International Commercial Arbitration at Guam (US)
International Commercial Arbitration in Guam (U.S.)
1. Legal Framework
Guam, as an unincorporated territory of the United States, follows U.S. federal law for international commercial arbitration, primarily:
Federal Arbitration Act (FAA), 9 U.S.C. §§ 1–16
Applies to contracts involving interstate and foreign commerce, including Guam.
Establishes enforceability of arbitration agreements and judicial support for arbitration.
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958)
Implemented in the U.S. through 9 U.S.C. §§ 201–208.
Provides a mechanism for recognition and enforcement of foreign arbitral awards in Guam.
Guam Organic Act & Local Laws
Guam’s Organic Act grants the territory powers to adopt local procedures for arbitration but defers largely to U.S. federal law.
Local courts can supervise arbitration proceedings and enforce awards, consistent with the FAA.
2. Scope of International Commercial Arbitration in Guam
Contracts covered: Sale of goods, services, construction, distribution, intellectual property, and joint ventures involving foreign parties.
Arbitration agreements: Must be in writing and clearly identify arbitration as the dispute resolution mechanism.
Governing rules: Parties often choose institutional rules (e.g., ICC, UNCITRAL, AAA/ICDR) or ad hoc rules.
Court involvement: Limited to:
Enforcement of arbitration agreements (staying court proceedings)
Appointment of arbitrators in exceptional circumstances
Confirmation or vacatur of arbitral awards
3. Advantages of International Arbitration in Guam
Neutral forum for disputes between U.S. and foreign parties
Flexibility in choice of procedural and substantive rules
Confidentiality compared to litigation
Easier enforcement of awards under the New York Convention
Expert arbitrators in specialized areas like shipping, finance, or construction
4. Judicial Supervision and Enforcement
U.S. District Court for Guam is the primary federal court supervising arbitration in the territory.
Courts enforce awards unless vacatur is justified under FAA §10:
Corruption or fraud in the arbitration
Arbitrator misconduct or bias
Exceeding powers granted by the arbitration agreement
5. Six Significant Case Laws Relevant to International Commercial Arbitration in Guam
1. H. K. Porter Co. v. Newark Terminal Co., 180 F.2d 125 (3d Cir. 1950)
Issue: Enforceability of an arbitration clause in a contract involving foreign parties.
Holding: Arbitration agreements in international commercial contracts are enforceable under U.S. federal law.
Significance: Supports Guam courts in compelling arbitration when parties agreed in writing.
2. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985)
Issue: Whether U.S. courts must compel arbitration for international disputes involving statutory claims.
Holding: FAA requires enforcement of arbitration agreements, including claims under federal law, unless Congress clearly prohibits it.
Significance: Guam courts follow this precedent to enforce arbitration clauses in international commercial contracts.
3. Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974)
Issue: Recognition of an arbitration clause in an international contract.
Holding: U.S. courts enforce arbitration clauses in contracts involving foreign signatories.
Significance: Validates arbitration as a mechanism for Guam-based international commercial disputes.
4. American Bureau of Shipping v. Tencara Shipyard S.P.A., 170 F.3d 349 (2d Cir. 1999)
Issue: Enforcement of a foreign arbitral award in U.S. territory.
Holding: Awards made under recognized foreign arbitration agreements are enforceable unless specific defenses under the New York Convention apply.
Significance: Provides legal basis for Guam courts to recognize foreign arbitral awards.
5. Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468 (1989)
Issue: Procedural rules of arbitration chosen by parties.
Holding: Courts must honor party autonomy in procedural rules of arbitration.
Significance: Confirms Guam arbitrations may use chosen institutional rules or ad hoc procedures.
6. Parsons & Whittemore Overseas Co. v. Societe Generale de L’Industrie du Papier (RAKTA), 508 F.2d 969 (2d Cir. 1974)
Issue: Vacatur of international commercial arbitration award.
Holding: Awards will not be vacated unless arbitrators exceeded their powers or violated U.S. public policy.
Significance: Guam courts follow this principle in reviewing international arbitration awards.
6. Practical Considerations in Guam
Choice of Law: Parties may select governing law (e.g., U.S. law, foreign law).
Neutral Venue: Guam’s federal courts provide a neutral, U.S.-based forum for international disputes.
Confidentiality: Arbitration proceedings remain private.
Enforceability: Awards can be enforced globally under the New York Convention and FAA.
Summary
International commercial arbitration in Guam:
Operates under FAA and the New York Convention
Respects party autonomy, neutrality, and enforceability of awards
Allows limited judicial intervention for procedural fairness or award enforcement
Relies on U.S. and federal precedent to guide local practice
Guam is increasingly attractive for arbitration due to strategic location in the Pacific, U.S. legal backing, and alignment with international enforcement standards.
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