In the last century, there has been a major change in the international trading regime. Beginning from a closed and restricted trading system, it transformed into a liberalized multilateral regime under the auspices of the WTO. At the same time, this necessitated a regulatory mechanism that would also involve settling disputes among states. The GATT, set up in 1947, represented the first attempt to regulate the international trading regime, but soon proved to have weak legal foundations and institutional handicaps. Nothing more than a multi lateral agreement, it provided for joint action by the contracting parties, thereby failing to exercise effective regulatory authority. Unfortunately, the GATT dispute settlement procedures were found to be ineffective. Finally, after a series of long negotiations, the Uruguay Round, concluded in 1994, led to the setting up of the WTO.

In this article, the writer shall begin with the manner in which the WTO’s dispute settlement body functions, and shall thereafter proceed to address the question of how and to what extent principles of international law are applied by the Dispute Settlement Body (hereinafter the DSB) in settling disputes before it.

A. MEANING, SOURCES AND PRINCIPLES OF INTERNATIONAL LAW

International Law can be defined as the system of customary and conventional rules that regulate the conduct and intercourse of civilized states, accepted by states as a part of international obligation. The purpose of law, generally speaking, is to bind members of a community together, securing their adherence to recognized values and standards. International law is no different, the subjects being nation-states and not individual citizens. The origins of present international law can be traced to Europe, where notions such as sovereignty and independent nation-state required that there be a system by which inter-state relations could be conducted according to commonly accepted standards of behavior. This took the shape of international law. The period after the Renaissance in Europe saw profound changes in the international system. Today, international law stands as an independent branch of law, codified and imposed through means such as sanctions and collective action.

Article 38 (1) of the Statute of the ICJ is widely recognized as the most authoritative statement as to the sources of international law. These sources shall be briefly examined. Custom means any recurring mode of interaction among individuals and groups, together with the more or less explicit acknowledgment by these groups and individuals that such patterns of interaction produce reciprocal expectations of conduct that ought to be satisfied. Essentially, a custom entitles one state to a right, and imposes a corresponding duty on another state. General Principles have no standard definition, but refer to those principles adopted by national legal systems that are applied to solve disputes of an international character. So as to provide solutions in disputes where treaties and customs are found lacking, the ICJ decided to incorporate this as one of the sources of international law. These legal principles are common to all or almost all national legal systems. The specific rules may again differ from one legal system to another, but the underlying legal principles are the same. For instance, an international organization while deciding disputes will inevitable recognize the right of the both sides to be heard, as all legal systems do so. The relevant treaties and customary law may hardly deal with this, but this should not mean the case will be undecided. In such circumstances, recourse can be had to these general principles. Treaties can be understood as those international agreements concluded between states in the written form governed by international law, whether embodied in a single instrument or in two or more related instruments, whatever may be its designation. The fundamental principle of treaty law is that treaties are binding upon the parties, and must be performed in good faith. Judicial Decisions although only a subsidiary means, can be of a lot of importance. Previous decisions are generally followed so as to ensure there is certainty in the system. The ‘teachings of the most highly qualified publicists of various nations’ is also one of the subsidiary means. In the days of natural law, juristic opinions proved to be crucial, but nowadays due to the emphasis on treaties and customs, this has meant a declining importance of this source.

An increasing range of dispute settlement procedures and mechanisms are available to assist in resolution of international disputes. Broadly speaking, all these techniques can be classified into diplomatic and legal means. In the former the parties to the dispute retain control over the dispute in so far as they may accept or reject a proposed statement. Negotiation, consultation, mediation, conciliation and inquiry fall under this category. In the latter the decisions of an independent authority are binding for the parties to the dispute (e.g. arbitration and judicial settlement). Since such techniques have evolved, there has been a shift from political arrangements to dispute-settlement by means of binding third party adjudication. As a consequence, application of international law has increased to a large extent in solving international disputes. Another trend has been a shift from inter-state dispute settlement towards techniques involving non-state actors. Both trends have occurred in the context of the shift from ad hoc arrangements to established institutional bodies to decide disputes.

