Title: International Arbitration and Enforcement in U.S. Federal Courts
Abstract: I. INTRODUCTION In the international arena, the advantage of arbitration over litigation as a method of dispute resolution is no longer subject to debate.(1) One reason for this trend is that private international arbitration agreements allow parties to draft provisions suited to their particular needs in anticipation of future disputes.(2) Indeed, arbitration agreements are in essence a type of forum selection agreement that attempts to avoid many of the problems related to jurisdiction.(3) Such problems range from whether a court has jurisdiction over the defendant(4) to the unattractiveness of disputing or attempting to enforce a judgment in the other party's country, where the tribunal may be more inclined to favor its own nationals.(5) In other words, international businesses have a strong incentive to avoid the local bias that may be faced when arguing a dispute in the courts of other countries. Arbitration also provides flexibility, speed, and financial savings in international disputes, whereas litigation can be slow and costly.(6) Arbitration also foregoes the need for a judge and the accompanying formal proceedings. Instead, the parties agree an impartial third person to act as arbitrator.(7) Typically the arbitrator is more informed than judges or juries about the subject of the dispute and the customs of the industry and can preside over the proceedings without formal procedural requirements, such as rules of evidence, which often create an overly adversarial environment.(8) Thus, the increasing use of international arbitration, when conducted under the auspices of an arbitral institution,(9) shows that privatized rulemaking can, at least in the area of comparative law, serve as a practical tool to the international commercial community.(10) The effectiveness of private international arbitration, however, is dependent on substantial and predictable governmental and intergovernmental support.(11) This reality leads to the irrefutable logic that in the absence of reciprocal commitments and effective control, there is little reason to believe that one country's courts would allow its citizens' property to be confiscated simply because a private actor has ruled so.(12) Taking this logic a step forward, [w]ithout the assurance of enforcement by a national court in whose territory an award debtor's property is located, international commercial arbitration simply will not work.(13) But it has worked.(14) Unlike criminal law, where ideological and other differences between nations have prevented the forming of a unified rule of international law,(15) in private, commercial matters, nations have been willing and able to reach some consensus.(16) Without such a consensus, the explosive expansion of international commerce and the recognition of the global economy would be in doubt.(17) The decision of an arbitrator, however, does not necessarily result in the resolution of a dispute. Parties to an arbitral proceeding will often resort to domestic proceedings in local courts to enforce either the agreement to arbitrate or the award decision reached by the arbitrator.(18) With the assigned roles of an arbitral tribunal and domestic courts, it is inevitable that contradictory rulings may occasionally occur. This inconsistency can be particularly problematic when a domestic court and an arbitral tribunal disagree in implementation of enforcement provisions of the United Nations Convention the Recognition and Enforcement of Foreign `Arbitral Awards, also known as the New York Arbitration Convention of 1958 (Convention).(19) Two recent federal court cases illustrate this dilemma: In re Arbitration of Certain Controversies Between Chromalloy Aeroservices, Corp. and the Arab Republic of Egypt (Chromalloy)(20) and Alghanim & Sons v. Toys R Us (Toys R Us).(21) Two important issues are raised by these two decisions. In Chromalloy, the issue is whether U.S. domestic arbitration law should be allowed to sustain an international award that was nullified under the national law of the rendering state. …
Publication Year: 2000
Publication Date: 2000-01-01
Language: en
Type: article
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