Originally from American Review of International Arbitration - ARIA

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All who support the development of international commercial arbitration must be grateful to Professor Hans Smit for his perceptive insights into the ways in which differences in national legal systems, cultures and institutions affect the processes of international justice. In the field of arbitration, these national differences have resulted in what Professor Giorgio Bernini has aptly called the "geopolitics of arbitration," a phrase that I borrow for the title and theme of this article.1

I. THE GEOPOLITICAL BASIS FOR INTERNATIONAL COMMERCIAL ARBITRATION

A useful way to look at modern international commercial arbitration is to view it as a process that has been developed to meet the geopolitical needs of business and lawyers. Because this is not the way we usually approach arbitration, it may be useful to start the discussion with a brief explanation.

The word "geopolitics" is, of course, a combination of the words "geography" and "politics." Geography is important to all men and women — we each have strong attachments to the geographical place where we were born and educated and that we consider our cultural home. Although we recognize that it may not be a perfect place, we are familiar with it; we understand it better, and people there understand us better. In a word, we are most comfortable there. Thus, geography has an immense psychological influence on each of us.

The other half of the word "geopolitical" is "politics." "Politics," in its broadest sense, is defined in dictionaries as the "art or science of government." A fundamental element in any government is its system of law. As we all know, systems of law vary from country to country. National laws relating to arbitration are no exception; they, too, differ widely. As is the case with geography, although we each recognize that our own political system, including its legal system, may not be perfect, we are most familiar with it; we understand it better, and, therefore, we are most comfortable with it.

The other side of the coin is that although we are comfortable in our own geographical place operating within our own legal system, we are uncomfortable in another geographical place operating in an alien legal system. The psychological reality that even sophisticated businesses and lawyers are usually comfortable in their legal systems at home but less comfortable abroad creates what I will call the "geopolitical discomfort factor." When commercial disputes arise, how can this discomfort factor be overcome so that one party does not have to submit to the national legal procedures and judges of the home country of the other party? The obvious answer is to create a truly international forum. That forum is international commercial arbitration.