B. FUNCTIONING OF THE WTO DISPUTE SETTLEMENT UNDERSTANDING (DSU)

Any analysis of the WTO’s dispute settlement system would be incomplete without reference its predecessor, the GATT. The dispute settlement provisions of the GATT were rather simple in relation to what had been envisaged in the Havana Charter, since it contained no provision for reference of actual disputes or questions involving interpretation of international trade law to the ICJ. Moreover, it could not set up a tribunal to solve disputes or to give binding decisions, unlike the WTO. The contracting parties would themselves solve the dispute within the broad framework provided. The solutions were thus more political and less judicial. The DSB is largely similar to the GATT to the extent that it is founded upon the principle of nullification of benefits available to a member under the WTO. However, the arrangements under GATT were such that there was a system of panels with the power to issue recommendations that were not binding in nature since the same could be blocked by a single contracting party. Under the WTO, the basis of the system is notification and consultation. It does not intend to sit as a court that shall decide all disputes. Instead, it intends to help the parties to find solutions by means such as conciliation, mediation and use of good offices. The underlying principle is that the parties should first attempt to solve their dispute themselves, but should they fail to do so they may refer it to the WTO. This is also evident from the dispute settlement system, under which the DSB generally appoints panels to provide recommendations by which the parties may settle their disputes, only after which is an authoritative ruling passed.

Only states can be members of the WTO. Thus, the dispute settlement system is essentially dispute-settlement among the states, the original function of international courts and tribunals. The DSB is no different, since its primary function is to solve trade disputes. Beyond the field of human rights, the principle of locus standi has been established to a large extent in the economic field, but has failed to permeate into trade-related disputes. This explains why claims of private entities have to be represented in the WTO by the state that they have been incorporated in.

The DSU is intended to prevent and resolve disputes arising under the WTO and other related instruments. The decisions of the WTO panels shall be binding till there is a consensus to the contrary. Thus, it represents a system of compulsory third party adjudication with binding effects for its members.

The DSU establishes a dispute settlement system that consists of the Dispute Settlement Body (hereinafter referred to as the DSB, the Appellate Body (hereinafter referred to as the AB) and Panels appointed on an ad hoc basis, all of which are based in Geneva. The representatives of all the contracting parties are entitled to sit in the DSB. Established so as to administer the system, it has the authority to appoint panels of experts to suggest measures to resolve disputes, and may adopt reports of such panels. The authority to issue rulings (including rulings by which the complainant is authorized to suspend the WTO obligations towards the respondent) is enjoyed by the DSB.

The DSB is a political body that consists of representatives of the WTO members. Administering the dispute settlement process, it supervises consultations between disputing members. Thereafter, it may establish adjudicative panels upon the request of any party to the dispute. The reports of such panels can be adopted or rejected. Similar is the case with the recommendations of the AB. In addition, ensuring implementation of the recommendation is in the hands of the DSB. To this extent, its functions are largely executive in nature. In case of refusal on part of a member to follow the recommendations of the AB, it may impose trade sanctions.

The approach is first to suggest steps by which the parties may solve their dispute. Should that fail, a Panel is generally appointed to provide its recommendations. Alternately, an authoritative ruling may be issued to the complainant to suspend WTO obligations in respect of the respondent. Decisions are taken by consensus. The WTO system establishes a detailed road map for settlement of inter-governmental dispute settlement that is both speedy and procedurally clear to a large extent. In case of a dispute concerning trade-related obligations, one party may request the other to enter into consultations and notify the DSB in this respect. If this fails, the parties may propose traditional dispute settlement procedures be employed with the assistance of the WTO Director – General. Should this also fail to settle the dispute, the DSB may be asked to set up an ad hoc panel. Once established, the panel will conduct hearings and issue a non-binding report on the case. The recommendations will be binding if they have been adopted by the DSB. Adoption is automatic until and unless there is a consensus against it. The reports, unlike under the GATT, can be appealed to the AB. The appeal is heard before a three-member division of the AB, which may uphold, modify or reverse the legal findings of the panel. The decision of the AB is binding till unanimously opposed by the DSB.

The success of the system is demonstrated by the fact that since its inception, as many as 141 requests for consultation were initiated before it, involving over 100 distinct disputes, as compared to the 196 cases heard by the GATT in its 45 years of operation. The law that is to be applied by the Panels and AB is found in GATT, and in multi-lateral agreements to the GATT (e.g. General Agreement on Trade in Services). In US – Standards for Reformulated and Conventional Gasoline, the AB held “Trade rules are not to be read in clinical isolation from public international laws”. Thus, though there may be specific provisions governing trade, those shall not be in derogation of the principles of international law.

