WTO Dispute Settlement Reform Still Up in the Air

The facilitator of the World Trade Organization's dispute settlement reform, Marco Tulio Molina Tejeda, circulated the fourth draft of the confidential ministerial decision, our correspondent writes.

This draft remains silent on the appeal/review mechanism and the restoration of the Appellate Body. It introduces terms like “adjudicators,” absent in the current dispute settlement understanding, according to sources.

Tejeda's email, dated January 15, to WTO members, stated that this version reflects feedback from January 10-12 plenary meetings, covering topics like ADRs, Arbitration, Panel Process Streamlining, Conciseness, and Time-Frame Adherence. The draft consolidates sections on panel composition and dispute resolution focus, replacing earlier versions circulated on January 6.

Negotiators express serious concern over the draft’s omission of the Appellate Body, the WTO’s DSU cornerstone. Tejeda, representing Guatemala, has advocated for the Appellate Body's restoration at monthly Dispute Settlement Body meetings. However, his apparent avoidance of this issue in informal discussions raises questions about the process's integrity.

With the WTO’s 13th ministerial conference in Abu Dhabi approaching on February 26, speculation grows over whether the draft will include Article 17’s Appellate Review/Standing Appellate Body or an unexpected, diluted appeal/review mechanism.

The 52-page draft introduces several changes, including references to Article IV of the Marrakesh Agreement, previously omitted. It omits Article IV’s paragraph three on dispute settlement body functioning. The draft also acknowledges consensus-based decision-making per Article IX, contrasting with the dispute settlement body’s negative consensus practice.

The draft's silence on the Appellate Body's role, possibly due to opposition from a major industrial country, is noteworthy. The latest draft’s chapeau language emphasizes dispute settlement reform, aiming for a fully functional system by 2024, and focuses on member interests, alternative dispute resolution, and prompt compliance.

Specific provisions address alternative dispute resolution, arbitration, simplified arbitration proceedings, compliance, adjudicator guidelines, and transparency. It highlights the need for increased accessibility for developing and least developed countries, proposing regular reviews of the dispute settlement system and implementation of reforms.

The draft also includes a proposed accountability mechanism, with biennial reviews starting in October 2026, and considers transitional provisions. The terminology shift from “panel members” to “adjudicators” is significant, reflecting the draft's focus on procedural management, diversity, and complex dispute categorization.