International Arbitration: Law and Practice

Gary b. born
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For Clyde Raymond Born
Table of Contents

Preface

Acknowledgments

Part I
International Arbitration Agreements

Chapter 1
Introduction to International Arbitration
§1.01 Definition of International Arbitration
[A] What Is “Arbitration”?
[1] Consensual M eans to Resolve Disputes
[2] Non-Governmental Decision-M aker Selected by or for the Parties
[3] Final and Binding Decision
[4] Use of Adjudicatory Procedures
[B] Forum Selection Clauses and National Courts
[C] Other Forms of Alternative Dispute Resolution
[1] M ediation and Conciliation
[2] Expert Determination
[3] M ini-Trials and Neutral Evaluation
[4] “Baseball” or “Final-Offer” Arbitration
[D] “International” Arbitration
§1.02 Reasons for International Arbitration
[A] Neutrality
[B] Centralized Dispute Resolution
[C] Enforceability of Agreements and Awards
[D] Commercial Competence and Expertise
[E] Finality of Decisions
[F] Party Autonomy and Procedural Flexibility
[G] Cost and Speed
[H] Confidentiality and Privacy of Dispute Resolution
[I] Arbitration Involving States and State-Entities
§1.03 Popularity of International Arbitration
§1.04 Contemporary International Arbitration Conventions
 [A] New York Convention
[B] Inter-American Convention
[C] European Convention
§1.05 Contemporary National Arbitration Legislation
[A] Supportive National Arbitration Legislation
[B] 1985 UNCITRAL M odel Law and 2006 Revisions
[C] Less Supportive National Legislation
§1.06 Ad Hoc and Institutional Arbitration
[A] Institutional Arbitration
[B] Ad Hoc Arbitration
[C] Relative Advantages and Disadvantages of Institutional and Ad Hoc Arbitration
[D] UNCITRAL Arbitration Rules
[E] Leading International Arbitral Institutions
[1] International Chamber of Commerce
[2] London Court of International Arbitration
[3] American Arbitration Association/International Centre for Dispute
Resolution
[4] Singapore International Arbitral Centre
[5] ICSID
[6] Permanent Court of Arbitration
[7] Other International Arbitral Institutions
§1.07 Elements of International Arbitration Agreements
[A] Submission Agreement versus Arbitration Clause
[B] Critical Elements of International Arbitration Agreements
[1] The Agreement to Arbitrat
[2] Scope of Arbitration Agreement
[3] Institutional Arbitration Rules
[4] Seat or Place of the Arbitration
[5] Number, M ethod of Selection and Qualifications of Arbitrators
[6] Language of the Arbitration
[7] Choice-of-Law Clauses
[C] Other Provisions of International Arbitration Agreements
§1.08 Overview of Choice of Law in International Commercial Arbitration
[A] Law Applicable to the Substance of the Parties’ Dispute
[B] Law Applicable to the Arbitration Agreement
[C] Procedural Law Applicable to the Arbitral Proceedings
[D] Choice of Laws Rules Applicable in International Arbitration
§1.09 Investor-State Arbitration
 [A] ICSID Convention
[B] Bilateral Investment Treaties
§1.10 State-to-State Arbitration

Chapter 2
International Arbitration Agreements: Legal Framework
§2.01 Disputes Concerning International Arbitration Agreements
[A] Challenges to Existence, Validity and Scope of International Commercial
Arbitration Agreements
[B] Procedural Settings for Jurisdictional Objections
[1] Consideration of Jurisdictional Objections by Arbitrators
[2] Consideration of Jurisdictional Objections by National Courts
§2.02 Jurisdictional Requirements of International and National Commercial Arbitration
Regimes
[A] “Arbitration” Agreement Requirement
[B] “Commercial” Relationship Requirement
[C] “Disputes” or “Differences” Requirement
[D] “Existing or Future” Disputes Requirement
[E] “Defined Legal Relationship” Requirement
[F] “Foreign” or “International” Arbitration Agreements Requirement
[G] Reciprocity Requirements
§2.03 Presumptive Validity of International Arbitration Agreements
[A] Historic Rules of Unenforceability
[B] New York Convention
[C] National Arbitration Legislation
§2.04 Separability of International Arbitration Agreements
[A] Separability Presumption
[B] Rationale for Separability Presumption
[C] Consequences of Separability Presumption
§2.05 Allocation of Competence to Decide Disputes Over Existence, Validity and
Interpretation of International Arbitration Agreements
[A] Competence-Competence Doctrine
[B] Allocation of Competence to Decide Jurisdictional Disputes
[1] France: Prima Facie Jurisdiction
[2] United States: Interlocutory Judicial Decisions
[3] UNCITRAL M odel Law: Diversity of Approaches
§2.06 Law Applicable to Formation, Validity and Interpretation of International Arbitration
Agreements
 [A] Law of Judicial Enforcement Forum
[B] Law Chosen by Parties
[C] Law of Arbitral Seat
[D] “Validation” Principle
[E] International Law
[F] Other Choice-of-Law Issues
[1] Formal Validity
[2] Capacity
[3] Non-Arbitrability
[4] Non-Signatory Issues
§2.07 Effects of International Arbitration Agreements
[A] Positive Effects of Arbitration Agreement: Obligation to Arbitrate in Good Faith
[1] Source of Positive Obligations to Arbitrate
[2] Content of Positive Obligation to Arbitrate
[3] Remedies for Breach of Positive Obligation to Arbitrate
[B] Negative Effects of Arbitration Agreement: Obligation Not to Litigate
[1] Negative Obligations under Agreement to Arbitrate
[2] Remedies for Breach of Negative Obligation Not to Litigate Arbitrable
Disputes: Stay or Dismissal of Litigation
[3] Remedies for Breach of Negative Obligation Not to Litigate Arbitrable
Disputes: Antisuit Injunction
[4] Remedies for Breach of Negative Obligation Not to Litigate Disputes:
Damages for Breach of Obligation Not to Litigate
[5] Remedies for Breach of Negative Obligation Not to Litigate Disputes: Non-
Recognition of Judgments
[C] Anti-Arbitration and Anti-Suit Orders

Chapter 3
Formation and Validity of International Arbitration Agreements
§3.01 Formation of International Arbitration Agreements
[A] Consent to Arbitration Agreement
[B] Standard of Proof for International Arbitration Agreements
[C] Essential Terms of Arbitration Agreements
[1] Agreement to Arbitrate
[2] Incidental Terms
[3] Blank Clauses
[D] Pathological Arbitration Clauses
[1] Indefinite Arbitration Agreements
 [2] Arbitration Agreements Referring to Non-Existent Arbitral Institutions,
Arbitration Rules, or Arbitrators
[3] Internally Contradictory Arbitration Agreements
[4] “Optional” or Non-M andatory Arbitration Agreements
[E] Formal Validity of International Arbitration Agreements
[1] Written Form Requirement – New York Convention
[2] Written Form Requirement – National Arbitration Legislation
[3] UNCITRAL M odel Law, Article 7 (and Revisions)
[4] Relationship between New York Convention and National Law
[5] 2006 UNCITRAL Recommendations
[6] Incorporation of Arbitration Agreement
[F] Substantive Validity of International Arbitration Agreements
[1] “Null and Void,” “Inoperable” and “Incapable of Being Performed”
[2] Unconscionability and Duress
[3] Fraudulent Inducement or Fraud
[4] Impossibility and Frustration
[5] Illegality
[6] Lack of Capacity
[7] Termination and Repudiation
[8] Waiver of Right to Arbitrate
[9] Inconvenient Arbitral Seat
§3.02 The Non-Arbitrability Doctrine
[A] Basis for Non-Arbitrability Doctrine
[B] Applications of Non-Arbitrability Doctrine
[1] Competition and Antitrust Claims
[2] Securities Claims
[3] Bankruptcy
[4] Employment Contracts
[5] Consumer Disputes
[6] Other Non-Arbitrable Disputes
[C] Choice of Law Governing Non-Arbitrability
[D] Non-Arbitrability Issues in Annulment or Enforcement of Awards

Chapter 4
Interpretation of International Arbitration Agreements
§4.01 Scope of Arbitration Agreements
[A] Rules of Construction
[1] Pro-Arbitration Rules of Construction
 [2] Anti-Arbitration Rules of Construction
[B] Recurrent Issues
[1] Commonly-Used Formulae in Arbitration Agreements
[2] “Broad” versus “Narrow” Arbitration Clauses
[3] Tort Claims
[4] Statutory Claims
[5] M ultiple Contracts
§4.02 Incorporation of Institutional Arbitration Rules
§4.03 Allocation of Competence to Interpret International Arbitration Agreements

Chapter 5
International Arbitration Agreements: Non-signatory Issues
§5.01 Non-Signatories to Arbitration Agreements
[A] Agency
[B] Alter Ego and Veil-Piercing
[C] Group of Companies
[D] Succession
[E] Assignment or Transfer
[F] Estoppel
[G] Corporate Officers and Directors
§5.02 Formal Validity and Non-Signatories
§5.03 Choice of Law Governing Non-Signatory Issues
§5.04 Allocation of Competence to Decide Non-Signatory Issues
§5.05 Non-Signatory Issues and Institutional Arbitration Rules

Part II
International Arbitral Proceedings

Chapter 6
International Arbitral Proceedings: Legal Framework
§6.01 M eaning and Importance of the Arbitral Seat
[A] Location of Arbitral Seat
[B] Arbitral Seat Distinguished from Location of Hearings
[C] Territorial Structure of National Arbitration Legislation
[D] Issues Governed by Law of Arbitral Seat
[1] “Internal” Procedures in the Arbitration: Due Process Requirements of
Arbitral Seat
[2] “External” Relationship with National Courts: Supervisory Authority of
 Courts of Arbitral Seat
[i] Annulment of Award
[ii] Qualifications, Selection and Removal of Arbitrators
[iii] Interlocutory Jurisdictional Disputes
[iv] Provisional M easures and Evidence-Taking
[v] Procedural and Other M andatory Requirements
[E] Civil Procedure Rules of Arbitral Seat Not Applicable
§6.02 Applicable Procedural Law in International Arbitration
[A] Definition of Procedural Law
[B] Procedural Law of Arbitration Is Not Local Civil Procedure Rules
[C] Choice of Procedural Law Other than That of Arbitral Seat
[D] Consequences of Choice of Foreign Procedural Law
§6.03 Selection of Arbitral Seat
[A] Selection of Arbitral Seat by Parties’ Agreement
[B] Selection of Arbitral Seat by Arbitrators or Arbitral Institution
[C] Selection of Arbitral Seat by National Courts
§6.04 Choice of Arbitral Seat
[A] Considerations Relevant to Choice of Arbitral Seat
[1] Contracting Party of New York Convention
[2] Standards for Annulment of Arbitral Awards
[3] Supportive National Arbitration Regime
[4] Effect on Selection of Arbitrators
[5] Effects on Procedural and Substantive Laws
[6] Convenience and Cost
[B] Arbitral Seats Commonly Chosen in Practice

Chapter 7
S election and Removal of Arbitrators in International Arbitration
§7.01 Selection of Arbitrators in International Arbitration
[A] Parties’ Autonomy in Selection of Arbitrators
[1] Party Autonomy to Select Arbitrators under New York Convention
[2] Party Autonomy to Select Arbitrators under National Arbitration
Legislation
[3] Party Autonomy to Select Arbitrators under Institutional Rules
[4] Consequences of Failure to Comply with Contractual Appointment
M echanism for Arbitrator
[B] Exercise of Parties’ Autonomy to Select Arbitrators
[1] Number of Arbitrators
 [i] Sole Arbitrator
[ii] Three Arbitrators
[iii] Default Rules on Number of Arbitrators
[2] M ethod of Selection of Arbitrators
[i] Selection of Co-Arbitrator
[ii] Interview of Prospective Arbitrators
[iii] Party’s Failure to Select Co-Arbitrator
[iv] Selection of Sole or Presiding Arbitrator by Parties
[v] Selection of Arbitrator by Arbitral Institution
[vi] Selection of Sole or Presiding Arbitrator by National Court
[C] Restrictions Concerning Arbitrators’ Impartiality, Nationality, Qualifications
and Experience under National Law
[1] Requirements for Arbitrators’ Independence and Impartiality
[i] Requirements for Arbitrators’ Independence and Impartiality under
National Arbitration Legislation
[ii] Requirements for Arbitrators’ Independence and Impartiality under
Institutional Arbitration Rules
[iii] Standards of Impartiality and Independence for Co-Arbitrators and
Presiding Arbitrator
[iv] IBA Guidelines on Conflicts of Interest
[v] Disclosure Obligations of Arbitrators
[vi] Grounds for Finding Lack of Impartiality
[2] Nationality of Sole and Presiding Arbitrators
[3] Natural Persons and Legal Capacity
[4] Legally Qualification and Civil Rights
[5] Arbitrator M ust Not Be a National Court Judge
[D] Contractual Limitations on Arbitrators’ Qualifications
[1] Contractual Nationality Requirements
[2] Contractual Language Requirements
[3] Expertise and Accreditation Requirements
[4] Legal Qualifications
[5] Prohibitions against Legal Qualifications
§7.02 Procedures for Challenging Arbitrators
[A] Institutional Challenges
[B] Interlocutory Challenges in National Courts
[C] Waiver of Rights to Object to Arbitrator
§7.03 Replacement of Arbitrators
§7.04 Truncated Tribunal
§7.05 Arbitrators’ Rights and Duties
§7.06 Arbitral Immunity

Chapter 8
Procedural Issues in International Arbitration
§8.01 Applicable Procedural Law in International Arbitration
§8.02 Parties’ Procedural Autonomy in International Arbitration
[A] New York Convention
[B] National Arbitration Legislation
[C] Institutional Rules
§8.03 Arbitrators’ Procedural Discretion in International Arbitration
[A] New York Convention
[B] National Arbitration Legislation
[C] Institutional Rules
§8.04 M andatory Procedural Requirements in Arbitral Proceedings
[A] New York Convention
[B] National Arbitration Legislation
§8.05 Limited Grounds for Interlocutory Judicial Review of Arbitrators’ Procedural
Decisions
[A] Principle of Judicial Non-Interference in Arbitral Proceedings
[B] Limited Grounds for Judicial Intervention or Assistance
§8.06 Arbitrators’ Exercise of Procedural Authority in International Arbitration
[A] No General Procedural Code for International Arbitrations
[B] Arbitral Tribunal’s Exercise of Discretion Over Arbitral Procedures
§8.07 M ajor Procedural Steps in International Arbitral Practice
[A] Notice of Arbitration or Request for Arbitration
[B] Reply and Counterclaims
[C] Constitution of Arbitral Tribunal and Challenges
[D] Presiding Arbitrator’s Procedural Authority
[E] Written Communications with Arbitral Tribunal during Proceedings
[F] Jurisdictional Objections
[G] Language of the Arbitration
[H] Initial Procedural Conference
[I] Procedural Timetable and Time Limits
[J] Bifurcation or Other Segmentation of Proceedings
[K] ICC Terms of Reference
[L] Advance on Costs or Deposits
[M ] Introduction of New Claims and Defenses
 [N] Disclosure or Discovery
[O] Written Submissions
[P] Documentary Evidence
[Q] Written Witness Statements
[R] Evidentiary Hearings and Time Limits
[S] Transcripts and M inutes
[T] Fact Witnesses
[U] Expert Witnesses
[V] Witness-Conferencing
[W] Post-Hearing Written Submissions
[X] Closing of Arbitral Proceedings
[Y] Ex Parte Proceedings and Default Awards
[Z] Deliberations of Arbitrators
[AA] M aking and Notification of Award
§8.08 Evidentiary Rules and Burden of Proof
§8.09 Costs of the Arbitration

Chapter 9
Disclosure and Evidence-Taking in International Arbitration
§9.01 Authority of Arbitral Tribunal over Disclosure and Evidence-Taking
[A] National Arbitration Legislation
[1] UNCITRAL M odel Law
[2] Other National Legislation
[3] Arbitral Tribunal’s Implied Authority
[4] Arbitral Tribunal Not Limited to Disclosure and Evidence-Taking
Authority of Local Courts
[B] Institutional Arbitration Rules
[1] LCIA Rules
[2] UNCITRAL Rules
[3] ICC Rules
[C] Arbitral Tribunal’s Disclosure Powers Generally Limited to Parties
[D] Arbitral Tribunal’s Exercise of Discretion to Order Disclosure and Structure
Evidence-Taking
[1] Availability and Scope of Disclosure: Civil Law versus Common Law
[2] No Automatic Right of Parties to Request Disclosure
[3] Commonly-Used Procedural Frameworks for Document Disclosure
[4] Scope of Disclosure
[5] Privilege in International Arbitration
 [6] Electronic Disclosure
[E] Sanctions for Failure to Comply with Disclosure and Other Orders
§9.02 Role of National Courts in Obtaining Evidence for Use in International Arbitrations
[A] National Arbitration Legislation
[1] UNCITRAL M odel Law
[2] Other National Arbitration Legislation
[3] United States
[B] Judicial Assistance in Evidence-Taking in “Foreign” Arbitrations
[1] Section 1782
[2] Other National Arbitration Legislation
[C] Inapplicability of Hague Evidence Convention to Evidence-Taking in
International Arbitration

Chapter 10
Confidentiality and Transparency in International Arbitration
§10.01 “Confidentiality” versus “Privacy”
§10.02 Confidentiality Under National Arbitration Legislation
[A] National Arbitration Legislation Generally Silent on Confidentiality
[B] Choice of Law Governing Confidentiality
[C] Parties’ Autonomy with Regard to Confidentiality
[D] Implied Obligations of Confidentiality
[1] Recognition of Implied Confidentiality Obligations
[2] Non-Recognition of Implied Confidentiality Obligations
§10.03 Confidentiality under Institutional Arbitration Rules
§10.04 Confidentiality of Arbitrators’ Deliberations
§10.05 Confidentiality in Investor-State Arbitration

Chapter 11
Provisional Measures in International Arbitration
§11.01 Arbitrators’ Authority to Order Provisional Relief
[A] Effect of National Arbitration Legislation on Arbitrators’ Authority to Order
Provisional M easures
[B] Law Applicable to Arbitrators’ Authority to Order Provisional M easures
[C] Effect of Institutional Arbitration Rules on Authority of Arbitrators to Order
Provisional Relief
[D] Limitations on Arbitrators’ Authority to Order Provisional Relief
[1] Arbitrators’ Authority Limited to Parties
[2] Arbitrators’ Lack of Enforcement Authority
 [3] Limitations on Arbitrators’ Authority
[4] No Interim Relief Until Tribunal is Constituted
[E] Arbitrators’ Exercise of Authority to Order Provisional Relief
[1] “Irreparable” or “Serious” Injury
[2] Urgency
[3] No Prejudgment of the M erits
[4] Prima Facie Case or Probability of Success on M erits
[5] Jurisdiction
[6] Tribunal’s “Discretion” Regarding Type of Provisional M easures
[7] Categories of Provisional M easures
[8] Ex Parte Provisional M easures
[F] Specialized Institutional Arbitration Rules for Expedited Action
§11.02 Judicial Enforcement of Provisional M easures Ordered by Arbitrators
[A] Status of Provisional M easures as “Final” Awards
[B] Specialized National Arbitration Legislation Permitting Enforcement of
Provisional M easures
§11.03 Provisional M easures Ordered by National Courts in Aid of Arbitration
[A] Effect of the New York Convention on the Authority of National Courts to
Grant Provisional Relief in Aid of International Arbitrations
[1] Judicial Decisions Holding That Article II(3) Forbids Court-Ordered
Provisional M easures
[2] Judicial Decisions Holding That Article II(3) Permits Court-Ordered
Provisional M easures
[B] Effect of National Arbitration Legislation on Authority of National Courts to
Grant Provisional Relief in Aid of International Arbitration
[C] Effect of Institutional Rules on Authority of National Courts to Grant
Provisional Relief in Aid of International Arbitration
[D] Application for Court-Ordered Provisional M easures Does Not Ordinarily
Waive Right to Arbitrate
[E] Choice of Law Applicable to Court-Ordered Provisional M easures
§11.04 Appropriate National Court to Grant Pre-Award Provisional M easures in Aid of an
International Arbitration

Chapter 12
Multiparty and Multicontract Issues in International Arbitration
§12.01 Consolidation, Joinder and Intervention: General Considerations
§12.02 Consolidation, Joinder and Intervention Under National Arbitration Legislation
[A] Consolidation and Joinder/Intervention Pursuant to Parties’ Arbitration
 Agreement
[B] Nature of Agreement Required for Consolidation and Joinder/Intervention
[C] Consolidation or Joinder/Intervention under National Law in Absence of Parties’
Agreement
§12.03 Consolidation, Joinder and Intervention Under Institutional Rules
[A] Consolidation under ICC Rules
[B] Joinder and/or Intervention under LCIA Rules
[C] Consolidation under Swiss Rules of International Arbitration
§12.04 Consolidation and Joinder/Intervention: Selection of Arbitral Tribunal(s)
§12.05 M ulticontract Issues in International Arbitral Proceedings

Chapter 13
Choice of S ubstantive Law in International Arbitration
§13.01 Arbitral Tribunal’s Authority to Select Applicable Substantive Law
[A] National Arbitration Legislation
[B] Institutional Arbitration Rules
§13.02 Choice of Substantive Law in Absence of Agreement on Applicable Law
[A] Choice of Substantive Law under National Arbitration Legislation in Absence of
Choice-of-Law Agreement
[B] Choice of Substantive Law under Institutional Arbitration Rules in Absence of
Choice-of-Law Agreement
[C] Relationship between Institutional Arbitration Rules and National Law
[D] Choice-of-Law Rules Applied by Arbitral Tribunals in Absence of Choice-of-
Law Agreement
[1] Choice-of-Law Rules of Arbitral Seat
[2] Choice-of-Law Rules that Arbitral Tribunal Considers “Appropriate”
[3] “Cumulative” Application of Choice-of-Law Rules
[4] Application of Substantive Law of State with Closest Connection to
Dispute
[5] Choice-of-Law Rules of the State M ost Closely Connected to Underlying
Dispute
[6] “International” Choice-of-Law Rules
[7] Application of Non-National Legal System in Absence of Parties’ Choice-
of-Law Agreement
[E] “Direct” Application of Substantive Law
[F] Distinction between M atters of Substance and Procedure
[1] Burden of Proof
[2] Statutes of Limitations
 [3] Damages and Remedies
[G] Trade Usages
§13.03 Choice of Law Governing the M erits of the Parties’ Dispute Pursuant to Choice-of-
Law Agreements
[A] Presumptive Validity of Choice-of-Law Agreements
[1] Presumptive Validity of Parties’ Choice-of-Law Agreement Selecting
Substantive Law under International Conventions
[2] Presumptive Validity of Parties’ Choice-of-Law Agreements Selecting
Substantive Law under Arbitration Legislation
[3] Presumptive Validity of Parties’ Choice-of-Law Agreement Selecting
Substantive Law under Institutional Arbitration Rules
[B] Public Policy Limitations on Parties’ Choice of Law in International Arbitration
[1] M andatory Laws and Public Policy
[2] Content of “Public Policy” and “M andatory Law”
[3] “Foreign” M andatory Laws and Public Policies
[4] Authority of Arbitrator to Consider M andatory Law or Public Policy
[C] Implied Choice-of-Law Agreements
[D] Defects in Formation of Choice-of-Law Agreement
[E] Other Grounds for Challenging Choice-of-Law Agreements
§13.04 Choices of Substantive Law in Choice-of-Law Agreements
[A] Considerations Affecting Choice of Substantive Law
[B] Choice of M ultiple or Overlapping National Laws
[C] “Split” Choice-of-Law Clauses
[D] Choice of “Floating” National Law
[E] Non-National Choice-of-Law Agreements
[1] General Principles of Law
[2] Lex Mercatoria
[3] UNIDROIT Principles of International Commercial Contracts
[F] Stabilization Clauses
[G] Amiable Composition and Ex Aequo et Bono
§13.05 Interpretation of Choice-of-Law Agreements
[A] “Stand-Alone” Character of Choice-of-Law Clause
[B] The Legal Rules Selected by Choice-of-Law Agreements
[1] Renvoi versus “Whole Law”: Does the Choice-of-Law Agreement Select
Substantive Rules or Conflict of Laws Rules?
[2] Procedural Law of the Arbitration
[3] “Procedural” Issues
[4] Non-Contractual Issues
§13.06 M inimal Judicial Review of Arbitrators’ Choice of Law Decisions

Chapter 14
Legal Representatives and Professional Responsibility in International Arbitration
§14.01 Right to Counsel in International Arbitration
[A] Rights to Legal Representation of Party’s Choice
[B] National Law Restrictions on Legal Representation
§14.02 Exercise of Rights to Representation
§14.03 Standards and Supervision of Professional Conduct
[A] Recurrent Professional Conduct Issues
[1] Witness Interviews and Preparation
[2] Conflicts of Interest
[3] Contingent Fees and Other Fee Arrangements
[4] Lawyer-Client Privilege and Communications with Opposing Counsel
[5] Settlement Communications
[6] Candor and Honesty
[B] Choice of Law Governing Professional Conduct Issues
[C] Choice of Forum Governing Professional Conduct Issues

Part III
International Arbitral Awards

Chapter 15
International Arbitral Awards: Legal Framework
§15.01 Legal Framework for International Arbitral Awards
[A] New York Convention
[1] Elimination of “Double Exequatur”
[2] Presumptive Obligation to Recognize and Enforce Awards
[3] Limited, Exclusive Grounds for Non-Recognition with Burden of Proof on
Award Debtor
[4] Limits on Forums for Annulment
[5] Optional and Permissive Non-Recognition
[B] National Arbitration Legislation
§15.02 Definition of Arbitral “Award”
[A] Decision Resulting from an Agreement to Arbitrate
[B] “Award” by the Arbitral Tribunal
[C] “Awards” Distinguished from “Procedural Orders”
[D] Jurisdictional Awards
 [E] Decisions Concerning Preliminary Substantive Issues
§15.03 Formal Requirements for International Arbitral Awards
[A] Writing, Place, Date and Signature Requirements
[B] Reasons for Award
[C] Consequences of Non-Compliance with Statutory Form Requirements
[D] Form Requirements under Institutional Rules
[E] Language of Award
§15.04 Types of Awards
[A] “Final” Awards
[B] “Partial” Awards
[C] Interim Awards
[D] Consent Awards
[E] Default Awards
[F] Additional Awards
[G] Corrections and Interpretations
[H] Termination of Arbitral Proceedings Without An Award
[I] M ajority Awards and Awards by Presiding Arbitrator
[J] Dissenting, Concurring and Separate Opinions
§15.05 Time Limits, Service and Publication of International Arbitral Awards
[A] Time Limits for M aking Awards
[B] Delivery, Service, or Notification of Awards
[C] Registration of Awards
§15.06 Relief Granted in Arbitral Award
[A] Arbitrator’s Remedial Authority
[B] M onetary Awards
[C] Other Relief
[D] Interest
[E] Costs
[1] Awards of Costs of Arbitration under National Arbitration Legislation
[2] Awards of Costs of Arbitration under Institutional Rules
§15.07 Functus Officio Doctrine

Chapter 16
Annulment of International Arbitral Awards
§16.01 Presumptive Finality of International Arbitral Awards
[A] Presumptive Validity of Arbitral Awards under UNCITRAL M odel Law
[1] Article 34 Provides Exclusive Grounds of Annulment
[2] Article 34 Grounds for Annulment Are Discretionary
 [3] Party Seeking Annulment under Article 34 Generally Bears Burden of Proof
[B] Presumptive Validity of Arbitral Awards under FAA
[C] Presumptive Validity of Arbitral Awards under Other National Arbitration
Legislation
§16.02 Limits on Forums for Annulling International Arbitral Awards
[A] New York Convention Limits on Forums for Annulling Awards
[1] Article V(1)(e) and VI Limits on Forums for Annulling Awards
[2] Forums Where Annulment Is Permitted
[i] Country Where Award Is “M ade”
[ii] Place “Under the Law of Which” an Award Is M ade
[B] National Law Limits on Forums for Seeking to Annul International Arbitral
Awards
§16.03 Annulment of International Arbitral Awards
[A] Annulment Governed by Domestic Law of Arbitral Seat
[B] Grounds for Annulment under National Law
[1] No Valid Arbitration Agreement
[i] Standards for Recognition of Arbitration Agreements Generally
Applicable
[ii] Choice of Law
[iii] Preclusive Effect of Arbitrators’ Jurisdictional Award: Positive
Jurisdictional Awards
[iv] Preclusive Effect of Arbitrators’ Jurisdictional Award: Negative
Jurisdictional Awards
[2] Excess of Authority
[3] Denial of the Opportunity to Present Party’s Case
[i] Distinguished from Violation of Parties’ Agreed Arbitral Procedures
[ii] Applicable Standards of Procedural Fairness
[iii] Deference to Parties’ Agreed Arbitral Procedures
[iv] Deference to Arbitrators’ Procedural Discretion
[v] Waiver
[4] Failure to Comply with Parties’ Agreed Procedures
[5] Failure to Comply With Procedures Prescribed by Law of Arbitral Seat
[6] Lack of Impartiality, Bias and M isconduct of the Arbitrator and Fraud
[7] Awards Contrary to Public Policy
[8] Disputes Not “Capable of Settlement” by Arbitration
[9] Fraud
[C] National Arbitration Legislation Providing Grounds for Annulment M ore
Expansive than under UNCITRAL M odel Law
 [1] Substantive Review of M erits of Arbitrators’ Decision
[2] Internally-Contradictory Awards
[3] Formal Defects
[4] Other Grounds for Annulment
[D] National Arbitration Legislation Providing Grounds for Annulment Less
Expansive than under UNCITRAL M odel Law
§16.04 Agreements Waiving Right to Seek Annulment of International Arbitral Award
[A] Agreements Excluding or Limiting Applications to Annul International Arbitral
Award
[1] National Arbitration Legislation Permitting Agreements to Exclude or Limit
Annulment
[2] National Arbitration Legislation Invalidating Agreements to Exclude or
Limit Annulment
[3] Interpretation of Agreements to Exclude or Limit Annulment
[B] Agreements for Heightened Judicial Review of International Arbitral Awards
§16.05 Consequences of Annulling International Arbitral Award
[A] Authorities Permitting Recognition of Annulled Awards
[1] Recognition of Annulled Awards in European Jurisdictions
[2] Recognition of Annulled Awards in United States
[3] Judicial Decisions Refusing to Recognize Annulled Awards
§16.06 Corrections, Interpretation and Supplementation of International Arbitral Awards
[A] Correction of Awards
[1] Correction of Awards under National Arbitration Legislation
[i] UNCITRAL M odel Law
[ii] Other National Arbitration Legislation
[iii] Federal Arbitration Act
[2] Correction of Awards under Institutional Arbitration Rules
[3] Status of Arbitral Tribunal’s Corrections
[B] Interpretation of International Arbitral Awards
[1] National Arbitration Legislation
[2] Institutional Arbitration Rules
[C] Supplementation of International Arbitral Awards
[1] National Arbitration Legislation
[2] Institutional Arbitration Rules
[D] Remission of International Arbitral Award to Arbitral Tribunal
[E] Revocation of Fraudulently-Obtained Arbitral Awards
[F] Internal Review and Appeal Proceedings
§16.07 Preclusive Effects of Arbitral Award
 [A] Principles of Preclusion in International Arbitration
[1] Common Law Jurisdictions
[2] Civil Law Jurisdictions
[B] Preclusive Effects of International Arbitral Awards
[1] Preclusive Effects of International Arbitral Awards under the New York
Convention
[2] Preclusive Effects of International Arbitral Awards under UNCITRAL
M odel Law
[3] Preclusive Effects of International Arbitral Awards in the United States
[4] Preclusive Effects of International Arbitral Awards in Other Common Law
Jurisdictions
[5] Preclusive Effects of International Arbitral Awards in Civil Law
Jurisdictions
[6] Choice of Law Governing Preclusive Effect of Arbitral Awards
[C] Preclusive Effects of National Court Judgments
[D] Jurisdictional Decisions
[1] Allocation of Competence between Arbitral Tribunals and National Courts
to Decide Jurisdictional Issues
[i] Arguable Preclusive Effect of Jurisdictional Decision by National
Court
[ii] Lack of Preclusive Effect of Jurisdictional Determination by National
Court
[E] Role of Precedent in International Arbitration

