DISPUTE SETTLEMENT SYSTEM TRAINING MODULE: CHAPTER 6
The process — Stages in a typical WTO dispute settlement case
Even after a panel has been established by the DSB, it still must be composed because there are no permanent panels nor permanent panelists in the (WTO). Instead, panels must be composed ad hoc for each individual dispute, with the selection of three or five members, pursuant to procedures laid down in the DSU (Article 8 of the DSU).
Panels are composed of three persons unless the parties to the dispute agree, within ten days from the establishment of the panel, to a panel composed of five panelists (Article 8.5 of the DSU). The Secretariat proposes nominations for the panel to the parties to the dispute (Article 8.6 of the DSU). Potential candidates must meet certain requirements in terms of expertise and independence (Articles 8.1 and 8.2 of the DSU). Panelists may be selected from an indicative list of governmental and non-governmental individuals nominated by WTO Members, although other names can be considered as well. The WTO Secretariat maintains this list (Article 8.4 of the DSU) and periodically revises it according to any modifications or additions submitted by WTO Members. As noted, it is not necessary to be on the indicative list in order to be proposed as a potential panel member in a specific dispute. Citizens of a party or a third party to a dispute may not serve as panelists without the agreement of the parties (Article 8.3 of the DSU). When a dispute is between a developing country Member and a developed country Member the panel must, upon request by the developing country Member, include at least one panelist from a developing country Member (Article 8.10 of the DSU). Traditionally, many panelists are trade delegates of WTO Members or capital-based trade officials, but former Secretariat officials, retired government officials and academics also regularly serve on panels. These individuals perform the task of a panelist on a part-time basis, in addition to their usual professional activity.
When the Secretariat proposes qualified individuals nominations as panelists, the parties must not oppose these nominations except for compelling reasons (Article 8.6 of the DSU). In practice, many Members make quite extensive use of this clause and oppose nominations very frequently. In such cases, there is no review regarding whether the reasons given are truly compelling. Rather, the Secretariat proposes other names. If, according to this method, there is no agreement between the parties on the composition of the panel within 20 days after the date of its establishment by the DSB, either party may request the Director-General of the WTO to determine the composition of the panel. Within ten days after sending this request to the chairperson of the DSB, the Director-General appoints the panel members in consultation with the chairperson of the DSB and the chairperson of the relevant Council or Committee, after consulting with the parties (Article 8.7 of the DSU).1 The availability of this procedure is important because it prevents a respondent from blocking the entire panel proceeding by delaying (forever) the composition of the panel, which is what sometimes happens in other systems of international dispute resolution. Of course, the parties are always free to devote more than 20 days attempting to agree on the composition of the panel as long as none of them requests the Director-General to intervene.
The selected panelists must fulfil their task in full independence and not as representatives of a government or other organization for which they might happen to work. Members are prohibited from giving panelists instructions or seeking to influence them with regard to matters before the panel (Article 8.9 of the DSU).
Special rules on composition back to top
The Ministerial Decision on Certain Dispute Settlement Procedures for the General Agreement on Trade in Services, adopted in Marrakesh on 15 April 1994, and paragraph 4 of the GATS Annex on Financial Services expressly provide for the selection of panelists to ensure that panels have the relevant specific expertise in the sector that is the subject of the dispute.
Multiple complainants back to top
Given that governmental measures regulating trade often affect trade with many WTO Members, there is frequently more than one other Member taking issue with a measure allegedly breaching WTO law or impairing benefits under the WTO Agreements. Past practice shows that Members have used various strategies available under the dispute settlement rules to protect their commercial interests:
- The most passive strategy has been to hold back completely and hope that another Member raises the issue, proceeds through the entire dispute settlement process and ultimately secures the withdrawal of a measure if it has been found WTO-inconsistent. If this happens, all WTO Members benefit from that withdrawal.2 Whether the Member which invoked the dispute settlement system benefits from that withdrawal to a greater extent than the passive Member(s) will largely depend on the respective trade flows in the products or services concerned.
