CONCLUSION OF FIRST ARBITRATION AS AN ALTERNATIVE TO THE WTO’S APPELATE BODY

The trade dispute between Turkey and the European Union over discriminatory practices concerning the production, importation and marketing of pharmaceutical products (DS583: Turkey — Certain Measures concerning the Production, Importation and Marketing of Pharmaceutical Products) was the first to use arbitration as an alternative to the World Trade Organization’s (WTO) Appellate Body (AB). The award (document WT/DS583/ARB25) was issued on July 25th in favor of the European Union and does not need to be adopted by the Dispute Settlement Body (DSB).

This was the first case to have an appeal ruling in the WTO in over two years. Since October 2018, the United States has been blocking the appointment of new members for the Appellate Body, which has been paralyzed since the end of 2019 due to lack of quorum.

The use of arbitration is permitted under article 25 of the Dispute Settlement Understanding (DSU), which allows for this procedure to be used as an alternative method for dispute settlement, provided there is a mutual agreement between the parties on its use and on the rules and procedures.

The European Union and Turkey agreed on the arbitral appeal procedures to be followed in March of this year. The rules are very similar to those of the Multiparty Interim Appeal Arbitration Arrangement (MPIA), an alternative appeal mechanism for WTO disputes created in 2020 in light of the inactivity of the AB.

Learn more about the MPIA here.

Learn more about dispute settlement in the WTO here.

Our team closely monitors the developments on this subject.