The settlement mechanism of the World Trade Organization provides an elaborate means to solve various problems. The importance and relevance of any rule-based trading system would rendered ineffective unless such a mechanism exists which ensures the predictability and security of this trading system. The system is based on clearly defined rules with time-frame for completing a case. There are different stages of this redressal mechanism.

At the very outset rulings are made by a panel and endorsed or rejected by the a body consisting of all the members of WTO. It is possible to make appeals on points based on law. It is important to note that a lot of emphasis is given on settlement of disputes through consultations among the parties. And the members of WTO have undertaken and agreed that if there are disputes in the nature of violation of trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally which means they would abide by the agreed procedures and respect judgements. A dispute arises when one country takes a trade policy measure or any action which one or more fellow WTO members construe as violation of the WTO agreements or a failure to live up to obligations.

A procedure for settling disputes existed under the erstwhile GATT system but there was no fixed timetables for settlement of disputes and the parties could easily block proceedings and the cases remained pending for a long time .But under the WTO settlement dispensation there is greater discipline for the length of time that a case should take to settle with flexible deadlines set in various stages of the procedure. If a case runs its full course to a first ruling, it should not normally take more than about one year. And 15 months if the case is appealed. Thus it ensures predictability of an outcome.

Disputes Settlement Body (DSB) is the sole authority to establish panels of experts to consider a case and to accept or reject the findings of the panel or the results of an appeal and it also monitors the implementation of the rulings and recommendations and has the power to authorize retaliation when a country does not comply with a ruling.