The Potential of Private Commercial Arbitration for Facilitating Economic Growth in Less Developed Countries
ICCA Congress Series No. 19, Kluwer Law International, Forthcoming
Presented at the 2016 Biennial Congress of the International Council on Commercial Arbitration (“ICCA”)
15 Pages Posted: 2 Oct 2016
Date Written: June 21, 2016
The paper assumes that the development of market economies in less developed countries depends, at least in part, on the availability of legal institutions capable of supporting the private ordering of economic exchange, and poses the following question: how can a less developed country provide the legal institutions upon which the private ordering of commercial affairs depends without the developed economy upon which effective legal institutions depend? Put another way, how can a less developed country supply reliable legal institutions – laws, courts, lawyers, and enforcement mechanisms – essential to a robust market economy without the robust economy necessary to create and sustain the institutions? My thesis is that a simple domestic legal regime highly protective of private commercial arbitration, accompanied by an expansive scope of permissible autonomy of contract, offers a partial solution. My principal focus is the establishment of a basic legal institutional framework within which expanding domestic economic exchange reliably may operate, perhaps fostering simultaneously a broader popular understanding of the “rule of law,” or at least of the role of law in the private ordering of commercial affairs. I address briefly the perceived risk that a regime of private arbitration risks reducing incentives in less developed countries to invest in reliable public judicial institutions.
Keywords: Economic Development, Dispute Resolution, Arbitration, Less Developed Countries, Developing Countries, Law and Development, Rule of Law, Role of Law, Legal Infrastructure, Foreign Direct Investment, New York Convention, Party Autonomy, Autonomy of Contract, Emerging Markets
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