Dispute resolution under GATT 1947 was governed by Articles XXII and XXIII, which set up a system of consultation for the settlement of disputes between member nations. The dispute settlement system under GATT evolved over time and there were additional documents and legal instruments created to incorporate the changes. Examples of these include the 1966 Decision on Procedures under Article XXIII, which approved procedural changes to help developing countries proceed in the dispute settlement process, and the 1979 Understanding Regarding Nullification, Consultation and Dispute Settlement, which codified many of the customary dispute settlement practices that had been developed over the years. Part of the customary practice was to have the case heard by a panel of experts when consultations did not resolve the matter.
Even with the changes in the GATT procedure, the dispute settlement process was not considered satisfactory. Therefore, one of the mandates at the Uruguay Round was to strengthen and improve the rules and procedures for dispute settlement. The intent was to make the rules more concrete, so that it would be possible to have a more consistent application.
The basis for the WTO dispute settlement process is the Understanding on Rules and Procedures Governing the Settlement of Disputes [generally referred to as the DSU], which appears as Annex 2 of the WTO Agreement. Under the DSU, member countries can engage in consultations to settle disputes arising out of any of the WTO agreements or they can have a WTO panel hear the case. Under the DSU, panel decisions can be appealed to the Appellate Body. Additionally, unlike under GATT, WTO final decisions must be adopted unless there is a unanimous vote of all members not to do so.