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64 AMERICAN BUSINESS LAW JOURNAL

International Commercial
Arbitration
by PIETER SANDERS*
The significance of internation- the arbritration proceedings from
al commercial arbitration is grow- beginning to end. Although prac-
ing steadily. The closer the ties ticed now and then, a warning
between business firms all over should be sounded, both with res-
the world, the more need there is pect to international and national
for a simple device for friendly arbitration, against the so-called
"arbitration ad hoc"; in this case
settlement of disputes that may
arise out of these commercial con- parties incorporate in their con-
tacts. International Commercial tract an arbitration clause, in
Arbitration follows international which they do not specifically re-
trade. Rather than going to a State fer to an existing arbitration bcdy,
Court in a foreign country parties but merely stipulate that all dis-
to international contracts prefer to putes which may arise out of their
have access to arbitrators, experts, contract will be settled by arbi-
in the particular field of commer- tration.
cial endeavor of the parties and Although sometimes provisions
familiar with the customs of inter- are made for the number of arbi-
national trade. trators and the manner in which
There are quite a number of they should be chosen many other
trade organizations, that have cre- questions are left open or unsettled.
ated their own arbitration facili- An arbitration ad hoc, may there-
ties and that are hearing and de- fore lead to many disappointments.
ciding disputes resulting out of in- However, where parties in their
ternational contracts in their spe- contract refer to arbitration ac-
cific trade. Typical examples can cording to the Rules of a specific
be found in the corn-trade, the rub- Arbitral Body they, in making this
ber-trade, the oil-trade. Besides simple clause, include in their con-
these specialized arbitration bod- tract, all the detailed Rules of the
ies there can be found, further, Arbitration Institute referred to.
general arbitration institutes will- This entails not only the nomina-
ing to administer all kinds of inter- tion of arbitrators but also the sub-
national commercial arbitration; sequent steps and formalities to be
typical examples of this category observed, all the way through to
are the American Arbitration Asso- the rendering of the arbitral award.
ciation, located in New York, and The nomination of arbitrators, once
the Court of Arbitration of the In- a dispute has arisen, is assured in
ternational Chamber of Commerce, this case. The Rules stipulate a.o.
located in Paris. with great care and d e t a i 1 the
The advantage of these various method of appointing arbitrators:
arbitration agencies is that 'they if one of the parties would refuse
are eminently suited to administer to cooperate in naming arbitrators
:::Biographical Note: Dr. Pieter Sanders is professor of Commercial law at the
Nothorlands School of Economics at Rotterdam, the Netherlands. IlIc i3 the author,
amongst other publications of "International Commercial Arbitration" of which
handbook two volumes already are published by Martinus Nijhoff, The Hague,
Netherlands. He received his L.L.B., L.L.M., and S.J.D. degrees at the Law School
of Leiden University, Leiden, The Netherlands. For many years, he practiced law
as member of the Rotterdam bar, interrupted only by a few ye.ar.s in high govern-
mental positions.
COMMERCIAL ARBITRATION 65

