International Arbitration (Preliminary Matters) - Chapter 16 - College of Commercial Arbitrators Guide to Best Practices in Commercial Arbitration - 3rd Edition
Axel H. Baum
Robert B. Davidson
James M. Gaitis
Urs Martin Laeuchli
Lawrence W. Newman
Lucy F. Reed
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Originally from: College of Commercial Arbitrators Guide to Best Practices in Commercial Arbitration
Arbitrators should understand the many characteristics and evolving challenges that distinguish international arbitrations from domestic commercial arbitrations as well as the features they have in common.
The term international arbitration can be defined in various ways. For the purposes of this Guide, an international arbitration is an arbitration proceeding with one or more cross-border elements. International elements may include the site of the arbitration, the applicable substantive law, the nationalities of the parties, the likely places of enforcement, or other similar factors.
Although centuries old, international arbitration has become common in the United States only during the past forty or so years. Prior to that time, U.S. lawyers and parties were wary of submitting commercial disputes to international arbitration because of their uncertainty about and unfamiliarity with applicable laws and procedures, foreign languages, potentially long delays, and the prospect of high costs. In addition, most agreements to submit future disputes to arbitration were unenforceable. Only agreements to arbitrate existing disputes were capable of specific enforcement. Partially as a result of the increased sophistication and numbers of U.S.-based arbitrators and attorneys with international law and international arbitration backgrounds, however, as well as the heightened emphasis on international arbitration by U.S.-based arbitral institutions and centers, the conduct of international arbitrations in the United States has now become commonplace. In terms of the heightening of awareness and acceptance of international arbitration as a viable cross-border dispute resolution mechanism, the defining event was the advent of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 330 U.N.T.S. 38 (New York Convention). After a notable delay, the United States ratified the New York Convention in 1970, and Congress implemented the Convention through the enactment of Chapter 2 of the FAA. The New York Convention, now with at least 146 signatory parties, has two major aims: (1) the enforcement of international arbitration agreements, and (2) the recognition and enforcement of foreign arbitral awards. The Convention also applies to arbitral awards that are not considered domestic arbitral awards. The Convention also applies to arbitral awards that are not considered domestic awards in the state in which their confirmation and vacatur, or recognition and enforcement, are sought. The New York Convention generally provides that when the court of a contracting state "is seized of an action" involving an international commercial dispute with respect to which the parties have made a written agreement to arbitrate, the court shall, upon the request of one of the parties, "refer the parties to arbitration" unless it finds that the agreement is "null and void, inoperative or incapable of being performed." New York Convention, Art. III(3). In the years since the United States and other countries have acceded to the New York Convention, considerable case law has been generated on the application of the Convention and the foregoing terminology.