KluwerArbitration

Document information Arbitration: History and Background

Michael Mustill
Publication (*)
Journal of International
Arbitration I. Precursors
Commercial arbitration must have existed since the dawn of commerce. All trade
potentially involves disputes, and successful trade must have a means of dispute
Bibliographic resolution other than force. From the start, it must have involved a neutral
determination, and an agreement, tacit or otherwise, to abide by the result, backed by
reference some kind of sanction. It must have taken many forms, with mediation no doubt merging
Michael Mustill, into adjudication. The story is now lost for ever. Even for historical times it is impossible
'Arbitration: History and to piece together the details, as will readily be understood by anyone who nowadays
Background', Journal of attempts to obtain reliable statistics on the current incidence and varieties of
International Arbitration, arbitrations. Private dispute resolution has always been resolutely private.
(© Kluwer Law
International; Kluwer Law At first, the arbitration may often have been indistinguishable from whatever procedure
International 1989, Volume occupied the role of litigation. If the tribal chief, or the council of elders, or the whole
6 Issue 2) pp. 43 - 56 tribe itself in conclave assumed the function of adjudication, there may simply have
been no room for two individuals to seek out a third for a binding ruling. But as soon as
society became sufficiently complex, and the social units sufficiently large, to give social
and geographical room for alternatives, extrajudicial settlement would spring up.
Allowing for obvious differences in context, the motives would have been very much the
same as they are today. The official system was too slow; the dispute could not always
wait for the justiciar to arrive on circuit, or for the lord to return from the wars. It was too
expensive; there would be court fees or stamp duties to pay, and a formalised legal
P 44 system invariably breeds professional lawyers, who have rarely undercharged. Its
methods were unsuitable; compurgation and trial by battle could not yield reliable
results where the issues concerned transactions rather than truth. The proceedings were
public, a feature which traders have never cared for. The tribunal would often lack the
necessary qualifications. Judges who were admirable for dispensing public justice might
be incapable for reasons of temperament and upbringing, or unfitted by unfamiliarity
with current practice, to rule on questions involving the technicalities of trade. Moreover,
the impartiality of the tribunal could not be guaranteed, particularly if one of the parties
was a stranger.
Thus, we find the spontaneous growth, in widely separated locations, and at substantially
different times, of various types of “alternative dispute resolution”. As is the case today,
these fell into two quite distinct categories: what in current jargon would be called ad hoc
and “institutional” arbitrations. Of the ad hoc arbitration, arranged man to man upon the
occurrence of the dispute, and with the arbitrator selected to decide that single dispute
and no other we know practically nothing, at least so far as the common law is concerned,
until it emerged from the private room into the law reports and statutes in the
seventeenth century.
The institutional arbitration is much more fully documented. Three broad categories may
be distinguished, each involving a standing body which formed a pseudo-court,
functioning in parallel with the state legal system. First, there were the bodies which
regulated disputes in a particular trade. Sometimes these achieved recognition as
specialised local courts regulating disputes in a particular trade, for example the
Stannary Courts in Cornwall, with their jurisdiction regarding tin mining and ancillary
matters. Perhaps more often the tribunals would stay outside the formal structure of the
courts, whilst maintaining exclusive power in a defined field; as for example with the
guild tribunals, prominent first of all in Italy, where commercial activity and organisation
was so much more advanced than elsewhere. Later, specialised maritime courts emerged
along the shores of the Mediterranean.
Secondly, there developed special courts, or arbitral tribunals—it makes little difference
what they are called—dealing with more diverse trade disputes; again coming to
prominence first in Italy, in the shape of the officium mercanziale and then spreading to
Southern France.
These two varieties of tribunals became at the same time the sources and the
enforcement agencies of a new commercial and maritime law, and constituted in
practice a series of autonomous legal systems operating in parallel with the judicial
structure maintained by the rulers. The law merchant, so developed, came to transcend
national boundaries, and hence helped further to weaken the grip of the local governors
P 45 over the resolution of commercial disputes.
Third, we must note for the sake of completeness the type of regulatory body which
governed the affairs of a particular section of the community, rather than a particular
trade or group of trades. The Rabbinical courts provide an example.

