Christopher R. Drahozal

Private Ordering and International Commercial Arbitration

With its focus on private legal systems, the private ordering literature sets up a seeming dichotomy between public court adjudication of disputes, applying publicly created laws, and private arbitral adjudication of disputes, applying privately developed rules. Trade association arbitrations fit neatly into the latter category; public courts fit almost as neatly into the former. But while the dichotomy highlights the cases of most interest in the private ordering literature, it is too simple. It gives the appearance of an all-or-nothing choice - all public dispute resolution or all private dispute resolution - when in fact hybrid choices are common.This article seeks to add to the private ordering literature in two ways. First, it argues that international commercial arbitration, while sometimes cited as an example of private ordering, is in fact - a hybrid case - with important elements of public involvement supplementing the use of a private decision maker. Too often, international arbitration is grouped with trade association arbitration in ways that blur the important distinctions between the two. Not all arbitration is alike, and not all parties that agree to arbitrate opt out of the legal system altogether. Second, this article examines attributes of international transactions that help explain party choice among these different mechanisms of resolving disputes. It considers four attributes: (1) distance - geographic, as well as cultural and political - between the parties; (2) the complexity of the good or service; (3) the clarity of the applicable national law; and (4) the importance of speedy resolution of disputes. Trade association arbitration is most likely to be used for transactions in simple goods, although less likely in international transactions involving greater distances than domestic transactions. International commercial arbitration is the more likely choice for international transactions, except in cases in which the applicable law is clear or emergency relief is likely to be needed. In such cases, parties are more likely to choose litigation in national courts. The attributes thus prove useful in explaining differences in the choice of enforcement mechanism across various types of international transactions.

Regulatory Competition and the Location of International Arbitration Proceedings

This article examines the effect of regulatory competition in international arbitration law on the parties’ choice of the place of arbitration – in other words, the extent to which countries that revise their arbitration statutes succeed in attracting parties to hold more arbitration proceedings in the country. Using a panel of countries that enacted new or revised arbitration statutes from 1994 through 1999, the article finds that a country which enacts a new or revised arbitration statute experiences a statistically significant increase in the number of ICC arbitration proceedings held by party agreement in the country. Because the published data are only for ICC arbitrations and not arbitrations administered by other institutions (or ad hoc arbitration proceedings), the estimates here likely reflect the minimum increase that results. In absolute numbers, the estimated increase is small, with roughly two additional arbitrations in the full sample and from eight to ten more arbitrations in major arbitration countries. That is not surprising, given the relatively small number of ICC arbitration proceedings held worldwide in any given year. In percentage terms, by comparison, the estimated effect is greater, ranging from 18.39 percent for the full sample to 26.95 percent for the major arbitration countries. Because of the small number of arbitrations involved, the estimated economic benefit to arbitral sites from new or revised arbitration statutes is substantially smaller than some have suggested, although data limitations make translating the increase in the number of arbitrations into monetary terms inexact.

Arbitration Clauses in Credit Card Agreements: An Empirical Study

This article uses a newly available database of consumer credit card agreements to take the first, in‐depth empirical look at why credit card issuers use arbitration clauses. Based on a sample of credit card agreements made available by 298 issuers under the Credit Card Accountability Responsibility and Disclosure Act of 2009, it finds that while most credit card agreements include arbitration clauses, the substantial majority of credit card issuers (247 of 298, or 82.9 percent) do not use arbitration clauses in their credit card agreements. The article also finds that credit card issuers are more likely to use arbitration clauses when they (1) specialize in making credit card loans; (2) make riskier credit card loans; and (3) have a larger credit card portfolio. Conversely, issuers are less likely to use arbitration clauses when they are (1) mutually owned (i.e., credit unions) rather than shareholder owned (i.e., banks); and (2) are located in states in which class arbitration waivers are unenforceable. These empirical findings have potentially important implications for a number of timely policy questions, such as: What sorts of options are available to consumers who wish to obtain a credit card that is not subject to an arbitration clause? How might increased regulation of arbitration (whether by Congress or by the Consumer Financial Protection Bureau) affect the market for credit card loans? and How are businesses likely to respond to the Supreme Courts recent decision in AT&T Mobility LLC v. Concepcion?

