Regional dispute settlement bodies in trade and investment and their interference with the WTO dispute settlement system

Most preferential trade agreements (PTAs) contain at least a state-to-state dispute settlement system similar to that of the WTO – normally in the form of arbitration or a panel-like process; some PTAs contain specific dispute settlement provisions for certain types of trade measures (e.g. trade remedies such as Chapter 19 of the North American Free Trade Agreement (NAFTA)). In addition, many new PTAs contain investor–state dispute settlement provisions which are open to private parties and have become increasingly used in the past ten years, e.g. NAFTA Chapter 11. A number of claims under NAFTA’s investment chapter have been related to trade issues (including public procurement and countervailing duties). This project will first review the mechanisms typically found in PTAs (both bilateral and regional), in order to avoid clashes with the WTO Dispute Settlement Understanding and analyse their suitability. The second step will be to look at recent case law (e.g. in BITs and Mercosur) to describe the problems arising from the existing system. We will address the question of the sequence of possible overlaps between regional dispute settlement bodies (including investment protection and economic provisions in human rights treaties) and the WTO’s Dispute Settlement Mechanism. In discussing how best to avoid legal conflicts between PTAs, BITs and the WTO, we will explore how future agreements can be designed to reduce the risk of a legal spaghetti bowl of overlapping rules, procedures and arbitral decisions with regard to the WTO.