COUNTERVAILING DUTIES ON INDONESIAN BIODIESEL: WTO DISPUTE RESOLUTION AND THE USE OF ARBITRATION UNDER DSU ARTICLE 25

Abstract

This research aims to analyse the legal dispute between Indonesia and the European Union (EU) concerning countervailing duties on biodiesel imports. Employing a normative qualitative legal research method, the study relies on both primary data, such as WTO legal instruments, panel reports, and dispute settlement documents, and secondary sources, including academic journals, policy papers, and relevant news reports. A case study approach was used to critically assess the role of the World Trade Organization (WTO) in resolving the dispute and the potential of arbitration as an alternative mechanism. The findings indicated that arbitral considerations largely favour Indonesia, affirming that the EU’s measures are inconsistent with WTO rules. Practically, the research suggests arbitration as a future-oriented instrument for trade dispute settlement, while highlighting its limitations in implementation and relevance for policymakers and legal practitioners. Academically, this study contributes by offering a critical perspective on how WTO law interacts with state sovereignty and provides insight into the underexplored role of arbitration in international trade disputes, thereby addressing gaps in existing literature. The research argues that arbitration provides a fair mechanism for dispute resolution. However, if arbitration cannot be achieved, parties may resort to litigation before national courts, or, where jurisdiction has been previously recognised, seek recourse to an international court. Without mutual consent or an established jurisdictional basis, submission to an international court would not be possible.