Originally from Law and Practice of Arbitration - 4th Edition

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1. Introduction

International commercial arbitration (ICA) has been a very positive experience for the world community and an outstanding legal and adjudicatory success. Even in recessionary times, it is vital to the conduct of global commerce. Because business transactions cannot take place without a functional system of adjudication, ICA has enabled parties to engage in and pursue international commerce.1 As a result, it has had an enormous impact upon the international practice of law, the structuring of a de facto international legal system,2 and the development of a world law of commerce.3 In a word, ICA has been a vital engine in the creation of a transborder rule of law.4 Furthering this design, the arbitral “method” has even been applied to the unruly political problems that attend international trade and the implementation of international trade policy.5

At the very least, a transborder contractual dispute can raise choice-of-forum, venue, jurisdictional, choice-of-law, proof and interpretation of foreign law, and enforcement of judgment problems. Once a dispute arises, the fear of foreign law and foreign judicial bias compels the parties to file suit in their respective national jurisdictions, to pursue parallel actions in the two fora simultaneously, and to arrive at the stalemate of having two judgments that are equally unenforceable. The conduct of business across national boundaries already involves a high level of risk: Compliance with customs regulations, obtaining government permissions and licenses, the hazards of international transport, the special labor law regimes in foreign countries, and the variability and complexity of national import-export regulation. It is unlikely, therefore, that transborder commerce would take place at all if there were no effective adjudicatory mechanism for resolving the basic problems of commercial contracts (defining breach, assessing performance, enforcing timely delivery, measuring the impact of exculpatory allegations and other requirements).

In addition to its service to the wealth-creating ambition of the international business community, ICA also represents a visionary experiment in transborder understanding and cooperation.6 The early and present-day architects of the process faced head-on the challenge of diversity. They confronted a wide variety of cultural, historical, religious, national, regional, economic, and political dispositions in erecting and then maintaining the process. Initially, as with any venture in transnational cooperation, optimism reigns and the horizons are limitless.