Courts Matter! A Comparison of Dispute Settlement under GATT and the WTO

Abstract

Analysing disputes between the US and the EU under GATT and the WTO respectively, the paper demonstrates that the judicialization (or legalization) of international dispute settlement procedures can contribute to states’ compliance with these dispute settlement mechanisms. The paper compares four sets of pairwise similar disputes with US had with the EU: the so-called Domestic International Sales Corporations (DISC) case (which arose under GATT) and the Foreign Sales Corporations case (which was settled through WTO procedures), the Steel case (GATT) and the Patents case (WTO), the two Hormones cases under GATT and the WTO respectively, and the Citrus case (GATT) and the Bananas case (WTO). In each of the four comparisons the US acted more in accordance with the judicial WTO dispute settlement procedures than with the diplomatic GATT procedures. We can therefore say that contrary to realist assumptions, the judicialization of dispute settlement procedures can contribute to their effectiveness. However, contrary to idealist assumptions the effectiveness of international dispute settlement procedures does not automatically follow from their judicialization. Yet, as assumed by institutionalists, judicialized dispute settlement procedures are better than diplomatic dispute settlement mechanisms in sustaining states’ compliance with these procedures precisely because of their normative and strategic effects.