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Mediation and Settlement as Key Elements of the WTO Dispute Resolution System

Dmitry Davydenko and Alexandra Khizunova,
Muranov Chernyakov & Partners law firm

Securing a positive outcome to a dispute is the aim of the WTO dispute resolution mechanism. It is expressly specified in the Understanding on Rules and Procedures Governing the Settlement of Disputes (Marrakesh, 15.IV.1994). Mediation is central to the WTO approach to dispute settlement.

The WTO system includes a number of “diplomatic” techniques which aim to provide a chance for the parties to find a mutually satisfactory outcome. These methods are: consultations, mediation, conciliation and good offices. All these methods are part of the traditional diplomatic toolkit. In the WTO they are especially valued because complicated and tough regulation created by the WTO treaties provokes numerous and often “high-stakes” disputes. Finding a solution which works for every state involved is vital to preserving a benign legal and regulatory environment for international commerce.

The United Nations Charter provides, in Article 33: “The parties to any dispute, the continuance of which is likely to endanger the maintenance of international peace and security, shall, first of all, seek a solution by negotiation, enquiry, mediation, conciliation, arbitration, judicial settlement, resort to regional agencies or arrangements, or other peaceful means of their own choice.”

According to the WTO Understanding, each Member State undertakes to give sympathetic consideration to, and afford adequate opportunity for consultation regarding, any representations made by another Member State concerning measures affecting the operation of any applicable agreement.

A Member State having a claim against another Member State must request consultation with the other party and then wait 60 days before initiating arbitration proceedings. This period starts to run from the date of receipt of the request.

During consultation, parties ex change information, assess the strengths and weaknesses of their respective cases, narrow the scope of the differences between them and, in a large number of cases, reach a mutually acceptable solution. Where no such agreement is reached, consultations also provide the parties with an opportunity to define and limit the nature of the dispute between them.

“Good offices” is the terms describing organizational and logistic assistance given in order to facilitate negotiations. Mediation and conciliation are similar procedures. The difference in international law is that, unlike the conciliator, the mediator is expected to propose and recommend to the parties possible solutions which he or she deems appropriate.

Good offices, conciliation and mediation are undertaken voluntarily if the parties to the dispute agree. Proceedings involving good offices, conciliation and mediation are confidential, and without prejudice to the rights of either party in any further proceedings. Good offices, conciliation or mediation may be requested at any time by any party to a dispute. They may begin at any time and be terminated at any time. Once procedures for good offices, conciliation or mediation are terminated, a complaining party may then proceed with a request for the establishment of a panel.

When good offices, conciliation or mediation are entered into within 60 days after the date of receipt of a request for consultations, the complaining party must still allow a period of 60 days after the date of receipt of the request for consultations before requesting the establishment of a panel. The complaining party may request the establishment of a panel during the 60-day period if the parties to the dispute jointly consider that the good offices, conciliation or mediation process has failed to settle the dispute.

If the parties to a dispute agree, procedures for good offices, conciliation or mediation may continue while the panel process proceeds.

The Director-General of the WTO may, acting in an ex officio capacity, offer good offices, conciliation or mediation with a view to helping Member States settle a dispute.

Importantly, such techniques may be used by Member States at any stage of the dispute resolution process. The Parties are, furthermore, encouraged to negotiate a solution, provided that it is consistent with the WTO treaties and does not infringe upon other Member States not involved in the dispute in question.

Eighty-seven disputes have been settled or terminated: either the complaint was withdrawn, or the parties reached a mutually agreed solution. This constitutes about 20% of all disputes initiated under WTO rules.

Sometimes the dispute is settled even after it was heard and resolved within the WTO system. Thus, in 21 cases the parties notified agreement on implementation of the decisions of the Dispute Settlement Body.

The following example demonstrates the use of mediation in the disputes arising out of the WTO treaties. A dispute arose between Thailand (aggrieved party) and the EC (defaulting party) and concerned tuna exports. The Philippines joined the dispute as another aggrieved party. In September 2002, the parties jointly submitted a formal letter to the Director-General of the WTO, requesting mediation. The parties negotiated working procedures and agreed a joint “compromise” exhaustively describing the facts and issues of the case backed by the parties’ arguments. The Deputy Director-General was appointed as mediator.

The dispute arose from preferential tariff set by the EC for canned tuna originating from ACP (African/Caribbean/Pacific) states. The main issue was the extent to which the economies of Thailand and the Philippines were affected by the EC preferential tariff s. The aggrieved countries prepared a detailed analysis of economic injury and described a methodology to assess that injury.

On 5 November 2002 the WTO ambassadors of Thailand and the EC presented their oral argument outlining essential arguments and claims of the parties. Then the mediator gave each party an opportunity to refute the arguments of the opponent and to ask questions directly.

As early as 20 December 2002, the mediator prepared an advisory opinion and proposed a possible solution to the dispute based on thorough research into the problem.

However the final result was achieved by further state-to-state communication when the advisory opinion of mediator was considered. Consequently, on 5 June 2003 the EC Council adopted a Regulation declaring the EC’s intention to resolve the “long-standing” case with the Philippines and Thailand. Pursuant to that Regulation the EC “has decided to accept this [mediator’s] proposal” by approving that “an additional tariff quota for a limited volume of canned tuna should be opened.”

The so-called Canned Tuna case proves how efficient and adequate mediation as a mean of WTO dispute settlement is. The Mediator’s opinion is not binding. However, if the states are actually interested in resolving the case, such opinion may greatly assist to reach and elaborate final reasonable outcome for all parties within shorter time period and with lower costs.


Mediation as a method of WTO dispute resolution helps, by informal negotiations (as opposed to formal dispute proceedings), parties at odds with each other reach mutually acceptable compromises in a fairly short period of time. The Canned Tuna case was settled in less than three and a half months, which saved a lot of “court” costs.

At the same time, mediation also encourages the parties to reach a decision on their own rather than having one imposed by a “kind of court proceeding.” A mediator scrutinizes the parties’ arguments and tries to provide a solution “absolutely viable” for all parties.

WTO mediation helps to avoid formal proceeding and encourages dialogue between Member States with the assistance of a neutral person on a voluntary, non-binding basis. Acceptance or rejection of the mediator’s opinion is always at the discretion of the States involved in the dispute.

Article source: AEB BUSINESS QUARTERLY • Autumn 2012

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25 november 2012

Mediation and Settlement as Key Elements of the WTO Dispute Resolution System - An article by Dmitry Davydenko and Alexandra Khizunova published in AEB BUSINESS QUARTERLY, 2012

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