This article addresses one prominent expression of the interplay between politics and law in international cooperation: the dynamics of bargaining in the settling of compliance disputes. Our central argument is that the formal structure of dispute settlement systematically shapes the likelihood and terms of negotiated compliance settlements. We introduce an ideal type distinction between interstate dispute settlement, where the authority to sue states for non-compliance resides exclusively with states, and supranational dispute settlement, where this authority is partly or entirely delegated to a commission or secretariat with a prosecutorial function. We hypothesize that systems relying on supranational prosecution are more effective in addressing non-compliance, and more likely to mediate the impact of power asymmetries on dispute settlement outcomes, compared to systems relying on state-initiated complaints only. We find support for this proposition in an in-depth comparison of dispute settlement and compliance bargaining in the World Trade Organization and the European Union, and in a brief survey of experiences from other international organizations.