Financial Payments as a Remedy in WTO Dispute Settlement Proceedings - An Update

Abstract

Remedies in international law present an intriguing challenge: what happens if a sovereign state refuses to comply with its obligations, even after an international adjudicatory body has ruled in its disfavour? The absence of compulsory enforcement arguably means that international law as a system lacks binding effect. The solution offered under the WTO system has been to authorize the prevailing Member in the settlement of a dispute to retaliate, if and when the respondent Member fails to implement a panel or Appellate Body ruling. Such retaliation can take the form of additional restrictions on imports of goods or services, or suspensions of intellectual property rights. Our paper examines whether fairer and more effective means of ensuring compliance could be inserted into the WTO system. First, existing remedy systems are outlined, comparing general public international law with the current WTO system, after which the EU compliance regime is analysed. This is followed by an examination of the advantages of introducing the remedy of financial payments into WTO dispute settlement as well as a refutation of potential objections. The main elements of the subsequent proposal relate to the calculation, term, retro-activity and beneficiary of financial payments as a remedy. This version of our analysis updates a paper we published in May 2013. This new version takes on board the substantial comments we received on the earlier paper at a conference on WTO dispute settlement at the Europa-College in Bruges in September 2014.