Within the framework of trade agreements between States, and in light of efforts to remove obstacles that hinder the development of the international community, expand the volume of international trade, and facilitate its flow, it is possible for a State to fail to comply with its prescribed obligations, thereby giving rise to disputes. To address this situation, the World Trade Organization established a Dispute Settlement Body among its Members pursuant to the Understanding on Rules and Procedures Governing the Settlement of Disputes (the “Dispute Settlement Understanding”). This Body is vested with the authority to establish dispute settlement panels, adopt the rules and recommendations contained in the reports of panels and the Appellate Body, supervise the implementation of the decisions and recommendations set forth in such reports, and authorize recourse to compensatory measures in the event of non-compliance with those decisions and recommendations.
This Body is chaired by the Permanent Representative of the Kingdom of Saudi Arabia to the World Trade Organization, Saqr Al-Muqbel, for the terms 2024/2025 and 2025/2026, making him the first Arab representative to hold this position. The Kingdom of Saudi Arabia’s chairmanship reflects its important and leading role on the international economic stage.
The World Trade Organization
The World Trade Organization is an international organization established to ensure and oversee the liberalization of international trade. Its headquarters are located in Geneva, Switzerland. The Organization formally commenced its operations on 1 January 1995 pursuant to the Marrakesh Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which had been established in 1947.
The Organization currently comprises 164 Member States, representing more than 97% of global trade. (1) The establishment of this global organization coincided with the completion of economic globalization’s three principal mechanisms, alongside the International Monetary Fund and the World Bank. The trading system constitutes one of the most important pillars of the economic system, as trade has historically played a significant role in economic development.
Following the Second World War, GATT was established to lead the world toward economic recovery and prosperity and, together with the International Monetary Fund and the World Bank, to form the principal foundations of the global economy. As of the beginning of 1995, the World Trade Organization became responsible for supervising the global trading system. (2)
Objectives of the Organization
- Administration of multilateral trade agreements.
- Serving as a forum for trade negotiations.
- Settlement of trade disputes.
- Review of national trade policies.
- Assistance to developing countries in matters relating to trade policy. (3)
Principles of the Organization
- The principle of trade liberalization from all restrictions.
- The right to an effective dispute settlement system.
- The principle of market access.
- The principle of the right to protection against unfair competition.
- The principle of non-discrimination. (4)
Definition of the Dispute Settlement Body
The Dispute Settlement Body is the organ established pursuant to Article (2) of the Dispute Settlement Understanding annexed to the WTO Agreement. It administers the rules and procedures governing consultations and dispute settlement. It is entrusted with the authority to approve the establishment and composition of special dispute settlement panels, adopt their reports and those of the Appellate Body, supervise the implementation of rulings and recommendations, and authorize the suspension of concessions and other obligations arising under the covered agreements.
The Dispute Settlement Body intervenes in disputes in accordance with defined legal rules and clarifies existing provisions of the covered agreements in accordance with customary rules of interpretation under public international law. This provides firm assurance to WTO Members that the Dispute Settlement Body exercises its powers in accordance with legal and objective standards, rather than personal or ideological considerations. (5)
Characteristics of the Dispute Settlement Body
- Expeditious resolution of disputes:
This is achieved through a logical and detailed timetable for each step of the dispute settlement procedures, accompanied by a clear and precise description of the content of each step. (6)
- A unified system:
Given its jurisdiction over all disputes between Member States and the unity of the body supervising the administration of the dispute settlement procedures, such unification leads to the application of uniform rules, thereby ensuring stability in international trade relations. (7)
- An automatic system:
Automaticity is reflected in the continuity and sequencing of procedures, (8) whereby they proceed along their prescribed path step by step and stage by stage throughout all phases of settlement, without interruption based on the will of any of the disputing parties, under a single mechanism. (9)
- A prompt system with precise timelines:
Such speed and precision are achieved through a clearly defined timetable based on a detailed specification of each procedural step in the dispute settlement process, accompanied by a clear and accurate description of each step, beginning with the request for consultations and extending through the implementation of decisions and recommendations issued by the dispute settlement panel and the Appellate Body after their adoption by the Dispute Settlement Body.
- A quasi-judicial system:
This character arises from Members’ obligation to resort to the Dispute Settlement Body, the automatic establishment of special panels, the existence of an Appellate Body to which reports may be appealed, the determination of time limits for the consideration of disputes and for the implementation of rulings, the possibility of referring disputes to arbitration, and the consistent reliance on legal means for the resolution of disputes. (10)
Principles Governing the Dispute Settlement Body
- Principle of adherence to the settlement system under GATT 1947:
This principle is set forth in paragraph (1) of Article (3) of the Dispute Settlement Understanding, which provides:
“Members affirm their adherence to the principles for the management of disputes heretofore applied under Articles XXII and XXIII of GATT 1947, and to the rules and procedures as further elaborated and modified herein.”
