NATIONAL COURTS AND ARBITRATION:
COLLABORATION OR COMPETITION?
Courts and arbitration as partners in the international dispute resolution project
Chief Justice Allsop ⃰
Synopsis
Courts and arbitration play their separate but connected and related roles in international
dispute resolution. The focus should first be upon the needs of the world and regional
commercial community and communities for a fair, efficient and practical system of dispute
resolution. This is no less than a demand for a practical working legal order that delivers
just dispute resolution outcomes. This can be seen to be, and is, provided by two legal
orders: the international arbitral and the national judicial legal orders. The paper will
explore the points of co-operation and healthy competition and express some ideas as to
how the symbiotic legal orders will develop and meet the challenge of international
commercial justice in the 21st century.
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Introduction
The topic of this paper posits an antinomy between courts and arbitration: collaboration or
competition. The reality is a combination, in that commercial people have a choice, and in
that the two institutions complement each other. In the future, that complementarity may
grow in sophistication. Perhaps a better way of putting the matter is that courts and arbitral
institutions are partners in a competitive collaboration.
The co-operation and partnership between courts and arbitral structures is essential for a
jurisdiction to serve international commerce, and for judicial and arbitral institutions to
complement each other and to grow and succeed.
The ideal court for international commercial arbitration
How well any particular jurisdiction deals with international commercial arbitration and so
serves the international commercial community is dependent upon the quality and qualities
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of its commercial courts. Commercial courts, as supervising seat courts and as enforcing
courts, are a critical integer in the successful operation of the international commercial
arbitral legal order. The desired qualities of such courts can be taken from the description
of the subject matter: (1) international; (2) commercial; and (3) arbitration.
First, the court must be international in focus and approach. This requires an attitude or
state of mind of judges, of court administrators and officers, and of practitioners to
welcome and encourage foreign commercial parties to the jurisdiction. This international
focus of the judiciary should be reflected in an arbitration law (written and unwritten) that
is internationally focused and “arbitration-friendly”.
Secondly, the Court must be commercial in its focus, skills and approach. This requires that
the judges handling arbitral proceedings (whether support, supervision or enforcement)
understand the commerce involved in the substantive dispute. How else, for instance, can a
seat court or enforcing court assess the fairness, or not, as the case may be, of arbitrators
giving short shrift to a point latterly thought up by a party and of little legal worth that
would delay the reference or the making of the award. The fairness of the approach of the
arbitrators who think the point meritless should be considered by a judge who understands
the point. It is critical that international commercial arbitration be supervised by judges
who understand commerce.
An aspect of this feature of the work of a court is that sometimes the subject commerce is
straightforward, but the technical subject matter is complex. An example is whether
engineering, computing, intellectual property, or other technical issues have been dealt with
fairly and in accordance with any aspect of the arbitration clause. A supervising court
should, if the need arises, be able to call upon relevant technical assistance, such as by the
use of an assessor sitting with a judge to assess any arguments about the issues concerned
from a technically informed perspective. Thus, for instance, a claim that natural justice was
denied to a party by the arbitrators deciding the reference on issues that were not argued
or a claim that arbitrators have not addressed the case of a party or a claim that the matters
dealt with were outside the reach of the arbitration clause would be able to be assessed
with the confidence that the court has a mastery of the technical subject. This mastery is
not to second-guess the arbitrators, but to assess reliably any argument that arbitrators
have dealt appropriately with the technical subject matter in the arbitration.
Thirdly, the court must understand arbitration. This is not merely quantitative; it is not
merely knowing about arbitration law and practice. But it is also qualitative; it involves
understanding the perspective and approach that facilitates the smooth working of the
arbitral system. This “cultural perspective” comes from experience, judicial education and
professional collaboration with the arbitral community.
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This last point requires a little elaboration. The court should not approach its task
mechanically, but from an understanding of the need for two legal orders to co-exist: the
national judicial legal order and the international arbitral legal order made up of
institutional and ad hoc arbitration founded on party autonomy. The relationship is forged
by international agreement (such as New York Convention and the Model Law) and
embedded in national law. The whole structure is one of sympathetic support of arbitration
as the fair and efficient mechanism for dispute resolution. It is a critical framework for,
indeed the foundation of, the rule of law in international commerce in the 21st century.
