2009 Global Business Forum - Session Papers
International Commercial Arbitration — Miami Style
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After all, resolving international business disputes between corporations, individuals and even nations is far more interesting than drafting pension plans, said Jan Paulsson, a partner of the Paris-based law firm of Freshfields Bruckhaus Deringer and a visiting professor at the University of Miami School of Law.
But can Miami get a piece of the international commercial arbitration action?
That was the main question considered in “International Commercial Arbitration — Miami Style,” a panel discussion held during the University of Miami Global Business Forum Jan. 15 - 16, 2009.
“The law practitioners in Miami are very interested in developing Miami as a place for international arbitration. This is not an unusual ambition,” said Paulsson, who is also president of the London Court of Arbitration, a judge of the World Bank Administrative Tribunal and a member of the Council for Commercial Arbitration. “Legal practitioners in all sorts of towns around the world want their town to become active in international arbitration.”
John Rooney, who has taught International Commercial Arbitration at UM School of Law, believes Miami has what it takes.
“There is an interesting pool of talent that is found here in Miami that is perhaps a little more difficult to find in other areas,” said Rooney, who has worked with several arbitrating institutions including the International Chamber of Commerce and the Inter-American Arbitration Commission. “One of the things I notice as a practitioner, and not just in the area of arbitration, is that to practice law in Miami is to have an international preference, and it pretty much cuts across all practice groups.”While Chicago and New York have their share of international attorneys, “they don’t have the same kind of experience and training [attorneys in Miami have],” Rooney added. “We have a very receptive pool of professionals who are used to dealing with [cross-border issues].”
The UM School of Law is helping to advance the region’s international arbitration ambitions. “The University of Miami is unusual as a law school because the number of people who teach international law [at UM] is large and because all of us who teach those subjects also teach domestic law,” said Caroline Bradley, who professor and chair of the School's International LLM Program.
International arbitration with regard to the business world is a fairly new specialty, according to Paulsson. Its foundation was established during the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, or the New York Convention for short. Countries that signed on to that United Nations-sponsored initiative pledged to enforce awards enacted in international arbitrations. As of 2008, 144 countries and territories had signed the New York Convention.
As international business has increased, so has the need for lawyers who specialize in international arbitration. Paulsson expects that trend to continue growing “exponentially,” with issues ranging from contract disputes of a few thousand dollars to a multibillion-dollar corporate investment into a developing country.
But there are significant obstacles to Miami realizing a starring role in this field. For one, Miami’s location within the United States, a powerhouse of international trade, makes it less likely to be selected by a foreign entity seeking to resolve a dispute with an American company.
“If an American party is involved as a contracting partner,” Paulsson said, “all things being equal, the arbitration is not going to be in the United States because that is not even-handed.
“Parties are looking for something neutral; they are looking for something neutral in every way they can find — law, rules, language of arbitration, etc.,” he continued. “One of the obvious qualities that will become apparent to a businessman with no legal knowledge is that you are from the United States, I am from France, where is the place for arbitration?” The answer, more often than not, is a neutral location outside of both of those nations.
International business disputes in Europe, for example, are unlikely to be arbitrated in Miami if a neutral site could be found on the other side of the Atlantic. “Why would French and German parties seek their place of arbitration in the United States?” Paulsson asked rhetorically.
However, he noted some significant incentives to arbitrating in Miami when at least one party is from the Western Hemisphere.
“In the United States, Miami has a bit of a particular position because of its cosmopolitan nature ... in terms of its geographical location, because of its culture, because of its various nationalities of people who live here,” Paulsson said. “It seems that every Latin American has two capital cities — one is the original one and the other is Miami.... They have residences in both places and they feel quite at home [in Miami.]”
The bilingual and even trilingual nature of the Magic City only helps its standing with Latin American parties. Although traditionally resistant to international arbitration, Latin American companies and governments have been warming up to the process over the past couple of decades and have an increasing number of attorneys adept at international law. “Now it is a game they know how to participate in,” Paulsson said.
“If you are dealing with an arbitration in which you have a party that deals exclusively in Spanish or Portuguese, it is relatively easy in Miami to have the infrastructure [for an arbitration],” Rooney added.
But it is still a “scary thing,” Paulsson said, because anyone can be named an arbitrator. Current international law allows each party in a dispute to name its own arbitrator, with a third “chairman” being agreed upon either by both parties or by an organization such as the International Chamber of Commerce. “Ultimately you are appointing an arbitrator that the other party obviously does not trust,” Paulsson explained. In fact, dissenting opinions in arbitrations are written by the appointed arbitrator of the losing side “98 percent of the time,” he said.
This system has inspired the creation of an “incredible number of international arbitration institutions, most of which are composed of two men and a dog and hoping that all three of them are going to be appointed arbitrators,” Paulsson joked. “It is rather likely that perhaps the two men don’t know as much about arbitration as the dog does.”
Paulsson concluded that international arbitration is in need of reform and that attorneys should find ways to ensure that all three arbitrators named in a case are trusted by all parties involved.
“People fear foreign things,” he said. “So international arbitration has to see to it that it isn’t foreign. We are all international. That is the message and that is the reality of this world.”
By Erik Bojnansky
