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American Review of International Arbitration - ARIA
ARIA Vol. 3 No. 1-4 1993
This essay is a contribution to a liber amicorum for Hans Smit, a man whom I greatly admire. I am proud to have been considered one of the amici who are contributors to this book. What follows is an effort to distill various observations I have made over the years, both publicly and privately, on the process of international commercial arbitration as it is worked out in the real world.
Business disputes of an international character have been part of my professional life for nearly two decades. The observations set out here represent what I would say to clients or colleagues who are not familiar with international arbitration and other means of resolving international commercial disputes. These thoughts have pertinence primarily for the businessman (and his advisor) who is afforded the opportunity at the drafting stage of negotiating the means of resolving disputes expected to arise out of a contract. I have tried to convey what, among the various procedures available for resolving disputes — litigation, arbitration and negotiation-based alternative dispute resolution techniques — makes the most practical sense.
The dispute resolution mechanisms that are available have as their ultimate objective the achieving of just results with a minimum expenditure of time and money. The central theme of this discussion is the extent to which various forms of dispute resolution achieve the objectives of the aspirational motto of the American Arbitration Association: "Speed, economy and justice." My judgment is that commercial arbitration more frequently meets these objectives than does the judicial process. Accordingly, the bulk of this essay focuses on arbitration.
National courts are, of course, available throughout the world for the resolution of commercial disputes between locals and foreigners. For American companies doing business abroad, however, it is not difficult to conclude that submitting to the courts of a country other than the United States can easily have unhappy results. At best, participation in litigation in courts outside one's own country means involvement with unfamiliar languages, procedures and laws. At worst, it means entanglement with processes that are time-consuming, biased in favor of locals and perhaps even corrupt. These problems have probably been exacerbated in recent years as courts all over the world have seen increases in their workloads that have exceeded their capacities. Since courts are provided by governments to their citizens as a service and undoubtedly operate everywhere at a loss — notwithstanding fees that may be charged — they are all too often overworked, understaffed and presided over by underpaid judges.
Lawrence W. Newman - Partner, Baker & McKenzie, where he is Chairman of the Litigation Department of the New York office.