Amicable Settlements of WTO Disputes: Bilateral Solutions in a Multilateral System

Abstract

Every third dispute brought to the WTO and not withdrawn early is settled amicably through a mutually agreed solution (MAS). This includes high-profile and long-standing WTO disputes such as EC–Bananas or Softwood Lumber. By offering a negotiated solution to hard cases, MAS have added stability to the multilateral trading system. MAS, however, also raise concerns. Settlements favour the instant resolution of disputes, but may conflict with third party interests and collective stakes. Where WTO members use their MAS to contract out of WTO law ('WTO'/'WTO-'MAS), the multilateral trading system may be at risk. In addition, new forms of bilateral (interim-)settlements not foreseen in the DSU have recently emerged which currently escape multilateral disciplines. This article assesses how well the DSU balances the competing interests involved in amicable settlements preserving the contractual flexibility of disputants while safeguarding multilateral interests. Contributing to current DSU reform debates, the article rejects the need for greater MAS enforceability, endorses the strengthening of procedural and substantive safeguards protecting collective stakeholders in settlements and calls for new DSU disciplines on interim-settlements.

Keywords: WTO, Dispute Settlement, Mutually Agreed Solutions, Amicable Settlements, Memorandum of Understanding