“I used once the noun ‘globalization,’ and it twice happened that native English speakers asked me, ‘Gerold, are you sure this word exists in the English language?’”*
On Wednesday of last week, The Miami International Arbitration Society had the privilege of hosting Gerold Herrmann, current President of the International Council for Commercial Arbitration (the ICCA), for his reflections on the “Globalization of Arbitration in Modern Times.”
There are few better individuals with which to consider the global development of commercial arbitration – Herrmann has played an indispensible role in the process. Formerly the secretary of UNCITRAL and President of the London Court of International Arbitration, Herrmann has had a hand in the sculpting (or his voice in the promotion) of many of the essential legal instruments of the international commercial arbitration regime.
To properly survey the “globalization of arbitration,” Herrmann suggested, the analysis should proceed by focusing on three principle vectors of international commercial arbitration’s progression: proliferation; harmonization; and, internationalization.
Beginning with the “proliferation of arbitration,” Herrmann reminded the audience that the spread of arbitration, as we currently define it, is a “relatively recent phenomenon. “ He cited his own closing remarks at the ICCA Montreal Congress in 2006 where he celebrated the demiurgic work of Pieter Sanders by presenting him with the first ICCA lifetime achievement award. The fact that he (Herrmann), in 2006, could present the “father” of commercial arbitration such an award is evidence of the youth of the field and the recency of its spread. “This man really personifies the development of international commercial arbitration,” he asserted.**
Hermann then pointed beyond the U.S., U.K. and Europe to emphasize commercial arbitration’s proliferation. The Hong Kong International Arbitration Center, he said, hosted 54 arbitrations in 1990. In 2005: 281. Similarly, CIETAC (China International Economic and Trade Arbitration Commission) hosted 238 arbitrations in 1999. By 2005: 991. Likewise, the recent 2006 ICCA congress in Montreal and upcoming May 2010 conference in Rio de Jineiro, Herrmann noted, are a product of the ICCA recognition of a growing use of commercial arbitration in Canada and South America. (See this link for information on the Rio conference: http://www.iccario2010.org/ ).
Moving to the “harmonization of arbitration,” Herrmann took note that, in order to globalize, arbitration procedure has had to harmonize with diverse legal and cultural traditions. He recalled his time working as the Director of the International Entry Course for the Chartered Institute of Arbitrators. CIArb, Herrmann explained, was originally offering courses in London only. By spearheading an International Entry Course, Herrmann could choose the country where classes would be offered (and did so on the basis of their receptivity to the UNCITRAL model rules). As such, he was positioned to promote the acceptance of the UNCITRAL rules while concomitantly witnessing obstacles to harmonization.
In addition to the frequently cited differences between civil and common jurisdictions (e.g. contingency fees, oral vs. written presentation of evidence), and the constitutional objections to “contracting away a party’s access to the courts,” there were other consequential legal hurdles in the West. Herrmann cited a court decision in Hamburg holding that arbitrators could not also be lawyers. Further, for a period in the U.K., Herrmann explained, judges were not permitted to charge or accept payment for arbitrating.
There were idiosyncratic aspects of politics, history and religion that made harmonization interesting, too. In Mexico, political serendipity opened the doors to acceptance of new rules: the just-elected political party had promised a modernized commercial code – the “commercial” in international commercial arbitration was stressed. In Switzerland, domestic commercial arbitration was Canton Law – so there, the “international” in international commercial arbitration was stressed. In Thailand and Egypt, the institutions of arbitration had to be independent (reliably “out from under” the political influence of the ruling regime) to receive UNCITRAL’s imprimatur. When Iranian officials (post-Islamic Revolution) approached Herrmann about a new arbitration law that they hoped would make Tehran a regional arbitration center – he was surprised to find that they weren’t concerned by the rules on Riba (interest). The Iranian parliament, they told him, passes laws frequently obliging the payment of interest.
Herrmann closed with a brief treatment of the final component of globalization: “internationalization of the proceeding.” “Nationality,” he asserted, “is becoming less important in choosing an arbitrator.” To illustrate, Herrmann cited his colleague Jan Paulsson (also in attendance), who maintains more than one citizenship. Herrmann raised this point, along with several anecdotes, to emphasize that parties increasingly exhibit preference for certain qualities in an arbitrator (merit and acumen among them) over national or regional commonality.
*Gerold Herrmann’s remarks before the M.I.A.S. referencing reactions to his assertion in the 1980’s that UNCITRAL’s Convention on the International Sale of Goods (CISG) took the regional efforts of The Hague uniform laws and “globalized them.”
**The 6 page Montreal closing speech, citing some of Sanders’ accomplishments (like drafting aspects of the most important convention for the cross-border enforcement of arbitration awards in use throughout the world today: the 1958 NY Convention) is retrievable on the ICCA website, here: http://www.arbitration-icca.org/media/0/12287499183780/speech_herrmann_on_sanders_montreal_2006.pdf
Covered by: John Philip Sonner