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

59 Pages Posted: 28 Mar 2011 Last revised: 10 Jul 2011

Matthew C. Turk

Indiana University - Kelley School of Business

Date Written: August 1, 2010

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

Suggested Citation

Turk, Matthew C., Why Does the Complainant Always Win at the WTO?: A Reputation-Based Theory of Litigation at the World Trade Organization (August 1, 2010). Northwestern Journal of International Law & Business, Vol. 31, p. 385, 2011. Available at SSRN: https://ssrn.com/abstract=1780558

Matthew Turk (Contact Author)

Indiana University - Kelley School of Business ( email )

1309 E. 10th Street
Rm. HH4080
Bloomington, IA 47405
United States

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