Restating the U.S. law of international commercial arbitration.

Author:Bermann, George A.
Position:Proceedings of the One Hundred Second Annual Meeting of the American Society of International Law: The Politics of International Law
 
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This panel was convened at 1:00 p.m., Thursday, April 10, by its moderator, Andrea Bjorklund of University of California, Davis, School of Law, who introduced the panelists: George Bermann of Columbia Law School; Catherine Kessedjian of Universite de Paris II; Peter Trooboff of Covington & Burling LLP; and Judge Diane Wood of the U.S. Court of Appeals for the Seventh Circuit. *

INTRODUCTORY REMARKS BY ANDREA BJORKLUND ([dagger])

I am Andrea Bjorkhind. I teach at the University of California, Davis, School of Law. I am sorry that Carolyn Lamm, who was initially to have moderated this panel, will not be able to join us, as she has been detained in a hearing. I have no doubt that her hearing would have gone much more smoothly, and she would have been able to come, had they only had the ability to have recourse to a new Restatement of Arbitration.

It is my very great pleasure to introduce to you this distinguished panel. As they are all luminaries in their respective fields, they are doubtless well enough known to you already that I can cut my introductions short.

Our first panelist will be George Bermann, the Jean Monnet Professor of European Union Law and Walter Gellhorn Professor of Law at Columbia University School of Law. He is an expert in comparative law and in transnational arbitration and litigation. He is the Chief Reporter of the Restatement Project, and he will talk about its impetus and proposed scope.

Our next speaker will be Judge Diane Wood. She is, of course, a Judge on the U.S. Court of Appeals for the Seventh Circuit. Prior to her appointment to the bench, she taught at the University of Chicago Law School, where she held the Harold J. and Marion F. Green Professorship in International Legal Studies. She has also worked in both the Justice and State Departments and is known to many of us as the federal judge who is most knowledgeable about international law. She will give the view from the bench as to what judges might look for from this proposed Restatement Project.

Peter Trooboff is a partner at Covington and Burling here in Washington, D.C. He is a past president of the American Society of International Law and has more than thirtyfive years of international trade and litigation experience. He has supervised a number of investigations of violations of U.S. foreign trade controls and serves as counsel and arbitrator in international arbitrations with particular expertise in proceedings arising from claims based on international law, and he will give us the practitioner's perspective on the project.

Finally, it is my very great pleasure to introduce Catherine Kessedjian, who is Deputy Director of the European College of Paris and Professor of European business law, private international law, international dispute resolution and international commercial arbitration at the University of Pantheon Assas, Paris II. From 1996 to 2000, Professor Kessedjian was Deputy Secretary General of the Hague Conference on Private International Law, where she was in charge of the preparation and monitoring of the negotiations for a proposed worldwide convention on jurisdiction and judgments. She will give us the international view and, I hope, the benefit of her expertise on the harmonization and codification projects that she developed while working at the Hague Conference.

* The panel wishes to thank Meghan Mattimoe, who served as reporter for this panel, and Anna Beier-Pedrazzi, who prepared the following edited transcript.

([dagger]) Professor of Law, University of California, Davis, School of Law.

REMARKS BY GEORGE BERMANN *

What I hope to do with suitable brevity is to do exactly as requested by Andrea, namely say something about the impetus for the Restatement project and something about its intended scope (and the problems associated with defining that scope).

By way of introduction, as I sat through yesterday morning's program of the Institute of Transnational Arbitration on the promises and perils of soft law in international commercial arbitration, I was struck by the unique place that Restatements of the Law occupy on the landscape of soft law.

Restatements of the Law are, I think, properly characterized as soft law, assuming we employ the usual criteria for identifying that species of law. Yet, among instruments of soft law, they stand to my mind in a unique relationship to "hard" law. This is because their mission is precisely to order and to clarify the hard law that pre- and co-exists with it. I do not think that that can be said about all pieces of soft law. This mission is quite important in a field such as this, with its multiplicity of sources: both statute and common law (state and federal), treaty law and, frankly, tons of the kind of soft law that occupied yesterday's meeting of the Institute of Transnational Arbitration.

