International Commercial Arbitration and International Courts

INTRODUCTION In the last fifty years, arbitration has become the most important mechanism for resolving international commercial disputes. (1) Firms in global commerce routinely agree to submit their disputes to private arbitral panels, and states routinely require firms to honor their agreements. (2) Moreover, states routinely enforce arbitral awards. (3) International conventions and national laws allow domestic courts to reject arbitral awards in some circumstances, but courts rarely do so. (4) In terms of its integration into domestic legal regimes, international commercial arbitration (ICA) qualifies as a great success story. The editors of this symposium have asked us to address an interesting question. Why hasn't ICA's success been repeated in the context of international courts? In the last few decades, states have created scores of permanent tribunals with jurisdiction to resolve disputes about international law. (5) By and large, though, states have not been as receptive to the rulings of these tribunals. For example, domestic courts seem less willing to enforce international court judgments than ICA awards. What accounts for this comparative lack of hospitality? Why do states treat ICA and international adjudication so differently? In this essay, I offer an explanation. States treat ICA and international adjudication differently because they are categorically different enterprises. As a private contractual arrangement, ICA does not raise serious legitimacy concerns. (6) Arbitral awards bind only the parties and lack a systemic impact on domestic law. (7) Moreover, ICA involves commercial disputes between sophisticated international traders. States have little interest in policing such disputes, and commercial law does not differ much from place to place anyway. (8) ICA helps facilitate global commerce, which in turn promotes domestic economic growth. (9) Finally, ICA has the support of influential domestic constituencies: firms that rely on arbitration to resolve international commercial disputes and lawyers who see a lucrative professional opportunity. (10) Given all this, it is not surprising that states see ICA as a promise, not a threat. International adjudication does not fit the ICA pattern. (International investment arbitration does not fit the ICA pattern exactly, a matter I discuss below. (11)) International courts do raise significant legitimacy concerns. International courts are not ad hoc contractual arrangements, but permanent institutions that create substantial bodies of law. (12) Their rulings increasingly concern public-law questions on which there is little global consensus. Moreover, the economic benefits of international courts are not so straightforward. Even when they promote domestic growth, international courts can become entangled in sensitive policy debates. Finally, although some lawyers and law professors advocate deference to international courts, international adjudication does not have the same level of support from domestic constituencies as ICA does. As a result, states tend to be much less receptive to international adjudication than ICA. This essay proceeds as follows. First, I describe ICA. I focus on the most important treaty in the area, the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention of 1958) (13) and the laws of three countries that are particularly important in the ICA world: the United States, France and Germany. The New York Convention and the domestic laws of these countries all contain a strong pro-arbitration presumption. I explain why this is so and argue that one example that might seem to cast doubt on my theory--international investment arbitration--in fact does not. Next, I turn to international adjudication. I discuss a series of rulings by the International Court of Justice (ICJ) on the interpretation of the Vienna Convention on Consular Relations (the VCCR). …