International Law

What role does international law play in international business?

Businesses increasingly turn to binding arbitration(1) as a mechanism for dispute resolution. This is manifest not only in the number of arbitration cases, but also by the growing utilization of arbitration clauses in contracts and the expansive variety of transactions that are covered by these agreements.(2) The judiciary has played a role in furthering this interest and activity by enforcing contractual arbitration clauses(3) and by showing deference to the decisions of arbitrators.(4)

Arbitration

Arbitration is intended to provide a quicker, less expensive, and more private alternative to litigation. Other extolled virtues include simplicity, informality, and the benefit of having experienced and knowledgeable decision-makers. Although some arbitrations are merely advisory in effect, this article is directed at binding arbitration. Thus, finality is another positive and complementary attribute of arbitration.

Arbitration is similar to litigation in that it involves an adjudicative process including the presentation of proofs and arguments and the making of a decision by a third party.(5) It is different in other respects.(6) Notably, the disputants, through their agreement to arbitrate, have the opportunity to design specific features of the process. They can set the procedural rules, which include, for example, establishment of a method for selecting the third party decision-maker. Additionally, the disputants can designate the decision-making principles that are to be applied by the arbitrators in reaching their decision.

This latter feature raises some uncertainty about the role of substantive law(7) in arbitration. In litigation, the judge decides the case based on applicable rules of substantive law. Judges strive to apply the law correctly because a prejudicial error can result in an appeal, negating a judgment. In arbitration, arbitrators may be, but usually are not, directed to establish their decision on principles of substantive law, and typical arbitration awards are not subject to appellate review. Thus, the extent to which arbitrators should and do apply substantive law in deciding cases is less clear.

This vague aspect of arbitration has received surprisingly little attention in the legal literature and the world of dispute resolution. One may conjecture that a great many arbitrants and even their attorneys erroneously believe that arbitration is to be resolved in accordance with principles of substantive law.

This article will examine the role of substantive law in commercial arbitration.(8) This will include an evaluation of arbitration statutes and typical contractual agreements that establish the right to arbitration. It will also explore the judicial treatment of the substantive law issue. This article will evaluate the merits of arbitration as an adjudicative dispute resolution process that is not devoted to the application of principles of substantive law. The importance of maintaining arbitration as an alternative that is conceived only through volition emerges from this analysis. Finally, this article will propose a solution to the associated concern that businesses sometimes are unfairly forcing weaker parties into arbitration agreements. The proposed solution assures the viability of arbitration as a meaningful alternative dispute resolution process, but protects against unfair loss of legal rights.

Bibliography

1. Bebchuk, Lucian Arye, 1999, A Rent-Protection Theory of Corporate Ownership and Control, NBER Working Paper No. 7203

2. Bebchuk, Lucian Arye, and Marcel Kahan, 2000, Adverse Selection and Gains to Controllers in Corporate Freezeouts, in Randall K. Morck ed., Concentrated Corporate Ownership, 247-261

3. Bekaert, Geert, Campbell Harvey, and Chris Lundblad, 2005, Does Financial Liberalization Spur Growth? Journal of Financial Economics, 77, 3-56.

4. Bertrand, Marianne, Paras Mehta, and Sendhil Mullainathan, 2002, Ferreting out Tunneling: An Application to Indian Business Groups, Quarterly Journal of Economics, 117, 121-148

In what way do the standards, guidelines and “codes of conduct” of non-governmental and intergovernmental organizations contribute to our concept of international law?

Several branches of international law contain norms that are relevant for the right to adequate food in emergency situations: human rights law, humanitarian law, refugee law, criminal law, economic law and environmental law. All these bodies of norms must be taken into account in construing the normative content of the right to adequate food. Studies on the right to adequate food are often limited to the human rights law provisions directly concerning that right, while humanitarian operators often refer only to international humanitarian law. However, a comprehensive approach is necessary in order to strengthen respect, protection and fulfilment of the right to adequate food in emergency situations. This chapter reviews the relevant branches of international law, analyses to what extent they are applicable to emergency situations, and explores their complementarity.

