Author: Vratislav Pechota*
Published: December 1992
Proposals to Create an International Arbitration System
New York Convention
UNCITRAL Model Law
Description: The growth of commercial arbitration has been especially conspicuous in the international field. Surely, a contributing factor is the continuing emancipation of the arbitral process from the sway of national laws and its gradual subordination to transnational standards. The loosening of national control over arbitration parallels similar developments in other spheres of private law that are essential to the proper functioning of world markets, such as the law of contract. From a historical perspective, this evolutionary process helps remove those impediments to reinstating universal legal standards that were created by the excessive nationalism which perverted universal law in the nineteenth century. Prior to that period, private law had been governed, at least in continental Europe, by the jus commune, a body of law not emanating from national authority, yet recognized by the most diverse countries as governing transboundary relations.
The task today is to revive and develop the old concept of universal standards of private law, adapting it to the modern world. International commercial arbitration stands as proof that this goal is achievable. Despite the many problems that remain to be solved, the process that turns commercial arbitration into a universal and international modus operandi is irreversible. Prejudice, attachment to the status quo or simply the irresistible habit of appealing to national authority may account for temporary setbacks. However, it has become increasingly evident that arbitrators conducting international proceedings cannot operate effectively unless they embrace universal standards. The need to develop and apply universal standards issues not only from practical considerations, but arises as a matter of principle. This is so because, first, the rules governing arbitration are based on the recognition of the equal claim of all parties without any distinction as to nationality, and because all tribunals are equally obliged to respect them. Second, since these rules have become a factor in ordering international business relations and, indeed, are an ingredient of the structure of modern international economic order, respect for them is of legitimate concern to all nations, and their promotion through appropriate means has become a priority of competent international institutions.
The end of the division of the world into antagonistic political, economic and legal systems, and the regained dominance of the market economy throughout the developed world, have provided a fresh impetus to make arbitration law universal. It was the Soviet Union and its socialist allies who dug a ditch between themselves and the West by creating their own brand of mandatory arbitration which effectively eliminated the arbitration agreement and supplanted it with governmental fiat.
*Assistant Director, Parker School; Lecturer in Law, Columbia University.