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THE PENNSYLVANIA STATE UNIVERSITY

THE DICKINSON SCHOOL OF LAW


Legal Studies Research Paper No. 24-2011

TITLE

The Restatement as New Rules


AUTHOR

Catherine A. Rogers

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THE RESTATEMENT AS NEW RULES

Catherine A. Rogers*

Several contributions in this volume derive from a panel at the Sixth Annual
Fordham Law School Conference on International Arbitration and Mediation entitled
New Rules for International Arbitration. Panel participants provided important updates
for international arbitration specialists regarding several newly revised sets of rules that
govern the arbitration process, including the newly revised ICC Arbitral Rules, the
Revised UNCITRAL Arbitration Rules, and the Revised IBA Rules on the Taking of
Evidence in International Arbitration, all of which were revised in 2010.1 In apparent
contrast to these examples, the topic of this Chapter is something called a Restatement
of the U.S. law of international commercial arbitration.
For the uninitiated, Restatements are a fixture in the U.S. legal landscape. By
2004, there were more than 160,000 judicial citations to Restatements.2 Traditionally,
they have focused on subjects such as torts, contracts and property, subject areas for
which the primary source of law is the common lawa collective amalgam of judicial
decisionsas opposed to statutes.
*

Professor Rogers is an Associate Reporter for the Restatement (Third) of the U.S. Law of
International Commercial Arbitration. The opinions expressed in this Chapter are those of the author, not
the American Law Institute.
1
Catherine Kessedjian also presents in this volume a paper on EU Regulation 44/2001, 22
December 2000, OJ 2001, L.12, p.1. While the Regulation is in many respects a form of new rules, and
is undoubtedly an important development, it differs in nature and its enactment process from the ICC,
UNCITRAL and IBA efforts. For this reason, I do not systematically incorporate it into my comparison of
the Restatement with these other sources of new rules, but only occasionally mention points of similarity.
2
David A. Logan, When the Restatement Is not a Restatement: The Curious Case of the
Flagrant Trespasser, 37 WM. MITCHELL L. REV. 1448, 1449 (2011).

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The development of legal rules through the common law is regarded as more
dynamic and more adaptable to changing circumstances than statutory law. It is also
considerably messier. If, as the saying goes, too many cooks spoil a broth, imagine how
indigestible is a stew cooked up by thousands of judges in various courts independently
interpreting judicial precedents and applying them to new factual scenarios.

But

digesting the common law is precisely the task of a Restatement. At this level, the
drafting a Restatement seems very distinct from rule-making, particularly the type
engaged in by the ICC, UNCITRAL and the IBA. The point of this Chapter, however, is
to demonstrate that, while many differences exist, there are also inescapable points of
similarity.
The Restatement is, inevitably, ushering in new rules. These new rules will
enable U.S. courts to make more systematic and consistent decisions regarding issues
involving international arbitration agreements and awards. As a result, it will facilitate
greater predictability, and consequently allow more careful planning by both foreign and
domestic parties, and the counsel who represent them.
This Chapter proceeds in four parts. The first three parts compare, in turn, the
objectives, constituencies and processes for adopting new rules in other contexts and in
the Restatement project. The final part sketches a few substantive examples of the new
rules implemented through the Restatement.
A. Objectives
The most apparent distinction between conventional new rules and the
Restatement is foreshadowed in their respective names. Rule-making projects expressly
aim to articulate what the relevant rule ought to be. It might be prudent not to rethink and

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redraft an entire body of existing rules in the name of building a better mousetrap.3
Parties, counsel and arbitrators have developed expectations based on existing rules,
which ideally are only disturbed when the improvement outweighs the costs associated
with implementing the innovation.4 Even in light of this prudential concern, however,
projects to revise international arbitration rules are generally unbounded inquiries into
what would be the best rule based in light of essential policy goals and practical
objectives. These objectives include ensuring that a new rule provides clear guidance,
promotes efficiency, ensures minimum standards of fairness, and remains accessible to
parties from different legal traditions. Rule-makers are relatively free to fashion
whatever rule they believe will best serve these goals.
In contrast, as the very name implies, Reporters of a Restatement are not free to
simply state what the law ought to be. Rather, we are charged with restating what the
law is. The term restatement connotes an iteration that repeats a prior statement,
usually in a slightly different form.5 The ALIs official description of a Restatement
confirms this definition:

Restatements are addressed to courts and others applying existing law.