Chapter 17
Recognition and Enforcement of International Arbitral Awards
§17.01 Jurisdictional Requirements of International and National Arbitration Regimes
[A] “Award” Requirement
[B] “Commercial” Relationship
[C] “Defined Legal” Relationship
[D] “Foreign,” “Non-Domestic” and “International” Awards
[1] New York Convention
[i] “Foreign” Awards
[ii] “Non-Domestic” Awards
[2] National Arbitration Legislation
[E] Reciprocity Requirements under International Conventions
§17.02 Proof of Foreign Arbitral Awards
[A] Proof of Award under New York Convention
 [B] Proof of Award under National Arbitration Legislation
§17.03 Presumptive Obligation to Recognize International Arbitral Awards
[A] Presumptive Obligation to Recognize Awards under New York Convention
[B] Obligation to Recognize Awards under National Arbitration Legislation
§17.04 New York Convention Provides Exclusive Grounds for Non-Recognition of Foreign
Arbitral Award
[A] Article V’s Exclusive Grounds for Non-Recognition
[B] Burden of Proof of Grounds for Non-Recognition
[C] No Double Exequatur Requirement under New York Convention
[D] No Obligation under New York Convention to Deny Recognition of Awards
[E] No Judicial Review of M erits of Arbitrator’s Decision
§17.05 Grounds for Refusing to Recognize International Arbitral Awards
[A] No Valid Arbitration Agreement
[1] General Principles
[2] Burden of Proof
[3] Preclusive Effects of Jurisdictional Award
[4] Waiver
[B] Excess of Authority
[C] Denial of the Opportunity to Present Party’s Case
[1] General Principles
[2] Party Autonomy and Arbitral Tribunal’s Procedural Discretion
[3] Choice of Law
[4] Waiver and Preclusion
[D] Irregular Procedural Conduct of the Arbitration
[1] Parties’ Agreed Arbitral Procedures
[2] Agreed Arbitral Procedures and M andatory Law in Arbitral Seat
[3] Procedural Law of Arbitral Seat
[4] Waiver and Preclusion
[E] Lack of Independence, Bias and M isconduct of the Arbitrators and Fraud
[1] General Principles
[2] Effects of Prior Institutional Challenge of Arbitration
[3] Waiver
[F] Award Annulled in Arbitral Seat
[G] Award Not “Binding”
[H] Award Contrary to Public Policy
[1] General Principles
[2] Choice of Law
[3] Restrictive Approach to Public Policy
 [I] Disputes Not “Capable of Settlement” by Arbitration
§17.06 Limits on Forums for Seeking Recognition or Enforcement of International Arbitral
Awards
[A] No Limits in New York Convention on Forums for Seeking Recognition or
Enforcement of Arbitral Awards
[B] National Law Limits on Forums for Seeking Recognition or Enforcement of
International Arbitral Awards
§17.07 Suspension of Recognition Proceedings Pending Resolution of Application to Annul
Award in Arbitral Seat

Chapter 18
Investor-S tate and S tate-to-S tate Arbitration
§18.01 Investor-State Arbitration
[A] Introduction
[1] Contemporary Foreign Investment Treaties
[i] ICSID Convention
[ii] North American Free Trade Agreement
[iii] ASEAN Comprehensive Investment Agreement
[iv] Energy Charter Treaty
[v] Bilateral Investment Treaties
[vi] Investment Protection Legislation
[2] Distinguishing Characteristics of Investor-State Arbitration
[3] Popularity of Investor-State Arbitration
[4] Criticism of Investor-State Arbitration
[B] Jurisdictional Issues in Investment Arbitration
[1] ICSID Jurisdictional Requirements
[i] Legal Dispute Arising out of an Investment
[ii] Nationality Requirement
[iii] Written Consent to ICSID Arbitration
[iv] ICSID Additional Facility Rules
[2] BIT Jurisdictional Requirements
[i] No Separate Consent by Host State
[ii] Nationality Requirement
[iii] Investment
[iv] Compliance with Host State Law
[v] Exclusions
[3] Notice and Other Requirements
[i] Notice and “Cooling Off” Periods
 [ii] “Fork in the Road” Provisions
[iii] Exhaustion Requirements
[C] “Umbrella Clauses”
[D] Substantive Issues in Investor-State Disputes
[1] Substantive Claims in Investor-State Arbitrations
[2] Defenses in Investor-State Arbitration
[E] Arbitral Procedures in Investor-State Arbitration
[F] Applicable Law in Investment Arbitration
[G] Finality of Awards
[1] ICSID Awards
[2] Non-ICSID Awards
[H] Enforcement of Awards
§18.02 State-To-State Arbitration
[A] Historical Background
[B] Reasons for State-to-State Arbitration
[C] Jurisdiction in State-to-State Arbitrations
[D] Procedures in State-to-State Arbitration
[E] Applicable Law in State-to-State Arbitration
[F] Finality of Awards and Enforcement

Annex I
United Nations Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (“New York Convention”)

Annex II
UNCITRAL Model Law on International Commercial Arbitration – 2006 Revisions

Annex III
UNCITRAL Model Law on International Commercial Arbitration

Index
Preface

This book aims to provide an introduction to international arbitration – including

international commercial arbitration, international investment arbitration and state-to-state
arbitration. The book focuses on the basic legal framework for international arbitration and
the contemporary practice of international arbitration. Throughout, the emphasis is on
introducing the key legal principles and customary practices in an accessible and
straightforward manner, tailored to the needs of general practitioners, law students and others
seeking an introduction to the international arbitral process.
Chapter 1 of the book provides an overview of the legal framework for international
commercial arbitration, including the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (or “New York Convention”) and the United
Nations Commission on International Trade Law’s Model Law on International Commercial
Arbitration (“UNCITRAL Model Law”). Throughout the book, the New York Convention
and the UNCITRAL Model Law are used as the basis for discussion, reflecting their central
and increasing importance in the international commercial arbitration process. The book
focuses in particular on international and comparative authorities and practices, rather than
approaches from any single jurisdiction, aiming to introduce the emerging constitutional
structure and practice on international arbitration rather than the domestic approach to
arbitration in particular jurisdictions.
The body of the book is divided into three main parts, structured on the chronology of an
international arbitration. Part I addresses international arbitration agreements, including their
formation, enforcement and interpretation; Part II address international arbitral proceedings,
examining how arbitrations are conducted in practice; and Part III addresses international
arbitral awards, including their recognition and enforcement. All three Parts focus principally
on international commercial arbitration, with comparisons where useful to international
investment or state-to-state arbitration.
Chapter 18 of the book provides an overview of investment and state-to-state arbitrations,
focusing in particular on distinctions between these forms of arbitration and international
commercial arbitration. Among other things, the chapter introduces the International Centre
for the Settlement of Investment Disputes (“ICSID”) and the network of international
investment treaties (including bilateral investment treaties or “BITs”) which are central to the
contemporary process of international investment arbitration.
This book is not meant to replace more detailed treatments of international arbitration in
lengthier treatises and commentaries. These authorities are referred to in the notes
accomp any ing Chapter 1 and the book’s three Parts and readers should consult these
materials for more detailed discussions of the subject.
As already noted, this book contains mistakes and over-simplifications, for which the
author apologizes. Future editions will seek to correct these shortcomings and readers are
encouraged to provide comments, criticisms and queries by email to
bornbookcomments@wilmerhale.com.

Gary Born
London, England
October 2012
Acknowledgments

This book would never have been written without the able assistance and comments by
colleagues, friends, students and competitors from around the world. I owe thanks in
particular for Katrin Frach’s exceptional secretarial and organizational talents, as well as the
assistance of Thomas Snider and Elizabeth Song, both of whom provided invaluable
contributions. Able assistance was also provided by Suzanne Spears, Marc Epstein, David
Khachvani, M arc Akio Lee, Justin Li, Giulio Valz-Gen, Tiago Andreotti E Silva, Sasha Sharif,
Constantin Klein, Marija Scekic, Mary Arutyunyan, Ema Gojkovic, Christina von Post, Julia
Bassett and Kathleen Kundt. All mistakes are of course mine alone.
The book benefitted in particular from comments on draft chapter from friends who have
given generously of their time and experience, including Guillermo Aguilar-Alvarez, José
Alvarez, Arthur Appleton, Frédéric Bachand, Pieter Bekker, Andrea K. Bjorklund, Heather
Bray, Devin Bray, Chip Brower, David Caron, James Carter, Doug Cassel, Tai-Heng Cheng,
Jack Coe, Tony Cole, Brooks Daly, Maria-Krystyna Duval, Oscar Garibaldi, Fabien Gélinas,
Jonathan Greenblatt, Horacio Grigera Naón, Leah Harhay, Mark Kantor, Hege Elisabeth
Kjos, Jan Kleinheisterkamp, Johannes Koepp, Sabine Konrad, Barry Leon, Joseph
Matthews, John Lorn McDougall QC, Maurice Mendelson QC, Ludovit Micinsky, Julian
Mortenson, Lawrence Newman, Mona Pinchis, Lucia Raimanova, Catherine Rogers, Stephan
Schill, Stacie Strong, Christopher Thomas QC, Maria Vicien-Milburn, Janet Walker, Sarah
Wheeler and Stephan Wilske. As always, my editor, Gwen de Vries, was unfailingly helpful
and practical and, without her, the book would not have progressed beyond a thought. Again,
all mistakes are mine alone, and result primarily from the inability to take good advice when
offered.
Like international arbitration itself, this book is a work in progress. It addresses a complex
field that is continuously evolving in response to changing conditions and needs. The book
inevitably contains errors, omissions and confusions, which will require correction,
clarification and further development in future editions, to keep pace with the field.
Corrections, comments and questions are encouraged, by email to
bornbookcomments@wilmerhale.com.
Part I
International Arbitration Agreements

The foundation of almost every international arbitration – and of the international arbitral
process itself – is an international arbitration agreement. In the words of one commentator,
“[o]bviously, no arbitration is possible without its very basis, the arbitration agreement.” 1
Absent a valid agreement to arbitrate, there are generally no legal grounds for requiring a party
to arbitrate a dispute or for enforcing an arbitral award against a party. “Arbitration ‘is a
matter of contract and a party cannot be required to submit to arbitration any dispute which
he has not agreed to so submit.’”2
International arbitration agreements can be drafted in countless different ways. Typically,
an arbitration agreement is a provision in an underlying commercial contract, requiring
arbitration of any future disputes relating to the contract.3 Such a provision can be either
short and standardized or longer and tailor-made for a particular transaction. As models of
brevity, if not prudence, European commentators sometimes cite clauses that provided
“English law – arbitration, if any, London according ICC Rules,” 4 and “Arbitration –
Hamburg, Germany.” 5 A U.S. counterpart read: “Arbitration; if required in New York
City.”6
At the opposite end of the spectrum are multi-paragraph arbitration provisions,
recommended by assiduous practitioners for inclusion in commercial contracts, or specially-
drafted for a particular transaction. It is also possible for entire agreements to be devoted
exclusively to the arbitration of disputes under a series of related contracts, typically
involving multiple parties. Falling between these extremes are model clauses promulgated by
leading international arbitral institutions, including the International Chamber of Commerce
(“ICC”), London Court of International Arbitration (“LCIA”) and International Centre for
Dispute Resolution (“ICDR”), which provide generic, but typically concise and well-tested,
formulae.
Whatever form they take, international arbitration agreements are vitally important to the
international arbitral process. Properly drafted, they can provide the basis for a relatively
smooth and efficient arbitration; less carefully drafted, they can give rise to a host of legal and
practical issues; badly drafted, arbitration agreements can be pathological, either incapable of
enforcement or precursors to uncertain and costly litigation in national courts.
The Chapters which follow in this Part explore the principal legal and practical issues
arising from international arbitration agreements. Chapter 2 discusses the legal framework for
international arbitration agreements, including the jurisdictional requirements for the New
York Convention and national arbitration legislation, the presumptive validity of international
arbitration agreements, the separability of arbitration agreements, the competence-
competence doctrine, the choice of law governing the arbitration agreement and the effects of
international arbitration agreements.
Chapter 3 discusses the substantive rules governing the formation, validity and legality of
international arbitration agreements. It addresses the formal validity of international
arbitration agreements, including requirements for a “writing,” as well as the rules of
substantive law applicable to issues of formation, including standards of proof and consent,
and to issues of capacity and substantive validity, including fraud, unconscionability, duress,
mistake, waiver, termination and illegality. The Chapter also considers the so-called “non-
arbitrability” doctrine and related issues of public policy.
Chapter 4 addresses the interpretation of international arbitration agreements. In particular,
it considers the rules applicable to interpreting the scope of arbitration agreements which
have been developed in different national legal systems.
Chapter 5 discusses issues relating to parties bound by international arbitration
agreements. It examines the various legal theories that have been used to give binding effect to
arbitration agreements vis-à-vis non-signatories, including agency, alter ego status, the group
of companies theory, estoppel, guarantor relations, third party beneficiary rights and
miscellaneous other grounds. The Chapter also examines the choice of law governing the
foregoing issues and the allocation of competence to decide such disputes between national
courts and arbitral tribunals.
_________________________
1. A. van den Berg, The New York Arbitration Convention of 1958 144–45 (1981).
2. Howsam v. Dean W itter Reynolds, Inc., 537 U.S. 79, 83 (U.S. S.Ct. 2002) (quoting Steelworkers of Am. v. W arrior
& Gulf Navigation Co., 363 U.S. 574, 582 (U.S. S.Ct. 1960)).
3. It is also possible for parties to an existing dispute, not otherwise subject to arbitration, to agree to submit that
dispute to arbitration. The agreement doing so is typically a stand-alone arbitration agreement, often called a
“ submission agreement” or “ compromis.”
4. Arab African Energy Corp. Ltd v. Olieprodukten Nederland BV [1983] 2 Lloyd’ s Rep. 419 (Q.B.).
5. Judgment of 24 January 2003, 2003 SchiedsVZ 284, 287 (Hanseatisches Oberlandesgericht Hamburg).
6. Oriental Commercial and Shipping Co. v. Rosseel, NV, 609 F.Supp. 75 (S.D.N.Y. 1985).
Chapter 1
Introduction to International Arbitration

International arbitration provides an efficient and effective means of resolving international

disputes – including international commercial, investment and state-to-state disputes. This
Chapter summarizes the legal framework for international commercial arbitration, which is
addressed in greater detail in Chapters 2 through 17. It also introduces investor-state
arbitration and state-to-state arbitration, which are discussed in greater detail in Chapter 18.

§1.01 DEFINITION OF INTERNATIONAL ARBITRATION

As discussed below, the United Nations Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (“New York Convention”) and most national arbitration statutes
prescribe an effective “pro-arbitration” regime that ensures the enforceability of international
arbitration agreements and awards. In general, this legal regime applies only if the parties have
made an agreement to resolve their disputes by “international arbitration” – as opposed to an
agreement for some other form of dispute resolution (such as expert determination or
mediation).
There is a surprising lack of guidance on what constitutes an “arbitration agreement.”
Article II(1) of the New York Convention refers to an agreement to arbitrate as “an agreement
in writing under which the parties undertake to submit to arbitration all or any differences
which have arisen or which may arise between them in respect of a defined legal relationship,
whether contractual or not.” Similarly, Article 7(1) of the United Nations Commission on
International Trade Law Model Law on International Commercial Arbitration (“UNCITRAL
Model Law”) provides that “[a]n ‘arbitration agreement’ is an agreement by the parties to
submit to arbitration all or certain disputes which have arisen or which may arise between
them in respect of a defined legal relationship, whether contractual or not.”
These definitions are minimally useful. They make clear that an arbitration agreement
involves a contractual relationship between parties; that this agreement deals with disputes,
either future or existing; and that these disputes will be submitted to and resolved by
“arbitration.” At the same time, these definitions provide little guidance in determining
precisely what constitutes an “arbitration” agreement, as distinguished from an agreement
concerning other forms of dispute resolution. This has left national courts, arbitral tribunals
and commentators with the task of defining what constitutes “arbitration.”
[A] What Is “Arbitration”?

Preliminarily, the label adopted by the parties for a dispute resolution mechanism is not
decisive in defining the true character of that mechanism.1 Parties are free to call a forum
selection clause or an expert determination mechanism an “agreement to arbitrate,” but this
(mis-)label does not alter the mechanism’s nature. It is still necessary to examine the
substance of a dispute resolution provision to determine, objectively, whether it constitutes
an agreement to arbitrate under applicable law. Nonetheless, as a practical matter, if the
parties’ agreement provides for something labeled “arbitration,” it is likely that this will be
categorized as an arbitration agreement.
There is general agreement on what the term “arbitration” means. With some variations,
virtually all authorities accept that arbitration is – and only is – a process by which parties
consensually submit a dispute to a non-governmental decision-maker, selected by or for the
parties, to render a binding decision resolving a dispute in accordance with neutral,
adjudicatory procedures affording each party an opportunity to present its case. Most
authorities have adopted similar definitions:

– “Consistent with the traditional notion of private arbitration, one may define
[the arbitration clause] as an agreement according to which two or more specific
or determinable parties agree in a binding way to submit one or several existing
or future disputes to an arbitral tribunal, to the exclusion of the original
competence of state courts and subject to a (directly or indirectly) determinable
legal system.”2
– “a contractual method of resolving disputes. By their contract the parties agree
to entrust the differences between them to the decision of an arbitrator or panel
of arbitrators, to the exclusion of the Courts, and they bind themselves to accept
that decision, once made, whether or not they think it right.”3
– “An agreement to arbitrate before a specified tribunal is, in effect, a specialized
kind of forum-selection clause that posits not only the situs of suit but also the
procedure to be used in resolving the dispute.”4

Each of the various elements of these definitions of arbitration is important.

[1] Consensual Means to Resolve Disputes

It is elementary that “arbitration” is a consensual process that requires the agreement of the
parties. Article II of the New York Convention applies only to an “agreement ... under which
the parties undertake to submit to arbitration,”5 while Article 8 of the UNCITRAL Model
Law applies only where there is “an agreement by the parties to submit to arbitration all or
certain disputes.”6 Similarly, national courts uniformly hold that “arbitration is a creature
that owes its existence to the will of the parties alone,”7 and that “arbitration is a matter of
contract and a party cannot be required to submit to arbitration any dispute which he has not
agreed so to submit.”8

[2] Non-Governmental Decision-Maker Selected by or for the Parties

Another fundamental attribute of “arbitration” is that it involves the submission of disputes

to a non-governmental decision-maker selected by or for the parties. A defining characteristic
of arbitration is the selection of particular “arbitrators” to resolve a dispute, or defined
category of disputes; typically, arbitrators are chosen by the parties themselves or, in the
absence of agreement by the parties, by an arbitral institution chosen by the parties.9 In
contrast, “arbitration” does not extend to forum selection agreements, where parties agree to
submit their disputes to a specified national court.10

[3] Final and Binding Decision

A third defining characteristic of arbitration is that it produces a binding award that decides
the parties’ dispute in a final manner and is subject only to limited grounds for challenge in
national courts. Arbitration does not produce a non-binding, advisory recommendation,
which the parties are free to accept or reject; it also is not merely a process of negotiation,
during which the parties are free to agree (or not) to settle their disputes. Instead, arbitration
results in a final and binding decision by a third-party decision-maker – the arbitrator – that
can be coercively enforced against the unsuccessful party or its assets.11

[4] Use of Adjudicatory Procedures

Finally, a defining characteristic of “arbitration” is the use of impartial adjudicative

procedures which afford each party the opportunity to present its case. Forms of dispute
resolution that do not provide parties the opportunity to present their views (e.g., valuation,
where the decision-maker proceeds with an independent investigation) do not generally
constitute arbitration.12 Similarly, contractual provisions that give one party the right to
unilaterally decide a particular issue do not constitute arbitration.

[B] Forum Selection Clauses and National Courts

In practice, international contracts frequently contain “forum selection” or “choice of court”

agreements. These provisions provide either that (a) specified disputes may be resolved in a
specified court, without excluding litigation in other forums (so-called “jurisdiction” or
“prorogation” agreements); or (b) specified disputes must be resolved exclusively in the
specified courts (so-called “exclusive jurisdiction” or “derogation” agreements). A forum
selection clause is not an arbitration agreement, and vice versa: this is because a forum
selection clause provides for resolution of disputes by litigation in a national court, not by
arbitration before a non-governmental arbitrator selected by or for the parties.13

EXCLUSIVE FORUM SELECTION CLAUSE:

“The courts of _______ shall have exclusive jurisdiction over all disputes relating
to this Agreement.”

NON-EXCLUSIVE FORUM SELECTION CLAUSE:

“The parties submit to the non-exclusive jurisdiction of the courts of ________ for
any disputes relating to this Agreement.”

Forum selection agreements do not benefit from the protections of the “pro-arbitration” legal
regime established by the New York Convention and contemporary arbitration legislation.
Instead, forum selection agreements are typically subject to national law (or regional regimes
such as Regulation 44/2001 in the European Union). The Hague Convention on Choice of
Court Agreements, adopted in 2005, may in the future provide international standards for
enforcing forum selection agreements; at present, however, only a limited number of states
have ratified the Convention and prospects for its successful implementation remain
unclear.14

[C] Other Forms of Alternative Dispute Resolution

Arbitration is only one of many forms of alternative dispute resolution (i.e., mechanisms for
resolution of disputes outside of national courts). Other forms of “ADR” adopt a variety of
procedural mechanisms, aimed at different types of problems and parties.
[1] Mediation and Conciliation

Arbitration agreements differ fundamentally from agreements for “conciliation,” “mediation,”

early neutral evaluation and the like. These procedures do not provide for a binding decision
to be imposed on the parties; rather, they provide for a non-binding process that may (or
may not) assist the parties in reaching a consensual settlement.15 The mediator or conciliator
is not empowered to decide the parties’ dispute, but simply to discuss and negotiate with the
parties in an effort to persuade them to reach a mutually agreeable resolution of their dispute.
This does not constitute “arbitration” because it does not produce a final third-party decision
that resolves the parties’ dispute.
Many leading arbitral institutions have adopted rules of conciliation. These include the
International Chamber of Commerce, American Arbitration Association and World
Intellectual Property Organization. In some jurisdictions, separate legislation has also been
adopted to govern mediation, conciliation and related forms of ADR. 16 These legislative
regimes differ from those governing international arbitration agreements and awards (most
notably, they lack any provision for the enforcement of third-party decisions).

[2] Expert Determination

Commercial contracts may also contain provisions for the resolution of certain categories of
disputes by an expert selected by or for the parties and authorized to render a binding
decision on an issue.17 Such provisions can involve accounting (or other financial)
calculations by an accountant; quality assessment by an industry expert; oil and gas reserve
estimates by a geologist; or construction evaluations by an architect or engineer.
In many national legal systems, an important distinction is drawn between “arbitration”
and binding “expert determination,” “appraisal,” or “valuation.”18 The latter do not
necessarily require the use of adjudicative procedures, which is a defining feature of
arbitration, but instead entail only the decision-maker’s own investigations and use of existing
expertise. Moreover, expert determinations frequently involve narrowly-defined and
circumscribed factual or technical issues, unlike arbitral proceedings, which seek to resolve
broader legal disputes between the parties (e.g., whether a contract or statutory protection
has been breached and what consequences flow from that breach).19

[3] Mini-Trials and Neutral Evaluation

Parties sometimes seek to resolve disputes through “mini-trials,” which typically involve
relatively brief presentations of each party’s case to a “judge” or panel of “judges,” who are
authorized to make an advisory decision or otherwise encourage settlement. Like mediation,
the decisions in mini-trials are usually non-binding. Neutral evaluation involves a similar
process, in which a third party hears the parties’ presentations, on either their dispute or
selected issues, and provides a neutral assessment of the strengths and weaknesses of each
parties’ position.

[4] “Baseball” or “Final-Offer” Arbitration

Some forms of ADR narrowly limit the decision-maker’s authority to decide the parties’
dispute. So-called “baseball” arbitration refers to a process where, at the conclusion of the
parties’ submissions, each side submits its “final offer” (or “best offer”) in a sealed
envelope.20 The tribunal is then authorized only to select one or the other party’s “offer” in
resolution of the dispute, rather than making an independent determination of the “correct”
resolution under applicable law. Alternatively, in “high/low arbitration,” the parties agree on
the minimum and maximum amounts that the arbitrator can award.

[D] “International” Arbitration

The New York Convention (and other international arbitration conventions) applies only to
arbitration agreements that have some “foreign” or “international” element, and not to purely
domestic agreements.21 The same is true under many national legal regimes, where
“international” or “foreign” arbitration agreements are often subject to legislative and/or
judicial regimes distinct from those applicable to domestic arbitration agreements. That is
true, for example, under the UNCITRAL Model Law, which is limited by Article 1(3) to
“international” matters.22 In these jurisdictions, domestic arbitration agreements, arbitral
proceedings and awards are often subject to separate, non-international legal regimes.23 This
is consistent with the purpose of the Convention and the Model Law, which is to facilitate
t h e international arbitral process, without disturbing regulation of domestic arbitration
matters.

§1.02 REASONS FOR INTERNATIONAL ARBITRATION

Arbitration is widely regarded as the preferred means of resolving international commercial
disputes. That is true for a number of reasons. In summary, international arbitration provides
a neutral, speedy and expert dispute resolution process, largely subject to the parties’
control, in a single, centralized forum, with internationally-enforceable dispute resolution
agreements and decisions. While far from perfect, international arbitration is rightly regarded
as suffering fewer ills than litigation of international disputes in national courts and as
affording parties more practical, efficient and neutral dispute resolution than available in other
forums.

Reasons For International Arbitration

– Neutrality
– Centralized Dispute Resolution
– Enforceability of Agreements and Awards
– Commercial Competence and Expertise
– Finality of Decisions
– Party Autonomy and Procedural Flexibility
– Cost and Speed
– Confidentiality or Privacy of Dispute Resolution
– Arbitration Involving States and State-Entities

[A] Neutrality
One of the central objectives of international arbitration agreements is to provide a neutral
forum for dispute resolution, detached from the parties and their respective home-state
governments.24 Parties often begin to negotiate dispute resolution mechanisms with the
objective of ensuring that disputes are resolved in the forum they perceive to be the most
favorable to them – often the local courts in that party’s principal place of business. These
courts will be convenient and familiar to the home-town party; they will also probably be
inconvenient and unfamiliar to the counter-party. However, the characteristics that make one
party’s local courts attractive to it will often make them unacceptable to counter-parties. As
a consequence, outside of lending and similar transactions, it is often impossible for either
party to obtain agreement to dispute resolution in its local courts.
In these circumstances, the reaction is almost always to seek agreement on a suitable
neutral forum – a forum for dispute resolution that does not favor either party, but affords
each the opportunity to present its case to an objective and impartial tribunal. The result, in
most instances, is an agreement to arbitrate (or, less frequently, litigate) in a neutral forum. 25
For example, a French and a Mexican company may agree to arbitrate their disputes in
Miami, Spain or England, while a U.S. and a Japanese or German company might agree to
dispute resolution in Switzerland, England, Canada, or Singapore. Put simply, a party
typically does not agree to arbitrate because arbitration is the most favorable possible forum,
but because it is the least unfavorable forum that the party can obtain in arm’s length
negotiations.

[B] Centralized Dispute Resolution

Another basic objective of international arbitration is to avoid the jurisdictional disputes,
choice-of-law debates and multiplicitous litigation in different national courts that attend
international litigation.26 Instead, international arbitration offers a centralized dispute
resolution in a single contractually selected forum. As the U.S. Supreme Court has put it:

Much uncertainty and possibly great inconvenience to both parties could arise if a suit
could be maintained in any jurisdiction [where jurisdiction could be established]. The
elimination of all such uncertainties by agreeing in advance on a forum acceptable to both
parties is an indispensable element in international trade, commerce and contracting.27

Empirical findings are to the same effect.28 At the same time, in cases of pathologically-
drafted arbitration agreements, disputes over the validity or scope of the agreement can lead
to uncertainty and expense rivaling that in international litigation – illustrating the importance
of well-negotiated and drafted international arbitration agreements.

