Abstract

The research addresses two critical problems in the context of international trade disputes. Firstly, it highlights the lack of sufficient international courts to address interstate trade disputes, which has hindered effective dispute resolution and posed economic threats to state parties engaged in international trade. Secondly, it underscores the absence of robust enforcement mechanisms for judgments issued by international tribunals, particularly in the realm of international trade law, resulting in challenges to the implementation of decisions in disputes among states. The primary research objective is to examine the legal and institutional frameworks as mechanisms for settling interstate trade disputes. The study adopts a qualitative research methodology, emphasizing an empirical and analytical approach. The research draws upon primary data from decided cases derived from laws and international court decisions. The study addresses four research questions, achieving corresponding research objectives. Key findings include the definition of trade, and the causes of interstate trade disputes. The research also identifies legal and institutional frameworks for settling such disputes, encompassing international and regional mechanisms, as well as Alternative Dispute Resolution methods. Challenges in settling interstate trade disputes, including conflicts of laws and enforcement issues, are highlighted. To address the challenges identified, the study recommends the establishment of an international mechanism to enforce judgments and arbitral awards. Additionally, it suggests efforts to harmonize legal frameworks, enhance transparency, promote trust-building measures, provide capacity-building support, and improve the enforceability of arbitral awards to foster a conducive environment for resolving interstate trade disputes effectively. These measures are crucial for maintaining a fair and efficient global trading system.s.

Chapter One: General Introduction

1.1 Background to the Study

 International trade law is the law regulating international commerce. It has two aspects: public and private.[1]The public aspect of international trade law seeks to coordinate commercial policies of states and it’s a part of public international law. The private aspect of international trade law governs international commercial transactions between the people belonging to different states. This is substantially covered under private international law. There is increase international trade nowadays because of the benefit of trade across the international borders. Conflict which is a controversy or disagreement between two or more persons or states is very rampant in our international community today thus the need for settlement.

For a better comprehension, the research seeks to look at the meaning of the settlement of interstate trade disputes, the various mechanisms both legal and institutional frameworks put in place for the settlement of interstate trade disputes. Furthermore, the lacunae or loopholes in the laws or mechanisms put in place for the settlement of interstate trade dispute will be looked at not leaving out the possible recommendations to be put in place for the settlement of disputes in trade amongst states.

However chapter one of this research shall consist of; background to the study, statement of the research problem, research questions (general and specific research questions),research objectives (main and specific research objectives), research methodology, literature review, theoretical and conceptual framework, justification for the study, significance of the study, scope or delimitation of the study, limitation to the study and operational definition of the key terms.

1.1. BACKGROUND TO THE STUDY

Inter-state trade has played a pivotal role in the economic development of nations since ancient times. It has not only fostered economic growth but also contributed significantly to political and social interactions among states[2]. However, the expansion of inter-state trade has been accompanied by a concurrent rise in trade disputes[3]. These disputes, often arising from differences in trade policies, regulations, or the interpretation of trade agreements, have the potential to disrupt economic relations, strain diplomatic ties, and undermine the overall stability of regions and nations. Trade is the buying and selling of goods or services. Trade between two or more states is known as international trade. This international trade existed far back during the medieval period where barter system was prominent and commonly used. It was only after the Second World War that modernization came into existence and there was however the need for a modern trade system to be implemented such as interstate economic transactions to be done through bilateral treaties or International Investments Agreements

The origins of inter-state trade can be traced back to the Silk Road[4], which connected the ancient empires of China, India, Persia, and Rome. While this trade route facilitated the exchange of goods and ideas, it also witnessed disputes over trade routes, tariffs, and customs regulations. These early disputes often led to conflicts and wars among nations, highlighting the need for mechanisms to settle trade-related disagreements.

During the Middle Ages, trade guilds and leagues, such as the Hanseatic League in Northern Europe, emerged to protect the interests of merchants engaged in inter-state trade. These organizations played a rudimentary role in resolving trade disputes but lacked the legal and institutional framework necessary for effective dispute resolution. The advent of mercantilism in the early modern period further intensified inter-state trade conflicts. Mercantilist policies, focused on accumulating wealth through trade surpluses, led to the imposition of protectionist measures and tariffs, often sparking trade disputes among nations. The late 19th and early 20th centuries saw the development of modern international trade law. Key milestones included the establishment of the General Agreement on Tariffs and Trade (GATT) in 1947 and its successor, the World Trade Organization (WTO) in 1995. These international organizations provided a platform for member states to negotiate and resolve trade disputes through a structured and rules-based approach.

