What Rules Govern The Process Of International Arbitration?

On behalf of Wolf Popper LLP

We've been looking in recent posts at the issue of arbitration, specifically what laws govern the process. As we noted previously, domestic arbitration is governed by both state and federal law, while international arbitration is a bit more complex. The New York Convention ensures uniformity of enforcement of arbitration decisions for member countries. What, though, about the procedural rules of international arbitration?

There is no single set of rules that govern the process of international arbitration. Rather, there are various entities that have established their own rules and which may appoint arbitrators or provide a list from which parties may select an arbitrator. In addition, parties may negotiate changes to these rules in some cases to address certain concerns they may have about the process in the context of their arbitration.  

One prominent organization that handles international arbitration is the International Chamber of Commerce Court of Arbitration, which is widely considered the leading institution handling commercial arbitration. Part of the reason for this is that the institution has less of a national character than other arbitration institutions. The rules used by the ICC have been criticized as burdensome and potentially costly, but it nevertheless remains one of the leading organizations in the field.

Wolf Popper's attorneys have experience in litigation, arbitration, and discovery in or involving foreign jurisdictions. This includes comprehensive experience involving foreign law matters; the litigation of claims governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG); and representing clients before arbitration panels organized under the ICC, the ad-hoc United Nations Commission on International Trade Law (UNCITRAL) proceedings, and the International Centre for Settlement of Investment Disputes (ICSID). Navigating the procedural rules of international arbitration is not necessarily and easy matter, particularly when parties choose to use rules of their own choosing. Not only is it important to work with experienced legal counsel in navigating these rules and presenting the best possible case, but it is also important to select a qualified, neutral arbitrator to ensure such cases are handled properly and fairly. 

International Arbitration And The New York Convention

On behalf of Wolf Popper LLP

Last time, we began looking at the issue of arbitration, and specifically what law or laws govern the process. As we noted, domestic arbitration is governed by both state contract law and arbitration statutes, as well as the Federal Arbitration Act. As some arbitration experts point out, the Federal Arbitration Act plays a larger role in governing the process of arbitration than some would expect, though parties do have the freedom to determine for themselves the rules that govern the process.

When it comes to international arbitration, one of the primary measures governing the process is the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The measure, also known as the New York Convention, was passed in 1958 with the aim of providing a common set of legislative standards governing arbitration involving foreign and non-domestic awards. 

The New York Convention is aimed not only at arbitration awards reached in foreign jurisdictions, but also in domestic arbitration cases deemed foreign because there is some aspect of the proceedings that is foreign to the country in which the arbitration occurred. Again, parties to arbitration are able to select the rules governing arbitration proceedings, and this includes foreign arbitration rules, if so desired.

The New York Convention ensures that foreign arbitration awards will be recognized and enforced the same way domestic arbitration awards would be. The convention also requires the courts to deny access to the court system when there is a valid agreement to arbitration a dispute.  

Like other international laws, the New York Convention is only binding on countries that become parties to the agreement. At present, most major nations have signed onto the agreement. In a future post, we'll look briefly at some of the major international institutions and entities that establish rules and appoint arbitrators in international disputes, as well as the importance of working with experienced legal counsel in navigating international disputes. 

What Law Governs The Process Of Arbitration?

On behalf of Wolf Popper LLP

Arbitration is commonly used in the business world to resolve a wide variety of disputes, and it can be a very useful tool for this purpose. As a process that falls outside the court system, arbitration has certain advantages over litigation. For one thing, it allows for greater flexible in resolving disputes. Arbitration can be either voluntary or mandatory, whether by statute or contract, as well as binding or non-binding, and also allows for greater privacy in resolving disputes.

Arbitration also gives parties the ability to select who will hear their dispute and the rules that will govern the process. Arbitration is commonly used to resolve commercial disputes, both domestically and overseas, and the laws applicable to the process vary accordingly, depending on the terms of the arbitration agreement. 

Domestically, arbitration is governed by both state and federal law. The Federal Arbitration Act is usually the law that governs the arbitration of disputes, unless the parties clearly express their intention to use state arbitration law in place of, or in addition to, the Federal Arbitration Act. The FAA imposes both substantive and procedure rules regarding the arbitration process.

Parties can, however, choose to change the rules of the arbitration process to suit their needs, and these changes are allowed by the Federal Arbitration Act, provided the parties clearly express their intention to do so. Making a careful selection about the rules that govern the process can be an important decision to ensure the process is set up fairly and impartially.

International arbitration is also an increasingly common occurrence for businesses. In our next post, we'll look at the law that governs international arbitration.