide for the filing andservice of written submissions in electronic form. Theseamendments take effect for appeals initiated on/ after 15

September 2010



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The appellate stage follows the issuance of a report by a panelestablished pursuant to the DSU.

Panel reports must be adopted by the DSB within 60 days of their

circulation to WTO Members, unless a party decides to appeal.

Parties to a dispute may appeal a panel report at any time before

the panel report is adopted by the DSB.

Third parties are not entitled to appeal a panel report.

Appeals are limited to issues of law covered in the panel report

and legal interpretations developed by the panel.



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An appeal is commenced upon written notification to the DSB andthe simultaneous filing of a Notice of Appeal with the Appellate

Body Secretariat. A party that files a Notice of Appeal is known as

the appellant.

A party to the dispute that wishes to respond to the allegations

raised by the appellant may file its own written submission within

18 days of the date on which the Notice of Appeal and the

appellant's submission were filed. A party that files a written

submission is known as an appellee.



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The Working Procedures recognize that some disputes may involvemultiple appeals.

A party to the dispute other than the original appellant may alsoappeal on the same grounds or on other alleged errors by filing aNotice of Other Appeal and a written submission within 5 days of the

filing of the Notice of Appeal. This party is known as an otherappellant.

Parties wishing to respond to the allegations raised by the otherappellant may file a written submission within 18 days of the filing ofthe Notice of Appeal.

Members that are third parties during the panel process may also filewritten submissions within 21 days of the date of filing of the Notice of

Appeal. Third parties that file written submissions or appear at the oralhearing (after taking written or discretionary permission from

Appellate Body Secretariat and Appellate Body Division) are known

as third participants.



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Oral Hearing: At the oral hearing, appellants, other appellants,appellees and third participants are given an opportunity to presentoral arguments and to respond to questions put to them by the

Appellate Body Division hearing the appeal.

The hearing generally takes place within 30 to 45 days of the filing of

the Notice of Appeal.

Proceedings before the Appellate Body are confidential. Only WTOMembers that are appellants, other appellants, appellees or thirdparticipants are entitled to attend oral hearings.

In a few instances, at the request of the parties, Appellate Body oralhearings have been opened to the public.

After the oral hearing and before finalizing the Appellate Body Report,the Appellate Body Division hearing the appeal exchanges views withthe other four Appellate Body Members



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The Appellate Body Report is circulated to WTO Members in the 3official languages of the WTO (English, French, and Spanish) within90 days of the date when the Notice of Appeal was filed, and itbecomes public immediately upon circulation to Members.

In its Report, the Appellate Body may uphold, modify or reverse the

legal findings and conclusions of the panel.

Within 30 days of the circulation of an Appellate Body Report, theReport, together with the panel report will be put on the agenda of aDSB meeting for adoption.

The DSB will adopt the reports and an adopted Appellate BodyReport, together with the adopted Panel Report, must beunconditionally accepted by the parties to the dispute.



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IEP~Session 8~Dispute Settlement

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