Dispute Settlement Body – Definition

Cite this article as:"Dispute Settlement Body – Definition," in The Business Professor, updated November 22, 2018, last accessed October 29, 2020, https://thebusinessprofessor.com/lesson/dispute-settlement-body-explained/.


Dispute Settlement Body (DSB) Definition

The Dispute Settlement Body (DSB) is a diplomatic body dealing with trade disputes between the members of WTO. It is convened by the General Council of the WTO and consists of representatives from all WTO member states.

The DSB administers the dispute settlement system by establishing dispute settlement panels, referring matters to arbitration, and adopting panel, appellate body and arbitration reports. It is also responsible for monitoring the implementation of recommendations and rulings contained in such reports and authorizing suspension of concessions when those recommendations and rulings are not followed.

A Little More on the Dispute Settlement Body

All members of the WTO, by virtue of their membership, agree to use the multilateral system of settling disputes. If they believe any of their fellow member states have adopted a trade policy or are involved in an action that contradicts the WTO agreement, they can approach the DSB to resolve the issue.

A trade dispute may arise when a member state violates any agreements contained in the Final Act of the Uruguay Round. The Final Act is annexed by the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).

If a member state believes another fellow member state has breached the terms of the agreement, it can call for a consultation with other states. The consultation has 60 days after receiving the request to resolve the dispute. If it fails, the complainant state can appeal to establish a dispute settlement panel, unless DSB by consensus decides anything else. The Secretariat then sets up a panel with three members on an ad hoc basis. The panel asks the parties to submit their position verbally or in writing. The proceedings are confidential and only the representatives of the concerned states are allowed to attend the proceeding or submit before the panel. The panel makes a decision after hearing the submissions and makes recommendations to the DSB. The final version of the report is distributed to the parties involved in the dispute. Then after two weeks, it is circulated among all the WTO members.

Reverse consensus rule is followed in adopting the report. The report is adopted unless there is a consensus of the members against adoption or a party involved in the dispute gives notice for appealing before the Appellate Body. The report needs to be adopted within 60 days from the circulation. The parties involved may approach the standing Appellate Body if they are not satisfied with the legal interpretations developed by the panel in the report.

The Appellate Body has seven members, each serving four-year terms. It is appointed by the DSB with representatives from different WTO member states. They are the individuals with proven knowledge of international trade and laws. Three members from the Appellate body hears the appeal of the party and may uphold the legal interpretations and recommendations made by the panel or they can modify or reverse it.

Usually, the Appellate body gets 60 days to review the appeal, at the most 90 days are allowed. Members can comment on the report of the Appellate Body, but they do not have the power to derail it. If within the 30 days of circulation, DSB doesn鈥檛 decide by consensus not to adopt the report, the report is adopted by the DSB and the parties have to accept it unconditionally.

After adopting the report, the respondent state gets 30 days to inform the DSB about the implementation of the recommendations and rulings. If they find it impossible to implement it right away, they can appeal for a reasonable time to comply, This time period should not exceed 15 months.

If they cannot reach a consensus regarding the time period, an arbitrator is appointed by agreement to the parties to settle the issue. If there is a dispute regarding the measures taken by the respondent state to comply with the report, a panel can resolve it. It is preferably the same panel which heard the case.

Even if the respondent state declares that they have taken measures according to the recommendations and the panel and complainant state are satisfied with the measure, the DSB monitors the implementation of the recommendations.

