United States courts recognize the strong federal policy favoring arbitration of disputes involving international commerce. Enforcing parties' agreements on the forum and rules for resolving potential disputes has been praised as encouraging orderliness and predictability, which are important to international business.1 Arbitration allows parties engaged in international business to remove a potential dispute from a possibly hostile local judicial forum or one unfamiliar with the problem at issue.2 Deference to arbitration has also been lauded as providing a healthy respect for the parties' written promises-even if that means a neutral tribunal, situated outside of the United States, applies foreign law to resolve a dispute.3
It is paradoxical that the very courts that embrace the concept of arbitration spend considerable time and resources addressing complex issues that arise solely because the parties elect a non judicial dispute resolution procedure. As a result of statutory mandate, or at times due to their own devices, U.S. courts have become imbedded in the international arbitration process. Courts frequently determine whether an arbitration agreement is enforceable and, if so, whether the agreement covers the referenced dispute. If arbitration is appropriate, courts may order that arbitration occur in a specific location and designate the arbitrators, the issues to be arbitrated, and the applicable law. On occasion, courts resolve the propriety of interim measures in aid of arbitration. If competing policy concerns arise, such as the need to have all bankruptcy-- related matters decided in a single forum or if state law issues or federalism principles come into play, the courts decide the prevailing interest.
Furthermore, U.S. courts are authorized to confirm international commercial arbitration awards and reduce them to judgments. A challenge to an award may prompt judicial review of the arbitration proceedings to determine if the award should not be enforced or if enforcement should be deferred. A court may be asked to consider litigation relating to the award, for example, a proceeding to vacate an award filed in the country where the arbitration was conducted. Also, after the parties have gone to the expense of arbitration, a court may consider the propriety of arbitration in the first instance.
More than thirty years have passed since the United States acceded to the principal convention on international arbitration, the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards,4 and enacted Chapter 2 of the United States Arbitration Act (commonly referred to as the Federal Arbitration Act or "FAA") to implement the New York Convention.5 The U.S. Senate was urged to accede to the New York Convention and enact the Convention Act "because the people engaged in foreign trade consider arbitration . . . a very economical and speedy way of settling commercial disputes."6 Arbitration would provide prompt dispute resolution without requiring American businesses to deal with unfamiliar foreign judicial procedures.7 The U.S. Supreme Court, in its first case to address the Convention Act,8 praised the New York Convention. The Convention served "to unify the standards by which agreements to arbitrate are observed and arbitral awards are enforced in the signatory countries."9
An established body of law has emerged regarding certain aspects of the New York Convention, as implemented in the United States through the Convention Act, and as to other relevant FAA provisions.10 Nevertheless, with courts regularly tackling new, sometimes complex, issues relating to the Convention in the context of a federal system, the judicial landscape is far from clear.11
This Article analyzes international commercial arbitration in U.S. courts with an emphasis on the Convention. The interaction between the Convention Act and the Domestic FAA and between the FAA, in general, and the Convention's substantive provisions can best be described as a tangled-web. …