Precedential Value of MPIA Awards in WTO Law

By Sarvagya Agarwal & Akshat Gaur, law students at Dr. Ram Manohar Lohiya National Law University.

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Introduction

The Dispute Settlement System of the World Trade Organization (hereinafter WTO) has been the backbone of International Trade, ensuring that countries resolve their disputes through rules rather than power . What this means in practice is that trade disagreements are settled on the basis of agreed legal commitments and structured procedures, not the economic or political strength of individual members. However, with the appeals going into the void, WTO members have turned to ADR mechanisms, such as the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), to safeguard the right to appeal. This “void” emerged after the Appellate Body became dysfunctional in December 2019 when its membership fell below the minimum requires to hear appeals. Thereafter, USA blocked new Appellate Body appointments, leaving the body without enough members to hear cases.

The MPIA awards have begun to fill the jurisprudential gap left by the Appellate Body (hereinafter AB). This gap emerged because the AB has been unable to hear appeals since 2019, which halted the issuance of appellate interpretations that normally refine, clarify and stabiles WTO law. However, an essential question arises for academic consideration: Do these awards have any precedential value within WTO law? Exploring this issue is essential for understanding how International Trade Law adapts in times of institutional crisis.

Establishment and Functioning of the MPIA

The  MPIA was formally established via a joint communication to the WTO DSB in April 2020. It was initiated and coordinated by the European Union, under the leadership of EU Trade Commissioner Phil Hogan at the time, together with 15 other WTO Members, to revive an appellate forum after the eventual fall of AB in December 2019. Legally, the MPIA is empowered by Article 25 of DSU, which allows Members to resolve disagreements through arbitration as an alternative means of dispute settlement. The participating members of MPIA agree in advance that any dispute shall be referred to arbitration before a three-member panel selected from a roster of ten. Furthermore, if a party wishes to appeal under MPIA, it may request the suspension of panel proceedings before the panel report is circulated. The MPIA draws from a pool of ten arbitrators, appointed by positive consensus among participating members in 2020, a roster that remains unchanged as of 2025. For each appeal, three arbitrators are randomly selected from this pool to hear the case and issue a final award. The resulting award is enforceable and binding between the parties under Article 25(3), like an AB ruling, but it is not adopted by the Dispute Settlement Board (DSB). This distinction is significant as, although an MPIA award is binding on the parties to the dispute, the lack of the DSB’s formal acknowledgement limits its precedential authority compared to AB reports within WTO law.

Understanding the Concept of Precedent in WTO Law

In International Trade Law, consistency and predictability are essential; however, under the WTO AB, there is no strict rule of Stare Decisis. Similar​‍​‌‍​‍‌​‍​‌‍​‍‌ to many other dispute resolution entities, it considers cases individually; hence, the Panels and AB are not obligated to follow the previous decisions. Nevertheless, a consistent practice of recognising and following past AB decisions has emerged within the WTO. This development is supported by Article 3.2 of the Dispute Settlement Understanding (DSU), which emphasises the importance of sovereignty, security and predictability in the multilateral trading system. While Article 3.2 does not itself mandate the use of precedent, its focus on security and predictability has been interpreted as favoring consistency in interpretation of WTO law. Over time, this has encouraged panels and divisions of the Appellate Body to treat earlier interpretations as persuasive guidance, giving rise to the soft-precedent practice within WTO dispute settlement. Gradually, several cases also played a major role in propounding this system.

The​‍​‌‍​‍‌​‍​‌‍​‍‌ clearest recognition of this was in the case of Japan Alcoholic beverages (1996), where AB mentioned that the reports "generate legitimate expectations" of the members and hence, they must be considered in the subsequent disputes, although they do not have the force of binding authority. The WTO has highlighted this argument by its repeated references, thus confirming a culture of interpretative ​‍​‌‍​‍‌​‍​‌‍​‍‌continuity.

