INTERNATIONAL DISPUTE SETTLEMENT 2003-2004
THE ARBITRAL
PROCESS: 4 THE LEX ARBITRI
Suggested
**Goode,
‘The Role of the Lex Loci Arbitri in International Commercial
Arbitration,’ 17 Arbitration International 19 (2001), also published in Lex
Mercatoria: Essays in Honour of Professor Francis Reynolds.
Lew, The Applicable Law in
International Commercial Arbitration, (1978), 51-61
**
Paulsson, ‘Arbitration Unbound: Award Detached from the Law of its Country of
Origin’, 30 ICLQ 358 (1981);
--‘Delocalisation
of International Commercial Arbitration: When and Why It Matters’, 32 ICLQ 53
(1983) ;
---The
extent of independence of international arbitration from the law of the situs’, in Lew (Ed.), Contemporary Problems in International
Arbitration (1986), 141
**
Park, ‘The Lex Loci Arbitri and
International Commercial Arbitration’, 32 ICLQ 21 (1983);
---National Law and Commercial Justice: Safeguarding Procedural
Integrity in International Arbitration.’ 63 Tulane LR 647 (1989)
Rensmann, ‘Anational arbitral awards –legal phenomenon or academic phantom?’, (1998) 15/2 Journal of International Arbitration 37.
Sinclair, ‘Some Procedural Aspects in
International Litigation’, 30 ICLQ 338 (1981)
**Toope,
Mixed International Arbitration (1990),
chs II, III
van
den Berg, The New York Arbitration
Convention of 1958, (1981), 28-51
---, Planning Efficient
Arbitration Proceedings: The Law Applicable in International Arbitration
(1996).
Yu and Molife, ‘The Impact of National Law
elements on International Commercial Arbitration,’ [2001] Int’l Arbitration
Law Review 17-23
The Lex Arbitri (or curial Law)
1. It is necessary to distinguish: (a) the
law governing the arbitration agreement,
as a contract; (b) the source of rules prescribing the conduct of the arbitral
tribunal (see following handout) ; (c) the lex arbitri, which is the law of the
supervisory jurisdiction. See Thomas, ‘The Proper Law of Arbitration
Agreements,’ [1984] LMCLQ 304, and ‘The Curial Law of Arbitration Proceedings.’
[1984] LMCLQ 491.
On the role of the lex arbitri
see, e.g., Paul Smith Ltd v. H & S Holding Inc. [1992] 2
Lloyd’s Rep. 127, 130; Whitworth Street Estates
v. James Miller [1970] AC 583; Union of India v. McDonnell Douglas Corp. [1993] 2 Lloyd’s Rep. 48; UK Arbitration Act 1996, ss. 2, 3.
2. The various theories concerning the
nature of arbitration bear upon the identification of, and the explanation for
the authority of, the lex arbitri. The main theories are: (i) the jurisdictional
theory [authority derives from the sovereignty of the State where the
arbitration has its seat]; (ii) the contractual theory [authority derives from
agreement between the parties]; (iii) the hybrid theory, which combines (i) +
(ii) [the law of the seat allows the parties to agree…]; (iv) the autonomous
theory [arbitration is a wholly autonomous institution, not in need of further
explanation].
The orthodox
position: lex arbitri = Law of the Seat of the
Arbitration
3. The orthodox theory is that the law of
the seat is necessarily the lex arbitri. See the
BP v.
The ‘Delocalization’ debate: lex
arbitri freed from the accidents of geography
4. Objection to the impact of technical
rules of the local law on arbitrations which happen to be held there have led
to attempts to detach the arbitration from the local law (= ‘delocalisation’ of
the arbitration). See Paulsson, Park,
Mann (above); Götaverken Arendal AB v. Libyan General National Maritime Transport
Co., (1978), Wetter, The
International Arbitral Process, II, 178 (1979); Götaverken
(Paris) 30 ICLQ 358, 385 (1981); (1980) J. Droit Int. 763 [note role of ICC
Rules, art. 11]; Götaverken (Sweden), 21 Va. J. Int. L. 244 (1981); German-Rumanian Mixed Claims Tribunal, 16
June 1925 -David, Arbitration in
International Trade, (1985), 305; **Saudi Arabia v. Aramco, 27 ILR 117 (1958)
