Is arbitration the future of international disputes resolution?

The city of Atlanta in Georgia is fast becoming a preferred seat for international dispute resolution. This is in part due to the efforts of the Atlanta International Arbitration Society (AtlAS), whose primary goal is to promote Atlanta as a venue for the resolution of international comatlas-logomercial and investment disputes. AtlAS hosts an annual conference in pursuit of this goal,  which provides a forum where practitioners, experts, and others interested in international arbitration can network and exchange ideas related to this rapidly evolving field. We had the privilege to represent the University of Georgia School of Law as student reporters at the 5th AtlAS conference, October 10-11, 2016, and the particular panel we attended gave some background information on arbitration and focused on the use of arbitration as a dispute resolution mechanism in the payments processing, international non-profit, intellectual property (IP), and construction industries. Here are a few things that we learned.

Arbitration is a binding dispute settlement mechanism whose basic concept is that it is beneficial for somebody with a deep understanding of the context of a dispute to decide the outcome of that dispute. The practice of arbitration first came about when merchants decided that they wanted their fellow merchants to settle their disputes instead of judges, who often lacked the knowledge necessary to fairly settle a dispute in a particular commercial context. These merchants they believed that because other merchants were the people with the best understanding of their particular industry, they were more likely to fairly settle their disputes than anyone else. The practice of arbitration has continued through the ages, but arbitrators in this day and age are almost always lawyers with expertise in a particular field. However, non-lawyer industry experts still play a vital role by providing information that helps the arbitrators decide the case.

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The payments processing industry facilitates the use of credit and debit cards. When someone uses a credit or debit card, the payment must first pass through a processor to get from the bank to the receiving business. Most disputes in this industry are currently resolved through litigation, but experts in the field see value in moving clients to arbitration. Litigation is often cost prohibitive and the public forum is an inhospitable place to settle disputes in the payments processing industry in general. The confidentiality of arbitration would be a great benefit, as it would allow companies to better protect consumer data.

CARE_default_thumb.jpgIn relation to international non-profit organizations, disputes generally arise between the charity and private companies, governments, or employees. However, formal disputes are not common in the non-profit industry, and when they do arise charities tend to favor courtrooms over arbitration. This is because charities are often seen as sympathetic parties, which can increase their chances of winning a judgment in court as opposed to arbitration. However, international charities often find it hard to get a balanced approach in foreign courts, as they are often subject to local bias and trust issues while litigating in foreign legal systems. Arbitration might be the solution for international organizations looking for a fair resolution of disputes arising in foreign countries.

There are many opportunities for arbitration to be utilized in the IP industry. As the cost of litigation rises, more businesses are electing to pursue cost-effective means of dispute resolution, like arbitration, in lieu of protecting their rights in court. That being said, there are generally three categories of disputes that arise in the IP industry.

The first is where two parties are unknown to each other before the dispute arises. In this situation, one party is usually alleging that the another party has infringed upon their patent rights, and they go to court to settle their dispute.

The second category is where parties have a contractual relationship. This can be between licensors and licensees, manufacturers and distributors, or suppliers and purchasers. Because of the prevalence of arbitration clauses in contracts, these disputes are often settled through arbitration. The final category is where companies lack agreements between themselves but work in the same industry. Typically these companies are not likely to arbitrate; however given that litigation is very expensive, some companies do arbitrate in order to keep their legal costs down.

The construction industry is multitrillion-dollar industry worldwide. International construction projects often produce massive and complex disputes that usually cost more than is necessary and take longer than they should. The construction industry has traditionally looked for alternative ways to settle disputes. Arbitration is quicker and cheaper than going to court and still provides an enforceable resolution to the dispute, making it preferable to other more traditional methods of dispute resolution like litigation. Arbitration is also valuable in that it provides the ability to have a dispute decided by others working in the same industry, as most construction clients would prefer that arbitrators knowledgeable about the construction industry decide their case instead of a judge or a jury with no knowledge of the industry.

Attending this year’s AtlAS Conference was an enriching experience. We learned about the use of arbitration as a dispute settlement mechanism in the context of four different industries and we took full advantage of the opportunity to meet and network with practitioners and experts in this rapidly growing field, many of whom were willing to share their experiences and impart helpful advice in regards to our academic journey at the University of Georgia School of Law. In doing so, we forged important professional relationships that we hope will last for many years to come. Finally, we thank Georgia Law for this wonderful opportunity to represent our law school at this important and highly educational event. Read more

Johann & Brian

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