The Dispute Settlement Mechanism

An overview of the WTO Dispute Settlement Process

Introduction
The DSB is, in effect, a session of the General Council of the
WTO: that is, all of the representatives of the WTO member
governments, usually at ambassadorial level, meeting
together.
It decides the outcome of a trade dispute on the
recommendation of a Dispute Panel and (possibly) on a report
from the Appellate Body of WTO, which may have amended
the Panel recommendation if a party chose to appeal.
Only the DSB can make these decisions: Panels and the
Appellate Body are limited to making recommendations.
Reverse Consensus :
Contributions
Dispute settlement is the central pillar of the
multilateral trading system, and the WTO’s unique
contribution to the stability of the global economy.
The system is based on clearly-defined rules, with
timetables for completing a case. 339 cases settled as
on 2007
First rulings are made by a panel and endorsed (or
rejected) by the WTO’s full membership. 
Appeals based on points of law are possible.
The priority is to settle disputes, through consultations
if possible.
Principles
Proper balance between rights and obligations of members, Article
3.3 Annex 2
Security and predictability to multilateral trading system,
US – Section 301 Trade Act, clarify existing provisions of WTO
covered agreements according to customary rules of interpretation
of public international law, Article 3.2 of DSU
Settlement of disputes through multilateral procedures, and not
through unilateral actions, Article 23.1 of DSU, US-certain EC
products
Members should not unilaterally determine the violation of WTO
law and should not take unilateral retaliation
Settlement of disputes through consultations, Article 3.7 positive
solution which is mutually acceptable.
Principles continued..
Article 19.2 of the DSU , the Appellate Body cannot add to or
diminish the rights and obligations provided in the covered
agreements.
This flows from Article IX: 2 of the WTO Agreement, “The
Ministerial Conference and the General Council shall have the
exclusive authority to adopt interpretations of this Agreement and of
the Multilateral Trade Agreements”
This principle was clearly laid out in US- Certain EC Products
 DSU cannot take the role of a legislator or judicial activism
Article 3.10 ,Settlement of Disputes in Good Faith,
US – Offset Act (Byrd Amendment) , two conditions,
(a) Member failed to act in good faith
(b) there should be something more than mere violation.