[C] Enforceability of Agreements and Awards

One of the objectives of contemporary legal regimes for international arbitration is facilitating
the enforcement of arbitration agreements and awards. In particular, both international
arbitration conventions (particularly, the New York Convention) and arbitration legislation
(particularly, the UNCITRAL Model Law) ensure that international arbitration agreements
are more readily, expeditiously enforced and more broadly interpreted than forum selection
clauses.29 This is consistently cited as a key benefit of international arbitration.30
In contrast, there are only a few regional arrangements that seek to establish effective
international enforcement regimes for forum selection clauses. The most notable is the
Brussels I Regulation in the European Union, which provides for the enforceability of forum
selection agreements designating an EU Member State’s courts, subject to only limited
exceptions.31 There are also a few industry-specific arrangements providing enforcement
mechanisms for international forum selection clauses (such as treaties governing carriage of
goods by sea).32 In general, however, forum selection agreements do not benefit from
anything comparable to the enforcement mechanism of the New York Convention.
Like agreements to arbitrate, international arbitral awards enjoy the protection of the New
York Convention, as well as favorable arbitration legislation in many countries. As discussed
below, these instruments provide a “pro-enforcement” regime, with expedited recognition
procedures and only limited grounds for denying recognition to an arbitral award.33
In contrast, there are again only a few regional arrangements for the enforcement of foreign
court judgments (in particular, the Brussels I Regulation), and there is no global counterpart
to the New York Convention for foreign judgments. Some major trading states, including the
United States, are party to no bilateral or multilateral agreement on the enforceability of
foreign judgments. In the absence of international treaties, the recognition of foreign
judgments is subject to local law, which often makes it difficult, if not impossible, to
effectively enforce them.34 As a consequence, there is generally a significantly greater
likelihood that an arbitral award will be enforced abroad (and thereby conclude the parties’
dispute) than a foreign judgment. Together with the comparatively greater enforceability of
arbitration agreements, the more reliable enforceability of arbitral awards is one of the basic
objectives, and attractions, of international arbitration.

[D] Commercial Competence and Expertise

Another essential objective of international arbitration is to provide a competent, expert

dispute resolution process. Arbitration was historically favored by users because it offered a
more expert, experienced means of resolving commercial disputes.35 This continues to be the
case today, with empirical studies emphasizing the importance of arbitrators’ commercial
expertise in decisions to make use of international arbitration.36 In a survey of users, one
respondent summarized the issue as follows:

for a French party, the big advantage is that international commercial arbitration offers
“de luxe justice” ... instead of having a $600 million dispute before the Commercial
Court in Paris, where each party has only one hour for pleading and where you can’t
present witnesses and have no discovery; for a dispute of that importance it may well
be worth the costs to get a type of justice that is more international and more
“luxurious”; what you get is more extensive and thorough examination of witness
testimony.37

Similarly, in the words of the former President of the French Cour de cassation, explaining
why he admired arbitration: “in many fields you are more professional than we are.”38
It is a harsh, but undeniable, fact that many national court systems are ill-equipped to
resolve international commercial disputes. In many states, local courts have little experience
in resolving complex international disputes and face serious challenges in reliably resolving
commercial disputes. Moreover, in some states, basic standards of judicial integrity,
competence and independence are lacking.
Of course, some national judiciaries include talented judges with considerable international
experience. The courts of England, Switzerland, New York, Japan, Singapore and a few other
jurisdictions are able to resolve complex transnational disputes with a fairly high degree of
reliability. Nevertheless, even in these jurisdictions, local practices (like the jury trial or split
legal profession) may obstruct efficient and objective dispute resolution. Moreover, in most
legal traditions, judges are randomly assigned to cases, regardless of their experience. Judges
are also ordinarily generalists, often without specialization in complex commercial matters,
much less a particular type of transaction (e.g., M&A, joint ventures) or industry (e.g., oil
and gas, insurance).
In contrast, in international arbitration, the parties are able to participate in the selection of
the arbitral tribunal for their dispute. This aspect of the arbitral process is intended to enable
the parties – who have the most intimate knowledge of their disagreements and the greatest
incentive to choose a capable tribunal – to select arbitrators with the best experience, abilities
and availability for their dispute (as discussed below). Moreover, in most substantial
international arbitrations, tribunals consist of three members (rather than a single trial judge),
permitting a mix of legal and technical experience, as well as extra sets of eyes.

[E] Finality of Decisions

Another salient feature of international arbitration is the absence, in most cases, of extensive
appellate review of arbitral awards. Judicial review of awards in most developed countries is
narrowly confined to issues of jurisdiction, procedural fairness and public policy, and highly
deferential to the arbitrators’ substantive decisions (as discussed below). This contrasts
markedly with the availability of appellate review of first instance judgments, where national
laws allow either de novo or fairly searching review of legal, and often factual, matters.
There are both advantages and disadvantages to the general unavailability of appellate
review of awards. Dispensing with appellate review significantly reduces litigation costs and
delays (particularly when a successful appeal means that the case must be retried in the first
instance court). On the other hand, it also means that a badly wrong arbitral decision cannot
readily be corrected. In general, anecdotal and empirical evidence indicate that business users
prefer the efficiency and finality of arbitral procedures, even at the expense of appellate
rights.39 There are also some legal systems in which the parties have the possibility, by
contracting into or out of judicial review, to obtain a measure of appellate review of the
arbitrators’ substantive decisions, or to select a procedure that includes arbitral appeals.
[F] Party Autonomy and Procedural Flexibility

A further objective, and perceived advantage, of international arbitration is its facilitation of

party autonomy and procedural flexibility. As discussed below, international arbitration
conventions and national laws accord parties broad autonomy to agree upon the substantive
laws and procedures applicable to “their” arbitrations.40
In practice, one of the principal reasons for granting the parties procedural autonomy is to
enable them to dispense with the technical formalities of national court proceedings and
instead to tailor the procedures to their particular disputes. Some categories of disputes call
for specialized procedures for presenting expert evidence, “fast track” procedures where time
is of the essence, or mechanisms designed for particular commercial markets. More generally,
parties are typically free to agree upon the timetable for the arbitral process, the existence
and scope of disclosure, the modes for presentation of fact and expert evidence, the length of
the hearing(s) and other matters. The parties’ ability to adopt flexible procedures is a central
attraction of international arbitration – again, as evidenced by empirical findings.41

[G] Cost and Speed

It has long been said that arbitration offers a cheaper, quicker means of dispute resolution
than litigation.42 At the same time, it has become fashionable, at least in some circles, to
describe arbitration as a slower, costlier alternative.43 In reality, both international arbitration
and international litigation can involve significant expense and delay, and it is wrong to make
sweeping generalizations about which mechanism is necessarily quicker or cheaper.
Although arbitration is sometimes lauded for its speed and cost-effectiveness, it can be an
expensive process. This is particularly true in major international disputes, which may
involve longer written submissions, more extensive factual and expert evidence, and lengthier
hearings than international litigation – in part because, in complex matters, parties often
affirmatively want extensive, thorough proceedings. Moreover, in international arbitration,
the parties are required (subject to later allocation of costs by the tribunal) to pay the fees of
the arbitrator(s) and, usually, an arbitral institution. The parties will also have to pay for
renting hearing rooms, travel to the arbitral situs, lodging and the like.
Nonetheless, in actual practice, the expenses of arbitration will often pale in comparison
with the costs associated with parallel or multiplicitous proceedings in national courts. This
can be the case where the parties have not agreed upon an exclusive forum selection clause, or
where such a clause is held unenforceable or inapplicable. Likewise, the expenses of
arbitration will typically not approach those associated with relitigating factual issues in
national trial and appellate courts. In addition, arbitration is less likely to involve costly,
scorched-earth discovery, or prolonged disputes over service, evidentiary matters, immunity
and other litigation formalities.
International commercial arbitration is also not always speedy. Outside of some
specialized contexts, major commercial disputes can require between 18 and 36 months to
reach a final award, with limited possibilities for summary dispositions. Procedural mishaps,
challenges to arbitrators and jurisdictional disputes can delay even these fairly stately
timetables, as can crowded diaries of busy arbitrators and counsel. It is possible to expedite
the proceedings, through drafting a “fast-track” arbitration clause or adroit arbitrator selection
and procedural planning, but there are limits to how quickly a major commercial arbitration
realistically can be resolved.
Nonetheless, in many jurisdictions, national court proceedings are also subject to
significant delays. Judicial dockets in many countries are over-burdened and obtaining a trial
date and final decision may take years. Further, as already noted, arbitration rarely involves
the delays inherent in appellate proceedings and the risk that new trial proceedings will be
required.
On balance, international arbitration does not necessarily have either dramatic speed and
cost advantages or disadvantages as compared to national court proceedings. Broadly
speaking, the absence of appellate review means that arbitration is usually less slow and less
expensive than litigation – and preferable, in part, for that reason. Nonetheless, there will
clearly be exceptions to this generalization in particular cases, where arbitrators are unusually
slow or particular national courts are especially fast.

[H] Confidentiality and Privacy of Dispute Resolution

Another objective of international arbitration is to provide a confidential, or at least private,

dispute resolution mechanism. Most national court proceedings are not confidential. Hearings
and court dockets are open to the public, competitors, press and regulators in many
countries, and parties are often free to disclose submissions and evidence to the public. Public
disclosure can encourage “trial by press release” and may impede compromises, by hardening
positions, aggravating tensions, or provoking collateral disputes.
In contrast, international arbitration is substantially more private, and often more
confidential, than national court proceedings. Arbitral hearings are virtually always closed to
the press and public, and in practice the parties’ submissions and tribunals’ awards often
remain confidential. In some (but by no means all) jurisdictions, confidentiality obligations
are implied in international arbitration agreements as a matter of law, while some arbitration
agreements or institutional arbitration rules impose such duties expressly. 44 In general, most
international businesses prefer, and actively seek, the privacy and confidentiality that the
arbitral process offers.45 Confidentiality reduces the risks of aggravating the parties’ dispute,
limits the collateral damage of a dispute and focuses the parties on an amicable, business-like
resolution of their disagreements.

[I] Arbitration Involving States and State-Entities

Finally, arbitration offers particular benefits in cases involving states and state-entities.
Under most legal systems, a state’s agreement to arbitrate constitutes a waiver of state or
sovereign immunity – almost always with regard to enforcement of the parties’ arbitration
agreement and resulting awards and sometimes with regard to enforcement of awards against
state assets.46 M oreover, a neutral international tribunal is often a more appropriate decision-
maker than a national court for disputes between states or state-entities and private parties.
In practice, therefore, commercial contracts between private parties and foreign states or
state-related entities very frequently contain arbitration provisions.47

§1.03 POPULARITY OF INTERNATIONAL ARBITRATION

The aspirations of the arbitral process to accomplish the various objectives described above
lead proponents of international arbitration to proclaim:

In th[e] realm of international commercial transactions, arbitration has become the

preferred method of dispute resolution. Arbitration is preferred over judicial methods of
dispute resolution because the parties have considerable freedom and flexibility with
regard to choice of arbitrators, location of the arbitration, procedural rules for the
arbitration, and the substantive law that will govern the relationship and rights of the
parties.48

Equally vigorous are some critics, including those who regard arbitration as “the slower, more
expensive alternative,”49 or conclude that “arbitration sometimes involves perils that even
surpass the ‘perils of the seas.’”50
In fact, the truth about contemporary international commercial arbitration is less clear-cut
and lies somewhere between these extremes: “The more enthusiastic of [its] sponsors have
thought of arbitration as a universal panacea. We doubt whether it will cure corns or bring
general beatitude. Few panaceas work as well as advertised.”51 At bottom, international
arbitration is much like democracy; it is nowhere close to ideal, but it is generally a good deal
better than the alternatives. Litigation of complex international disputes in national courts is
often distinctly unappealing – particularly where litigation occurs in courts that have not
been selected in advance for their neutrality, integrity, competence and convenience. Indeed,
the risks of corruption, incompetence, or procedural arbitrariness make litigation of
commercial disputes in some national courts an unacceptable option. Despite procedural,
choice of law and other uncertainties, international arbitration often offers the least ineffective
and damaging means to finally settle the disputes that arise when international transactions go
awry.
Dispute resolution mechanisms must fulfill difficult, often thankless, tasks, particularly in
international disputes: parties who are often bent upon (mis-)using every procedural and
other opportunity to disadvantage one another simultaneously demand rapid, expert and
objective results at minimal cost. Despite these generally unrealistic expectations, arbitration
has for centuries been perceived as the most effective – if by no means flawless – means for
resolving international commercial disputes. That perception has not diminished, but rather
been strengthened, in recent decades. In the words of one authority: arbitration is “‘the’
ordinary and normal method of settling disputes of international trade.”52
The enduring popularity of international arbitration as a means of dispute resolution is
reflected by a number of developments. These include steadily increasing case-loads at
leading arbitral institutions, with the number of reported cases increasing between three and
five-fold in the past 25 years.
The same preference for, and increasing use of, international commercial arbitration is
reflected in empirical studies on the use of arbitration clauses in international commercial
agreements.53 Similarly, the use of arbitration as a means of resolving new (previously “un-
arbitrated”) categories of disputes, including investment treaty claims, on-line disputes, class
actions, tax disputes and human rights claims, attests to its enduring and increasing
popularity.

§1.04 CONTEMPORARY INTERNATIONAL ARBITRATION

CONVENTIONS
International commercial arbitration is governed by a complex legal regime. That regime
includes (a) international arbitration conventions, particularly the New York Convention, (b)
national arbitration legislation, particularly local enactments of the UNCITRAL Model Law,
(c) institutional arbitration rules, incorporated by parties’ arbitration agreements, and (d)
arbitration agreements, given effect by international arbitration conventions and national
arbitration legislation.
These various elements of the legal regime for international arbitration, and representative
examples of each of these elements, are summarized in the following sections.

[A] New York Convention

The first modern international commercial arbitration conventions were the 1923 Geneva
Protocol on Arbitration Clauses in Commercial Matters 54 and the 1927 Geneva Convention
for the Execution of Foreign Arbitral Awards. 55 The Protocol provided for the recognition of
international commercial arbitration agreements, requiring contracting states to refer parties to
such agreements to arbitration. The Convention, on the other hand, provided for the
recognition of arbitral awards made in other contracting states (subject to a number of
exceptions). In part because of the outbreak of WWII, the Protocol and Convention had
limited practical impact.
The Geneva Protocol and Convention were succeeded by the 1958 United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards. 56 Generally
referred to as the “New York Convention,” the Convention is the most significant
contemporary legislative instrument relating to international commercial arbitration. It
provides a universal constitutional charter for the international arbitral process, whose
expansive terms have enabled both national courts and arbitral tribunals to develop durable,
effective means for enforcing international arbitration agreements and awards.
The Convention was adopted – like many national arbitration statutes – to address the
needs of the international business community, and in particular to improve the legal regime
provided by the Geneva Protocol and Geneva Convention. The Convention was negotiated
principally at a three-week conference – the United Nations Conference on Commercial
Arbitration – attended by 45 states in the Spring of 1958.57 The conference resulted in a
document – the New York Convention – a radically innovative instrument that created for the
first time a comprehensive legal regime for the international arbitral process.
The Convention is set forth in English, French, Spanish, Russian and Chinese texts, all of
which are equally authentic. The Convention is only a few pages long, with the instrument’s
essential substance contained in five concise provisions (Articles I through V). Despite its
brevity, the Convention is widely regarded as “the cornerstone of current international
commercial arbitration.”58 In the apt words of Judge Stephen Schwebel, “It works.”59
It is often said that the Convention did not provide a detailed legislative regime for all
aspects of international arbitration (as, for example, the 1985 UNCITRAL M odel Law would
later do60 ). Rather, the Convention’s provisions focused on the recognition and enforcement
of arbitration agreements and arbitral awards, without specifically regulating the conduct of
the arbitral proceedings or other aspects of the arbitral process.
A key objective of the Convention was uniformity: the Convention’s drafters sought to
establish a single set of international legal standards for the enforcement of arbitration
agreements and awards.61 In particular, the Convention’s provisions prescribe uniform
international rules that: (a) require national courts to recognize and enforce foreign arbitral
awards (Articles III and IV), subject to a limited number of specified exceptions (Article V);
(b) require national courts to recognize the validity of arbitration agreements, subject to
specified exceptions (Article II); and (c) require national courts to refer parties to arbitration
when they have entered into a valid agreement to arbitrate that is subject to the Convention
(Article II(3)). The permissible exceptions to the obligation to recognize foreign awards are
limited to issues of jurisdiction, procedural regularity and fairness, compliance with the
parties’ arbitration agreement and public policy; they do not include review by a recognition
court of the merits of the arbitrators’ substantive decision.
The New York Convention made a number of significant improvements in the regime of
the Geneva Protocol and Geneva Convention for international arbitration. Particularly
important were the Convention’s shifting of the burden of proving the invalidity of arbitral
awards to the party resisting enforcement,62 its recognition of substantial party autonomy
with respect to choice of arbitral procedures and law applicable to the arbitration
agreement,63 and its abolition of the previous “double exequatur” requirement (which
required that awards be confirmed in the arbitral seat before being recognized abroad64 ).
Despite the Convention’s brevity and focus on arbitration agreements and awards, the
significance of its terms can scarcely be exaggerated. The Convention’s provisions effected a
fundamental restructuring of the legal regime for international commercial arbitration,
combining the separate subject matters of the Geneva Protocol and Geneva Convention into a
single instrument which provided a legal framework that covered international arbitrations
from their inception (the arbitration agreement) until their conclusion (the award). In so
doing, the Convention established for the first time a comprehensive international legal
framework for international arbitration agreements, arbitral proceedings and arbitral awards.
Despite its present significance, the New York Convention initially attracted few
ratifications. Over time, however, states from all regions of the globe reconsidered their
position, and today 146 nations have ratified the Convention.65 The Convention’s parties
include virtually all major trading states and many Latin American, African, Asian, Middle
Eastern and former socialist states. During the past decade, numerous states (including a
number in the Middle East and Latin America) have overcome traditions of distrust of
international arbitration and ratified the Convention.66 The Convention has thus realized its
drafters’ aspirations and come to serve as a global charter or constitution for international
arbitration.
Article VII of the New York Convention provides that the Convention does not affect the
validity of any bilateral or other multilateral arrangements concerning the recognition and
enforcement of foreign arbitral awards (except the Geneva Protocol and Geneva Convention,
which are terminated as between Contracting States).67 Article VII(1) also provides that the
Convention “shall not ... deprive any interested party of any right he may have to avail
himself of an arbitral award in the manner and to the extent allowed by the law or treaties of
the country where such award is sought to be relied upon.”68 Article VII has been interpreted
in a “pro-enforcement” fashion, to permit agreements and awards to be enforced under either
the Convention, or another treaty, or national law, if more favorable than the Convention.69
In virtually all Contracting States, the Convention has been implemented through national
legislation. The practical effect of the Convention is therefore often dependent on both the
content of such national legislation and the interpretations given by national courts to the
Convention and national implementing legislation.70 In some states, the Convention may also
have direct (or self-executing) effects in national courts, without the need for implementing
legislation.
As noted above, an important aim of the Convention’s drafters was uniformity. The
fulfillment of that aim is dependent upon national legislatures and courts, in different
Contracting States, to adopt uniform interpretations of the Convention. In general, national
courts have risen to this challenge. That process has accelerated in recent decades, as national
court decisions have become increasingly available in foreign jurisdictions and national courts
have increasingly cited authorities from foreign and international sources in interpreting the
Convention.71

[B] Inter-American Convention

In the early years of the 20th century, much of South America turned its back on
international arbitration. Despite this, in 1975 the United States and most South American
nations negotiated, and later ratified, the Inter-American Convention on International
Commercial Arbitration (“Inter-American Convention”), also known as the “Panama
Convention.”72 Like the New York Convention, the Inter-American Convention provides for
the presumptive validity and enforceability of arbitration agreements and arbitral awards,
subject to specified exceptions similar to those in the New York Convention.73
The Inter-American Convention introduces significant innovations, not present in the New
York Convention. It does so by providing (in Article 3) that, where the parties have not
agreed to any institutional arbitration rules, the rules of the “Inter-American Commercial
Arbitration Commission” (“IACAC”) will govern. In turn, the Commission has adopted rules
that are almost identical to the UNCITRAL Arbitration Rules. The Convention also
introduces provisions (again, in Article 3) regarding the constitution of the arbitral tribunal
and the parties’ freedom to appoint arbitrators of their choosing (regardless of nationality).
Less desirably, the Inter-American Convention departs from the New York Convention by
omitting provisions prohibiting the courts of Contracting States from entertaining suits
brought in breach of an international arbitration agreement.74

[C] European Convention

The 1961 European Convention on International Commercial Arbitration 75 entered into force
in 1964, and 31 states are currently party to it. Most European states (but not the United
Kingdom, the Netherlands, or Finland) are party to the Convention, while some ten non-EU
states are parties, including Russia, Cuba and Burkina Faso. The Convention consists of 19
articles and an annex.
The Convention addresses the three principal phases of the international arbitral process –
arbitration agreements, arbitral procedure and awards. With regard to arbitration agreements,
the Convention does not expressly provide for their presumptive validity, but instead (in
Articles V and VI) confirms the arbitrators’ competence-competence and the authority of
national courts to consider jurisdictional objections on an interlocutory basis. With regard to
the arbitral procedure, Articles III-VII of the Convention confirm the autonomy of the parties
and the arbitrators (or arbitral institution) to conduct the arbitral proceedings. With regard to
awards, the Convention is designed to supplement the New York Convention, dealing in
Article IX only with the effects of a judicial decision annulling an award in the arbitral seat in
other jurisdictions (and not with other obligations of courts to recognize awards). In practice,
the Convention’s impact has been modest, owing to the limited number of Contracting States,
all of whom are also party to the New York Convention.

§1.05 CONTEMPORARY NATIONAL ARBITRATION LEGISLATION

It is essential to the effective functioning of the arbitral process, and the realization of the
parties’ objectives in agreeing to arbitrate, that national courts give effect to arbitration
agreements and awards, and provide support for the arbitral process. The enactment of
legislation accomplishing these ends has been a major objective – and achievement – of
developed states over the past 50 years.76 These national arbitration statutes generally
implement the New York Convention (and other international arbitration conventions) and
provide the basis for national court decisions dealing with international arbitration agreements
and awards.
Particularly in civil law jurisdictions, arbitration legislation often took the form of a chapter
in the national Code of Civil Procedure (for example, in Germany, France, Italy, the
Netherlands and Austria). In common law jurisdictions, the tendency has been to enact
separate legislation dealing specifically with arbitration (for example, in the United States,
England, Singapore and Australia). The growing popularity of the UNCITRAL Model Law
has made the latter approach of stand-alone arbitration legislation increasingly common.
As discussed below, in many cases, national arbitration statutes are applicable only to
international (not domestic) arbitrations, or contain separate parts for domestic and
international arbitration. This approach has been adopted to permit “pro-arbitration” rules in
the international context, which may not (for historical or other reasons) be appropriate for
domestic matters. Nevertheless, a number of countries (e.g., England, Germany and Spain)
have adopted the same legislation for both domestic and international arbitrations with
different provisions for particular subjects.
Broadly speaking, there are two categories of arbitration legislation: statutes which are
supportive of the arbitral process (increasingly, but not always, modeled on the UNCITRAL
Model Law) and statutes which are not supportive of the arbitral process. Both types of
legislation are discussed below.

[A] Supportive National Arbitration Legislation

Most states in Europe, North America and Asia have adopted legislation that provides
effective support for the arbitral process. In many cases, states have progressively refined
their national arbitration statutes, adopting either amendments or new legislation to make
their arbitration regimes maximally supportive for the international arbitral process. Thus,
over the past 40 years, virtually every developed country has substantially revised or
entirely replaced its international arbitration legislation, in every case, to facilitate the arbitral
process and promote the use of international arbitration.77
Paralleling the New York Convention, the pillars of modern arbitration statutes are
provisions that affirm the freedom of parties to enter into valid and binding agreements to
arbitrate future commercial disputes, provide mechanisms for the enforcement of such
agreements by national courts (through orders to stay litigation or compel arbitration),
prescribe procedures for confirming or annulling awards and require the recognition and
enforcement of foreign awards. In many cases, arbitration statutes also authorize limited
judicial assistance to the arbitral process; this assistance can include selecting arbitrators,
enforcing a tribunal’s orders for evidence-taking and granting provisional relief in aid of
arbitration. In addition, most modern arbitration legislation affirms the parties’ autonomy to
agree upon arbitral procedures and, sometimes, the substantive law governing the parties’
dispute, while limiting the power of national courts to intervene in the arbitral process, either
when arbitral proceedings are pending or in reviewing awards.
The central objective of contemporary international arbitration statutes has been to
facilitate international trade and investment by providing more secure means of dispute
resolution. Recognizing that international transactions are subject to unique legal uncertainties
and risks, states have sought to promote the use of arbitration as a way of mitigating such
risks. In the words of the Indian Supreme Court, “[t]o attract the confidence of the
international mercantile community and the growing volume of India’s trade and commercial
relationship with the rest of the world ..., [the] Indian Parliament was persuaded to enact the
Arbitration and Conciliation Act of 1996 in UNCITRAL M odel.”78

[B] 1985 UNCITRAL Model Law and 2006 Revisions

The 1985 UNCITRAL Model Law is the single most important statutory instrument in the
field of international commercial arbitration. It has been adopted in a substantial (and
growing) number of jurisdiction and served as a model for legislation in many others. Recent
revisions to the M odel Law (in 2006) sought to improve its legislative framework.
The Model Law was preceded by extensive consultations involving states, the business
and international arbitration community, and regional organizations (e.g., Asian-African Legal
Consultative Committee). These discussions produced the current draft of the Model Law,
which UNCITRAL approved in a resolution in 1985; the Model Law was approved by a
U.N. General Assembly resolution later the same year.79
The Model Law was designed to be implemented by national legislatures, with the
objective of harmonizing the treatment of international commercial arbitration in different
countries. The Law consists of 36 articles, which deal comprehensively with the international
arbitral process. Among other things, the law contains provisions concerning the enforcement
of arbitration agreements (Articles 7–9), appointment of and challenges to arbitrators
(Articles 10–15), jurisdiction of arbitrators (Article 16), provisional measures (Article 17),
conduct of the arbitral proceedings, including language, seat of arbitration and procedures
(Articles 18–26), evidence-taking (Article 27), applicable substantive law (Article 28),
arbitral awards (Articles 29–33), setting aside awards (Article 34), and recognition and
enforcement of foreign awards, including bases for non-recognition (Articles 35–36).
Under the M odel Law, written international arbitration agreements are presumptively valid
and enforceable, subject to limited, specified exceptions.80 Article 8 of the Law provides for
the enforcement of valid arbitration agreements, regardless of the arbitral seat, by way of a
dismissal or stay of national court litigation. The Law also adopts the separability doctrine
(Article 16), and grants arbitrators authority (competence-competence) to consider their own
jurisdiction (also in Article 16).
Article 5 of the Model Law prescribes a principle of judicial non-intervention in arbitral
proceedings. The Law also affirms the parties’ autonomy (subject to due process limits) with
regard to the arbitral procedures (Article 19(1)) and, absent agreement between the parties,
the tribunal’s authority to prescribe such procedures (Article 19(2)). The basic approach of
the M odel Law to the arbitral proceedings is to define a basic set of procedural rules which –
subject to a very limited number of mandatory principles of fairness, due process and
equality of treatment 81 – the parties are free to alter by agreement. The Law also provides for
judicial assistance to the arbitral process in prescribed and limited respects, including
provisional measures, constitution of a tribunal and evidence-taking (Articles 9, 11–13 and
27).
Article 34 of the Model Law mandates the presumptive validity of international arbitral
awards, subject to a limited, exclusive list of grounds for annulment of awards in the arbitral
seat; these grounds parallel those available under the New York Convention for non-
recognition of an award (i.e., lack or excess of jurisdiction, non-compliance with arbitration
agreement, due process violations, public policy, non-arbitrability). In a parallel provision,
Articles 35 and 36 of the Model Law require the recognition and enforcement of foreign
awards (made in arbitral seats located outside the recognizing state), again on terms identical
to those prescribed in the Convention.
In 2006, UNCITRAL adopted a limited number of amendments to the 1985 Model Law. 82
The principal revisions were made to Article 2 (the addition of general interpretative
principles), Article 7 (written form of arbitration agreement), Article 17 (the availability of
and standards for provisional measures from arbitral tribunals and national courts) and Article
35 (procedures for recognition of awards).
The Model Law does not have independent legal effect and must instead be adopted by
individual national legislatures. Some 50 jurisdictions have adopted legislation based on the
Model Law, including Australia, Bermuda, Bulgaria, Canada, Cyprus, Germany, Hong Kong,
India, Mexico, New Zealand, Nigeria, Norway, Russia, Scotland, Singapore, Spain, Tunisia
and various U.S., Canadian and Australian states or provinces. 83 At least as important, the
Model Law has set the agenda for reform of arbitration statutes even in countries such as
England, France and Switzerland where it was not adopted. Moreover, decisions by courts in
jurisdictions that have adopted the M odel Law are beginning to produce a reasonably uniform
international body of precedent concerning its meaning.84

[C] Less Supportive National Legislation

Some nations regarded international arbitration with a mixture of suspicion and hostility
during much of the 20th century. 85 This hostility arose from a reluctance to compromise
perceived principles of national sovereignty and from doubts concerning the neutrality and
efficacy of international arbitration. Although distrust for international arbitration has waned
substantially in recent decades, it has not entirely disappeared and continues intermittently
to influence legislation and judicial decisions in a few countries.
Historically, some developing countries refused to enforce agreements to arbitrate future
disputes. This was particularly true in Latin America and the Middle East. Some states took
the position that arbitration agreements were an unjustifiable infringement upon national
sovereignty, which was to be vigorously resisted. In many cases, arbitration agreements were
valid only if they concerned an existing (not a future) dispute, which was the subject of a
submission agreement committing the parties to resolve the dispute by arbitration.
In 19th century Latin America, the Calvo doctrine declared that foreign nationals were
mandatorily subject to the jurisdiction of local courts, which could not be ousted by
arbitration agreements. The doctrine was incorporated into national legislation, which not
infrequently rendered international arbitration agreements per se invalid. Political declarations
also reflected the hostility of some developing states towards international arbitration well
into the 20th century.86
Against this background, arbitration legislation in a few developing states still does not
provide effective enforcement of agreements to arbitrate future disputes; these agreements are
sometimes revocable at will or unenforceable in broad categories of disputes.87 Similarly, in a
number of states, arbitral awards are subject to either de novo judicial review or to similarly
rigorous scrutiny on other grounds.88 Finally, some national courts have interfered in the
international arbitral process – for example, by purporting to remove arbitrators, to resolve
“preliminary” issues, or to enjoin arbitrations.89
Nonetheless, during the last 20 years, a number of states that once distrusted international
arbitration have ratified the New York Convention and/or enacted legislation supportive of
the arbitral process.90 This includes India, China, Saudi Arabia, Argentina, Algeria, Bahrain,
Brazil, Tunisia, Turkey, Nigeria, Peru, Russia and (at least for a time) Ecuador and
Venezuela. Although there has been limited practical experience with the application of
arbitration legislation in such states, these statutes have the potential for providing a more
stable framework for international arbitration.
Unfortunately, even where national law may appear to support the international arbitral
process, some national courts have displayed a readiness to hold arbitration agreements or
awards invalid or to interfere with the arbitral process. That is particularly true when national
courts are requested to do so by local parties or state entities. Moreover, the early years of
the 21st century have seen a modest resurgence of ideological opposition to the international
arbitral process, with a few developing states91 questioning the legitimacy of aspects of the
process. It remains to be seen whether this trend will continue, although it has thus far
attracted little interest outside a limited number of states.

