Efficiency. What Else? Efficiency as the Emerging Defining Value of International Arbitration: between Systems theories and party autonomy

Abstract

This paper explores efficiency as a perceived value of international arbitration. It argues that arbitration is not intrinsically efficient but may be efficient by design. It also argues that the quest for efficiency creates a tension between party autonomy and the desire of arbitral institutions, several authors and users to attribute to arbitration systemic qualities. The paper first explores the origins of the efficiency quest and its establishment as a value of international arbitration before exploring and assessing the role of the law, arbitrators, and arbitral institutions in ensuring efficiency. In conclusion, the efficiency paradigm is presented along with an assessment as to whether we have moved to a law and economics or systems theory approach in international arbitration.

Efficiency is a relative concept the content of which varies depending on the different parties, actors and factors involved in the arbitral process. Efficiency is also an emerging value. Regulation of efficiency may be bespoke and “from within”: disputing parties set their objectives and expectations and design the conduct of “their” arbitration. Alternatively, regulation of efficiency may be “from outside”: arbitral institutions or other formulating agencies design an arbitral process to which the parties opt in and the procedure of which they may partially modify to the extent opt out of the rules is permitted. In the “from outside” model we attribute to arbitration systemic qualities.

Despite complaints as to the increasing judicialization of arbitral proceedings, this paper has shown that the introduction of new procedural rules in most cases is aimed at improving efficiency. It is essential for international arbitration to address and meet parties’ procedural expectations and needs. Arbitration is a process owned by the parties. However, arbitrators and institutions steer the process and have a role in ensuring that the process is not frustrated. In that sense efficiency (speed and cost saving) is almost never a standalone value: it is combined and co-existing with rule compliance and fairness values. Parties may design their own efficiency paradigm by exercising their party autonomy and agreeing to a process of their liking. However, when the parties cannot reach an agreement, the safeguard of efficiency is in the hands of arbitral institutions and tribunals.

Keywords: International arbitration, efficiency, regulation, party autonomy, systems theory, law and economics, arbitral procedure, arbitral institutions, arbitral tribunal, process designs