Understanding (and Misunderstanding) “Primary Jurisdiction” – Vol. 21 No. 1-4

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Author: Alan Scott Rau*

Published: April 2011

Commencement of Arbitral Proceedings
Choice of Forum/Place of Proceedings
Operation and Effects


There is always disputed territory. It is the interaction within this substantial administration that determines the random walk of the world: everything interesting happens at the borders between domains of power.

Any private mechanism of dispute resolution – wherever it falls on the spectrum running from consensual settlement all the way through binding arbitration – depends in the last resort on public sanctions and the public monopoly of force. It is in this sense at the very least that we can speak of a hierarchical, or vertical, relationship between courts and arbitral tribunals. At the same time, though, in our world of comparative advantage, of global ventures, and connected markets, transactions – and disputes – will routinely flow over national boundaries; they will inescapably involve parties of different nationalities – distant from each other not only geographically but culturally and politically –and will implicate different sovereign interests. And here – when we add a horizontal dimension – is where things truly become interesting: In this “Westphalian” world, conflict and competition between national jurisdictions, with overlapping and yet plausible claims to supervise the process, become inevitable; here is where the demands of tolerance become strained. And where our powers of systematization are truly put to the test.

Because arbitrators do not at least for the moment have armed marshals at their personal disposition, we must at some point look to those that do – that is, to a state court charged with assessing whether to lend, or to withhold, its support to the arbitration process (or, if need be, to interpose itself between private individuals and mere officious interlopers with no plausible claim to power over them). We may (at least some of us may) cherish the vision of a mechanism for mercantile self-government that is entirely self-contained – even autarkic, one independent of local peculiarities, and with a claim to universal recognition. But (thank goodness) for the moment such an ideal lacks any organized, permanent, hierarchical structure, any supranational standing bureaucracy, that could make it a concrete reality.

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*Mark G. and Judy G. Yudof Chair in Law, the University of Texas at Austin.