DISPUTE SETTLEMENT SYSTEM TRAINING MODULE: CHAPTER 7
Legal effect of panel and appellate body reports and DSB recommendations and rulings
A dispute relates to a specific matter and takes place between two or more specific Members of the (WTO). The report of a panel or the Appellate Body also relates to that specific matter in the dispute between these Members. Even if adopted, the reports of panels and the Appellate Body are not binding precedents for other disputes between the same parties on other matters or different parties on the same matter, even though the same questions of WTO law might arise. As in other areas of international law, there is no rule of stare decisis in WTO dispute settlement according to which previous rulings bind panels and the Appellate Body in subsequent cases. This means that a panel is not obliged to follow previous Appellate Body reports even if they have developed a certain interpretation of exactly the provisions which are now at issue before the panel. Nor is the Appellate Body obliged to maintain the legal interpretations it has developed in past cases. The Appellate Body has confirmed that conclusions and recommendations in panel reports adopted under GATT 1947 bound the parties to the particular dispute, but that subsequent panels were not legally bound by the details and reasoning of a previous panel report.
If the reasoning developed in the previous report in support of the interpretation given to a WTO rule is persuasive from the perspective of the panel or the Appellate Body in the subsequent case, it is very likely that the panel or the Appellate Body will repeat and follow it. This is also in line with a key objective of the dispute settlement system which is to enhance the security and predictability of the multilateral trading system (Article 3.2 of the DSU). In the words of the Appellate Body, these GATT and WTO panel reports — and equally adopted Appellate Body reports1 — “create legitimate expectations among WTO Members, and, therefore, should be taken into account where they are relevant to any dispute”.2
Although unadopted panel reports have no formal legal status in the GATT or WTO system, the reasoning contained in an unadopted panel report can nevertheless provide useful guidance to a panel or the Appellate Body in a subsequent case involving the same legal question.3
2. Appellate Body Report, Japan — Alcoholic Beverages II DSR 1996:I, 97 at p107-108 back to text
3. Panel Report, Japan — Alcoholic Beverages II, para. 6.10; Appellate Body Report, Japan — Alcoholic Beverages II DSR 1996:I, 97 at 108 back to text