FAA Preemption after Concepcion

AT&T Mobility LLC v. Concepcion is an important case for its holding that the FAA preempts application of state unconscionability doctrine to invalidate an arbitration clause with a class arbitration waiver. But in a number of respects, the effect of Concepcion has been overstated, including its effect on application of state unconscionability doctrine to arbitration clauses. Concepcion does not preempt all or even most state unconscionability doctrine as applied to arbitration agreements. Properly construed, Concepcion preempts state unconscionability doctrine only when that doctrine conditions enforcement of arbitration agreements on procedures inconsistent with “fundamental attributes of arbitration” of the sort illustrated in Concepcion itself ― such as the use of juries, court-monitored discovery, evidentiary rules, and, of course, class arbitration. If, however, the Supreme Court were to construe Concepcion more broadly (or eliminate application of unconscionability to invalidate arbitration clauses altogether), courts would retain some residual authority to police the fairness of arbitration clauses, but only by finding a dispute resolution process not to be arbitration at all.

The Iran-U.S. Claims Tribunal at 25 : The Cases Everyone Needs to Know for Investor-State & International Arbitration

1. Iran-U.S. Claims Tribunal Precedent in Investor-State Arbitration, Christopher S. Gibson and Christopher R. Drahozal 2. Nationality of Business Association Claims Before the Tribunal: Key Cases that International Arbitrators Should Know, David J. Bederman Awards: Housing & Urban Services, Intl (HAUS), Inc. v. Islamic Republic of Iran Bikoff v. Islamic Republic of Iran Saghi v. Islamic Republic of Iran 3. Interim Measures of Relief: The Continuing Importance of the Iran-U.S. Claims Tribunals Jurisprudence, Sean D. Murphy Awards: Behring Intl, Inc. v. Islamic Republic Iranian Air Force E-Systems, Inc. v. Islamic Republic of Iran Islamic Republic of Iran v. United States 4. The Tribunals Transparency Features: Some Observations, Jack J. Coe, Jr. 5. Consolidation of Proceedings in Investor-State Arbitration: From the Iran-U.S. Claims Tribunal to the NAFTA, Lucinda A. Low and Jeffrey F. Pryce 6. Evidentiary Practices Before the Iran-United States Claims Tribunal, Roger P. Alford Awards: Avco Corp. v. Iran Aircraft Industries Buckameier v. Islamic Republic of Iran Harris Intl Telecommunications, Inc. v. Islamic Republic of Iran 7. Contract-Related Claims in Iran-U.S. Claims Tribunal Jurisprudence, Daniel M. Price Awards: Starrett Housing Corp. v. Islamic Republic of Iran SeaCo, Inc. v. Islamic Republic of Iran 8. The Contributions of the Iran-United States Claims Tribunal to the International Law on Expropriation, Mark R. Joelson Awards: Amoco Intl Finance Corp. v. Islamic Repoublic of Iran Phillips Petroleum Co. Iran v. Islamic Republic of Iran Foremost Tehran, Inc. v. Islamic Republic of Iran 9. The Enduring Relevance of the Expropriation Jurisprudence of the Iran-U.S. Claims Tribunal for Investor-State Arbitrations, Andrea J. Menaker Awards: Starrett Housing Corp. v. Islamic Republic of Iran Tippetts, Abbett, McCarthy, Stratton v. TAMS-AFFA Consulting Engineers of Iran Phelps Dodge Corp. v. Islamic Republic of Iran 10. The Iran-U.s. Claims Tribunal and Investment Arbitration: Understanding the Claims Settlement Declaration as a Retrospective BIT, David D. Caron