International Class Arbitration - Flourishing or Floundering?

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In her discussion of her forthcoming paper “Resolving Mass Legal Disputes Through Class Arbitration: The United States and Canada Compared,” Professor S.I. Strong explained that despite setbacks to class arbitration in two recent Supreme Court cases[1], class arbitration is not dead in the United States. Rather, Strong suggests, forthcoming cases will likely test the applicatory boundaries and narrowly construe previously announced limitations on class arbitration.[2]

If class arbitration is not dead in American courts, then what are the prospects for cross-border applications of the process? What does the future hold for international class arbitration?

A recent post by Paul Karlsgodt of Class Action Blawg suggests that the need for international class arbitration is growing. As the size and incidence of international transactions continues to grow in an increasingly globalized economy[3], the need for methods of redress for collective harm will follow suit because the “scale of commerce drives the scale of mass harms.”[4] Harm needs a remedy, and even countries resistant to change will be forced to answer increasing calls for collective redress.[5]

What is there to guarantee that governments will use class arbitration to answer this growing need? Not much—however, as Strong suggests, class arbitration “may be particularly well suited to address international disputes.”[6] Arbitration often solves some of the more difficult problems associated with large, multi-national conflicts, like “identifying a single forum that has jurisdiction over the entire dispute” and providing a remedy that is “easily enforceable in one or more states.”[7] Handling the dispute in one forum not only ensures efficiency by “[decreasing] the likelihood of additional dispute resolution proceedings,” but also encourages a more just result and allows for a more realistic, manageable “single global settlement.”[8]

Furthermore, in a newly published article, Professor Strong suggests that the Permanent Court of Arbitration (“PCA”) could play a significant role in the expansion of international class arbitration.[9] With the PCA and other international arbitration organizations firmly established, it seems likely that increasing need for remedies to collective harm will find a natural home in international class arbitration.

So, is international class arbitration dead? The answer seems to be a resounding “no”. On the contrary, conditions are present for international class arbitration to experience profound growth in coming years as governments start to catch up to continuing expansion in international business.


[1] See AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011); see also Stolt-Nielsen SA v. AnimalFeeds Int’l Corp., 130 S.Ct. 1758 (2010).

[2] See S.I. Strong, Resolving Mass Legal Disputes Through Class Arbitration: The United States and Canada Compared, 37 N.C J. Int’l L & Com. Reg. (forthcoming 2012) (manuscript at 16-17) (available athttp://ssrn.com/abstract=1967101).

[3] Despite a contraction in global trade in 2009, the volume of world exports has increased nearly every year for the past 50 years. See Press Release, World Trade Org., Trade to expand by 9.5% in 2010 after a dismal 2009, WTO reports (Mar. 26, 2010) (available athttp://www.wto.org/english/news_e/pres10_e/pr598_e.pdf).

[4] Paul Karlsgodt, Notes from the 5th Annual Conference on the Globalization of Class Actions and Mass Litigation, Session 6 – Paths to (Mass) Justice, Class Action Blawg (Jan. 13, 2012), http://classactionblawg.com (citing Professor Deborah Hensler).

[5] Karlsgodt, supra note 4 (citing Robert Hammesfahr, Managing Director of Claims and Liabilities at Swiss Reinsurance Co. Ltd.).

[6] Strong, supra note 2 (manuscript at 20).

[7] S.I. Strong, Class Arbitration Outside the United States: Reading the Tea Leaves, in Dossier VII: Arbitration and Multiparty Contracts (Bernard Hanotiau & Eric A. Schwartz eds. 2010) (available athttp://ssrn.com/abstract=1517272).

[8] S.I. Strong, Enforcing Class Arbitration in the International Sphere: Due Process and Policy Concerns, 30 U. Pa. J. Int’l. L. 1, 82-83 (2008).

[9] See S.I. Strong, Class and Collective Relief in the Cross-Border Context: A Possible Role for the Permanent Court of Arbitration, 23 Hague Y.B. Int’l L. 2010.


Posted by Kevin G. Schroeder on Mon. February 27, 2012 9:01 AM
Categories: Disputes from Arbitration Agreements

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