References for Dispute Settlement Body


Academic Research on Dispute Settlement Body, Panel, Understanding

  • 路聽聽聽聽聽聽 Principles of international law in the WTO聽dispute settlement body, Cameron, J., & Gray, K. R. (2001).聽International & Comparative Law Quarterly,聽50(2), 248-298. This paper examines the framework that governs the trade obligations of and between members of the World Trade Organization (WTO). Where the 1947 General Agreement on Tariffs and Trade (GATT) covered trade involving only goods, the WTO now includes services, intellectual property, and investment, among other economic concerns.
  • 路聽聽聽聽聽聽 Compliance by WTO members with adverse WTO聽dispute settlement聽rulings: the record to date, Wilson, B. (2007). Journal of International Economic Law,聽10(2), 397-403. This paper takes a broad look at the recent history of how World Trade Organization (WTO) members have accepted adverse rulings handed down by the Appellate Body of the WTO. According to the author鈥檚 findings, almost 90% of the reports show that when a WTO member has been found to be in violation, they show a willingness to comply with the WTO ruling if they have not already done so.
  • 路聽聽聽聽聽聽 International trade policy and domestic food safety regulation: The case for substantial deference by the WTO聽Dispute Settlement Body聽under the SPS Agreement, Trebilcock, M. J., & Soloway, J. A. (2002). This paper takes a look at how a state鈥檚 regulatory policy can, in some cases, function as de facto tariffs, even when traditional tariffs are not in place. This paper suggests a system of approaches for the World Trade Organization (WTO) that can meet public health needs while still reducing the barriers to international trade when the WTO reviews international safety and health regulations.
  • 路聽聽聽聽聽聽 Out of Conformity: China’s Capacity to Implement World Trade Organization聽Dispute Settlement Body聽Decisions After Accession, Duncan, C. (2002). Am. U. Int’l L. Rev.,聽18, 399.
  • 路聽聽聽聽聽聽 Developing Countries and the WTO Legal and聽Dispute Settlement聽System: A view from the bench, Lacarte-Muro, J., & Gappah, P. (2000).聽Journal of International Economic Law,聽3(3), 395-401. This article outlines the role that developing countries play in respect to their interaction with the World Trade Organization鈥檚 (WTO鈥檚) Appellate Body. Their participation, contribution to WTO legal issues, and how they help form provisions that serve their special interests are also examined.
  • 路聽聽聽聽聽聽 Peculiarities of retaliation in WTO聽dispute settlement, Anderson, K. (2002). World Trade Review,聽1(2), 123-134. Retaliation is the imposition of sanctions by the World Trade Organization (WTO) on a country that doesn鈥檛 conform to agreed-to WTO policies, and this paper takes a look at the purpose of retaliation and why it is preferred to compensation. The situations under which retaliation are permissible are also examined. Suggestions for improving this particular method of dispute resolution are also discussed.
  • 路聽聽聽聽聽聽 The new WTO聽dispute settlement聽procedure: an overview of the first three years, Hudec, R. E. (1999). Minn. J. Global Trade,聽8, 1. The new obligations and stronger procedures of the World Trade Organization鈥檚 (WTO鈥檚) improved dispute settlement process are examined. The author first outlines the substantive changes to the process, and then makes an examination of the recent decisions that fall under this updated procedure.
  • 路聽聽聽聽聽聽 The WTO聽dispute settlement聽system: the first ten years, Davey, W. J. (2005). Journal of International Economic Law,聽8(1), 17-50. This paper makes a general survey of the actions taken by the World Trade Organization鈥檚 (WTO鈥檚) dispute settlement system during its first ten years from 1995 to 2004. A general review of the system is made, and then interactions with major countries are examined and evaluated. Particular attention is paid to certain bilateral relationships, like the one between the U.S. and E.C. The author finds that while the system is effective in achieving its stated goals, it does not operate as quickly as hoped.
  • 路聽聽聽聽聽聽 Dispute Settlement聽and the WTO, Jackson, J. H. (1998). Journal of International Economic Law,聽1(3), 329-351. This paper examines the first 40 months of the World Trade Organization鈥檚 (WTO鈥檚) dispute settlement system. The developing jurisprudence of the Appellate Body is examined, and recommendations are made regarding the Body鈥檚 approach to national regulatory systems. The author also notes some areas of concern regarding the Body鈥檚 ability to address ambiguities in the language of the system.
  • 路聽聽聽聽聽聽 WTO聽dispute settlement: praise and suggestions for reform, Schoenbaum, T. J. (1998).聽International & Comparative Law Quarterly,聽47(3), 647-658. This paper takes a look at the first three years of the newly formed system for dispute settlement under the World Trade Organization. The author examines the rulings and offers suggestions to improve the operation of this dispute resolution process.
