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7/28/2019 Dispute Settlement Mechanisms in International Trade
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Dispute settlementmechanisms ininternational trade
Tamrika Tyagi
D22
Abhinav Bhatnagar
D25 Sarath Chandra
Sabarish D50
Alok Arya D51
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Sources of Data ReferenceO www.wto.org
O
www.iccwbo.org
O www.unctad.org
O http://www.assocham.org
O http://www.ficci.com/
http://www.wto.org/http://www.iccwbo.org/http://www.unctad.org/http://www.assocham.org/http://www.ficci.com/http://www.ficci.com/http://www.ficci.com/http://www.assocham.org/http://www.assocham.org/http://www.unctad.org/http://www.iccwbo.org/http://www.wto.org/7/28/2019 Dispute Settlement Mechanisms in International Trade
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What is Dispute in
international contextO A dispute arises when a member government
believes another member government isviolating an agreement or a commitment that ithas made in the WTO.
O In other words, a dispute arises when oneWTO Member adopts a trade policy measure
that one or more other Members consider to beinconsistent with the obligations set out in theWTO Agreement.
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Who will resolve these
disputes ?O Ultimate responsibility for settling disputes lies with
member governments through the Dispute Settlement
Body.
O The member governments themselves entered agreements
through negotiations among other members.
O The Dispute Settlement Understanding (DSU) is the main
WTO agreement on settling disputes. This was one of the
outcomes of the Uruguay Round(1986-1994) negotiationsin which 123 countries participated. It sets out the
procedures and rules that define todays dispute settlement
system.
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What is international tra
de ?
O International trade is the exchange of
capital, goods, and services across
international borders or territoriesO Although international trade is understood
in the WTO as the flow of goods and
services between Members, such trade is
typically not conducted by States, but
rather by private economic operators.
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WTOO A rule-based organization, member driven
organization wherein all decisions are
made by member governments, and the
rules are the outcome of negotiationsamong members.
O The only international organization dealing
with the global rules of trade between
nations. Its main function is to ensure thattrade flows as smoothly, predictably and
freely as possible.
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Facts about WTOO Established on 1st January 1995.
O Headquarters in Geneva, Switzerland.
O 159 member countries ( as on 2nd march
2013)O Headed by Pascal Lamy.
O Deals in Goods, services and IntellectualProperty Rights.
O Extended GATT principles to newer tradeareas.
O Compulsory and binding disputeresolution system.
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Functions of WTOO Administering trade agreements
O Forum for trade negotiations
O Settlement of disputes
O Monitoring national trade policies
O Co-operation with other internationalorganizations
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DISPUTE SETTLEMENT
BODY OF WTOO It is made up of all member governments, and is usually
represented by ambassadors.
O Helps in preventing detrimental effects of unresolved international
trade conflicts and to mitigate the imbalances between strongerand weaker players by having their disputes settled on the basis of
rules rather than having power determine the outcome.
O The current chairperson is H.E. Shahid Bashir(Pakistan).
O Fast, efficient, dependable and rule-oriented binding system
O This system constitutes a major improvement over theprevious GATT dispute settlement system
O has greatly enhanced the stability and predictability of the rules of
international trade
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(2013) 10
Aims of the DSU
(Article 3)
O To provide security and predictabilityto the multilateral
trading system.
O That aprompt settlementof disputes is essential.
O To secure apositive solution to a dispute. (Negotiatedsolution is preferable to litigated decisions.)
O Once a violation is determined the aim is to secure the
withdrawalof the offending measure.
O Compensation is to be resorted to onlyif the withdrawal of
the measure is impracticable.
O As a last resort, have suspension of concessions or other
obligations (Retaliation).
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(2013) 11
DSU Articles --Article 19 (Panel & AB Recommendations)
Article 21 -- (Surveillance of Implementation)Article 22 -- (Suspension of Concessions)
O Article 19 ---Recommendation is to bring the measure into confo rmity with the WTOagreement.
O Article 21 --- Prompt com pl ianceis essential. The panel reviews a disagreement over
consistency of compliance measures taken and keeps undersurvei l lanceimplementing actions.
O Parties need to inform of intentions to comply with DSB.