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 These various tribunals did not exercise the fierce remedies available to the civil power,
but they had sanctions enough. A merchant who fell out with his guild was finished. In
other contexts, failure to honour a decision could have grave social or business
consequences.

II. Divergence of the Common Law

I believe that at least one of the keys to the very striking divergence between the
arbitration systems of mainland Europe and of England lies in the factors which I have
just very briefly described. It is important to recognise that as England emerged from the
Middle Ages it was at the same time economically underdeveloped and possessed of a
comparatively strong central government. Because trade in general was so
circumscribed, and international trade in particular was so much in the hands of
foreigners, the local institutions were never quite strong enough, nor did they deploy
sufficient breadth of expertise, to establish a lasting system of pseudo-legal jurisdictions,
similar to that which had grown up on the mainland. The emergence of an English law
merchant, late as it was, took place not through the medium of specialist tribunals but
within the body of the royal courts: most notably, of course, through the energy and
cosmopolitan learning of Lord Mansfield, coupled with his skilful exploitation of the
special jury.
Now, the existence of this lacuna had one possible and one certain consequence. The
possible consequence is that parties to commercial disputes were forced into private
arbitration on a scale which may not have been equalled elsewhere. Whether this was
really so is speculation, although it is clear that private arbitration was already of
substantial importance by the end of the seventeenth century. What is, however, certain
is that the parties had to face an unenviable choice. On the one hand, the royal courts
were an unhappy home for their disputes, given the judges’ lack of familiarity with the
subject-matter, and the unsuitability of the common jury as an instrument for deciding
issues which involved specialised techniques or complex facts. On the other hand,
private arbitration at common law suffered from a number of near-fatal juridical
weaknesses: and not only in England, as we shall see. These were:
1. The agreement to arbitrate was construed as a revocable mandate. By revoking the
P 46 arbitrator's authority to make a binding award, a defendant could prevent the
reference from ever beginning, or frustrate it once it was under way.
2. Conversely, there was no manner in which the plaintiff could be held to the
arbitration agreement, so that the defendant was powerless if the plaintiff enforced
his claim by means of an action in court, rather than an arbitration.
3. There was no ready means of enforcing the award.
These weaknesses were recognised, and steps were taken to put them right in a course of
legislation which began in 1698 and culminated in the Common Law Procedure Act of
1854. In essence the method used was to exploit a useful and long-established power
which enabled the court to refer to arbitration any complex issue arising in the course of
an action, rather than have it decided by the jury. A reference to arbitration of this kind
brought into being by order of the court was treated as an extension of the action itself,
so that the penal powers of the court could be used to prevent non-compliance: and, it
may be added, the court retained jurisdiction over the whole of the dispute, so that it
could intervene directly to remedy any procedural abuse occurring in the course of the
arbitration. The device used in the legislation was to assimilate “voluntary arbitration out
of court” to an arbitration “pursuant to a rule of court”, thus allowing the parties to carry
on the arbitration as if it were entirely of their own making, whilst having in reserve the
sanctions of the court to stay an action brought in breach of an agreement to arbitrate, to
prevent the defendant from revoking the submission, and to enable the award to be
enforced through the processes of the court.
The perfecting of this ingenious device fortunately coincided with two other
developments in English mercantile society. (I say fortunately: but it was not really
adventitious, since the elaborations of arbitration law in the Act of 1854 were part of the
convulsions in English procedure which arose from the recognition that English courts in
the early part of the nineteenth century were not equal to the challenge which the new
society brought to bear.) The first was the explosive development in manufacturing
capacity, in overseas trade and in the speed of communication which coincided with the
peak of the Industrial Revolution in England, and created an urgent need for a new
commercial law of unprecedented complexity and adaptability. Second, there were the
judges of the three common law courts who from about 1845 furnished a reservoir of
intellect, learning and business common sense unequalled in the history of the English
law. The combination of these factors meant that within a short time England leapt from
the back rank to the front, in commerce and commercial law alike; and, in addition, had
P 47 been furnished by Parliament with an up-to-date arbitration law.
This historical account is much over-simplified, but it will perhaps serve to explain what
appear to be the principal differences between two of the three philosophies of
arbitration as they still exist today-I omit the United States for the time being. These
distinctions have been somewhat eroded in the past few decades, but I believe that they
still colour the thinking of practitioners and theoreticians alike, and account for the

