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Using experts rather than conventional courts to
"It is to be wished that arbitration return, at
least for technically complicated cases, to one of the reasons to which it owes
its existence: to submit a dispute to people truly knowledgeable in the subject
matter." Prof. Pierre Lalive
(quoting Professor Jean-François Poudret in the Preface to Arbitration and
Expertise, International Chamber of Commerce publication No. 480/7, 1994.)
What is Arbitration?
Arbitration is a binding form of dispute resolution in
which parties agree to submit their dispute to a person (or panel of persons)
who will apply the same laws that would have been applied by regular courts.
However, the arbitrators can use simplified procedures (for example, no
discovery in the USA), conduct the arbitration in the language of choice of the
parties, and need not be judges or even lawyers.
Arbitral awards have the same force at law as a court judgement.
Arbitration is possible because it is permitted by a
national laws. All developed
countries, and many other countries, have arbitration laws that permit
arbitration of commercial disputes between companies, if the companies either:
agree to arbitration in a contract, before a dispute arises, or
agree to arbitration in an ad-hoc agreement, after a dispute arises.
Either the parties or an arbitration institution specify
a venue for the arbitration. The
laws of that venue govern the arbitration and can have a significant effect on
the conduct of the proceedings. Indeed,
the details of what is or is not arbitrable, the form of arbitration agreements,
how national courts may or may not interfere with arbitration proceedings, and
many other important practical details vary greatly by jurisdiction.
For a number of reasons, the most commonly used venues
for international arbitration are Paris, France; London, UK; and Geneva,
Switzerland; but many other venues are commonly used, in particular Stockholm,
Sweden; The Hague, Netherlands; and Vienna, Austria.
Why use Arbitration?
"... how can the jury judge between two statements
each founded upon an experience confessedly foreign in kind to their own?
The truth of either combatting proposition lies just in its validity as
an inference from a vast mass of experience ... as to the truth of which trained
powers of observation are quite essential, the results themselves of a life of
technical training." Judge
Learned Hand ("Historical and Practical Considerations Regarding Expert
Testimony", Harvard Law Review, 1901)
Arbitration by experts is appropriate for cases in which
the dispute involves facts which are difficult for the non-expert to understand.
In many situations, only persons with advanced degrees and many years
practical experience will be able to make sense of the facts as presented by the
There are many reasons why parties may agree to arbitrate
rather than to use court proceedings to resolve disputes. Among the reasons are:
is faster, and consequently less expensive, because:
arbitral tribunal can be composed of people with specialized knowledge and
are ruled out, or at least there is only one level of appeal.
is assured, thus avoiding any publicity surrounding the dispute.
parties wish to stipulate that a certain substantive law applies to the contract
between them, but that some other procedural law should be used to regulate the
proceedings relative to a dispute.
party either does not trust the other party's national court system, or is
unwilling to engage in a court proceeding in the other party's home territory
under unfamiliar procedural rules.
While not all of these reasons are valid in all cases, it
is a fact that reasons 3 and 4 are generally valid, and in fact account for the
continued growth of arbitration, both domestic and international.
Law and Practice of International Commercial Arbitration
by Alan Redfern and Martin Hunter, Sweet and Maxwell, 1991.
ICC Arbitration by W. Laurence Craig, William W. Park,
and Jan Paulsson, ICC Publishing, 1990