§1.06 AD HOC AND INSTITUTIONAL ARBITRATION

International arbitrations may be either “institutional” or “ad hoc.” There are important
differences between these two forms of arbitration, both theoretical and practical.
Institutional arbitrations are conducted pursuant to institutional arbitration rules, which
have been incorporated by the parties’ arbitration agreement (and which, absent such
incorporation, have no independent legal effect). Institutional arbitrations are conducted
pursuant to institutional rules and in practice are almost always overseen by an appointing
authority with responsibility for constituting the arbitral tribunal, fixing the arbitrators’
compensation and similar matters. In contrast, ad hoc arbitrations are conducted without the
benefit of an appointing authority or (generally) pre-existing arbitration rules, subject only to
the parties’ arbitration agreement and applicable national arbitration legislation.
[A] Institutional Arbitration

Institutional arbitrations are administered by specialized arbitral institutions. A number of

organizations provide institutional arbitration services for international users, sometimes
tailored to particular commercial or other needs. The best-known international commercial
arbitration institutions are the International Chamber of Commerce (“ICC”), the American
Arbitration Association (“AAA”) and its International Centre for Dispute Resolution
(“ICDR”), the London Court of International Arbitration (“LCIA”) and the Singapore
International Arbitral Centre (“SIAC”).
These (and other) arbitral institutions have promulgated sets of procedural rules that apply
where parties have agreed to arbitration pursuant to such rules, typically by incorporating
such rules in their arbitration agreements. These rules set out the basic procedural framework
for arbitral proceedings and typically authorize the arbitral institution to assist in selecting
arbitrators in particular disputes (that is, to serve as “appointing authority”), to resolve
challenges to arbitrators, to designate the place of arbitration, to fix the fees payable to the
arbitrators and (sometimes) to review the arbitrators’ awards to reduce the risk of
unenforceability. Each institution has a staff, with the size varying significantly from one
institution to another, and a decision-making body.
It is fundamental that arbitral institutions do not themselves arbitrate the merits of the
parties’ dispute. This is the responsibility of the individuals selected by the parties or
institution as arbitrators. In practice, arbitrators are almost never employees of the arbitral
institution, but instead are private persons selected by the parties. If parties cannot agree
upon an arbitrator, most institutional rules provide that the host institution will act as an
“appointing authority,” to choose the arbitrators in the absence of the parties’ agreement.

[B] Ad Hoc Arbitration

Ad hoc arbitrations are not conducted under the auspices or supervision of an arbitral
institution. Instead, parties simply agree to arbitrate, without designating any institution to
administer their arbitration. Ad hoc arbitration agreements often select an arbitrator or
arbitrators to resolve the dispute without institutional supervision. The parties will
sometimes also select a pre-existing set of procedural rules designed for ad hoc arbitrations.
For international commercial disputes, UNCITRAL has published a set of such rules, the
UNCITRAL Arbitration Rules, which are discussed below.
I n ad hoc arbitrations, parties usually designate an appointing authority to select the
arbitrator(s) if the parties cannot agree and to consider any subsequent challenges to members
of the tribunal. If the parties fail to select an appointing authority, then arbitration statutes in
many states permit national courts to appoint arbitrators, but this may be less desirable than
having an experienced appointing authority do so.

[C] Relative Advantages and Disadvantages of Institutional and Ad Hoc

Arbitration
Both institutional and ad hoc arbitration have strengths. Institutional arbitration is conducted
under a standing set of procedural rules and supervised by professional staff. As a practical
matter, this reduces the risks of procedural breakdowns, particularly at the beginning of the
arbitral process, and of technical defects in the arbitration proceedings and award. The
institution’s involvement can be particularly constructive in the appointment of arbitrators,
challenges to arbitrators, selection of an arbitral seat and fixing of arbitrators’ fees, where
specialized staff provide better service than ad hoc decisions by national courts with little
experience in such matters.92 Equally important, many institutional rules contain provisions
that make the arbitral process more effective. This includes provisions concerning
competence-competence, separability, provisional measures, disclosure, arbitrator
impartiality, corrections and challenges to awards, replacement of arbitrators and costs.
On the other hand, ad hoc arbitration is arguably more flexible and potentially more
confidential than institutional arbitration. Moreover, the growing size and sophistication of
the international arbitration bar and the efficacy of legal regimes for arbitration arguably
reduce the advantages of institutional arbitration. Nonetheless, most users prefer the more
predictable character of institutional arbitration, the benefits of institutional rules and
appointment mechanisms and the reduced roles of national courts, at least absent unusual
circumstances.

[D] UNCITRAL Arbitration Rules

The UNCITRAL Arbitration Rules occupy an important position in contemporary

arbitration practice. The objective of the Rules was to create a predictable procedural
framework for international arbitrations which was acceptable to common law, civil law and
other legal systems, as well to capital-importing and exporting interests.93 The Rules, which
were first promulgated by the U.N. General Assembly in December 1976, were revised in
2010.
Like most institutional rules, the UNCITRAL Rules prescribe a basic procedural
framework for arbitrations. This includes provisions for initiating an arbitration (Articles 3
and 4), selection and challenge of arbitrators (Articles 7–16), conduct of the arbitral
proceedings (Articles 17–32), choice of applicable law (Article 35), awards (Articles 33–39)
and arbitration costs (Articles 40–43). The Rules also contain provisions (in Article 23)
confirming the separability of the arbitration clause and the tribunal’s power (competence-
competence) to consider jurisdictional objections. Under the Rules, the PCA serves a sui
generis function of designating an appointing authority when requested, unless the parties
have agreed to a different appointment mechanism.94
The UNCITRAL Rules were revised in 2010. The revised Rules allow for more liberal
joinder of parties and specify that the tribunal’s power includes the authority to grant
injunctions and order the preservation of evidence. In a departure from the approach of other
arbitration rules, the revised Rules give the parties the option to waive recourse against an
award (while most other sets of rules provide for such waivers as a default rule).

[E] Leading International Arbitral Institutions

If institutional arbitration is desired, the parties must choose a particular arbitral institution
and refer to it and its rules in their arbitration clause (often by using an institution’s model
clause). In practice, parties ordinarily rely on one of a few established institutions. This
avoids the uncertainty that comes from inexperienced arbitrator appointments and
administrative efforts.
All leading international arbitral institutions are prepared to, and routinely do, administer
arbitrations seated almost anywhere in the world, and not merely in the place where the
institution itself is located. There is therefore no need to select an institution headquartered in
the parties’ desired arbitral seat (e.g., the LCIA or Vienna International Arbitral Centre can
readily administer an arbitration seated in Paris or New York, while the AAA can administer
arbitrations seated in Vienna or London).
The services rendered by professional arbitration institutions come at a price, which is in
addition to the fees of the arbitrators. Every institution has a fee schedule that specifies what
that price is. The amounts charged by institutions for particular matters vary significantly, as
does the basis for calculating such fees. For example, some institutions use hourly charges
while others charge based upon a percentage of the amount in dispute.

[1] International Chamber of Commerce

Based in Paris, with a branch office in Hong Kong, the International Chamber of Commerce
(“ICC”) is, by most accounts, the world’s leading international arbitration institution. The
ICC has promulgated a set of ICC Rules of Arbitration (which are periodically revised, most
recently as of 2012) as well as the ICC Rules of Optional Conciliation and the ICC Rules for
Expertise. Under the ICC Arbitration Rules, the ICC (through its International Court of
Arbitration (“ICC Court”)) is extensively involved in the administration of arbitrations.
Despite its name, the ICC Court is not a “court” and does not act as an arbitrator. Rather, the
ICC Court is an administrative body that acts in a supervisory and appointing capacity; it is
the arbitrators that the ICC Court appoints that decide cases, not the ICC Court itself.
Under the ICC Rules, the ICC Court and its Secretariat are responsible for service of the
initial Request for Arbitration (Articles 4–5); fixing advances on costs of the arbitration
(Article 36); confirming parties’ nominations of arbitrators (Articles 11–13); appointing
arbitrators if the parties are unable to agree upon a presiding arbitrator or sole arbitrator
(Article 13); considering challenges to the arbitrators (Article 14); approving so-called
“Terms of Reference,” which define the issues in the arbitration (Article 23); reviewing
tribunals’ draft awards for defects (Article 33); and fixing the arbitrators’ fees (Article 37).
The ICC Rules are similar to the UNCITRAL Rules in providing a broad procedural
framework for arbitral proceedings. As with most institutional rules, only a skeletal
procedural framework is provided, with the parties and arbitrators accorded substantial
freedom to adopt procedures tailored to particular disputes. Unusually, the ICC Rules
require a “Terms of Reference” and procedural timetable to be adopted by the tribunal at the
outset of proceedings and that an award be rendered within six months (absent extensions,
which are freely granted). Also unusually, the ICC Rules provide for the ICC Court to review
draft awards before they are finalized.
The ICC Rules were extensively revised as of 2012, with the objective of making the
arbitral process more efficient. Under the revised Rules, tribunals are required to conduct a
case management conference and granted express authority to conduct the arbitration
efficiently (Articles 22, 24). The revised Rules also streamline the process of constituting the
tribunal (Articles 11–13) and establish an “Emergency Arbitrator” mechanism to deal with
interim relief prior to constitution of the tribunal (Article 29). In addition, the 2012 Rules
permit liberal joinder of parties and consolidation of disputes (Articles 7–10).
The ICC’s annual case load was roughly 300 cases per year during much of the 1990s,
increasing to more than 600 cases per year in the following decade, with 793 new cases being
filed in 2010.95 Most of these cases are international disputes, many involving very
substantial sums. The ICC’s caseload of 1485 pending cases in 2010 involved disputes with
parties from 140 countries or territories.96 ICC arbitrations are conducted throughout the
world. In 2010, for example, ICC arbitrations were conducted in 53 countries.97 The ICC
does not maintain a list of arbitrators and its Secretariat instead selects arbitrators with the
assistance of local “National Committees” in individual countries – often, that of the arbitral
seat.
The ICC’s administrative fees and the fees of the arbitrators are based principally on the
amount in dispute between the parties. The ICC Rules require (in Article 36) that the parties
pay an advance on the costs of the arbitration calculated by the ICC Court. The advance on
costs is equally divided between the claimant and the respondent, although one party may
pay the full amount in order to enable the arbitration to proceed if the other party defaults.
The ICC Rules have sometimes been criticized as expensive and cumbersome, although
recent amendments reflect concerted efforts to address this concern.98 Despite criticism, the
ICC clearly remains the institution of preference for many sophisticated commercial users.

[2] London Court of International Arbitration

Founded in 1892, the LCIA is, by many accounts, the second most popular European
institution for international commercial arbitration. The LCIA’s annual caseload has exceeded
200 disputes in recent years, with 246 disputes referred to arbitration in 2010. The LCIA has
made a largely successful effort in recent years to overcome perceptions that it is a
predominantly English institution. In recent years, fewer than 20% of the LCIA’s cases have
involved a U.K. party, with the number declining to 17% in 2010.
The LCIA administers a set of arbitration rules, the LCIA Arbitration Rules, which were
extensively revised in 1998. Although identifiably English in drafting style and procedural
approach, the LCIA Rules provide a sound basis for international dispute resolution,
particularly for parties desiring common law procedures (e.g., disclosure, security for costs).
Broadly speaking, LCIA arbitrations are administered in a less comprehensive fashion than
ICC cases. Among other things, the LCIA Rules contain no Terms of Reference procedure
and do not provide for institutional review of draft awards.
Most LCIA arbitrations are seated in London. Absent contrary agreement by the parties,
London will ordinarily be selected as the arbitral seat under Article 16(1) of the LCIA Rules.
A particular procedural advantage of the LCIA Rules is their provision for expedited
formation of the tribunal. The LCIA Rules also permit intervention of third parties in
arbitrations, subject to prescribed conditions (Article 22(1)(h)). Unusually, the LCIA
publishes decisions of the LCIA Court on challenges to arbitrators (in a redacted form),
providing enhanced predictability about arbitrator challenges.
Like the ICC, the LCIA does not maintain a standing list of arbitrators. The LCIA’s
appointments of arbitrators have been drawn predominantly from the English bar and retired
judiciary, in part because many LCIA cases have involved contracts governed by English law.
In 2010, roughly 60% of the arbitrators nominated by the LCIA were U.K. nationals. The
LCIA calculates arbitrators’ fees according to the time expended by arbitrators at the hourly
rates published by the LCIA and fixed by agreement between the arbitrators and the LCIA.

[3] American Arbitration Association/International Centre for Dispute

Resolution
The AAA is the leading U.S. arbitral institution, and reportedly handles one of the largest
numbers of arbitral disputes in the world. The primary arbitration rules administered by the
AAA are the AAA Commercial Arbitration Rules; these rules are used in a large number of
domestic U.S. arbitrations.99
In recent years, the AAA has taken steps aimed at enhancing its position as an
international arbitral institution. In 1996, the AAA established an International Centre for
Dispute Resolution (“ICDR”), with responsibility for administering international
arbitrations. The ICDR International Dispute Resolution Procedures (“ICDR Rules”) are
applied where parties have agreed to them or have agreed to an AAA arbitration in an
“international” dispute, but without specifying a particular set of AAA rules. Where the
parties have agreed to a different set of AAA rules, such as the AAA Commercial Rules, that
choice will prevail.
The AAA’s case load has increased significantly over recent decades. In 1997, it reported a
total case load of 11,130 cases (under its Commercial Rules), rising to 15,232 cases in 1998
and to 20,711 in 2007. Similar growth is reported in international cases, from 453
international cases filed in 1999 to 888 new international filings in 2010.100
The ICDR Rules are based on the UNCITRAL Rules. Under all versions of AAA rules,
the AAA/ICDR administrative staff plays a less significant supervisory role than does the
ICC Secretariat. Among other things, the AAA/ICDR does not receive or serve initial
requests for arbitration; does not require a Terms of Reference; and plays a less significant
role in setting the arbitrators’ fees. The AAA’s administrative charges are based on the
amount in dispute. With respect to the arbitrators’ fees, arbitrators fix their own rates, which
are provided for parties to consider when receiving a list of potential arbitrators.
Compensation under the ICDR Rules (Article 32) is based on the arbitrators’ “amount of
service,” taking into account their stated rates and the “size and complexity of the case.”
In practice, most ICDR appointments of arbitrators are based on a list procedure, with
names drawn from a list of some 500 names maintained by the ICDR and presented to the
parties for expressions of preference. Although the AAA’s lists have historically been
dominated by U.S. practitioners, the ICDR increasingly seeks to appoint arbitrators with
international experience. Nonetheless, some users have found the AAA/ICDR appointment
procedures and selections patchy, with less involvement of experienced international
practitioners than other leading institutions.

[4] Singapore International Arbitral Centre

The Singapore International Arbitration Centre (“SIAC”) was established in 1990, initially
focused on disputes arising out of construction, shipping, banking and insurance. In recent
years, the SIAC has taken steps to enhance its international reputation and, by many
accounts, is now the leading Asian international arbitral institution. The SIAC’s case load
saw a substantial increase over the past decade, rising from 58 in 2000 to 198 cases filed in
2010.101 The SIAC Rules are based largely on the UNCITRAL Rules, and the most recent
version came into force on 1 July 2010.

[5] ICSID

The International Centre for Settlement of Investment Disputes (“ICSID”) administers

arbitrations and conciliations pursuant to the so-called “ICSID Convention” or “Washington
Convention” of 1965.102 As discussed below, ICSID jurisdiction is confined generally to
“investment” disputes, involving claims by foreign investors against host states; investment
disputes typically arise under contracts containing ICSID arbitration clauses or pursuant to
bilateral investment treaties (discussed below). ICSID’s case load has increased significantly
over the past several decades, rising from roughly 1 case filed per year in the 1970s to
roughly 30 cases per year in 2010 and 2011.

[6] Permanent Court of Arbitration

The PCA in the Hague was founded under the Hague Convention of 1899 on the Pacific
Settlement of Disputes, initially to administer state-to-state arbitrations. The PCA has
promulgated several sets of rules based largely on the UNCITRAL Rules, applicable to
disputes between both states and (more recently) private parties.103 A limited number of
state-to-state arbitrations, including several very significant disputes, have been conducted
under the auspices of the PCA.104 The PCA is also designated under the UNCITRAL Rules
as the default mechanism for choosing an appointing authority in the event the parties are
unable to agree upon the choice of arbitrators or appointing authority.

[7] Other International Arbitral Institutions

There are a number of other international arbitral institutions, typically with either a regional
or industry focus. Regional institutions include the Arbitration Institute of the Stockholm
Chamber of Commerce, Japan Commercial Arbitration Association, Hong Kong International
Arbitration Centre, Swiss Chambers’ Arbitration Institution, German Institution of
Arbitration, Vienna International Arbitral Centre, China International Economic and Trade
Arbitration Commission, Cairo Regional Centre for International Commercial Arbitration,
Australian Centre for International Commercial Arbitration, Kuala Lumpur Regional Centre
for Arbitration and Indian Council of Arbitration.
There are also a number of specialized arbitral institutions, dealing with industry-specific
matters, such as intellectual property, maritime, commodities, construction, insurance and
labor matters. These include the World Intellectual Property Organization, London Maritime
Arbitration Association, National Grain and Feed Association, AIDA Reinsurance and
Insurance Arbitration Association (“ARIAS”) and similar organizations. In each case, these
institutions have adopted institutional rules and administer arbitrations conducted pursuant
to those rules.

§1.07 ELEMENTS OF INTERNATIONAL ARBITRATION

AGREEMENTS

As already discussed, international arbitration is almost always consensual: arbitration

generally occurs pursuant to an arbitration agreement between the parties.105 Parties are
largely free to draft their arbitration agreements in whatever terms they wish and in practice
this freedom is liberally exercised. Like other contractual clauses, the terms of arbitration
agreements are largely a product of the parties’ interests, negotiations and drafting skills.
Article 7(1) of the UNCITRAL Model Law provides that “[a]n arbitration agreement may
be in the form of an arbitration clause in a contract or in the form of a separate agreement.”
Using this freedom, parties draft arbitration agreements that are either clauses within
underlying commercial contracts or stand-alone “arbitration agreements,” and that are either
very short, very long, or somewhere in between. National courts have upheld arbitration
clauses that are as brief as “English law – arbitration, if any, London according ICC Rules,” or
“arbitration – Hamburg, Germany.” At the other extreme, arbitration agreements in large
transactions sometimes take the form of separately-executed documents running to dozens of
pages and (purportedly) addressing every procedural eventuality.

[A] Submission Agreement versus Arbitration Clause

It is possible for parties to agree to submit a dispute that has already arisen between the
parties to arbitration. The resulting agreement is called a “submission agreement” or
“compromise.” When an existing dispute is submitted to arbitration, the parties’ agreement
must define that dispute and will also typically select the arbitrators and procedures for
resolving the dispute. Typically, it is difficult to negotiate a submission agreement once a
dispute has arisen and litigation tactics have been explored. As a consequence, the
overwhelming majority of international arbitration agreements take the form of clauses
included in a commercial contract. Arbitration clauses of this character typically apply to
future disputes related to the parties’ contract. The arbitration clause provides a mechanism
for resolving future disputes, which have not yet arisen (and may, hopefully, never arise).

[B] Critical Elements of International Arbitration Agreements

International arbitration agreements ordinarily address: (a) the agreement to arbitrate; (b) the
scope of disputes submitted to arbitration; (c) the use of an arbitral institution and its rules;
(d) the seat of the arbitration; (e) the method of appointment, number and qualifications of
the arbitrators; (f) the language of the arbitration; and (g) a choice-of-law clause.

Critical Elements of International Arbitration Agreement

1. Agreement to Arbitrate
2. Scope of Disputes Submitted to Arbitration
3. Institutional Arbitration Rules
4. Arbitral Seat
5. Arbitrators’ Number, Qualifications and Selection
6. Language of Arbitration
7. Choice-of-Law Clause

Other Provisions of International Arbitration Agreements

1. Allocation of Legal Costs
2. Interest and Currency of Award
3. Disclosure
4. Fast-Track or Other Procedures
5. M ulti-Tier Dispute Resolution
6. State/Sovereign Immunity
7. Confidentiality
8. Waiver of Annulment

[1] The Agreement to Arbitrate

It seems tautological – but not always the case in practice – that any arbitration clause must
set forth the parties’ agreement to arbitrate. As a drafting matter, this means that arbitration
agreements should (and usually do) expressly refer disputes to “arbitration” – and not to
expert determination, mediation, “ADR,” or some other form of dispute resolution. These
other forms of alternative dispute resolution are not categorized as “arbitration” under many
international treaties and arbitration statutes, and will often not qualify for the “pro-
enforcement” safeguards provided by these instruments. Accordingly, a critical element of
any international arbitration agreement is the parties’ undertaking that “all disputes shall be
finally resolved by arbitration ....”
Similarly, most arbitration agreements provide that disputes should be referred to
arbitration for a “binding” or “final” disposition (and not to an advisory recommendation). In
addition, arbitration clauses should treat arbitration as mandatory and not a possible future
option, applicable if the parties so agree after a dispute arises. Thus, arbitration clauses
usually (and should) provide that “all disputes shall be finally resolved by arbitration ....”

[2] Scope of Arbitration Agreement

Critical to any arbitration clause is its “scope” – that is, the categories of disputes that will be
subject to arbitration. For example, an agreement to arbitrate may provide that all disputes
between the parties, bearing any connection to their contractual relations, are subject to
arbitration. Alternatively, the parties may agree that only contract claims that arise under the
express terms of their agreement (or particular provisions of that agreement) will be arbitrated
or that particular types of claims are to be excluded from an otherwise broad arbitration
agreement. Alternatively, in the case of a submission agreement, parties may agree to arbitrate
only a single, pre-existing dispute.
As a general rule, parties draft arbitration clauses broadly, to cover all disputes having any
connection with the parties’ dealings. Doing so avoids the expense arising from parallel
proceedings (where certain contractual disputes are arbitrated and other contractual, or non-
contractual, disputes are litigated). It also avoids the uncertainties resulting from potentially
inconsistent judgments and jurisdictional disputes over the scope of the various proceedings.
There are a handful of formulae that are commonly used to define the scope of arbitration
clauses. These formulae include “any” or “all” disputes: (i) “arising under this Agreement”;
(ii) “arising in connection with this Agreement”; or (iii) “relating to this Agreement.”
Alternative formulations include: (iv) “all disputes relating to this Agreement, including any
question regarding its existence, validity, breach or termination”; or (v) “all disputes relating
to this Agreement or the subject matter hereof.”
Even where the parties have agreed in principle to a broad arbitration clause, there may be
claims or disputes that one party does not want submitted to arbitration. This can include
matters such as intellectual property rights or payment obligations, which are sometimes
excluded or carved out of the scope of the arbitration clause.106 It is often better to avoid
efforts to exclude particular types of disputes from arbitration, except in unusual
circumstances. Such exclusions can lead (undesirably) to parallel proceedings in both the
arbitral forum and national courts, and to jurisdictional disputes over the application of a
clause to particular claims.

[3] Institutional Arbitration Rules

As discussed above, institutional arbitration is conducted pursuant to procedural rules of a

particular arbitral institution. If institutional arbitration is desired, the parties’ arbitration
agreement must select and refer to an arbitral institution and its rules. In general, every
arbitral institution provides its own model arbitration clause (with examples below); parties
wishing to invoke the institution’s rules should ordinarily use this clause as the basis for their
agreement, departing from it only with care and for considered reasons.

Model ICC Arbitration Clause

“All disputes arising out of or in connection with the present contract shall be finally
settled under the Rules of Arbitration of the International Chamber of Commerce by one
or more arbitrators appointed in accordance with the said Rules.”

Model UNCITRAL Arbitration Clause

“Any dispute, controversy or claim arising out of or relating to this contract, or the
breach, termination or invalidity thereof, shall be settled by arbitration in accordance
with the UNCITRAL Arbitration Rules.”

In cases where the parties do not desire institutional arbitration, they will sometimes select a
pre-existing set of procedural rules designed for ad hoc arbitrations (such as the UNCITRAL
Rules). Arbitration clauses frequently do so by references such as “all disputes shall be
settled by arbitration in accordance with the UNCITRAL Arbitration Rules ....”

[4] Seat or Place of the Arbitration

Another vital element of any international arbitration agreement is designation of the “seat”
(or “place”) of the arbitration. This is the state where the arbitration has its formal legal or
juridical seat, and where the arbitral award will formally be made. The text of contractual
provisions selecting the arbitral seat is not complex, usually providing only “The seat of the
arbitration shall be [Singapore].”
As discussed below, there are a number of legal and practical consequences that follow
from selection of an arbitral seat, making this one of the most important aspects of any
international arbitration agreement. These consequences include the selection of the
procedural law of the arbitration and the national courts responsible for applying that law,
the national courts responsible for issues relating to constitution of the tribunal and the
national courts responsible for (and arbitration law applicable to) annulment of arbitral
awards.107 All of these issues are of substantial importance to the arbitral process in
international matters.

[5] Number, Method of Selection and Qualifications of Arbitrators

It is common for arbitration agreements to address the number, means of appointment and
qualifications of the arbitrators.108 Selection of the arbitrators is one of the most critical
issues in any arbitration. Addressing this issue in the arbitration agreement is vitally-
important to the effectiveness of the process.
Arbitration clauses often specify the number of persons who will comprise the tribunal in
the event of future disputes. If the parties do not agree upon the number of arbitrators,
institutional rules generally grant the institution power to do so; otherwise, national courts
will have the power to decide, pursuant to default rules in arbitration legislation. Nonetheless,
relying on a judicial or institutional decision regarding the number of arbitrators can result in
delays or disputes. As a consequence, parties often specify the number of arbitrators
(usually one or three) in their arbitration clause.109
It is also important for an arbitration clause to include a method for selecting the
arbitrator(s). Some clauses identify a specific individual as arbitrator (e.g., “The arbitrator
shall be George Martin.”). The most common provision for selection of the arbitrator is
designation of an “appointing authority,” which will select a sole arbitrator or presiding
arbitrator in the event that the parties cannot do so; in three-person tribunals, many
arbitration clauses permit each party to select a party-nominated arbitrator, with the
appointing authority choosing the presiding arbitrator. Most institutional rules provide for
such a role by the sponsoring institution when parties agree to arbitrate under the
institution’s rules,110 and no special wording (aside from adopting the institution’s rules) is
necessary to select the institution as appointing authority.

[6] Language of the Arbitration

Arbitration clauses also frequently specify the language (or languages) of the arbitral
proceedings and award. This is a point of vital importance, which can have a profound
practical effect on the selection of the arbitrators and character of the arbitral proceedings.111
 Absent the parties’ agreement, institutional rules usually authorize the tribunal to select a
language (or languages) of the arbitration. This will often be the language of the underlying
contract, although some regional institutional rules provide that the default language of the
arbitration shall be that of the country where the institution is based (e.g., for CIETAC,
Chinese). Even if institutional rules do not address the issue, national law will ordinarily give
the tribunal authority to select a language for the arbitration. Nonetheless, there is seldom any
reason to leave this issue to chance, particularly given the simplicity of a provision to the
effect that “the language of the arbitration shall be [English].”

[7] Choice-of-Law Clauses

International arbitration can give rise to tortuous choice-of-law questions. As a consequence,

many arbitration agreements are accompanied by a choice-of-law clause, specifying the
substantive law applicable to the parties’ contract and related disputes. 112 A common
formulation is “This Agreement will be governed by, and all disputes relating to or arising in
connection with this Agreement shall be resolved in accordance with, the laws of [State X].”

[C] Other Provisions of International Arbitration Agreements

Many arbitration agreements also contain other provisions, in addition to the elements
discussed above. The character of these provisions varies from case to case, depending on the
parties’ interests. The most common additional elements include: (a) legal costs; (b) interest
and currency of award; (c) disclosure powers of tribunal; (d) fast-track or other procedural
rules, including so-called escalation clauses; (e) state/sovereign immunity waivers; (f)
confidentiality; and (g) waivers of rights to seek annulment of an award.113

§1.08 OVERVIEW OF CHOICE OF LAW IN INTERNATIONAL

COMMERCIAL ARBITRATION

Choice-of-law issues play an important role in international commercial arbitration. It is

necessary to distinguish between four choice-of-law issues that can arise in connection with
an international arbitration: (a) the substantive law governing the merits of the parties’
underlying contract and other claims; (b) the substantive law governing the parties’
arbitration agreement; (c) the law applicable to the arbitral proceedings (also called the
“procedural law of the arbitration,” the “curial law” or the “lex arbitri”); and (d) the conflict
of laws rules applicable to select each of the foregoing laws. Although not common, it is
possible for each of these four issues to be governed by a different national (or other) law.
 Choices of Law in International Arbitration
1. Substantive Law Governing Merits of Parties’ Dispute (Including Underlying
Contract)
2. Substantive Law Governing Arbitration Agreement
3. Procedural Law Applicable to Arbitral Proceedings
4. Conflict of Laws Rules

Each of the foregoing choice-of-law issues can have a vital influence on international arbitral
proceedings. Different national laws provide different – sometimes dramatically different –
rules applicable at different stages of the arbitral process. Understanding which national rules
will potentially be applicable can therefore be critical.