Similarly, in the case of the USA (stainless steel) vs Mexico (2008), the AB built on that foundation by refining its approach and introducing the cogent reasons test. It criticised the Panel for disregarding earlier cases and emphasised that unless there are cogent reasons to depart from previous interpretations, panels are expected to follow established jurisprudence, in order to maintain consistency and predictability in the system. This instance is frequently referred to as the origin of a 'soft precedent' regime in the ​‍​‌‍​‍‌​‍​‌‍​‍‌AB. This case is often regarded as the start of a ‘soft precedent’ system within the AB.

Currently, the MPIA faces a significant question: whether to adopt a soft precedence system or to deviate from the practice of AB.

Analysing the Precedential Value of MPIA Awards

Understanding the abovementioned limitation is essential to analyse the precedential value of MPIA awards. The core question is whether MPIA awards will influence the development of WTO law in the same way AB reports once did. The answer to this can be seen through three different lenses. One perspective suggests that MPIA cannot produce true precedent, because it is structurally and politically limited [it operates only among participating members (around 53 as of 2025)]. The participation is limited, as only those members who have joined MPIA are bound to use it, and the US (along with several other countries, including India) remain outside of its scope. Further, MPIA awards are not adopted via DSB, whereas AB reports were formally adopted and integrated into the WTO’s framework. This adoption by DSB gave AB reports the legitimacy to increase their applicability beyond individual disputes, thereby allowing panels and subsequent AB divisions to treat them as part of the interpretative acquis of WTO law.

Another argument is that even without formal DSB adoption, MPIA awards will still matter in practice. The reason being that MPIA can be seen as an effort to preserve the “sovereignty, security and predictability” enshrined under DSU Article 3.2. It keeps a similar appeal process and approach to interpretation that the AB used, helping the WTO system to stay consistent and predictable, even without a permanent appellate body. Moreover, the MPIA arbitrators are chosen from a roster of ten individuals with prior experience in WTO dispute settlement. These arbitrators are also ex-members of the Appellate Body, who help in maintaining the procedural and jurisprudential continuity. These features make it likely that MPIA awards will closely follow established AB jurisprudence, unless there are strong reasons to deviate from it. Hence, ensuring consistency within the law.

A further viewpoint considers that the precedential weight of MPIA awards will be functional rather than formal. Future panels, even those involving non-MPIA members, may cite these for their persuasive and well-reasoned analysis, much like unadopted panel reports. If the AB is revived, it will not start from scratch but will inherit a body of MPIA jurisprudence, raising the question of whether it will treat these awards as persuasive guidance, as it once did with its own rulings.

Normative Implications and Future Outlook

Building on these perspectives, it becomes necessary to consider the normative implications of the MPIA and its awards. The MPIA suggests an operational shift in WTO dispute settlement towards a more plurilateral model. Instead of a single, universal appellate forum, a sub-group of willing members has created its own appeal mechanism. Therefore, through MPIA, appellate review is no longer a single institution [the Appellate Body], but something created by a coalition.

There are two futures that follow from this development. One possibility is reintegration. If the AB is revived, it will not return to a gap in jurisprudence; rather, it will inherit a body of MPIA awards. In that Scenario, a restored AB could selectively adopt MPIA jurisprudence and reassert a single line of authority for the whole membership. Consequently, MPIA will be a bridge rather than a break. Another possibility is that the system becomes increasingly divided. If the deadlock of AB persists, WTO dispute settlement may evolve towards a multi-level precedent, under which it will no longer have a single appellate authority but several parallel interpretations, each carrying different levels of influence, namely: traditional AB reports, MPIA awards, unappealed or bilateral panel reports. The direction the system ultimately takes will decide whether MPIA is a temporary body or the beginning of a more plural and divided WTO order.

The Appellate Body, being in a state of limbo, has raised serious questions, but the emergence of interim solutions, such as the MPIA, demonstrates that members can innovate even under pressure. One of the most important things needed to rebuild trust in the WTO Dispute Settlement Mechanism is regular dialogue among stakeholders. As the WTO DSB is central to international trade law, the system now stands at a crossroads. It is difficult to see how global trade rules can function effectively unless the DSB resumes its role.