This sophisticated understanding of arbitration is to be derived in part from education and
immersion in the topic. Various methods and approaches are available to jurisdictions to
develop this understanding. The judiciary should be open to engagement and dialogue with
the arbitration profession and community – in conferences and informal technical dialogue.
The judiciary should be open to engagement with the judiciaries of other jurisdictions who
deal with arbitration. The recently established ICCA Judicial Forum is an example of a
vehicle for such dialogue. The judiciary and arbitration profession should devote time also
to the education of the legal profession and commercial community about the place of
international commercial arbitration and the role of the court system as complementary
legal orders. All this will assist in the development of a strong and sophisticated dispute
resolution culture, in both courts and in the practice of arbitration.
Thus the ideal court is:
international in outlook,
commercial in skill and
arbitration sympathetic.
The above description of the ideal court presupposes a number of matters that are
assumptions underlying the London Principles 2015. The first is a clear and effective
modern arbitration law that is harmonious with international form and practice, with clear,
practical and reliable rules and practice of recognition and enforcement. It must set the
clear legal framework for the sympathetic and supportive approach of the whole legal
system to freely chosen and fair dispute resolution systems – in arbitration, conciliation and
mediation.
The second assumption is an ethical and well-educated legal profession, skilled and
knowledgeable about international commercial arbitration and international dispute
resolution, about commercial law, and about international commercial law. This necessarily
involves a degree of dedication of judges, of arbitrators and of the legal profession generally
to the education of themselves and also of those studying law. Courts and arbitration
professionals should understand that if they expect the highest quality of practice, they
should participate in the setting of standards for those practices. This should begin with
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university and practical training of students and young practitioners. It should also involve
the high level consideration and discussion by skilled professionals in arbitration as to what
makes good arbitration, good arbitrators, good judicial systems and good judges in in
commercial dispute resolution. This will facilitate the recognition that the way to efficient
dispute resolution may be found in studying the comparative techniques of commercial
courts as well as arbitration practice.
The third assumption is the availability of high quality facilities that support arbitration and
the parties. This is not just hotel rooms and transport, but extends to the ability quickly to
obtain visas and the sophisticated electronic environment for document handling and
document retention.
What does the “arbitration industry” or “ arbitration profession” want in judicial conduct?
The above really encapsulates how a court should approach its task.
But perhaps one thing should be emphasised. At the foundation of any system of justice
(and that is what the arbitral legal order aspires to be) is fairness. It is a root conception of
human behaviour. Without it, disputes are not resolved. It lies at the heart of the Model
Law (Art 18). It inheres in the notion of public policy in the New York Convention and the
Model Law. Arbitrators should expect, indeed desire, the courts to be astute to prevent
unfairness.
The requirement of fairness is bilateral. It is not only the requirement upon an arbitrator to
give a party time that is adequate to present its case. It involves being fair to both parties
and not permitting a party to demand more than is reasonable, and thereby to impede the
arbitration for the other party. Together with the implicit requirement of the parties to
arbitrate in good faith, the requirement of fairness and procedural fairness should be seen
to empower the arbitrator to run an efficient arbitration. It is a source of authority of the
arbitrator and not merely a constriction upon the arbitrator in how the reference is
conducted. But, courts must understand what fairness means in this context. Fairness is
context specific. This is international commercial litigation, not the imposition or wielding of
state power over vulnerable individuals. It is not a mechanistic or pernickety approach; it is
a robust, but fair evaluation of a process. Thus, astuteness to see fairness must not be an
excuse for intervention. Astuteness in this respect is compatible with robust appreciation of
context.
This highlights the importance of the seat court – its skill, efficiency and reliability. If
arbitrators in a jurisdiction have the confidence that the seat court supervising their conduct
will share their view as to the need for robust and efficient management of arbitration, it is
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more likely that arbitrators will be empowered to run more efficient, and therefore less
costly, arbitration.