  • 路聽聽聽聽聽聽 The economics of trade聽disputes, the GATT’s Article XXIII, and the WTO’s聽Dispute Settlement Understanding, Bown, C. P. (2002). Economics & Politics,聽14(3), 283-323. This article questions why some World Trade Organization (WTO) member countries might choose to violate their trade agreements, even when faced with clearly defined retaliation systems. The authors take a look at situations where a member country might choose to violate the agreement and why the punishments levied by the WTO are not sufficient incentive to play by the rules.
  • 路聽聽聽聽聽聽 The new WTO聽dispute settlement聽procedure: an overview of the first three years, Hudec, R. E. (1999).聽Minn. J. Global Trade,聽8, 1.
  • 路聽聽聽聽聽聽 International Law Status of WTO聽Dispute Settlement聽Reports: Obligation to Comply or Option to 鈥淏uy Out鈥?, Jackson, J. H. (2004). American Journal of International Law,聽98(1), 109-125. This piece takes a look at rulings from the World Trade Organization鈥檚 (WTO鈥檚) Appellate Body. The author examines the rulings in comparison to the traditional view of international law. They find that the WTO is less of a legal framework meting out justice and enforcing rules, but rather a place of voluntary policing between sovereign governments.
  • 路聽聽聽聽聽聽 The review of the WTO聽understanding聽on聽dispute settlement: some reflections on the current debate, Van der Borght, K. (1998).聽Am. U. Int’l L. Rev.,聽14, 1223. This piece offers an overview of the World Trade Organization鈥檚 (WTO鈥檚) framework for dispute resolution, and then tries to determine if it is meeting the needs and expectations of the member states.
  • 路聽聽聽聽聽聽 Revenge of the push-me, pull-you: the implementation process under the WTO聽dispute settlement understanding, Reif, T. M., & Florestal, M. (1998). In聽Int’l L.聽(Vol. 32, p. 755). This editorial takes on the World Trade Organization鈥檚 (WTO鈥檚) dispute resolution system. The author examines various decision of the WTO鈥檚 appellate body. The summary questions whether both parties benefit or are equally inconvenienced by the body鈥檚 decisions.
  • 路聽聽聽聽聽聽 The WTO聽dispute settlement understanding: an unlikely weapon in the fight against AIDS, Curti, A. M. (2001). Am. JL & Med.,聽27, 469. This article examines the role that the World Trade Organization (WTO) plays in affecting the trade and intellectual property protection of pharmaceuticals that could be used to treat AIDS. The author shows how a narrowly tailored pharmaceutical licensing program could stay consistent with the WTO鈥檚 agreements on intellectual property protection while still increasing the availability of life-saving medications in developing countries.
  • 路聽聽聽聽聽聽 Review of the聽dispute settlement understanding: Operation of panels, Stewart, T. P., & Karpel, A. A. (1999).聽Law & Pol’y Int’l Bus.,聽31, 593. This paper takes an overview of the General Agreement on Tariffs and Trade (GATT) as it relates to the agreement鈥檚 ability to resolve conflict between member states. The essential function of panels and panel reports in this system of agreements is examined.
  • 路聽聽聽聽聽聽 True Appellate Procedure or Only a Two-Stage Process-A Comparative View of the Appellate Body under the WTO聽Dispute Settlement Understanding, Joergens, K. J. (1998). Law & Pol’y Int’l Bus.,聽30, 193. This paper takes a look at the function and success of the Appellate Body system of dispute resolution under the World Trade Organization (WTO). The author notes the initial concerns that the Appellate Body may take too legal of an approach in a system built on practical diplomacy. Analysis of the appellate decisions and review of the system finds that the Appellate Body satisfies member needs and succeeds more than it fails.
  • 路聽聽聽聽聽聽 TRIPS and the聽Dispute Settlement Understanding: The first six years, Felgueroso, J. (2002). AIPLA QJ,聽30, 165. This article offers a broad examination of the dispute resolution system under the World Trade Organization (WTO) agreement, with a specific look at the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. The author takes a look at the makeup and history of the WTO before beginning an examination of past WTO case rulings.
  • 路聽聽聽聽聽聽 The聽Dispute Settlement Understanding聽of the WTO Agreement: An Inadequate Mechanism for the Resolution of International Trade聽Disputes, Feeney, S. P. (2002). Pepp. Disp. Resol. LJ,聽2, 99. This critical analysis takes to task the dispute resolution system of the World Trade Organization (WTO) agreement. The author outlines the needs that the dispute resolution was intended to address, then analyzes past rulings to determine their effectiveness.