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 difficulties of comprehension which often appear when, even with the greatest goodwill,
such persons discuss the problems of international commercial arbitration, and try to
arrive at solutions.
A. The systems of mainland Europe, and those which are derived from them, tended to
favour institutional arbitration. The English system, having few institutions upon
which to found, was concerned primarily with ad hoc arbitration, and was enabled
to do so because the court supplied a framework for the individual reference.
B. For good or ill, the relationship between the courts and the arbitral process was
much closer, both practically and psychologically, under the English system than
was the case in mainland Europe. Although the practical link has been somewhat
attenuated recently by the Arbitration Act, 1979, the psychological link has
strengthened in recent decades, since the recent commercial judges have all had
prior experience of arbitration as advocates and arbitrators.
C. Mercantile law in the common law countries has been developed in the courts, and
has received comparatively little infusion from specialist trade bodies, and from
the arbitration institutions dependent upon them.
Perhaps the historical features to which I have drawn attention also account for another
conspicuous element of divergence, namely the much greater influence of theory, and of
academic writers upon it, in the field of continental arbitration law. Under the English
system, answers to problems of arbitration law have been sought through the courts, as
and when they arise. This has, it may be claimed, given the law a practical slant, but
undeniably the price has been a shortage of systematic conceptual study.
Thus far, I have said nothing about the third major system, that of the United States,
largely because I am not qualified to do so. To an outsider, however, it seems that until
the initiation of the statutory reforms which began about sixty years ago arbitration in
the United States sat mid-way between the two older systems. There was no tradition of
institutional arbitration, playing a part in the evolution of mercantile law; equally,
although the common law of arbitration, with all its grave weaknesses had been adopted,
P 48 there was no such statutory reinforcement, employing the courts as a coercive and
supportive agent, as had long been a feature of the English system, and of those
Commonwealth laws of arbitration which had drawn upon it. The absence of a
relationship with the courts was a source of weakness, and also led to a hostility between
the courts and the arbitration process which lasted until considerably later than it had
disappeared in the other common law system; but it did of course also have the obverse
feature, seen as an advantage by many, that the process could be carried out
untrammelled by any substantial degree of judicial control, whether on the procedural or
substantive aspects of the dispute.
Whether this is a correct analysis of the former American law of arbitration is something
which I hope will be explored in discussion by those better fitted than I to express an
opinion. In any event, of course, it does not reflect the position today.

III. Internationalism
The aftermath of the First World War saw the rise of idealistic internationalism. This
provided fertile soil for the growth of an international spirit in the field of commercial
arbitration. Two features may be particularly mentioned. The first was the inauguration of
the International Chamber of Commerce, with its associated Court of Arbitration. The
number of disputes actually handled was and remains small, by comparison with the
total of ad hoc arbitrations conducted throughout the world. The importance of the
Institute has, however, consisted more of what it has been prepared to offer than it is
actually called upon to provide. Participants in large commercial ventures can stipulate
in their contracts arbitration under the auspices of the I.C.C. hoping, in the great majority
of cases correctly, that their relationships will not involve a fight, but knowing that if
unhappily this should come to pass there will be a standing body of proven
independence ready and able to furnish the structure for an orderly resolution of the
dispute. Furthermore, the Institute has in recent years made strenuous efforts, to the
benefit of the international community in general, to ameliorate the tensions which could
have been detected to exist between itself, with an intellectual foundation rooted in the
mainland European concepts of arbitration, and the more pragmatic approach of the
common lawyers. Recent concentration on practical issues, rather than debates on
overworked theoretical questions, have created a climate in which the serious problems
which face international commercial arbitration today can be faced in a truly ecumenical
P 49 intellectual spirit.
The second manifestation of internationalism was the recognition that commercial
arbitration crossing national boundaries was dangerously flawed, in the following
respects:
(i) In many countries an agreement to refer future disputes to arbitration was
unenforceable; only the submission of an existing dispute would suffice. A party
could therefore disregard an arbitration clause with impunity.
(ii) There was no expeditious method of enforcing in one country an award made in
another.