[A] Law Applicable to the Substance of the Parties’ Dispute

The parties’ underlying dispute will ordinarily 114 be resolved under the rules of substantive
law of a particular national legal system. In the first instance, it will usually be the arbitrators
who determine the substantive law applicable to the parties’ dispute. As discussed in detail
below, international arbitral awards typically give effect to the parties’ agreements concerning
applicable substantive law (“choice-of-law clauses”).115 The principal exception is where
mandatory national laws or public policies override contractual arrangements.
Where the parties have not agreed upon the substantive law governing their dispute, the
arbitral tribunal must select such a law. In so doing, the tribunal will sometimes refer to
national or international conflict of laws rules.116 Although the historical practice was to
apply the national conflict of laws rules of the arbitral seat, more recent practice is diverse.
Some tribunals and commentators adhere to the traditional approach, while others look to the
conflicts rules of all states having a connection with the dispute; additionally, some
authorities adopt either international conflict of laws rules or validation principles.

[B] Law Applicable to the Arbitration Agreement

As discussed elsewhere, arbitration agreements are universally regarded as presumptively
“separable” from the underlying contract in which they appear. One consequence of this is
that the parties’ arbitration agreement may be governed by a different national law than that
of the underlying contract. The governing law may be chosen by the parties or determined by
applying conflict of laws rules (which may select different laws for the parties’ arbitration
agreement and underlying contract).
 As described below, four alternatives for the law governing an arbitration agreement are of
particular importance: (a) the law chosen by the parties to govern the arbitration agreement
itself; (b) the law of the arbitral seat; (c) the law governing the parties’ underlying contract;
and (d) international principles, either applied as a substantive body of contract law (as in
France) or as rules of non-discrimination (as in most U.S. authority).117

[C] Procedural Law Applicable to the Arbitral Proceedings

The arbitral proceedings themselves are subject to legal rules, governing both “internal”
procedural matters and “external” relations between the arbitration and national courts. In
most instances, the law governing the arbitral proceeding is the arbitration statute of the
arbitral seat.118
Among other things, the law of the arbitral seat typically deals with such issues as the
appointment and qualifications of arbitrators, the qualifications and professional
responsibilities of parties’ legal representatives, the extent of judicial intervention in the
arbitral process, the availability of provisional relief, the procedural conduct of the
arbitration, the form of an award and standards for annulment of an award. Different national
laws take different approaches to these various issues. In some countries, national law
imposes significant limits or requirements on the conduct of the arbitration and local courts
have broad powers to supervise arbitral proceedings. Elsewhere, and in most developed
jurisdictions, local law affords international arbitrators virtually unfettered freedom to
conduct the arbitral process – subject only to basic requirements of procedural regularity
(“due process” or “natural justice”).
In many jurisdictions, parties are free to select the procedural law of the arbitration (as
discussed below). This includes, in some jurisdictions, the freedom to agree to the application
of a different procedural law than that of the arbitral seat. This occurs only in very rare cases
and is ordinarily avoided because of the uncertainties it creates, including as to which national
courts may select and remove arbitrators or annul awards.

[D] Choice of Laws Rules Applicable in International Arbitration

Selecting each of the bodies of law identified in the foregoing three sections – the law
applicable to the merits of the underlying contract, the arbitration agreement and the arbitral
proceedings – ordinarily requires application of conflict of laws rules. In order to select the
substantive law governing the parties’ dispute, for example, the tribunal must ordinarily
apply a conflict of laws system. A tribunal must therefore decide at the outset what set of
conflicts rules to apply to select each of these systems of law. The practice of tribunals in
selecting the law applicable to each of the foregoing issues varies significantly. As discussed
in greater detail below, approaches include application of (a) the arbitral seat’s conflict of
laws rules; (b) “international” conflict of laws rules; (c) successive application of the conflict
of laws rules of all interested states; and (d) “direct” application of substantive law (without
any express conflicts analysis).

§1.09 INVESTOR-STATE ARBITRATION

Most international arbitrations are international commercial arbitrations, arising from

commercial dealings between private parties. Another significant, if less common, category of
international arbitration involves “investor-state” or “investment” arbitrations, usually
conducted pursuant to the arbitration provisions of a specialized multilateral or bilateral
investment treaty, or, less frequently, pursuant to the arbitration clauses in state contracts.
Investment arbitrations involve “investment disputes” between foreign investors and host
states. As discussed in Chapter 18 below, investment disputes usually involve claims of
expropriation without full compensation, unfair or inequitable treatment, or discriminatory
treatment of a foreign investor by a host state. In most cases, investment arbitrations involve
only claims by investors against the host state (and not counterclaims against the investor).

[A] ICSID Convention

As noted above, the ICSID Convention is a specialized international treaty (with 147
Contracting Parties from all regions of the world) designed to facilitate the settlement of
“investment disputes” (i.e., “legal dispute[s] arising directly out of ... investment[s]”).119
The ICSID Convention provides a stand-alone legal regime for ICSID arbitration agreements
and arbitral awards (which are generally not subject to the New York Convention or
generally-applicable national arbitration legislation). Arbitrations under the ICSID
Convention are administered by ICSID, a specialized arbitral institution, which has
promulgated the ICSID Arbitration Rules (and related conciliation rules). The ICSID
Convention and Arbitration Rules are discussed in greater detail below.120

[B] Bilateral Investment Treaties

Investment arbitrations can also arise under Bilateral Investment Treaties (“BITs”), which
became common during the 1980s and 1990s as a means of encouraging capital investment in
developing markets. More than 2,800 BITs are presently in force, with additional BITs being
concluded each year.121
 As discussed below, most BITs provide significant substantive protections for
investments made by foreign investors, including guarantees against expropriation and denials
of fair and equitable treatment. BITs also frequently contain dispute resolution provisions
which permit foreign investors to require international arbitration (typically referred to as
“investor-state arbitration”) of specified categories of investment disputes with the host
state;122 these provisions permit investors to require arbitration of investment disputes in
the absence of a traditional contractual arbitration agreement with the host state (so-called
“arbitration without privity”).123 Unlike ICSID arbitrations, BIT arbitral awards are often
subject to the New York Convention and general national arbitration legislation. The role of
BITs in investor-state arbitration is discussed in Chapter 18 below.

§1.10 STATE-TO-STATE ARBITRATION

An even more specialized category of international arbitration involves “state-to-state” or

“interstate” arbitrations, also discussed in Chapter 18 below. Interstate arbitrations typically
involve disputes between two states or state-like entities and often raise issues of public
international law. Many state-to-state arbitrations involve boundary disputes (involving
either land or maritime boundaries).124
M any state-to-state arbitrations are ad hoc and conducted pursuant to specially-negotiated
procedural rules. Alternatively, some interstate arbitrations are conducted pursuant to the
PCA’s rules for arbitrations between states (discussed above). Interstate arbitration
agreements and awards are, in many cases, not subject to enforcement under the New York
Convention, in large part because of reservations limiting the Convention to “commercial”
matters, or national arbitration legislation. Nonetheless, where states or state entities arbitrate
commercial or financial disputes, arbitral awards are in principle subject to recognition and
enforcement under the New York Convention and legislation in many states.
_________________________
1. See Benson Pump Co. v. S. Cent. Pool Supply, Inc ., 325 F.Supp.2d 1152, 1155 (D. Nev. 2004) (“ no magic words
such as ‘ arbitrate’ ... are required to obtain the benefits of the FAA ... [I]f the parties have agreed to submit a
dispute for a decision by a third party, they have agreed to arbitration”); Taylor v. Yielding (1912) 56 Sol Jo 253
(Ch.) (“ you cannot make a valuer an arbitrator by calling him so, or vice versa”).
2. Judgment of 21 November 2003, DFT 130 III 66, cons. 3.1 (Swiss Federal Tribunal).
3. Motunui Ltd v. Methanex Spellman [2004] 1 NZLR 95 (Auckland High Court).
4. Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (U.S. S.Ct. 1974).
5. New York Convention, Arts. II(1) & II(3) (emphasis added).
6. UNCITRAL Model Law, Arts. 8(1) & 7(1) (emphasis added).
7. Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, at ¶51 (Canadian S.Ct.).
8. Howsam v. Dean W itter Reynolds, Inc ., 537 U.S. 79, 83 (U.S. S.Ct. 2002) (quoting Steelworkers v. W arrior &
Gulf Nav. Co ., 363 U.S. 574, 582 (U.S. S.Ct. 1960)). See Judgment of 8 July 2003, DFT 129 III 675, 679 (Swiss
Federal Tribunal) (“ The statute does not define the minimal content of an arbitration agreement. It results from the
purpose of the arbitration agreement that the intent of the parties must be expressed to submit certain existing or
 future disputes to an arbitral tribunal, i.e. not a state court.”).
9. See infra pp. 121–29. In cases when no agreement on either the arbitrator(s) or an institutional appointing
authority is possible, national courts can provide a default mechanism for appointment of arbitrators. See infra pp.
129.
10. See infra pp. 45, 70–73.
11. See, e.g., Judgment of 17 June 2004, Le Parmentier v. La Société Miss France , XXX Y.B. Comm. Arb. 119, 123–
124 (Paris Cour d’ appel) (2005) (Uniform Domain Name Resolution Policy dispute resolution proceeding is not
arbitration because it “ allows for a recourse to state courts to have the dispute re-adjudged, both before the
administrative proceeding is commenced and after it is concluded and, ... during the proceeding.”); Salt Lake
Tribune Publishing Co., LLC v. Mgt Planning, Inc., 390 F.3d 684, 689 (10th Cir. 2004) (“ [O]ne feature that must
necessarily appertain to a process to render it an arbitration is that the third party’ s decision will settle the
dispute.”); W alkinshaw v. Diniz [2000] 2 All E.R. (Comm.) 237 (Q.B.) (agreement “ must contemplate that the
tribunal which carries on the process will make a decision which is binding on the parties”).
12. See, e.g., Portland Gen. Elec. Co. v. U.S. Bank Trust Nat’l Ass’n , 218 F.3d 1085, 1090 (9th Cir. 2000)
(“ arbitration agreements permit arbitrators to resolve pending disputes generally through adversary hearings at
which evidence is admitted and the arbitrator plays a quasi-judicial role”); W alkinshaw v. Diniz [2000] 2 All
E.R. (Comm.) 237 (Q.B.) (“ It is a characteristic of arbitration that the parties should have a proper opportunity of
presenting their case.”).
13. See Omni Tech Corp. v. MPC Solutions Sales, LLC, 432 F.3d 797, 799 (7th Cir. 2005) (“ many contracts have
venue or forum-selection clauses. These do not call for arbitration but are routinely enforced.”); Sonatrach
Petroleum Corp. ( BVI) v. Ferrell Int’l Ltd [2002] 1 All E.R. (Comm.) 627 (Q.B.) (agreement to arbitrate must
establish the parties’ objective intention to arbitrate rather than refer disputes to national courts).
14. Hague Convention of 30 June 2005 on Choice of Court Agreements, available at www.hcch.net. G. Born & P.
Rutledge, International Civil Litigation in United States Courts 468 & 1085 (5th ed. 2011).
15. G. Born, International Commercial Arbitration 234–40 (2009).See also Report of the Secretary-General on
the Possible Uniform Rules on Certain Issues Concerning Settlement of Commercial Disputes Conciliation,
UN Doc, A/CN.9/WG.II/WP .108, ¶11 (2000), available at www.uncitral.org.
16. See, e.g., UN General Assembly, Resolution adopted by the 750 Meeting on the UNCITRAL Adoption of the
Model on International Commercial Conciliation, UN Doc. A/57/17, Annex 1, available at www.uncitral.org.
17. See G. Born, International Commercial Arbitration 222–33 (2009); J. Kendall, Expert Determination ¶8.7.1
(3d ed. 2001).
18. See G. Born, International Commercial Arbitration 223 (2009).
19. See, e.g., Portland Gen. Elec. Co. v. U.S. Bank Trust Nat’l Ass’n , 218 F.3d 1085, 1090 (9th Cir. 2000) (appraisal
provision “ did not attempt to usurp the judiciary’ s power to resolve the case as a whole, [but is] typically
limited to ministerial determinations such as the ascertainment of quality or quantity of items, the ascertainment of
loss or damage to property or the ascertainment of the value of property”); Judgment of 9 November 1999,
Syndicat des Coproprietaires du 35, rue Jouvent v. Halpern , 2001 Rev. arb. 159 (Paris Cour d’ appel) (expert’ s
determinations were not to resolve dispute but only to “ perfect” a compromise).
20. The name is derived from a form of dispute resolution used in fixing the salaries of professional athletes in the
United States. See G. Born, International Commercial Arbitration 244–46 (2009).
21. As discussed below, by virtue of Article I(1), the New York Convention is applicable to specified categories of
“ foreign” or “ non-domestic” arbitral awards. See supra pp. 370–73. The Convention does not define expressly
the arbitration agreements to which it applies; it is best interpreted as applying to all “ international” arbitration
agreements, wherever they are seated, rather than to purely domestic arbitration agreements. See G. Born,
International Commercial Arbitration 275–77 (2009).
22. Article 1(3) of the Model Law provides: “ An arbitration is international if (a) the parties to an arbitration
agreement have, at the time of the conclusion of that agreement, their places of business in different States; or (b)
one of the following places is situated outside the State in which the parties have their places of business: (i) the
place of arbitration if determined in, or pursuant to, the arbitration agreement; (ii) any place where a substantial
part of the obligations of the commercial relationship is to be performed or the place with which the subject-
matter of the dispute is most closely connected; or (c) the parties have expressly agreed that the subject matter of
 the arbitration agreement relates to more than one country.” Similar definitions apply in the United States, France,
England, and elsewhere. G. Born, International Commercial Arbitration 284–99 (2009).
23. In a few jurisdictions, arbitration legislation applies to both domestic and international arbitrations. For
example, England, Spain and Germany’ s enactments of the UNCITRAL Model Law deleted provisions limiting
the legislation’ s application to “ international” arbitrations, extending it to all arbitrations. German ZP O,
§1025; English Arbitration Act, 1996, §2. Even then, such legislation often has specific provisions that treat
international and domestic arbitration differently with regard to particular subjects. See G. Born, International
Commercial Arbitration 109–10 (2009).
24. G. Born, International Commercial Arbitration 71–73 (2009). Users of international arbitration identify
neutrality as one of the most important benefits of the process. Buehring-Uhle, A Survey on Arbitration and
Settlement in International Business Disputes, in C. Drahozal & R. Naimark, Towards a Science of
International Arbitration: Collected Empirical Research 33 (2005).
25. Sometimes parties will not agree upon any dispute resolution provisions, leaving it to post-dispute litigation to
determine the place (or places) where their dispute will be resolved. That approach is usually disfavored by
commercial parties because it produces substantial uncertainties and inefficiencies.
26. G. Born, International Commercial Arbitration 73 (2009). As discussed below, international arbitration
agreements are typically drafted expansively and given broad effect, including to preclude the parallel litigation
of the same or similar claims in national courts. This facilitates the parties’ objective of centralizing their disputes
in a single forum for prompt, efficient resolution. See infra pp. 62–67.
27. Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 13–14 (U.S. S.Ct. 1972) (in context of a forum selection clause). See
also Judgment of 15 March 1990, DFT 116 1a 56, 58 (Swiss Federal Tribunal).
28. C. Bühring-Uhle, A Survey on Arbitration and Settlement in International Business Disputes, in C. Drahozal &
R. Naimark, Towards a Science of International Arbitration: Collected Empirical Research 31, 35 (2005);
P riceWaterhouseCoopers, International Arbitration: Corporate Attitudes and Practices 6–7 (2006), available
at www.pwc.com/arbitrationstudy.
29. As discussed below, Article II of the New York Convention and Article 8 of the UNCITRAL Model Law
provide for the presumptive validity and enforceability of international arbitration agreements. See infra pp. 48–
49.
30. C. Bühring-Uhle, A Survey on Arbitration and Settlement in International Business Disputes, in C. Drahozal &
R. Naimark, Towards a Science of International Arbitration: Collected Empirical Research 31, 35 (2005) (one
of the “ two most significant advantages [of] arbitration as a means of international commercial dispute resolution
[is] ... the superiority of its legal framework with treaties like the New York Convention”);
P riceWaterhouseCoopers, International Arbitration: Corporate Attitudes and Practices 6–7 (2006), available
at www.pwc.com/arbitrationstudy.
31. EC Regulation 44/2001, O.J. L 012, 16/01/2001, Art. 23.
32. See, e.g., Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air,
Signed at Warsaw, 12 October 1929, as Amended at the Hague, 1955, and by Protocol No. 4 of Montreal, 1975,
ICAO Doc. 9148.
33. See infra pp. 303–307.
34. The draft Hague Convention on Choice of Court Agreements would prescribe broadly-applicable international
standards applicable to the recognition and enforcement of judgments based on forum selection agreements. G.
Born & P. Rutledge, International Civil Litigation in United States Courts 468 & 1085 (5th ed. 2011). This is,
however, conditional on ratification of the Convention by significant numbers of states, which has not yet
occurred. Even if it did, the Convention is subject to important exceptions and limitations, which will likely
detract materially from its efficacy. At least for the foreseeable future, like arbitration agreements, arbitral awards
will therefore enjoy a substantial “ enforceability premium” as compared to national court judgments.
35. See G. Born, International Commercial Arbitration 79–80 (2009).
36. Naimark & Keer, International Private Commercial Arbitration – Expectations and Perceptions of Attorneys
and Business People, in C. Drahozal & R. Naimark, Towards a Science of International Arbitration: Collected
Empirical Research 45, 49 (2005) (expertise as one of several significant objectives); PriceWaterhouseCoopers,
International Arbitration: Corporate Attitudes and Practices 6 (2006), available at
 www.pwc.com/arbitrationstudy (“ The ability of parties to select arbitrators with the necessary skills and
expertise and who are well suited to the appropriate cultural and legal context was also ranked highly.”).
37. Bühring-Uhle, A Survey on Arbitration and Settlement in International Business Disputes, in C. Drahozal & R.
Naimark, Towards a Science of International Arbitration: Collected Empirical Research 34 & n.28 (2005).
38. Lazareff, International Arbitration: Towards a Common Procedural Approach, in S. Frommel & B. Rider (eds.),
Conflicting Legal Cultures in Commercial Arbitration 31, 33 (1999).
39. Bühring-Uhle, A Survey on Arbitration and Settlement in International Business Disputes, in C. Drahozal & R.
Naimark, Towards a Science of International Arbitration: Collected Empirical Research 32, 35 (2005);
Shavell, Alternative Dispute Resolution: An Economic Analysis, 24 J. Legal Studies 1, 6 (1995).
40. See infra pp. 244–46; G. Born, International Commercial Arbitration 81–83 (2009).
41. CP R Institute for Dispute Resolution Comm’ n on the Future of Arbitration, Commercial Arbitration at its Best:
Successful Strategies for Business Users xxiii (2000) (“ Ultimately, many business users regard control over the
process – the flexibility to make arbitration what you want it to be – as the single most important advantage of
binding arbitration and other forms of ADR.”).
42. See G. Born, International Commercial Arbitration 83–85 (2009); Stipanowich, Rethinking American
Arbitration, 63 Ind. L.J. 425, 438–40 (1987) (“ speed and efficiency” of arbitral process).
43. Lyons, Arbitration: The Slower, More Expensive Alternative , The American Lawyer 107 (Jan./Feb. 1985); Blue
Tee Corp. v. Koehring Co., 999 F.2d 633 (2d Cir. 1993) (“ This appeal ... makes one wonder about the alleged
speed and economy of arbitration in resolving commercial disputes.”).
44. See infra pp. 196–202. Even where such obligations exist, they are subject to exceptions which have the effect
that arbitral awards are sometimes made public, either in enforcement actions or otherwise.
45. Empirical research suggests that confidentiality is a material, but not primary, motivation for international
arbitration agreements. Buehring-Uhle, A Survey on Arbitration and Settlement in International Business
Disputes, in C. Drahozal & R. Naimark, Towards a Science of International Arbitration: Collected Empirical
Research 35 (2005) (confidentiality third in list of 11 reasons for arbitration).
46. Under some national laws, agreements to arbitrate are regarded as waivers of foreign state immunity. This is true,
for example, under the Foreign Sovereign Immunities Act in the United States. (28 U.S.C. § 1605(a)(6)).
Nonetheless, it is prudent to include express sovereign immunity waivers in commercial contracts with foreign
states and their companies. See G. Born, International Arbitration and Forum Selection Agreements: Drafting
and Enforcing 101 (2d ed. 2006).
47. “ Investment contracts” between foreign investors and their host state are discussed in Chapter 18 below. See
infra pp. 411–439.
48. Buchanan, Public Policy and International Commercial Arbitration, 26 Am. Bus. L.J. 511, 512 (1988).
49. Lyons, Arbitration: The Slower, More Expensive Alternative, The American Lawyer 107 (Jan./Feb. 1985).
50. In re Canadian Gulf Line, 98 F.2d 711, 714 (2d Cir. 1938) (Learned Hand, J.).
51. Kulukundis Shipping Co. v. Amtorg Trading Corp., 126 F.2d 978, 987 n.32 (2d Cir. 1942).
52. Lalive, Transnational ( or Truly International) Public Policy in Arbitration, in P. Sanders (ed.), Comparative
Arbitration Practice and Public Policy in Arbitration 257, 293 (1987).
53. C. Drahozal & R. Naimark, Towards a Science of International Arbitration: Collected Empirical Research 59
(2005) (88% of surveyed international joint venture agreements contain arbitration clauses);
P riceWaterhouseCoopers, International Arbitration: Corporate Attitudes and Practices 2, 5 (2006), available
at www.pwc.com/arbitrationstudy.
54. Geneva P rotocol on Arbitration Clauses in Commercial Matters (“ Geneva P rotocol”), 27 L.N.T.S. 158 (1924).
55. Geneva Convention on the Execution of Foreign Arbitral Awards (“ Geneva Convention”), 92 L.N.T.S. 302
(1929). See G. Born, International Commercial Arbitration 58–63 (2009).
56. 330 U.N.T.S., No. 4739; www.uncitral.org.
57. Sanders, The History of the New York Convention, in A. van den Berg (ed.), Improving the Efficiency of
Arbitration Agreements and Awards: 40 Years of Application of the New York Convention 11, 12 (ICCA
Congress Series No. 9 1999).
58. A. van den Berg, The New York Arbitration Convention of 1958 1 (1981). See also G. Born, International
Commercial Arbitration 95 (2009).
59. Schwebel, A Celebration of the United Nations New York Convention on the Recognition and Enforcement of
Foreign Arbitral Awards, 12 Arb. Int’ l 83, 85 (1996).
60. See infra pp. 24–25.
61. A. van den Berg, The New York Arbitration Convention of 1958 1, 54–55, 168–69, 262–63, 357–58 (1981).
62. See New York Convention, Arts. III, IV, V; infra pp. 377–79. The shift in the burden of proof was accomplished
by Articles III and V, which required the award-creditor to present only minimal evidence in support of
recognition of an award (in Article III), while specifying only limited grounds, which needed affirmatively to be
proven, that could result in non-recognition (in Article V). See infra pp. 375–79.
63. See New York Convention, Arts. V(1)(a), 1(d); supra pp. 13–14 & infra pp. 148–49.
64. See supra pp. 19–20 & infra pp. 275, 381.
65. See www.uncitral.org for a list of states that have ratified the Convention.
66. In ratifying the Convention, many states have attached reservations that can have significant consequences in
private disputes. These reservations frequently deal with reciprocity and limiting the Convention’ s applicability
to disputes arising from “ commercial” relations. See infra pp. 45–46.
67. New York Convention, Arts. VII(1), VII(2). See G. Born, International Commercial Arbitration 99, 208–09,
500–01 (2009).
68. New York Convention, Arts. VII(1), VII(2).
69. See also G. Born, International Commercial Arbitration 99, 2397–2403, 2722–25 (2009).
70. See infra pp. 55–58, 58–67.
71. For representative examples, see Fiona Trust & Holding Corp. v. Privalov [2007] 1 All E.R. (Comm.) 891
(English Court of Appeal), aff’d, [2007] UKHL 40 (House of Lords) (citing U.S. and German authority); Karaha
Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara , 364 F.3d 274 (5th Cir. 2004)
(English, Hong Kong, Swedish, and Swiss authorities); Hebei Imp. & Exp. Corp. v. Polytek Eng’g Co., XXIVa
Y.B. Comm. Arb. 652, 668 (H.K. Court of Appeal, High Court 1999) (1999) (U.S. and Indian authorities).
72. Inter-American Convention on International Commercial Arbitration, signed in Panama on January 30, 1975. The
Convention is reprinted at III Y.B. Comm. Arb. 15 (1978) and www.sice.oas.org. The United States ratified the
Convention in 1990. Other parties include Mexico, Brazil, Argentina, Venezuela, Columbia, Chile, Ecuador,
P eru, Costa Rica, El Salvador, Guatemala, Honduras, P anama, P araguay and Uruguay.
73. Inter-American Convention, Arts. 1, 4, 5.
74. Compare New York Convention, Art. II(3); infra pp. 62–67.
75. European Convention on International Commercial Arbitration, 21 April 1961, 484 U.N.T.S. 349. See G.
Born, International Commercial Arbitration 102–03 (2009).
76. See G. Born, International Commercial Arbitration 109 (2009).
77. Important new enactments, or revisions, have occurred in Algeria (1993), Australia (1989 and 2009), Austria
(2005), Bahrain (1994), Bangladesh (2001), Brazil (1996), Bulgaria (1993), Cambodia (2006), China (1991 and
1994), Colombia (1991), Costa Rica (1997), Croatia (2001), Czech Republic (1994), Denmark (2005), Egypt
(1994), England (1996), Finland (1992), Germany (1998), Greece (1999), Hong Kong (2011), India (1996),
Indonesia (1990), Ireland (1998), Italy (1994), Mexico (1989 and 1993), New Zealand (1996); Nicaragua (2005),
Norway (2004), P eru (1992), P oland (2005), Russia (1993), Scotland (2009), Singapore (2002), Spain (2003 and
2011), Tunisia (1993), Turkey (2001) and the United Arab Emirates (1992).
78. See Konkan Railways Corp. v. Mehul Constr. Co., (2000) 7 SCC 201 (Indian S.Ct.).
79. UN General Assembly Resolution No. 40/72, Model Law on International Commercial Arbitration of the
UNCITRAL(1985), available at www.uncitral.org.
80. UNCITRAL Model Law, Arts. 7–8; infra pp. 48–49, 77–81. The original 1985 Model Law’ s “ writing”
requirement for arbitration agreements is broadly similar to, but somewhat less demanding than, Article II of the
New York Convention. See UNCITRAL Model Law, Art. 7(2). The 2006 revisions include options that
substantially reduce or eliminate any writing requirement.
81. UNCITRAL Model Law, Art. 18 (“ The parties shall be treated with equality and each party shall be given a full
opportunity of presenting his case.”); infra pp. 152–54.
82. UNCITRAL Model Law, 2006 Revision; Menon & Chao, Reforming the Model Law Provisions on Interim
Measures of Protection, 2 Asian Int’ l Arb. J. 1 (2006).
 83. For jurisdictions adopting the Model Law, see
www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration_status.html.
84. H. Alvarez, N. Kaplan & D. Rivkin, Model Law Decisions: Cases Applying the UNCITRAL Model Law on
International Commercial Arbitration(2003); Case Law on UNCITRAL Texts (“ CLOUT”) UNCITRAL Model
Law on International Commercial Arbitration, www.org/english/clout/MAL-thesaurus/cloutsearch-etm.
85. E.g., Shalakany, Arbitration and the Third W orld: A Plea for Reassessing Bias Under the Specter of Neo-
Liberalism, 41 Harv. Int’ l L.J. 419 (2000); Sornarajah, The Climate of International Arbitration, 8 J. Int’ l Arb.
47 (1991).
86. Decision 24 of the Andean Commission Concerning Treatment of Foreign Capital, Article 51, 10 Int’ l Leg. Mat.
15 (1971) (“ [No agreement concerning foreign investment shall] withdraw possible ... controversies from the
national jurisdiction of the recipient country.”).
87. See infra pp. 77–82; Grigera Naón, Argentine Law and the ICC Rules: A Comment on the ECOFISA Case, 3
World Arb. & Med. Rep. 100 (1992); Brazilian Arbitration Law, Arts. 6–7 (arguably requiring post-dispute
compromise).
88. See infra pp. 328–33; Judgment of 1 August 2002, Electrificadora del Atlantico SA ESP v. Termorio SA ESP ,
Expte. 11001-03-25-000-2001-004601 (21041) (Consejo de Estado de Colombia).
89. See infra pp. 67, 154–55.
90. Alfaro & Guimarey, W ho Should Determine Arbitrability? Arbitration in a Changing Economic and Political
Environment, 12 Arb. Int’ l 415, 424–26 (1996); Asouzu, The Adoption of the UNCITRAL Model Law in
Nigeria: Implications on the Recognition and Enforcement of Arbitral Awards, (1999) J. Bus. Law. 185;
Grigera Naón, Arbitration and Latin America: Progress and Setbacks, 21 Arb. Int’ l 127, 149–76 (2005).
91. See ICSID News Release, Bolivia Submits a Notice under Article 71 of the ICSID Convention(16 May 2007),
available at http://icsid.worldbank.org (Bolivia’ s denunciation of ICSID Convention); Trade benefits at risk as
Ecuador scraps US Treaty, Reuters, www.reuters.com (7 May 2007) (Ecuador threatens termination of BIT with
United States).
92. As discussed below, national courts will generally have the power, under most developed arbitration statutes, to
assist the arbitral process by appointing arbitrators, considering challenges to arbitrators and fixing
compensation of arbitrators (where not otherwise agreed). See infra pp. 126–127, 129, 140–41; G. Born,
International Commercial Arbitration 150 (2009).
93. Report of the Secretary General on the Revised Draft Set of Arbitration Rules, UNCITRAL, 9th Session,
Introduction, ¶17, UN Doc. A/CN.9/112 (1975); G. Born, International Commercial Arbitration 151–53
(2009).
94. UNCITRAL Rules, Art. 7; infra pp. 126–29. The parties can specify an arbitral institution (like the ICC, AAA,
or LCIA) or individual as appointing authority (without adopting that institution’ s rules more generally).
95. ICC Statistical Report 2010, available at www.iccdrl.com; Statistics, 20(1) ICC Ct. Bull. 5 (2009).
96. Fifty percent of parties were from Europe, 24% from the Americas, 20% from Asia and the Pacific (with a record of
36 parties from Asia), and 6% from Africa. ICC Statistical Report 2010, available at www.iccdrl.com.
97. ICC Statistical Report 2010, available at www.iccdrl.com. The most common seats for ICC arbitrations are France,
Switzerland, England, other Western European states and the United States, as well as Singapore and Hong
Kong.
98. A recent ICC task force studied ways to reduce costs and delay in ICC arbitrations. See ICC, Techniques for
Controlling Time and Costs in Arbitration (ICC P ublication No. 843 2007).
99. See www.adr.org/sp.asp? id=22440. Numerous other sets of AAA arbitration rules also exist, in particular for
specialized types of disputes (such as construction, energy, health care, insurance, securities, labor and
intellectual property), and can be selected in the parties’ arbitration agreement. See www.adr.org/sp.asp?
id=28780.
100. AAA Annual Report 2010, available at www.adr.org.
101. SIAC Annual Report 2000 and 2010, available at www.siac.org.sg.
102. Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, produced at
Washington, D.C., 18 March 1965, available at www.worldbank.org/icsid. ICSID is based at the Washington
D.C. headquarters of the International Bank for Reconstruction and Development (or “ World Bank”). The ICSID
 Arbitration Rules are available at www.worldbank.org/icsid.
103. P CA Optional Rules for Arbitrating Disputes between Two States, available at www.pca-
cpa.org/upload/files/2STATENG.pdf; P CA Optional Rules for Arbitrating Disputes between Two Parties of
Which Only One Is a State, available at www.pca-cpa.org/upload/files/1STATENG.pdf. See also infra pp. 42,
436–37, 442.
104. Among other things, the P CA administered arbitrations between Sudan and the Sudan People’ s Liberation
Movement/Army and Ethiopia and Eritrea, available at www.pca-cpa.org/showpage.asp? pag_id=1029.
105. There is a small, but important, category of cases in which international investment arbitrations may result
without a consensual agreement, by virtue of provisions in international investment protection or other
conventions or legislation. This category of arbitrations (without “ privity”) is unusual, however, and
underscores the essential requirement that international arbitration is consensual in character. See infra pp. 42,
415–16.
106. For examples of exclusions for particular types of issues, see G. Born, International Arbitration and Forum
Selection Agreements: Drafting and Enforcing 42–44 (3d ed. 2010).
107. See infra pp. 308 & 311.
108. See infra pp. 124–38.
109. The text of provisions designating the number of arbitrators is not complex. For example, a typical clause would
provide: “ Any dispute shall be finally resolved under the [– Rules] by [three arbitrators][one arbitrator]
appointed in accordance with the said Rules.” An alternative provides “ the number of arbitrators shall be [three]
[one].”
110. See infra p. 128. An institution will also appoint an arbitrator on behalf of a party which fails to exercise its
right under the parties’ arbitration agreement to do so.
111. See infra p. 161.
112. For a discussion of the drafting of such choice-of-law clauses, see G. Born, International Arbitration and Forum
Selection Agreements: Drafting and Enforcing 79–80 (3d ed. 2010). See infra pp. 39–41, 55–56.
113. G. Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing 82–110 (3d ed.
2010).
114. Parties sometimes agree to permit arbitrators to resolve their dispute without reference to law, that is, ex aequo et
bono or as amiable compositeur, see infra pp. 255–56, or by reference to a non-national legal system, see infra
pp. 253–55.
115. See infra pp. 244–46; UNCITRAL Model Law, Art. 28(1); UNCITRAL Rules, Art. 33(1).
116. See infra pp. 237–42.
117. See infra pp. 152–54.
118. See infra pp. 111–14.
119. ICSID Convention, Art. 25(1). As discussed below, investment disputes are defined as controversies that arise
out of an “ investment” and are between a Contracting State or state entity (but not merely a private entity based
in a Contracting State) and a national of another Contracting State. See infra pp. 420–27.
120. See infra pp. 412, 420–25, 436–37.
121. UNCTAD, Bilateral Investment Treaties 1995–2006: Trends in Investment Rulemaking 1
(UNCTAD/ITE/IIA/2006/5), available at www.unctad.org; UNCTAD World Investment Report 2011, available
at www.unctad-docs.org/files/UNCTAD-WIR2011-Full-en.pdf
122. See infra p. 415.
123. See P aulsson, Arbitration W ithout Privity, 10 ICSID L. Rev. 232 (1995). See infra pp. 415–16.
124. See infra pp. 439–44. Other interstate arbitrations involve sui generis disputes, such as the France-New Zealand
arbitration over the Rainbow Warrior, U.S.-France arbitrations over air transport issues or arbitrations involving
financial claims. See G. Born, International Arbitration: Cases and Materials 92–93 (2011).
Chapter 2
International Arbitration Agreements: Legal Framework