They aim at clear formulations of common law and its statutory elements
or variations and reflect the law as it presently stands or might plausibly

For an extended discussion of the costs of legal change, including those that arguably represent
improvements in substance, see Michael P. Van Alstine, The Costs of Legal Change, 49 UCLA L. REV. 789
(2002).
4
For an extended discussion of the costs of legal change, including those that arguably represent
improvements in substance, see Michael P. Van Alstine, The Costs of Legal Change, 49 UCLA L. REV. 789
(2002).
5
ROGETS II THE NEW THESAURUS 832-33 (Kaethe Ellis et al. eds., 3d ed. 1995) (cited in Logan,
supra, note 2, at 1448).

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be stated by a court. Restatement black-letter formulations assume the


stance of describing the law as it is.6

Under this definition, a Restatement seems to challenge both the designation as new
and as rules.
Taking the latter designation (rule) first, the primary text of a Restatement is
often referred to as black-letter rules. These provisions, however, lack one of the most
essential features of a rulethey are not binding. A rule is generally understood as a
general norm mandating or guiding conduct or action in a given type of situation.7
Restatement black-letter provisions do not become rules, and hence do not formally bind
parties or have the effect of law, until they are adopted by a court. The distinction
between black-letter provisions and rules, however, does not stop there.
The nature and origin of the black-letter provisions also differ significantly from
other legal rules. The Restatement movement was born out of recognition at the turn of
the Nineteenth Century that the current state of the common law was in disarray. There
were numerous, prominent cases reaching contradictory results, both among the various
states and sometimes even within a single jurisdiction. Despite the apparent disarray, the
founders of the American Law Institute and the original architects of the Restatement
project regarded the common law as a closed system that yielded answers to all issues
that arise, and the Restatements were an opportunity to reaffirm this view.8

http://www.ali.org/index.cfm?fuseaction=projects.main
BLACKS LAW DICTIONARY (9th ed. 2009).
8
John P. Frank, The American Law Institute, 1923-1998, 26 HOFSTRA L. REV. 615, 624 (1998);
Logan, supra, note 2, at 1450.
7

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While the Restatement movement aimed to distill the essence of conflicting


common law precedents into discernable black-letter provisions, it was also regarded an
attempt to protect the common law against formal codification by legislatures, which it
was believed would trump and largely vanquish the common law.9 In this respect,
Roscoe Pound attributed this resistance to codification to the historical distrust that
lawyers and judges have had for legislation.10
In this respect, Restatements were believed to be better able to preserve the
flexibility and dynamism of the common law in a way that traditional codification
could not.11 Despite the fact that the form and goals of the Restatements were very
similar to codes or legal rules, early proponents of Restatements rejected the notion that
the black-letter provisions of Restatements had anything more than a superficial
resemblance to rules that were passed by legislative bodies or incorporated into codes.
On the other hand, to the extent that the Restatement movement aims to produce
something resembling rules, that goal has been criticized as predicated on an overly
formalistic understanding of legal rules and their relation to judicial decisions. Karl
Llewellyn argued that there are several different possible meanings of the statement,
[T]his is the rule.12 As Professor Kristen Adams explains:
Llewellyn cautioned that simply calling something a rule does not provide
enough information. Instead, he urged, it is important to determine
9

Nathan M. Crystal, Codification and the Rise of the Restatement Movement, 54 WASH. L. REV.
239, 240 (1979).
10
Kristen David Adams, Blaming the Mirror: The Restatements and the Common Law, 40 IND. L.
REV. 205, 226-27 (2007) (citing Roscoe Pound, Liberty of Contract, 18 YALE L.J. 454 (1909), reprinted in
AMERICAN LEGAL REALISM 29-30 (William W. Fisher et al. eds., 1993)).
11
See id. at 227.
12
Karl N. Llewellyn, A Realistic JurisprudenceThe Next Step, 30 COLUM. L. REV. 431 (1930),
reprinted in AMERICAN LEGAL REALISM 55 (William W. Fisher et al. eds., 1993).