O Arbit rat ionas to reasonable period. Ar t. 21(3).
O Consis tency of compl iance original panel. Ar t. 21(5).
O Article 22 ---Full implementation is preferred. Sanct ions(withdrawal of concessions)may be authorized.
O
Authorization for sanctions to DSB.O Arbit rat ion(by panel) for amount of sanctions. Ar t. 22(6).
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Brief about the Dispute
Settlement processO When non-compliance with the WTO Agreement is alleged by
a WTO Member, the dispute settlement system provides for arelatively rapid resolution of the matter through an independentruling, that must be implemented promptly and if notimplemented, the non-implementing member will face possible
trade sanctions.O If the parties to the dispute do not manage to reach a mutually
agreed solution, the complainant is guaranteed a rules-basedprocedure in which the merits of its claims will be examined byan independent body (panels and the Appellate Body)
O If the complainant prevails, the desired option is to secure the
withdrawal of the measure found to be inconsistent with theWTO Agreement. Compensation and countermeasures areavailable only as secondary and temporary responses.
O Also, it provides a forum for the respondent to defend itself if itdisagrees with the claims raised by the complainant.
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Dispute Settlement in the
WTO: An OverviewO Overall aim is to secure compliance with the
Agreements.
O An integrated system:a. Applies to all the multilateral agreements.
b. A single set of rules for all disputes.
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Dispute Settlement in the
WTO- Main players
O Dispute Settlement Body (DSB)
O Panel and Appellate Body
O Parties: WTO Members
O WTO Secretariat
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15
Dispute Settlement in the WTO:Relationship of players
Panel
Appellate Body
Ministerial Conference
Dispute Settlement Body(General Council)
Request for Panel
by WTO Member
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(2013) 16
Basic Procedures.
O First stage is consul tat ions.
O Upon failure of consultations panelsare established by the Dispute
Sett lement Bo dy (DSB)(General Council).
O Panels have detailed rules of procedures providing for descriptive
sections, in ter im reports, and f inal reports.
O
If appealed the Appellate Body (AB) reviews the panel report.O Issu es of lawcovered by the panel
O Legal interpretation sdeveloped by the panel.
O The DSBautomat ical lyadopts the reports of the panels and the
Appellate Body unless there is a consensus (unanimity) against its
adoption. (Concept of automaticity.)
O DSB keeps survei l lance o f imp lementat ion.
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17
Dispute Settlement in the WTO:Main Procedures
Implementation
Appelate Body
Panel
Consultations 60 days
9 months
90 days
15 months
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Dispute Settlement in the WTO
1) Consultations: the requestO Notified to Dispute Settlement
Body and circulated to all
MembersO Indicates reasons for the request:
O Identification of the measures to
be taken
O Identification of the legal basis
for complaint
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Consultations: functionO Main function is to accord sympathetic
consideration to and accord adequate
opportunity for consultationO Confidential i.e. only between the
Members concerned
O In some instances, other Members can
request to be joined in the consultationsArticle 4.11 DSU
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Consultations: if not successful
O If consultations fail to resolve the matter
within 60 days from receipt of request;
O Or if no response or no entering into
consultations
O A request for establishment of a panel can
be made
Di t S ttl t i th WTO
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21
Dispute Settlement in the WTO:
Establishment of panels
O A request for establishment of panel ismade to the dispute settlement body anda brief summary of the problem is madesufficient to clearly present the problem.
O The panel is established at the latest bynegative consensus at the second DSBmeeting at which the request is made.
O
The panel consist of well-qualifiedgovernment and/or non-governmentalindividuals.