Now the basic questions facing us, as we contemplate bringing soft law having the ambition of the Restatement into a field like international commercial arbitration, are two: is the state of the law within the field such that the field stands to benefit from the assumed contributions of a Restatement? And is the magnitude of that benefit such as to justify the evident magnitude of the effort that a proper Restatement requires? These are questions particularly worth asking whenever the ALI steps--as it is increasingly doing--out of the classic and paradigmatic terrain of restatements, that is to say i.e. fields of common law falling within the remit of state law.

As for identifying the impetus for the project, that is simply another reason to wish that Carolyn Lamm were here, for she knows best how, when and why the idea of a Restatement of the U.S. Law of International Commercial Arbitration began to germinate within the ALI program committee of which she is a member. Clearly she thought the project worthy of rising to the top of prospective new ALI projects, and clearly she was not alone.

But I can certainly speak to the considerations that fueled this Reporter's belief in the project. I believe that anyone working seriously in the field of international arbitration would agree that a proper Restatement would---or at least could bring real benefits to the field. This audience may not need convincing, but I shall try to convince anyway. To that end, I would like to share with you just one example--perhaps my favorite one--of a problem to whose solution a Restatement might just contribute. It is a serious and central problem-but one that, for all its difficulty, is simply not at all esoteric. And it is one that I suspect a court might consider itself inadequately equipped to address or at least find itself in an uncomfortably improvisational mode, wishing in some measure for guidance from a Restatement. Diane Wood can of course prove me wrong on this.

Consider the following: in time I, Court A is asked to refer the parties to arbitration and, in doing so, makes certain determinations about the meaning, the scope, the validity and the enforceability of the arbitration agreement (not to mention about who is bound by it). In time II, the arbitrators may be called upon to revisit some or all of the same questions. In time m, Court B, in the place of arbitration, is invited by a disappointed party to annul the award on recognized grounds, some of which closely echo challenges to the arbitration agreement that not only the arbitrators, but also the court that compelled arbitration in the first place, will or may have addressed. Of course, if the action before Court B is unsuccessful and the award survives, the award may well be brought for recognition or enforcement in yet another court, Court C. Once again, very similar if not identical grounds may be advanced for denying the recognition and enforcement that is sought.

Should any of these courts feel bound by the prior determinations? Should they at least show them deference? Or are these the "hallmark" issues that every court in the chain of courts should, if asked, answer for itself?. Scenarios abound for preclusion. So too with questions of waiver. If the disappointed party has failed to contest the arbitration agreement or the award either at the time that arbitration was compelled, or when the arbitration was underway, or upon vacatur, is it too late to do so at a later point in time? This question, too, may arise throughout the length of the procedure. Arbitrations can enjoy long and interesting life cycles, with numerous points of intersection with the courts and numerous opportunities for parties to question the validity and enforceability of the arbitration agreement and award.

Some in the audience may have sharp, clear and well-established answers to these questions. I confess that I do not. Should the answer depend upon the specific challenge to the agreement or award (lack of consent to arbitrate?, dispute beyond the scope of the arbitrators' authority?, procedural irregularity or partiality of the tribunal?, etc.) that is being raised at these multiple moments in time? Should the answer depend on the court's assessment of the choice of law properly to be applied to each of these challenges? As was the case with respect to waiver, might the answer depend on the nature of the particular objection being raised or upon the substantive law that a court chooses to apply to the challenge?

This is merely one set of examples of very real scenarios--not contrived by me--that do arise now and then. Judge Wood can tell us whether these are scenarios to which a judge would have a ready and settled response. I trust she will answer at least somewhat in the negative, or else the case for the Restatement will have been seriously weakened.

So much for the genesis of this Restatement. We know and shudder at how much inspiration and perspiration remains to be invested in this project. But even at the outset, prior to getting into particulars, we face certain conceptual challenges. The only ones that I have time to...

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