The Practice of International Litigation - 2nd Edition - Looseleaf
The Practice of International Litigation - 2nd Edition - Electronic
International Arbitration - Past, Present and Future
Lawrence W. Newman and Michael Burrows
With the beginning of a new calendar year, the 20th anniversary in
2005 of the adoption of the UNCITRAL (United Nations Commission on
International Trade Law) Model Law on International Commercial
Arbitration, and the approaching (two years from now) 50th anniversary of
the 1958 United Nations Convention on the Recognition and Enforcement
of Foreign Arbitral Awards, it seems an opportune time to share with our
readers some observations concerning changes that we perceive have taken
place in international arbitration and for us to hazard guesses as to future
trends in international arbitration.
International Arbitration Hike
There has always been a strong case for the use of international
arbitration as a means of resolving transnational commercial disputes.
Contracting parties see international arbitration as a means to avoid giving
the other side a “home court” advantage, and because of the involvement
of experienced commercial arbitrators, international arbitration is regarded
as offering greater predictability of dispute resolution. Other perceived
benefits include the greater amounts of time generally available to
arbitrators, and, of course, the vaunted increased speed and lower costs.
Thus, even though arbitrators have to be compensated by the parties and
judges do not, a greater number of international commercial disputes –
particularly those involving large amounts of money – have come to be
resolved through arbitration rather than in the courts.
The greater use of international arbitration can be seen in
published statistics. There has been steady growth in number of cases heard
by the International Chamber of Commerce and the International Centre
for Dispute Resolution of the American Arbitration Association, as well as
a burgeoning of the number of disputes heard in China. Many arbitration
centers have grown up around the world, some with more hopes than
business, but enough to give rise to an active association of arbitration
This greater use of arbitration in international and commercial
matters may arguably be attributed to the establishment, in 1981, of the
Iran-United States Claims Tribunal. Proceedings before that tribunal were
governed by the arbitration rules of UNCITRAL and American lawyers
from all over the country were obliged to become acquainted with the
tribunal’s version of those rules when they presented their claims arising out
of breaches of contract and expropriation.
The Iran-U.S. Claims Tribunal not only heightened general
awareness of arbitration as an institution but it also enhanced the
acceptability of the notion that claims involving international law – such as
for expropriation – could and should be heard by arbitral tribunals. It is
probably fair to say that the State Department’s largely favorable experience
with the Iran-U.S. Claims Tribunal played an important role in the selection
of arbitration as a means of dispute resolution in the North American Free
Trade Agreement (NAFTA) and other investment treaties. Other countries
may well have been persuaded by the example of the United States to
follow suit in their investment treaties.
Lawrence W. Newman has been a partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of 4 works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.