International trade dispute settlement: World Trade Organisation Appellate Body crisis and the multi-party interim appeal arbitration arrangement

Summary:

The international trade dispute settlement system has seen sweeping changes in its working arrangements over time, having shifted from a single-tiered system established in 1947 under the General Agreement on Tariffs and Trade towards a two-tiered system under the World Trade Organization (WTO) in 1995. Both systems have generated a much higher dispute settlement output than other state-to-state dispute settlement systems, including the International Court of Justice. The United States' blockage of new appointments to the WTO Appellate Body (AB), the WTO dispute settlement system's second instance panel, has challenged the legitimacy both of what has often been referred to as the WTO's 'crown jewel' and of the WTO as an institution set up to uphold the rules-based multilateral trading system.

Since December 2019, the AB has been unable to hear appeals, and so first-instance panel reports appealed by the losing party have remained without a final binding ruling, undermining the winning party's right to enforce its rights under WTO law. As a temporary stop-gap solution to the AB impasse and to signal their commitment to the rules-based multilateral trading system, in 2020 the EU and a subset of WTO members set up a multi-party interim appeal arbitration arrangement (MPIA); four years on, the MPIA has settled just one case and its membership has grown only modestly. WTO members have resorted much less than before 2020 to litigation under the WTO dispute settlement system, significantly reducing its case load. They have either appealed cases into the 'legal void' or have resorted to ad hoc arbitration or other bilateral ways of reaching a solution. After the 2024 WTO Ministerial Conference, the future of the WTO's dispute settlement system remains uncertain, as the WTO members' self-imposed 2024 deadline for having a functioning system in place is approaching. This is a comprehensive update of a 2021 briefing by Jana Titievskaja.

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