Resonance with judges in leading commercial courts
The above should resonate with judges in leading commercial courts. It places their skill and
expertise, as both seat and enforcing judges (but particularly the former), as critical
components in the successful operation of the arbitral legal order.
There should be no resistance to the successful working of this relationship of the two legal
orders. Any “push back” may come from the requirement to enforce fairness. That
requirement, however, should not be seen as a legitimate source of resistance, but as the
necessary requirement for requisite trust to be maintained. It is always worth recalling that
the modern liberal and sympathetic approach by nation states (including their courts) to
arbitration is a pact, a “deal”, if you like, that is based on fair treatment.
Even on such an auspicious and celebratory occasion as this Centenary conference, it should
be remembered that there are those who doubt the value of, and question the faith or
confidence of others in, international commercial arbitration as an instrument of the
international rule of law. Such people should not be too quickly consigned to the category
of the ill-informed or uninformed. Some such people are very well informed. Some by
nature and training distrust private adjudication. The existence of these doubts is why the
existence of reliable and skilled commercial supervising courts is of such importance to
arbitration – as the bulwark of public confidence in it.
The future world of dispute resolution
Arbitration has forged ahead in the last 30-40 years; but it is not without its criticism – cost
and delay. This is sometimes, perhaps unfairly, put down to “judicialisation”. Curial
litigation is sometimes said to be inherently more expensive and slower than arbitration.
That is false. The best commercial courts can produce decisions and appeals in very short
time frames. The best arbitrations can, no doubt, do the same. A better word would be the
“industrialisation” of arbitration by platoons of lawyers engaging in costly process. The
challenge is to develop procedures and approaches, both in courts and arbitrations that
limit costs and time and enhance despatch: procedures that eliminate unnecessary processdriven costs. This challenge will be met, in part, by recognising and harnessing the best of
procedures of arbitration and courts in dispute resolution generally. For instance, in the
new practice note for the Commercial and Corporations Practice Area in the Federal Court
of Australia, use has been made of procedures in international arbitration such as Redfern
discovery procedure to assist in case management. Important policy choices for countries,
courts and the commercial community will increasingly involve assessment of new and
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flexible ways of resolving disputes and the choices involved in providing “dispute resolution
services” to the international commercial community.
In looking to the future, it is worthwhile to remind oneself that this is not just about a
“market” for “legal services”. These are not potatoes or lemons being sold, but skilled,
impartial professional expertise in resolving disputes.
Good commercial courts have deep embedded skill and expertise. They attract foreign
parties by such skill. Seventy percent of the London Commercial Court’s work has no
relationship to England except for the choice of court clause.
Good commercial courts exist around the world. If they can be given an international
character and their skill embedded they can provide greater confidence of an international
outlook.
Good commercial courts can combine procedures and utilise their expertise as courts or as
arbitral chambers. Arbitration by judges is not new: The Bamburi [1982] 1 Lloyd’s Rep 312;
and see the Arbitration Act 1966 (UK), s. 93.
These approaches challenge nations to adapt their dispute resolution systems to the needs
of international commerce. The underpinning notion of arbitration is the free choice of the
parties – party autonomy and choice. How countries harness and deploy their expertise and
capital, physical and human, that is locked up in their court systems is an emerging
challenge, and opportunity.
None of the above should be seen as some challenge by national courts to arbitration. The
reality is that the commercial community will make its own choice. Many disputes have
always been, and will always be, settled principally by arbitration: commodities, reinsurance, salvage and many maritime disputes are uniquely suited to skilled trade or
industry arbitration. Other types of international commercial disputes often require legal
resolution in a manner which makes the choice between arbitration and judicial proceedings
depend upon likely characteristics of cost, delay, enforceability, confidentiality and general
party control over procedure. Sometimes that choice is made through inertia and standard
form contracts. It will remain the choice of the international commercial community for the
most efficient, reliable, practical and enforceable mechanism of dispute resolution.
London
2 July 2015
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