Dispute Settlement in the WTO

Abstract Inevitably, the WTO system of dispute settlement builds on the practices in the GATT as they had evolved over five decades. But whereas those practices had grown up largely in a series of informal or ‘pragmatic ‘ arrangements based on two articles of the General Agreement that gave little guidance—indeed did not even mention the idea of panels—the Understanding on Dispute Settlement is set out in an elaborate treaty of 27 articles and four appendices subscribed to by all member states of the World Trade Organization and applicable to virtually all of the WTO agreements. Moreover, the WTO system of dispute settlement contains two major innovations—provision for appellate review of panel decisions by a standing Appellate Body, and provision for compensation or retaliation if a respondent party found to be out of compliance does not repeal or modify its objectionable practice.