there is always a way out; the In- accordance with the Rules of the
stitute will in that case do the nom- Arbitration Institute of that coun-
ination on his behalf. try; conversely, if the d i s p u t e
In an arbitration ad hoc when should be settled in country B it
a party refuses to appoint his arbi- shall be the Arbitration Institute of
traitor, the other party may have that latter country that will decide
Lo go to Court requesting the Court the case according to its rules. The
to do the nomination. The arbitra- only problem still to be decided
tion may in these cases already be upon is, the determination in which
faltering before it even got started. country the dispute shall be settled.
Also, during the course of the arbi- This decision can either be left to
ration many incidents may occur a joint committee of the two Arbi-
which were not and could not be tration Institutes that concluded
anticipated at the time that the con- the bilateral agreement, or it can
tract with an ad hoc arbitral clause be left to the decision of a third
was drawi up. party.
The detailed Rules of the Arbi- Gradually a network of bilateral
tration Body provide for all these agreements between Arbitration
matters. Furthermore, it puts at Institutes of different countries is
the disposal of the parties and the covering the entire globe: exam-
arbitrators a neutral administrat- ples are the agreements made by
or who takes care of the exchange American Arbitration Association
of written memoranda and furnish- with the Japanese Arbitration As-
es facilities needed by the parties sociation and with the Netherlands
and arbitrators for the oral hear- Arbitration Institute. The Nether-
ings if these are needed. Adminis- lands Arbitration Association in
tration of arbitral procedures is a turn, concluded a few months ago
job requiring just as much expert such an agreement with Japan.
skill as many another job. An im- Another development w h i c h
properly or unskillfully administer- should be noticed in the field of
ed arbitration presents many risks. international commercial arbitra-
There is increasing consensus on tion is the growing importance of
this point; the wide recognition of arbitration, not only between two
the perils inherent in the ad hoc private business firms located in
arbitration serves to explain the different countries, but also be-
rapid growth of Arbitration Insti- tween a private firm in one coun-
tutes all over the world. try and a Government or govern-
This recognition also explains mental agency in another country.
another development in the field Here again arbitration follows in-
of international commercial arbi- ternational trade. International
tration. Upon the initiative of the trade in our post-World-War II
American Arbitration Association days has received an increasing
the number of bilateral agreements public aspect, due to the making
between Arbitration Institutes in of contracts by private firms with
different countries has been stead- foreign states or foreign govern-
ily growing since World War II. mental agencies; examples are
These bilateral agreements provide contracts for the delivery of goods,
that the parties can incorporate in construction of public utilities, har-
their contract a so-called "joint bours, roads, and last but not least
arbitration clause"; this means international loans to and invest-
that, when a dispute arises between ments in foreign countries.
two parties, one living in country Dr. Martin Donke gave 'n the
A and the other in country B, and Arbitration Journal, vol xn'. 3 of
this dispute should be settled in 1962 an impressive list of all the
country A, it shall be decided in activities recently developed by all
66 AMERICAN BUSINESS LAW JOURNAL

kinds of organizations and institu- tional Disputes between two Par-

tions to come to arbitration facili- ties of which only one is a State."
ties for this type of cases. Many It goes without saying that in-
wishes and recommendations have ternational arbitration is not a uni-
been embodied in resolutions of in- versal remedy. However, those in-
ternational conferences of lawyers, terested in international t r a d e
bankers and businessmen. Here should also be interested in the
again it seems to me, is a need for peaceful settlement of disputes
institutional arbitration, an arbitra- which will occur, as long as human
tion machinery provided for by an beings remain the way they are.
experienced agency. But it is safe to state that interna-
tional arbitration contributes sub-
The Permanent Court of Arbitra- stantially to international collabor-
tion located in the Peace Palace ation and understanding. Its de-
in the Hague, the Netherlands has velopment deserves therefore, the
just issued a new set of rules, spe- attention of all those who are gen-
cially drafted for this purpose: uinely interested in fostering inter-
"Rules 1962 of Arbitration and Con- national trade, as a means of
ciliation for Settlement of Interna- peaceful international cooperation.

"Fix Your Eyes On Greatness"

by
.PERICLES OF ATHENS
(495-429 B.C.)
Most of those who have stood in pendence both in war and peace.
this place before me have com- Of the battles which we and our
mended the institution of this clos- fathers fought I do not wish to say to
ing address. It is good, they have more. They are too familiar
you all. I wish rather to set forth
felt, that solemn words should .be with
spoken over our fallen soldiers. I the constitution and manner I
do not share this feeling. Our which we rose to greatness. For
a number think . . . that these things should
sense of the deserts of
sol-
of our fellow citizens should not be called to mind in today's
depend upon the felicity of one emnity,
man's speech. But since the wis- Our governmnt is not copied
dom of our ancestors enacted this from those of our neighbors. We
law, I, too, must submit and try to are an example to them rather
suit as best I can the wishes and than they to us. Our constitution it
feelings of every member of this is named a democracy, because
gathering. is in the hands not of the few but
My first words shall be for our of the many. But our laws private secure
equal justice for all in their
ancestors; for it is both just to
them and seemly that on an occa- disputes, and our public opinion
sion such as this our tribute of welcomes and honors talent in
memory should be paid them. For, every branch of achievement.
dwelling always in this country, And as we give free play to all
they have handed it down to us in our public life, so we carry the
free by their exertions. So they same spirit into our daily relations
are worthy of our praises; and still with one another. We have no
more so are our fathers, while it is black looks or angry words for our
we ourselves who consolidated our neighbor if he enjoys himself in his
power and secured the city's inde- own way. Open and friendly in our