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Corporate Counsel?s Guide to International Arbitration

By guestcontributor

I. When to Opt for International Arbitration

One selects arbitration as the dispute resolution device in a contract for several reasons: (1) to reduce legal costs, (2) for the convenience of the parties in scheduling and presentation, (3) to keep the proceedings and the result confidential, and (4) to avoid trial of claims which could potentially produce large damage awards when decided by other than “commercial” people or in a particular jurisdiction. Add to that list two very significant reasons for selecting arbitration in an international contract: (1) decision enforcement and (2) a neutral forum.

Decision Enforcement. Each country has its own laws and applies those laws within its own borders. That may be an accepted fundamental precept of international law, but, practically speaking, that happens because the country has the force and the control to accomplish that result within its own borders. The extent to which a country’s laws will be recognized outside its borders by other countries is limited. There is no international legal or enforcement body to require a country to recognize the decisions of another country. One country recognizes the decisions of another purely by “comity” or “as a favor” to the other country. In many commercial countries, having a foreign country judgment has virtually no effect. You must try your lawsuit all over again. In others, having a judgment limits the defenses which can be raised, but one still essentially must try one’s case twice. Even the United States, thought to be a commercially and legally advanced country, has no federal statutory law on recognition or enforcement of foreign country judgments. There is state statutory law. (c) 2008 Chris Helmer, Esq. (more…)

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Full post as published by InhouseBlog - News and Jobs for Inhouse Counsel on October 04, 2008 (boomark / email).