Getting Along: The Evolution of Dispute Resolution Regimes in International Trade Organizations

Abstract

In the face of the remarkable growth of international organizations in the last fifty years, scholars in multiple disciplines have applied various theories in trying to explain why and how states cooperate. This article uses these theories as a window through which we can examine how states resolve disputes. Dispute resolution is one of the most crucial issues of international cooperation and the increased cooperation in this area has led to the creation of different regimes of dispute resolution. Examining the dispute resolution regimes of international organizations in light of these theories can inform and help reform these evolving regimes.

This article first explores five legal factors that differentiate between the types of dispute resolution regimes. These five factors-direct effect, standing, supremacy, transparency and enforcement-are not exhaustive. However, it is the differences in each of these factors and the combination of these factors that have dictated the form and function of the four current dispute resolution regimes currently in use by international trade organizations.

Next, this article introduces a four-part clarification of dispute resolution regimes. I call these four regimes "Negotiation," "Investment Arbitration," "International Court" and "Supranational Adjudication." The Negotiation Regime is exemplified by the dispute settlement system of the General Agreement on Trade and Tariffs (GATT) as it existed prior to the creation of the WTO as well as the current form of Chapter 20 of the NAFTA. The second regime is Investment Arbitration. Examples of this regime include arbitration under the International Centre for the Settlement of Investment Disputes (ICSID), and arbitration under the UN Commission for International Trade Law (UNCITRAL) rules for ad hoc arbitration. Both of these arbitration options are provided for in most bilateral investment treaties and also in Chapter 11B of NAFTA. The third regime of dispute resolution is International Adjudication. An example of this regime of dispute resolution is the new dispute resolution understanding of the WTO. The fourth and final regime of dispute resolution is the Supranational Court. The classic example of this type of dispute resolution is the ECJ for the EU.

After reviewing the types of regimes, the latter sections of the article attempt to assess the effectiveness of current dispute settlement regimes using theories from economics and political science as well as outlining directions for future work in this area.

Keywords: dispute resolution, international trade, international organizations, dispute systems design, regimes