Introduction
The World Trade Organization (WTO) was established on the foundational belief that international trade disputes should be settled by the rule of law rather than by the exercise of economic power. Its dispute settlement system has been applauded for its predictability and neutrality for decades. However, recent years have exposed its growing difficulty in keeping pace with sectors shaped by digitalization, intangible assets, and opaque regulatory practices. A striking illustration of this tension in 2025 is the China–European Union intellectual property dispute, officially titled China — Measures Concerning the Enforcement of Intellectual Property Rights (DS611). This piece examines the enduring legal relevance of WTO mechanisms alongside structural shortcomings, using the China–EU intellectual property dispute as a case study. It argues that one of the most urgent areas of institutional reform lies in the WTO’s ability to assess the broader context of judicial behavior, especially in jurisdictions where courts may not operate independently. Instead of discarding its foundations, the WTO must adapt to these challenges by developing hybrid mechanisms capable of evaluating how domestic judicial systems function in practice.
Background and Legal Claims
The EU brought the case against China in 2022, alleging that Chinese courts were issuing anti-suit injunctions (ASIs) to prevent European companies from enforcing their patent rights in foreign jurisdictions. These ASIs, issued at the request of Chinese firms, essentially restrained EU rights-holders from initiating and/or continuing parallel proceedings in third countries. The EU claimed this constituted a violation of China’s obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), specifically Articles 28 and 41, which relate to patent rights and the enforcement of IP laws.
Article 28 provides for the exclusive rights of patent holders, including the rights to prevent third parties from making, using, offering for sale, or importing a patented product without the holder’s consent. The EU argued that China, by issuing ASIs that blocked European firms from asserting these rights in foreign jurisdictions, effectively undermined the core guarantee of market access and legal recourse that Article 28 was designed to protect. Article 41 requires that members ensure that enforcement procedures are available under their law so as to permit effective action against any act of infringement of IP rights. The EU contended that the repeated issuance of ASIs by Chinese courts not only obstructed enforcement but created an environment where patent holders were systematically discouraged from exercising their legal rights abroad. In the EU’s view, this pattern of judicial conduct impaired the availability and effectiveness of enforcement mechanisms, breaching both the letter and spirit of Article 41.
The WTO panel, whose final report was released in April 2025, rejected the EU’s primary claim that the ASIs amounted to a direct breach of these substantive TRIPS obligations. The panel was not persuaded that the Chinese state, by virtue of its judiciary, had denied the EU firms their TRIPS-consistent rights. However, the panel did find that China failed to ensure transparency in its judicial processes, violating Article 63.1 of the TRIPS Agreement, which requires members to make available information on regulations and ultimate judicial decisions pertaining to IP enforcement.
Why the WTO Still Matters: Affirmation of Legal Authority
At a time when the broader dispute settlement system is under strain, most notably with the paralysis of the Appellate Body, the panel’s ability to issue a well-reasoned decision in DS611 is a testament to the WTO’s continued legal credibility. The case affirmed the organization’s capacity to mediate between powerful economic actors in a complex and politically sensitive domain. It demonstrated that WTO rules still provide an authoritative benchmark for evaluating state behavior, particularly when national practices appear to deviate from global norms.
Moreover, the panel’s reliance on the transparency provisions of TRIPS underscores an important, if often underutilized, aspect of WTO law: its ability to discipline states not only for overt violations but also for procedural opacity. In doing so, the ruling reinforced the idea that legal predictability and access to information are core components of fair trade. This dimension of the ruling has been praised by scholars such as Henning Grosse Ruse-Khan, who emphasize the value of transparency not merely as a procedural safeguard but as a substantive prerequisite for accountability in IP governance. Likewise, economist Bernard Hoekman has argued that even when panels refrain from imposing broad rulings on state conduct, their willingness to spotlight procedural shortcomings helps sustain the WTO’s legitimacy as a forum for rule-based critique. In the context of growing global concern over rule-of-law issues and regulatory opacity in major economies, the DS611 decision represents a modest but meaningful reassertion of multilateral oversight. It also affirms that transparency obligations, sometimes viewed as technical, can act as a gateway to deeper systemic scrutiny, specifically where direct legal remedies may be politically and diplomatically infeasible.