Although parties frequently agree to arbitrate, in practice they also sometimes reconsider that
commitment after disputes arise. In particular, notwithstanding their agreement to arbitrate,
parties may seek either to litigate their dispute in local courts or to obstruct the arbitral
process. Ultimately, the efficacy of an arbitration agreement often depends on the parties’
ability to enforce that agreement.
The legal framework for enforcing international arbitration agreements has undergone
important changes over the past century, evolving from a position of relative disfavor to one
of essentially universal support. That legal regime consists of international conventions
(principally the New York Convention), national law (such as the UNCITRAL Model Law)
and institutional arbitration rules. When their jurisdictional requirements are satisfied, these
instruments provide a robust and highly effective framework for enforcing international
arbitration agreements.

§2.01 DISPUTES CONCERNING INTERNATIONAL ARBITRATION

AGREEMENTS

Disputes over the enforceability of international arbitration agreements can take a variety of
forms (e.g., to the existence, validity and scope of the arbitration agreement). They can also
arise in different procedural settings, including both arbitral proceedings and national courts.

[A] Challenges to Existence, Validity and Scope of International Commercial

Arbitration Agreements

There are a variety of possible challenges to the enforceability of an international commercial

arbitration agreement. These challenges include (a) claims by a party that it never consented
to any agreement, including any arbitration agreement, with its counter-party, and therefore
that no agreement to arbitrate exists; (b) claims that any arbitration agreement between the
parties is invalid, either on grounds of formal invalidity (i.e., failure to satisfy requirements
for a written form) or substantive invalidity (i.e., unconscionability, termination, frustration,
fraud); or (c) claims that, while the parties agreed to arbitrate some disputes, they did not
agree to arbitrate the dispute which has actually arisen (e.g., the parties’ arbitration agreement
covers disputes relating to a lease agreement, but not claims for libel or unfair competition).
[B] Procedural Settings for Jurisdictional Objections

Challenges to the existence, validity or scope of an international arbitration agreement can

arise in a variety of different procedural settings.

[1] Consideration of Jurisdictional Objections by Arbitrators

In some cases, the respondent in an arbitration will raise a jurisdictional objection in the
arbitration itself, arguing to the arbitrators that it is not bound by a valid arbitration
agreement or that the arbitration agreement does not encompass the parties’ dispute. As
discussed below, it is universally recognized that arbitrators have the authority to consider
such jurisdictional objections and to make a decision on them (as provided, for example, by
Article 16 of the UNCITRAL Model Law and parallel provisions of other arbitration
statutes).1 In practice, tribunals will resolve jurisdictional disputes conducted in proceedings
much like those to resolve substantive disputes – with written submissions, evidentiary
hearings and witness testimony, followed by a decision of the arbitrators. If the arbitral
tribunal upholds the jurisdictional objection, it will dismiss the claimant’s claims and the
arbitration will conclude (with the arbitrators’ negative jurisdictional award potentially
subject to judicial review). Conversely, if the tribunal rejects the objections, it will make a
positive jurisdictional award (which will potentially be subject to judicial review) and the
arbitration will proceed to the merits.

[2] Consideration of Jurisdictional Objections by National Courts

In other cases, one of the parties to a dispute may commence litigation in a national court
(often its own home courts), notwithstanding its putative agreement to arbitrate. In that
event, the other party will often invoke the arbitration agreement, requesting that the national
court stay any litigation and “refer” the parties to arbitration. As discussed below, this relief
is contemplated by Article II of the New York Convention and Article 8 of the UNCITRAL
Model Law (and parallel provisions of other national arbitration statutes).2 In determining
whether or not to refer the parties to arbitration, a national court will generally consider
whether the parties are bound by a valid arbitration agreement which applies to their dispute.
Alternatively, a party may choose not to appear in the arbitral proceedings or to
commence parallel litigation, and instead subsequently either seek annulment of any arbitral
award or resist enforcement of any award (in both cases, on jurisdictional grounds, as
provided for by Articles 34(2)(a)(i) and (iii) and 36(1)(a)(i) and (iii) of the Model Law). In
each case, a national court will be required to consider whether the parties are bound by a
valid arbitration agreement which encompassed their dispute.

§2.02 JURISDICTIONAL REQUIREMENTS OF INTERNATIONAL AND

NATIONAL COMMERCIAL ARBITRATION REGIMES
The New York Convention and most national arbitration statutes are “pro-arbitration,”
providing robust mechanisms for enforcing international arbitration agreements and awards.
In particular, Article II of the Convention imposes obligations on Contracting States to
recognize international arbitration agreements and enforce them by referring the parties to
arbitration; like many other arbitration statutes, Articles 7, 8 and 16 of the Model Law
provide a parallel enforcement mechanism for international arbitration agreements.
Both international arbitration conventions and national arbitration statutes contain
jurisdictional requirements that define which arbitration agreements are (and are not) subject
to those instruments’ substantive rules. These jurisdictional requirements have important
consequences, because they determine when the pro-enforcement regimes of the New York
Convention and many arbitration statutes are applicable – rather than other means of
enforcement, which are sometimes archaic and often ineffective.
There are many arbitration agreements to which the New York Convention does not apply.
In particular, seven jurisdictional requirements must be satisfied for an agreement to be
subject to the Convention; there must be: (1) an agreement to “arbitrate”; (2) a difference
arising out of “commercial” relationships; (3) a “dispute” or “difference”; (4) an agreement to
arbitrate differences which “have arisen or which may arise”; (5) an agreement “in respect of
a defined legal relationship, whether contractual or not”; (6) an international arbitration
agreement or, alternatively, an agreement that would produce a “foreign” or “non-domestic”
award; and (7) a showing that any reciprocity requirement must be satisfied.
Like the Convention, most international arbitration statutes contain jurisdictional
limitations. These jurisdictional requirements have substantial practical importance, because
they determine when the generally “pro-arbitration” provisions of contemporary arbitration
legislation apply to arbitration agreements (and arbitral awards). The jurisdictional
requirements of national arbitration statutes vary from state to state. In general, however,
these limits are broadly similar to those contained in the Convention.

[A] “Arbitration” Agreement Requirement

As discussed above, Article II(1) and II(2) of the New York Convention limit the
Convention’s coverage to “arbitration agreement[s]” and “arbitral clause[s].” Article 7 of the
Model Law contains a similar requirement, as do other arbitration statutes. These
requirements for an “arbitration” agreement are discussed above.3 As a consequence, the
Convention and most national arbitration legislation only apply to agreements to arbitrate, as
distinguished from other agreements (e.g., mediation agreements, forum selection clauses).

[B] “Commercial” Relationship Requirement

The Convention and many arbitration statutes potentially apply only to “commercial”
relationships. Article 1(3) of the Convention provides that Contracting States may declare
that the Convention applies only to “relationships ... which are considered as commercial
under the national law of the State making [the] declaration.” A number of nations, including
the United States, have made declarations under Article 1(3).4
Similarly, many arbitration statutes are limited to “commercial” matters. Article 1(1) of the
Model Law limits the Law’s application to “international commercial arbitration,” while §1
of the FAA is limited to arbitration agreements in “transaction[s] involving commerce.” In
general, national courts have adopted broad definitions of the “commercial” requirement,
including almost any profit-making activity within its scope.

[C] “Disputes” or “Differences” Requirement

Article II(1) of the Convention and Article 7 of the Model Law (like many other arbitration
statutes) applies to agreements to arbitrate “disputes” or “differences.” These provisions
impliedly require that a real “dispute” or “difference” exists before an arbitration agreement
may be enforced. In general, national courts and arbitral tribunals have found this requirement
satisfied when a party seeks relief that its counter-party refuses to comply with.5

[D] “Existing or Future” Disputes Requirement

Article II(1) of the Convention provides for the recognition of agreements to arbitrate
“differences which have arisen or may arise”; Article 7 of the Model Law contains a similar
requirement. These provisions are more in the nature of clarifications than limitations: by
confirming that arbitration agreements may apply to either “existing or future” disputes,
these provisions supersede the historic reluctance of courts in some jurisdictions to enforce
agreements to arbitrate future disputes.

[E] “Defined Legal Relationship” Requirement

Article II(3) of the Convention requires that an arbitration agreement be “in respect of a
defined legal relationship, whether contractual or not”; Article 7 of the Model Law contains a
parallel requirement. In virtually all cases, arbitration agreements relate to a written contract
and Article II(3)’s requirement is clearly satisfied. Indeed, it is difficult to envisage
circumstances in which an arbitration agreement would not arise in connection with a “defined
legal relationship.” The requirement is more relevant in confirming that international arbitral
tribunals may decide non-contractual, as well as contractual, disputes.6

[F] “Foreign” or “International” Arbitration Agreements Requirement

Both the Convention and most statutes that regulate international arbitration apply only to
arbitration agreements that have some sort of “foreign” or “international” connection. This
requirement is consistent with the purpose of both types of instruments, which is to
facilitate the international arbitral process, without disturbing domestic arbitration matters.

New York Convention

Article I
1. This Convention shall apply to the recognition and enforcement of arbitral awards
made in the territory of a State other than the State where the recognition and
enforcement of such awards are sought, and arising out of differences between persons,
whether physical or legal. It shall also apply to arbitral awards not considered as
domestic awards in the State where their recognition and enforcement are sought.

Article I(1) of the Convention provides a definition of the arbitral awards to which the
Convention applies. Under that definition, the Convention is applicable only to awards that:
(i) are “made” in a state other than the Contracting State where recognition is sought, or (ii)
are “not considered as domestic awards” under the law of the recognizing state.7 In contrast,
the Convention does not provide any equivalent definition of those arbitration agreements to
which it applies. Different approaches have been adopted to defining the scope of the
Convention as applied to arbitration agreements. Some authorities have applied Article I(1)
by analogy to arbitration agreements, holding that Article II applies only to arbitration
agreements with a foreign seat (outside the state asked to enforce the agreement), while other
authorities have correctly extended the Convention more broadly to any “international”
arbitration agreements (even if the arbitration is seated in the relevant Contracting State).8
The limitation of the Convention to international arbitration agreements is paralleled by
similar jurisdictional requirements in many arbitration statutes. For example, Article 1(1) of
the Model Law provides that the Law applies only to “international commercial arbitration”;
in turn, Article 1(3) defines “international” to include almost any agreement or relationship
involving parties from different states or conduct in different states. M ost other national laws
adopt similarly broad definitions.

[G] Reciprocity Requirements

Article I(3) of the Convention permits Contracting States to make “reciprocity reservations,”
undertaking the Convention’s obligations only towards other Contracting States. Nearly two-
thirds of Contracting States have made reciprocity reservations. The U.S. reservation
provides that the United States will apply the Convention, on the basis of reciprocity, to the
recognition and enforcement of “only those awards made in the territory of another
Contracting State.”9 Other reciprocity reservations are similar. In addition, Article XIV of the
Convention contains a separate, more general reciprocity provision, limiting a Contracting
State’s rights under the Convention to those it “is itself bound to apply.” 10 In practice,
because almost all trading states have ratified the Convention (except Taiwan, Libya and
Ethiopia), the reciprocity exception has very limited importance.

§2.03 PRESUMPTIVE VALIDITY OF INTERNATIONAL

ARBITRATION AGREEMENTS

One of the main objectives of the New York Convention was to overturn historic mistrust of
arbitration and render international arbitration agreements more readily enforceable. Thus,
Article II of the Convention (and parallel provisions of other arbitration conventions)
provides that international arbitration agreements are presumptively valid and shall be
recognized. This rule is subject to an exclusive and limited number of bases for invalidity,
where agreements are “null and void,” “inoperative,” or “incapable of being performed.”11
Most states have enacted legislation that parallels the Convention. Examples include
Article 8 of the UNCITRAL Model Law and §2 of the FAA.12 Like Article II of the
Convention, this legislation typically provides that arbitration agreements are presumptively
valid and shall be recognized, subject only to defined grounds for challenging the validity of
such agreements. This skepticism was first overcome in the 1923 Geneva Protocol on
Arbitration Clauses in Commercial Matters (and the related 1927 Geneva Convention for the
Execution of Foreign Arbitral Awards), which provided for the presumptive validity of
international arbitration agreements (and arbitral awards).13

[A] Historic Rules of Unenforceability

It is frequently said that arbitration agreements were historically disfavored. The U.S. view in
the 19th century was that “the judgment of arbitrators is but rusticum judicium,” and that
arbitration agreements were not specifically enforceable.14 Similar views prevailed in France,
England (except where overridden by statute) and elsewhere.15 These views reflect a
skepticism about arbitration that prevailed in many jurisdictions until the early 20th century.

[B] New York Convention

The New York Convention confirmed the abandonment of historic obstacles to the
enforcement of arbitration agreements and instead provided for the presumptive validity and
enforceability of agreements to arbitrate. In particular, Article II(1) of the Convention set
forth a mandatory obligation that Contracting States “shall recognize” agreements in writing
under which the parties undertake “to submit to arbitration all or any differences which have
arisen or which may arise between them in respect of a defined legal relationship, whether
contractual or not, concerning a subject matter capable of settlement by arbitration.” This
obligation extends to all material terms of an agreement to arbitrate (including, for example,
the parties’ selection of the arbitral seat, the scope of the arbitration clause, the selection of
the arbitrators, the designation of institutional rules and the like).
The Convention went on to provide an enforcement mechanism for agreements to arbitrate
in Article II(3), requiring specific performance of such agreements, subject only to a limited
set of enumerated exceptions based on generally-applicable contract law principles: “The
court of a Contracting State, when seized of an action in a matter in respect of which the
parties have made an agreement within the meaning of this article, shall ... refer the parties to
arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of
being performed.” In so doing, the Convention permitted non-recognition of arbitration
agreements only in limited cases – where they are “null and void, inoperative or incapable of
being performed” or where they concern a “subject matter not capable of settlement by
arbitration”;16 the Convention’s drafters left no room for national courts to invent additional
bases for holding an international arbitration agreement invalid.

[C] National Arbitration Legislation

Legislation in most states also provides for the presumptive validity of agreements to
arbitrate and the mandatory recognition of such agreements. Paralleling Article II(3) of the
Convention, Article 8(1) of the Model Law provides: “A court before which an action is
brought in a matter which is the subject of an arbitration agreement shall, if a party so
requests ... refer the parties to arbitration unless it finds that the agreement is null and void,
inoperative or incapable of being performed.” Courts have uniformly interpreted Article 8 as
imposing a mandatory obligation to specifically enforce arbitration agreements, subject only
to limited and specific exceptions.17
Legislation in developed jurisdictions that have not adopted the Model Law similarly
guarantees the presumptive validity of international arbitration agreements, typically subject
only to generally-applicable contract defenses. In the United States, §2 of the FAA provides
that arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.” Applying §206 of the
second chapter of the FAA, U.S. courts have underscored the narrow grounds that are
available for challenging the validity or enforceability of international arbitration
agreements.18 Similarly, courts in most civil law jurisdictions apply generally-applicable rules
of contract formation and validity to international arbitration agreements, typically
construing exceptions to the presumptive validity of such agreements narrowly.19

§2.04 SEPARABILITY OF INTERNATIONAL ARBITRATION

AGREEMENTS

[A] Separability Presumption

In the international context, arbitration clauses are presumptively “separable” or “severable”

from the contract within which they are found (sometimes termed the “main” or “underlying”
contract). The “separability presumption” is provided for by legislation or judicial decisions
in virtually all jurisdictions, and by leading institutional arbitration rules. The separability
presumption provides that an arbitration agreement, even though included in and related
closely to an underlying commercial contract, is presumptively a separate and autonomous
agreement. According to a leading arbitral award: “the arbitral clause is autonomous and
juridically independent from the main contract in which it is contained ....”20

[B] Rationale for Separability Presumption

The rationale for the separability presumption is that the parties’ agreement to arbitrate
consists of promises that are independent from the underlying contract: “the mutual
promises to arbitrate [generally] form the quid pro quo of one another and constitute a
separable and enforceable part of the agreement.”21 The presumption is also supported by
practical justifications, including insulating the arbitration agreement and arbitrators’
jurisdiction from challenges to the underlying contract. These rationales have provided the
basis for provisions in many national arbitration statutes, confirming the presumptive
separability of arbitration agreements; Article 16(1) of the Model Law is representative,
providing that “an arbitration clause which forms part of a contract shall be treated as an
agreement independent of the other terms of the contract.”22

[C] Consequences of Separability Presumption

The separability presumption is correctly seen as having vital consequences for the arbitral
process. Among other things, the presumption is understood as providing for (a) the validity
of an arbitration clause notwithstanding defects in or termination of the parties’ underlying
contract; (b) the potential validity of the underlying contract, notwithstanding defects in the
arbitration clause; (c) the potential application of different substantive laws to the arbitration
agreement and the underlying contract; and (d) the potential application of different form
requirements to the arbitration agreement and the underlying contract.

S eparability Presumption: Consequences

1. Invalidity or non-existence of underlying contract does not necessarily mean
invalidity or non-existence of arbitration agreement.
2. Invalidity of arbitration agreement does not necessarily mean invalidity of main or
underlying contract.
3. Law governing main or underlying contract is not necessarily the same as law
governing arbitration agreement.
4. Different form requirements for main or underlying contract and arbitration
agreement.

Suppose, for example, that two parties conclude a sale agreement, containing an arbitration
clause, and disputes arise, leading to termination of the contract; thereafter, one party claims
damages, alleging breach of the contract (e.g., because the goods were defective or payment
was not made). Notwithstanding termination of the underlying sales contract, the separability
presumption provides for the continued validity of the arbitration agreement, with the
arbitral tribunal having jurisdiction to decide claims regarding termination of the underlying
contract; it also provides for the possible application of a different law to the arbitration
agreement (for example, the law of the arbitral seat), than to the underlying contract.
Similarly, if one party claims that the parties’ underlying contract was procured by fraud
(e.g., misrepresentations about quality of goods or assets in a sales contract), the separability
presumption provides that this claim does not impeach the validity of the separable
arbitration agreement, and is for resolution by the arbitrators.23 Conversely, a claim that the
parties’ arbitration agreement itself is invalid (for example, because its terms give one party
an unconscionably disproportionate influence on choice of the arbitrators or arbitral
procedure) does not affect the validity of the underlying contract.24

§2.05 ALLOCATION OF COMPETENCE TO DECIDE DISPUTES OVER

EXISTENCE, VALIDITY AND INTERPRETATION OF
INTERNATIONAL ARBITRATION AGREEMENTS

Another basic issue affecting the enforceability of international arbitration agreements is the
allocation of authority between arbitrators and national courts to decide disputes over the
interpretation, validity and enforceability of arbitration agreements, including the
“competence-competence” doctrine.

[A] Competence-Competence Doctrine

The competence-competence doctrine is almost universally accepted in arbitration legislation,

judicial decisions and other authorities. Under this doctrine, an arbitral tribunal
presumptively possesses jurisdiction to consider and decide on its own jurisdiction.
Arbitration legislation in many states specifically provides for the arbitrators’ competence-
competence. Article 16 of the UNCITRAL Model Law is entitled “Competence of arbitral
tribunal to rule on its jurisdiction,” and grants arbitrators competence-competence to consider
challenges to their own jurisdiction, including challenges to the arbitration agreement: “The
arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the
existence or validity of the arbitration agreement.” Arbitration legislation, or judicial
authority, in other states uniformly recognizes the same principle. 25 In practice, the
competence-competence doctrine means that, if a party argues to the arbitral tribunal that it
lacks jurisdiction (i.e., because the arbitration agreement is invalid or terminated), the tribunal
presumptively has the authority to consider and rule upon the jurisdictional challenge,
subject to at least a measure of subsequent judicial review of the arbitrators’ decision.
Leading institutional rules also almost uniformly recognize the competence-competence of
arbitrators. The UNCITRAL Rules are representative, providing in Article 21(1) that: “The
arbitral tribunal shall have the power to rule on objections that it has no jurisdiction, including
any objections with respect to the existence or validity of the arbitration clause or of the
separate arbitration agreement.” Other institutional rules are similar.26

[B] Allocation of Competence to Decide Jurisdictional Disputes

A related issue is the allocation of competence between national courts and arbitrators to
decide disputes over the interpretation, validity and enforceability of arbitration agreements.
In particular, a critically-important issue is whether, when a jurisdictional objection is raised,
a national court must initially decide the issue or, alternatively, whether an arbitral tribunal
may initially to decide the jurisdictional objection, subject to subsequent (or no) judicial
review. Different states adopt different approaches to this issue.

[1] France: Prima Facie Jurisdiction

In France, statutory provisions and judicial authority recognize a “prima facie” approach to
challenges to arbitral jurisdiction. If a jurisdictional objection is raised in a French court (e.g.,
if a party seeks to litigate a claim allegedly subject to arbitration), the court will refer the
parties to arbitration unless the putative arbitration agreement is “manifestly null”27 ; if an
arbitral tribunal has already been constituted, a French court will not even consider whether
the arbitration clause is manifestly null, and will instead simply refer the parties to arbitration
– where the jurisdictional objection may be raised before the tribunal. The arbitrators’
jurisdictional decision is later subject to de novo review in French courts – but those courts
will virtually never initially decide a jurisdictional objection.

[2] United States: Interlocutory Judicial Decisions

In the United States, the FAA generally permits interlocutory judicial determination of
jurisdictional objections, with the court making a binding decision on such issues. Thus, if a
party seeks to refer a claim, asserted in litigation, to arbitration, a U.S. court will ordinarily
make a final decision whether or not the claim is subject a valid arbitration agreement before
referring the parties to arbitration. If a court decides that no valid arbitration agreement exists,
or that the agreement does not apply to the parties’ dispute, then it will not refer the parties
to arbitration and will instead allow litigation of the parties’ dispute to proceed.
The allocation of competence to decide jurisdictional disputes in the United States is
significantly affected by the separability presumption. As discussed above, the separability
presumption provides that an arbitration agreement is separable from the underlying contract
and that challenges to the validity of the underlying contract do not affect or impeach the
validity of the contract’s arbitration clause.28 As a consequence, where a party challenges the
validity of the underlying contract (e.g., on the grounds that it is void for fraud,
unconscionability or mistake), but does not specifically challenge the validity of the
arbitration clause itself, U.S. courts hold that there is no jurisdictional challenge and that the
parties’ dispute over the validity of the underlying contract must be referred to arbitration.
For example, the U.S. Supreme Court held in Buckeye Check Cashing, Inc. v. Cardegna
that claims challenging the legality of the parties’ underlying contract were for initial
resolution by the arbitrators: “because respondents challenge the [underlying] Agreement,
and not specifically its arbitration provisions, those provisions are enforceable apart from the
remainder of the contract,” and “should therefore be considered by an arbitrator, not a
court.”29 Consistent with this analysis, U.S. courts have held that claims of invalidity (e.g.,
unconscionability, mistake), illegality, or termination are for judicial determination only when
they are “specifically” directed at the arbitration agreement itself, and not when they are
directed at the underlying contract or generally at both the underlying contract and the
arbitration agreement.30
A more difficult category of cases involves challenges to the existence (as distinguished
from the validity) of the underlying contract. The Supreme Court noted this issue in Buckeye
Check Cashing, reasoning that: “The issue of the contract’s validity is different from the
issue of whether any agreement between the alleged obligor and obligee was ever
concluded.”31 The Court referred in particular to lower court decisions holding that “it is for
courts to decide whether the alleged obligor ever signed the contract, whether the signed
lacked authority to commit the alleged principal and whether the signor lacked the mental
capacity to assent.”32 Applying this analysis, U.S. courts have generally held that, where a
party denies that any contract was ever concluded, the challenge may be resolved initially by
the court and must not first be referred to arbitration.33
The foregoing rules regarding the allocation of competence under the FAA are subject to an
important exception, where parties have agreed to arbitrate jurisdictional disputes. The U.S.
Supreme Court held, in First Options of Chicago, Inc. v. Kaplan, that parties may validly
agree to submit jurisdictional disputes to final resolution by an arbitral tribunal, but that such
an agreement will be found only where there is “clear and unmistakable” evidence of the
parties’ intention. 34 If such an agreement exists, U.S. courts will refer the parties’
jurisdictional objections to arbitration and subject the resulting decision to only minimal
judicial review.35 In many cases, arbitration agreements incorporating institutional arbitration
rules will be treated as clear and unmistakable evidence of an agreement to arbitrate
jurisdictional disputes.36

[3] UNCITRAL Model Law: Diversity of Approaches

It is uncertain how competence to decide jurisdictional objections is allocated under the

UNCITRAL Model Law. Article 8(1) of the Model Law provides that, where a suit is
brought “in a matter which is the subject of an arbitration agreement,” the national court
“shall ... refer the parties to arbitration,” unless “it finds that the agreement is null and void,
inoperative, or incapable of being performed.” The ordinary meaning of this language suggests
that the court’s mission under Article 8(1) includes making a final determination (“find[ing]”)
whether or not the agreement is valid.37
Despite the language of Article 8, courts in several Model Law jurisdictions have held that
only a “prima facie inquiry” into jurisdiction should be conducted by a court before referring
parties to arbitration. Under this analysis, if there is any plausible argument that a valid
arbitration agreement exists, the arbitrators should be permitted initially to resolve the
jurisdictional issue (subject to subsequent judicial review); only if it is clear that there is no
valid arbitration agreement, may a claim be litigated.38 It is uncertain which approach to the
allocation of jurisdictional competence under the M odel Law will ultimately prevail.

