In today’s world it is probably fair to say that a majority of important international contracts – whether they are for joint ventures, concession agreements, major projects or major investments – have clauses providing for resolution of disputes through arbitration. These provisions ordinarily bind the parties to arbitrate in accordance with the rules of such well known international arbitral institutions as the International Chamber of Commerce or the International Centre for Dispute Resolution of the American Arbitration Association.

International arbitration gives businessmen peace of mind in that parties from faraway countries will not be able to drag them into courts where procedures are alien and where impartiality is frequently uncertain, especially for outsiders. Likewise, an agreement to arbitrate avoids the risk of having the parties race to their favorite courthouse. These benefits of arbitration stem, in so small measure, from the widespread acceptance, in over 140 countries, of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the U.N. Convention). The Convention requires signatory countries to refer disputes covered by arbitration clauses to arbitration in accordance with the parties’ agreement.

Procedural Predictability

Are the businessmen obtaining the kind of predictability of dispute resolution that they think they are? The answer is, frequently, only to a limited extent, especially if the parties and the arbitrators are from different legal cultures. One of the reasons is that, although the rules of the international arbitral institutions provide certainty in some areas, in other areas they are not specific about the ways in which arbitral proceedings are to be conducted. One example relates to the extent of discovery that will be permitted. More subtle examples are the emphasis that will be placed in the hearings on oral testimony, cross-examination and the maintenance of a verbatim transcript of proceedings.

In major international arbitrations, there is ordinarily a preliminary conference among the parties and the arbitrators in which various matters concerning the future course of the proceedings are discussed and decided. Prior to such a meeting, the parties can, and should, try to agree between themselves on as much as they can concerning the procedures to govern the case. Often, at this stage, however, the parties are antagonistic and not in a mood to agree. (Frequently, they have even been unable to agree on the chairman of the arbitration panel, leaving the selection to the arbitral institution.) In the face of the parties’ inability to agree on such important matters as discovery and other procedures of the case, the way in which the proceedings will be conducted will be up to the tribunal, and particularly its chairman,1 who has, under international arbitration practice, enormous control over the procedural aspects of the arbitration.