Arbitration and Jurisdiction: How to Build a More Efficient and Effective Justice Administration System

When speaking of the existence of two judicial avenues to resolve conflicts, the idea often comes up that one is better or preferable to the other. Some people value the flexibility, specialization, and confidentiality of arbitration. Others attach particular importance to the stricter control of certain procedural aspects and to the substance of any eventual resolution. In the past, the paradigm lay in the apparent competition between one system and the other. The reality is that neither is better than the other; they serve different purposes.

After a review of the traditional conception of judicial conflict resolution, the complementarity of both avenues becomes evident. One of the great lessons from practical experience is that an inefficient Judiciary presents a problem for any user, even if they have chosen to submit to the decision of an arbitral tribunal. On the other hand, discredited arbitral practice also fails to meet any real need and ends up contributing to the overload of state courts.

For that reason, many jurisdictions around the world are shifting paradigms, understanding that the relationship should be more one of cooperation and complementarity. In other words, the Judiciary should assist in facilitating (or initiating) an arbitral procedure. One of the examples used to illustrate the ideal dynamic lies in provisional or interim measures (preliminary injunctions) prior to the commencement of an arbitration. In those cases, the time it takes to establish the tribunal may contrast with the need and urgency of adopting interim measures, despite the speed and flexibility of this type of process.

Thus, it is not unusual to see that such requests, which do not pursue a determination on the merits, are submitted to the state courts. In that context, a capacity for responsive action and a reasonable balancing of the interests at stake guarantee the effectiveness of a potential award, without the initial output obtained (the interim measure) becoming an abusive tool of pressure for one of the parties. This issue is especially sensitive in long-term contracts, in which delay in resolving a dispute entails losses for both parties, derived from indirect costs or interest charges incurred in financing the transaction.

On the other hand, judicial review of the arbitral award is also particularly challenging whenever exercised, considering that important precedents are being set. In that scenario, it is important that the Judiciary understands the arbitral procedure, its principles, and the logic behind it, so as not to undermine a successful proceeding that is faithful to the rules of the game to which the parties agreed. It is necessary to remember that this means of dispute resolution is selected by the parties with attention to the specialization of the rules applicable to a particular legal relationship. Therefore, trying to correct the substance of the award actually interferes with a healthy dynamic in the administration of justice.

In conclusion, arbitration represents an effective solution that the market itself has been shaping to open space for the resolution of eminently commercial disputes in a swift manner  without hindering economic exchange and without overwhelming the Judiciary, which faces increasingly complex needs. Notwithstanding the above, even within that dynamic of arbitral justice, there remains a need for a state judiciary that is effective, modern, and prepared for the strategic challenges that society faces.