Is commercial arbitration International?

The assessment of international commercial arbitration on the basis of the various practitioners’ communities is a fascinating exercise. What is studied in universities is soon revealed to be a rather peculiar version of international commercial arbitration – one that, for the most part, only exists in textbooks, and involves a relatively small circle of practitioners and a few high-profile cases. International commercial arbitration, however, is a large and lively universe, the diversity of which raises the question on whether there is such thing as “international” commercial arbitration, or whether there are some common principles informing what is in fact a commercial dispute settlement mechanism declined differently in the various countries that offer it in some form.

“International commercial arbitration” is a term that technically defines an arbitral dispute between parties of different nationalities based on a contract with a transnational element. Such transnationality is a fertile ground for the emergence of clashes of the different legal cultures relevant to the dispute. However well one may write the arbitration clause, a dispute between two parties gives rise to a number of interpretive and applicative problems for the specific reason that the parties come from different nations. What relevance is to be given to contractual negotiations in the interpretation of the contract? How important is good faith in the performance of the contractual obligations? What sort of evidence can be produced before the arbitrators? These are only a few of the many questions that can arise when parties from different nations are brought before an arbitral panel in a neutral forum (which comes with its set of mandatory rules of applications, when not the entire corpus of laws and regulations). Sometimes the arbitration clause is in fact sufficient to solve most of these problems; other times, it is up to the arbitrators to step up and sort things out. The clash of legal cultures, however, can affect the panel itself. Whilst counsels and scholars commonly refer to “the arbitrators”, “the tribunal” or “the panel” as a joint unity, any tribunal is in fact made of three individuals, each with their prejudices, culture and background. Great lawyers can usually make some sense of the chaos created by multiple relevant laws and principles; such chaos, however, is inherent with the international nature of international commercial arbitration.

One may argue – as I would – that such international character is what makes international commercial arbitration exceptionally fascinating. It shows that there is fertile soil in the world for a truly universal dispute settlement mechanism, in which the diversity of legal cultures across the continents can converge towards a contemporary ius gentium. International commercial arbitration may in fact be one of the few positive aspects of globalization.

This view, however, may be exquisitely utopistic – not only because of the chimeric goal of a new ius gentium but also (and foremost) because truly international commercial arbitration is rather uncommon. Textbooks on international commercial arbitration describe a mechanism half-based on the aforementioned utopia – namely, a universal mechanism for the settlement of commercial disputes worldwide – and half-based on a high-profile, high rewards iteration of international commercial arbitration. This version of international arbitration is, however, a rather exclusive club, the members of which are a select group of practitioners involved in a handful of disputes every year in one of the hubs of international commercial arbitration (the likes of London, Stockholm, Paris and New York). International commercial arbitration, however, is a much more diverse universe, in which the role of local communities is overwhelming – and yet, very much ignored by the scholarship. Gathering the views and opinions of arbitration practitioners across Europe immediately highlight one aspect: the practice of commercial arbitration varies dramatically from country to country, and to argue that arbitration is the same thing in – say – Denmark and Italy is akin to claiming that rugby and American football are effectively the same sport. It is undisputable that the basic principles are the same: party autonomy, independence, impartiality, evidence and challenges have the same names and abstract definitions everywhere. In their application, however, these principles and the rules that embody them show all their differences – and such differences are the result of the diversity of the various legal cultures at play. This is not only true for purely domestic disputes: it is as true for those international disputes played in a particular forum for reasons of proximity with the place of performance of the contract, or because one party was powerful enough to pick the seat during negotiations, and it is also true for those disputes heard in neutral countries by arbitrators from different legal backgrounds. The actors that are truly international – one may call them “transnational practitioners” – are a select few, as stated above. Most practitioners, on the other hand, operate locally, with the occasional international dispute here and there: their legal culture is part of the package the parties buy with the appointment as counsels or arbitrators.

Assessing whether such cultural diversity is a good thing is a hard and ultimately subjective task. One may claim that the arbitral utopia and the establishment of a new ius gentium by means of arbitration is a good enough end to aim for the uniformization of arbitration everywhere and the flattening of legal backgrounds in the field. Another one may argue that familiarity is an essential element of legal proceedings, and the trust that parties have in a dispute settlement mechanism is dependent upon the recognition of a specific culture in counsels and arbitrators. Either way, it is at the very least questionable that international commercial arbitration is truly international. International law is the set of rules and principles that states agree upon to regulate their relationships and, regardless of the many possibilities to opt out from certain rules, is a universal body of treaties and customs; reservations and options out are ultimately exceptions. International commercial arbitration, at least in its textbook interpretation of the term, is in fact an exception itself in its universality. Each legal culture carries its own concept of international commercial arbitration – or, more correctly, of the salient principles of international commercial arbitration, making it a domestic version of arbitration aimed at settling transnational commercial disputes. Is It really international in the end?