What price for the community enforcement of WTO dispute settlement body’s rulings?

Authors: Alessandra Arcuri, Sara Poli

ABSTRACT

Under the World Trade Organization (WTO) legal framework, when a violation is deemed to occur, Members have recourse to a quasi-automatic dispute settlement system. If the breach persists after the WTO Dispute Settlement Body (DSB) has adopted a ruling, Members hurt by the illegal measures can be authorized to retaliate against the scofflaw Member. Rights and obligations are, thus, centrally enforced within the WTO. The object of this article is the decentralized enforcement of WTO law, and more precisely of DSB rulings through the ECJ. The aim is to explore whether it is in the Community (EC) as well as in the WTO’s interests to ensure that these acts are enforced before the Luxembourg Courts. Notoriously, the European Courts have been resistant to Community enforcement of DSB’ rulings. Unlike many legal commentators that have criticized the European Courts, we conclude that the approach of the Courts is justified both from a purely legal standpoint and from a Law and Economics perspective. In relation to the latter, we develop a theoretical framework, building on Calabresi and Melamed’s ‘Cathedral’, and show that the Community enforcement of DSB’s decisions bears costs that outweigh the benefits.

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