Arbitration addresses large-scale legal injuries across borders

Arbitration addresses large-scale legal injuries across borders 30 March 2012

Globalisation has made cross-border collective injuries a legal and societal reality. However, most state courts operate on a territorial basis and are therefore ill-equipped to deal with this kind of legal harm. Arbitration turns out to be a viable alternative according to the preliminary outcomes of an ongoing research project conducted by a HiiL/NIAS fellow.

Large-scale legal injuries are very difficult to handle within existing litigation models, particularly when the parties come from different countries. The most common form of addressing mass legal injuries – the United States class action – has been subject to severe criticism and is highly problematic in the international context due to its use of opt-out mechanisms. Other countries offer a range of judicial procedures meant to address widespread legal harm, but many of these devices are only available on a domestic basis.

The European Union, recognising the unique challenges associated with international disputes, has recently announced formal efforts to create a coherent system of cross-border collective redress, although a firm proposal will be years in the making and will face numerous legal and political obstacles.

Is there a solution? Recent efforts to establish transnational judicial processes for international disputes have not been widely embraced. However, arbitration might provide some answers since it is by far the preferred means of resolving complex international commercial disputes.

Arbitration might be ideal to address collective cross-border disputes for several reasons.

Firstly, it eliminates problems associated with judicial jurisdiction, since arbitration is established by the consent of the parties.

Second, arbitration addresses many of the procedural challenges involved in international litigation, since arbitral procedures can be specially designed to meet the needs of the parties and the dispute. It can harmonise differences between the common and civil law.

Third, foreign arbitral awards are much easier to enforce internationally than foreign judgements, due to the existence of international treaties such as the New York Convention.

Finally, arbitration avoids certain conflict of laws concerns that could affect the enforceability of foreign forum selection clauses.

These are the preliminary outcomes of an ongoing research project conducted by HiiL/NIAS Fellow Stacie Strong on ‘Collective Arbitral Relief for Mass Injuries’.

Downloads and Resources

  • Article: S.I. Strong, Class and Collective Relief in the Cross-Border Context: A Possible Role for the Permanent Court of Arbitration, 23 The Hague Yearbook of International Law, 2010, 113, Martinus Nijhoff Publishers, 2011
  • Book: S.I. Strong, Class Arbitration and Collective Arbitration: Mass Claims in the National and International Sphere, Oxford University Press, forthcoming 2013
  • Article: S.I. Strong, Collective Redress in the Cross-Border Context: Litigation, Arbitration, Settlement and Beyond, in: Sam Muller et. Al (Eds.), The law of the Future and the Future of the Law. Torkel Opsahl Academic EPublisher, forthcoming 2012

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