Annual Update On WTO Dispute Settlement Marked By Impasse On Appellate Body Selections

The annual update on World Trade Organization dispute settlement was especially challenging this year due to the ongoing impasse regarding selection process to the Appellate Body. During the event, some light was shed on the “alarming consequences” of the stalemate.

The 11^th Annual Update on WTO Dispute Settlement, hosted by the Graduate Institute of Geneva on 3 May, saw WTO officials and practitioners come together to discuss the highlights of the past year. In addition to practitioners’ comments on latest decisions, the focus was on institutional functioning with the rise of protectionism and risk of tit-for-tat measures.

The disagreement over the selection process for Appellate Body panellists has been going on for many months (IPW, WTO, 25 October 2017).

Ambassador Ujal Singh Bhatia of India, chairperson of the Appellate Body, lamented that this would undermine the collegiality of the Appellate Body’s deliberations. Further, he noted that the lack of geographical representation threatens to dilute the legitimacy of the Appellate Body. The text of Bhatia’s speech is available from the WTO here.

In addition to causing delays in adjudication, Bhatia said, forming three-member panels will become increasingly difficult because of issues like conflict of interest, as for instance, a national of a country litigating will not sit as an adjudicator. Such paralysis of the Appellate Body will affect Panel proceedings too, he said.

Highlighting the symbiotic relationship between the Appellate Body and Panel, Bhatia painted a bleak picture of parties unwilling to adopt panel reports and not being able to have their appeals heard. This will make negative consensus rule redundant. The rule of negative (or reverse) consensus means that the complainant ultimately has a guarantee that the requested panel will be established if it so wishes.

Further, he noted that the lack of an effective dispute settlement system will reduce members’ faith in the institution and participation in negotiations will also suffer.

To prevent the failure of member-driven governance, the situation calls for swift and collective actions by members, according to participants. This is especially important as Amb. Junichi Ihara (Japan), the chairperson of the Dispute Settlement Body, noted increased participation by developing countries as claimants and third parties. Despite the increase in members using the system, only 60 countries have been backing the proposal to fill the vacancies at the earliest.

Participants at the event noted that it would require both members that use the system actively and others that may have to in future to come together to preserve the multilateral trading system.

Image Credits: WTO