WTO Dispute Settlement: a Check-up
twenty years of the system’s operation, this volume takes stock by providing an in-depth analysis of key issues that have emerged. The book collects and updates papers by a group of eminent experts that were presented at an international conference at the College of Europe in Bruges. The fundamental question of whether the system is in good shape or whether changes are necessary is addressed through five themes.
Firstly, the book looks at the interpretive function of the dispute settlement system and questions whether rulings are capable of "gap-filling". Secondly, under the heading ‘Jurisdiction and Applicable Law’ we cover the thorny issue of how public international law can be integrated into the dispute resolution system. Thirdly, regarding problems associated with implementation, we ask whether the system ensures satisfactory compliance with its rules and rulings or whether financial remedies need to be added. Furthermore, through themes four and five we compare the WTO dispute settlement system with the dispute settlement system contained in the Free Trade Agreements, as well as the investor-state arbitration system (ISDS). We investigate how these two different systems can influence each other and learn from one another. With respect to the reform debate on ISDS, for example, the question was raised whether the WTO dispute settlement system could be considered as a model for such a reform.
This review comes to the conclusion that the system is functioning, if not perfectly, at least reasonably well. Where problems are identified, solutions are suggested to improve the system.
Table Of Contents
- About the author(s)/editor(s)
- About the book
- This eBook can be cited
- Table of Contents
- The Origins of WTO Dispute Settlement (Dirk De Bièvre)
- A Comment (Lothar Ehring)
- Jurisdiction and Applicable Law in the WTO (Lorand Bartels)
- A Comment (Mary Footer)
- Panel Discussion: Business and WTO Dispute Settlement (Reinhard Quick / Peter Chase / Darya Galperina / Adrian van den Hoven / Geert Zonnekeyn)
- Financial Payments as a Remedy in WTO Dispute Settlement Proceedings. An Update (Marco Bronckers / Freya Baetens)
- A Comment (Bernard Hoekman)
- A Comment (Christian Tietje)
- WTO Dispute Settlement and Dispute Settlement in EU FTA Agreements (Colin M. Brown)
- A Comment (Pieter Jan Kuijper)
- Five Scenarios in Search of a Director. WTO Judges, Their Terms of References, Scope of Competence, Remedies they Proscribe, and the Consequences for the Addressees (Louise Johannesson / Petros C. Mavroidis)
- Strengths, Weaknesses, Opportunities and Threats of Investor-State Dispute Settlement as Compared to WTO Dispute Settlement (Freya Baetens)
- A Comment (Jacob Grierson)
- Series index
Its dispute settlement system is still regularly referred to as the jewel in the WTO’s crown. At the same time, this system has been under review for rather more than half of its existence, and that review has spawned hundreds of proposals for amendment from the WTO membership – although none has been accepted so far.1 Academics and practitioners have added their fair share of criticisms and calls for improvements over the years. It seemed therefore apposite, when reaching the WTO’s 20th anniversary, to perform a “health check” of WTO dispute settlement during a scientific conference: is the system fundamentally in good shape, or are fundamental changes in order?
When designing the conference, the emphasis was indeed on essentials. We did not want to get lost in the myriad of technical issues that easily bedevil any discussion of the WTO’s Dispute Settlement Understanding (DSU), or the case law of WTO panels and the WTO Appellate Body.
After a welcoming address by Prof. Monar, Rector of the College of Europe, Prof. Ehlermann, former member of the WTO Appellate Body, gave the keynote speech. He noted “the appalling lack of equilibrium” between the “legislative branch” and the “judicial branch” of the WTO. He referred to the increasing workload of the WTO dispute settlement system and proposed remedies. With foresight, given the crisis that arose later in the spring of 2016 when the United States blocked the re-nomination of the Korean member of the Appellate Body Prof. Seung Wha Chang, Prof. Ehlermann deplored “the denaturation of the selection of Appellate Body members” resulting in part from the shortness of the mandates.2
Experts were invited to present papers on five basic themes, and these papers with commentary are reproduced in the volume you now have in front of you. First, it did appear useful to start at the beginning, and re-examine the function of WTO dispute settlement. Prof. De Bièvre raised the question whether the function of the WTO dispute settlement was just to settle disputes between Members – to which uncertainties about ← 9 | 10 → precedents would point, or to create “jurisprudence” in the broader sense – if so, there is a need for “judicial economy”.
In his comments Dr. Ehring focused on the operation of the WTO dispute settlement system in the present circumstances. He characterized them as an era of dysfunctional negotiations in the WTO, an era of protectionism and an era of bilateralism. On the US criticism about “gap filling” by the WTO dispute settlement system he pointed out that is not for individual Members to decide that there are gaps.
Another basic question that received attention in a second panel was: what is or should be the applicable law in WTO dispute settlement proceedings? This question arises at the establishment of a panel, being a precondition to the exercise of jurisdiction by the panel, the applicability and the application of rules of law to the facts of a matter. On this latter point Prof. Bartels saw in Article 19:2 of the DSU – panel and Appellate Body may not “add to or diminish” rights and obligations under the covered agreements – “a conflicts rule limiting the uses of what could, a priori, be accepted as applicable law”. Relying on several Appellate Body reports, Prof. Bartels concluded that it is right for WTO panels and the Appellate Body to apply international law, with the proviso that this may not lead to non-application of valid WTO law.
