Do International Dispute Bodies Overreach? Reassessing World Trade Organization Dispute Ruling

Abstract

Abstract Compliance with World Trade Organization dispute rulings declined in recent years. Governments frequently accuse the Appellate Body (AB) of exceeding its mandate by relying on precedent despite having no such authority. Is this criticism fair? We use new data on over 5,000 applications of legal precedent in AB rulings to test competing hypotheses. The “legal coherence hypothesis” says that legal systems adhere to precedent because they have strong incentives to appear consistent in their rulings over time. Alternatively, the “adaptation hypothesis” says that legal systems respond to political resistance, such as noncompliance, by subtly modifying precedent. The results lend greater support to the “adaptation hypothesis.” The AB is much more likely to drift from previous rulings when those decisions failed to induce compliance. The results speak to common criticisms about the intransigence of international legal systems and the ways in which international case law evolves.