As compared to its predecessor GATT, WTO is far better structured. The WTO covers a much wider range of trade, including services, intellectual property, agriculture and investment (unlike GATT which only covered goods). The present trading regime is also far more organized, in the sense of not simply being a collection of ad hoc agreements, panel reports and understandings between parties. Member states have to accept obligations contained in all WTO covered agreements without enjoying the option of picking and choosing. This was not so under GATT, wherein there were no uniformly applicable obligations. An overview of the WTO system indicates a shift undertaken from a power-oriented diplomatic approach to trade relations to a rule-oriented and impartial dispute settlement. This not only represents a greater extent of regulation in international trade, but also ensures international law replaces international relations that can be heavily dominated by economic superiority. Fairness in the system is evident as panels under the WTO provide a forum to all members to express their concerns, notwithstanding other compulsions.

A. IN TREATY INTERPRETATION

Interpretation of WTO agreements is at the center of dispute-settlement since most disputes involve questions of law relating to interpretation of the relevant agreement. In a number of disputes, the VCLT has been used as a guide in this respect. In US Restrictions on Imports of Tuna, it was recognized as a guide for treaty-interpretation. However, panels under the GATT seldom referred to it, perhaps because the GATT was not a treaty among nations, as is the WTO. Since the WTO is a treaty in itself, it may apply the VCLT to a far greater extent. In order to ensure a transparent process of dispute settlement, dispute settlement bodies under WTO are required to invoke rules of interpretation of treaties as a source so as to clarify WTO agreements. Article 3:2 of the DSU requires all WTO agreements to be interpreted according to customary rules of interpretation of public international law. The general trend is that all means of solving disputes as contained in Article 38 (1) of the ICJ statute are potential sources of law that shall apply to disputes before the WTO. In EEC – Regulations on Imports of Parts and Components, Article XX (d) of the GATT was interpreted according to Article 31 of the VCLT. However, express references to the VCLT are not generally observed.

In US – Restrictions on Imports of Sugar, it was held that the principle of “ordinary meaning” as contained in Article 31 (1) was applicable to solving the dispute. The DSB requires all those principles that apply to interpretation and application of GATT rules shall be laid down so as to guide the DSU in solving disputes. If treaties are interpreted in a consistent manner, there shall be greater faith in the WTO system as a whole. Thus, the importance of using means such as the VCLT for this purpose.

Customary international law as contained in Articles 31 and 32 of the VCLT is applicable to treaty-interpretation. In US-Standards for Reformulated and Conventional Gasoline, it was held that any clarifications in the WTO agreements should be done with reference to Article 31 (1) of the VCLT. In this dispute both Venezuela and Brazil brought a complaint concerning the consequences of the rules prescribed under the US Clean Air Act to foreign exported gasoline. Before the AB, USA pleaded that its measures were in pursuance of its duty to conserve its natural resources (under Article XX, GATT). The AB criticized the Panel for not fully applying Article 31 (1) in deciding whether the rule amounted to a measure actually only in relation to conservation of natural resources or not. Finally, the AB concluded that this measure could not be justified on the grounds that it was solely aimed at conservation, since it specified the baseline levels of clean gasoline quantities applicable to foreign producers only.

Under Article 31 (1) of the VCLT, a treaty has to be interpreted in good faith in accordance with the ordinary meanings given to the terms of the treaty in their context, in the light of the treaty’s object and purpose. A tribunal should look at the ordinary meaning of the words as given in the treaty, paying particular attention to the overall context of the treaty since a provision should not be interpreted in isolation but first in relation to that part of the agreement to which it relates, and then in relation to the entire agreement. Under Article 31 (2), the contents of an agreement expressly include the text of that treaty. Under Article 32, use of supplementary tools of treaty interpretation should be done only when use of Article 31 is not enough to resolve the dispute in hand. Some of the supplementary means include circumstances in which a treaty was concluded. Also, under Article 32 reference to secondary rules of treaty interpretation can be done if and only if after applying Article 31; the interpretation leaves the treaty’s meaning ambiguous or obscure or leads to an unreasonable result.

The Panels cannot deviate from the requirement of using Articles 31 and 32 of the VCLT for treaty-interpretation. Should a Panel not apply this test, or use other methods not specified, there is every chance that its rulings may be overturned. In LAN Computers, the Panel was overruled by the AB as it failed to examine the object or purpose of the WTO Agreement and GATT before examining legitimate expectations of the parties. The proper procedure is to first look at the text of the provisions, followed by finding out what the object and purpose of the treaty is, where the meaning of the text is equivocal or inconclusive.

