THE CIVIL LITIGATOR
Resolving Collateral Colorado Business Disputes
As Colorado continues to grow and its economy integrates into further reaches of the world market, regional companies increase their exposure to international disputes. This article examines legal and practical issues that Colorado companies should carefully consider concerning potential international disputes, with a focus on international arbitration as a means to resolve those disputes.
In the middle of the 19th century, Horace Greeley implored Civil War veterans, immigrants, and all other ambitious readers of his newspaper: "Go West... and grow up with the country."[1 And the West grew up.
As Colorado's economy integrates deeper into the global market, Colorado companies face new opportunities to partner with foreign companies. To best manage those opportunities, Colorado companies should understand how international arbitration operates— particularly when it intersects with collateral litigation in Colorado. This article discusses international arbitration and identifies several practical considerations for Colorado companies considering, or already involved in, international arbitration and collateral court litigation.
What is International Arbitration?
Arbitration is any method of dispute resolution in which a neutral third party has the authority to issue a binding decision.2 International arbitration involves disputes among companies (or governments) from different countries. Numerous international arbitral institutions operate around the world, including:
• The International Court of Arbitration of the International Chamber of Commerce (ICC). The ICC touts its role as the "world business organization, enabling business to secure peace, prosperity and opportunity for all."3
• The International Centre for Dispute Resolution (ICDR). The ICDR is the international division of the American Arbitration Association and advertises itself as "the world's leading provider of dispute resolution services to businesses in matters involving cross-border transactions."4
• The London Court of International Arbitration (LCIA). This London-based arbitration institution is celebrating its 125th anniversary this year. The organization notes that "over 80% of parties in pending LCIA cases are not English nationality."5
Why Agree to International Arbitration?
A Colorado company entering into a transaction where the parties, assets, services, or products will involve foreign jurisdictions should carefully consider agreeing to international arbitration to resolve future disputes. Particularly where a dispute will span multiple jurisdictions, the benefits of international arbitration include:
• Award enforcement. The 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention)[6 provides for enforcement of international arbitral awards by courts in the vast majority of countries around the world. No similar treaty exists for the enforcement of foreign court judgments. It follows that international arbitration for multijurisdictional disputes may increase the likelihood that a Colorado company can enforce any award it obtains. Over 150 countries are parties to the New York Convention.
• Procedural flexibility. International arbitration procedures offer participants more procedural flexibility than U.S. court rules. Parties generally agree on the procedure at the outset, including the ability to waive certain hearings and disclosure requirements that often (exponentially) increase costs in U.S. litigation.7The corollary tradeoff is that arbitration will not always include the extensive procedural protections built into U.S. court rules, which may lead to uncertainty.
• Confidentiality of proceedings. In Colorado, courts favor public access to proceedings and documents. The U.S. District Court for the District of Colorado requires that "the public shall have access to all cases and documents filed with the court and all court proceedings."8Although mechanisms exist to protect certain documents or testimony, a Colorado company involved in federal or state litigation will almost never keep the entire proceeding confidential. In contrast, international arbitration offers extensive protections for keeping a dispute and its eventual resolution confidential. And parties can agree to confidentiality in an arbitration clause, keeping any dispute out of the public sphere from the outset.
• Arbitrator selection. Most international arbitration organizations have mechanisms for identifying and agreeing on who will arbitrate the dispute. This gives a Colorado...