In her comments, Prof. Footer spoke of the WTO’s “institutional schizophrenia”, referring to the WTO “legislative’s” body inability to come up with authentic interpretations. She noted that there was not enough thinking about conflict rules. She saw in the case law a recognition of “ne ultra petitum”. She was of the view that “matter” in an Article 21:5 DSU proceeding could be new rather than additional to the matter in the original proceeding.
Before moving on to the last two papers, Prof. Quick addressed several questions on the WTO dispute settlement process to a panel composed of business representatives. The main points made were the following. For business, the rule of law is essential for a stable, predictable climate; business therefore supports a more effective dispute settlement system. Moreover, a concern was expressed about a very narrow attitude on “res inter alios acta”, i.e. rulings about Member A measures have no impact on Member B applying similar measures. In addition, the policy of the EU Commission in respect of bringing cases to WTO dispute settlement was questioned: the EU Commission should be braver. Moreover, in the absence of any progress at WTO level, the WTO dispute settlement system should be strengthened through bilateral negotiations. Finally, business should push their own governments to comply with WTO dispute settlement rulings. One business representative focused on TRIPs enforcement and its impact on the relationship between competition policy and IPRs and illustrated this with a series of examples. ← 10 | 11 →
A third paper analyzed the very end of WTO dispute settlement proceedings: are the current remedies to ensure compliance with WTO rules and rulings satisfactory? Prof. Bronckers and Prof. Baetens situated the WTO’s system by drawing comparisons with public international law generally, as well as EU law. In their view the WTO system of remedies is seriously flawed. The authors advocate that financial remedies be added to the DSU, with some retroactive effect, to enhance compliance and avoid the drawbacks of retaliation (“shooting in one’s own foot”, and damaging “innocent bystanders”). Financial remedies would also serve to re-balance the WTO’s dispute settlement system, notably with an eye to the legitimate interests of smaller and developing countries.
In his comments, Prof. Hoekman, speaking as an economist, referred to the drawbacks of retaliation as expounded in the economic literature. He quibbled with the view that governments don’t want to retaliate and referred to examples and the FIAM judgment; he also took issue with the view that retaliation never works. He confirmed that, also from an economic point of view, financial payments are much better than retaliation. He elaborated on how this could work. He advocated that small Members act together threatening to retaliate collectively in an effort to persuade a large respondent to pay financial compensation. Prof. Tietje noted that it is wrongly assumed that there is a compliance problem; there are only some pathological situations and cited statistics to that effect. He made the point that “suspension of concessions” has nothing to do with compensation and is meant to re-establish the balance of concessions. Instances of application of Article 22 DSU deal with deeply rooted regulatory matters that have nothing to do with exchange of concessions (Hormones, FSC, Bananas). For Prof. Tietje the best remedy is to give private parties the right to sue the respondent Member. Internalizing the externalities caused by non-compliance at intergovernmental level is only a second-best solution
Given the ascendance of bilateral and regional trade agreements, it was only timely to look at the way these newer agreements envisage the settlement of disputes. The fourth paper of Mr. Brown draws a parallel between dispute settlement as arranged in the latest EU Free Trade Agreements and WTO dispute settlement. It also deals with the relationships between these two kinds of dispute settlement regimes and refers in particular to the arrangements in the EU/Korea FTA. In his comments Prof. Kuijper first underlined the need for drawing clear border lines between these two kinds of dispute settlement systems. In his view, the EU should learn from WTO cases that went wrong: in Mexico-High Fructose Syrup the respondent blocked a list of panelists. He advocates a return to the old system of arbitration. On retaliation he made two points: the need for a “no double jeopardy” clause and the principle of “electa una via, altra non datur”, i.e., no right to seek WTO ← 11 | 12 → dispute settlement where one is not happy with the result of a proceeding of an FTA dispute settlement.
In recent years the mechanisms used to resolve disputes between foreign investors and states (“ISDS”) have also attracted much attention and controversy. A fifth panel questioned whether there is anything here that could inspire reform of the WTO, and conversely are there elements in the WTO’s system of settling disputes that could improve ISDS? One key feature in the debate on investor-state dispute settlement is the appointment of arbitrators. Should private parties continue to have the freedom to appoint one of the arbitrators, or should arbitrators be selected exclusively from a list or roster established by governments? In that debate, the experience with the (governmental) appointment of ad hoc panelists in WTO dispute settlement proceedings could be enlightening. This was the subject of an exhaustive analysis by Mrs. Johannesson and Prof. Mavroidis. In her paper Prof. Baetens compared the strengths, weakness, opportunities and threats of the ISDS and WTO systems. She concludes that both systems would benefit from a “look across the border”. Finally, Mr. Grierson offered comments from a practitioner’s perspective on the points made in the papers on the ISDS process.
As the participants of the conference will realize, publication of the conference papers has taken a bit of time. The editors like to think that, with additional reflection on the proceedings in Bruges, the authors have managed to improve their papers measurably. We very much like to express our appreciation to all their efforts expended on the pages that follow. There is much in this volume that offers food for thought for the future.
Finally, we want to thank the sponsors of the conference, without whose support this whole exercise could not have taken place: the College of Europe, Bayer, European Generic Medicines Association, Evonik, Pernod Ricard, and the Verband der Chemischen Industrie e. V. (VCI).
Jacques Bourgeois Marco Bronckers Reinhard Quick
- ISBN (PDF)
- ISBN (ePUB)
- ISBN (MOBI)
- ISBN (Softcover)
- Publication date
- 2017 (August)
- Bruxelles, Bern, Berlin, Frankfurt am Main, New York, Oxford, Wien, 2017. 167 pp. 1 fig., 1 table