However, the principles as contained in the VCLT are not the only principles to be applied to interpret treaties. The Principle Of Effectiveness is equally important. If a treaty is capable of being interpreted in two ways, with one of them giving no effect or not giving the desired effects, it is necessary to interpret in an effective manner the treaty, bearing in mind good faith and the object and purpose so that it may be put into effect. This has been held in cases such as Reformulated Gasoline and Japanese Agricultural Products. This brings one to the question of what shall happen if the legal provisions of one agreement are in conflict with those of another. Sometimes, there may be a conflict between the interpretation of one agreement and those of another. In Guatemala – Anti-Dumping, the appellants contended that the dispute settlement provisions under the Anti-Dumping Agreement should take precedence over those contained in the DSU. But the AB noted that although the former provides for special rules and procedures, they shall prevail over the DSU only when there is a divergence between the two provisions. Only in the situation of a conflict that adherence to one of the provisions will lead to a violation of the other, shall the Anti-Dumping Agreement provisions prevail. But if there is no difference then the rules of the DSU and those of the Anti-Dumping Agreement shall apply together.

Another tool of interpretation is the Principle Of In Dubio Mitius, widely recognized as a supplementary means of interpretation. If a term is found ambiguous, whichever interpretation is less onerous on the party assuming an obligation has to be followed. In other words, such an interpretation should least interfere with its territorial and personal supremacy. In Beef Hormones, the Panel held that the measures taken by the EC must be based on and conform to international standards under Article 3.1 of the SPS Agreement. The AB rejected this interpretation, by explaining that this interpretation would impose on the EU a more onerous obligation than it intended to assume.

The Doctrine Of Legitimate Expectations has been applied in many trade disputes. In the context of something that traders can rely upon, it is something “held by a reasonable person as to matters likely to occur in the normal course of his affairs.” In Lotus, the PCIJ dealt with this issue.

The dispute involved prosecution of the crew of a French ship (Lotus) that had collided with a Turkish ship (Boz-kourt) on the high seas. The issue was whether abstention from instituting criminal proceedings against the crew of a ship in case of a collision on the high seas was a custom or not. It was held that this did not amount to a custom since it was not a legitimate expectation. Simply because there were factual instances of the same kind in the past, it did not mean that there was an expectation that the same should be followed in future also. The GATT gave importance to this principle since the legitimate expectations of members concerning the conditions of competition should be protected to inject security and predictability into the trading system.

In LAN Computers Panel report, the issue was interpretation of a tariff schedule. The purpose of granting a tariff concession is not to subsequently increase the price so as to minimize the effect of the concession. The Panel concluded that the US was entitled to legitimately expect a reduction in the actual tariff treatment. The US contended that LAN equipment was clearly included within the meaning of “ADP machines”, since that was the prevailing practice of the EC during the Uruguay Round.

The interpretation of this doctrine is fairly wide in scope. Even after a dispute there may be legitimate expectations based on the decision of the dispute. This is noteworthy, since the decisions of the DSU are not binding on future disputes, but simply have persuasive worth. Due to the operation of this doctrine, its decisions have more than just persuasive worth since they may give rise to legitimate expectations that shall hold good in similar circumstances in future.

Another principle that finds application is that of Non-Retroactivity Of Treaties codified in Article 28 of the VCLT. Since WTO agreements replaced GATT, the manner of bringing about the required transition was questioned. In Desiccated Coconut the Philippines brought a complaint against Brazil under the GATT for countervailing measure on the imports of desiccated coconut introduced after the GATT was in force. However, Brazilian investigation had commenced while the GATT was in still in effect. According to the new Panel the solution was to balance the objectives of a swift entry into the WTO and protecting the pre-existing obligations from the old regime.

The Role Of GATT Panel Decisions in interpreting the WTO agreements received some attention in the Japan Taxes case by the AB. The AB refused to grant any binding status to previous GATT reports, but that does not diminish the worth of GATT Panel reports that are generally referred to. The two broad legal systems in the world are the civil and common law systems. The common law system affords more judicial authority to previous decisions (the doctrine of stare decisis). In combining both legal systems, the DSB generally follows previous Panel reports for deciding disputes before it. However, it is not bound to do so, since there is no doctrine of precedent in international law. However, all this underlines the fact that the system should be as flexible as possible, disputes being decided in the light of their specific facts and circumstances.

