The W&L/UNCTAD joint symposium today was absolutely fascinating, I have no doubt that this is the field I want to work in eventually. If I may summarize and comment on a few things:
The premise behind Alternative Dispute Resolution (ADR) is such that both parties involved in a potential litigation can benefit from resolving the conflict amicably through arbitration. Since this saves significant amounts of time and money, it would appear to be a logical solution. Unfortunately this is not always the case…especially for emerging markets. Thailand’s Minister of Foreign Affairs stipulated that they faced a constant battle with (1) the lack of a coordinating arbitration agency, (2) firms’ lack of experience with investment arbitration (3) lack of experienced arbitration lawyers, (4) significant language barriers increasing costs, and (5) lack of political willingness to uphold a ruling in which the state is the losing party.
Legal representatives of multiple underdeveloped states were present (Dominican Republic, Ecuador, Peru, Bolivia), and though there was no verbal affirmation from them regarding the impact of the aforementioned struggles to push for arbitration in their countries, I can assure you that they exist. As a student of international political economy who is interested in emerging markets and development studies, I became keenly aware that this is yet another example of the way in which incomplete information and access to wealth-creation has led to the current situation of global inequality. It was widely recognized that without properly trained legal counsil, many parties are incredibly hesitant to consider an approach of arbitrage rather than litigation. What the panel really stressed was finding a way to universalize the concept of this amicable approach to dispute resolution (arbitrage), so that individual parties do not feel threatened by it because they are unaware of the concept and therefore are fearful of the consequences.
It was suggested on several occasions that the future of bilateral trade disputes lies in arbitration and not in formal litigation.
More to come…
-BAE
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Hi Benjamin,
I agree with your sentiments regarding underdeveloped economies. However, is arbitration not similar to litigation and isn’t there growing literature advocating the use of other dispute resolution mechanisms?
Professor,
You are certainly more learned on the subject than I
Please correct my misunderstanding, if it is in fact such. I interpreted the symposium speakers’ use of “arbitration” compared to formal “litigation” as referring to the new literature on Alternative Dispute Resolution (ADR), or settling an investment dispute through legally arbitrated mediation outside of a court room, whereas in a traditional litigation setting, both parties cases are heard and decided on by a judge. So if that definition hold true, yes the two are incredibly similar only one pertains to finding a tenable solution for investment disputes without moving to a court setting. I would appreciate your insight.
ADR in the case of investment disputes was founded on the premise that national judicial institutions specifically in third world countries were unsuitable to provide impartial judgments on investment disputes submitted to them, which involved national governments. Therefore an alternative forum was instituted, outside the influence of national third world governments who were party to such disputes. Since national investment activities are subject to domestic laws and hence domestic jurisdiction, ADR therefore only has an exceptional legal status. However, judicial institutional development within third world countries have improved drastically over the last 80 yrs, to such an extent that specific developing countries have acquired not only the institutional capacities, but also the necesary accompanying human resources to guarantee impartial judgment of investment disputes involving national governments.
Therefore, the time will definitely come, when these currently third world countries might strive to revoke the special status granted transnational ADR regimes. In otherwords, transnational ADR regimes, independent of international efforts coming from the West and OECD countries, might never evolve to become the standard practice in resolving international economic-FDI conflicts in the long run, as the developed world sees and wishes it! The exception might definitely be eventually revoked. The third world sees it in any case in this context.