Illinois International Commercial Arbitration Act



 The 1998 Illinois International Commercial Arbitration Act was drafted by the Chicago International Dispute Resolution Association with the assistance of the International and Foreign Law Committee of the Chicago Bar Association.  It encourages arbitration of international commercial disputes, and provides comprehensive, easy-to-follow arbitration procedures where the parties have not already specified them.

State and Federal Arbitration Laws.  In 1961, Illinois enacted the Uniform Arbitration Act, 710 ILCS 5/1 et seq.  Arbitration is far more accepted today, especially for transnational transactions.  The Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., provides for the enforcement of foreign arbitral awards, but does little else to support international arbitration.  Both are sparse statutes with few procedural details or default mechanisms that can help international parties effectuate agreements to arbitrate.  As a result, Illinois, New York, California, Texas, Ohio, Florida, and five other states, now have international arbitration statutes of their own.

Illinois’ New International Commercial Arbitration Statute.  As cross-border trade and investment grow, transnational business conflicts also increase.  The importance of effective dispute resolution is heightened by the fact that the laws of at least two countries are likely to apply to any such conflict.  A legal framework that provides maximum autonomy to the contracting parties reduces the risks of global commerce.  Illinois’ arbitration law now extends effectively to these situations.

Illinois Adoption of the UNCITRAL Model Law.  Beginning in 1986, the UN Commission on International Trade Law has urged passage of the UNCITRAL Model Law on International Commercial Arbitration.  So far over 20 nations have enacted the Model Law, including all the provinces of Canada, Singapore, Hong Kong, and other major Illinois trading partners.  The Model Law was written as a comprehensive "code" for all countries to use.  It allows parties to choose how disputes will be determined, focuses the role of national courts, establishes basic provisions to ensure fairness and due process, and provides default and enforcement mechanisms for the conduct of arbitrations.  Illinois’ adoption of a modified version of this Act, which incorporates provisions already accepted and familiar to companies around the world, makes the state especially hospitable to international arbitration and thus enhances the legal infrastructure for global business in Illinois.

Commentary on the ICAA.  For a description and analysis of the new Illinois statute, see Baugher and Austermiller, "A New Way to Resolve International Business Disputes in Illinois," 88 Ill. Bar Journal 582 (Oct. 2000)