Fall of Last Safeguard in Global Dejudicialization : Protecting Public Interest in Business Disputes

The importance of courts is shrinking. This is largely due to global dejudicialization: the process of outsourcing disputes to private dispute resolution. In the last several decades, along with the triumph of neoliberalism, privatization of the resolution of disputes has become the gospel of modern judiciaries. Courts have been pushed to the tail end of the private adjudication process and are used only as the last resort. The courts’ warm embrace of this structure along with practitioners’ push has led to a staggering expansion of private dispute resolution. The world therefore has witnessed an unprecedented growth of arbitration — the primary mode of private dispute resolution. Despite its importance, judicial review at the tail end of dispute resolution has been understudied. Much of the existing literature focuses on doctrinal definition, normative recommendations, and commentaries about specific high-profile cases. With at least three decades of growing cross-border business disputes, research is needed to form a more holistic view of national courts’ review of arbitration and to provide a path forward in the redesign of the modern global private dispute resolution. This Article achieves that goal by providing an empirical and doctrinal analysis of the public policy exception as a pivotal indicator for judicial reviewability and supervisory function of transnational commercial disputes. The modern private justice system provides an important (if not the only) substantive safeguard to courts. As one of the last remaining safeguards, the public policy doctrine grants discretion to courts to set aside arbitration agreements and awards that harm the public. Owing to the evasive nature of this doctrine, courts and arbitral tribunals alike have grappled with an appropriate way to define and approach this notion. In a comprehensive study, this Article analyzes arbitral tribunals’ and courts’ treatment of public policy claims in commercial disputes over the last three decades using coding and empirical research. The study demonstrates the frequency of public policy claims in courts and arbitral tribunals, issues presented under this rubric, and the success rate of these claims. Results suggest that public policy arguments have increased, while the courts and arbitral tribunals alike have remained passive to these arguments. This Article argues that a triangle of a pro-arbitration policy of courts, the doctrine of international public policy, and the contractual view of arbitration has led to underutilization, ineffectiveness, and the fall of the public policy doctrine as the last safeguard in the dejudicialization of domestic and global business disputes. This Article calls for an overhaul of this structure whereby judicial review is not exclusively available at the end of the private dispute resolution process