A Fair and Efficient International Arbitration Process - Dispute Resolution Journal - Vol. 59, No. 1
John Fellas is a partner at Hughes Hubbard & Reed LLP (New York City). He acts as counsel and serves as an arbitrator in international arbitration proceedings.
Originally from Dispute Resolution Journal
This article discusses how arbitrators, parties and counsel can contribute to the fairness and efficiency of the international arbitration process in which they are involved.
One of the perennial debates about arbitration is whether it really is quicker and cheaper than litigation. Proponents of that view point to aspects of arbitration, such as less discovery and narrower grounds for appeal, that would make it likely to be faster and less costly. Detractors point to the fact that, by contrast to litigation, arbitration proceedings are rarely resolved on a motion to dismiss or for summary judgment. I believe that this debate is somewhat beside the point. This is because parties usually make the decision about whether to select arbitration over litigation at the time they negotiate their agreement.1 At that time, the question of whether arbitration would be quicker and cheaper than litigation turns on many factors that cannot be known with any degree of certainty, such as the nature of the dispute that in fact arises; the relationship between the parties when the dispute arises; whether one of the parties would commence a litigation notwithstanding the arbitration clause and if a lawsuit is commenced, where it would be brought; and whether any arbitration award would be susceptible to challenge.2
The long-standing debate is especially beside the point when it comes to international transactions. This is because the reasons to include an arbitration clause in a contract between parties from different countries do not rest solely on supposed savings in cost and time, but lie elsewhere. The two most important reasons are:
• Arbitration provides a neutral forum to resolve international disputes, as compared to the national courts of one of the parties to the contract.
• International arbitration awards are easier to enforce than national court judgments.3