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Dispute Settlement in the WTO:Panels: how they function
Functions of the Panela panel should make an objective assessment of the
matter before it, including an objective assessment of the
facts of the case and the applicability of and conformity
with the relevant covered agreements
Functions of the dispute settlement system to preserve the rights and obligations of Members under the
covered agreements, and to clarify the existing provisions of thoseagreements in accordance with customary rules of interpretationof public international law Art. 3.2 DSU
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Dispute Settlement in the WTO:Panel Procedures: main steps
O Oral hearings (usually 2), on basis of writtensubmissions
O Descriptive part of report issued to parties
O Interim review based on draft report
O Final report issued to parties
O Final report circulated to all Members
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Dispute Settlement in the WTO:Panel Procedures: other sources of input
O Third parties have make presentations
O need substantial interest (Article 10 DSU)
O
Panels may seek
O factual information from any relevant source
(Article 13 DSU)
O scientific or technical advice from an Expertreview group (Appendix 4 DSU)
O Requirement of confidentiality (Article 14 DSU)
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Dispute Settlement in the WTO:Panel Procedures: duration
O As a general rule, 9 months from establishment
of panel to consideration of report for adoption
(if no appeal)
O 12 months where report is appealed
(Article 20 DSU)
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Dispute Settlement in the WTO:Panel procedures:Adoption of Panel Reports
O Adoption within 60
days of circulation,
by negative
consensus.
Except if
appealed
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Dispute Settlement in the WTO:
Appellate ReviewO Appeals limited to
issues of law and legal
interpretations
developed by the panel
O Appeal only open to
parties to the dispute
Appellate BodyO 7 members
O
members to haverecognized authority and
expertise in international
trade law
O members unaffiliated with
any government
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Dispute Settlement in the WTO:Appellate Review: report and adoption
Report of the Appellate Body:
O may uphold, modify or reverse the legal findings and
conclusions of the panel (Art. 17.12 DSU)
O Adoption of Appellate Body report: by reverseconsensus within 30 days of circulation to Members
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Dispute Settlement in the WTO:Implementation
O Member must bring the
measures into
conformity with its WTO
obligations
(Article 19 DSU)
O Member must inform DSB
of its intentions in for
implementation of the
recommendations
(Article 1 DSU)
If there is a finding of
violation:
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Dispute Settlement in the WTO:Implementation: reasonable period of time
Determination of reasonable period of time for
implementation:
O proposed by Member, and approved by DSB, or
O mutually agreed by the parties, or
O determined through arbitration:
O guideline for the arbitrator: 15 months from the date of
adoption (Article 21.3 DSU)
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Dispute Settlement in the WTO:Implementation: surveillance
O Surveillance by the DSB
O Status reports on implementation
O Temporary measures
O If Member fails to bring measure into conformitywithin reasonable period of time, possibility
O compensation or
O suspension of concessions (retaliation)
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Dispute Settlement in the WTO:Implementation
Compensation:(Article 22 DSU)
O Voluntary
O Negotiated
O Compatible with WTO Agreements
O If no compensation agreed within 20 days afterexpiry of reasonable period of time.
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Dispute Settlement in the WTO:Implementation
Suspension of concessions:O when authorized?
O on expiry of 20 days after the end of the reasonable
period of timeO which products?
O same sector/other sector/ other agreement
O level of suspension?
O equivalent to the level of nullification or impairment (Art.22.4 DSU)
O arbitration on level of suspension, or principles of Art. 22.3
DSU
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(2013) 34
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International Court
of Arbitration
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IntroductionO The ICC International court of arbitration commonly known
as the court.
O It comprises more than 100 members from about 90
countries.
O The courts primary role is to administer InternationalChamber of Commerce(ICC) arbitrations.
O Arbitration is a consensual process
O The parties must first agree on ICC arbitration before the
International Court of Arbitration will become involved in a
dispute.
O It can also be entered into by the parties after the dispute
arises, if it arises in connection with a business contract.
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Functions of ICC Internationalcourt of arbitration
O Fixing the place of arbitration
O Assessing whether there is a prima facie ICCArbitration agreement
O
Taking certain necessary decisions in complex multi-party or multi-contract arbitrations
O Confirming, appointing and replacing arbitrators
O Deciding on any challenges filed against arbitrators
O Monitoring the arbitral process from the filing of therequest for arbitration to the notification of the finalaward to ensure that it proceeds in accordance withthe Rules and with the required commitment todiligence and efficiency
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Methods of settlement
O The first and classical mode of settlement
is negotiation. This involves a direct and
bilateral process.
O Mediation.
O Conciliation.
O Arbitration
O Commissions of inquiry
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Process of dispute settlement
at ICAO There are essentially two kinds of
arbitration, ad hocand institutional.
