United States and Canada arbitrate a softwood lumber dispute in the London Court of International Arbitration.

• Author: Crook, John R.

In August 2007, the United States initiated arbitration proceedings against Canada in the London Court of International Arbitration under the 2006 Softwood Lumber Agreement (SLA) between the two countries. (1) As of the date of this writing (late December 2007), the proceedings are under way, and a decision on the merits of the U.S. claims is anticipated in the first quarter of 2008.

The bilateral SLA creates an unusual dispute settlement mechanism. It authorizes arbitration of intergovernmental disputes in the London Court of International Arbitration (LCIA), a venerable nongovernmental institution that typically administers commercial cases between private parties. (2) Under Article XIV of the SLA, either Canada or the United States "may initiate dispute settlement under this Article regarding any matter arising under the SLA 2006" or concerning implementation of regional exemptions under Article XII.

Article XIV sets out the agreed dispute settlement procedure in thirty-two detailed paragraphs. Under Article XIV(6), if a dispute cannot be resolved by consultations, either party may initiate arbitration through a written request to the LCIA's registrar. The arbitration is regulated by the LCIA's rules as they stood when the SLA was signed (excluding an LCIA rule allowing tribunal-appointed experts). Each party appoints one arbitrator; the two party-appointed arbitrators must then select a chairman within ten days, failing which the LCIA makes the appointment. Under Article XIV(13), the "legal place of arbitration shall be London, United Kingdom. All hearings shall be conducted in the United States or Canada as the tribunal may decide ..." This provision, making London the legal place of arbitration, apparently has the effect of subjecting the proceedings to a degree of supervisory jurisdiction by the British courts. Article XIV(17) and (18) provides for pleadings, transcripts, awards, and other documents to be made public, and for hearings to be open to the public--which is a change from LCIA proceedings, which typically are kept confidential. (3) Article XIV also spells out in detail the available remedies should the tribunal find violations of the SLA. (4)

In the spring of 2007, a dispute arose between the United States and Canada regarding Canada's implementation of the "surge" mechanism created by the SLA to limit exports of softwood lumber from western Canada at times when North American lumber prices sink below an agreed threshold...