The Burden Of Proof is an important evidentiary rule. In proceedings before the DSU, the burden of proof is normally upon the complainant, to establish that there has been a violation of WTO obligations. In Shirts and Blouses, the Panel found that the burden of proof rested with India to prove that there was a treaty violation by the US. For this, India was under a duty to put forth relevant legal and factual contentions to prove its point.

Judicial Economy can be defined as an attempt to settle as many issues as possible in a single proceeding. Under Article 9 (1) of the DSU, disputes can be joined. The Panel has full discretion to do so whenever requested by more than one WTO member. The need for judicial economy is greater under the WTO since disputes generally involve many claims. However, it must be noted that all claims/issues pleaded by the parties do not bind the Panel to decide on all those issues. Instead, only those issues/claims need to be decided that are necessary for giving a final decision.

The Terms Of Reference decide the extent of jurisdiction that a Panel shall have. In Desiccated Coconut, the EU submitted that a request for an establishing a Panel. The request has to include the measure being challenged, relevant obligation under the WTO agreement that is alleged to have been violated, and a brief explanation of the way in which the measure infringed the legal obligations.

Principle Of Locus Standi was dealt with in EC Banana, wherein the Panel dealt with a series of EC regulations concerning import of bananas between traditional importing ACP countries and non-traditional importing ACP countries. The dispute involved as many as 20 third parties. Noting that the decision could have wider ramifications, third parties were allowed to participate. Even if a party has a potential trade interest, it may be a party to a case, actual trade impacts not being of any consequence in such circumstances. It was contended that the US did not have a standing since did not export bananas. However, the fact that it had a potential interest in import of bananas was enough to enable it to be joined as a party.

B. APPLICATION OF GENERAL PRINCIPLES

International legal principles may have guided the Panel on many occasions but direct references to such principles are fewer, as already noted. In Shrimp-Turtle, the Principle Of State Responsibility was applied. The AB held the US responsible for the acts of its departments and branches in relation to the guidelines that had been framed for import of shrimp turtles. Widening the scope of this principle, even for the acts of its judiciary, the US was held liable. The underlying principle in this case was that internationally, the judiciary of a state is considered to be a part of the state even though it ideally should exist and function independently of the state’s executive and legislature. However, the application of this principle is possible only when it can be proved that the measures are attributable to a Member State. Generally, there is a wide interpretation of government measures. In Japanese Agricultural Products, the Japan government undertook purely voluntary measures aimed at encouraging farmers to restrict internal production. These were held to be government measures even though not binding in nature. Thus, the consequence of the measures adopted shall be the determining factor. Should the government effectively control private activity, such activity loses its autonomous character, therefore becoming an act of the state concerned. In the Japan Trade in Semi-conductors, private enterprises trading in semi-conductors were monitored by a third party, as decided by the government. This constituted an act of imposing quantitative restrictions by state. On the face of it, it may have been private activity, but in reality it had all the characteristics of a governmental activity.

The Principle Of Estoppel prevents a state from denying a clear and unequivocal representation upon which another party relies in subsequent activity to its detriment, or to the other’s benefit. This principle is widely recognized in civil and common law systems both. In the Eastern Greenland case, there was a dispute between Denmark and Norway as to who has sovereignty over Greenland. In all treaties with other countries, Demark had recognized its sovereignty over the whole of Greenland. On that basis, its claim of sovereignty over Greenland was upheld. As far as the WTO is concerned, in German Starch, the Benelux governments claimed that Germany had not acted on its assurance to reduce tariffs immediately on starch. The question of whether Germany had made such a representation or not was settled since during the negotiations, it had said that it would reduce tariffs as soon as possible. Based upon this, the Benelux governments had reduced their own tariffs in the course of negotiations. It was held that if there was any subsequent agreement by Germany to grant tariff concessions, then it would have to do the same. But Germany was not ordered to immediately reduce tariffs.

