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The political logic of dispute settlement: Introduction to the special issue

Author(s): Davis, Christina L

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Abstract: In the absence of centralized enforcement authority, international institutions have devised a wide range of measures to enforce agreements. At one extreme, states have delegated authority to third party legal bodies to interpret and rule on compliance with authorization of sanctions to punish violations. At the other end of the spectrum, states rely upon peer pressure to encourage compliance and agree to negotiate over any differences of interpretation. Researchers have broadly explored two dimensions of dispute settlement: the variation in design of dispute settlement provisions within institutions and the pattern of state behavior within established dispute processes. This special issue pushes forward research on both dimensions while raising new agenda for probing the political determinants of institutional design and state behavior in dispute settlement. Are judges immune from the influence of power considerations in their rulings? Why do we observe electoral cycles in the pattern of case filings in the WTO? How does sensitivity to interest group pressure shape the structure of dispute settlement? In addition, the articles bring new insights from comparison across issue areas. What explains the variation of dispute design across issue areas? Does legalization of one issue area generate ripple effects that shape behavior for other issue areas? Finally, the articles hone in on critical micro-level differences within dispute settlement. Stepping beyond the issue of why states establish enforcement measures and description of the initiation and disposition of cases, the articles consider details such as the economic stakes at hand and conditions that favor resolving disputes with direct compensation. The challenge to cooperation arises from uncertainty over compliance given incentives for others to cheat or free ride in the face of mixed incentives and collective action problems. This places dispute settlement at the heart of any theory of cooperation. Institutions work to the extent they can provide information that lowers transaction costs for actors to make and enforce their commitments (Williamson 1985; North 1990; Ostrom et al. 1992). The literature on international institutions posits that the lack of liability rules and asymmetric information contribute to market failures at the international level - states that would otherwise benefit from cooperative bargains cannot reach agreement because of the difficulty to credibly commit to comply or allocate responsibility in the case of disagreements and cheating. Keohane (1984) developed a functional theory to show the role of institutions to reduce transaction costs by providing information and mechanisms that raise the costs of non-compliance. Yet just as the transaction cost economics literature searched for institutions that provided alternatives to centralized legal enforcement, much of the study of international institutions began with an emphasis on ways that institutions encourage compliance through such mechanisms as diffuse reciprocity and reputation. These theories focus more on the role of institutions to avoid disputes than on the role of institutions to solve those disputes that occur. Yet few if any institutions achieve complete compliance. Misunderstandings, differences of interpretation, and willful violations lead to disputes over the behavior of countries that have signed agreements. This gives rise to the need to settle disputes. The stability of institutions depends on mechanisms short of ending all cooperation that allow states to manage these disputes. Many theories focus directly on the role of dispute settlement to sustain cooperation (Milgrom et al. 1990; Rosendorff 2005). The comparison of different forms of dispute settlement examines the variation of legalization and access to dispute processes (Abbott et al. 2000; Keohane et al. 2000; Koremenos 2007). Finally, many studies assess the effectiveness of different dispute settlement mechanisms to resolve the underlying disagreement (Busch and Reinhardt 2002; Bown 2004; Kono 2007; Huth et al. 2011; Davis 2012). While individual studies address questions about specific aspects in the design and utilization of dispute settlement processes, it is necessary to recognize that dispute settlement serves multiple functions across the different stages of international cooperation. The primary purpose is to resolve a problem so that cooperation can resume, but the dispute settlement process can also sustain future cooperation by deterring violations, closing gaps in treaty interpretation, and helping states to accommodate new circumstances arising from changes in political interests or external conditions. The expected success of enforcement in turn connects to the bargaining dynamic that establishes rules for cooperation (Fearon 1998). The interplay of political incentives and institutional constraints operate at each level of cooperation as states strive to resolve their disputes.
Publication Date: 2-Apr-2015
Citation: Davis, Christina L. (2015). The political logic of dispute settlement: Introduction to the special issue. REVIEW OF INTERNATIONAL ORGANIZATIONS, 10 (2), 107 - 117. doi:10.1007/s11558-015-9220-1
DOI: doi:10.1007/s11558-015-9220-1
ISSN: 1559-7431
EISSN: 1559-744X
Pages: 1 - 19
Type of Material: Journal Article
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

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