An Examination of GATT/WTO Arbitration Procedures

Article excerpt

Arbitration is often preferred to traditional court proceedings because it can offer the prospect of reaching a relatively economical final solution by specialist arbitrators through a quick and often less formal procedure. The discrete character of arbitral proceedings can add to its attractiveness, particularly when trade secrets are involved. Furthermore, arbitral awards are quite easily enforced both in the country of origin and abroad. It can be said that the two basic principles underlying arbitration are that of party autonomy and that of limited judicial review of arbitral awards. The principle of party autonomy is reflected in the consensual nature of the parties' choice to have their claims arising out of their contractual relationship submitted to arbitration; in the selection of the arbitral tribunal; and the applicable law and the autonomy afforded to the parties in structuring the proceedings. The control by courts of arbitral awards takes the form of a review of final awards on limited grounds. The arbitration will be subject to the law chosen by the parties, unless the arbitrators have been authorized by the parties to decide the dispute ex aequo et bono.

Additionally, an important feature of arbitration is the resjudicata, the binding effect of arbitral decisions that lead to a total or partial settlement of a dispute. The moment when, and the circumstances under which, an award assumes its res judicata effect are determined by national arbitration law. Finally, the procedure for setting aside an award is an exception to the general rule of the finality of arbitral awards.

Arbitration also has a number of advantages for international litigants. It allows the use of rules of procedure which are less formal and more flexible. This leads to a process that is less time-consuming and expensive and which can be tailored to handle the specific characteristics of each dispute. Furthermore, in arbitration proceedings none of the litigants enjoy a home court advantage, thus increasing the international acceptability of the resulting awards. In the field of international trade, by allowing individuals or entities direct access to resolving a dispute to settle claims against a state, arbitration reduces the potential politicization of this kind of litigation. Let us now investigate if these principles or advantages of arbitration are applicable in the case of arbitration under the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO).

From GATT to WTO

GATT still exists as an internal part of the WTO Treaty as included in GATT 1994, which includes the text of the original GATT agreement-called GATT 1947-together with amendments. GATT was originally an agreement containing the results of multilateral tariff negotiations undertaken at the initiative of the U.S. and the U.K. after World War 111. GATT contained commercial disciplines, the purpose of which was to ensure that governments would effectively respect multilateral tariff reductions and maintain the overall economic balance of tariff concessions.

The purpose of the initially limited GATT dispute settlement rules was to maintain the balance of reciprocal rights and obligations relating to tariffs and non-tariff measures. The ultimate sanction for nonvoluntary compliance with a panel recommendation was a unilateral readjustment of concessions.

WTO, like GATT, is about market-access guarantees. It can be said that the main principles of GATT law are still applicable to the WTO agreement. The purpose of the dispute settlement mechanism of WTO is to guarantee WTO members full access to their expected commercial and competitive opportunities. However, it seems that the only remedy that can be recommended by a WTO panel is to bring the measure into conformity with the VV`TO agreement. If the losing member does not bring its measure into conformity with the WTO agreement, the panel, and the appellate body recommendations, then a compensation may be agreed upon. …