- A more active strategy has been to participate as a third party in a dispute between two other Members involving a measure of interest. Compared to the passive option, being a third party offers the advantage of receiving information on the dispute, namely, the initial submissions, and of being heard by the panel and the parties. But the panel report does not include conclusions and recommendations with respect of third parties. A third party can always, however, switch to a more active role at a later stage and initiate a dispute settlement proceeding in its own right (Article 10.4 of the
- The most active strategy available would be that of being a complainant in one’s own right by requesting consultations and a panel either in parallel to other complainants or jointly with other (co-)complainants. Both these variations exist in practice.
Establishment and composition in the case of multiple complainants back to top
In the case of multiple complainants, i.e. more than one Member requesting the establishment of a panel related to the same matter, Article 9.1 of the DSU applies and calls for the DSB, whenever feasible, to establish a single panel to examine these complaints taking into account the rights of all Members concerned.3 For example, in US — Shrimp, the DSB decided to establish one single panel, despite a separate request made by India after the establishment of a panel at the joint request of Malaysia and Thailand and a separate request of Pakistan.4 The “feasibility” of establishing a single panel obviously depends on factors such as the timing of the various disputes being more or less similar. If there is a long period of time between the different requests for establishment of a panel, establishing a single panel may be unfeasible, for instance if the panel that has been established first has already held its substantive meetings. When the time lag between the two disputes is less, establishing a single panel can be feasible if the parties, for instance, agree on a shorter time-period for consultations.
If it is not feasible to establish a single panel and more than one panel is established, the same persons should, if possible, serve as panelists on each of the separate panels and the timetables should be harmonized (Article 9.3 of the DSU). In EC — Hormones, for instance, the complaint of Canada (WT/DS48) and that of the United States (WT/DS26) were reviewed by two separate panels composed of the same individuals.
These two solutions serve to ensure that there is a consistent legal approach on the different complaints. With various panels composed of different panelists, who would work separately and not know each others’ reasoning and decision (panel procedures are confidential until the circulation of the report), there is a risk that the different panel reports could depart one from another and even be contradictory.5
The panel procedure back to top
Once established and composed, the panel now exists as a collegial body and can start its work. One of the first tasks for the panel is to draw up a calendar for the panel’s work (Article 12.3 of the DSU). The procedure is primarily set out in Article 12 and Appendix 3 to the DSU, but offers a certain degree of flexibility. The panel can follow different procedures after consulting the parties (Article 12.1 of the DSU, paragraph 11 of Appendix 3). In practice, panels generally follow the working procedures of Appendix 3 to the DSU, but often adopt additional rules where the specific dispute so requires. This usually happens in consultations or in agreement with the parties during the panel’s “organizational” meeting with the parties. If this is not possible, the panel takes a decision on the working schedule and notifies the parties. The calendar of work thus adopted on the basis of the suggested timetable in Appendix 3 to the DSU sets dates and deadlines for the key stages of the panel proceeding, (e.g. the dates by which submissions have to be filed, the oral hearings (called “first” or “second substantive meeting”) take place, when the interim and the final panel report are to be issued, etc.).
1. This procedure is available, whether the disagreement relates to one, two or all three panel members. back to text
2. In the case of non-violation nullification or impairment, this strategy may not work equally well because there is no obligation to withdraw the measure (Article 26.1(b) of the DSU). The mutually satisfactory adjustment found by the parties in the phase of implementation may well provide for a benefit granted by the respondent that is particularly beneficial to the complainant, or the complainant may withdraw a reciprocal benefit. The passive Member whose benefit has also been (and continues to be) nullified or impaired would not profit from these adjustments to a similar degree. back to text
5. Although the Appellate Body could rectify such inconsistencies, divergent rulings by different panels would not enhance the credibility of these panel decisions and not serve the purpose of providing security and predictability to the multilateral trading system, which is one of the goals of the dispute settlement system (Article 3.2 of the DSU). If there is no appeal rectifying the inconsistencies, the divergent panel conclusions and recommendations could even be mutually incompatible and lead to insurmountable problems in the process of implementation. back to text