Dispute Settlement and Understanding Programme

Burden of Proof in WTO Dispute Settlement: Contemplating Preponderance of the Evidence

By James Headen Pfitzer and Sheila Sabune

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The Dispute Settlement Understanding (DSU), the agreement that governs the WTO dispute settlement mechanism, seeks to ensure an improved prospect of compliance, given its provisions on compensation and retaliation and thus constitutes a central element in providing security and predictability to the multilateral trade system.

Now in its second decade, member states have demonstrated that the structure and enforcement mechanisms provided by the DSU provide a legal recourse unparalleled by many similar intergovernmental bodies. Yet growing use has revealed problems within the institutional framework of the system itself, as well as in the jurisprudence thus far developed.

These shortcomings threaten the continued usefulness of the dispute settlement body, and by implication, the very legitimacy of the multilateral trading system itself. Truly, without effective adjudication under the DSU, a major advantage of multilateral trade coordination is lost as members will invariably seek unilateral recourse in trade disputes.

The burden of proof as currently applied is one such point of concern.

A legal principle not defined by the DSU, its meaning only emerges through amalgamation of Appellate Body decisions. Oft repeated yet inescapably uncertain, the rule has emerged that parties must forward sufficient evidence to make a ‘prima facie‘ case.

Illusive in both definition and application, this principle can create profound challenges to system participation and overall function. Appellate Body reasoning has been applied capriciously at the panel level, undermining predictability. Contradictions between rulings undermine consistency, and overall system transparency is eroded as how much and what kind of evidence is required to satisfy the burden is unknown, allowing decision makers to seemingly draw arbitrary distinctions amongst evidentiary submissions.

Since the adjudication of trade disputes would remain ambiguous without the transparent and consistent application of the burden of proof, the lack of clarity within the ‘prima facie‘ principle could be seen to detract from overall system legitimacy while further presenting an additional obstacle to entry for inexperienced members, especially the developing and least developed amongst them, wishing to engage in the dispute settlement system.

This study clarifies the standard through reference to WTO jurisprudence, scholarly analysis, as well as international and domestic legal traditions. Providing both general overview and focused guidance, this paper tracks case-by-case interpretations of the standard at all levels of WTO dispute settlement, providing key language while attempting to reconcile internal contradictions.

After comprehensive analysis, this study advocates modifying the burden of proof to a preponderance of the evidence standard, a principle which the authors argue is better suited to the inherent structural organization of the Dispute Settlement Mechanism.

It is the central conclusion of this paper that such an adoption would provide clarity within the system while easing the entry of new participants to the system - both ultimate goals of the DSU. Providing useful commentary on how this new standard may be implemented, this study cites evidence from recent decisions indicating that a shift to this standard may already be underway within the dispute settlement system.

This study aims to assist both experienced practitioners and newcomers in understanding the current nuances of the dispute settlement system, while also presenting a well-reasoned argument for reform. It is our hope that you find this paper a useful contribution within the field.

This paper is produced under ICTSD’s research and dialogue program on Dispute Settlement and Legal Aspects of International Trade which aims to explore realistic strategies to maximize developing countries’ capability to engage international dispute settlement systems to defend their trade interest and sustainable development objectives. The authors are James Headen Pfitzer, legal technical officer at the World Health Organization in Geneva, and Sheila Sabune, Trade in Services and Dispute Settlement Programme Officer at ICTSD.