The Case for International Arbitration

As a secondary summary of what was emphasized during this year’s California International Arbitration Week, today’s post will cover why there seems to be growing consensus that arbitration is the superior choice of all dispute resolution options – and especially in the international context.

  1. The arbitration can be tailored to the parties’ specific issues and needs. While court litigation is governed by the federal or state rules of that jurisdiction, arbitration process rules can be modified to ensure efficiency. Examples of this include limiting the scope of the discovery process by reducing the amount of written requests that can be served, limiting the number of depositions that can be taken, or even agreeing to a set of “undisputed facts” so that trial time isn’t wasted. The possibilities are sort of endless, and they allow the parties and arbitrator(s) to decide what needs to be focused on – and what doesn’t.
  2. The parties can choose their decisionmakers. In addition to the ability to change the process, a huge benefit of arbitration is the ability to choose an arbitrator or panel of arbitrators with relevant expertise and knowledge. It’s clear that the biggest arbitration forums are growing pools of highly-qualified arbitrators with specific expertise. This is especially so important when dealing with technical issues, whether it’s in the pharmaceutical industry or the technology industry. Contrast that to a jury trial – juries are unlikely to be as familiar or knowledgeable as a whole.
  3. Therefore, arbitration is efficient. In most cases, because of the ability to tailor the process, arbitration is faster and correspondingly, less expensive. Furthermore, because arbitrators are in private practice, it is much more likely they will have more time than federal or state judges, who often have case loads that require foresight into several years.
  4. International arbitration is a neutral forum. This is especially important when two or more parties are from different countries. Seeking a “neutral” international arbitration forum can help avoid any “home court advantages” that could make a difference where things like patent rights vary by country.
  5. Arbitration is non-public. For companies that have sophisticated and proprietary technical information that they want kept confidential, arbitration is “non-public” (meaning, you can’t find arbitration documents online). In contrast, courts err on the side of disclosure and require motion practice when any one party seeks to seal court records. Where it makes sense, it is common for the parties to even deem the arbitration completely confidential.
  6. Enforcement of any arbitration award is relatively straightforward. Finally, it seems to also be more and more agreed that arbitral awards are easier to enforce in foreign countries under the New York Convention. Of course, there are narrow grounds to oppose, but generally, parties understand that if they submit to the arbitration process, the chance of appealing any decision is slim to none, which allows for finality and relief in most cases once that arbitration award is issued.