The Doctrine Of Abuse Of Rights is essentially based upon the principles of good faith and equity, both of which are important principles in international law. In the North Sea Continental Shelf case, a final delimitation between the parties (West Germany, Holland and Denmark) took place in accordance with the principles of equity. In the light of the facts of the case, use of the equidistant method was refrained from. Good faith is expressly provided for in Article 2 (2) of the UN Charter. In the Nuclear Tests case, it was held that legal obligations between countries are founded upon the basis of good faith, which is how international obligations assume a binding character. In Certain German Interests in Polish Upper Silesia, certain commonly accepted principles of international law were recognized that should apply to the treatment of aliens, notwithstanding municipal law. This is consistent with the “international minimum standard” that has to apply to the protection of foreign nationals. In a broader sense, a country cannot undertake any action that is inconsistent with the broader purposes and principles of a treaty until and unless it has clarified its intentions with respect to that treaty. Coming to trade disputes, in Ammonium Sulphate, Chile and Australia negotiated for a mutual tariff reduction on ammonium sulphate fertilizers. Australia discontinued subsidies for Chile, due to which it complained that it had to face a loss since it had granted concessions. It desired that on the basis that Australia should do the same, as it had been doing for all this while. Strictly speaking, Australia had no such obligation under GATT. However, in the broader interests of equity and good faith, it was ruled that Chile had a legitimate expectation of the subsidy continuing. Therefore, Australia was required to extent the subsidy.

The Principle Of Exhaustion Of Local Remedies is not relevant to trade disputes to the same extent to which it is relevant in other cases. Interestingly, no party under the GATT has ever brought forth this issue, nor has any WTO member. However, an exception is Grey Portland Cement, wherein it was held that there is nothing under the GATT requiring a member to exhaust local remedies before approaching the court. Thus, this principle is clearly more relevant in cases of infringement of individual rights under international law, for instances human rights violations. In Ambatielos, Greece initiated proceedings against Britain due to a contract signed by Ambatielos. The tribunal refused to entertain the claim since the legal remedies that could have been available under English law had not been fully utilized. But this position is fast changing. The principle of exhaustion of local remedies is slowly beginning to apply to trade disputes too. Under GATS, parties are required to set up an independent review procedure at the domestic level itself (Article IV). If local remedies are available, then the parties should at least first use such remedies, as this would help in reducing the burden of the DSB, particularly since it is mainly private enterprises that engage in trade disputes and not states themselves.

A WTO member state may have entered into other international treaties as well. How far would this affect its obligations under the WTO? Is the WTO to override or be in derogation to such treaties? A Sometimes there can be conflicting treaty obligations as has happened in the past in relation to multi lateral environmental agreements. In Canada – Measures Affecting Exports of Unprocessed Herring and Salmon, Canada contended that its export restrictions were for the purpose of conserving exhaustible natural resources permissible under Article XX (g) of the GATT. It cited a treaty that it had entered into with US, apart from questioning the relevance of the provisions under UNCLOS. The Panel came to the conclusion that said the measures were inconsistent, and not justifiable under the GATT.

The findings of the researcher are as follows:

1. The dispute settlement system under the WTO represents compulsory third party adjudication, thus showing a definite shift from the traditional approach of dispute settlement that involved more of international relations than international law in solving disputes. Presently, the whole system under the WTO is far more judicialised in nature. This means a far larger scope for applying the principles of international law.

2. In treaty interpretation, the principles of the VCLT have been applied as far as possible. The principles contained therein provide a guide to interpret treaties. The principle of effectiveness, founded upon the principle that it is better to give effect to the provisions of a treaty than to simply let it be a nullity, is widely applied in this connection. Reference to supplementary sources is done only when there is a total ambiguity in the main provisions of the treaty.

3. The doctrine of legitimate expectations has been invoked by the WTO, so as to give a binding effect to earlier decisions that are otherwise not legally binding since the doctrine of precedent does not enjoy legal force. Nevertheless, previous decisions are given due importance, and until and unless there are no reasons for not applying the decisions in previous cases, the same shall be applied notwithstanding absence of any legal compulsions in this respect.

4. The principle of locus standi is fairly liberalized. The member may not have any actual interest in a particular dispute, but that shall not be sufficient to prevent it from being a party to the dispute since potential trade interest is permissible to be a party to a dispute.

5. In a dispute, the parties are required to clearly specify what the terms of reference are since this shall decide what the jurisdiction of the court shall be, in other words what issues it may adjudicate upon.

6. The principle of judicial economy is entrenched in the system, since the WTO does not have to decide upon all issues pleaded by the parties, but only upon those that are required to give a definite ruling.

