Legalization And Compliance: How Judicial Activity Undercuts The Global Trade Regime

Yadhu Krishna, BBA LLB (Hons), Presidency University

ABSTRACT

The World Trade Organization (WTO) has been a subject of debate over whether to replace the political-diplomatic dispute settlement model under the General Agreement on Tariffs and Trade (GATT) with a legalized dispute settlement model. The GATT model allowed a panel report to be given full legal force only if adopted by a consensus of GATT Contracting Parties. The WTO model automatically adopts a panel or Appellate Body report unless a negative consensus is reached. Critics argue that the legalized approach might be cumbersome in different political contexts.

The World Trade Organization crisis highlights the trade-off between legalization and compliance in international legal systems. Extending legal precedent can reduce flexibility in agreements. This highlights the life cycles of international organizations and questions of design and cooperation in international legal systems. Most WTO disputes focus on interpretation of vague provisions or silent agreements. The Dispute Settlement Body (DSB) could grant exceptions to rigid contractual obligations to "complete" incomplete contracts. The study examines the independence of international courts from state influence and how they manage the tension between legal principles and political concerns. It reveals that the ad hoc nature of WTO dispute settlement panels, judicial hierarchy, and panelists' concern for compliance encourage them to moderate rulings against powerful members. The study suggests that WTO panels use judicial economy to reduce the scope of having an underlying issue regarding the judicial compliance and dispute resolution in the international trade.

Keywords: WTO, Dispute resolution, Judicial precedents