Originally from: Lowenfeld on International Arbitration

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Introduction

Andreas F. Lowenfeld

1. A PRIMER ON INTERNATIONAL ARBITRATION

A. Why Arbitrate

      1. An agreement to arbitrate is in the first instance, a forum
selection agreement that avoids all (or nearly all) problems of
jurisdiction. Without a forum selection agreement, a dispute between
parties from different countries either involves the aggrieved party
(plaintiff) litigating in the courts where the other party (defendant) is
established, or litigating in its own country, with all the problems of
judicial jurisdiction plus, at least potentially, the problems of
enforcement of judgments. It is, of course, possible for parties from
two states to agree on a judicial forum in a third state, as shown, for
instance in the well known Zapata cases. But apart from maritime,
commodity and related industries, selection of third country courts is
relatively rare; when parties agree on a particular court to resolve
future disputes, they usually select the courts at the place of business
of one party or the other. In contrast, even if the arbitration is to be
held in the country where one party is established, an agreement to
arbitrate is an agreement on a neutral forum, not tied to the judicial
or political structure of either party.

      2. As a result of the United Nations Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (the New
York Convention), arbitral awards are relatively easy to enforce —
much easier world-wide than judgments of courts. To preview more
detailed discussion hereafter, the New York Convention makes
arbitral awards rendered in Convention states enforceable in all other
Convention states on the same basis as domestic arbitral awards,
subject to very limited defenses. While the member states of the
European Union have been bound inter se since adoption of the
Brussels Convention of 1968 to enforce each others’ judgments in
civil and commercial matters, there is no world-wide treaty network
for enforcement of judgments of courts comparable to the New York
Convention with respect to arbitral awards, and efforts under the
auspices of the Hague Conference on Private International Law for
over a decade to achieve such a treaty were unsuccessful. The United
States, for its part, is not a party to any treaty — bilateral or multilateral
— with respect to enforcement of judgments, but it is linked with
respect to arbitral agreements and awards to nearly all the major
commercial countries of the world — some 135 as of Summer 2004.