International Arbitration.

• Author: Bjorklund, Andrea K.
• Position: Special Section: McGill Companion to Law

In its ideal form, international arbitration is "a-national"; it is separate and apart from any national legal order and arbitrators can apply international norms that are themselves divorced from the control of any national legislature. Indeed, the fact that international arbitration operates at a remove from national systems explains its status as the preferred means of dispute settlement in complex commercial transactions and the increased frequency of recourse to investor-state arbitration under investment treaties. Notwithstanding this idealized picture, in its practical form an international arbitration is likely to involve the application of a bewildering array of national and international legal orders, which will interact with each other in multifaceted and unpredictable ways.

International arbitration is transsystemia on steroids. International commercial arbitration requires at a minimum the intersection of three "systems": the procedural law applicable to the arbitration, the procedural rules that govern the arbitration, and the substantive law or laws that govern the dispute. The laws of the places where an arbitral award might eventually be enforced can also be in issue, as might be the laws of places where key evidence might be located. Investment arbitration--arbitration between a foreign investor and the "host" state in which an investment is located and from which the dispute arises--adds a complicating twist in that the law applicable to the arbitration will in most cases be international law, yet the domestic law of the host state is certain to play one or more roles in the dispute.

The apparent dichotomy between the ideal and the practical is attributable to the continued presence of the state. Arbitration is usually described as a "creature of contract"; in the first instance, arbitrators gain their authority from the parties who agree to refer their dispute to them.

Some would argue that this is the only necessary source of arbitral authority. (Note that the initial authority is itself based on a contract that is binding because it is grounded in some legal order.) If the disputing parties in an arbitration are cooperative, an award is rendered, the losing party honours it without protest, and no national court system will be called upon to intersect with the arbitration. If, however, one or both parties are uncooperative, or arbitral authority needs to reach beyond the two parties before the arbitrators, the arbitrators' lack of coercive power becomes evident. In order to preserve the arbitration, a coercive authority belonging to a state or states will need to offer support.

To facilitate international arbitration, the international community has set up a remarkable transsystemic framework. The glue that holds the framework together is the Convention on...