Need for creation of Global dispute settlement

Need for creation of Global dispute settlement

Subject :IR

Section: International Body

Context: Recently concluded G-20 declaration reiterated need to reform WTO to improve its functioning along with establishing fully functioning dispute settlement system accessible to all members by 2024.

More details

• WTO’s dispute settlement system, conceived as two-tier panel cum appellate body , has been dysfunctional since 2019, due to repeated blockage by US.
• Other area seeing formative stages of appellate process is ISDS (investor state dispute settlement),an ubiquitous component of BITs (bilateral investment treaties).
• ISDS today is principal means to settle international investment law disputes.
• Till 1 Jan 2023, 1257 ISDS cases have been initiated. India has a chequered history with ISDS- with 5 adverse awards: 4 in favour and several pending claims.

WTO dispute settlement

• WTO is an international body that also deals in Dispute Settlements.
• The member country will approach the WTO’s dispute settlement body when a country fails to comply with WTO rules.
• All the members are encouraged to settle the disputes through consultation or a panel if the consultation fails.
• The constituted panel will circulate the verdict of the dispute settlement amongst WTO members who can decide to reject the ruling.
• If the ruling is approved, the member country that violated the rules must change rules in line with the WTO Agreement.
• In the case of failure to do so, the complaining country and the violating country may determine a mutually-acceptable compensation, failing which, the complaining country may retaliate suitably.

WTO’s Appellate Body

• Appeals against the orders of DSB is taken to WTO Appellate Body.
• The Appellate Body, set up in 1995, is a standing committee of seven members that presides over appeals against judgments passed in trade-related disputes brought by WTO members.
• Countries involved in a dispute over measures purported to break a WTO agreement or obligation can approach the Appellate Body if they feel the report of the panel set up to examine the issue needs to be reviewed on points of law.
• However, existing evidence is not re-examined but legal interpretations are reviewed.
• The Appellate Body can uphold, modify, or reverse the legal findings of the panel that heard the dispute. Countries on either or both sides of the dispute can appeal.
• The Appellate Body has so far issued 152 reports. The reports, once adopted by the WTO’s dispute settlement body, are final and binding on the parties.

UNCITRAL

• It is a subsidiary body of the U.N. General Assembly (UNGA) responsible for helping to facilitate international trade and investment.
• It is the core legal body of the United Nations system in the field of international trade law.
• UNCITRAL carries out its work at annual sessions held alternately in New York City and Vienna, where it is headquartered.
• Established by the UNGA in 1966.
• The Tribunal constituted in accordance with the UNCITRAL Arbitration Rules 1976 is seated at the Hague, Netherlands, and proceedings are administered by the Permanent Court of Arbitration.
• Since its inception, India is only one of eight countries that has been a member of UNCITRAL.
• The UNCITRAL Model Law on Cross-Border Insolvency (1997) (MLCBI) is designed to assist States in developing a modern, harmonized and fair insolvency framework to more effectively address instances of cross-border proceedings concerning debtors experiencing severe financial distress or insolvency.
  • It provides legal framework to deal with cross-border insolvency issues while ensuring the least intrusion into the country’s domestic insolvency law.