But one area where the usefulness of arbitration is recognized almost universally is international business such as U.S./Japanese sales under discussion here. On reflection the reasons are not altogether happy ones, for most of the benefits as seen by the proponents of arbitration seem to flow largely from the inadequacies of litigation, which are especially pronounced in the transnational context. What are some of the difficulties peculiar to transnational litigation? In the U.S./Japanese context they include: differences of jurisdictional requirements; uncertainty about which law will be found to govern an international contract under current choice-of-law rules; uncertainty even as to the enforceability in the United States of governing law and prorogation clauses agreed upon by the parties; and uncertainty about the enforceability of foreign judgments in both countries. These structural inadequacies of the transnational "legal order" are in addition to the usual delay and expense of domestic litigation, and also to the burdens peculiar to foreign lawsuits—lack of familiarity with habits of foreign lawyers, translation of documents, distant and absentee witnesses, vast differences in trial procedures and problems of proving foreign law. The result of all these difficulties, as merchants well know, is that transnational litigation is not only protracted, risky, and tedious, but always poor business because it absorbs executive time and adrenalin, yielding only salvage value discounted by inordinate expense and damaged commercial relations.
Taro Kawakami & Dan F. Henderson,
Arbitration in U.S./Japanese Sales Disputes,
42 Wash. L. Rev.
Available at: https://digitalcommons.law.uw.edu/wlr/vol42/iss2/29