The dispute-settlement system at the World Trade Organization (WTO) is one of the world’s most frequently used processes for resolving state-to-state disputes.
Since the WTO’s creation in 1995, a total of 621 disputes have been referred to it. Canada has been a complainant or respondent in 63 disputes and a third party in 173 disputes. Between 1995 and 2023, the WTO’s dispute-settlement panels and its Appellate Body issued more than 350 rulings.
This HillNote describes the WTO’s dispute-settlement process and discusses the Appellate Body’s current status. Because the Appellate Body is currently not functioning, it also examines the implications of appealing “into the void” and identifies certain other dispute-settlement options that some WTO members are using.
Overview of the process
When a WTO member refers a complaint to the WTO, the disputing parties – the complainant and the respondent – begin consultations with the goal of finding a mutually agreed solution. If these consultations fail, the parties may seek resolution by a dispute-settlement panel established by the Dispute Settlement Body.
Panel rulings can be appealed to the Appellate Body. According to the Appellate Body’s most recent annual report, from 1996 to the first half of 2020, approximately 67% of panel rulings were appealed.
Figure 1 presents an overview of the WTO’s dispute-settlement process. As discussed below, the process is currently limited to the panel stage.
Figure 1 – Overview of the Dispute-Settlement Process at the World Trade Organization
Note: Beginning on 10 December 2019, World Trade Organization members have been able to request consultations and panels which, once established and composed, have been able to issue reports. Moreover, since 10 December 2019, disputing parties have been able to appeal panel reports and compliance panel reports, but the Appellate Body has been unable to hear appeals.
Source: Figure prepared by the Library of Parliament using data obtained from World Trade Organization, “The process – Stages in a typical WTO dispute settlement case,” Dispute Settlement System Training Module: Chapter 6.
Current status of the Appellate Body
According to the Dispute Settlement Understanding, each of the Appellate Body’s seven members serves a four-year term and is eligible for reappointment once. The Appellate Body must have at least three members to hear an appeal.
Since early 2017, the United States (U.S.) has opposed the appointment of members to the Appellate Body. According to a report by the U.S. Trade Representative, the Appellate Body repeatedly failed to “apply the rules of the WTO agreements in a manner that adheres to the text of those agreements.”
On 10 December 2019, the Appellate Body stopped functioning when it lost its quorum of three members. Since 30 November 2020, it has had no members.
Appealing “into the void”
At present, although WTO members can appeal panel rulings, these appeals can – in some sense – be filed “into the void.” In accordance with the Dispute Settlement Understanding, if an appeal is filed but cannot be heard, the panel’s ruling is not adopted and does not have legal effect.
Between 10 December 2019 and the end of 2023, more than 20 appeals had been filed “into the void.” Canada is a disputing party in an appeal filed by the United States on 28 September 2020 against the panel’s report concerning U.S. – Softwood Lumber VII.
In a statement made following the United States’ appeal, Canada said that “an appeal, in the current circumstances, has the effect of denying Canada its right, under the Dispute Settlement Understanding, to prompt settlement of [the softwood lumber] dispute.” The country also indicated that the “United States’ behaviour significantly reduces the security and predictability” of international trade.
WTO members have continued to bring disputes to the WTO, and they are pending at various stages of the dispute-settlement process. As of 29 January 2024, Canada was a third party in more than a dozen active disputes at the panel stage. In most cases, the disputing parties have not agreed to use an alternative to the Appellate Body process, and appealing a panel ruling may result in an appeal “into the void.”
Selected alternatives to appealing “into the void”
Negotiations to reform the WTO’s dispute-settlement system are ongoing and, because the Appellate Body is not functioning at this time, alternatives both outside and within the context of the WTO are being used.
For example, disputing parties have made greater use of the dispute-settlement provisions in their bilateral and regional trade agreements. According to observers, countries have historically underused these provisions when compared to the WTO’s dispute-settlement system.
Since the entry into force of the Canada–United States–Mexico Agreement (CUSMA) in 2020, four disputes have been resolved under Chapter 31, which provides for state-to-state dispute settlement. A dispute was resolved using the comparable process in CUSMA’s predecessor – the North American Free Trade Agreement – for the last time in 1998.
A second alternative to appealing “into the void” is the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), which is the main alternative used within the WTO. Canada, the European Union and 17 other WTO members established the MPIA on 30 April 2020.
MPIA participants agree to have appeals heard under article 25 of the Dispute Settlement Understanding, which provides for “expeditious arbitration” as an alternative to the panel’s and Appellate Body’s processes. Participants also commit not to pursue appeals under the Appellate Body process.