O
An institutional arbitration is one that isentrusted to one of the majorarbitration
institutions to handle.
O Ad hoc, or unadministered, arbitration is
flexible, relatively cheap and fast way of
dispute settlement if the parties
cooperate
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The arbitral proceedings can be commenced by
O Issuing a notice to the opposing party to appoint
O issuing a notice to the appointing party to submit
the dispute to the arbitral tribunal
O commencing the procedure for appointment of
the arbitral tribunal as provided in the arbitration
agreement
O It is always useful to convene apreliminary
meetingonce the arbitral tribunal has been
constituted
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O The first step that would be taken once
the arbitral tribunal has been appointed
and the procedure established would be
an exchange between the parties of some
form ofwritten submissions.
O International Commercial Arbitration
provides that each party shall state thefacts supporting his claim or defense
O The next stage is Hearing. It may be
conducted on the basis of documents
only or oral hearing.
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O After hearing, the arbitrators will look
carefully at clauses that provide for amiablecomposition.
O The arbitrators are bound to apply to the
merits of the dispute the rules of law chosen
by the parties, as a general rule ofinternational arbitration law.
O The award must be notifiedto the parties.
Arbitration laws or rules forad hoc arbitration
usually place the obligation on the tribunal.Institutional arbitration rules usually will provide
that the institution will communicate the award.
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O The recognition and enforcementproceedings of foreign arbitral awards
under the New York Convention of 1958
(hereinafter: NYC) constitute the final
stage of any arbitration
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Case solved by ICAO Case abstract: A Chinese seller,
defendant, sold scaffold fittings to an
Austrian buyer, plaintiff. The buyer
claimed lack of conformity of the goods
and declared the contract avoided.
Subsequently, the buyer sold the goods
and sued the seller for damages, as such
goods had been sold only partially and ata lower price.
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FICCI
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INTRODUCTIONO FICCI is the largest and oldest apex
business organisation in India.
O It is a non-government, not-for-profit
organisation.
O FICCI draws its membership from thecorporate sector, both private and public,including SMEs and MNCs.
O FICCI has an indirect membership of over2,50,000 companies from various regionalchambers of commerce.
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O
FICCI, in the year 1952, established FACT(formerly known as the FICCI Tribunal ofArbitration [FTA]).
O FACT was set up to offer disputeresolution services primarily to FICCI
members and other parties.O FACT has headquarters at New Delhi and
has an active panel of prominentarbitration expert.
O
The FACT mission is to resolve businessdisputes outside the traditional frameworkoffered by courts of law,
FACT
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OBJECTIVESO To administer international and domestic
arbitration under the Rules of FACT.
O To promote public confidence in the ADR
mechanism of conciliation / mediation as aprocess for resolving disputes and to create aculture of settlement of disputes through suchmechanisms.
O To establish and maintain a comprehensive
Panel of Arbitrators and Conciliators from anextensive array of distinguished and impartialpersons.
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ASSOCHAMTHE ASSOCIATED CHAMBERS OF
COMMERCE AND INDUSTRY OF
INDIA
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INTRODUCTIONO ASSOCHAM initiated its endeavour of
value creation for Indian industry in 1920.
O
ASSOCHAM represents the interests ofmore than 3,00,000 direct and indirect
members.
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O The major segments covered include:
Trade (National & International)
Manufacturing Sector
MNCs, PSUs, Banks, Financial Institutions
Professionals, Service Sector, Importers
Exporters, Large,Medium & Small Enterprises
Trade & Industry Associations, other
Chambers of Commerce
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OBJECTIVESO Articulate the genuine, legitimate needs and
interests of its members.
O Impact the policy and legislative environment forfostering balanced economic, industrial and socialdevelopment.
O Catalyze development of knowledge driven sunriseindustry
O Provide a vibrant interface between Governmentand Industry on policy initiatives with Union and
State Ministries, Diplomatic Missions and VisitingDelegations.
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MEMBERSHIPThere are four routes to membership
1) promoter chambers
2) patron members3) ordinary members
4) corporate associates
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SPECIALISED SERVICESASSOCHAM is authorized by the
Government of India to
Issue Certificates of Origin
Certify commercial invoices
Recommend Business Visa
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THANK YOU