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 There was nothing especially new in the recognition of these problems. The novelty lay in
the decision, inspired by the International Chamber of Commerce, that something should
be done about them. The first fruits were (as to the first problem) the Geneva Protocol on
Arbitration Clauses of 1923, and (as to the second) the Geneva Convention on the
Execution of Foreign Awards of 1927. These achieved important results, but there
remained in many jurisdictions an obstacle in the shape of the requirement that awards
should be “final”, with its apparent call for double exequatur; and it was also unfortunate
that the powers of enforcement applied only to awards made in a contracting state.
Accordingly there was promoted in 1958 the New York Convention on International
Commercial Arbitration from which emerged the Convention on the Recognition of
Foreign Arbitral Awards. This cleared up the difficulties just mentioned, and also required
the courts of contracting states to stay, upon request, any action in court brought in
breach of a valid arbitration agreement. This Convention has been the most successful
international instrument in the field of arbitration, and perhaps could lay claim to be the
most effective instance of international legislation in the entire history of commercial
law. Scores of nations have acceded to the Convention, and important accessions are
continuing up to the present day.

IV. The Growth of Institutional Arbitration

Although, as we have seen, institutional arbitration was slow to take root in the common
law world there have been some instances of long standing, of which the Liverpool Cotton
Association is one of the oldest. More recently there has been a rapid increase in the
number of centres offering facilities and encouragement for commercial arbitrations.
These bodies differ widely in the extent of their participation in the actual proceedings
on the individual case, and also in the reasons why they were called into existence.
P 50 Thus, we have at one end of the spectrum the trade body which simply offers the
parties a means of calling into existence an arbitration at the place stipulated in the
contract, with assistance in the constitution or completion of a tribunal, but leaving it to
the arbitrators to conduct the reference in whatever way they may think appropriate, in
the light of the wishes expressed by the parties and the demands of the local law. These
are essentially ad hoc arbitrations, under the general auspices of the association. At the
other extreme are the institutions which busy themselves at every stage of the reference:
by nominating chairmen or members of the tribunal; deciding upon the venue; directing
the venue; laying down the procedures; fixing and collecting the fees; providing
accommodation and facilities; and even scrutinising the award for mistakes. All this at a
substantial charge. Here, both the parties and the arbitrators yield some of their
autonomy to the institution, which also takes upon itself some of the functions which,
under systems such as the English, would be performed by the court.
Between these extremes there are many different structures for institutional arbitration.
It is pointless to argue about which is the best. Some practitioners are accustomed to one
system, others to another. Some types are suitable for one kind of dispute, but less so for
a different kind. What is important is not so much the mesh of the individual mechanism,
but rather that the businessmen should have at their disposal a repertory of bodies from
which they can choose the one which can decide their disputes in the way in which they
will feel most comfortable.
As to the reasons for the remarkable proliferation in recent times of arbitral institutions
in places where they had never been seen before, perhaps the following may be
identified. They are not mutually exclusive.
A. Many trade associations publish standard forms of contract. These often contain
arbitration clauses stipulating for arbitration under the rules of the association.
Here, the provisions for arbitration form part of the structure within which it is
contemplated that business in that trade will be conducted. The orderly resolution
of disputes by that mechanism will benefit the trade, because it keeps the dispute
within the trade, and will benefit the parties because they can be confident that the
selected arbitrators will know the practicalities of the trade and will be in tune with
the common understanding of what the standard forms imply.
B. Some groupings of arbitrators have been formed with the object of providing an
orderly structure for what are essentially ad hoc arbitrations. These groupings have
accredited members, books of rules, and so on, and they are confined to a
particular trade. But they are not adjuncts of a trade association, and do not aim to
P 51 furnish an inclusive service. To a greater or lesser degree, the parties and the
arbitrators are allowed to get on with the arbitration as they think best. Nor is it the
object of these groupings, of which the maritime arbitration associations in America
and London are the examples which come most readily to mind, to promote or
attract arbitrations. The arbitrations are already there, and the motive is to ensure
that they are more effectively carried through.
C. Some bodies are motivated by the twin assumptions that what is good for
international trade is good for the world as a whole, and that what is good for
arbitration is good for international trade. The ambitions of these bodies may be
worldwide, or they may simply spring up because it is recognised that there is in a
particular part of the world an arbitration gap the filling of which will be in the
general interests of those trading. Ultimately, the motive is disinterested, even if