Since World War II, many progress have been made in liberalizing international trade. Following from the theoretical foundations established by Adam Smith and David Ricardo[5] who both reiterated that trade allows different economies to take advantage of their particular comparative advantage by opening their doors to the exchange of commodities which one economy can produce efficiently with those that another economy can produce efficient.

Trade disputes under the World Trade Organization are simply about broken promises amongst states due to non-compliance with trade agreements. Dispute settlement therefore is the central pillar of multilateral trading system and the World Trade Organization unique contribution to the stability of the global economy. The U.N Charter plays equally a major role regarding disputes between states. Interstate trade dispute resolutions are conflict resolution methods used during disagreement amongst trade parties.

Legally, [6]section 2(3) of the U.N Charter provides that “all members shall settle their international disputes by peaceful means in such a manner that international peace, security and justice are not endangered”. [7]The Charter goes further in its Article 33 of Chapter VI to state that “the parties to any dispute, the continuance of which is likely to endanger the maintenance of international peace and security shall first of all seek a solution by negotiation, enquiry, mediation, conciliation, arbitration, judicial settlement, resort to regional agencies and arrangements or any other peaceful means of their own choice.

Institutionally, the international chambers of commerce are one of the bodies engaged in settlement of interstate trade disputes. The other body is the OHADA Common Court of Justice and Arbitration which is a supranational institution and the highest court of the organization. The CCJA is also an original body promoting arbitration within OHADA with its dual role, both in judicial settlement and arbitration[8].

The GATT, formed after World War II, marked a significant shift in the approach to settling inter-state trade disputes. It established the principles of non-discrimination, most-favored-nation treatment, and dispute settlement procedures. The GATT’s dispute settlement mechanisms laid the foundation for a more orderly resolution of trade conflicts, with member states committing to binding dispute resolution processes.

The creation of the WTO in 1995 represented a milestone in the evolution of trade dispute resolution mechanisms. The WTO’s Dispute Settlement Body (DSB) became the primary forum for resolving trade disputes among member states. It introduced a structured process with strict timelines for dispute resolution, ensuring that disputes were settled more efficiently and transparently.

1.2. STATEMENT OF THE PROBLEM

The research problem has been defined as an intellectual stimulus calling for a response in the form of a scientific inquiry. This research has identified the following problems.

First, lack of a strong enforcement mechanisms to enforce judgments which have been taken by international tribunals or courts. In international trade law especially amongst states, there has been that lack of enforcement mechanisms to strictly implement decisions taken by the international courts or tribunals with respect to trade disputes amongst states

Secondly, insufficient international courts and institution to address interstate trade disputes. In this case there have been little or no international courts and foreign institutions to address interstate disputes which pose a lot of threat to the economic situation of state parties to trade as it prevents some of them to lay their worries or plights with regards to trade with other nations.

1.3. RESEARCH QUESTION

1.3.1 Main Research Question

1. What is the legal regime of the settlement of interstate trade disputes?

1.3.2 Specific Research Questions

• What is settlement of interstate trade disputes under World Trade Organization?
• What are the legal and institutional frameworks for the settlement of interstate trade disputes?
• What are the challenges encountered so far in the measures put in place to settle interstate trade disputes?
• What are the possible recommendations for an efficient settlement of interstate trade dispute?

1.4. RESEARCH OBJECTIVES

1.4.1 Main Research Objective.

• To examine the legal regime for the settlement of interstate trade disputes.

1.4.2 Specific Research Objectives.

• To provide an overview of the concept of settlement of interstate trade disputes under World Trade Organization.
• To analyze both the legal and institutional frameworks put in place for the settlement of interstate trade disputes.
• To critically look at the challenges faced so far in settling interstate trade disputes Under World Organization.
• To critically analyze the possible recommendations for the settlement of interstate trade disputes.