Currently, Canada and 25 other WTO members are MPIA participants. However, some of the most frequent users of the WTO’s dispute-settlement system – including India, Russia and the United States – are not participants. For example, the United States was a complainant or respondent in more than 45% of the disputes referred to the WTO from 1995 to 2023.
As shown in Table 1, the MPIA’s arbitrators have issued one ruling since the MPIA’s entry into force. In a statement concerning Colombia – Frozen Fries, Colombia said that the first MPIA ruling showed that the MPIA process had “proven to be a viable and well-functioning interim mechanism that can replace, on a temporary basis, the Appellate Body and preserve [WTO] Members’ right of appeal.”
Although several disputes between MPIA participants were completed without an appeal under that process, the participants’ commitment not to appeal “into the void” may have contributed to disputing parties reaching a settlement. For example, Table 1 shows that Australia and Canada reached a mutually agreed solution in Canada – Wine, and that the disputing parties did not appeal the panel ruling in Costa Rica – Avocados.
Table 1 – World Trade Organization Disputes Resolved as of 29 January 2024 in Which the Complainant and the Respondent are Participants in the Multi-Party Interim Appeal Arbitration Arrangement
| Dispute Title | Complainant | Respondent | Status |
| Canada – Commercial Aircraft (DS522) | Brazil | Canada | Withdrawn by Brazil on 18 February 2021 |
| Costa Rica – Avocados (DS524) | Mexico | Costa Rica | Panel report adopted on
31 May 2022 |
| Canada – Wine (DS537) | Australia | Canada | Mutually agreed solution reached on 12 May 2021 |
| Colombia – Frozen Fries (DS591) | European Union | Colombia | Ruling issued by arbitrators on 21 December 2022 |
| China – Anti-dumping and Countervailing Duty Measures on Barley (DS598) | Australia | China | Mutually agreed solution reached on 11 August 2023 |
| China – Anti-dumping on Stainless Steel (DS601) | Japan | China | Panel report adopted on 28 July 2023 |
Notes: “Complainant” refers to the World Trade Organization (WTO) member making a request for consultations, and “respondent” refers to the member to which the request for consultations is addressed. Other members who have a substantial interest in the subject matter of the dispute can participate in various stages of the dispute settlement process.
In this table, proceedings are considered resolved if they are withdrawn or settled – which includes reaching a mutually agreed solution or adopting the panel report without an appeal – or if the arbitrators of a Multi-Party Interim Appeal Arbitration Arrangement have issued a ruling.
Source: Table prepared by the Library of Parliament using data obtained from World Trade Organization, “Current status of disputes,” Dispute Settlement: the Disputes.
Reforming the dispute-settlement system
Reforming the dispute-settlement system is expected to be a “key reform priority” at the WTO’s 13th Ministerial Conference to be held in February 2024. In keeping with their commitment “to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024,” WTO members have been informally discussing reform.
In November 2023, WTO senior officials described the ongoing informal discussions as “an important step towards preparing the ground for an outcome at [the 13th Ministerial Conference].”
Additional Resources
Abu Taleb, Bashar, and Offah Obale. The World Trade Organization: Selected Challenges and Canada’s Priorities. Publication No. 2019-50-E. Library of Parliament, 11 March 2020.
Gervais, Nicolas, and André-Philippe Ouellet. “L’échapper belle : AMPA ou MPIA. Quatre lettres au secours du système de règlement des différends à l’OMC.” Revue québécoise de droit international. No. 32.2, 2019 [en français]
Hoekman, Bernard M., and Petros C. Mavroidis. “To AB or Not to AB? Dispute Settlement in WTO Reform.” Journal of International Economic Law. Vol. 23, No. 3, September 2020.
Hughes, Valerie. “Maintaining Relevance in a Much-Changed World: Reforming WTO Dispute Settlement.” Journal of International Economic Law. Vol. 26, No. 1, March 2023.
Pauwelyn, Joost. “The WTO’s Multi-Party Interim Appeal Arbitration Arrangement (MPIA): What’s New?” World Trade Review. Vol. 22, No. 5, 14 June 2023.
Schneider-Petsinger, Marianne. “Reforming the World Trade Organization: Prospects for Transatlantic Cooperation and the Global Trade System.” Chatham House. Research paper, 11 September 2020.
Wolff, Alan Wm. WTO 2025: Restoring binding dispute settlement. Peterson Institute for International Economics. Working Papers 22-5, April 2022.
World Trade Organization. Strengthening and Modernizing the WTO: Discussion Paper. Communication from Canada. 24 September 2018.
By Anne-Marie Therrien-Tremblay, Library of Parliament