Dispute Settlement Understanding
In 1994， the WTO members agreed on the Understanding on Rules and Procedures Governing the Settlement of Disputes or DSU （ annexed to the“Final Act”signed in Marrakesh in 1994） . Pursuant to the rules detailed in the DSU， member states can engage in consultations to resolve trade disputes pertaining to a“covered agreement”or， if unsuccessful， have a WTO panel hear the case. The priority， however， is to settle disputes， through consultations if possible. By July 2005， only about 130 of the nearly 332 cases had reached the full panel process.
The operation of the WTO dispute settlement process involves the parties and third parties to a case and may also involve the DSB panels， the Appellate Body， the WTO Secretariat， arbitrators， independent experts， and several specialized institutions. The General Council discharges its responsibilities under the DSU through the Dispute Settlement Body （ DSB） .Like the General Council，the DSB is composed of representatives of all WTO Members. The DSB is responsible for administering the DSU， i.e. for overseeing the entire dispute settlement process. It also has the authority to establish panels， adopt panel and Appellate Body reports， maintain surveillance of implementation of rulings and recommendations， and authorize the suspension of obligations under the covered agreements. The DSB meets as often as necessary to adhere to the timeframes provided for in the DSU.
From complaint to final report
If a member state considers that a measure adopted by another member state has deprived it of a benefit accruing to it under one of the covered agreements， it may call for consultations with the other member state. If consultations fail to resolve the dispute within 60 days after receipt of the request for consultations， the complainant state may request the establishment of a panel. It is not possible for the respondent state to prevent or delay the establishment of a panel， unless the DSB by consensus decides otherwise. The panel， normally consisting of three members appointed ad hoc by the Secretariat， sits to receive written and oral submissions of the parties， on the basis of which it is expected to make findings and conclusions for presentation to the DSB. The proceedings are confidential， and even when private parties are directly concerned， they are not permitted to attend or make submissions separate from those of the state in question. Disputes can also arise under Non-violation nullification of benefits claims.
The final version of the panel s report is distributed first to the parties； two weeks later it is circulated to all the members of the WTO. In sharp contrast with other systems， the report is required to be adopted at a meeting of the DSB within 60 days of its circulation， unless the DSB by consensus decides not to adopt the report or a party to the dispute gives notice of its intention to appeal. A party may appeal a panel report to the standing Appellate Body， but only on issues of law and legal interpretations developed by the panel. Each appeal is heard by three members of the permanent sevenmember Appellate Body set up by the Dispute Settlement Body and broadly representing the range of WTO membership. Members of the Appellate Body have four-year terms. They must be individuals with recognized standing in the field of law and international trade， not affiliated with any government. The Appellate Body may uphold， modify or reverse the panel s legal findings and conclusions. Normally appeals should not last more than 60 days， with an absolute maximum of 90 days. The possibility for appeal makes the WTO dispute resolution system unique among the judicial processes of dispute settlement in general public international law.
Members may express their views on the report of the Appellate Body， but they cannot derail it. The DSU states unequivocally that an Appellate Body report shall be adopted by the DSB and unconditionally accepted by the parties， unless the DSB decides by consensus within thirty days of its circulation not to adopt the report. Unless otherwise agreed by the parties to the dispute， the period from establishment of the panel to consideration of the report by the DSB shall as a general rule not exceed nine months if there is no appeal， and twelve months if there is an appeal.
Compliance
The DSU addresses the question of compliance and retaliation. Within thirty days of the adoption of the report， the member concerned is to inform the DSB of its intentions in respect of implementation of the recommendations and rulings. If the member explains that it is impracticable to comply immediately with the recommendations and rulings， it is to have a“reasonable period of time”in which to comply. If no agreement is reached about the reasonable period for compliance， that issue is to be the subject of binding arbitration； the arbitrator is to be appointed by agreement of the parties. If there is a disagreement as to the satisfactory nature of the measures adopted by the respondent state to comply with the report， that disagreement is to be decided by a panel， if possible the same panel that heard the original dispute， but apparently without the possibility of appeal from its decision. The DSU provides that even if the respondent asserts that it has complied with the recommendation in a report， and even if the complainant party or the panel accepts that assertion， the DSB is supposed to keep the implementation of the recommendations under surveillance.
Compensation and retaliation
If all else fails， two more possibilities are set out in the DSU：
（ 1） If a member fails within the“reasonable period”to carry out the recommendations and rulings， it may negotiate with the complaining state for a mutually acceptable compensation. Compensation is not defined， but may be expected to consist of the grant of a concession by the respondent state on a product or service of interest to the complainant state.