Arbitrator Selection and Regulatory Competition in International Arbitration Law

Abstract

This paper examines empirically the effect of enacting a new or revised arbitration statute on the selection of international arbitrators. It considers three principal ways in which arbitrators may benefit from a new arbitration law. Parties may prefer to select arbitrators from the country in which the arbitration proceeding is held because of their expertise in the country‟s arbitration law (which governs the conduct of the arbitration proceeding). Thus, any increase in arbitration proceedings in a country following enactment itself likely benefits local arbitrators. In addition, enactment of a new arbitration statute might make it more likely that local arbitrators will be selected in proceedings held in the enacting country, because the changed legal regime makes local arbitrators‟ expertise more valuable than it was before enactment. Finally, successfully lobbying for a new arbitration statute may signal that arbitrators in the country have the sort of managerial or consensus-building skills that would make them effective arbitrators. If so, enactment might make it more likely that arbitrators in the enacting country will be selected for arbitration proceedings elsewhere.

The paper uses cross-sectional data to estimate models of the selection of presiding and party-appointed arbitrators in arbitration proceedings administered by the International Chamber of Commerce (“ICC”) in 2000. The principal empirical findings are threefold. First, there is a strong relationship between the number of arbitration proceedings held in a country and the number of arbitrators selected from the country. Thus, as expected, an increase in arbitration proceedings held in a country following enactment of a new arbitration law almost certainly benefits prospective arbitrators in that country. Second, the rate at which local arbitrators are selected for arbitration proceedings held in a country increases after enactment of a new arbitration law. Enactment thus benefits local arbitrators not only by increasing the number of proceedings in the country, but also by increasing the rate at which local arbitrators are selected in those proceedings. Third, the rate at which local arbitrators are selected for arbitration proceedings held in other countries does not appear to increase after enactment of a new arbitration law, with the possible exception of presiding arbitrators in countries that have enacted the UNCITRAL Model Law on International Commercial Arbitration. The evidence thus does not support the theory that enactment of a new arbitration statute serves as a signal of arbitrator quality.

Keywords: Arbitration, Arbitrator Selection, Dispute Resolution, Regulatory Competition

JEL Classification: K12, K41