Document Type

Article

Publication Date

1993

Abstract

With support from the executive branch, Congress, and the courts, arbitration has become an increasingly popular method of international dispute resolution. While agreements to arbitrate traditionally were frowned upon, particularly when the dispute involved certain “public law” or “statutory” matters, the situation has changed dramatically in the past few decades. United States courts now routinely order arbitration of disputes implicating important policy issues in securities, antitrust, Racketeer Influenced and Corrupt Organizations (“RICO”), and employment law matters. By the end of the 1980’s, the presence of a public or “statutory” issue seemed no longer to be a distinguishing factor; arbitration, when selected by the parties in a binding agreement, would be the method of dispute settlement.

Just as most legal trends met with limitations, in 1992 this liberal enforcement of arbitration agreements was rejected by the United States Court of Appeals for the Federal Circuit in Farrel v. United States International Trade Commission. The Farrel decision is troubling for those who believe contracting parties should have unlimited autonomy to select arbitration as a form of dispute settlement in international transactions...Farrel compels further consideration of the relationship among private dispute settlement arrangements, national laws governing international trade, and sovereign international trade obligations.

This commentary begins by reviewing the background of U.S. law regarding enforcement of arbitration agreements, against which the Farrel decision must be considered. It then addresses Farrel's effect on substantive trade law issues. Finally, it concludes that Farrel raises serious concerns about U.S. compliance with GATT obligations and U.S. courts’ future practice in dealing with those obligations.

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