The Fall of Substantive Law and the Rise of US Commercial Arbitration Law

Substantive law is derived from the common law, statutes, or a constitution. The law of contracts, real property, torts, and criminal law are perfect examples of substantive law. In essence following the substantive law procedures means following the established legal mechanisms of a court process to have disputes resolved. This is the path that has been known in the UK for ages, and what people have done with cases over time. However, there has been a significant rise in the application of US commercial arbitration law. The arbitration approach affords commercial entities an opportunity to engage in dispute resolution within a relatively shorter period as compared to litigation in court. The arbitration process offers flexibility of the time within which disputes are resolved. The out-of-court litigation process is gaining popularity among commercial entities. This research seeks to unearth why the UK is shifting from its traditions of substantive law to apply the US commercial arbitration law. Through a thorough research based on existing scholarly information, one shall tell why the shift is happening.

Arbitration has gained great traction among organizations that court processes. The outcome of a case process may be indeterminable at the start of it. The public exposure of the challenges affecting the organizations in the background is feared as a possible image spoiler for a firm. Therefore, firms would always prefer a more silent process behind the scenes. It leaves their public perception intact as they resolve their differences in the background. In business, it is also preferred that disputed are resolved as soon as possible. This is not likely with a court litigation process that has to be scheduled amongst other disputes. The commercial entities then prefer a more privatized attention and process. A dispute resolution process that could have taken a year in a court may be resolved within a week in the private arbitration sector. As such, commercial arbitration has gained favour among those in contractual agreements as opposed to the processes offered by common law. This raises the question of whether substantive law is falling behind US commercial arbitration law in preference and application in disputes.

The research question is the area of research that the process shall seek to answer. Every piece of information and data collected shall be tailored to responding to the research question. In this research, the question is as follows.

1. Research Question: Why is US commercial arbitration law overtaking substantive law in resolving disputes between organizations in business contracts?

2. Hypothesis: Organizations prefer the commercial arbitration process to the substantive law because of its effectiveness, efficiency, and speed of execution.

Scholars have written along about substantive law, US commercial arbitration law, and the relationship between the two. Application of substantive law has been effective for ages, especially where disputes have emerged between UK businesses. The law applies equally to all businesses in the UK. Nevertheless, UK businesses have had to trade with their international partners from other countries. The jurisdiction of the substantive law applied in the standard procedures of the United Kingdom ends with the borders of the country. At the international level, an alternative of resolving contractual disputes must be sought. A majority of international commercial contracts include an arbitration clause which in the event of a contractual dispute directs the parties to apply arbitral proceeding. This illustrates the first major advantage that the US commercial arbitration law has over the substantive law applied in the UK.

The main question between disputing parties is whether to apply the court litigation process or an arbitration procedure in dispute resolution. At the point of getting into a contract, parties can determine the dispute resolution mechanisms they desire to apply in case of a contractual negligence. This autonomy by parties has favoured the arbitration process more often than the court litigation process. In many cases, the more applicable law in arbitration is the United States commercial arbitration law. The scope of party autonomy may be variable, but plays an important role in the determination of approach. Whichever decision is made; it must follow the principles of law outlined in the context of national and international business. A firm must be considerate of the legal positions and procedures of the jurisdiction within which it operates.

There has been a progressive erosion of substantive law, in favour of private arbitration as an alternative to court adjudication. The fall of substantive law has been orchestrated by the more efficient and flexible concept of arbitration in resolving disputes arising from commercial contracts. The claim that the US commercial arbitration law has been on the rise is based on the application of its principles. Whereas substantive law is anchored on constitutional processes, commercial arbitration is based on private dispute resolution. The courts can set precedence on the despite resolution decisions, but the private arbitration cannot do the same. In that regard, the application of arbitration law does not enrich the constitutional dispensation of justice, despite playing a significant role in the resolution of conflicts.

The arguable convenience offered by private dispute resolution is a trade-off with the transparency offered by public litigation. The parties involved in private proceedings can easily conspire without public knowledge. The ease of having things go their way is appealing to the actors in the commercial sector. As such, they would readily shake off the possibility of applying the substantive law where they have a chance to use the commercial arbitration approach.

The United States has gone a step further by introducing the Federal Arbitration Act (FAA), an act of Congress that provides for judicial facilitation of private dispute resolution through arbitration. Therefore, American courts can integrate private arbitration within their mechanism at any given time. This makes the commercial arbitration have a reference and support from substantive law. Fundamentally, the FAA justifies the legality of the commercial arbitration procedures by granting them support. The fusion between arbitration and substantive law is palpable in the case of the United States. Having borrowed the concept of arbitration from the US procedures, the FAA then provides another dimension of integrating arbitration into common law procedures.

The research methodology is the contextual framework, or the coherent and logical scheme used by a researcher to answer the research question. This research shall follow a qualitative research design to respond comprehensively to the demands of the study. Qualitative research relies on nonnumeric data to evaluate evidence and come up with substantive conclusions about the phenomenon under study. In this research, the process tries to evaluate what has caused the decline in application of substantive law, and in its place business entities have favoured commercial arbitration law. The shift in the legal process is evaluated by gathering data from various sources as follows;

1. Peer-reviewed research articles explaining the preference of commercial arbitration in place of substantive law.
2. Interviews with legal consultants who handle private arbitration of commercial entities at a local and international scale.
3. Primary documents detailing the laws, arbitration processes, and regulations of substantive law in commercial conflicts.

Beyond data collection from the sources highlighted above, the data shall also be analysed. Data analysis in this research shall take the qualitative approach. Data from the sources highlighted shall be analysed in two approaches of narrative analysis and grounded theory. The techniques try to categorize the data according to emerging themes from the information. These themes will be further narrowed into specific generalized conclusions as evidenced by information collected. After the data analysis, it is important to present the data. The research outcome will be presented in form of a research report. During the research process, one can expect to encounter different challenges and limitations. Among the limitations is access to an appreciable number of legal consultants in the sector, who would make a credible sample for the research. Further, the privacy and confidentiality of research participants may emerge as a challenge that requires being resolved. Another limitation could be on availability of resources to complete the research effectively.

The qualitative research process employed in this study should help answer the research question. Following the literature review, one can identify the research gaps that are present in this domain. One of the gaps is addressed in this research, trying to justify that the preference of commercial arbitration is guided by the desire for a more effective and fast process. Arbitration and the court process all come across as litigation, but one has favour among the businesses. The research will address the reasons why there is that preference of one over the other.