7. The burden of proof shall always lie upon the complainant that shall have to bring factual and legal evidence in support of his allegations against the other member state.

8. The principle of estoppel, doctrine of abuse of rights, principle of state responsibility and principle of exhaustion of local remedies all find application in the WTO system, but not to the same extent. The principle of state responsibility has been widely been construed, so that even those measures having a slight degree of governmental control lead to liability on part of the state. On the other hand, the principle of exhaustion of local remedies has hardly been pleaded and ever applied. The doctrine of abuse of rights, inherent in the principles of good faith and equity, is widely applied, so is the principle of estoppel since trading obligations are by their very nature reciprocal.

9. The dispute settlement mechanism under the WTO is far better as compared to that under the GATT that actually rested upon weak legal foundations. The decisions of the WTO are binding in most circumstances, unlike the GATT whose rulings could be blocked by a single contracting party.

10. In future, there is likely to be greater recourse to the WTO system, thus necessitating the body to emphasize conciliation between parties as a means to solve disputes. This shall represent a speedier resolution of disputes by the parties themselves without the direct involvement of the WTO itself.

APPENDIX 1

 

· Schoebaun, Thomas J, Nakagawa, Junji and Reif, Linda (Ed.), “Traditional Perspectives on International Legal Issues – From Theory to Practice”, Transnational Publishers Inc., 1998, New York

· Collier, John and Lowe, Vaughan, “Settlement of Disputes in International Law – Institutions and Procedures”, Oxford University Press, 1999, Oxford

· Akhurst, Micheal, “A Modern Introduction to International Law”, 5^{th Edition, George Allen and Unwin, London}

· Shaw, Malcom N, “International Law”, Cambridge University Press, 1997, Cambridge

· Bowlett, DW, “The Law of International Institutions”, 4th Edition, Universal

· Sands, Philippe and Klein, Pierre, “Bowlett’s Law of International Institutions”, 5th Edition, Sweet and Maxwell

· Tucker, Robert W, “Hans Kelsen’s Principles of International Law”, 2nd Edition, Holt, Rinehart and Winston Inc.

· Cameron, James and Gray, Kevin R, “Principles of International Law in the WTO Dispute Settlement Body”, International and Comparative Law Quarterly, April 2001

· Kanthan, PP, “The Legal Limitations of GATT and UNCTAD -- Towards Mutual Co-operation”, Indian Journal of International Law, Vol. 15, 1975

· Ambatielos 23 ILR p. 306

· Australian Subsidy on Ammonium Sulphate, BISD II/188, 3rd April 1950

· Brazil – Export Financing Programme for Aircraft WT / DS 46 / AB / R

· Brazil – Measures Affecting Desiccated Coconut, (1997) WT / DS 22 / R

· Canada – Measures Affecting Exports of Unprocessed Herring and Salmon

· Certain German Interests in Polish Upper Silesia PCIJ, Series A, No. 7, p. 19

· Corfu Channel case

· Eastern Greenland case

· EEC – Regulations on Imports of Parts and Components

· Frontiers between Turkey and Iraq (1925) Series B, No. 12

· German Import Duties on Starch, (1950) BISD 3S/77

· Grey Portland Cement

· Guatemala – Anti – Dumping Investigation Regarding Portland Cement from Mexico (WT / DS 60 / AB / R)

· India – Patent Protection for Pharmaceutical and Agricultural Chemical Products WT/DS 50/AB/R.Dec. 1997

· India – Patent Protection for Pharmaceutical and Agricultural Chemical Products WT/DS 50/AB/R.Dec. 1997)

· India – Woven Wool Shirts and Blouses, (1997) WT / DS 33 / AB

· Japan – Taxes case.

· Japan Trade in Semi-conductors, GATT 1994 Panel Report, 5th Supp, BISD, 1986

· Japanese Agricultural Products

· LAN Computers

· North Sea Continental Shelf case ICJ Reports, 1969

· Nuclear Tests case, ICJ Reports 1974

· Shrimp-Turtles

· US – Restrictions on Imports of Sugar (1989) 36 Supp. BISD 331

· US – Standards for Reformulated and Conventional Gasoline Case AB – 1996 – 1, Report of the Appellate Body, 29th April 1996: WTO Doc. WT/DS2/9

· US – Taxes on Petroleum and Certain Imported Substances, BISD 34 S / 136