§2.06 LAW APPLICABLE TO FORMATION, VALIDITY AND

INTERPRETATION OF INTERNATIONAL ARBITRATION
AGREEMENTS

The law applicable to the formation, validity and interpretation of an arbitration agreement
may be different from both the law applicable to the substance of the parties’ underlying
contract and the law applicable to the arbitral procedure.39 Given the separability
presumption, a separate choice of law analysis is required to determine the law governing the
substantive validity of the arbitration agreement itself (as distinguished from the underlying
contract). Five options exist: (a) the law of the forum where judicial enforcement of the
agreement is sought; (b) the law expressly or impliedly chosen by the parties to govern the
arbitration agreement itself; (c) the law of the arbitral seat; (d) a “validation” principle; and (e)
international law.

Law Applicable to S ubstantive Validity of Arbitration Agreement

1. Law of Judicial Enforcement Forum
2. Law Chosen by the Parties
3. Law of Arbitral Seat
4. “Validation” Principle
5. International Law

[A] Law of Judicial Enforcement Forum

Historically, many authorities held that an arbitration agreement was governed by the law of
the judicial forum where enforcement of the agreement was sought (typically the forum in
which one party sought to litigate the parties’ dispute, leading its counter-party to invoke the
arbitration clause). That approach regarded the validity of an arbitration agreement as a
“procedural” or “remedial” matter. Application of the law of the judicial enforcement forum
has been largely superseded by alternative choice-of-law rules.

[B] Law Chosen by Parties

There is almost uniform acceptance of the parties’ autonomy to choose the law governing an
international arbitration agreement. This position is reflected in Article V(1)(a) of the New
York Convention, which permits non-recognition of an arbitral award only if the parties’
agreement to arbitrate is invalid “under the law to which the parties have subjected it or,
failing any indication thereon, under the law of the country where the award was made”; the
same rule is reflected in Articles 34(2)(a)(i) and 36(1)(a)(i) of the UNCITRAL Model Law. 40
Most authorities have applied this rule – which governs the recognition of awards – to
disputes over recognition of arbitration agreements.
It is uncertain when parties will be found to have selected the law governing an arbitration
agreement. In most cases, parties do not agree upon a choice-of-law clause specifically
applicable to their arbitration agreement (e.g., “This arbitration agreement (Article X) shall be
governed by [X] law.”), and instead agree only to a general choice-of-law clause, applicable
to their underlying contract (e.g., “This contract shall be governed by [X] law.”). In these
circumstances, some authorities have held that the parties’ choice-of-law clause does not
extend to the “separable” agreement to arbitrate; other authorities have held that the choice-
of-law clause necessarily extends to all the provisions of the parties’ contract, including its
arbitration agreement.41

[C] Law of Arbitral Seat

If the parties have not selected a law to govern their arbitration agreement, many authorities
adopt a default rule applying the law of the putative arbitral seat. This rule is again contained
in Article V(1)(a) of the Convention, providing that, in the absence of a choice-of-law
agreement, the “law of the country where the award was made” shall apply; the same rule is
adopted in Articles 34(2) (a)(i) and 36(1)(a)(i) of the Model Law. 42 Other authorities have
reached the same result by concluding that the parties’ choice of the arbitral seat reflects an
implied choice of the law of the seat to govern the arbitration agreement. Alternatively,
applying the separability presumption, some authorities have held that the seat has the
closest connection to the agreement to arbitrate (as distinguished from the underlying
contract) and that the law of the seat should therefore govern the arbitration agreement.
[D] “Validation” Principle

Some authorities hold that traditional choice of law rules are ill-suited to international
arbitration agreements and have instead applied a “validation” principle. The validation
principle provides that, if the arbitration agreement is valid under any of several laws which
are potentially applicable to it, then the agreement will be upheld. Examples of the validation
principle include Article 178(2) of the Swiss Law on Private International Law, providing
that an arbitration agreement will be given effect if it is valid under any of the laws chosen by
the parties, the law applicable to the underlying contract, or Swiss law.43

[E] International Law

Some national courts and arbitral tribunals hold that international arbitration agreements are
not subject to national law and are instead governed by international law. French courts hold
that international arbitration agreements are autonomous from national legal systems and
subject to “international law,” which gives effect to the parties’ intentions (subject only to
very limited, overriding rules of public policy).44 U.S. courts adopt a comparable approach,
holding that the New York Convention permits application only of “internationally neutral”
rules of general contract law – not idiosyncratic domestic rules that invalidate agreements to
arbitrate.45 Like the validation principle, application of rules of international law serves to
maximize the enforceability and efficacy of international commercial arbitration agreements.

[F] Other Choice-of-Law Issues

Article V(1)(a) of the New York Convention and Articles 34(2)(a)(i) and 36(1)(a)(i) of the
Model Law apply to the formation, substantive validity and interpretation of arbitration
agreements. Different choice-of-law rules are applicable to other issues.

[1] Formal Validity

The formal validity of arbitration agreements is typically governed by separate choice-of-law

rules. As discussed below, Articles II(1) and II(2) of the Convention are interpreted as
prescribing a uniform international rule, imposing a maximum form requirement which
Contracting States may not supplement with additional requirements.46 Similarly, Article 7
of the 1985 Model Law (and revised Article 7 of the 2006 Model Law) imposes a rule of
formal validity applicable to agreements subject to the Law. 47 These provisions prescribe
substantive rules and specialized choice-of-law rules for formal validity, which differ from
the choice-of-law rules applicable to the substantive validity of arbitration agreements.

[2] Capacity

The capacity of parties to conclude valid international arbitration agreements is also governed
by separate choice-of-law rules, which differ from those applicable to the substantive (and
formal) validity of such agreements. Article V(1)(a) of the Convention provides that an
arbitral award may be denied recognition if “the parties to the [arbitration agreement] were,
under the law applicable to them, under some incapacity.” Article V(1)(a) has generally been
interpreted as requiring application of the national law of the party’s domicile or place of
incorporation to questions of capacity.48

[3] Non-Arbitrability

As discussed below, the New York Convention and most arbitration statutes provide that, in
exceptional cases, an otherwise valid arbitration agreement may be denied enforcement
because the parties’ dispute is “not capable of settlement by arbitration” – i.e., the dispute is
“non-arbitrable.” The law applicable to questions of non-arbitrability is addressed, with
respect to recognition of awards, in Article V(2)(a) of the Convention, which provides that an
award need not be recognized in a Contracting State if “the subject matter of the dispute is
not capable of settlement by arbitration under the law of that country.” The same rule is
contained in Article 36(1)(b)(i) of the Model Law. Most authorities have applied this rule by
analogy to the enforcement of arbitration agreements, holding that a state may apply its own
non-arbitrability rules in deciding to refer a dispute to arbitration.49

[4] Non-Signatory Issues

As discussed below, arbitration agreements are sometimes argued to apply to non-signatories

(i.e., parties that did not sign the arbitration agreement, but who are nonetheless bound by it).
A non-signatory may be subject to an arbitration agreement on various legal theories,
including alter ego, agency, succession, and estoppel.50 When one of these grounds is asserted
as the basis for subjecting a non-signatory to an arbitration agreement, choice-of-law issues
are raised.
In many instances, the law governing a particular issue (e.g., merger, alter ego status) will
be different from that governing the agreement to arbitrate. For example, if A (incorporated in
State A) and B (incorporated in State B) agree to arbitrate in State C, the effect of a merger
between A and D (also incorporated in State A) on the parties’ arbitration agreement will
often be subject to the law of State A, and, specifically, State A’s merger legislation.
Similarly, if A were alleged to be the alter ego or agent of D, the law governing the alter ego or
agency relationship might differ from that governing the validity of the arbitration agreement.

§2.07 EFFECTS OF INTERNATIONAL ARBITRATION AGREEMENTS

A valid arbitration agreement produces important legal effects for its parties. These effects
are both positive and negative: the positive effects include an obligation to participate in good
faith in the arbitration of disputes pursuant to the arbitration agreement, while the negative
effects include an obligation not to pursue litigation in national courts or similar fora.
An important aspect of these legal effects is the mechanism to enforce them. During some
historical periods, arbitration agreements were rendered ineffective because they were not
susceptible to enforcement through orders for specific performance and because monetary
damages provided inadequate disincentives for breaches.51 Contemporary arbitration regimes
have altered this, making it possible to obtain orders of specific performance from national
courts of both the negative and positive obligations imposed by arbitration agreements. These
remedies vary among legal systems, but, in developed jurisdictions, provide highly effective
means of enforcing international arbitration agreements: these means include stays of
litigation, orders to compel arbitration, anti-suit injunctions, actions for monetary damages
and non-recognition of judgments.

[A] Positive Effects of Arbitration Agreement: Obligation to Arbitrate in Good

Faith
The most fundamental effect of an arbitration agreement is to obligate the parties to
participate in good faith in the arbitration of their disputes. This obligation is a sui generis
one – requiring parties whose underlying commercial or other relations have deteriorated to
the point of litigation to cooperate together, in good faith, in an adjudicatory procedure that
will finally resolve their disputes, either for or against one of the parties.

[1] Source of Positive Obligations to Arbitrate

The positive obligations imposed by an arbitration agreement have their source in that
agreement itself, which is given effect by the New York Convention and national law. In
agreeing to arbitrate, the parties do not merely negatively waive their access to judicial
remedies, but also affirmatively agree to participate in the resolution of their disputes through
the arbitral process. This positive obligation to participate cooperatively in a mutually-
established, adjudicative dispute resolution process is central to the arbitration agreement.
In turn, the New York Convention requires Contracting States to “recognize” agreements
by which parties have undertaken “to submit to arbitration” specified disputes.52 The
parties’ positive obligation to participate in arbitrating their differences is also given effect by
national legal systems, which parallel and implement the approach taken by the Convention.
Thus, Article 7(1) of the UNCITRAL Model Law defines an arbitration agreement as “an
agreement by the parties to submit to arbitration all or certain disputes,” while Article 8
requires that agreements to arbitrate be enforced by “refer[ring]” the parties to arbitration.”
Other arbitration legislation deals similarly with the positive obligations imposed by an
agreement to arbitrate.53

[2] Content of Positive Obligation to Arbitrate

The content of the positive obligation to arbitrate is dealt with under the Convention and
national arbitration legislation by giving effect to the parties’ agreement – that is, by requiring
“recognition” of that agreement – rather than by stating a generally-applicable and abstract
“obligation to arbitrate.” This approach to the positive duty to arbitrate is consistent with
the contractual character of the arbitral process. As discussed elsewhere, party autonomy is
one of the essential characteristics of international arbitration. This autonomy, and hence the
contents of the positive obligation to arbitrate, extend to the disputes to be arbitrated, the
parties to the arbitration, the constitution of the arbitral tribunal, the selection of the arbitral
seat, the arbitral procedures and the choice of the applicable law(s).54
The positive obligation to participate in the resolution of disputes by arbitration includes
duties to participate in good faith and cooperatively in the arbitral process. An arbitration
agreement is not merely a negative undertaking not to litigate, but a positive obligation to take
part in a sui generis process which requires a substantial degree of cooperation (e.g., in
constituting a tribunal, paying the arbitrators, agreeing upon an arbitral procedure, obeying
the arbitral procedure and complying with the award). When a party agrees to arbitrate, it
impliedly agrees to participate cooperatively in all of these aspects of the arbitral process.

In a few jurisdictions, these obligations are contained in national arbitration legislation.55

Even absent such legislative provisions, national courts have emphasized that an arbitration
agreement imposes obligations to make use of, and participate cooperatively in, the arbitral
process. For example, it is well settled under English law that there is an implied term in an
agreement to arbitrate that the parties must cooperate in the conduct of the arbitration:
 [T]he obligation is, in my view, mutual: it obliges each party to cooperate with the other
in taking appropriate steps to keep the procedure in the arbitration moving ... [I]t is in
my view a necessary implication from their having agreed that the arbitrator shall resolve
their dispute that both parties, respondent as well as claimant, are under a mutual
obligation to one another to join in applying to the arbitrator for appropriate directions
to put an end to the delay.56

A Swiss Federal Tribunal decision adopted similar conclusions, emphasizing the parties’
obligations of good faith: “One of the aims of arbitration is to come to a fast resolution of the
disputes submitted to it. The parties who agree to arbitration are bound by the rules of good
faith to avoid any conduct which might delay without absolute necessity the normal conduct
of the arbitral proceedings.”57
The precise contours of the obligation to participate cooperatively in the arbitral process
are unsettled. They have been held to include participating in the constitution of the tribunal,
paying the arbitrators’ fees, cooperating in relation to procedural matters, not obstructing the
arbitral process, obeying confidentiality obligations relating to the arbitration and complying
with disclosure requests and other orders.58 As with other aspects of the arbitral process,
these obligations are the subject of party autonomy, and can be altered by agreement.

[3] Remedies for Breach of Positive Obligation to Arbitrate

As noted above, Article II(3) of the New York Convention and Article 8(1) of the
UNCITRAL Model Law provide that, if a valid arbitration agreement exists, courts shall
“refer the parties to arbitration.” The wording of these provisions indicate an obligation on
national courts affirmatively to direct the parties to proceed with the arbitration of their
dispute (rather than merely an obligation not to permit litigation to proceed). Despite that,
virtually none of the Convention’s Contracting States or Model Law’s adherents enforce
arbitration agreements by way of orders affirmatively directing a party to arbitrate; rather,
the consistent approach is to dismiss or stay (i.e., suspend) litigation brought in breach of an
agreement to arbitrate.59
The only major exception to this approach is the United States, where the FAA provides
for the issuance of orders compelling arbitration (under §4 and §206 of the FAA).60 These
provisions empower U.S. courts to grant orders requiring parties to arbitrate pursuant to
their arbitration agreements. In the words of one U.S. lower court, a request under §4 (or
§206) “is simply a request for an order compelling specific performance of part of a
contract.”61
Pursuant to §§4 and 206 of the FAA, U.S. courts have frequently ordered parties to
comply with the positive obligations under their arbitration agreements. In so doing, they
have emphasized that the issuance of such an order is not a matter of discretion, but a
mandatory legal right (guaranteed by the FAA):

So long as the parties are bound to arbitrate and the district court has personal
jurisdiction over them, the court is under an unflagging, nondiscretionary duty to grant a
timely motion to compel arbitration and thereby enforce the New York Convention as
provided in chapter 2 of the FAA, even though the agreement in question requires
arbitration in a distant forum.62

U.S. courts have issued orders compelling arbitration in both arbitrations seated in the United
States and in other states.63 In contrast, as already noted, most states do not provide for
specific performance of the positive obligations of arbitration agreements. Instead, the
mechanism for enforcing such obligations is through a stay or dismissal of litigation, thereby
allowing a party to commence and proceed with an arbitration, potentially obtaining a default
award without its counter-party’s participation.

[B] Negative Effects of Arbitration Agreement: Obligation Not to Litigate

An arbitration agreement also has negative effects, which are almost precisely the mirror-
image of its positive effects. That is, with regard to virtually all of the disputes that a party is
obligated positively to resolve by arbitration, a comparable negative obligation forbids
litigation of such matters.64

[1] Negative Obligations under Agreement to Arbitrate

As discussed above, Articles II(1) and II(3) of the New York Convention provide for
Contracting States to “recognize” agreements to arbitrate and to “refer the parties to
arbitration.”65 These provisions enforce the negative effects of an arbitration agreement, by
requiring either the stay or dismissal of national court litigation. Any other action by a
national court, dealing with the substance of an arbitrable dispute, is contrary to the
obligation to “refer the parties to arbitration.” Where the Convention applies, many
authorities hold that Article II(1) and II(3) impose a mandatory (not discretionary) obligation
to give effect to arbitration agreements.66
Most arbitration legislation gives identical effect to the negative obligations imposed by
arbitration agreements. Article 8(1) of the Model Law is representative, requiring that courts
“refer the parties to arbitration.” Article 8(1) impliedly precludes a national court from
entertaining a dispute on the merits if the parties have agreed to arbitrate it, and instead
requires that the parties be referred to arbitration. National courts have consistently held that
this obligation is mandatory. 67 As with Article II(3) of the Convention, Article 8 applies to
agreements providing for arbitration seated abroad, as well as locally. 68 Other national
arbitration legislation is similar.69
Although arbitration clauses typically do not provide expressly that “all disputes shall be
resolved by arbitration, to the exclusion of national courts,” this negative obligation is the
clear intent of virtually all arbitration agreements. One of the fundamental purposes of
international arbitration agreements is to centralize the parties’ disputes in a single forum for
final resolution – an objective that would be frustrated if parallel litigation was permitted. A
party’s commencement of litigation on claims, subject to an arbitration agreement, is
therefore a breach of that agreement and, in particular, its negative obligations. That breach,
like other violations of contractual obligations, entitles the non-breaching party to relief,
including specific enforcement through a stay or dismissal of the litigation, and exposes the
breaching party to contractual liability or injunctive and other remedies.

[2] Remedies for Breach of Negative Obligation Not to Litigate Arbitrable

Disputes: Stay or Dismissal of Litigation

As discussed above, some courts historically refused to stay litigation of arbitrable disputes,
either holding that arbitration agreements were revocable or not subject to specific
performance. In contrast, the principal contemporary remedies for breach of an arbitration
agreement’s negative obligation not to litigate arbitrable disputes are either dismissal of the
improperly-commenced litigation or a mandatory stay of that litigation.
As discussed above, Article II(3) of the Convention provides for the dismissal or stay of
proceedings in national courts brought in breach of an arbitration agreement. Article II(3) does
not leave courts with any discretion to deny a dismissal or stay of judicial proceedings where
an arbitration agreement is enforceable under the Convention. Rather, it mandatorily requires
that national courts “shall” refer parties to arbitration.70
Some arbitration legislation expressly provides for a stay of litigation brought in violation
of an arbitration agreement, including in the United States, England, Canada, Singapore and
other common law jurisdictions.71 In other countries (principally civil law jurisdictions,
including France, Switzerland and Germany), legislation requires courts to decline jurisdiction
over arbitrable disputes.72 Whether through a stay or a dismissal of litigation, it is the almost
uniform practice of national courts to refuse to hear the merits of claims, initiated in litigation,
which are properly subject to arbitration. As one national court put it:
 The [FAA] “leaves no room for the exercise of discretion by a district court, but instead
mandates that district courts shall direct the parties to proceed to an arbitration on
issues as to which an arbitration agreement has been signed.”73

The imposition of this obligation on courts to order specific performance of the negative
duties imposed by international arbitration agreements, which were historically often not
enforceable in this manner, was one of the central achievements of the New York Convention
and modern arbitration statutes.
As already discussed, the negative effects of an arbitration agreement are almost precisely
the mirror-image of the positive effects of such an agreement. Accordingly, insofar as an
arbitral tribunal is vested with jurisdiction to hear disputes, then national courts must cease
to exercise parallel jurisdiction to decide such disputes (save for their roles in supporting the
arbitral process or reviewing an award). Where one jurisdictional ambit stops (e.g., the
court’s) then the other (e.g., the arbitral tribunal’s) generally begins.74

[3] Remedies for Breach of Negative Obligation Not to Litigate Arbitrable

Disputes: Antisuit Injunction

A party’s ability to obtain a stay of litigation is not always sufficient to effectively enforce
an arbitration agreement. That is because a party may be able to pursue litigation of the
underlying dispute in a national court which does not honor, or fully honor, its undertakings
in the New York Convention. In that event, a stay of the underlying litigation in one (or
several) national courts, which do honor the Convention, may ultimately be an ineffective
remedy for fully enforcing the arbitration agreement.
Accordingly, some states permit additional means of enforcement of the negative obligation
to refrain from litigating arbitrable disputes. In particular, courts in some common law
jurisdictions are prepared to issue “anti-suit injunctions” to prohibit litigation in a foreign
forum. Anti-suit orders are directed against the parties to a litigation (not the foreign court),
but are intended to preclude a litigation from proceeding in the foreign court.75 In practice,
antisuit injunctions can be powerful tools for compelling compliance with an agreement to
arbitrate.
English courts have long been prepared to enjoin foreign litigations brought in violation of
an arbitration agreement. Under English law, an injunction may ordinarily be granted against a
foreign litigation if (a) the English forum has a sufficient interest in the matter, (b) the foreign
proceeding causes sufficient prejudice to the applicant, and (c) the antisuit injunction would
not unjustly deprive the claimant in the foreign court of a legitimate advantage.76 One English
decision affirmed the existence of this power in emphatic terms, reasoning:
 in my judgment there is no good reason for diffidence in granting an injunction to restrain
foreign proceedings [brought in violation of an arbitration agreement] on the clear and
simple ground that the defendant has promised not to bring them. ... I cannot accept the
proposition that any Court would be offended by the grant of an injunction to restrain a
party from invoking a jurisdiction which he had promised not to invoke and which it
was its own duty to decline.77

English courts have sometimes given consideration to notions of comity, as justifying the
withholding of an antisuit injunction against parties to a foreign litigation, but nonetheless
generally have been very willing to issue antisuit orders.78
Courts in other common law jurisdictions, including Singapore, Canada, Bermuda and
Australia, have also issued antisuit orders to enforce the negative obligations of arbitration
agreements.79 The Singapore High Court explained the rationale for these orders as follows:

[An antisuit order] is entirely consistent with the principle that parties be made to abide
by their agreement to arbitrate. Furthermore, the New York Arbitration Convention
obliges state parties to uphold arbitration agreements and awards. Such an agreement is
often contravened by a party commencing an action in its home courts. Once this Court
is satisfied that there is an arbitration agreement, it has a duty to uphold that agreement
and prevent any breach of it.80

U.S. courts have also been prepared to grant antisuit injunctions prohibiting parties from
proceeding with foreign litigation in violation of a valid arbitration agreement, but subject to
greater restrictions than in other common law jurisdictions. Some U.S. courts will grant an
antisuit injunction based upon only a showing of serious inconvenience or risk of inconsistent
judgments,81 while others are more demanding and require a clear showing that the foreign
litigation would threaten the jurisdiction or public policies of the U.S. forum.82 Even U.S.
courts that are reluctant to issue anti-suit injunctions will sometimes do so where foreign
litigation is brought in violation of the parties’ agreement to arbitrate, based on U.S. policies
favoring international arbitration:

The enjoining forum’s strong public policy in favor of arbitration, particularly in

international disputes, would be threatened if [the respondent] were permitted to
continue to pursue the [action in its home courts], particularly in light of the court’s
decision herein granting [the plaintiff’s] motion to compel arbitration.83

In contrast to the common law approach, civil law jurisdictions have generally refused to
grant antisuit orders, whether to enforce arbitration agreements or otherwise.84 In most cases,
civil law courts are not even requested to issue antisuit orders, because it is clear that no such
remedy is available.

[4] Remedies for Breach of Negative Obligation Not to Litigate Disputes:

Damages for Breach of Obligation Not to Litigate

Another means of enforcing the negative effects of an arbitration agreement is damages for
breaches of the undertaking not to litigate disputes that have been submitted to arbitration.
Indeed, in historical contexts when arbitration agreements were not capable of specific
performance, damages were the only remedy for their breach.85
It was frequently (and correctly) remarked that damages for breach of an arbitration
agreement are an uncertain and inadequate remedy (because calculating the quantum of
damages is speculative). While inadequate when considered alone, damages for breach of an
arbitration agreement can be an appropriate supplementary means of enforcing arbitration
agreements, by increasing the disincentives for such conduct. A few contemporary judicial
decisions in the United States and England have either awarded damages for the breach of an
arbitration agreement or indicated that the possibility for doing so existed.86

[5] Remedies for Breach of Negative Obligation Not to Litigate Disputes:

Non-Recognition of Judgments

If a party pursues litigation in breach of a valid arbitration agreement, then the resulting
judgment should not be entitled to recognition. Indeed, it would violate the New York
Convention for a Contracting State to enforce a judgment obtained in breach of a valid
agreement to arbitrate, which is subject to the Convention. Contracting States are committed
under Articles II(1) and II(3) of the Convention to recognize arbitration agreements and to
refer parties to such agreements to arbitration. Where a judgment is obtained in breach of an
agreement protected by the Convention, a Contracting State would violate these
commitments by giving effect to that judgment, rather than ordering the parties to arbitrate
their disputes, as Article II requires. A Singapore court explained this rationale:

By virtue of [the parties’ agreement, the respondent] had agreed to submit disputes to
arbitration in Singapore upon election by any party and the Plaintiffs have so elected. In
the circumstances it would be manifestly against public policy to give recognition to the
foreign judgment at the behest of the Defendants who have procured it in breach of an
order emanating from this Court.87
Similarly, Swiss courts have held that they will not recognize foreign judgments that are
obtained in a litigation that violated the Convention. In one decision, the Swiss Federal
Tribunal refused to annul an award on the grounds that it conflicted with a foreign judgment,
reasoning that the judgment had been issued in proceedings conducted in breach of an
arbitration agreement:

A foreign state court which, notwithstanding the presence of the conditions of Art. II of
the Convention, does not refer the parties to arbitration but takes the dispute into its
own hands lacks thus indirect jurisdiction [necessary for recognition of a foreign
judgment] and its decision cannot be recognized in Switzerland, unless the lack of
jurisdiction of the arbitral tribunal is determined by the tribunal itself or in the context of
a review by a state court.88

Other courts have also made it clear that they will not recognize judgments rendered in breach
of a valid arbitration agreement. In particular, both U.S. and English courts have refused to
recognize foreign judgments made in violation of an arbitration agreement.89

