Comment by Jay R. Sever
Arbitration has become a preferred dispute resolution mechanism for parties to international business transactions. It has also become a profitable business for international arbitration organizations. Most countries allow contracting parties considerable freedom to fashion arbitration agreements. Moreover, arbitration agreements are almost universally enforceable. National courts have become increasingly less patient with parties who attempt to evade valid predispute arbitration agreements.
Nonetheless, in almost all countries, courts and legislators have placed limits on the scope of matters subject to arbitration. Through both domestic statutes and international agreements, states have traditionally retained the power to overturn agreements to arbitrate or to disallow enforcement of awards that violate their public policy. However, the traditional power of domestic courts to overturn, or even examine, arbitration agreements and awards has been increasingly limited in many countries. States are liberalizing their arbitration laws at an alarming rate. In some jurisdictions, it has become virtually impossible for parties to appeal the arbitrability of the agreement or the enforceability of the award. In Belgium, for example, parties to international arbitration agreements are no longer able to appeal any aspect of the procedure—no matter how defective the process. In the United States, as of 1991, courts may no longer entertain challenges to arbitration based on the previously universally followed principle that certain statutory securities issues may not be arbitrated.
Legal scholars and businessmen alike have applauded the breakdown of the traditional judicial hegemony over arbitration. The walls of court authority are all but collapsed in many countries. This Comment is a plea for caution. As an increasing number of scholars are recognizing, the privatization of all aspects of the arbitral process has many dangers. Among the most important of these dangers is the possibility that arbitration will be allowed to violate basic principles of fairness. Both universally recognized rules and local laws would be equally at risk. If arbitration becomes unfair, it may also become less desirable. Moreover, unfair arbitration may be subject to seizure by reactionary legislatures, who will unreasonably limit arbitral autonomy and turn the clock back on the freedom to arbitrate. This Comment urges that a full consideration of the dangers of unchecked arbitration be undertaken by all participants to the current liberalization.
About the Author
Jay R. Sever.
Citation
65 Tul. L. Rev. 1661 (1991)