Author: Hans Smit*
Published: March 1990
Description: In the United States, until the law was changed by statute, agreements to submit disputes to arbitration were not enforced by the courts. If a party refused to proceed to arbitration, the courts would not compel it and, upon application, would enjoin the arbitration from proceeding. Among the reasons for this disfavor of arbitration were the notion that the settlement of disputes was too important a function to be entrusted to privately selected arbitrators and a judicial disinclination to cooperate in divesting the courts of power bestowed upon them by law.
The judicial reluctance to sanction private dispute resolution was so persistent that legislative measures were required to overcome it. At present, both the United States and its constituent states have arbitration statutes that provide for arbitration. The common thrust of these statutes is that they require enforcement of arbitration agreements that are in writing. The written agreement need not be signed by the party to be binding; the proof that the party to be bound has agreed to the content of the writing may be rendered by other means.
The Federal Arbitration Act governs international matters. Since, by definition, international matters involve commerce with foreign nations, by virtue of the Supremacy Clause federal law prevails over state law. Following the formulation by the United Nations’ Commission on International Trade Law of a Model Arbitration Law, a number of states, in an effort to create a hospitable forum for international arbitration, have enacted statutes that are in considerable measure patterned on the UNCITRAL Model Arbitration Law. To the extent that state laws do not conflict with federal law and may be regarded as pursuing the same policies as the Federal Act, they may be applied concurrently with the Federal Act.
The rapid growth in recent years of international arbitration has occasioned a concomitant increase in the case law and the scholarly literature on the subject. This article, without making any claim to comprehensiveness, will consider some of the salient elements of international commercial arbitration in the United States.
*Stanley H. Fuld Professor of Law and Director of the Parker School of Foreign and Comparative Law, Columbia University. The author expresses his gratitude to Tiziana Tabucchi, Columbia Law 1991, for her helpful assistance.