chapter  1
17 Pages

Introduction

Strategic manipulating of procedure is a potential risk in international commercial dispute resolution. Substantive and procedural advantages are relatively easy to gain in international compared with domestic transactions, caused by the conflict of different legal systems and substantive laws.1 Effective dispute resolution is one of the key factors contributing to the success of international business practice. In order to achieve certainty and predictability, parties usually enter into dispute resolution agreements in their international civil and commercial relationship. Dispute resolution agreements record the parties’ consent on the method, the forum and the special procedural conditions to resolve their commercial disputes. Various dispute resolution agreements exist, including choice of court/jurisdiction agreements, arbitration agreements, mediation agreements, class action waiver agreements, etc. The two most important and frequently used dispute resolution agreements are choice of court agreements and arbitration agreements, which are the focus of this book. For the purpose of this book, disputer resolution agreements/clauses, thus, refer only to jurisdiction and arbitration agreements. The functioning of dispute resolution agreements is to direct the parties to the agreed forum, either a court or an arbitral tribunal, using the agreed method, adjudication or arbitration, to resolve their disputes.2 Where the parties enter into jurisdiction or arbitration agreements, they expect greater certainty, procedural efficiency and lower litigation cost. They wish their dispute to be brought in the only forum or tribunal, as designated in their agreements, and no party can freely breach the promise. If a dispute resolution agreement is the same as other contract terms, the expectation is realistic. However, dispute resolution agreements are

different from normal contract terms in that they aim to grant jurisdictional competence to an authority, while derogating other competent authorities from their jurisdiction. While state sovereignty is involved, the agreement, though aiming to resolve private matters between private parties, cannot be classified as purely ‘private’. The mixture of private rights and public power leads to the complexity of this issue. The recognition and enforcement of dispute resolution agreements, as a result, generate more perplexing problems than ordinary contract terms could. The forum, which has been designated by the parties, may not be able to accept the prorogated power because accepting such power might infringe the sovereignty of another state3 or because exercising this power is impractical.4 It is also possible that the subject matter concerns the interests of third parties, public policy or fundamental national interest, which is not privately disposable.5 More difficulty may result from the derogation effect of dispute resolution clauses, as many countries traditionally object to the idea of having courts’ authority ousted by the private agreement.6 The attitude to dispute resolution agreements has been largely changed in the contemporary world.7 However, the sceptical view of the ‘ouster’ effect has never been completely removed.8 The effectiveness of dispute resolution clauses, especially jurisdiction clauses, is frequently questioned in international legal practice. The original purpose of commercial parties by adopting dispute resolution agreements in their contracts is not achievable if state attitude towards dispute resolution clauses is unclear or negative. Regardless of practice in individual countries, the world clearly witnesses the trend to support party autonomy. This is demonstrated by the international effort to establish judicial cooperation or harmonized

jurisdiction rules on enforcement of procedural autonomy agreements. It is reasonable to predict that the importance of dispute resolution agreements will continue to increase in the future. Countries will further relax national law on deciding the validity and enforceability of dispute resolution agreements, and more in-depth judicial cooperation will be established in the international context to improve efficiency of dispute resolution agreements and to prevent concurrent proceedings and irreconcilable judgments.