DISPUTE SETTLEMENT SYSTEM TRAINING MODULE: CHAPTER 8
Dispute Settlement without recourse to Panels and the Appellate Body
The previous chapters have devoted much attention to the involvement of panels and the Appellate Body in the WTO dispute settlement system. However, it is important to stress that panels and the Appellate Body are not always involved in a WTO dispute and there are various other ways to solve disputes within the framework of the (WTO). Indeed, the parties often use these other ways and manage to solve their dispute in a cooperative manner and not through recourse to adjudication by panels and the Appellate Body. In this regard, parties can settle a dispute by finding a mutually agreed solution in bilateral negotiations or with the help of dispute resolution mechanisms such as good offices, conciliation or mediation. In addition, they can also agree to refer their dispute to an arbitrator.
In domestic judicial systems, the out-of-court solution of disputes is often referred to as an “alternative” form of dispute resolution. One could also talk about an “alternative” to panels and the Appellate Body in the WTO dispute settlement system, when parties settle their dispute with a mutually agreed solution, or through arbitration. However, these forms of dispute settlement are provided for in the DSU and are therefore formally part of, and not an alternative to, the WTO dispute settlement system.
The DSU expresses a preference for the parties to settle their disputes through mutually agreed solutions (Article 3.7 of the DSU). However, unlike many other judicial systems, the DSU does not allow the parties to settle their dispute on whatever terms they wish. Solutions mutually acceptable to the parties to the dispute must also be consistent with the WTO Agreement and must not nullify or impair benefits accruing under the agreement to any other Member (Articles 3.5 and 3.7 of the DSU). If the matter has been formally raised in a request for consultations, the mutually agreed solutions must be notified to the DSB and the relevant Councils and Committees (Article 3.6 of the DSU). This is meant to inform the other WTO Members and to give them an opportunity to raise whatever concern they may have with regard to the settlement. Implicit in these rules is an acknowledgement of the danger that the parties to a dispute might be tempted to settle on terms that are detrimental to a third Member not involved in the dispute, or in a way that is not entirely consistent with WTO law. Mutually agreed solutions must therefore be notified to the DSB with sufficient information for other Members.
In bilateral consultations or afterwards back to top
Bilateral consultations, which are required to take place at the beginning of any dispute, are intended to provide a setting in which the parties to a dispute should attempt to negotiate a mutually agreed solution. However, even when the consultations have failed to bring about a settlement and the dispute has progressed to the stage of adjudication, the parties are encouraged to continue their efforts to find a mutually agreed solution.
For instance, panels should consult regularly with the parties and give them adequate opportunity to develop a mutually satisfactory solution (Article 11 of the DSU). When panels suspend their work at the request of the complaining party (Article 12.12 of the DSU), this is usually to allow the parties to find a mutually agreed solution. In one case, the parties to the dispute reached a mutually agreed solution prior to the issuance of the interim report.1 In another case, they did so after the issuance of the interim report, but before the issuance of the final report to the parties.2 In yet another case, the parties reached a mutually agreed solution after the issuance but prior to the circulation3 of the panel report to all Members.4 Where the parties have found a settlement of the matter, the panel issues a report in which it briefly describes the case and reports that the parties have reached a mutually agreed solution (Article 12.7 of the DSU).
At the stage of appellate review, the appellant may withdraw the appeal at any time. One possible reason to do so would be that the parties have found a mutually agreed solution.
3. On the procedural stages of the interim report, the issuance and the circulation of the panel report, see the section on the Interim review and the section on the Issuance and circulation of the final report. back to text