Born, the head of international arbitration at Wilmer Cutler Pickering Hale and Dorr and president of the Singapore International Arbitration Centre, said that a golden age of arbitration has arrived in Asia. The popularity of arbitration has markedly grown during the past 20 years, as the increase in the number of arbitration users and cases demonstrates. For example, SIAC now handles over 250 arbitration cases a year and more than a dozen investor-state cases have been heard in Singapore in the past few years.

The golden age is also demonstrated by the use of arbitration in a growingly diverse array of fields. Even though arbitration has its roots in commercial disputes, it has evolved into a means of resolving disputes over sports, intellectual property and investor-state relationships. For example, the Court of Arbitration for Sport has efficiently resolved countless sports related disputes, while the World Intellectual Property Organization and various other arbitration bodies handle IP-related disputes.

Even disputes between tax authorities over tax-related issues such as double taxation, which used to be understood as subject to strong state sovereignty, have now come to be part of the realm of arbitration.

Why parties choose arbitration?

Born said the chief reasons why parties resort to arbitration are that it is efficient, expertise-driven and highly enforceable. Arbitration is a means of resolving disputes quickly, depending on the specifics of each case, without having to go through the court system, which may offer a home advantage to a local company.

The speed of arbitration rests on the fact that it is a single trial system. Also, in arbitration, it is possible to select experts of a certain field as arbitrators instead of depending on judges appointed by the court.

Furthermore, enforceability of arbitration agreements is guaranteed through the New York Convention, which has over 150 countries as signatories.

Apart from exceptions recognised by the 1958 New York Convention such as public policy violations, an arbitral award is easily enforceable in any country that is party to the convention. As such, the convention has contributed significantly to the development of international arbitration and transactions.

Criticism

In recent times, arbitration has received various criticisms, particularly that it harms legal stability and weakens the rule of law, Born said. Such negative views are nothing new. Joseph Story, who served as a US Supreme Court Justice during the 19th century, held in one of his judgments that an agreement to arbitrate future disputes was invalid, because arbitrators are not empowered to administer an oath or to order parties to produce documents, and supposedly lacked the ability to resolve complicated and challenging issues.

Basically, Judge Story's position was that arbitrators cannot be trusted because they are not judges. The same argument was put forward by German Supreme Court justice Siegfried Brosse earlier this year, who said that international arbitrations "not only infringe upon German sovereignty but also disregard German constitutional values, weaken the rule of law and infringe upon fundamental rights."

Many European opponents of investor-state dispute settlement in the pending Transatlantic Trade and Investment Partnership share the same view, Born said.

The right to arbitrate through history

Born takes a completely opposite view of arbitration from the critics. He argued that it is, in fact, the means to most effectively achieve the rule of law, demonstrating his point through several historical examples.

Article 86 of the Constitution of Year One, of the French Revolutionary Government, drawn up in 1793, proclaimed the people’s right to resolve problems according to the method of their choice, and guaranteed it as a fundamental right. This provision was later repealed and the Napoleonic Code that followed restricted the right to have recourse to arbitration, mainly on the basis that arbitrators would – it was argued – not be capable of resolving complicated issues.

Born also noted that, even though Germans had been entitled to a comprehensive right to choose arbitration from the 1870s, the Nazi regime scrapped the right of state and state-owned companies to arbitrate because it considered arbitration to be a threat to national sovereignty.

However, both Germany and France came once again to recognise the right to arbitrate following the end of World War II. In 1963, the German Labor Court recognised an arbitration agreement as a fundamental right deriving from the freedom of contract, a view which was upheld by the German Supreme Court.

As such, history shows that the right to arbitrate has expanded jointly with the development of fundamental civil rights and the rule of law, Born said.

The rule of law through arbitration

Born said that the greatest strength of arbitration is neither its efficiency, expertise nor enforceability, but rather the fact that, from beginning to end, the arbitration is based on an agreement between parties. He emphasised that the right to arbitrate must be recognised as a fundamental right in liberal democracies, like freedom of religion or to have a family.

People should be guaranteed the right to resolve issues arising from their relationships through the method of their choice, because the right to arbitrate is borne of the principle of private autonomy, a core value of a democratic society.

The future

During the subsequent Q&A session, the audience expressed keen interest in the future of arbitration and particularly investor state arbitration, given the current resistance to it. Born emphasised that, during the past 70 years, international arbitration has managed to develop on its own on the basis of the co-existence of the private and public sectors. He thought it will continue to do so.

However, Born explained that the right to arbitrate has limitations in the sense that certain procedures, such as criminal procedures are unfit for arbitration, as stipulated by the New York Convention. Born added that because arbitration derives from the freedom of contract, parties cannot be forced to participate in arbitration. Therefore, preparing the most appropriate language for the arbitration clause through negotiation is highly recommended.

Born concluded by expressing the view that international disputes are likely to increase even further, particularly with the adoption of the recently finalised Trans-Pacific Partnership, and his hope that arbitration continues to remain popular as a means of dispute resolution.

The Seoul Arbitation Lecture, organised by the Seoul International Dispute Resolution Centre, is now in its third year.

Born's lecture was sponsored by the Korean Commercial Arbitration Board, the Korean Council for International Arbitration, the Korean Bar Association, SIAC and the Chartered Institute of Arbitrators. There were over 100 attendees from academia, law and business.

Opening remarks were by Hi-Tael Shin, the chairman of Seoul IDRC and professor of law at Seoul National University and closing remarks by Sung-Bae Ji, the president of the KCAB.


Source : http://lbrbroadcast.com/1KSF-3XDDG-9GPGLT-1WWLTR-1/c.aspx