This is a collection of selected documents, mostly in abridged form, that have a bearing on partnerships among various actors for global governance. In order to set the documents in their developmental context, many are accompanied by commentaries written by persons involved in their drafting, adoption or implementation. The present publication is issued in a provisional form to facilitate discussions at the World Civil Society Conference: Building Global Governance Partnerships [WOCSOC], 7-11 December 1999, Montreal. Its revised version, reflecting the results of workshops during WOCSOC and including several analytical chapters, will be published in time for the Millennium NGO Forum and the UN Millennium Assembly in the year 2000.

During the past 25 years or so, notably since the Stockholm Conference on the Human Environment in 1972, there has been a massive emergence of NGO activities in international affairs throughout the world. These activities encompass not only the promotion of human rights, humanitarian relief, development cooperation and environmental action, but also cooperation in various phases of conflict resolution. NGOs are not a new phenomenon. However, the weight of their activities in world politics is significantly changing as they supplement or even, in some cases, partially substitute for traditional politics of the state.

Processes of global governance

As a result, both the substance and the processes of global governance are being transformed in profound ways. While we cannot foresee all of the forms and outcomes of this evolutionary stage, we can identify many of its characteristics and the challenges presented.

The nation-state as the central organizing structure of modern human civilization is proving to be both too large and too small to address effectively many of our most pressing contemporary problems. In response, and in order to find ways through or around these limitations, people — organizing themselves in a vast array of forms and styles that we refer to collectively as “civil society” — are trying to make a difference. By far most of the efforts of civil society organizations are carried out at the local level. But when the nature of the problems confronted so require, nongovernmental groups must encounter and deal with governmental structures from the local through international levels. To the extent that these disparate actors endeavor to create a constructive working relationship (as distinguished from an essentially confrontational one), we refer to the relationship as a “partnership.”

As the term “partnership” generally connotes a certain degree of equality or equivalence between the partners, it may be a euphemism at best in many cases of governmental/nongovernmental relationships. Nevertheless, it accurately conveys the intent to collaborate for shared goals while capitalizing on the unique identity and characteristics of each partner. The concept of governmental/nongovernmental partnership is a starting point for experimenting in creating new structures and processes for better, more human governance at all levels.

These partnership dynamics, however, are not only about how to evolve institutions and make decisions. They bear most profoundly on figuring out what the goals and cardinal principles of governance itself should be in our highly pluralistic, dangerous, and radically unequal world. The ethical foundations of global governance are undergoing a shift which may, with a century of hindsight, be viewed as that which finally allowed humanity to come of age as a social being on a worldwide scale.

The present collection of documents is no more than the tip of an iceberg, but hopefully it is sufficient to indicate what lies below as well. This collection illustrates the early stage we have reached in partnership-building among various actors and also suggests where we may go from here.

Bibliography

1. Tatsuro Kunugi, Ph.D., has been Professor of International Administration and Cooperation at International Christian University, Tokyo, since 1990. Previously, he was UN Assistant Secretary-General for humanitarian assistance to the Cambodian people (1984-87) and for population activities (1987-90). He is Representative of the International Cooperation Research Association, Tokyo, which he co-founded in 1991. He is also Special Coordinator of WOCSOC (World Civil Society Conference) for the UN University.

2. Martha L. Schweitz, J.D., has been Professor International Law at Seinan Gakuin University, Fukuoka, Japan, since 1990, after teaching in Japan as a Fulbright lecturer the year before. Previously, she taught international law at the University of Oregon (1986-89) and practiced international business law with a Chicago firm (1981-86). Her research in recent years has focused on civil society participation in intergovernmental institutions. She is also a member of the Steering Committee of WOCSOC (World Civil Society Conference).