The Evolution of International Commercial Dispute Resolution: From One Size Fits All to Bespoke Suit

By Lorraine M. Brennan, Esq.

Several years ago, I was giving a talk in Parma, Italy, on international commercial dispute resolution and the dramatic changes the field had undergone in the past century.  Looking around the room, I noticed that everyone was exhibiting la bella figura (this was Italy, after all); thus, I decided to use a clothing metaphor for my musings.

The “One Size Fits All” Era

The first phase of the evolution I referred to as the “One Size Fits All” period.  Following the end of the Great War, business leaders from the U.S., the U.K., France, Italy, and Belgium—known as the Merchants of Peace—founded the International Chamber of Commerce, headquartered in Paris, France.  The aim was to provide a forum to discuss business disputes and avoid another war.  Once the institution was founded, the founders realized they needed a mechanism to resolve disputes, which lead to the founding of the ICC Court of Arbitration in 1923, although with rules of arbitration and conciliation.   At that time, however, international arbitration was not widespread, as there was no international enforcement mechanism in place that made it a viable option.  Moreover, the conciliation rules provided an opt-out for either party, thus rendering them essentially toothless.

With the advent of the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), the world finally had a treaty that would allow for enforcement of foreign arbitral awards.  The Convention was concise, composed of only 16 Articles, and dealt with two issues:  the enforcement of the agreement to arbitrate and the enforcement of the resulting arbitral award.  The United States ratified the Convention in 1970, and to date there are 150 countries that are signatories.  This development was a dramatic and major step forward for international commercial dispute resolution.

Two other very significant developments were the 1965 creation of the International Centre for Settlement of Investment Disputes (ICSID) (the Washington Convention), designed to deal with Investor/State matters, and the Iran/U.S. Claims Tribunal of 1981.  Both bodies have contributed greatly to a “soft body” of international arbitration jurisprudence, and the Iran/U.S. Claims Tribunal elevated the status of the UNCITRAL Arbitration Rules by employing and adopting these rules for use at the Tribunal.

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