Of Dry Cleaning, Arbitration, and International Commercial Courts: When Courts Can Learn From ADR

By Dr Benjamin Hayward and Dr Drossos Stamboulakis

‘Those of you who have been to a dry cleaner in the United States may have seen a sign that says, “Fast.  Good.  Cheap.  Pick two.”  What this means is that you can have your dry cleaning good and fast, but it won’t be cheap.  Or you can have it good and cheap, but it won’t be fast.  Or you can have it fast and cheap, but in that case it won’t be good.  What you can’t have is all three …

Some people … seem to think that what applies to dry cleaning doesn’t apply to international arbitration.” [1]

Image: Cosmocatalano, public domain

Alternative dispute resolution might be alternative to the courts, but that doesn’t mean it’s disconnected.

International commercial arbitration and the courts have an important, and mutually beneficial, relationship.  Arbitration relieves pressure on our civil justice system.  Courts use their powers to support the arbitral process and enforce arbitral awards.  Arbitration and the courts also can – and do – learn from each other.

This last notion might seem strange, given that arbitration was traditionally seen as quicker and cheaper than litigation.  The reality now, however, is that both arbitration and litigation can be time consuming and expensive.  In light of this reality, both dispute resolution mechanisms have sought to improve their procedures over time.  When arbitration innovates, courts learn.  And when courts innovate, arbitration learns too.

All the while, both dispute resolution mechanisms must also deal with inevitable tensions arising between speed, quality, and cost.

In recent years, a number of international commercial courts (ICCs) have been established around the world.  To take just two examples, there are ICCs in Singapore and also in China.  They exist as part of those countries’ regular (national) court systems, but they specialise in hearing international commercial cases.  Australia doesn’t yet have an ICC.  Establishing an Australian ICC has been proposed, though the idea is also controversial for some.

If an Australian ICC was to be established, in the future, what could it learn from arbitration?

Potentially, quite a lot: especially given that ICCs aim to attract disputants, and as a result, they might draw inspiration from some of arbitration’s ‘distinctive features’.

One of those features is the power held by parties to select their arbitrators.  Of course, you can’t pick your judge in court.  However, an ICC can be constituted by judges having a range of international backgrounds and having specialist international expertise.  Arbitration is also renowned for its procedural flexibility.  An ICC might take a more flexible approach to the taking of evidence, and the process of proving foreign law.  ICCs may similarly allow for representation by foreign lawyers.  An ICC might further learn from arbitration’s capacity to offer more limited discovery than traditional litigation.

As courts, however, ICCs also bring with them their own benefits.  They include, for example, the judiciary’s contribution to the ongoing development of commercial law via the doctrine of precedent, and its ability to offer greater and more directive case management features designed to promote proportionality in the pursuit of civil justice.  ICCs can also more readily act beyond the parties’ autonomy, such as by joining third parties to proceedings where beneficial and expedient to do so.

Though historically thought of as rivals, arbitration and the courts have always learned from each other. The genesis of ICCs merely makes this process explicit, shedding light on the ongoing and conscious hybridisation of dispute resolution procedures in commercial dispute resolution.  It is this potential for greater responsiveness to the needs of commercial disputants, premised upon procedural innovation in the pursuit of just and efficient outcomes, that underpins the potential of a future Australian International Commercial Court.

– – –

[1] Jennifer Kirby, ‘Efficiency in International Arbitration: Whose Duty Is It?’ (2015) 32(6) Journal of International Arbitration 689, 690.

The authors are members of the Monash University Faculty of Law’s Commercial Disputes Group.

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