I came away from this week's reading being mostly confused about the laws governing the arbitration process. My understanding so far (which could well be entirely incorrect, since I'm mostly confused) is that there are potentially three separate laws that could apply to one arbitration: the law governing the substantive issues between the parties (e.g. contract law), the law governing the arbitration (e.g. law that sets out whether an issue is arbitratable), and the procedural law of the arbitration. Furthermore, the "seat" of the arbitration, where the rules of arbitration come from (lex arbitri), does not actually have to be the place in which most of the proceedings take place, but the lex arbitri are still what governs. Yet, local laws with regard to matters like evidence taking must still be respected.As a result, it seems unavoidable that some major forum shopping occurs, since forum shopping is a problem in this country with only two systems (state/federal) to contend with.
After reading about the laws governing arbitration, I am surprised that not more strife arises just from a) having the parties decide the governing laws b) having parties, halfway through the arbitration, get really confused as to which law governs what. Although the reading tried to explain the importance if the lex arbitri, I don't entirely understand why there can't be a uniform system of rules that satisfy what the lex arbitri accomplishes. True, different countries will have different interests, but I thought that part of the point of international arbitration was to provide neutral ground. If the country has no interest in the manner at hand, since it is (in theory) neutral, how important could having a country-specific arbitration process be? On matters such as whether you can use another country's procedural law, it seems odd that the international community has not just decided one way or the other.
I started this semester with the understanding that arbitration was meant to be a simpler solution to litigation. I am beginning to rethink that.
"Furthermore, the "seat" of the arbitration, where the rules of arbitration come from (lex arbitri), does not actually have to be the place in which most of the proceedings take place, but the lex arbitri are still what governs."
ReplyDeleteYou know, I forgot that. Good point. The text mentioned three abitrators signing from three different countries, but the seat of the arbitration is a fourth country. Brave new world.
"If the country has no interest in the manner at hand, since it is (in theory) neutral, how important could having a country-specific arbitration process be?" Enter Linda Janette on delocalization. Both of you seem to agree on producing more uniformity in the procedure.
I see a pattern of confusion amongst all of us regarding the many "laws" governing the arbitration process. Seems like all the decision-making that takes place before the proceedings, in deciding which jurisdiction to serve as the seat of the arbitration, which jurisdiction governs the substantive issues, etc. might be more time consuming than the actual proceedings. This is not necessarily surprising as litigation tends to work the same way ... trial prep is usually far more extensive than the actual trial. My confusion or discomfort though, comes not with the amount of time it takes to make all these decisions, but rather, all the elements that go into making each of these decisions. How to choose what jurisdiction and why? How to make the other party agree on that? Oh the world of arbitration! ...
ReplyDeleteAs Tim highlighted, I agree with you. Uniformity should be the goal, especially considering that international arbitration is supposed to be neutral. However, we all know that procedure affects substance. This is probably why countries refuse to agree on a uniform procedure system - all countries differ in their procedures becaue of the different substantive interests they protect. So it seems that uniformity is a very difficult thing to achieve, if not outright impossible.
ReplyDeleteDoesn't it also all seem kind of arbitrary that figuring out the ideal combination of forum, procedure, and tribunal (for one's own interests) may drastically change the outcome of the award? I suppose there are ideal states and arbitration panels based on subject matter of the issue, but figuring out which state's or convention's procedure is better for your party than for the other seems like a long involved process.
ReplyDeleteI think everyone who has said that the outcome of the award is in part dependent on the procedural selections is likely correct. But I actually admire this aspect of arbitration (as I have mentioned on other blogs). Conceptions of how best to resolve a dispute is likely to vary greatly between individuals, industries, cultures and countries. If the parties involved can agree on a procedure then surely that is good news for all involved. Arbitration seems able to cater for all this diversity.
ReplyDeleteIn a way this should be every lawyer's dream... It's the art of manipulating not only laws but also legal systems on an international scale!
ReplyDeleteI agree with Lauren (splitting the baby)!
ReplyDeleteYes, delocalization would be a perfect world but we should preserve each country's sovereignty.