Dispute Settlement Body

As this symposium and a plethora of literature have no doubt illustrated over the last few years, the World Trade Organisation’s (WTO’s) famed Dispute Settlement Body (DSB) is at a critical stage of its development. Some have referred to this stage as a crossroads – and with good reason – but I think it is more of a magic roundabout. Whichever way we look at it, there is so much at stake no matter which direction the DSB takes by the end of this crisis. One lesser discussed factor is the all-important question of participation, representation and diversity in the dispute resolution process.

The World Trade Organization (WTO) stands as a cornerstone of the global trade architecture, fostering cooperation and negotiation among its diverse membership. At the heart of its operations lies the Dispute Settlement Mechanism (DSM), a rules-based system designed to ensure fair resolution of trade disputes. However, as a rules-based system for global trade, DSM faces a challenge of representation of its diverse parts encompassing regional disparities, differences in legal traditions, and gender imbalances that impinge on its ability to serve the needs of all its members and maintain its legitimacy. This blog post critically examines these issues and proposes strategies to enhance diversity and representation within the DSM, bolstering its legitimacy and ability to fulfil its overarching objectives.

On 11 December 2023, it will be four years since the World Trade Organization's (WTO) Appellate Body (AB) was fully functional. Indeed, on 11 December 2019, the terms of two Appellate Body Members (ABMs), Amb. Ujal Singh Bhatia and Mr. Thomas R. Graham, expired. This left Dr. Hong Zhao as the sole ABM in a paralysed AB until 30 November 2020 when her term ended. With this, came the fall of a unique institution in international dispute settlement and the weakening of the WTO's dispute settlement system (DSM), which has been termed the WTO's "crown jewel". The AB's demise was triggered by the United States' (US) refusal to permit the appointment of ABMs. The US has very vocally and consistently stated that the AB had, essentially, become a law unto itself and overstepped its legal mandates set out in the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) and as a subordinate institution of the Dispute Settlement Body.

The introduction of the World Trade Organization (WTO) in 1995 was considered a historic milestone for the rules-based trade order instituted in the aftermath of World War II. In particular, the Dispute Settlement Mechanism (DSM), a rules-based dispute settlement system designed to ensure fair resolution of trade disputes among WTO members, was hailed as a "crown jewel" of the new system. Although not devoid of criticism, the two-tier system of the DSM had a relatively excellent start to life. Considered one of the most active international dispute mechanisms, especially since the turn of the millennium, the DSM has handled 621 disputes brought to the organisation, with over 350 rulings issued since its inception in 1995. However, the system's success has waned in recent years, effectively "grinding to a halt" with the U.S. spearheading its sabotage. Although the US was a major architect for its introduction in 1995, it opposed the appointment of new Appellate Body members, through successive US administrations and there are now no Appellate Body members since 2019. The demise of the Appellate Body created an impasse in the WTO that is yet to be resolved despite several efforts from WTO members. A primary criticism of the current system by the U.S. is that the Appellate Body has overstepped its limits and created new rules not envisaged by the WTO, an approach that the U.S. maintains does not support its interests. In this analysis, we argue that the proposed reforms to the WTO's DSM by the U.S. are self-serving, aligning with a consistent pattern of hegemonic powers shifting the goalposts and changing the rules when they face adverse consequences—the "bite"—of a regime they erstwhile championed.

This blog post focuses on the Agreement for the establishment of the African Continental Free Trade Area (AfCFTA) and the implications for the evolution of lex mercatoria in Africa. This blog post is primarily based on a recent paper by Chisa Onyejekwe and Eghosa Ekhator titled ‘AfCFTA and Lex Mercatoria: Reconceptualizing International Trade Law in Africa’. The paper argues that some of the major innovations embedded in the AfCFTA (such as variable geometry and dispute settlement amongst others) form the crux of an emerging African practice of lex mercatoria. Consequently, the creation of AfCFTA has engendered what can be termed as an emerging concept of ‘Lex Mercatoria Africana’. In the context of the AfCFTA, this is exemplified by the notion that the AfCFTA explicitly promotes African trade principles.

One would be justified in thinking that AU member states have intentionally created a court which they consciously know they would hardly use given the inertia identified above. If the reforms that would extend standing to private parties are not undertaken, there is little guarantee that Member States will suddenly change their habits. Assuming for once that they trigger the mechanism, it is also very likely that, consistent with their practice for political solutions to legal problems, they would not proceed beyond the consultation and good offices stages provided in Articles 7 and 8 of the Dispute Settlement Protocol.

The AfCFTA-DSM will be nestled in a culture of African States that does no pursue formal settlement of trade disputes before judicial or quasi-judicial bodies. Given the dearth of core economic integration disputes before the African regional economic community courts; and, the failure of previous WTO-like DSM transplanted at the regional level, what potential if any, has the AfCFTA-DSM to chart a new course? Similarly, what can we garner about the culture of African States towards trade disputes?

The settlement of disputes under the AfCFTA will be governed by the Protocol on Rules and Procedures of the Settlement of Disputes which provides for the establishment of Dispute Settlement Body with authority to establish panels to receive and determine interstate trade disputes. Thus, individuals do not have direct access to the DSP. Therefore, this raises the question: Is this mechanism attractive and would states use it? It is premature to predict whether or not states will use it.

The AfCFTA is thus a positive development for Africa as it seeks to advance its own interests through intra-African trade. For a region of the world that contributes to only about 3% of global trade, increasing intra-African trade is a laudable project. For example, while intra-Asia and intra-Europe trade account for 59 per cent and 69 per cent of exports respectively, intra-African trade accounts for only 18 per cent of total exports. However, despite the modest successes at improving intra-African trade through the eight African Union-recognized regional trade agreements on the continent, there are genuine apprehensions regarding the viability of the proposed AfCFTA.