DISPUTE SETTLEMENT SYSTEM TRAINING MODULE: CHAPTER 6
The process — Stages in a typical WTO dispute settlement case
The preferred objective of the DSU is for the Members concerned to settle the dispute between themselves in a manner that is consistent with the WTO Agreement (Article 3.7 of the DSU). Accordingly, bilateral consultations between the parties are the first stage of formal dispute settlement (Article 4 of the DSU). They give the parties an opportunity to discuss the matter and to find a satisfactory solution without resorting to litigation (Article 4.5 of the DSU). Only after such mandatory consultations have failed to produce a satisfactory solution within 60 days may the complainant request adjudication by a panel (Article 4.7 of the DSU).1 Even when consultations have failed to resolve the dispute, it always remains possible for the parties to find a mutually agreed solution at any later stage of the proceedings.2
A majority of disputes so far in the (WTO) have not proceeded beyond consultations, either because a satisfactory settlement was found, or because the complainant decided for other reasons not to pursue the matter further. This shows that consultations are often an effective means of dispute resolution in the WTO and that the instruments of adjudication and enforcement in the dispute settlement system are by no means always necessary.
Together with good offices, conciliation and mediation3, consultations are the key non-judicial/diplomatic feature of the dispute settlement system of the WTO. Consultations also allow the parties to clarify the facts of the matter and the claims of the complainant, possibly dispelling misunderstandings as to the actual nature of the measure at issue. In this sense, consultations serve either to lay the foundation for a settlement or for further proceedings under the DSU.
Legal basis and requirements for a request for consultations back to top
The request for consultations formally initiates a dispute in the WTO and triggers the application of the DSU. Very often, informal discussions on the matter between capital-based officials or between the Geneva delegations of the Members involved precede the formal WTO consultations. However, even where prior consultations occurred, it remains necessary for the complainant to go through the consultation procedure set forth in the DSU as a prerequisite for further proceedings in the WTO.
The complaining Member addresses the request for consultations to the responding Member, but must also notify the request to the DSB and to relevant Councils and Committees overseeing the agreement(s) in question (Article 4.4 of the DSU). Members only have to send one single text of their notification to the Secretariat, specifying the other relevant Councils or Committees. The Secretariat then distributes it to the specified relevant bodies.4 The request for consultations informs the entire Membership of the WTO and the public at large of the initiation of a WTO dispute. The complainant has to make the request pursuant to one or more of the covered agreements (Articles 4.3 and 1.1 of the DSU), specifically under the respective provision on consultations of the covered agreement(s) in question. Consultations are thus subject to the provisions of Article 4 of the DSU and the respective individual WTO Agreement.
Under GATT 1994 and those covered agreements that refer to the consultations and dispute settlement provisions of GATT 1994, two legal bases are available for launching a dispute with a request for consultations, that is, either Articles XXII:1 or XXIII:1 of GATT 1994. Similarly, under GATS), consultations can be initiated under either Articles XXII:1 or XXIII:1.
For practical purposes, the main difference between these two legal bases relates to the ability of other WTO Members to join as third parties, which is possible only when consultations are held pursuant to Article XXII of GATT 1994, Article XXII:1 of GATS, or the corresponding provisions in other covered agreements (Article 4.11 of the DSU). Hence, the choice between Articles XXII:1 and XXIII:1 of GATT 1994 is a strategic one, depending on whether the complainant wants to make it possible for other Members to participate. If the complainant invokes Article XXII:1, the admission of interested third parties depends on the respondent, who may or may not accept them. By choosing Article XXIII:1, the complainant is able to prevent the involvement in the consultations of third parties. This option may be attractive for a complainant who intends to work towards a mutually agreed solution with the respondent without interference from other Members.
A request for consultations must be submitted in writing and must give the reasons for the request. This includes identifying the measures at issue and indicating the legal basis for the complaint (Article 4.4 of the DSU). In practice, such requests for consultations are very brief; often they are no more than one or two pages long, yet they must be sufficiently precise. Because requests for consultations are always the first official WTO document emerging in a specific dispute and each dispute has its own WT/DS number, requests for consultations carry the document symbol WT/DS###/1 (except in the case of issues falling under the Agreement on Textiles and Clothing where different procedures apply).
Fruitfulness of action under the dispute settlement system back to top
Before initiating consultations, a Member is obliged to exercise its judgement as to whether action under the dispute settlement system would be fruitful, the aim of the dispute settlement mechanism being to secure a positive solution to the dispute (Article 3.7 of the DSU). By its express terms, Article 3.7 of the DSU entrusts the Members of the WTO with the self-regulating responsibility of exercising their own judgement in deciding whether they consider it would be fruitful to bring a case.
1. The parties to a dispute can depart from the requirement of consultations through mutual agreement under Article 25.2 of the DSU if they resort to arbitration as an alternative means of dispute settlement. back to text
2. It is not this possibility of, and preference for, mutually agreeable solutions, which distinguishes the dispute settlement system of the WTO from typical domestic judicial systems, but the formal prerequisite of prior consultations. However, many of these domestic systems are moving towards the inclusion of alternative means of dispute resolution as a formal prerequisite for judicial action such as, for instance, a prior attempt to find an amicable solution with a mediator. back to text
4. See DSB, Working Practices Concerning Dispute Settlement Procedures. As agreed by theDSB, WT/DSB/6, 6 June 1996, page 2; and DSB, Minutes of the Meeting of 19 July 1995, WT/DSB/M/6, page 12. back to text