**Texaco v.
5. The current trend is to revise national
laws so as to minimise its impact on international commercial arbitrations held
in the State. This is another means of
pursuing the goal of delocalisation. See, e.g., the
German Act on the Reform of the law
Relating to Arbitral Proceedings, 1997, 37 ILM
790 (1998); the French Decree
on Int'l Arbitration, 1981, VII Y'bk Comm. Arb. 271 (1982), 20 ILM 917
(1981); Delaume, ‘International Arbitration under French Law..’,
37 Arb. J. 38 (1982); the Belgian
legislation, 1985, 25 ILM 725 (1986); Paulsson, ‘Arbitration Unbound in
6. National courts show a marked
reluctance to accept the concept of delocalisation. **Bank Mellat v. Helliniki
Techniki SA [1983] 3 All ER 428, 431; **
Dallal v. Bank Mellat [1986] 1
All ER 239; Schindler, ‘Arbitration Still Bound’, 102 LQR 500 (1986)
THE ARBITRAL
PROCESS
1. The tribunal’s procedure may be agreed
by the parties, who may adopt by reference a set of arbitration rules [e.g.,
ICC, UNCITRAL], or -more rarely- the procedural law of another State: Union of India v. McDonnell Douglas Corp. [1993] 2 Lloyd’s Rep. 48. In the absence of
such agreement between the parties, law of the seat applies as the lex arbitri to determine procedural
questions. In any event. the
chosen procedure must comply with the lex
arbitri. See, e.g., UNCITRAL Rules,
section III (articles 15-30); UNCITRAL Model Law, articles 18- 27; UK
Arbitration Act 1996, ss. 33-41. For a
list of matters commonly addressed in arbitration rules see the UNCITRAL Notes on Organizing Arbitration
Proceedings, http://www.uncitral.org/en-index.htm
Cf., A. J. van den Berg, International Council for Commercial Arbitration, Congress Series n. 7:
Planning Efficient Arbitration Proceedings (The Hague, 1996). See
generally: ** Mani, International Adjudication: Procedural Aspects (1980); Hascher, Recueil des cours / Hague Receuil, 1999.
2 In principle, parties have the right
to be represented: see the Hague
Conventions, 1899 (art. 37), 1907 (art. 62); ICJ Statute art. 42. Even in tribunals where representation has
not traditionally been allowed, the move is in this direction: see the WTO
decision in the Bananas complaint
(1997), http://www.wto.org/wto/dispute/bananas.htm.
3. Agents and counsel have distinct roles:
Behring Sea Fur Seal Arbitration
(Moore, Int. Arb. vol. 1, p.
910). Their acts before the tribunal may
bind the parties: France-US Air Transport
arbitration (1963), 69 RGDIP 192 (1965); German Interests in Polish
4. There are certain minimum procedural
norms which natural justice / fairness demands be observed: see Carlston, The Process of International Arbitration
(1946); A.L. Merriott, ‘Evidence in
International Arbitration’, 5 Arbitration
International 280 (1989); and note the doctrine of the ‘rights of thre
defence’ in EU law [e.g., Case T-205/99 Hyper Srl v Commission
(2002) ] The norms (which may, subject
to the lex arbitri / law of
enforcement, be varied by the agreement of the parties) include the following:–
(a) the
right to be heard: (cf., 1907 Hague Convention, art. 70); Wal Wal arbitration, (1935) 29 AJIL 690; 3 UNRIAA 1657, 42 RGDIP 751
(1935), Potter, ‘The Wal Wal
Arbitration’, (1936) 30 AJIL 27; Hostages, (1980) ICJ Rep. 3, 38, 41
(paras. 82-83, 89). the M/V Saiga, Lowe, 48 ICLQ 187-199
(1999). Hague Convention 1907, arts. 62, 70; D.W. Shenton, ‘An
introduction to the IBA Rules of Evidence’, 1 Arbitration International 118 (1985). Note the impact of the non ultra petita principle.
(b) the right to due deliberation by duly
constituted tribunal: Beagle
Channel, 17 ILM 632, 643 (1978)
(c) the right to a reasoned judgement: Hague Convention,
1907, art. 79; Beagle Channel, 17 ILM 738 (1978) (Argentine Declaration of
Nullity); Arbitral Award of
(d) the right to a tribunal free from corruption: cf., Buraimi
Oasis, above.
(e) the right to proceedings free from fraud
5. In principle, non-observance of these
procedural norms renders the award a nullity: see the Umpire cases,
6. The lex
arbitri may empower arbitrators to deal with delay by the parties: see,
e.g., UK Arbitration Act 1996, ss 1, 40, 41; Owsia, ‘Consensual Abandonment of
Contract: Innovatory Developments in English Law in the Eighties Concerning
Arbitration References,’ 8 J. Int. Arb.