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whether courts really follow a rule or just recite it. Stated another way, the
Realist view was that rules do not wholly guide judges; rather, judicial
analysis is relatively flexible and more complex than might be assumed.13
Thus, the black-letter provisions of a Restatement may resemble rules, but there is room
to question their providence and pedigree as rules.
Even if one accepts that the Restatement comes up with rules, there is a
separate question of whether those rules are new, at least in the same sense that the
ICC, IBA and UNCITRAL Rules are new. Here again, the Restatement movement has
evolved over time, and is subject to differing perspectives. Despite the term
restatement and express mandate for Restatements to distill principles from existing
caselaw, there is significant debate both within the ALI community and among its critics
about how expressly Restatements should seek to implement legal reforms that change or
alter the existing caselaw.14 As Professor David Logan explains:
From the outset, all members of the ALI agreed that the common law
needed to be tidied up, but there was disagreement as to whether the
restatements should be descriptive or prescriptive. As a long-time member
of the ALI Council, Shirley Abrahamson, chief justice of the Wisconsin
Supreme Court, observed: There is always the struggle between the law
that is and the law as it ought to be.15

13

Adams, supra, note 10, at 231.


For thoughtful summaries of this debate, see Adams, supra note 10, at 227-30 and Logan,
supra, note 2, at 1454-55.
15
See Logan, supra, note 2, at 1454.
14

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Critics, meanwhile, have lamented that the Restatements efforts to adhere to existing law
specifically is a missed opportunity to introduce needed legal reforms. Hessel Yntema
describes [adherence to currently articulated legal principles] as an indefensible retreat
and a material nullification of the major objective of the Institute.16
Although restating the law is considered to be a much more constrained process
than conventional rule-making, this characterization may understate the discretion that is
afforded to Reporters, particularly in light of the range of precedents available and the
inability of any single precedent to mandate a single clear rule. As Arthur Corbin argue,
judicial decisions are not simply translated into a Restatement, but rather that [a] stated
rule used by [any] court as a basis of decision must fight for its life before it becomes
incorporated into a Restatement.17
B. Process
At first blush, rule-making by institutions or organizations such as the ICC,
UNCITRAL and the IBA seems to involve processes that are very different than the
process for drafting a Restatement. The process for drafting a Restatement is often
regarded as highly academic, particularly since Reporters are exclusively drawn from the
legal academia. It is worth summarizing what that process is to demonstrate how
Restatements are vetted outside of the ivory tower of The Academy:
Several testing stages comprise the ALIs formal process in
developing a restatement. The restatements reporters draft what are called

16

Adams, supra, note 10, at 214 (quoting AMERICAN LEGAL REALISM 52 (William W. Fisher et al.
eds., 1993).
17
Arthur L. Corbin, The Restatement of the Common Law by the American Law Institute, 15 IOWA
L. REV. 19, 25 (1929) (cited in Adams, supra, note 10, at 233).

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black letter sections, comments, and notes with citations. This becomes
a published Preliminary Draft that the reporters present to meetings with a
Members Consultative group of volunteers and to an appointed group of
Advisers, selected by the Executive Director to secure pro and con
balance. Spirited discussion often occurs at these meetings. The
Preliminary Draft in turn becomes a published Council draft for discussion
by ALIs governing body, the Council. Next, a published Tentative Draft,
available online and bearing the notice that it is not ALI policy, is
discussed and voted on at the members annual May meeting. Earlier
versions and efforts may be, in effect, remanded to the reporter at any
stage of the process. Final approval comes after that membership vote,
vetting by the ALIs professional staff, completion of the whole
restatement to be circulated as a proposed final draft, and a final
membership vote.18
Other rule-making projects may include commentary to aid in the implementation of the
rules, but few also include extensive notes that involve elaborate citations and
explanations that seek to justify the particular rules adopted. Similarly, many other rulemaking projects also include vetting process. But few, if any, involve the systematic,
multi-tiered process that leads to the finalization of a Restatement.
Finally, most rule-making projects, include votes to approve final drafts. Those
votes, however, are oftenmost obviously in this context with UNCITRALan

18

Doug Rendleman, Restating Restition: The Restatement Process and its Critics, 65 WASH. &
LEE L. REV. 933, 935 (2008).

