ICC Articles

International commercial arbitration is the servant of international business and trade. It was therefore only normal that the newly created International Chamber of Commerce in 1923 set up an arbitration system in order to encourage the settlement of disputes arising from international trade. The development of ICC arbitration is demonstrated by the fact that the ICC Court received on 8 June 1998 Case No 10 000 concerning a dispute between a North American claimant and several respondents from an East European former socialist country. The ICC also worked closely with the competent organs of the League of Nations in drafting the Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927.

As the Secretary General was kind enough to mention, the ICC in 1953 took the initiative and submitted to the United Nations the draft of a convention on the 'enforcement of international arbitral awards'.

Let us turn to the objectives of the New York Convention: to serve international trade and commerce.

Forty years later there can be no doubt that the New York Convention has been and still is a great success. By and large the enforcement of awards is considerably easier than the enforcement of judgements rendered by national courts. More than 115 countries have ratified the Convention, among them most major trading nations and many others from all regions of the world, especially from Latin America, a continent long hostile to international arbitration but where we have in recent years experienced spectacular growth.

Let us now briefly identify some areas where improvements could conceivably take place that would further assist the international exchange of goods and services, and therefore the objective pursued in 1953/58.

One main shortcoming of the Convention is the obvious lack of an efficient, universal enforcement procedure.

Judges Howard Holtzman and Stephen Schwebel, five years ago, as a vision for the next 100 years, proposed the creation of an international court for resolving disputes on the enforceability of arbitral awards. Here and today it would seem more prudent to be less visionary and to concentrate on the next ten years, leaving further topics to the discussion of the 10th of June of 2008.

International commercial arbitration is presently confronted with two main challenges.

Globalization and privatisation have produced an ever-growing number of parties to international transactions, with all the disputes and litigious phenomena this entails. The new actors on the international scene lack experience. The reservoir of arbitrators in many parts of the world is small and they are often not properly equipped and educated. In 1997 less than 60% of the parties to [Page8:] ICC arbitrations came from Western Europe and North America, but more than 85% of the arbitrators nominated were domiciled in these regions and in almost 90% of the cases the seat of the arbitration was chosen in the Western part of the world. To a large degree these choices are made by the parties themselves. This imbalance is due to a certain lack of confidence by the new players, in arbitrators from their own regions, and the widespread lack of confidence in the national legislations and court systems in many parts of the world. The necessary change will take time and much effort, and will not be spectacular. In the interest of the acceptability and effectiveness of international commercial arbitration it is, however, imperative that this change take place.

The other problem lies in the breakdown and asphyxia of the court systems in many parts of the world. This more than ever forces international business to resort to arbitration which, contrary to many preconceived ideas, is faster than court procedures with several levels of jurisdiction and often procedural idiosyncrasies. Arbitration is also cheaper in the overall balance than litigation before state courts. Although one will have to pay the arbitrators and possibly the arbitral institution, legal fees will be lower because of the more concentrated, shorter proceedings, and the fact that the foreign party does not need to instruct local counsel. Also, the shorter the proceedings, the less time is spent by management, an important cost factor.

In view of this congestion, all steps should be encouraged which will reduce the involvement of the courts in arbitration cases. There exists no real reason why the supervisory function of the courts should also be exercised at the place of the arbitration instead of only at the places of enforcement. There exists no real reason why the enforcement judge should apply other criteria than those of international public policy when examining a request for enforcement. There exists strictly no real reason why a party, which freely entered into a commercial transaction envisaging resolution of disputes by arbitration, should be allowed to opt out of its bargain with often spurious arguments, so that the dispute ends up in court.

Modern legislation like the UNCITRAL Model Law and new acts like the English and the Indian 1996 Arbitration Acts go a long way on this path, but the proof of the pudding is in the eating. Even with new legislation which encourages arbitration, some judges are still caught in bygone protectionist habits.

Parallel to these steps more thought has to be given to the role which mediation and conciliation can play, not to replace arbitration but to respond to specific needs and expectations, also in the international commercial area, whenever there is no need for an enforceable award.

Attention should also be given to better ways to resolve disputes of a small material value.

These are all small, unspectacular steps.

Reverting to the vision of Judges Holtzman and Schwebel for the next hundred years one might want to dream about effective ways to tackle the multi-party problem, to use arbitration in tort situations, especially in infringement matters, and find ways for effective enforcement of interim and protective measures and of procedural orders taken by arbitrators, for instance, regarding the taking of evidence.

As international business continues to grow, international commercial arbitration will grow. It is up to us practitioners to make the users feel even more comfortable with arbitration as the only realistic method to resolve international commercial differences. Our work is not spectacular, there are no easy fixes. One cannot take a helicopter to avoid the difficulties and pitfalls of the journey up the mountain; one has to put one foot in front of the other on the long way to the peak or, as Deng Xiao Ping said: 'to cross the river by touching each stone'.