Noes on Dispute settlement, Lecture notes of International Economic Law

Download Noes on Dispute settlement and more Lecture notes International Economic Law in PDF only on Docsity! WTO Dispute settlement mechanism • DSU and Its provisions. WTO Dispute settlement mechanism • WTO dispute settlement system is based on Dispute Settlement Understanding. (The document). • DSU = Dispute Settlement Understanding. • (The DSU is attached to the WTO Agreement as Annexure 2 and is generally considered one of the most important achievement of the Uruguay Round of negotiations. Principles of WTO Dispute Settlement: [Equitable, fast, effective, mutually acceptable ] • Principles of WTO Dispute Settlement • The Institutions of WTO Dispute Settlement • WTO Dispute Settlement proceedings. 1- Principles of WTO Dispute Settlement • (a) Object and purpose of the WTO dispute settlement system: • The primary objective of the WTO dispute settlement system is the prompt settlement of disputes between WTO members concerning their respective rights and obligations under WTO. • As stated in Article 3.3 of the DSU, the prompt settlement of disputes is “essential to the effective functioning of the WTO and the maintenance of a proper balance between the rights and obligations of Members”. Article 3.2 Article 3.2 of the DSU says: “The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system. The Members recognize that it serves to preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law”. • “Recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements”. Settlement of Disputes in Good Faith • Disputes in the WTO are essentially about broken promises. 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 taking action unilaterally. That means abiding by the agreed procedures, and respecting judgments. When does dispute arise? • A dispute arises when one country adopts a trade policy measure or takes some action that one or more fellow-WTO members considers to be breaking the WTO agreements, or to be a failure to live up to obligations. A third group of countries can declare that they have an interest in the case and enjoy some rights. METHODS OF DISPUTE SETTLEMENT • THE DSU provides more than one method to settle disputes between WTO members. In fact DSU provides for: • 1- Consultations or Negotiations • 2= Adjudication by Panels or the Appellate Body • 3= Arbitration and • 4= Good Offices, Conciliation and Mediation Article 5 of DSU Use of good offices, conciliation and Mediation Article 5 of DSU Use of good offices, conciliation and Mediation Good Offices, Conciliation and Mediation 1. Good offices, conciliation and mediation are procedures that are undertaken voluntarily if the parties to the dispute so agree. 2. Proceedings involving good offices, conciliation and mediation, and in particular positions taken by the parties to the dispute during these proceedings, shall be confidential, and without prejudice to the rights of either party in any further proceedings under these procedures. 3. Good offices, conciliation or mediation may be requested at any time by any party to a dispute. They may begin at any time and be terminated at any time. Once procedures for good offices, conciliation or mediation are terminated, a complaining party may then proceed with a request for the establishment of a panel. 4. When good offices, conciliation or mediation are entered into within 60 days after the date of receipt of a request for consultations, the complaining party must allow a period of 60 days after the date of receipt of the request for consultations before requesting the establishment of a panel. The complaining party may request the establishment of a panel during the 60-day period if the parties to the dispute jointly consider that the good offices, conciliation or mediation process has failed to settle the dispute. 5. If the parties to a dispute agree, procedures for good offices, conciliation or mediation may continue while the panel process proceeds. 6. The Director-General may, acting in an ex officio capacity, offer good offices, conciliation or mediation with the view to assisting Members to settle a dispute. Jurisdiction of the WTO dispute settlement system • 1- One Integrated system for all WTO disputes. • 2- Compulsory jurisdiction. Compulsory Jurisdiction (Cont) • The Uruguay Round agreement also made it impossible for the country losing a case to block the adoption of the ruling. Under the previous GATT procedure, rulings could only be adopted by consensus, meaning that a single objection could block the ruling. Now, rulings are automatically adopted unless there is a consensus to reject a ruling — any country wanting to block a ruling has to persuade all other WTO members (including its adversary in the case) to share its view. Compulsory Jurisdiction (Cont) • Although much of the procedure does resemble a court or tribunal, the preferred solution is for the countries concerned to discuss their problems and settle the dispute by themselves. The first stage is therefore consultations between the governments concerned, and even when the case has progressed to other stages, consultation and mediation are still always possible. How long to settle a dispute? These approximate periods for each stage of a dispute settlement procedure are target 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) THE APPEAL • Appeals • Either side can appeal a panel’s ruling. Sometimes both sides do so. • 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 Dispute Settlement Body 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. • The appeal can uphold, modify or reverse the panel’s 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. THE CASE HAS BEEN DECIDED. WHAT IS NEXT? • The case has been decided: what next? • Go directly to jail??!!. Do not pass Go, do not collect ?!!… . Well, not exactly. But the sentiments apply. If a country has done something wrong, it should swiftly correct its fault. And if it continues to break an agreement, it should offer compensation or face a suitable response that has some bite — although this is not actually a punishment: it’s a “remedy”, the ultimate goal being for the country to comply with the ruling. • The priority is for the losing “defendant” to bring its policy into line with the ruling or recommendations, and it is given time to do this. The dispute settlement agreement stresses that “prompt compliance with recommendations or rulings of the DSB [Dispute Settlement Body] is essential in order to ensure effective resolution of disputes to the benefit of all Members”. THE CASE HAS BEEN DECIDED. WHAT IS NEXT? (CONT) If the country that is the target of the complaint loses, it must follow the 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 report’s 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. If after 20 days, no satisfactory compensation is agreed, the complaining side may ask the Dispute Settlement Body for permission to retaliate (to “suspend concessions or other obligations”). This is intended to be temporary, to encourage the other country to comply. It could for example take the form of blocking imports by raising import duties on products from the other country above agreed limits to levels so high that the imports are too expensive to sell — within certain limits. The Dispute Settlement Body must authorize this within 30 days after the “reasonable period of time” expires unless there is a consensus against the request. In principle, the retaliation should be in the same sector as the dispute. If this is not practical or if it would not be effective, it can be in a different sector of the same agreement. In turn, if this is not effective or practicable and if the circumstances are serious enough, the action can be taken under another agreement. The objective is to minimize the chances of actions spilling over into unrelated sectors while at the same time allowing the actions to be effective. In any case, the Dispute Settlement Body monitors how adopted rulings are implemented. Any outstanding case remains on its agenda until the issue is resolved.