The WTO dispute settlement system is one of the major results of the Uruguay Round. It plays an important role by allowing the Members to enforce their rights under the WTO covered Agreements. By doing so, the WTO dispute settlement system underscores the rule of law and improves the stability and predictability of the MTS.
The dispute settlement procedure is based on clearly defined rules, In that way it helps to prevent the detrimental effects of unresolved international trade conflicts and to mitigate the imbalances between stronger and weaker players by having their disputes settled on the basis of rules rather than having power determine the outcome.
Typically a dispute arises when a WTO Member adopts a trade policy measure that one or more Members consider to be contrary to the obligations set out in the covered Agreements (*1). First rulings are made by a panel. Appeals based on points of law are possible. The rulings of panels and the Appellate Body have to be adopted by the Dispute Settlement Body (DSB). The primary objective of the system is not to make rulings. A solution mutually acceptable to the parties to a dispute, and consistent with the covered Agreements, is clearly to be preferred.
The rules and procedures of the WTO dispute settlement system are embodied in the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU)