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expression of political assent by entities whose vote is needed for the rules to be given
effect. With a Restatement, by contrast, committees focus on providing intellectual
guidance and the final votes are intellectual stamps of approval that permit the
Restatement to carry the ALI imprinteur. They are not votes of political assent.19
Nevertheless, like more democratic processes, as one commentator has reasoned,
Ultimately, the level of influence accorded a restatement rule is determined in the rough
and tumble of litigation in coming years. In this sense, the ALIs work will be tested
and will stand or fall in the marketplace of ideas.20 This testing in the marketplace of
ideas ends up making the new rules announced by a Restatement quite similar to other
new rules adopted through different processes in that, as described in greater detail in the
next section, they must ultimately be satisfactory to the users of the system.
C. Constituencies
Another way in which the Restatement appears to differ from other efforts to draft
new rules is that each activity aims its efforts at a different constituency. At a formal
level, the primary constituency for a Restatement is courts. A Restatement is a learned
source, which becomes final once it receives the stamp of approval of the American Law
Institute. Unlike rules adopted by a legislature, a Restatement only has any binding effect
if courts rely on it and cite it in their judicial decisions, thus incorporating it into their
own legal precedent.
19

This is not to suggest that intellectual positions are unrelated to political orientations. For
example, Judge Richard Posner has explained that Whatever its causes, the politicization of important
areas of American law has made it difficult for the Institute to engage with the most important questions
without crossing the line that separates technical law reform from politics. RICHARD A. POSNER, THE
PROBLEMATICS OF MORAL AND LEGAL THEORY 305 (1999). Votes approving drafts, however, are not
political in the sense that they are an exercise of political power in the same way as voting to approve a law
or a binding rule.
20
Logan, supra note 2, at 1482.

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The constituency of other rule-making projects in this volume, such as the ICC,
UNCITRAL and the IBA, are the international arbitration systems usersmeaning
primarily the parties and their counsel. While this would seem to be another apparent
point of contrast, in fact, in exercising our discretion in light of the often uncertain state
of precedent or confused nature of statutory language, the Reporters of the Restatement
often, even explicitly, seek to adopt a position that is most consistent with interests and
preferences of the systems users. This effort to satisfy users is not inconsistent with our
task of restating the law.
As Reporters, we realize that for our ultimate constituencycourtsto accept a
particular position adopted in the Restatement, parties and attorneys will have to argue
and brief it to courts. If parties and their counsel adopt a position that is friendly to a
particular black-letter provision in the Restatement, and particularly if both parties do so,
a court is much more likely to adopt that provision. We are also aware that many of
parties (and to some extent counsel) who end up in U.S. courts or who rely on U.S. court
opinions are foreign. In that respect, we are fortunate enough to count among our
advisors and consultants various foreign specialists in procedure and international
arbitration.
D. The New Rules of the Restatement
As noted above, in drafting the Restatement, we are primarily tasked with
restating and clarifying existing law. In that capacity, we are constrained by U.S.
Supreme Court decisions that unambiguously resolve a particular issue, and unambiguous
statutory terms in the New York and Panama Conventions, as well as the Federal
Arbitration Act (FAA). As it turns out, however, few of those sources are ever free from

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ambiguity. Both the Conventions and the FAA are distinctly sparse in language, and that
language was drafted many decades ago. American arbitration law and international
arbitration practice is significantly different in form and substance today than it was then.
Meanwhile, in a jurisdiction as large as the United States and that operates with a
largely decentralized court, consensus is rare among lower courts. More often than not,
there are judicial decisions that conflict on particular issues, or at least leave considerable
room for interpretation given the often complex interaction between domestic and
international arbitration precedents. There is rarely a single, clear path leading
inexorably to a specific black-letter provision. As a result, in practice, as Reporters we
have room to choose between competing authorities, and in that process, we have room to
choose what we regard as the better rule. In other words, the space between is and ought
described in the first section is not nearly as significant as might be presumed. A couple
of important examples demonstrate this point.
One example regards the source for the grounds for seeking vacatur of an
international arbitral award that is made in the United States. Most courts have held
that those grounds are the ones found in Section 10 of Chapter One of the FAA. One
court, however, in the Eleventh Circuit, has instead concluded that the grounds to be
applied are the grounds found in Article V of the New York Convention. The Eleventh
Circuit, which comprises Alabama, Florida and Georgia, is not generally regarded as
uniquely persuasive court, particularly in contrast to the Second Circuit (which includes
New York) and the Seventh Circuit (which includes several legendary judicial figures).
While the weight of judicial precedent might push the black-letter provision for
the Restatement toward the Section 10 grounds, in this instance, the issue was more

