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World Trade Organization Toolkit : Dispute Settlement System

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Dispute Settlement Procedure

The procedure for the dispute settlement is detailed in the DSU. Under the DSU, the organ responsible for administering the dispute settlement system is the Dispute Settlement Body (DSB) which is composed of all WTO Members. It has the authority to establish panels, adopt panel and Appellate Body reports, maintain surveillance of implementation of rulings and recommendations, and authorise suspension of concessions. The role of the Panel and the Appellate Body is thus to discharge the DSB from its responsibilities.

In case of dispute, the Member which considers to be affected must as a first step request consultations to the targeted Member. The Member to which the request is made shall enter into consultations in good faith within a maximum of 30 days after the request for consultation has been made. If consultations fail to resolve the dispute within 60 days from the date of the receipt of the request for consultations, the complaining party may request the establishment of a panel.

Upon request of the complaining party, the Panel shall be established by the DSB.

Once the Panel is established, the Secretariat shall propose the nominations for the Panel to the parties to the dispute. The Parties to the dispute shall not oppose nominations except for compelling reasons.

The stages before the Panel are then as follows:

• parties to the dispute present their case in writing to the Panel (first written submission);
• first meeting: the parties and those that have announced they have an interest in the dispute will be heard;
• parties to the dispute and countries involved make a second written submission;
• second meeting: the parties and those that have announced they have an interest in the dispute present their oral arguments at the Panel's second meeting;
• first draft: the Panel submits the descriptive sections of its report to the parties to the dispute. This report does not include the findings and conclusions;
• interim report: the Panel submits an interim report including its findings and conclusions;
• final report: the Panel submits its final report to the parties to the disputes and three weeks later circulates it to all WTO Members;
• adoption of the report by the DSB within 60 days, unless a consensus rejects it.

Each party to the dispute may appeal the report of the Panel to the Appellate Body within 60 days following the circulation of the Panel's report to Members. An appeal shall necessarily be limited to issues of law covered by the Panel report and legal interpretations developed by the Panel. The Appellate Body is a standing body composed of 7 persons who are appointed for a four-year period. Appeals are heard by a branch of three. The Appellate Body can only uphold, modify or reverse the legal findings and conclusions of the Panel.

If the system of the country which is the target of the complaint ("losing party") has been found to be inconsistent with the WTO rules, it should ensure prompt compliance with such rulings and recommendations. In other words, the "losing" party should put its legislation into conformity with the recommendations of the DSB. That party must inform the DSB of its intention in respect of the implementation of the rulings and the recommendations at a DSB meeting held within 30 days of the report's adoption. If immediate compliance proves to be impracticable, that party may request a reasonable period of time to implement the rulings or recommendations.

If the "losing" party fails to comply with the rulings or recommendations within the reasonable period of time which has been determined, parties to the dispute have to enter into bilateral negotiations in order to find a mutually-acceptable compensation. If, after 20 days, no solution for compensation has been agreed by the parties, the "winning" party may request from the DSB the authorisation to suspend concessions or obligations vis-à-vis the "losing" party.

In principle, sanctions should be made with respect to the same sector. If not practicable, the suspension of concessions or obligations should take place in other sectors but under the same agreement. If not practicable and the circumstances are serious enough, the concerned party may seek suspensions of concessions under another covered agreement.

Besides situations in which the "losing" party fails to implement the recommendations or rulings of the DSB, there are cases in which there is disagreement of the parties to the dispute as to whether the measures taken by the "losing" party indeed constitute a proper, correct and full implementation of the rulings or recommendations of the DSB. Disagreements over whether implementation measures are adequate are to be referred to, where possible, the origin panel. The Panel shall circulate its report within 90 days from the referral.

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