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 the conduct of the arbitration business may involve a substantial incidental profit.
D. Other associations have more local interests in view. A trading nation may wish to
be seen to offer what on a national scale might be called an inclusive service to
those with whom it has trade relations. This service may include a dispute
resolution system which is visibly independent of the local courts, and which
provides a mechanism for having disputes decided locally according to
internationally accepted norms, and with the kind of facilities which have by now
come to be expected. Such a system not only has macro-economic advantages, but
it also brings tangible monetary gains, since arbitration is now big business, and
may be a substantial invisible export for the home forum-a factor which the
promoters of the English Arbitration Act, 1979 did not shrink from making explicit.

V. Transnationalism and the New Lex Mercatoria

No account of the history of arbitration would be complete without some mention of two
doctrines, apparently linked, but in fact almost entirely distinct, which have come to
preoccupy theoreticians in recent years.
The first is the concept of a “transnational” procedural law. This is founded on the
premise that it is contrary to the interests of the trading community to tolerate a regime
in which international arbitrations have to be submitted to the differing arbitration laws
of different countries, according to where the arbitrations happen to be conducted. This
premise, which is certainly defensible, is seen as leading to the conclusion, which to the
present author at least seems altogether more open to debate, that the local arbitration
P 52 laws are by definition inapplicable to international arbitrations, which are visualised
as occupying a juristic universe of their own, detached altogether from the mundane
preoccupations of any single national system of arbitration law. This is not, it will be
noted, a doctrine of harmonisation, such as inspired, for example, the New York
Convention, and which underlies the UNCITRAL Model Law, to which I shall later refer. To
the transnationalist, harmonisation of domestic arbitration laws is an irrelevance, since
domestic laws are themselves an irrelevance to international commercial arbitration.
The second concept is that of “the new lex mercatoria”. Unlike transnationalism, this is
concerned with substantive not procedural law. The idea may be expressed in much
over-simplified terms by saying that just as arbitration is an autonomous juridical order,
parallel to but detached from any national courts, so also is the law which governs the
substance of disputes submitted to international commercial arbitration an autonomous
system of rules, only distantly connected, if connected at all, to any municipal law or
laws: just as, in mediaeval times, the trade tribunals in various parts of Europe all sought
to apply the same extra-national mercantile law. Thus, so the theory runs, those
appointed to decide international commercial disputes ought to apply, not any one
domestic law of contract or sale of goods or carriage by sea, chosen in accordance with
recognised theories of the conflicts of laws, but a single law which is the law of the
international trading community as a whole.
This is not the occasion, and in any event the limitations of time and space would not
permit, for an exploration of the merits of these concepts. Their theoretical interest is
amply demonstrated by the volume of analysis which has appeared in print. Their
practical importance has, perhaps, yet to be established. It is sufficient for present
purposes to note that the debate continues.

VI. Harmonisation, Forward or Back?

Quite different from the topic just discussed is the move towards the harmonisation of
domestic arbitration laws. The New York Convention was a successful venture into this
field, but it covered only a very small part of the entire canvas of arbitration law.
Altogether more ambitious was the project for a Model Law of arbitration, set in train by
the United Nations Commission on International Trade Law (UNCITRAL). This body had
already promoted, with favourable results, a set of standard terms for incorporation into
arbitration agreements, and was emboldened to expand the scope of the enterprise by
P 53 using these terms as the basis for a text which could form the substance of municipal
legislation on a worldwide basis. Whether a set of contractual terms was a sound point of
departure for legislation, and whether it was appropriate to choose the criteria
established by the New York Convention as the grounds for granting or refusing exequatur,
to represent the grounds upon which the local court might set aside an award made
locally, are matters for debate which cannot be explored here. Nor would it be
appropriate to offer any views on the merits of the text, as it ultimately emerged from
months of detailed debate. All that need be said is that if the Model Law fails to achieve
the goals which were set for it, this will not be for want of painstaking, informed and
magnanimous discussion, supported by a skilled and perceptive secretariat. I shall
return to the prospects for the Model Law in a moment.
First, however, one must take note of the efforts made by individual nations to make their
arbitration laws more effective—or more attractive. (The concluding words are added in
acknowledgement of the undeniable fact that contemporary legislation in more than one
country has had at least one eye on the direct and indirect economic advantages of
attracting disputants to come and arbitrate in one's own country rather than somewhere