  • 路聽聽聽聽聽聽 The politics of procedure: an examination of the GATT聽dispute settlement panel聽and the Article XXI defense in the context of the US embargo of Nicaragua, Whitt, R. S. (1987).聽Law & Pol’y Int’l Bus.,聽19, 603. This takes a look at the GATT panel and how it operated in the 1985 embargo of Nicaragua put in place by Ronald Reagan. It examines GATT exceptions that take the form of nation security measures under Article XXI. Suggested reforms are also included.
  • 路聽聽聽聽聽聽 Participation in聽wto聽Dispute Settlement: Complainants, Interested Parties, and Free Riders, Bown, C. P. (2005). The World Bank Economic Review,聽19(2), 287-310. This article takes a look at the reasons that may push a country to formally engage in a trade dispute that is directly related to their exporting interests. While looking at five years of litigation from the World Trade Organization (WTO), the author finds that the size of exports at stake is an important factor, as well as their ability to legally respond to trade disputes. These factors support the author鈥檚 hypothesis that for these reasons, developing countries operate at a disadvantage when bringing claims before the WTO鈥檚 Appellate Body.
  • 路聽聽聽聽聽聽 Dispute Settlement聽in GATT, Davey, W. J. (1987).聽Fordham Int’l LJ,聽11, 51.
  • 路聽聽聽聽聽聽 WTO聽dispute settlement: praise and suggestions for reform, Schoenbaum, T. J. (1998).聽International & Comparative Law Quarterly,聽47(3), 647-658.
  • 路聽聽聽聽聽聽 Overlapping institutions, forum shopping, and聽dispute settlement聽in international trade, Busch, M. L. (2007).聽International Organization,聽61(4), 735-761. This paper takes a look at disputes over Mexican brooms and Canadian periodicals to demonstrate the practice of forum shopping in international trade disputes. Preferred trade agreements give members of the World Trade Organization (WTO) the ability to select from a variety of forums in which to bring their trade grievances. This lets them strategically select forums that will give them the ideal ruling not only for their current issue, but in a way that can set beneficial precedents for future litigation.
  • 路聽聽聽聽聽聽 Recognizing public goods in WTO聽dispute settlement: who participates? Who decides? The case of TRIPS and pharmaceutical patent protection, Shaffer, G. (2004). Journal of International Economic Law,聽7(2), 459-482. This paper takes a look at the patent protection for pharmaceutical products to start a discussion about who gets to decide what is in the public good in the context of the World Trade Organization (WTO).聽 Because so many different countries and cultures are involved, the balance between open trade, administration of public health, and the protection of new knowledge have never been more important. This paper takes a look at the WTO鈥檚 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The article also notes that the system in place makes it difficult for developing countries to have a meaningful place in the WTO鈥檚 judicial process.
  • 路聽聽聽聽聽聽 The merits of dual pricing of Russian natural gas, Tarr, D. G., & Thomson, P. D. (2004). World Economy,聽27(8), 1173-1194. This paper argues that there is no reason, from Russia鈥檚 perspective, to segment the Russian and European markets when it sets the price for natural gas. The authors take a look at possible revenue from various pricing schemes.聽 The possibility of tariffs is also examined.
  • 路聽聽聽聽聽聽 Bargaining in the shadow of the law: early聽settlement聽in GATT/WTO聽disputes, Busch, M. L., & Reinhardt, E. (2000). Fordham Int’l LJ,聽24, 158. This paper takes a four-step approach to analyzing the dispute resolution in the World Trade Organization (WTO) and the General Agreement on Tariffs and Trade (GATT) for 50 years from 1948 to 1999. The authors look at the outcomes of the disputes as they relate to their stated hypotheses. They further analyze disputes the benefitted from the dispute settlement reforms of the 1990s. Proposed future reforms are also offered.
  • 路聽聽聽聽聽聽 Has the WTO聽dispute settlement聽system exceeded its authority? A consideration of deference shown by the system to member government decisions and its use of聽鈥, Davey, W. J. (2001).聽Journal of International Economic Law,聽4(1), 79-110. This paper undertakes a systematic study of 38 decisions rendered by the Appellate Body of the World Trade Organization (WTO). The author finds that the decisions made by this body generally do not overstep their stated authority as they show deference to member governments.
  • 路聽聽聽聽聽聽 The WTO聽dispute settlement聽understanding: less is more, Bello, J. H. (1996). American Journal of International Law,聽90(3), 416-418. This editorial offers an opinion regarding the unintended consequences of agreements and rulings that are a product of the World Trade Organization (WTO). The concerns of environmentalists and economic nationalists are examined, as well as state and local governments that take issue with the collection and distribution of tax revenue related to products that are traded between WTO member countries.

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