In one of my prior posts, I referred to how cumbersome the arbitration process in the international arena is becoming. Redfern and Hunter's chapters describing the laws governing arbitration add to my frustration with the process. While ideally international arbitration is supposed to be binding, in reality it is the superior tribunal's ruling which is binding... supposedly. The losing party can still appeal in the "seat" of the arbitration proceedings.
Furthermore, this whole process is complicated by the fact that no uniform set of procedural rules has been established in international arbitration. Indeed, the reading indicates that such rules might be impossible given the different cultural and educational backgrounds of all legal professionals. However, if delocalization, with its more sensible idea of having only one procedural law - that of the place of enforcement, cannot be uniformily agreed upon, what hope do other procedures have? Remember, these procedures come with the already familiar problems of distinguishing between procedural (lex arbitri) and substantive law. They're further complicated when for some reason or another, some attorneys decide to use the procedural rules of one state, while located in another state with its own procedudral mandates, and at the same time having to apply the original substantive law that is involved. No wonder there are appeals processes. The whole process is too convulated.
Greater uniformity is needed in the arbitration process. Otherwise, losing parties will keep finding procedural, substantive, or adjudicative grounds to appeal. With the extensive appeals opportunities, what is the point of arbitration other than privacy? Finally, we run into the same problems of enforcement, with commercial pressures and the state systems having to get involved - options which could've been used in the first place. In the end, the parties can forum shop to find a state that will enforce awards in both in the arbitration world, with the support of the NY Convention, and in the states' judiciaries.
4 comments:
I posted my blog for this week, and then immediately read yours, and found that we have picked up on very similar points. I think it highlights just how difficult drafting a good arbitration clause would be: there are so many factors you have to take into account, and the lawyer would have to have a good understanding of all the available options. Its hard to see how a sensible clause could be drafted in five minutes at the end of a contentious negotiation.
"They're further complicated when for some reason or another, some attorneys decide to use the procedural rules of one state, while located in another state with its own procedudral mandates, and at the same time having to apply the original substantive law that is involved." I agree that this is confusing! On the other hand, it seems like a lot of the complexity would come upfront in the proceedings: you have to figure out the different procedural laws right off the bat in order to proceed. To me that's encouraging. After you've got that figured out, you can do the arbitration, and recognition and enforcement should usually be a different, later problem.
I completely agree with you, and must say that I shared your confusion and frustration while reading these chapters. It makes no sense that an appeal is available at the "seat" of the arbitration, when the grounds may be substantive, and the seat of the arbitration may actually have nothing to do or know about the substantive issues brought (given that the jurisdiction or seat of the arbitration usually only deals with the procedures). I definitely wish there was more uniformity in the process.
I think that things are actually made more simple. Resort to the courts is infrequent, and usually for a narrow range of issues - enforcement, which is usually straightforward. When there is an enforcement issue, local courts only make a decision about enforcing based on a narrow set of criteria outlined in the NYC
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