The Arbitration–Litigation Relationship in Transnational Dispute Resolution: Empirical Insights from the U.S. Federal Courts

This Article explores two dimensions of the relationship between transnational arbitration and litigation. First, what is the relationship between arbitration and litigation as alternative methods of transnational dispute resolution? Some scholars argue that arbitration has largely replaced litigation as a method of transnational dispute resolution; but others suggest that this view may overestimate the ascendance of arbitration and underestimate the continued importance of litigation. Second, what is the role of domestic courts in the transnational arbitration system? While some observers argue that transnational arbitration can operate independently from domestic legal institutions, others emphasize arbitration’s reliance on domestic courts, especially for enforcement.This Article attempts to shed empirical light on both dimensions of the arbitration-litigation relationship in transnational dispute resolution. To do so, it analyzes existing data on transnational litigation and arbitration rates, and an original dataset of 199 U.S. federal court decisions involving arbitral awards covered by the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The results confirm that transnational litigation rates have been declining while transnational arbitration rates have been increasing; but it also shows that litigation continues to be a widely used method of transnational dispute resolution, even in contract disputes. The results also suggest that there is considerable post-award judicial involvement in the transnational arbitration process. Although U.S. federal courts appear to enforce arbitral awards more often than not, the evidence suggests that enforcement rates might be lower than widely believed. This may be discouraging from the perspective of one important arbitral value - the finality of awards - but it may be encouraging from the perspective of judicial monitoring of the integrity of the transnational arbitration system