Governance from Below? Lessons from Transnational Commercial Dispute Resolution

The interactions of subnational actors may offer an alternative to a growing inability of intergovernmental organizations to provide global public goods. In part to investigate such private forms of governance, Thomas Hale examines transnational commercial arbitration (TCA), a long-standing practice that has often succeeded in creating rule of law for cross-border transactions. TCA is also of particular interest to scholars who study investor-state dispute settlement (ISDS), which borrowed heavily from its model and is only now coming to terms with problems that resulted. Hale draws on the rich history of lex mercatoria, which has of course received significant attention previously. Chapters 2–4 attempt a “comprehensive account” (25) of the modern TCA regime, which, according to Hale, is “best thought of as a hybrid, plural, institutional ecosystem in which transnational tribunals, intergovernmental commitments, and domestic courts all play a role” (5). These institutions play varying roles across time and place. When transactions are high in value, when market power is not strongly imbalanced across firms, and where uncertainty is relatively high, private arbitration is likely to help firms keep commitments. Domestic courts may play a role in enforcement, but their independence is a function of domestic politics and embody a trade-off between scope and coercion (64). Hale explains variation in the use of TCA by dividing the problem into two components, demand and supply, and he focuses initially on three criteria for institutions—neutrality, efficiency, and authority—but he largely collapses these to one dimension, with neutrality having primacy (61)

Arbitration · Corporate governance · Dispute resolution · Economics · Enforcement · Law and economics · Neutrality · Plural · Political science · Politics · Transnational governance · Corporate Law and Human Rights · Dispute Resolution and Class Actions · International Arbitration and Investment Law · Law