Our general topic for today is the next ten years. But before looking to the future, in this 75th Anniversary year of the ICC International Court of Arbitration, we are entitled to celebrate the great strides that international commercial arbitration has made in that three quarters of a century. We are likewise entitled, with due modesty of course, to celebrate the leading role that the ICC and its Court of Arbitration have played in that development. It is appropriate to look at the past for another reason. It provides the basis for any assessment of what may be expected in the coming decade, but just as the present does not resemble the past, we are not entitled blithely to assume that the coming years will necessarily resemble the present.

Arbitration is now so thoroughly established that it is difficult to recapture its beleaguered condition 75 years ago, when the ICC Court was established. Although the ICC then as now had its headquarters in Paris, and although then as now American businessmen were in the forefront of ICC activities, in those early days neither the courts of France nor those of the United States would enforce an agreement to arbitrate a future dispute. The American position was summed up by a federal judge in 1915 as follows: an American might make a solemn contract of arbitration in England-where it was valid and enforceable-'and repudiate it at will in America with the approbation of the courts of his own country'.1

In this year of the World Cup, it may be permissible to view the respective terrains of international commercial arbitration and conventional national court litigation in terms of a football field. In 1923, when the ICC Rules came into effect, play was concentrated near the penalty box in front of the arbitrator's goal and the litigation team controlled the rest of the field.

The initial ICC Rules of Arbitration reflected this feeble state of the law of arbitration. Indeed, the Rules initially came in two versions, one for use in countries were an award might be expected to be enforced, the other for use elsewhere. In part, no doubt, because of this legal uncertainty, it was important to exert a moral and business compulsion on the parties to accept the results of the arbitration. Thus, the initial ICC Rules provided that the parties were 'honour bound' to carry out the award and that a failure to do so was to be followed by a request to any relevant business organization to which the defaulting party belonged 'to apply such disciplinary measures as it may think fit and proper under the circumstances'.2 Does this avowed reliance on the ethics of the businessman reflect a concept that is still current in international business today? [Page36:]

The background to the 1925 Federal arbitration legislation in the United States discloses mounting discontent in business circles at the refusal of courts to give effect to agreements to arbitrate. This sentiment did not, however, reflect a desire that the process of private dispute resolution be judicialized. On the contrary, the many private arbitrations held under the auspices of trade groups and chambers of commerce were for the most part conducted not by lawyers but by people expert in the trade or business concerned. To this day it is not uncommon to see in the arbitration clause in a charter party the requirement that 'the arbitrators shall be commercial men'. The arbitration rules of the Federation of Oils, Seeds and Fats Associations go still further: not only do they preclude the appointment of a lawyer as an arbitrator or umpire, but they also deny to the parties the right to have lawyers participate in the hearing or even to be present in the hearing room.3 Do these sentiments still resonate today among the international business community?

We are all familiar with the tremendous growth of international arbitration, particularly since World War II, but the groundwork was laid a generation earlier in the expansion of trade after the First World War. This development was reflected in, and perhaps to a degree was fueled by, liberalizing changes in the law relating to arbitration, changes that can easily be traced in the published decisions of judges, enacted national legislation, and two rounds of international conventions, the Geneva Conventions of 1923 and 1927, and the enormously successful New York Convention of 1958, which celebrated its 40th birthday last June with suitable ceremonies in New York.

The ICC can claim much credit for the New York Convention, certainly as the originator of suggestions for improvements in the earlier Geneva treaties that led to the New York Conference.

The pull of international commerce was responsible for the development of modern American legal doctrine strongly supportive of arbitration. The courts came to see this clearly: 'The expansion of American business and industry will hardly be encouraged if, notwithstanding solemn contracts, we insist on a parochial concept that all disputes must be resolved under our laws and in our courts.'4 The decisions that expanded the scope of arbitration emphasized the critical importance of the international dimension. First came the decision to enforce arbitration of an international dispute involving the Securities Exchange Act of 1934.5 Next was the truly momentous decision in another international case permitting arbitrators to rule on a defence asserted under that most American of statutes, the antitrust laws.6 These decisions were followed by what might be viewed as a series of mop-up decisions that abandoned the earlier emphasis on international commerce as a generating principle and approved the appropriateness of arbitration for decision of a wide array of statutory claims in purely domestic controversies.7

The football field no longer looks as it did. The center of play is now well past midfield and approaches the judges' goal. As a consequence of the wide-spread acceptance of the New York Convention, binding arbitral awards issued by ad hoc tribunals, which with only modest exaggeration can be described as largely composed of amateurs, proceeding confidentially, pursuant to no detailed rules of procedures, and subject to only marginal judicial review, are more readily entitled to enforcement in most countries of the world than the decisions of professional judges, rendered after public proceedings pursuant to established procedural codes and subject to correction on appeal. [Page37:]

Does the very success of international arbitration contain within it the seeds of a possible reaction? One aspect of this success has been a broadly generalized acceptance of arbitration as a decisional mode for questions invoking important issues of public policy. To the extent that this development substitutes arbitration for conventional litigation in national courts, the more likely it is that arbitration will be subjected to increasingly rigorous scrutiny testing whether it merits such confidence. The increasing legalization of arbitration that has been noted may be a reflection of this development, although it also reflects no doubt the increasing litigiousness of modern societies. There are, in short, clouds on the horizon.

