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Dispute settlement

The European Union uses various tools to enforce the commitments it negotiates to benefit companies, workers and citizens under international trade agreements. One of these tools is dispute settlement under the World Trade Organization (WTO) or EU bilateral trade agreements.

WTO dispute settlement

WTO dispute settlement provides for two-tier resolution of trade disputes between WTO members, comprising a panel stage and an Appellate Body stage.

Appellate Body

Since 11 December 2019, due to the blockage of new appointments to the WTO's Appellate Body, it is no longer able to deliver binding resolutions of trade disputes and guarantee the right to appellate review.

The EU is engaged in efforts to resolve this situation and has been supportive of the informal process under the auspices of the WTO General Council led by New Zealand Ambassador David Walker, who chairs the WTO Dispute Settlement Body (see also the EU Proposal to the WTO to amend the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), the EU Statement of 15 and 16 October 2019, and the EU Statement of 9 December 2019).

Pending such a resolution of the situation, the EU is preparing contingency measures to apply as long as the appointments remain blocked – known as 'Interim Appeal Arbitration Arrangements'. The interim arrangements would maintain two-tier dispute settlement through arbitration proceedings provided under Article 25 of the DSU, preventing disputes from becoming blocked. The EU has concluded such arrangements with Canada and Norway.

A Commission proposal to amend the Enforcement Regulation is the EU's third line of defence in response to the WTO issue. The Enforcement Regulation permits the European Commission to act on the EU's behalf in certain situations to respond to trade actions by partner countries.

The Commission has been tasked to review the scope of the Regulation. It reports its findings to the European Parliament and the Council. The Commission published an initial report in 2017 and a final report in 2019.

Investment disputes

Since 2009, the EU has been negotiating investment treaties that protect EU investors when they operate in third countries. These enable investors to resolve their investment disputes with States (e.g. on expropriation) before independent courts and tribunals.

Dispute settlement in a nutshell

  • It is an objective and effective means of settling disagreements between States or between investors and States on government measures/practices
  • It prevents unilateral actions and the escalation of diplomatic tensions, and contributes overall to peaceful international relations, and;
  • It clarifies the obligations of States under international law and develops a common understanding through case law

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