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 else. There is room for difference of opinion about the legitimacy of all this. If a domestic
law is operating unsatisfactorily, then the complaints of foreign users, just like the
complaints of domestic users, are a proper motive for change. But if the law is not seen as
unsatisfactory at home, then the dissatisfaction of those abroad is a less potent force.
Should not the legislature simply face up to the fact that the foreigner may take his
custom elsewhere, rather than change the law for the worse? This contentious issue need
not be debated here.)
The legislative efforts made in this direction have fallen into two groups. First, there have
been those countries which were early into the field, and whose laws, in common with the
technologies of many trail-blazers, have been overtaken by obsolescence. There was no
short-sighted or chauvinistic lack of recognition that change was called for, but rather a
sincere and intractable difference of opinion about what that change should be. Thus, for
example, it had long been recognised in France that the relevant provisions of the
venerable Code Civil would no longer do, but it required forty years of debate before the
seminal legislation of 1981 was brought into being. So also in the Netherlands, where the
arbitration law dated from 1838. The field was therefore open for large-scale legislative
action. The theory that there is a self-evident and self-enacting set of norms, pervading
the whole structure of international commercial arbitration, might have tempted one to
suppose that when national legislatures set about bringing their legislation into
conformity with current practice, all the legislation would turn out to be the same. So far
as the present author can see, this has not happened at all. The flurries of legislation in
P 54 this field which have taken place in recent years—Belgium (1955); England and Wales
(1979); France (1981); Italy (1983); Netherlands (1986); Federal Republic of Germany (1986
plus further changes under discussion); Switzerland (1988); Spain (draft under discussion)
—seem to have practically nothing in common. The cause of harmonisation might not
unkindly be said to be going backwards rather than forwards. In particular, there is no
trace of any movement towards the adoption of the Model Law, except perhaps for
cosmetic gestures as regards layout and terminology. This is perhaps not altogether
surprising. Each country tends to run its arbitrations in its own way, construing its
legislation accordingly. The institutions, arbitrators, lawyers and parties are used to a
particular way of proceeding, and to a particular legal framework. A new law would have
to demonstrate overwhelming practical advantages before the arbitration industry would
be willing to tear up the written and unwritten rule books and start again, the more so
since, as we have just seen, several countries have only recently enacted new arbitration
laws. These are early days, but thus far there have been few signs that the Model Law is
seen as fitting this description.
The second group of countries consists of those, principally comprising former dominions
or colonies of the United Kingdom, which adopted en bloc the arbitration law of the
mother country. This law was, when first developed, ahead of its time. But the countries
to which it was exported did not follow the English lead of updating it, no doubt because
there were not enough local arbitrations to make the exercise worthwhile. Thus, one finds
several countries which were still operating under the Act of 1854, or the Arbitration Act of
1889. More recently, some very penetrating analyses have been undertaken in a number
of these countries, particularly in Canada and Australia, since it became apparent that
international commercial arbitration was not a field which any major trading nation
could afford to neglect. The results have diverged. Some nations have embarked on
solutions of their own. Others—as our Canadian friends will of course know very well—
have decided to follow the lead of the UNCITRAL Model Law.
I have not so far mentioned a very important third group of countries. These are the
developing nations, who hitherto have had no appreciable number of international
commercial arbitrations and hence no need for a fully worked out arbitration law. Here,
the Model Law, and any other efforts towards harmonisation which may succeed it, have a
much greater part to play. There is no intellectual investment in a system which is
already up and running, which must be jettisoned if an entirely new legislative structure
P 55 is adopted. Instead, there is a void to fill, and much with which to fill it. A text which,
for all its several weaknesses, has been carefully thought out and scrutinised. An
unusually full and accessible set of travaux préparatoires. A structure which is familiar to
all the scores (literally) of nations who participated in the deliberations on the draft. It
would seem to the present author that such countries ought to give the most careful and
sympathetic thought to the adoption of the Model Law exactly as it stands.

