Nearly two years ago, the United Nations Commission on International Trade Law began to consider what that forum describes as an ‘instrument’ that would assist parties to obtain more expedited enforcement of cross-border conciliated or mediated settlements. UNCITRAL described the potential outcome as an instrument because there was no consensus on whether the result should be guidelines, a model law, or a convention akin to the New York Convention of 1958 that permits expedited enforcement of international arbitral awards and has been signed by over 150 countries. The New York Convention has created an explosion of both international arbitration and international arbitration centres. International arbitration is vastly preferred by international business because it aids certainty and avoids the vague results of national judicial judgments, which cannot be enforced outside the jurisdiction rendering the judgment in an expeditious manner.

The availability of international arbitration has facilitated international commerce but the costs of arbitration could be significantly reduced if there were a viable settlement alternative (as there is in both domestic litigation and arbitration). In the US, only a tiny fraction of judicial disputes go to trial because the associated costs and delays counsel settlement, either negotiated between the parties or obtained with the aid of a neutral – a mediated settlement. Settlement rates in arbitration are also significant, although lower than in filed court cases. But in the international setting, a settlement agreement that resolves a pending arbitral dispute (unless converted into an arbitral award) is now merely a contract subject to all the contractual defences that can be raised in the initial proceeding. 

Apr-Jun 2016 issue

Appropriate Dispute Solutions