FOREIGN ARBITRATION AWARDS IN ARIZONA

Business concerns across the globe have come to rely on alternative dispute resolution procedures, instead of local courts, to obtain efficient resolution of commercial disagreements. Alternative dispute resolution, or ADR, is most often thought of as either mediation or arbitration, although many other forms have been developed over the years. Mediation, referred to as “conciliation” in a number of European countries, allows the parties to utilize a third-party to reach agreement on solutions to their disputes. Where the parties have agreed ahead of time to mediate their disagreements, Arizona courts are empowered to refer the parties’ case to a mediator, but the courts are not required to do so.

Arbitration usually represents a miniature trial before an arbitrator or panel of arbitrators, who ultimately issue an award of monetary damages to one of the parties. Arbitration has two main advantages over litigation through the courts: (1) it is usually faster and cheaper than litigation; and (2) an arbitration award is much easier to enforce in another country than a court-made judgment. Over the years, arbitration procedures have at times become more costly and time-consuming, yet commercial parties continue to prefer arbitration, often to avoid litigation in countries whose courts they wish to avoid. In most jurisdictions, including Arizona, courts are required to enforce arbitration agreements by suspending litigation and allowing the parties to arbitrate their disputes, and providing enforcement for the arbitrators’ decisions. Several arbitration centers have come into existence to provide dispute resolution services to the world’s largest commercial endeavors including the International Chamber of Commerce (ICC), American Arbitration Association (AAA), London Court of International Arbitration (LCIA), and the Arbitration Center of Mexico (CAM). International treaties allow these institutions’ decisions to be enforced in the parties’ home jurisdictions.

Arizona courts will group arbitration agreements into four main categories: Arizona agreements, interstate agreements, international agreements, and Inter-American agreements. These classifications are imposed by a mixture of Arizona, federal, and international law, and will affect how an arbitrator’s award is enforced in Arizona and by which court. These classifications depend mainly upon who the parties to the agreement are and the nature of their commercial relationships. Obviously, when arbitration proceedings appear imminent, the parties should be aware of how their arbitration agreement will be classified as this will affect how a local court will treat the arbitrators’ orders and decisions. Despite the desirability of arbitration over litigation, parties with Arizona connections will still require experienced local litigation counsel to provide court enforcement of their arbitration agreements and their eventual awards, no matter where they plan to actually arbitrate their dispute.

THIS DOCUMENT WAS PREPARED FOR GENERAL INFORMATIONAL PURPOSES AND DOES NOT CONSTITUTE LEGAL ADVICE