International Arbitration Agreements: A Look Behind the Scenes
Hoellering, Michael F., Dispute Resolution Journal
Institutional support often plays a vital role in ensuring an efctive arbitration process. At the heart of the administered arbitration process, however, is party autonomy and wellcrafted rules of procedure.
When the three elements-the parties, the administering institution, and the rules-function in tandem, the result reflects fairness and efficiency. Michael Hoellering takes a comprehensive look at how the courts and arbitral institutions have helped shape the role played by the arbitrator and the institution in disputes arising out of international commercial and financial transactions.
International arbitration is a consensual, contractual process. At its heart is the cardinal principle of party autonomy, according to which parties enjoy wide latitude in structuring their arbitration arrangements so as to suit their particular needs.1 Implicit in this scheme of flexible arbitral self-government is an understanding that the rules stipulated to by the parties as governing their arbitration will bind the arbitrators and administering institution in performance of their respective functions. To a large extent, however, this characterization is incomplete, for it fails to describe the institution's role in shaping and giving true meaning to the parties' agreement-a role that the institution can more successfully play when the parties have drafted a simple, broadly worded arbitration clause that incorporates state of the art arbitration rules allowing for the constructive implementation of clause provisions to ensure a fair and effective arbitration process.
Institutional Efforts to Foster Autonomy
The present-day vitality of international commercial arbitration owes a great deal to institutional efforts in promoting full recognition of the consensual agreement to arbitrate. Throughout much of this century, leading arbitral institutions have devoted their energies to promoting the use of arbitration, encouraging the enactment of modern arbitration legislation, providing education on arbitration law and practice, and developing procedures for the conduct of arbitral proceedings.
In 1984, in separate amicus curiae briefs filed in the U.S. Supreme Court, both the ICC and AAA urged the court to expand the domain of arbitration by directing arbitration of antitrust claims arising under, and encompassed within, a valid international arbitration agreement. In a landmark decision, the court ultimately so ruled, finding that "concerns of international comity, respect for the capacities of foreign and transnational tribunals, and sensitivities of the international commercial system for predictability in the resolution of disputes, all require enforcement of the arbitration clause in question, even assuming that a contrary result would be forthcoming [at that time] in a domestic context." This pro-arbitration stance was subsequently extended to a range of U.S. statutory claims,2 irrespective of whether they arose in an international or domestic context. This advance, however, was not without its limits, for the high court made clear that to gain enforcement of the ultimate award, the parties could not agree to exclude, and the arbitrator had the duty to consider, the forum state's public policy concerns.3
In the vast majority of AAA international cases, the parties' agreement consists of a future disputes clause providing for AAA administration, or the application of its rules. Generally, the AAA's role is administrative, compared to the arbitrator's function which is substantive in nature. The extent of services provided by the AAA's International Center will depend on the rules chosen by the parties. These can provide for full administration, serving as a channel of communications between the arbitrator and the parties. Increasingly, however, the International Arbitration Rules (IAR) apply, providing for consultation with the parties in the early stages to manage the proceedings, sufficient authority to resolve procedural impasses, and institutional initiatives, notably pre-arbitration conferences, to streamline and expedite the arbitration process. …