VII. Arbitration as a Growth Industry: “Banalisation”

Commercial arbitration has changed beyond recognition within a working lifetime, and
not necessarily for the better. Two aspects may be identified.
First, arbitration is now a service industry, and a very profitable one at that. The arbitral
institution, the arbitrators, the lawyers, the expert witnesses and the providers of
ancillary services all charge fees on a scale which would quite literally have been
inconceivable thirty years ago. Hotel bills alone may now surpass what would then have
been the entire cost of an arbitration. Of course, in one sense there is nothing wrong with
charging what the market will stand. But in another, the recognition that this is what
those concerned are doing demonstrates how far commercial arbitration has come from
its former roots.

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 This is perhaps only one aspect of the second and more general question, which M. Yves
Derains has memorably encapsulated in the word “banalisation”. In former times, the
participants in a trade dispute would submit it in a good spirit to arbitration, looking for
a resolution which would be quick, cheap and informal, and for a decision which would
be inspired by practical common sense and a personal knowledge of the trade, and
which the loser would accept whether he agreed with it or not.
Is this the picture of international commercial arbitration today? On the small scale,
perhaps it still is. There are thousands of modest arbitrations, not only in the purely
domestic field, where the parties and the arbitrators get on with the dispute in a
reasonably cordial atmosphere at reasonable cost and speed, and where the loser pays
up with a semblance of good grace. But where the scale is grander, is the picture at all
the same? Do the parties work together to achieve a result which is fair and sensible in
commercial terms, or do they not rather seek out every procedural advantage to ensure
that they win, regardless of the merits? Do the parties really want a speedy decision, or
P 56 will not the defendant spin out the arbitration for as long as possible? Are the
proceedings any longer imbued by informality, or do they not have all the elephantine
laboriousness of an action in court, without the saving grace of the exasperated judge's
power to bang together the heads of recalcitrant parties? Most disturbingly of all, can
anyone now confidently say that the nomination by a party of an arbitrator is always
motivated only by a desire to appoint someone who will apply an informed and impartial
mind to the dispute, regardless of the special interests of his appointer? Will the losing
party pay up with good grace; and indeed, does he even know or care what good grace
means? The fact that these questions have to be asked is sufficient to show that the
assumptions as to the nature of the arbitral process which have permeated the writings
and discussions on international commercial arbitration since its earliest days can no
longer be relied upon to hold good. Depressing as the task may be, perhaps we should
face up to the new set of problems posed by an aggressively confrontational spirit in
contemporary arbitration by evolving a new, and less emollient, attitude towards the
conduct of the reference.

VIII. Problems for Commercial Arbitration

These observations are not intended to be defeatist or cynical. Nevertheless, it is to my
mind undeniable that international commercial arbitration faces some serious problems.
At least in its larger manifestations it can be too slow, too formalised and too expensive.
It also lacks the procedural teeth which are the prime advantage of the courts. Nobody
has yet discovered why the dinosaurs became extinct, but it is a reasonable surmise that
their bulk was a significant factor. It would be a pity if arbitration went the same way.
This is unlikely to happen, but it is at least worth asking whether a course of slimming
might be in order. On the horizon as competitors are mediation, mini-trials and other
forms of alternative dispute resolution and even (mirabile dictu) the courts themselves.
Arbitration has come to occupy an influential position in the conduct of international
trade. It has a great deal more to contribute, and it can and should grasp the
opportunities which stand before it. But there is no room for complacency. We must look
P 56 to our laurels.

References
*) Lord Justice of Appeal, London, England.
This article was prepared by Sir Michael Mustill, P.C. for The Continuing Legal
Education Society of British Columbia, May 1988. The article appeared in the
publication International Maritime Arbitration and is reprinted with the permission of
the author and the Continuing Legal Education Society of British Columbia.

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