28 June 2012 marked the 30th Anniversary of the GATT/WTO Legal Affairs Division. In its speech to the attendees of the commemoration ceremony, the Director General of the WTO, Mr. Pascal Lamy expressed his confidence in the WTO Dispute Settlement Mechanism.
Mr. Lamy shared several interesting statistics concerning the Dispute Settlement System. Up to this point of time, 98 WTO Members or 63% of the membership have participated in the WTO Dispute Settlement Mechanism. Out of the number, 6 of the most frequent complainants are developing country Members.
During the last 17 years since 1995, there have been 439 trade disputes brought to the WTO, many of which were solved by direct consultation. Only 206 cases involved the composition of panels. Of the 206 cases, only 177 disputes came with panel reports or 40% of all cases brought to the WTO. There are merely less than 30 cases dealt with compliance issue or 7% of all disputes. Out of these 30 cases, only 17 cases saw trade sanctions in cases of non-compliance.
In terms of timing, the average timeframe for WTO panel proceedings is 11 months, excluding the time to compose panels and translation time. It is significantly shorter compared to the average of 4 years at the International Court of Justice, 2 years at the European Court of Justice, and 3 and a half years before the International Center for the Settlement of Investment Disputes (ICSID).
In his speech, Mr. Lamy told the story of the initiation of the Legal Affairs Division. He explained that initially, trade diplomats were reluctant about having lawyers interpreting the rules that they had negotiated. Thus, during the early times, trade disputes were resolved by working parties with the emphasis to find politically-acceptable solutions rather than legal judgments. However, this became insufficient as new diplomats replaced the original negotiators. Eventually, trade disputes were referred to panels of experts.
Then, the GATT Contracting Parties started to introduce procedures, and moved towards a system based on rules. These efforts culminated at the end of the Uruguay Round, when Members then adopted the Dispute Settlement Understanding which contributed to the success of the WTO dispute settlement system, as one of the most successful systems for dispute settlement on the international plane.
Despite its success, Mr. Lamy noted that there are areas of the dispute settlement rules that can be clarified and perfected. These are now included in the current negotiations.