DISPUTE SETTLEMENT SYSTEM TRAINING MODULE: CHAPTER 6
The process — Stages in a typical WTO dispute settlement case
Although the panel report contains the findings and conclusions ruling on the substance of the dispute, it only becomes binding when the DSB has adopted it. This is why the DSU describes the function of panels as assisting the DSB in discharging its responsibilities under the DSU and the covered agreements (and as making such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements, Article 11 of the DSU). The DSU provides that the DSB must adopt the report no earlier than 20 days, but no later than 60 days after the date of its circulation to the Members1, unless a party to the dispute formally notifies the DSB of its decision to appeal or the DSB decides by consensus not to adopt the report (Article 16.4 of the DSU).
If a party has notified its decision to appeal, the panel report cannot yet be adopted, given that the Appellate Body could modify or reverse it. In that case, the panel report will be considered for adoption by the DSB only after completion of the appeal (Article 16.4 of the DSU).
If there is no appeal by either party, the DSB is obliged to adopt the report, unless there is a so-called negative (or reverse) consensus, i.e. a consensus in the DSB against the adoption. This is (after the establishment of the panel) the second key instance in which the decision-making rule of reverse consensus applies in the WTO dispute settlement system. By contrast, under GATT 1947, a rule of positive consensus applied at the stage of adopting panel reports. This gave the losing party the ability to block or veto the adoption of a report.
Although the parties to a dispute are entitled to fully participate in the DSB’s consideration of the panel report (Article 16.3 of the DSU), the adoption of panel reports no longer requires consensus in the (WTO) dispute settlement system. A single Member, typically the party having lost at the panel stage, cannot alone do much to prevent the adoption. One Member opposing the adoption of the report is not sufficient, nor is a majority; instead, what is needed to reject (or not to adopt) the panel report is a consensus against adoption by all Members represented at the relevant DSB meeting. In other words, one single Member insisting on adoption is sufficient in order to secure the adoption of the report. Normally, at least one party has an interest in the adoption because, overall, it prevailed with the panel. Even if many panel decisions are mixed in that not all the claims of violation of (WTO) law succeed, there is usually a “winner” (the complainant, if at least one claim is upheld, and the respondent, if all are dismissed) and a “loser” in the formal sense. Because the prevailing party has a natural interest in having the panel’s conclusions become binding upon the parties, the adoption of panel reports is “quasi-automatic”. Thus, rejection by (negative) consensus is more theoretical than real, and has never occurred in the WTO practice to date.
In order to be adopted in a DSB meeting, a panel report (which has not been appealed) must, however, be placed on the agenda of a DSB meeting. It is the practice that only WTO Members can request items to be put on the agenda of an upcoming DSB meeting (not the Secretariat). Thus, if no Member places a panel report on the DSB agenda for adoption, the adoption does not take place, even though this is not in conformity with Article 16.4 of the DSU. In the history of the WTO, only once has a panel report not been adopted for this reason (and not because a settlement between the parties intervened).2
The adoption procedure is without prejudice to the right of Members to express their views on a panel report (Article 16.4 of the DSU). The Members present at the DSB meeting in which a panel report is adopted, particularly Members that have been involved in the dispute as parties, often make use of this right to comment on the conclusions or the reasoning contained in the panel report. In circumstances where the panel developed unexpected reasoning or made unexpected findings, the parties and possibly other Members might want to put their objections on record.
In the early days of the WTO dispute settlement system, the chairperson of the DSB used to ask whether there was a consensus against the adoption of the report in question. Nowadays, he or she simply gives the floor to the parties to the dispute and then to other Members to express their opinions. It sometimes happens that a Member urges the other Members to oppose the report, but this typically has no consequence because a rejection of the report would require consensus of all the Members present at the meeting. The DSB chairperson, therefore, merely states that the DSB takes note of all the statements and adopts the report.
If there is no appeal, the dispute proceeds immediately to the implementation phase after the DSB has adopted the panel report.
There are special and additional rules with respect to the adoption of panel reports in the SCM Agreement. In disputes regarding both prohibited and actionable subsidies, the DSB must adopt the report within 30 days of its circulation to all Members, unless it decides by consensus not to adopt it or unless one of the parties notifies the DSB of its decision to appeal (Articles 4.8 and 7.6 SCM Agreement).
For the purposes of the description below of the further procedure, it is assumed that there is an appeal.