lawyers

International Arbitration: Which side of the road do you drive on?

We all know that when leaving the safe confines of our Arizona existence for international travel to a place such as London, we can expect some minor differences.

As between Arizona and England, the language is basically the same, although (depending on whom you ask) one side speaks with an accent. Some words mean different things – such as the soccer / football, boot / bonnet, and trunk / hood debates. And cars are driven on different sides of the roads.

But what of the attorney whose business client is leaving the safety and comfort of Arizona for the unknown of international arbitration in London?

As in Arizona, there are different ways to participate in a London arbitration, which are guided by the contractual agreement calling for disputes to be handled in this manner. The parties can find their own private arbitrators. Or they can look for the assistance of organizations whose purpose is to handle arbitrations and have extensive rules in place to allow for the experience.

Many business contracts here in Arizona and throughout the United States of America provide for arbitration, often (but certainly not always) through the American Arbitration Association (or, “AAA”). In international transactions, many agreements will cite London as the location for arbitration, and in particular The London Court of International Arbitration (or, “LCIA”) as the entity for use in international arbitration. Although considered by many to be a leader in international arbitrations, LCIA certainly is not alone. AAA, for example, created its own international arbitration commission in the 1990s. And although London might be the arbitration location cited in an agreement, LCIA proceedings can be conducted throughout the world.

Although separated by an ocean and much of a continent, the differences between AAA and LCIA are so minimal as to provide comfort to those who are familiar with one but not the other. Both have been around long enough to pretty much get things right. LCIA came into existence in the 1890s, with AAA following thereafter in the 1920s with the merger of two arbitration organizations.

The starting point for any arbitration is the agreement calling for such alternative dispute resolution. LCIA’s recommended contract alternative dispute resolution language looks familiar to anyone who has included arbitration clauses in a domestic business agreement.

“Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the LCIA Rules, which Rules are deemed to be incorporated by reference into this clause. The number of arbitrators shall be [one/three]. The seat, or legal place, of arbitration shall be [City and/or Country].  The language to be used in the arbitral proceedings shall be [    ]. The governing law of the contract shall be the substantive law of [    ].”

Once LCIA is the agreed-upon source of the tribunal, it is – as with a AAA arbitration proceeding – mainly a matter of following LCIA’s rules. The rules are straightforward, and the LCIA’s administrators are incredibly responsive. As with AAA, the parties have options as to how to select arbitrators, submit position statements if they choose, are given an expedited path to resolution (when compared to typical civil litigation), and participate in an evidentiary hearing.

So as it turns out, it does not matter which side you drive on, so long as you obey the rules of the road.

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