A Response to Criticism of International Arbitration

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Timothy Holbrook, Professor of Law at Emory University, acknowledged the advantages of international arbitration but challenged the notion that arbitration will always be the best method of resolution. Holbrook cited cost savings and efficiency as advantages of international arbitration. He also noted the necessity of providing an international forum, as all corporations have essentially become international through the use of the Internet.

Holbrook, however, criticized the use of international arbitration, particularly for intellectual property patents. Unlike the inherently private field of contract law, Holbrook argued that intellectual property is a public field and third-parties are often affected by the dispute’s outcome.[1] Because arbitration is usually confidential, third-parties may not even know about the dispute. Holbrook also questioned the self-regulating nature of arbitration, asking who would step in to point out or remedy a procedural problem with the arbitration.

To ameliorate these concerns, Holbrook proposed one single jurisdiction to address international patent concerns.[2] The public, represented by the State’s government, could be a party to the dispute resolution, similar to the process employed by the International Trade Commission. Presumably, such a system would require countries to recognize patents outside their own borders.

In Holbrook’s May 2008 article, he articulates concerns with such a system: issues with predictability,[3] the loss of legal diversity,[4] and the amount of time it would take to create such a new system.[5]

Instead of creating a new system, however, I suggest restructuring (or creating better default) procedural rules around arbitration to resolve the concerns about public involvement and third-party information. The first panelist, Ethan Berghoff, advocated for attorneys to pay better attention to default rules in contracts and to help clients develop alternative dispute resolution clauses that effectively address client concerns. Perhaps, without establishing a uniform system of international arbitration, it’s time for an international body to create such a set of default rules. Such a system could include a default method for third-parties, like the public, to intervene in arbitration proceedings without compromising the unique nature of each country’s legal rules for arbitration proceedings.

[1] Timothy Holbrook has previously noted this distinction in his work. See Timothy Holbrook, Patents, Presumptions, and Public Notice, 86 Ind. L.J. 779, 780 (2011).

[2] Holbrook noted that he has raised this notion before. For a more detailed explanation of this system, see Timothy Holbrook, Extraterritoriality in U.S. Patent Law, 49 Wm. & Mary L. Rev. 2119, 2163-92 (2008).

[3] Id. at 2189.

[4] Id. at 2190.

[5] Id. at 2188.

Posted by Elizabeth J. Ireland on Sun. February 26, 2012 11:52 AM
Categories: International Dispute Resolution, Symposium

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