55 (1991); Okekeifere, ‘The UNCITRAL Model Law and the
problem of delay in international commercial arbitration’, (1997) 14/1 Jo. Int’l Arb. 125; Trappe, ‘The arbitration
proceedings –fundamental principles and the rights of parties’, (1998) 15/3 Jo. Int’l Arb. 93. It is less
clear what may be done if the tribunal is the cause of the delay: see the UK
Arbitration Act, ss. 1, 33. Note that on the substance of claims, municipal
statutes of limitation do not bind international tribunals: Wena Hotels Inc.
v
7. Intervention in litigation is well
established in municipal law and, in the context of the PCIJ / ICJ, in
international law. It is not a general
principle of arbitration law. Institut de droit
international, 1875, art. 16. It is, however, sometimes
the subject of express provision: see e.g., 1899 Hague Convention, art. 56 (1907, art. 84);
8. Particular problems attend the
arbitration of multi-party disputes. The
problem may be that different applicants or respondents have different
interests in the same dispute, or that the same or similar parties have
interests in different disputes touching upon the same facts. Note problem of
deciding whether parties really are different, particularly in the
context of corporate claims: CME v
9. For an attempt to deal with the Dutco ‘different parties’ problem, see
the World Intellectual Property Organization (WIPO), Arbitration Rules (1994),
article 18, http://www.wipo.int/eng/arbit/index.htm, 34 ILM 562 (1995):
Appointment of Three Arbitrators in Case of Multiple Claimants or Respondents
Article 18
(a) Where
(i) three arbitrators are to be appointed,
(ii) the parties have not agreed on a procedure of appointment, and
(iii) the Request for Arbitration names more than one Claimant,
the Claimants shall make a joint appointment of an arbitrator in their Request for Arbitration.
The appointment of the second arbitrator and the presiding arbitrator shall, subject to paragraph
(b) of this Article, take place in accordance with Article 17(b), (c) or (d), as the case may be.
(b) Where
(i) three arbitrators are to be appointed,
(ii) the parties have not agreed on a procedure of appointment, and
(iii) the Request for Arbitration names more than one Respondent,
the Respondents shall jointly appoint an arbitrator. If, for whatever reason, the Respondents do
not make a joint appointment of an arbitrator within 30 days after receiving the Request for
Arbitration, any appointment of the arbitrator previously made by the Claimant or Claimants
shall be considered void and two arbitrators shall be appointed by the Center. The two
arbitrators thus appointed shall, within 30 days after the appointment of the second arbitrator,
appoint a third arbitrator, who shall be the presiding arbitrator.
(c) Where
(i) three arbitrators are to be appointed,
(ii) the parties have agreed upon a procedure of appointment, and
(iii) the Request for Arbitration names more than one Claimant or more than one
Respondent,
paragraphs (a) and (b) of this Article shall, notwithstanding Article 15(a), apply irrespective of
any contractual provisions in the Arbitration Agreement with respect to the procedure of
appointment, unless those provisions have expressly excluded the application of this Article.
10 The problems may be circumvented by the
appointment of tribunals of overlapping membership: Abu Dhabi Gas Liquefaction Co. Ltd. v. Eastern Bechtel Corp. (ADGAS), 21 ILM 1057 (1982); [1982] 2 Lloyds'
Rep. 425; Redfern & Hunter, 3rd ed., 174-183. But if that is not done, severe problems may
arise: Dutco (Siemens AG and BKMI Industrienlagen GmbH v. Dutco Consortium Construction Co.) French Cour de Cassation, 1992)
See C. Seppala, 8 International Arbitration
Report No 4 (April 1993), 25; J-L DJlvolvJ, ‘Multipartism: The Dutco Decision of the French Cour de
cassation’ 9 Arbitration International
197 (1993). ** International Law
Association, Report of the 66th
Conference (1994), pp. 689-714 and Report
of the 67th Conference (1996), pp. 603-622.
11. For attempts to deal with the problem of
separate but related arbitrations see the
Netherlands
Arbitration Act 1986, article 1046 (26 ILM 921 (1987); Redfern & Hunter,
3rd ed., p. 179) [Court power to consolidate]; UK Arbitration Act 1996, s. 35
[parties power to consolidate]; A A de Fina, ‘Consolidation of Arbitration
Proceedings in