Compliance with Decisions of the Permanent Court of Arbitration

• In Event: International Law and International Courts

Abstract

What factors explain compliance with international arbitration? We address this question using a novel database on awards issued by the Permanent Court of Arbitration (PCA) between 1902 and 2020. As the only binding alternative to adjudication, arbitration plays an important role in the modern global order. States use arbitration not only in traditional areas of international law such as territorial and maritime sovereignty, as the primary means of settling investment disputes with the corporate sector. Since the beginning of the twentieth century, the Permanent Court of Arbitration (PCA) is the main international venue to facilitate arbitral proceedings between states as well as proceedings between states and nonstate parties. We argue that compliance with PCA awards depends on the actors involved in a dispute. In interstate contentions, the choice of arbitration as a dispute resolution method emerges as a result of forum shopping. The commencement of interstate arbitral proceedings indicates that states have consented to arbitrate their contention, anticipating the obligation to recognize the award by both sides. In contrast, compliance in commercial and investment arbitrations—where one side is a nonstate actor—follows distinct patterns. Most of these arbitrations are administered under bilateral or multilateral investment treaties, or national investment laws and regulations. Because consent to arbitration does not rest on party specific agreement, we hypothesize that compliance in these arbitrations will be distinctly lower than in interstate contentions. We employ duration models to estimate the expected time to compliance, documenting differences across party profiles.

Authors

• Anibal Perez-Linan, University of Notre Dame

• Emilia Justyna Powell, University of Notre Dame