Where the WTO Fell Short: A Toolkit Ill-Suited to Judicial Realities
Despite the merits of the decision, the China–EU case also revealed fundamental gaps in the WTO’s institutional capacity to deal with 21st-century trade challenges. Most notably, the panel declined to engage with the broader context of judicial behavior in China. Namely, the informal influence of state interests on court decisions and the strategic use of ASIs to strengthen domestic industries. These practices have been well-documented in academic literature and reflect a blurring of public and private legal boundaries in China, where courts are not fully insulated from industrial policy objectives. Ignoring this context risks mischaracterizing ostensibly “neutral” judicial actions as apolitical. For the WTO to retain credibility in a world where state capitalism and hybrid governance are on the rise, it must develop institutional means to consider how judicial independence, regulatory culture, and soft law influence economic outcomes, particularly in disputes where courts themselves are instrumentalized for competitive advantage.
TRIPS, too, falls short in addressing the nuanced interplay between IP enforcement, cross-border litigation, and private law tactics like ASIs. Designed in the early 1990s, TRIPS assumes that IP enforcement occurs within relatively transparent, autonomous legal systems. This assumption fails when private litigants use domestic courts to impose extraterritorial constraints on foreign rights-holders. TRIPS lacks provisions for addressing how IP enforcement interacts with global value chains, digital jurisdiction, or forum shopping, making it increasingly disconnected from contemporary enforcement realities.
The Case for Hybrid Reform: Addressing Judicial Behavior in Trade Disputes
The DS611 dispute underscores a central blind spot in the WTO’s current legal framework: its inability to engage meaningfully with the broader context of judicial behavior in member states. While WTO law is premised on the formal equality of sovereign states and the neutrality of domestic legal institutions, this assumption is increasingly difficult to sustain in practice—particularly in jurisdictions where courts are not functionally independent or are used as tools of industrial policy. The WTO panel in DS611 declined to examine the institutional setting in which Chinese courts issued anti-suit injunctions (ASIs), treating them as isolated legal acts rather than as potential expressions of coordinated state strategy. Yet, as scholars such as Mark Wu and Gregory Shaffer have pointed out, state capitalism often manifests not through formal legislation but through regulatory behavior, administrative discretion, and judicial conduct—all of which can affect trade outcomes.
To remain a relevant arbiter of fairness in global trade, the WTO must develop tools and methodologies that allow panels to evaluate such institutional behavior without overstepping into domestic legal sovereignty. One possible reform is the establishment of a procedural annex or interpretive guideline that empowers panels to request contextual evidence on the independence, transparency, and systemic functioning of judicial bodies. This would not require panels to rule on the legality of domestic legal systems per se, but would provide a framework for weighing the credibility of enforcement mechanisms in IP or services-related disputes.
In parallel, WTO jurisprudence could be strengthened through the development of an “institutional behavior” amicus curiae practice, drawing on external expertise from rule-of-law monitors, comparative law scholars, and civil society organizations. These submissions could offer insight into the structural dynamics of domestic judicial systems, enabling panels to ground their decisions in a fuller understanding of enforcement realities. As Shaffer has argued, trade adjudication increasingly demands sensitivity to how legal norms operate in practice, not just on paper.
Finally, WTO cooperation with international organizations such as the World Bank or OECD, which routinely assess judicial integrity and institutional effectiveness, could provide a data-driven basis for panels to make context-aware evaluations. These partnerships could be formalized through memoranda of understanding and linked databases, reducing the burden on panels while improving the quality of institutional fact-finding. The ability to scrutinize judicial behavior in a principled, transparent, and context-sensitive manner will be critical as disputes involving cross-border enforcement, investment screening, and digital regulation continue to grow. Rather than compromising the sovereignty of member states, these reforms would help ensure that WTO rules are applied in a way that reflects the actual, not merely theoretical, conditions under which trade takes place. Scholars such as Keith Maskus and Jerome Reichman have emphasized that stronger institutional collaboration, particularly between the WTO and bodies like WIPO, could help bridge technical gaps and enhance the legitimacy of trade dispute outcomes in IP-heavy sectors. The DS611 ruling should therefore be viewed not only as a decision on transparency, but as a prompt for the WTO to rethink how it engages with the institutions that implement or undermine its legal norms.
Conclusion
The WTO’s long-term relevance depends on its ability to evolve, not by discarding its legal foundations, but by adapting its procedures to address emerging forms of regulatory influence, particularly judicial behavior. The China–EU IP dispute is not a sign of institutional failure, but a critical inflection point that demonstrates both the resilience and the blind spots of the existing multilateral trade framework. If the WTO can develop hybrid reforms — interpretive tools for institutional context, procedural mechanisms for transparency evaluation, and partnerships that enhance fact-finding — it can continue to serve as a credible anchor of legal order in a fragmented global economy. To do so, however, it must confront the realities of how law is practiced, not just how it is written.
Shreya Margale is a Juris Doctor candidate at the University of New South Wales in Sydney and holds a Bachelor’s Degree in Political Science from Barnard College, Columbia University.
Picture Credit: WTO