The Rule of Law in the Global Economy: Explaining Intergovernmental Backing for Private Commercial Tribunals

Abstract

Global trade depends on the ability of firms to make credible commitments across borders. But, absent a global state, how can credibility be assured? Today the majority of significant transborder contract disputes are adjudicated in private arbitral tribunals. The decisions of these bodies are enforceable in the public courts of the 146 countries that have ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, making it a central pillar of the global economy. The paper evaluates alternative explanations for this widespread delegation to private judicial authority via survival analysis of ratification from 1958 to the present. Unlike the WTO, PTAs, or BITs, the transnational commercial arbitration regime has been driven by the diffusion of norms through a transnational network of legal experts.

Keywords: arbitration, commercial law, norms, transnational governance, hybrid governance, rule of law, trade