Document Type

Article

Disciplines

International Law

Abstract

Common law judges have long been suspicious of arbitration agreements. In England throughout the eighteenth century, there was a '"very great inclination in the courts . . . to throw obstacles in the way of arbitration." Judges in that period were prone to view arbitration agreements as attempts to oust the courts of jurisdiction, and thus as "contrary to the policy of the law." The result of this negative stance was that a party to a contract containing an arbitration agreement could circumvent arbitration simply by commencing a lawsuit. The courts' hostility remained evident well into the early years of this century. Even when the English Arbitration Act of 1950 authorized English courts to order a stay of judicial proceedings during arbitration proceedings the courts continued to exercise an important "supervisory role" over arbitration proceedings through the "special case" proceeding by which questions of law arising during the arbitration had to be referred to the High Court for decision.

In the United States, the Federal Arbitration Act [FAA]' established a national policy in favor of supporting commercial arbitration agreements. The subsequent ratification of the New York Convention and adoption of enabling legislation added further support to both the enforcement of international arbitration agreements and the enforcement of foreign arbitral awards. The result has been a judicial doctrine that a "presumption of arbitrability exists requiring that whenever the scope of an arbitration clause is fairly debatable or reasonably in doubt, the court should decide the question of construction in favor of arbitration."' The basis for this presumption is the belief that arbitration is relatively quick and economical and reduces court congestion; there is also the strong policy argument that the intent of the parties should be given effect.

On the other hand, state legislatures and American judges-both state and federal-have not completely overcome the traditional suspicion of arbitration. Federal judges, despite the mandates of the FAA, have been prone to find claims arising under certain federal statutes, especially those statutes affecting the "public interest," inappropriate for arbitral resolution. Statutes in many states still deem agreements to arbitrate future disputes unenforceable;" and even states generally supportive of arbitration agreements continue to exclude certain categories of controversies from arbitration. While such judicial tendencies and state legislative activities most often work to deny enforcement of arbitration agreements between American citizens, especially in state courts, arbitration agreements made by parties to an international commercial contract also have been rendered unenforceable by the courts.

The United States Supreme Court, in three decisions rendered in the past two years, has eliminated nearly all obstacles to the enforcement in the United States of agreements to arbitrate made by parties to international commercial contracts. In Southland Corp. v. Keating,' the Court held that federal rather than state law determines the validity and enforceability of commercial arbitration agreements in state as well as federal courts. In Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, the Court held that few if any legal issues arising in an international context are inappropriate for resolution by arbitration. And, in Dean Witter Reynolds Inc. v. Byrd," the Court found that even the presence of non-arbitrable claims or defenses would not preclude the arbitration of other claims and defenses. Ironically, however, these cases, which all seem to favor arbitration, may make foreign arbitral awards less enforceable in American courts.

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