ICC arbitration has for decades left the choice of detailed procedure to the parties, in the name of party autonomy, and to the arbitrators, subject only to the most basic due process safeguards: the independence of the arbitrators and the principles of 'contradiction' and equality of treatment. We are soon going to be confronted, however, with proposed uniform rules for the conduct of an international arbitration, motivated by a perception of the anxiety that parties to an international dispute are believed to experience when confronted with the uncertain procedures in an arbitration under current practices. Is such a sense of anxiety a major element in the business view of an arbitration? Would uniform procedural rules, combining elements of civil and common law procedure, be welcomed?

In the United States the very success of arbitration has, indeed, produced reactions that may once again move the center of gravity on our football field. These reactions are thus far confined to domestic issues, particularly issues that for the most part pit the individual citizen, as consumer or employee, against business enterprises. This development is largely a consequence of the broad application of the federal arbitration statute, which has been interpreted as applying to most transactions or contracts 'involving commerce', that is, to any transaction or contract that can be said to have any impact on interstate or foreign commerce. In an age of ever larger business units and globalization of business dealings, little indeed is thus excluded from its scope.8 If arbitration is to be entrusted with the resolution of claims under important domestic statutes that can broadly be described as protecting individual rights (whether on account of race, gender, religion or age), can the procedures in arbitration be left to party design? Is it appropriate that arbitral errors of fact or law, which traditionally are not proper subjects of judicial review, are left unreviewed on the merits?9

Because arbitration, in the United States and everywhere else, offers among its other virtues, and not the least of them in some eyes, a means to relieve crowded court dockets and overworked judges, a solution is apt to be found, not in refusing to enforce arbitration agreements covering sensitive classes of issues, but rather in importing into arbitration various procedures well known to civil litigation, including a more expansive judicial review akin to court appellate review. If such changes are introduced into certain categories of essentially domestic American arbitration, it is to be expected that they will be advocated as equally desirable in the appropriate international case, as well. Fortunately the New York Convention stands as at least some defense against egregiously intrusive initiatives, but the Convention language is necessarily broad, and in any event an award is always subject to court challenge under the domestic law of the country where it was rendered.10 It must be seriously doubted that these possible developments are confined to the United States. [Page38:]

The ICC can take justifiable pride in the major contribution it has made to international arbitration. We surely live in interesting times. If the core values of international arbitration are to be protected against excessive judicial intrusion, we must identify those values and be ready to mobilize in defence of them.

1
United States Asphalt Refining Co. v. Trinidad Lake Petroleum Co. Ltd., 222 Fed. 1006, 1007 (USDC SDNY 1915).

2
ICC Rules of Arbitration, 1923, Articles 20 and 41, ICC Brochure No 21 (1923).

3
FOSFA Rules of Arbitration and Appeal (rev. 1 October 1990), Rule 3(g): 'If either party has expressed a wish to be present, the arbitrators or the umpire shall give reasonable notice to the parties of the date, time and place when any oral evidence or additional submissions may be heard and both parties to the arbitration or their authorized representatives may attend any such hearing but may not have present or be represented by counsel, solicitor or any member of the legal profession wholly or principally engaged in legal practice.'

4
The Bremen v. Zapata Off-Shore Co., 407 US 1, 9 (1972).

5
Scherk v. Alberto-Culver Co., 417 US 506 (1974).

6
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 US 614 (1985).

7
Shearson/American Express, Inc. v. McMahon, 482 US 220 (1987) (sustaining arbitrability of domestic claims under the Securities Act of 1934 and the Racketeer Influenced and Corrupt Organizations Act); Rodriguez de Quijas v. Shearson/ American Express, Inc., 490 US 477 (1989) (enforcing arbitration of a domestic Securities Act claim and overruling Wilko v. Swan, 346 US 427 (1953)); Gilmer v. Inter-state/Johnson Lane Corp., 500 US 20 (1990) (enforcing arbitration, required under rules of the New York Stock Exchange, of claims of employment discrimination).

8
Except to the extent that when enacted in 1925, the term 'commerce' would have been given a much less sweeping definition than it has since received, the American statute has never been confined in application to persons or entities classified as merchants ('commerçants' in the French sense), nor has the statute distinguished between international and domestic arbitration, as do French and Swiss law, for example, except in the limited sense that the New York Convention will not be applied to an arbitration agreement or award wholly between American citizens having no 'reasonable relation with one or more foreign states'. 9 USC § 202.

9
See Cole v. Burns International Security Devices, 105 F.3d 1465, 1487 (DC Cir. 1997) (enforcing clause providing for arbitration at employer's option of all disputes relating to the employment, including a claim of racial discrimination, on the basis that judicial review will be 'sufficiently rigorous to ensure that arbitrators have properly interpreted and applied statutory law').

10
See, e.g., Yusuf Ahmed Alghanim & Sons v. Toys 'R' Us, Inc., 126 F.3d 15 (2d Cir. 1997) (arbitral award issued in New York between Kuwaiti and American parties was a 'non-domestic' award as to which confirmation could be denied only on grounds recognized in the New York Convention, but as an award issued in the United States, it was subject to being vacated or annulled, in the absence of Convention provisions on that subject, on any ground available under domestic American arbitration law, including 'manifest disregard of the law').