- Principle of centrality in providing security and predictability:
Paragraph (2) of Article (3) of the Dispute Settlement Understanding provides that: “The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system. Members recognize that it serves to preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law. Recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements.”
- Principle of prompt and satisfactory settlement of disputes:
The dispute settlement system aims at the prompt, effective, and satisfactory resolution of disputes. Paragraph (4) of Article (3) of the Dispute Settlement Understanding provides:
“Recommendations and rulings of the DSB shall aim to achieve a satisfactory settlement of the matter in accordance with the rights and obligations under this Understanding and under the covered agreements.”
- Principle of legal settlement of disputes:
Paragraph (5) of Article (3) of the Dispute Settlement Understanding provides:
“All solutions to matters formally raised under the consultation and dispute settlement provisions of the covered agreements, including arbitration awards, shall be consistent with those agreements and shall not nullify or impair benefits accruing to any Member under those agreements, nor impede the attainment of any objective of those agreements.”
- Principle of notification:
Paragraph (6) of Article (3) of the Dispute Settlement Understanding provides:
“The DSB, and the relevant Councils and Committees, shall be informed of any mutually agreed solutions to matters formally raised under the consultation and dispute settlement provisions of the covered agreements. Any Member may raise any point relating thereto in the DSB and the relevant Councils and Committees.”
- Principle of prudence and restraint:
Paragraph (7) of Article (3) of the Dispute Settlement Understanding provides:
“Before bringing a case, a Member shall exercise its judgment as to whether action under these procedures would be fruitful. The aim of the dispute settlement mechanism is to secure a positive solution to a dispute. A solution mutually acceptable to the parties to a dispute and consistent with the covered agreements is clearly to be preferred. In the absence of a mutually agreed solution, the first objective of the dispute settlement mechanism is usually to secure the withdrawal of the measures concerned if these are found to be inconsistent with the provisions of any of the covered agreements.
Compensation should be resorted to only if the immediate withdrawal of the measure is impracticable and as a temporary measure pending the withdrawal of the measure which is inconsistent with a covered agreement. The last resort which this Understanding provides to the Member invoking the dispute settlement procedures is the possibility of suspending the application of concessions or other obligations under the covered agreements on a discriminatory basis vis-à-vis the other Member, subject to authorization by the DSB.”
Dispute Settlement Mechanisms
The Dispute Settlement Body has established effective and successful alternative avenues frequently resorted to by parties to resolve their disputes in a swift and efficient manner, away from judicial systems that have proven unsuitable for resolving such matters due to their multiple complexities. These mechanisms include:
- Consultations.
- Alternative dispute resolution methods (good offices, conciliation, and mediation).
- Arbitration.
- Special dispute settlement panels.
- Review through appeal.
Sources:
- Mahmoud Salah El-Din Sayed Mohamed Ali, “Settlement of Trade Disputes within the Framework of the World Trade Organization Agreements,” published in the Nile Journal of Commercial, Legal, and Information Systems Sciences, p. 1, available at the website: Dispute Settlement under the WTO Agreement.pdf, accessed March 17, 2025.
- Ahmed Hassan Seif, “Introduction to the World Trade Organization and its Principles,” a research paper published in PDF format, p. 400, available on the United Nations Economic and Social Commission for Western Asia (ESCWA) website, accessed March 18, 2025, at 1:15 PM and again at 2:00 PM.
- Ahmed Hassan Seif, “Introduction to the World Trade Organization and its Principles,” ibid., p. 413 et seq., a research paper published in PDF format, accessed March 18, 2025, at 1:15 PM.
4- Abdul Wahab Abdullah Ahmed Al-Maamari, The Role of the World Trade Organization in Settling Trade Disputes, a research paper published in the Journal of Social Studies, Yemen, Issue (27), December 2022, p. 762, accessed March 20, 2025, at 2:16 AM.
5- Muhammad Shawqi Al-Sayed, The Role of the World Trade Organization in Resolving International Trade Disputes, accessed March 20, 2025, at 2:16 AM.
6- Abdul Malik Abdul Rahman Mutahhar, The Agreement Establishing the World Trade Organization and its Role in Developing International Trade, Dar Al-Kutub Al-Qanuniyya, Cairo, 2009, p. 440.
7- Ibid., p. 438.
8- Ibid., p. 439.
9- Dr. Mahmoud Salah El-Din Sayed Muhammad Ali, op. cit., p. 9.
10- Ibid., p. 9.
