A panel of experts convened at the law school to discuss the benefits of international arbitration in a globalized economy on March 5.
Yasuhiro Saito of the Saito Law Group, who has guided some of the world’s largest businesses through complex commercial arbitrations, claimed that international arbitration differs from domestic arbitration in several ways. Although arbitration is customarily viewed as a cost saving mechanism, in the international sphere, arbitration may be as costly as litigation, depending on the circumstances, he said. The true benefit of international arbitration, he said, stems from the parties’ ability to agree on the law applied to the dispute and the forum, or location, where the dispute will be arbitrated. This eliminates the uncertainty of adjudicating a dispute in a foreign venue, he added.
Raúl B. Mañón of Squire Sanders, LLP, who has represented a number of governments and state agencies in international arbitration, agreed with Saito. International arbitration “serves as a bridge” between the antiquated domestic judicial processes that were not built to solve modern international commercial problems and the needs of businesses operating in a global economy, he said. However, Mañón argued that more work needs to be done. For example, there are no treaties between the U.S. and other countries to enforce international arbitration decisions in domestic courts, he said. Currently, only the New York Arbitration Convention, an agreement between hundreds of countries around the world to recognize and enforce arbitration awards, governs the enforceability of such awards.
Nancy Thévenin, global coordinator for the International Arbitration Practice Group at Baker and McKenzie, LLP, similarly stressed the importance of the New York Arbitration Convention. It is the mechanism that “gives arbitration awards teeth,” without it, enforcement would be quite difficult, she said.
Structuring an international arbitration is equally important, she claimed. The parties must agree on the rules, substantive law, language, forum and number of arbitrators up front so that the arbitration is objective and free from the kind of cultural interpretations commonly found when litigating abroad, she added.
Carlos Ramos-Mrosovsky of Freshfields Bruckhaus Deringer LLP, who has counseled clients appearing before the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission, spoke about the benefits of international investment arbitration for global investors.
International investment arbitrations arise out of agreements between governments designed to secure foreign investments, he said. These agreements represent a step forward in the resolution of economic disputes between foreign countries, Ramos-Mrosovsky said. In the past, for example, investors may have opened factories or oil refineries in foreign countries only to find them seized amidst political turmoil, Ramos-Mrosovsky explained. In those circumstances, countries pursued a militarized solution to such a problem, he said. Now, with international investment arbitration, countries are coming together to solve the same issues in a peaceful and civilized manner, he claimed. This is enormously helpful to countries looking to attract foreign investors as it provides investors with security, he concluded.
Professor Pammela Quinn Saunders, who has advised the U.S. State Department in commercial arbitrations, real property transactions and diplomatic property disputes around the globe, moderated the event. The event was part of the school’s Diversity Awareness Week and co-sponsored by the American Constitution Society, the International Law and Human Rights Society, OHADAC, Penn ILO and Barbri.