Why Does the Complainant Always Win at the WTO?: A Reputation-Based Theory of Litigation at the World Trade Organization

Abstract

WTO litigation presents an empirical puzzle: complaining parties “win” close to 90 percent of cases, while standard theories of litigation predict a strong tendency towards a 50 percent plaintiff win-rate.

This Article explains the high win-rate by examining the reputational costs and benefits of filing a case. The WTO’s lack of centralized enforcement means that the consequence of a judgment is merely to disseminate information that alters a party’s reputation for compliance with its trade obligations. Such a “reputational sanction” applies to both losing respondents and complainants. The result is that only cases with a very high probability of success on the merits have a positive expected value and will be filed.

Several, inter-related implications follow: (1) primarily “easy cases” that are clear on the merits are filed at the WTO; (2) because only easy cases are filed, the voluminous opinions of the Appellate Body represent a dysfunctional tendency towards unwarranted law-creation; (3) discussions of “WTO constitutionalism” are largely misguided; and (4) the resource/legal capacity of developing countries is not the biggest constraint on their ability to file cases.

Keywords: World Trade Organization, WTO, Litigation, Law and Economics, International Courts, International Law