If arbitration must go back to what it was in 1925, all these years of positive pro-arbitration evolution will be lost, and the arbitration process will be damaged irreparably.
Ylli Dautaj, Senior Research Associate, Jindal Global Law School, O.P. Jindal Global University, Sonipat, Haryana, India; PhD Candidate, Edinburgh University, Edinburgh Law School.
William F. Fox, Distinguished Visiting Professor (part-time), School of Transnational Law, Peking University, Shenzhen Graduate Campus.
Over the past 50 years, the international business community has settled on the device of international commercial arbitration to resolve the overwhelming number of disputes that arise in their commercial agreements. One reason is that many business people are suspicious of the domestic courts of many host countries and have always sought the comfort of a neutral forum.
Arbitration is neutral (i.e., not tied directly to any particular domestic legal system), efficient, and confidential. Much of this evolution has been triggered by events in the United States in particular a long series of United States Supreme Court decisions that ended the
courts’ traditional hostility to arbitration and established, firmly and with virtually no reservations, the legitimacy of arbitration but this line of decisions was not pre-ordained. The fundamental law, the United States Arbitration Act, usually referred to as the Federal Arbitration Act (FAA), is cryptic and skeletal in its language and the United States Congress has not seen fit to alter it in any substantial form since it was first enacted in 1925.
Virtuallyall the arbitral innovations and pro-arbitration developments in the United States have grown out of a now-long line of court decisions-essentially a kind of common law development-that has moved a great distance away from the nearly-deceptive simplicity of the FAA. All these developments in the United States have fostered similar pro-arbitration innovations around the world. The U.S. view of arbitration has now become the international norm.
But just recently, after the appointment of two new Supreme Court Justices, Neil Gorsuch and Brett Kavanaugh, and the announcement of two Supreme Court decisions—New Prime Inc. v. Oliveira, and Henry Schein v. Archer & White Sales—we have seen a great deal of concern and apprehension within the arbitration community. Gorsuch and Kavanaugh are two justices who believe in “originalism” and “textualism” as interpretative techniques. While these techniques are respectable, they do not work in the context of arbitration law.
While both techniques urge an interpretation that relies almost exclusively on the express language of statutes and the “original” meaning of those statutes, the fact that the FAA was enacted in 1925, has not been significantly amended, and is a mere skeleton of principles of arbitration law and procedure make them poor vehicles for principled decisions that preserve and protect arbitration. If arbitration must go back to what it was in 1925, all these years of positive pro-arbitration evolution will be lost, and the arbitration process will be damaged irreparably. At the same time, we do not wish to be too apocalyptic. These are only two cases and not all Supreme Court justices abide by the Gorsuch-Kavanaugh interpretative principles. After an exhaustive analysis of the two cases in light of all the modern, judicially-created pro-arbitration innovations, we urge the arbitration community to adopt a kind of “watchful waiting” posture.
This is not the end of arbitration as we know it, but we are all justified in our concerns for the future.
Published in: Cardozo Journal of Conflict Resolution
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