Dispute Settlement at the WTO: Appellate Crisis and the MPIA

WTO dispute settlement is the process countries use to challenge each other’s trade measures under World Trade Organization rules, run by a Dispute Settlement Body made up of every member state and governed by a 1995 agreement called the Dispute Settlement Understanding (DSU). Since it began, 644 disputes have been filed involving 112 countries as parties or third parties.¹² The system still hears cases at the panel level, but its appeals court has not functioned since late 2019, and that gap now shapes almost everything about how the process actually plays out.

How a Case Moves Through the System

The DSU sets a full timetable of roughly 15 months from complaint to enforceable outcome.³ The Dispute Settlement Body oversees each step and takes decisions by consensus.⁴ The stages are:

Consultations. The complaining country formally asks the other side for talks. The responding country has 30 days to enter consultations, and the parties have up to 60 days to settle on their own. Many disputes end here.
Panel. If consultations fail, the complainant can ask the DSB to set up a panel of trade experts. The panel takes written submissions and oral argument and typically issues its report within six months.
Appeal. Either side can appeal a panel’s legal conclusions to the Appellate Body, a standing group of seven trade law experts that is supposed to rule within 90 days.
Adoption and compliance. Once the DSB adopts the reports, they bind the losing country, which must say whether it will comply. If immediate compliance is not possible, it gets a “reasonable period of time,” normally no longer than 15 months.
Enforcement. If compliance still does not happen, the winning country can seek compensation or ask the DSB for authorization to impose equivalent trade sanctions, usually higher tariffs.

Historically, compliance has run around 90 percent, and the average dispute has resolved in about ten months once panel composition and translation time are set aside.⁵ By comparison, the International Court of Justice averages roughly four years per case.

Why the Appeals Stage Is Broken

The Appellate Body has heard no new case since late 2019, when the United States blocked the appointment of replacement judges and dropped its membership below the three required to sit an appeal.⁶ The last sitting member’s term ended on November 30, 2020, and as of mid-2026 the body has zero members.⁷

The U.S. objections have carried across the Obama, Trump, and Biden administrations. In a February 2020 report, the Office of the U.S. Trade Representative said the Appellate Body had engaged in “persistent overreaching” beyond its original mandate.⁸ The specific complaints include:

Ruling on legal questions it did not need to decide, in effect creating new obligations for members.
Treating its own past rulings as binding precedent that panels had to follow absent “cogent reasons,” which the USTR said the DSU never authorized.
Reviewing panels’ factual findings, including interpretations of domestic law, when appeals are supposed to be limited to questions of law.
Missing the 90-day report deadline the DSU describes as mandatory.
Letting outgoing members keep working on assigned cases after their terms expired, under an internal “Rule 15” the USTR called an unauthorized takeover of the DSB’s appointment power.⁹

The U.S. has rejected more than a dozen proposals to fill the vacancies, insisting these systemic problems must be resolved first. A coalition of 130 members continues to press for new appointments, but because appointments require consensus, the U.S. effectively holds a veto.¹⁰

Appealing Into the Void

The paralysis has opened a loophole. Under the DSU, a panel report cannot become legally binding while an appeal is pending, because the report must go through appellate review before adoption. With no functioning Appellate Body, an appeal suspends the ruling indefinitely. Both the U.S. and India have used the tactic to sidestep adverse panel findings, a practice known as “appealing into the void.”¹⁰

A current example is DS623, a Chinese challenge to U.S. tax credits under the Inflation Reduction Act. On January 30, 2026, a panel found that certain domestic content bonus credits for renewable energy investment violated national treatment rules, the Agreement on Trade-Related Investment Measures, and the Agreement on Subsidies and Countervailing Measures. The U.S. appealed on February 23, 2026 without filing an appellant submission. China noted in response that because the Appellate Body is not operating, all procedural deadlines are effectively suspended.¹¹ The ruling sits in limbo.

The MPIA Workaround

To route around the deadlock, a group of members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) in April 2020. It relies on DSU Article 25, which lets parties agree to resolve disputes through arbitration instead of the standard appellate process.¹²

As of June 2025, the MPIA covered 57 members representing 57.6 percent of world trade, including the European Union, China, Canada, Japan, Australia, Brazil, and the United Kingdom, which joined that month.¹³ The United States is not part of it and has described the arrangement as a provocation that fails to address its underlying concerns.¹⁰ That absence matters, because the arrangement only works between countries that have both signed on.

An MPIA appeal goes to three arbitrators drawn at random from a standing pool of ten trade lawyers. Awards are final and binding without needing formal DSB adoption, and the process runs on a 90-day clock.¹⁴ The arrangement has added procedural touches such as word limits on submissions, pre-hearing conferences, and public video recordings of oral hearings.

Usage has been thin. Between April 2020 and the end of 2025, only two cases went the full distance through the MPIA, even though at least 22 panel reports circulated during that window could have been appealed.¹⁰ The first was DS591, an EU challenge to Colombian anti-dumping duties on frozen fries, which produced an award in 75 days in December 2022. The second was DS611, an EU challenge to Chinese intellectual property enforcement measures, resolved on July 21, 2025 in an award that partially reversed the panel.¹⁵ Both moved much faster than the Appellate Body’s historical 10 to 12 months.

Where Reform Stands

Members have been trying to fix the system since the appeals function collapsed. At the 12th Ministerial Conference in June 2022, they committed to a “fully and well-functioning dispute settlement system accessible to all members by 2024.” Ministers at the 13th Ministerial Conference in March 2024 acknowledged progress and told officials to accelerate work on unresolved issues, especially appeals and accessibility.¹⁶ The 2024 target was not met.

The 14th Ministerial Conference took place in Yaoundé, Cameroon in March 2026, with a draft ministerial statement and reform work plan prepared for endorsement and work scheduled to start in April 2026 if approved.¹⁷ The draft plan directs Geneva officials to “intensify their work and provide concrete and substantive recommendations for action by the next Ministerial Conference.” Discussions are set to continue under the DSB, with proposals on the table from the U.S., EU, China, the UK, and several developing-country groups.¹⁸

The System Is Still Being Used

Filings have not dried up. Thirteen new disputes were brought in 2025, the highest annual number since the Appellate Body stopped functioning.¹⁷ Several recent cases show the range of what members are bringing:

Kazakhstan v. Indonesia (DS645). In April 2026, Kazakhstan filed its first WTO complaint, challenging a 20 percent Indonesian anti-dumping duty on hot-rolled steel coils and alleging the duty was extended to Kazakh exports without proper investigation or notification.¹⁹²⁰
Indonesia v. EU (DS593). In a long-running dispute over EU restrictions on palm oil biofuels, Indonesia asked in March 2026 for authorization to suspend concessions worth between $2.8 billion and $5.6 billion a year, alleging the EU had not complied with earlier rulings. The EU objected to the proposed level and the matter went to arbitration.²¹
EU v. U.S. (DS577). In December 2025, the DSB authorized the EU to impose countermeasures against the U.S. following an arbitration decision on anti-dumping and countervailing duties on ripe olives from Spain.²²
China v. U.S. and others. Multiple filings reflect U.S.-China trade tensions, including challenges to U.S. tariff measures (DS638, DS640) and Canadian surtaxes on steel and aluminum (DS641, DS643).²³

The practical picture, then, is a system in two halves. The panel stage still works, produces reasoned decisions, and gets used. The appeals stage does not, unless both sides happen to belong to the MPIA. Whether a WTO ruling actually binds the losing country in 2026 depends less on the merits of the case than on whether the loser chooses to appeal into a court that no longer sits.

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