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complicated. None of the existing precedents fully grappled with, let alone resolved,
several complex textual ambiguities in the FAA that could permit it to be interpreted
either as requiring application of the Section 10 grounds from Chapter One or the Article
V grounds of the Convention. That lacuna, combined with compelling policy reasons to
rely on the inherently more international grounds articulated in the Conventions, gave the
Reporters some intellectual room to adopt the less prevalent view that the Convention
grounds apply. Not surprisingly, however, the debate surrounding that position in the
current draft has inevitably raised questions about the role of a Restatement in reforming
law, about what it means to extract a rule out of judicial precedent, and about the is/ought
distinction in determining black-letter provisions.21
Another example where the Restatement appears to adopt a position that does not
inexorably derive from existing caselaw precedent is with respect to claim preclusion
(also known as res judicata). Here, there were not really any cases that got it right.
Courts uniformly held that, as an affirmative defense, the burden for establishing that an
award was entitled to preclusive effect was on the party seeking to rely on the award.
Courts also held that the substance of the burden was determined by reference to general
common law principles that govern the granting of preclusive effect to prior judicial
judgments. If the Restatement adopted this position, it would have effectively reversed
the Conventions allocation of burden of proof for recognition on the party opposing
recognition. It also would have violated the notion that Article V provides the exclusive

21

For an extended discussion of the existing precedents and the textual ambiguities in determining
what grounds apply to vacate international arbitral awards that are made in the United States, see Section 411 of Preliminary Draft No. 5 of the Restatement of the Law Third, The U.S. Law of International
Commercial Arbitration (September 1, 2011), at 146-154.

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grounds for denying recognition since it would have required courts to apply common
law principles governing res judicata.
The Reporters had some latitude on this issue because the caselaw dealt almost
exclusively with domestic arbitral awards. Meanwhile, the Convention standards on
recognition are clear and non-derogable.22 This is an instance in which the Restatement
was able to clarify and correct, through an apparently new rule, a long-standing but
obvious error by courts, at least with respect to international awards.23
E. Conclusion
International arbitration is a remarkably flexible and rapidly evolving area of
practice, for which new rules are constantly being introduced. There are numerous
reasons for this dynamism. First, international arbitration is a creature of, and intimately
tied to, international trade, which is itself expanding at a breakneck speed. As a result,
new parties and legal cultures are constantly being introduced to the system. These new
players raise potential challenges for existing rules since they often bring new
assumptions and expectations. The increased diversity, therefore, creates a need for
greater clarification through formal rules.
The international arbitration as an adjudicatory system may also be uniquely
prone to the introduction of new rules because it is only loosely tethered to national legal

22

For an extended discussion of the relationship between recognition of international arbitral


awards and res judicata in the United States, see Section 4-19 of Preliminary Draft No. 5 of the
Restatement of the Law Third, The U.S. Law of International Commercial Arbitration (September 1, 2011),
at 120-134.
23
Chapter One of the FAA, which pertains to domestic awards, does not refer to recognition of
an award. This omission may well be why courts historically looked to sources outside of arbitration law
(i.e., to the common law of res judicata applicable to court judgments) to determine the standards
applicable to arbitral awards. These precedents were then, in a few cases, simply applied without analysis
by courts that presumed the same rule would apply to international awards.

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systems and the slow-moving political apparatus that governs them.24 Instead, the
international arbitration system has evolved into its current form by systematizing the
most successful innovations in procedure and doctrine that were originally introduced on
an ad hoc basis. These processes and doctrines, meanwhile, are introduced in a
remarkably competitive market. In the international arbitration system, jurisdictions
compete to be the seat of international arbitration cases; arbitral institutions compete to
have their rules designated in international arbitration agreements; arbitrators compete to
be appointed by parties; and counsel compete to represent parties in arbitrations. In such
a rapidly evolving and competitive environment, it is not surprising thatin any given
yearthere are a host of new rules designed to refine and improve the system. The
Restatement is estimated to be a 10-year process, now only in its fifth year. That means,
most likely, that it will be counted among new rules for many years to come.

24

The inflexibility of national rule-making is one reason why Professor Kessedjian opposes the
proposed new EU Regulation. See [cross-reference to page 9 of Kessedjian draft].