1. Dispute settlement GATT 1947 provided for a dispute settlement system based on consultations and negotiations between Members. The Contracting Parties developed a sophisticated system of dispute settlement through adjudication. The DSU is inspired to the dispute settlement system under GATT 1947 but it tries to remedy the most important shortcomings.

2. Dispute settlement principles 1) prompt settlement of the disputes concerning the WTO Agreements  DSU ensures the enforcement of the rights and obligations of Members; enhances the predictability of the trade policies; contributes to clarification of WTO law.

3. Dispute settlement principles (II) 2) settlement of disputes through multilateral procedures: evolution of international law, under which every State can make a unilateral determination that a violation has occurred and may have recourse to retaliation measures (US under GATT 1947 made wide use of retaliation measures). Under the DSU the DSB determines whether a violation has occurred and the Members can obtain redress under multilateral procedures;

4. Dispute settlement principles (III) 3) extensive use of consultations between Members concerned  before the dispute can be submitted for adjudication, the parties are obliged to entertain consultations; 4) settlement of disputes in good faith;

5. Dispute settlement principles (IV) 5) clarification of WTO law  caution against judicial activism; authoritative interpretation by the Ministerial Conference or the General Council; the DSB, the Panels and the Appellate Body can only interpret the law and not add or diminish the rights and obligations of Members.

6. DSU Scope of application: Multilateral Trade Agreements (except Trade Review Policy Mechanism) + Plurilateral Trade Agreements (only with regard to States that are Members of those Agreements). Establishment of the Dispute Settlement Body  it administers rules and procedures under DSU and is composed by the Members of the General Council but has a different Chairperson.

7. DSU - Objectives 1) to achieve a satisfactory settlement of the matter in accordance with the rights and obligations under this Understanding and under the covered agreements: rule of law vs. solutions mutually acceptable for the parties;

8. DSU – Objectives (II) to provide security and predictability to multilateral trading system and to guarantee its effective functioning; to preserve the balance between rights and obligations of Members under the covered agreements;

9. DSU – Objectives (III) to clarify the existing provisions of WTO law in accordance with customary rules of interpretation of public international law (see articles 31-33 of the Vienna Convention on the Law of Treaties)  preference for the use of the ordinary interpretative criteria as a tool against fragmentation of international law. The interpretation of WTO law under the DSU is relevant only inter partes: the General Council can adopt authoritative interpretation of WTO law with effect erga omnes (see art. 3, para. 9, DSU).

10. Principles of the DSU: 1) principle of good faith: Members must exercise their judgement as to whether action under DSU would be fruitful (art. 3, para. 7); Members must engage in dispute settlement procedures in an effort to resolve the dispute (art. 3, para. 10).

11. Principles of the DSU (II) 2) preservation of third Member States’ rights: solution of disputes shall not nullify or impair benefits accruing to any Member (art. 3, para. 5); mutually agreed solutions must be notified to DSB and any Member may make observations (art. 3, para. 6).

12. Principles of the DSU (III) 3) burden of proof: the complaining State must give evidence that there has been a breach of WTO law but the damage is presumed, unless the defendant State can rebut the charge.

13. Principles of the DSU (IV) 4) consequences of the breach: when there is a breach of WTO law, the defendant State must withdraw the measure, or, if it is temporarily impossible, to give a compensation; only when the defendant State doesn’t withdraw the measure, the DSB can authorize the complainant State to suspend the concessions towards the defendant State (retaliation).