[C] Anti-Arbitration and Anti-Suit Orders

In rare cases, courts may issue “anti-arbitration” injunctions, forbidding a party from
pursuing its claims in arbitral proceedings. Such orders generally rest on the court’s
conclusion that there is no valid arbitration agreement providing a basis for the arbitration to
proceed. There are doubts as to the legitimacy of anti-arbitration injunctions (because they
interfere with the arbitral tribunal’s competence-competence). 90 Conversely, in even rarer
cases, an arbitral tribunal may issue an “antisuit” order, forbidding one party from pursuing
arbitrable claims in a litigation. Again, the basis for such orders is usually a conclusion that
the parties are bound to arbitrate, not litigate, their dispute.
_________________________
1. See infra pp. 52.
2. See infra pp. 63–64.
3. See supra p. 35.
4. G. Born, International Commercial Arbitration 258–75, 2361–63 (2009).
5. G. Born, International Commercial Arbitration 301 (2009).
6. See G. Born, International Commercial Arbitration 303 (2009).
7. See infra pp. 370–73.
8. See G. Born, International Commercial Arbitration 277–84 (2009).
9. U.S. FAA, 9 U.S.C. §201.
10. There is divergent authority on the meaning of Article XIV, including on the question whether it applies in
litigation between private parties. See G. Born, International Commercial Arbitration 303–05 (2009).
11. See infra p. 77; G. Born, International Commercial Arbitration 204 (2009).
12. See infra p. 77; G. Born, International Commercial Arbitration 206 (2009).
13. G. Born, International Commercial Arbitration 58–65 (2009).
14. Tobey v. County of Bristol, 23 Fed.Cas. 1313, 1321–23 (C.C.D. Mass. 1845) (Story, J.).
15. G. Born, International Commercial Arbitration 26–38, 48–55 (2009).
16. These grounds for non-recognition are discussed below. See infra pp. 77–86.
17. See, e.g., Kaverit Steel & Crane Ltd v. Kone Corp., XIX Y.B. Comm. Arb. 643 (Alberta Court of Appeal 1992)
(1994); Boart Sweden AB v. Nya Stromnes AB, 41 B.L.R. 295, ¶4 (Ontario S.Ct. 1988).
18. See, e.g., Sandvik AB v. Advent Int’l Corp ., 220 F.3d 99 (3d Cir. 2000) (“ The FAA establishes a strong federal
policy in favor of compelling arbitration over litigation [which] carries ‘ special force’ when international
commerce is involved”);Deloitte Noraudit A/S v. Deloitte Haskins & Sells, U.S., 9 F.3d 1060, 1063 (2d Cir.
1993) (policy in favor of arbitration “ is even stronger in the context of international transactions”).
19. See, e.g., Judgment of 20 December 1993, Municipalité de Khoms El Mergeb v. Societé Dalico, 1994 Rev. arb.
116 (French Cour de cassation civ. 1e) (1994); Judgment of 16 October 2003, 22 ASA Bull. 364 (Swiss Federal
Tribunal) (2004); Judgment of 16 October 2001, 2002 Rev. arb. 753 (Swiss Federal Tribunal).
20. Final Award in ICC Case No. 8938, XXIVa Y.B. Comm. Arb. 174, 176 (1999). See also G. Born, International
Commercial Arbitration 313–22, 344 (2009).
21. Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402, 409 (2d Cir. 1959).
22. See G. Born, International Commercial Arbitration 360–62 (2009).
23. See Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (U.S. S.Ct. 1967); G. Born, International
Commercial Arbitration 357–404 (2009).
24. See G. Born, International Commercial Arbitration 404–05 (2009).
25. See, e.g., Judgment of 26 May 1988, 1988 NJW-RR 1526, 1527 (German Bundesgerichtshof); Fiona Trust &
Holding Corp. v. Privalov [2007] 1 All E.R. (Comm.) 891 (English Court of Appeal), aff’d, [2007] UKHL 40
(House of Lords). See G. Born, International Commercial Arbitration 863–69, 877–966 (2009).
26. See, e.g., ICC Rules 2012, Art. 6(5) (“ [A]ny decision as to the jurisdiction... shall be taken by the arbitral
tribunal itself.”); LCIA Rules, Art. 23(1) ICDR Rules, Art. 15(1).
27. French Code of Civil P rocedure, Art. 1448(1).
28. See supra pp. 50–51.
29. 546 U.S. 440, 446 (U.S. S.Ct. 2006); G. Born, International Commercial Arbitration 938–43 (2009).
30. See G. Born, International Commercial Arbitration 938–43 (2009).
31. Buckeye Check Cashing, 546 U.S. at 444, n.1
32. Buckeye Check Cashing, 546 U.S. at 444, n.1
33. G. Born, International Commercial Arbitration 944–48 (2009).
34. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942 (U.S. S.Ct. 1995).
35. G. Born, International Commercial Arbitration 917–19 (2009).
36. See G. Born, International Commercial Arbitration 932–34 (2009).
37. Some national courts have adopted this view. See, e.g., Judgment of 7 October 2002, 2003 NJW-RR 354
(Bavarian Oberstes Landesgericht); Yawata Ltd v. Powell, [2000] D.C.R. 334 (Wellington Dist. Ct.); W alter Rau
Neusser Oel und Fett AG v. Cross Pac. Trading Ltd , XXXI Y.B. Comm. Arb. 559 (Australian Fed. Ct. 2005)
(2006). See also G. Born, International Commercial Arbitration 880–81 (2009).
38. See, e.g., Shin-Etsu Chem. Co. v. Aksh Optifibre Ltd, XXXI Y.B. Comm. Arb. 747, 784 (Indian S.Ct. 2005) (2006);
Gulf Canada Resources Ltd v. Arochem Int’l Ltd , 66 BCLR2d 113, 114 (B.C. Court of Appeal 1992); Skandia
Int’l Ins. Co. v. Al Amana Ins. & Reins. Co., XXIV Y.B. Comm. Arb. 615 (Bermuda S.Ct. 1994) (1999).
39. The law governing an arbitration agreement is applicable to the agreement’ s: (a) formation; (b) substantive
validity; and (c) interpretation. As discussed below, issues of formal validity, non-arbitrability and the effects of
the arbitration agreement on non-signatories are subject to different choice-of-law rules.
40. See infra pp. 304–05.
41. G. Born, International Commercial Arbitration 443–51 (2009).
42. See infra pp. 312–28.
43. Other authorities adopt the same rule. G. Born, International Commercial Arbitration 497–504 (2009).
44. See, e.g., Judgment of 20 December 1993, Municipalité de Khoms El Mergeb v. Société Dalico, 1994 Rev. arb.
116, 117 (French Cour de cassation civ. 1e).
45. See, e.g., Rhone Mediterranee Compagnia Franchese di Assicurazioni e Riassicurazioni v. Achille Lauro , 712
 F.2d 50 (3d Cir. 1983); Chloe Z Fishing Co. v. Odyssey Re ( London) Ltd, 109 F.Supp.2d 1236 (S.D. Cal. 2000).
46. See infra p. 75; G. Born, International Commercial Arbitration 534–46, 586–99 (2009).
47. See infra pp. 74–75; G. Born, International Commercial Arbitration 547–49, 600–06 (2009).
48. G. Born, International Commercial Arbitration 552–53, 624–29 (2009). See also Judgment of 23 April 1997,
Dalmine SpA v. M & M Sheet Metal Forming Machinery AG , XXIVa Y.B. Comm. Arb. 709 (Italian Corte di
Cassazione) (1999) (capacity for the purposes of Article V(1)(a) “ means not only the capacity of a physical
person to perform an act, but any capacity, both a legal capacity to perform an act – with an eye to the so-called
special legal incapacities – and the capacity of physical and legal persons; in the latter case, special attention is
given to representation by organs [of an entity] and their representation powers.”).
49. G. Born, International Commercial Arbitration 515 et seq. (esp. 515–22), 706–07, 768–76 (2009).
50. See infra pp. 95–99; G. Born, International Commercial Arbitration 1210–19 (2009).
51. See supra pp. 61, 63–64; G. Born, International Commercial Arbitration 34–37, 39–49, 565, 1045–46 (2009).
52. In the words of Article II(1), Contracting States “ shall recognize an agreement in writing under which the parties
undertake to submit to arbitration all or any differences.” The premise of Article II(1) is that the parties’
obligation to arbitrate includes the affirmative duty to accept the submission of their disputes to arbitration
(“ undertake to submit”) and to participate cooperatively in arbitral proceedings to resolve such disputes.
53. U.S. FAA, 9 U.S.C. §4; English Arbitration Act, 1996, §9; Swiss Law on Private International Law, Art. 7;
Singapore International Arbitration Act, §6. See G. Born, International Commercial Arbitration 1004–07
(2009).
54. See infra pp. 114–15, 121–24, 148–49, & 244–51; G. Born, International Commercial Arbitration 1007–13
(2009).
55. See, e.g., English Arbitration Act, 1996, §40(1) (“ The parties shall do all things necessary for the proper and
expeditious conduct of the arbitral proceedings.”); Victoria Commercial Arbitration Act, §37 (“ The parties to an
arbitration agreement shall at all times do all things which the arbitrator or umpire requires to enable a just award
to be made and no party shall wilfully do or cause to be done any act to delay or prevent an award being made.”).
56. Bremer Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corp. [1981] A.C. 909, 982–83, 985
(House of Lords) (emphasis added).
57. Judgment of 10 May 1982, DFT 108 Ia 197, 201 (Swiss Federal Tribunal). See G. Born, International
Commercial Arbitration 1009–11 (2009).
58. See G. Born, International Commercial Arbitration 1011–13 (2009).
59. See G. Born, International Commercial Arbitration 1013–20 (2009).
60. U.S. FAA, 9 U.S.C. §206 (“ A court having jurisdiction under this chapter may direct that arbitration be held in
accordance with the agreement at any place therein provided for....”). See G. Born, International Commercial
Arbitration 380 (2d ed. 2001).
61. Joseph Muller Corp. v. Commonwealth Petrochem., Inc., 334 F.Supp. 1013 (S.D.N.Y. 1971).
62. InterGen NV v. Grina, 344 F.3d 134, 142 (1st Cir. 2003).
63. See G. Born, International Commercial Arbitration 1013–17 (2009). See Invista N. Am. SARL v. Rhodia
Polyamide Intermediates SAS, 503 F.Supp.2d 195, 207 (D.D.C. 2007) (ordering parties to arbitrate in
Switzerland); Sea Bowld Marine Group, LDC v. Oceanfast Pty, Ltd, 432 F.Supp.2d 1305, 1319 (S.D. Fla. 2006)
(ordering parties to arbitrate in Australia); Acosta v. Norwegian Cruise Line, Ltd, 303 F.Supp.2d 1327, 1332
(S.D. Fla. 2003) (ordering parties to arbitrate in the P hilippines).
64. There are very limited exceptions to this principle, involving provisional measure and jurisdictional issues,
where the possibility of concurrent jurisdiction or proceedings in national courts exists. See supra pp. 52–54 &
infra pp. 213–17.
65. See supra pp. 59–61.
66. See Judgment of 7 September 2005, XXXI Y.B. Comm. Arb. 791, 794–95 (Israeli S.Ct.) (2006) (“ Article II(3) of
the Convention states in mandatory language that the court ‘ shall ... refer’ the parties to arbitration, unless one of
the exceptions listed in the section is present. ... if one of the three exceptions mentioned in Article II(3) does not
appear, the court is as a rule required to order a stay of the proceedings...”); Lonhro Ltd v. Shell Petroleum Co., IV
Y.B. Comm. Arb. 320 (Ch.) (1979) (“ the effect of Section I [of the English Arbitration Act, 1975, implementing
Article II(3)] is to deprive the court of any discretion whether a claim within a non-domestic arbitration
 agreement should be arbitrate or litigated ... The Section is mandatory.”).
67. See, e.g., PetroKazakhstan Inc. v. Lukoil Overseas Kumkol BV , 2005 ABQB 789 (Alberta Q.B.) (“ Courts in this
jurisdiction are required not to intervene in matters governed by arbitration: UNCITRAL Model Law, Article
8(1).”); Dalimpex Ltd v. Janicki, [2003] Ont. Rep. LEXIS 132 (Ontario Court of Appeal) (“ The wording of article
8 is mandatory.”). See also G. Born, International Commercial Arbitration 1021 (2009).
68. See supra pp. 59–61.
69. See Dean W itter Reynolds, Inc. v. Byrd , 470 U.S. 213, 218 (U.S. S.Ct. 1985) (terms of §3 “ leave no place for the
exercise of discretion by a district court, but instead ... mandate that district courts shall direct the parties to
proceed to arbitration on issues as to which an arbitration agreement has been signed”); Asghar v. Legal Serv.
Comm’n [2004] EWHC 1803 (Ch) (investigation by the Legal Services Commission stayed in respect of all
matters which under contract should be referred to arbitration); G. Born, International Commercial Arbitration
1022–23 (2009).
70. See supra p. 61; InterGen NV v. Grina, 344 F.3d 134, 141 (1st Cir. 2003) (“ Given this regime, it clearly appears
that enforcing arbitration clauses under the New York Convention is an obligation, not a matter committed to
district court discretion.”);Hi-Fert Pty Ltd v. Kiukiang Maritime Carriers Inc., 86 FCR 374, 393 (N.S.W. Dist.
1998) (“ the Court must stay the proceedings and refer the parties to arbitration”).
71. G. Born, International Commercial Arbitration 1025–26 (2009).
72. G. Born, International Commercial Arbitration 1026 (2009).
73. Danisco A/S Denmark v. Novo Nordisk A/S, 2003 U.S. Dist. LEXIS 1842 (S.D.N.Y. 2003).
74. Nonetheless, as discussed below, there are limited circumstances where both arbitral tribunals and national
courts simultaneously possess jurisdiction to consider and decide particular matters (e.g., jurisdictional issues
or a request for provisional measures). See supra pp. 52–54 and infra pp. 213–17. In these circumstances, the
jurisdiction of the arbitrators does not cease where that of national courts begin.
75. G. Born, International Commercial Arbitration 1035 (2009).
76. See Airbus Indus. GIE v. Patel [1998] 1 Lloyd’ s Rep. 631 (House of Lords).
77. Aggeliki Charis Compania Maritime SA v. Pagnan SpA ( The Angelic Grace) [1995] 1 Lloyd’ s Rep. 87, 96
(English Court of Appeal).
78. W orld Pride Shipping Ltd v. Daiichi Chuo Kisen Kaisha [1984] 2 Lloyd’ s Rep. 489 (Q.B.) (“ the American
court has not yet ruled on the joint motion for continuance [of litigation]. ... It seems to me that in those
circumstances it would be much better that the [U.S.] District Court should itself rule on the motion for
continuance and, if it thinks fit, stay all further proceedings on [the counterclaim’ ... rather than that I should seek
to preempt, and perhaps even seem to dictate the decision of a foreign Court.”).
79. G. Born, International Commercial Arbitration 1038 (2009).
80. W SG Nimbus Pte Ltd v. Board of Control for Cricket in Sri Lanka [2002] 3 Sing. L.R. 603, 637 (Singapore
High Court). See G. Born, International Commercial Arbitration 1037–38 (2009).
81. See, e.g., Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara , 335 F.3d 357 (5th
Cir. 2003); MacPhail v. Oceaneering Int’l, Inc., 302 F.3d 274 (5th Cir. 2002); Kaepa, Inc. v. Achilles Corp ., 76
F.3d 624 (5th Cir. 1996).
82. See, e.g., Goss Int’l Corp. v. Man Roland Druckmaschinen AG , 2007 U.S. App. LEXIS 14306 (8th Cir. 2007);
Quaak v. Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren , 361 F.3d 11 (1st Cir. 2004); Stonington
Partners v. Lernout & Hauspie Speech Prod. NV, 310 F.3d 118 (3d Cir. 2002).
83. SG Avipro Fin. Ltd v. Cameroon Airlines, 2005 U.S. Dist. LEXIS 11117 (S.D.N.Y. 2005).
84. G. Petrochilos, Procedural Law in International Arbitration 105 (2004) (“ Orders enjoining a party from
continuing with proceedings commenced by that party in another forum (commonly called ‘ antisuit injunctions’ )
are peculiar to Anglo-American common law systems.”).
85. This was the position in much of the United States prior to the FAA. See Red Cross Line v. Atlantic Fruit Co .,
264 U.S. 109 (U.S. S.Ct. 1924) (“ an agreement to arbitrate was legal in New York and damages were recoverable
for a breach thereof”); Payton v. The Hurst Eye, Ear, Nose & Throat Hos. , 318 S.W.2d 726 (Tex. Ct. App. 1958)
(under Texas common law, a party “ could not compel an arbitration ... and is relegated to a suit for damages for
any breach of the arbitration clause”).
86. See, e.g., Ball v. Versar, Inc ., 2006 WL 2568057 (S.D. Ind. 2006); Indosuez Int’l Fin., BV v. Nacional Reserve
 Bank, 758 N.Y.S.2d 308 (N.Y. App. Div. 2003); Schiffahrtsgesellschaft Detlev von Appen GmbH v. Voest
Alpine Intertrading GmbH [1997] 2 Lloyd’ s Rep. 279 (English Court of Appeal); Mantovani v. Caparelli SpA
[1980] 1 Lloyd’ s Rep. 375 (English Court of Appeal).
87. W SG Nimbus Pte Ltd v. Board of Control for Cricket in Sri Lanka [2002] 3 Sing. L.R. 603 (Singapore High
Court).
88. Judgment of 19 December 1997, Compañia Minera Condesa SA et Compañia de Minas Buenaventura SA v.
BRGMPérou SAS, DFT 124 III 83, 86–87 (Swiss Federal Tribunal).
89. CBS Corp. v. W AK Orient Power & Light Ltd , 168 F.Supp.2d 403 (E.D. Pa. 2001) (“ WAK’ s expressed
intention to attempt to obtain and register in the courts of the United States of America, without leave of this
court, a foreign judgment arising from a subject matter relating to the arbitral award would run afoul of this
court’ s judgment enforcing the Arbitral Award as well as the fundamental principles undergirding the
Convention.”); Tracomin SA v. Sudan Oil Seeds [1983] Lloyd’ s Rep. 384 (English Court of Appeal).
90. G. Born, International Commercial Arbitration 1049–55 (2009).
Chapter 3
Formation and Validity of International Arbitration
Agreements

A central issue in the enforcement of international arbitration agreements concerns the

standards for formation and validity. These standards play an essential role in ensuring that
international arbitration agreements are enforced in an effective and efficient manner and are
of substantial practical importance in the arbitral process.

§3.01 FORMATION OF INTERNATIONAL ARBITRATION

AGREEMENTS

Arbitration agreements, like other categories of contracts, give rise to questions of contract
formation (particularly issues of consent). An agreement to arbitrate cannot be recognized or
enforced unless it has been validly formed.1 The formation of arbitration agreements raises
several related issues: (a) consent to the agreement to arbitrate; (b) the essential terms
required for an arbitration agreement; and (c) defects in the arbitration agreement (or so-called
“pathological” arbitration clauses).

[A] Consent to Arbitration Agreement

In order for an arbitration agreement to exist, the parties must have validly consented to that
agreement. The question whether parties have validly consented to an arbitration agreement is
governed in most legal systems by generally-applicable principles of contract law, and
specifically, contract formation.2
In practice, consent in international commercial transactions is usually evidenced by
written instruments, typically with the execution of a formal contract with a corporate
officer’s signature. Nonetheless, other modes of establishing consent are also frequently
encountered, including by less formal writings, exchanges of writings (including electronic or
other communications), oral communications and conduct or acquiescence. Note that there is
a distinction between the existence of consent to an arbitration agreement (evidenced, for
example, by oral communications) and the formal validity of the arbitration agreement (which
may require a writing or signature).3
In most cases, consent to an arbitration clause will be evidenced by consent to the parties’
main or underlying contract (containing the arbitration clause); notwithstanding the
separability presumption, a party’s acceptance of the underlying contract will almost always
entail consent to the arbitration clause in that contract. Nonetheless, cases arise in which one
party argues either that (a) in consenting to the main or underlying contract, it did not also
consent to the arbitration clause (for example, because it was unaware of the clause or
because it indicated non-acceptance of the clause); or (b) while the underlying contract was
never executed, the parties agreed separately to the arbitration clause (for example, to cover
disputes involving conduct in contractual negotiations). In these instances, courts and arbitral
tribunals consider whether the parties sufficiently manifested their consent to the separable
arbitration agreement, regardless of their consent to the underlying contract.
A party’s commencement of arbitral proceedings, or its participation without protest in
such proceedings, can be the basis for finding valid consent to an arbitration agreement.
Article 16(2) of the UNCITRAL Model Law requires that any objection to a tribunal’s
jurisdiction be raised no later than the statement of defense, failing which the jurisdictional
objection is waived. Other national laws are similar. Under these authorities, a party’s tacit
acceptance of its counterparty’s initiation of arbitration, through participation in the arbitral
proceedings without raising a jurisdictional objection, can provide the basis for an agreement
to arbitrate.4 As a practical matter, waivers of jurisdictional objections frequently occur,
providing a valid basis for subsequent arbitral proceedings and arbitral awards.

[B] Standard of Proof for International Arbitration Agreements

Different approaches have been taken to the standard of proof required to establish the
existence of an arbitration agreement. Some authorities have required a heightened standard of
proof, as compared to other contracts, holding that the parties’ agreement to arbitrate must
be clearly demonstrated or that waiver of access to national courts must be express. Other
authorities have required a relaxed standard of proof, relying on the pro-arbitration policies of
the New York Convention and national arbitration legislation. Finally, a few authorities
apply the same standard of proof required for the formation of other types of contracts.5

[C] Essential Terms of Arbitration Agreements

In order for a valid international arbitration agreement to be formed, the parties must reach
agreement on a core of essential issues. Absent agreement on these essential terms, the
arbitration agreement will generally be void for indefiniteness or uncertainty.

[1] Agreement to Arbitrate

The essential core of an arbitration agreement is simple: it consists of nothing more than an
obligation to resolve certain disputes with another party by “arbitration” and the right to
demand that such disputes be resolved in this fashion. These rights and duties can be
contained in nothing more than the word “arbitration,” included in a contract, letter, or email,
by which the parties commit to resolve disputes relating to their transaction by arbitration;
alternatively, the essential terms of an arbitration agreement are contained in the phrase “All
disputes shall be finally resolved by arbitration.”

[2] Incidental Terms

As discussed above, international arbitration agreements typically do, and should, contain
additional important terms, including the scope of the obligation to arbitrate, the arbitral seat,
institutional rules, language and the like.6 Nonetheless, failure to include these terms does not
render the arbitration clause indefinite. Rather, in almost all jurisdictions, national law
provides default mechanisms that will give effect to the parties’ agreement (i.e., by providing
for judicial selection of arbitrators and by authorizing the arbitral tribunal to perform various
functions, such as selecting the arbitral seat and language).

[3] Blank Clauses

Some authorities hold that a so-called “blank clause,” which does not specify either the
arbitral seat or the means of choosing the arbitrators, is indefinite and void. These authorities
reason that a blank clause provides no means for either selecting an arbitral tribunal (absent
agreement by the parties) or the seat (at which judicial assistance to appoint arbitrators can
be sought). Other authorities hold that a blank clause impliedly authorizes the claimant to
designate the arbitral seat.7

[D] Pathological Arbitration Clauses

Although model arbitration clauses are readily available from most arbitral institutions (or
other sources8 ) in practice, parties not infrequently include so-called “pathological”
arbitration clauses in their contracts. These provisions contain a variety of defects, which are
often argued to render the arbitration agreement invalid.

“Pathological” Arbitration Clauses

– “Jurisdiction. In case of disputes, the parties undertake to submit them to
 arbitration as provided for by the Fédération Française de la Publicité. In case of
disputes, the Tribunal de la Seine would have exclusive jurisdiction.”
– “The parties may refer any dispute under this agreement to arbitration.”
– “Any dispute may be resolved by arbitration under the ICC Rules, applying the
UNCITRAL Arbitration Rules.”
– “The arbitration shall be seated in Miami; the seat of the arbitration shall be at
the ICC in Paris.”

[1] Indefinite Arbitration Agreements

Parties frequently draft arbitration agreements that lack specificity (for example, agreeing on
“Arbitration – New York”). National courts and arbitral tribunals generally seek to give effect
to arbitration agreements lacking specificity, holding that only the essential requirement of an
agreement to arbitrate is required, with incidental terms either being implied or provided by
national law.9 For example, one court cited the “general principle that Courts should uphold
arbitration, by striving to give effect to the intention of parties to submit disputes to
arbitration, and not allow any inconsistencies or uncertainties in the wording or operation of
the arbitration clause to thwart that intention.”10

[2] Arbitration Agreements Referring to Non-Existent Arbitral Institutions,

Arbitration Rules, or Arbitrators

National courts and arbitral tribunals have also generally upheld arbitration clauses that refer
to non-existent arbitral institutions or appointing authorities (e.g., referring to an institution
that has never existed, such as the “Transnational Arbitration Institute”). Some authorities
have deleted references to non-existent entities as surplusage, while others have sought to
correct or supplement inaccurate references. In the words of one court: “an agreement on a
non-existent arbitration forum is the equivalent of an agreement to arbitrate which does not
specify a forum; since the parties had the intent to arbitrate even in the absence of a properly
designated forum.”11 Alternatively, a Swiss arbitral tribunal construed a reference to the
“international trade association organization in Zurich” (there is none) to mean arbitration
under the Zurich Chamber of Commerce International Arbitration Rules.12
A related set of problems concerns arbitration clauses that select arbitral institutions that
once existed, but have ceased operations; that select arbitrators who once were competent,
but have since become incapacitated or passed away; or that select appointing authorities
which refuse to fulfill the contemplated functions. Again, most courts endeavor to preserve
the parties’ basic agreement to arbitrate, even if the particular mechanics that they have
chosen to implement this agreement cannot function or cannot function as intended.

[3] Internally Contradictory Arbitration Agreements

A similar set of issues arises from internally contradictory arbitration provisions. These can
involve clauses that select two different arbitral seats (i.e., “The arbitration shall be seated in
Miami; the seat of the arbitration shall be at the ICC in Paris”), or two different institutions
or mechanisms for selecting arbitrators (i.e., “The arbitration shall be conducted in accordance
with the ICC Rules and under the auspices of the LCIA”), or agreements that appear to
provide for both arbitration and litigation of the same disputes.
As with indefinite or ambiguous clauses, tribunals and courts have generally found ways to
enforce these provisions, either by deleting language as surplusage or by reconciling
inconsistent terms through liberal interpretation. In the words of one award, “when inserting
an arbitration clause in their contract the intention of the parties must be presumed to have
been willing to establish an effective machinery for the settlement of disputes covered by the
arbitration clause.”13 For example, if an agreement provides for both arbitration and litigation
in a specified court, decisions have generally construed the forum selection clause narrowly,
to apply only to litigation in support of the arbitration.14

[4] “Optional” or Non-Mandatory Arbitration Agreements

Parties sometimes agree to provisions that appear only to treat arbitration as an optional
means of dispute resolution, but not to require mandatory submission of future disputes to
arbitration (e.g., “the parties may elect to submit disputes to arbitration”). Most courts and
arbitral tribunals treat even ambiguously-drafted provisions as “mandatory,” thereby either
obliging parties to submit their disputes to arbitration (and to refrain from litigation of
arbitrable disputes) or granting either party the option to initiate arbitration (such that, if the
option is exercised by either party, both parties are then bound to arbitrate 15 ). The basis for
this conclusion is that it would make little sense for parties to agree to optional arbitration in
an entirely non-mandatory sense, leaving both parties free to decide when disputes arise
whether or not they wish to arbitrate.

[E] Formal Validity of International Arbitration Agreements

Like other types of contracts, international arbitration agreements are subject to form
requirements. The most significant and prevalent of these is the “writing” or “written form”
requirement, together with related requirements for a “signature” and/or an “exchange” of
written communications, which is contained in the New York Convention. In addition, some
national laws purport to impose other form requirements, including requirements concerning
the size and location of type in which the arbitration clause is printed, the need for separate
execution of arbitration agreements, the need for a selection of arbitrators and the like.

[1] Written Form Requirement – New York Convention

The most universal written form requirement for international arbitration agreements is
imposed by the Convention. As provided in Article II(1), the Convention applies only to
“agreements in writing,” which are then defined by Article II(2) to include “an arbitral clause
in a contract or an arbitration agreement, signed by the parties or contained in an exchange of
letters or telegrams.”
Article II(2) does not merely require that arbitration agreements be in “written” form, but
also that such agreements be either “signed by the parties” or contained in an “exchange of
letters or telegrams.” Under Article II(2), not merely a written record of the parties’
agreement, but also a contract that is signed or contained in an exchange of writings is
required. Article II(2) has generally been held to exclude not just oral agreements, but also
arbitration agreements involving oral or tacit acceptance of written instruments and unsigned,
but orally agreed written contracts. On the other hand, a few courts have held that Article
II(2) is satisfied by tacit acceptance of a written offer containing an arbitration provision,
particularly where performance of contractual obligations is also accepted.
Authorities are divided over the relationship between Articles II(1) and II(2). Some
authorities have held that Article II(2) provides an exhaustive definition of Article II(1)’s
requirement for an agreement in “writing”: only if an agreement satisfies the Article II(2)
definition will it be formally valid under the Convention. In contrast, other authorities hold
that Article II(2) only lists representative examples of written arbitration agreements and that
Article II(1) can also be satisfied by other types of writings (without a signature or
exchange). The latter view is adopted by an UNCITRAL Recommendation, discussed below.

[2] Written Form Requirement – National Arbitration Legislation

Most national arbitration legislation imposes some sort of written form requirement on
arbitration agreements. Many statutes parallel Article II(2) of the Convention, although often
modernizing the Convention’s approach by reference to email and other modern
communications; other jurisdictions have taken steps to minimize the role of form
requirements, in some cases eliminating (e.g., France, Sweden) or virtually eliminating (e.g.,
England) any written form requirement at all for international arbitration agreements.16

[3] UNCITRAL Model Law, Article 7 (and Revisions)

The Model Law originally contained a writing requirement that was similar to that of Article
II(2) of the Convention. Article 7(2) of the original 1985 M odel Law provided:

The arbitration agreement shall be in writing. An agreement is in writing if it is contained

in a document signed by the parties or in an exchange of letters, telexes, telegrams or
other means of telecommunications which provide a record of the agreement, or in an
exchange of statements of claim and defense in which the existence of an agreement is
alleged by one party and not denied by another.

Like Article II(2), Article 7(2) requires either a signed written contract or an exchange of
written communications that record the arbitration agreement. This excludes oral agreements
and purely tacit acquiescence to one party’s written proposal of an arbitration agreement.
Under Article 7(2), the “writing” requirement is a condition of contractual validity.
The 2006 Revisions to the Model Law adopt two “Options” for Article 7, which
materially reduce or eliminate any writing requirement. Option II provides that an
“arbitration agreement” is “an agreement to submit to arbitration all or certain disputes which
have arisen or which may arise between them in respect of a defined legal relationship,
whether contractual or not.” The effect of Option II is to eliminate any written form
requirement, leaving only substantive issues of consent; under Option II, oral and tacit
consent would both be sufficient for a valid arbitration agreement.
Option I for Article 7 is less sweeping. It retains the requirement that the “[a]n arbitration
agreement shall be in writing,” but then provides a liberalized definition of a writing: “an
arbitration agreement is in writing if its content is recorded in any form, whether or not the
arbitration agreement or contract has been concluded orally, by conduct, or by other means.”
This provision eliminates any requirements for an “exchange” of writings or for “signatures,”
and merely requires that there be a written record of the agreement to arbitrate (even if that
agreement is concluded orally or tacitly). For example, Option I would be satisfied where a
party had, in an internal email, recorded the terms of what had been agreed orally.

[4] Relationship between New York Convention and National Law

The relationship between the writing requirements in the Convention and national arbitration
legislation is complex. Authorities uniformly hold that Article II of the Convention prescribes
a mandatory “maximum” form requirement, which Contracting States may not exceed. Thus,
if a State purported to impose a heightened form requirement (e.g., arbitration agreements
must be in a separate contract, in capital letters), this requirement would be contrary to and
superseded by the Convention’s maximum form requirement.
Authorities are divided as to whether the Convention also prescribes a mandatory
“minimum” form requirement. Some authorities hold that an arbitration agreement is invalid if
it does not comply with Article II’s form requirement – even if it satisfies the reduced form
requirement of national law applicable to the arbitration clause (e.g., Article 7 of the 2006
Model Law); these authorities reason that the Convention supersedes less demanding
national form requirements. The weight of authority adopts a different position, holding that
Contracting States are free to adopt less demanding form requirements (by virtue of Article
VII of the Convention). This view is adopted by the UNCITRAL Recommendations,
discussed below.

[5] 2006 UNCITRAL Recommendations

In 2006, UNCITRAL adopted two “Recommendations” for interpretation of the New York
Convention’s writing requirement.17 The first Recommendation provided that Article II(2) of
the Convention should be interpreted in a non-exhaustive manner. Under the
Recommendation, Article II(1)’s writing requirement can be satisfied by agreements that do
not comply with Article II(2)’s requirements for a signature or exchange of letters (e.g., by an
unsigned written contract recording the parties’ agreement).

2006 UNCITRAL Recommendations

The United Nations Commission on International Trade Law,
...
1 . Recommends that article II, paragraph 2, of the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, done in New York, 10 June 1958, be
applied recognizing that the circumstances described therein are not exhaustive;
2. Recommends also that article VII, paragraph 1, of the Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, done in New York, 10 June 1958,
should be applied to allow any interested party to avail itself of rights it may have,
under the law or treaties of the country where an arbitration agreement is sought to
be relied upon, to seek recognition of the validity of such an arbitration agreement.
Under UNCITRAL’s second Recommendation, Article VII(1) of the Convention should be
interpreted to permit less demanding national form requirements than that under Article II of
the Convention. Thus, the Convention would not impose a “minimum” form requirement,
but would instead permit Contracting States to adopt legislation (like the 2006 Revisions to
the M odel Law) eliminating or relaxing the form requirement of Article II of the Convention.

[6] Incorporation of Arbitration Agreement

International contracts frequently seek to incorporate arbitration agreements or rules from

other instruments, including other contracts (between the same or different parties), trade
association rules or by-laws, or one party’s standard terms and conditions. For example, a
sales contract may provide “all disputes arising under this contract shall be resolved by
arbitration pursuant to Article XI of the M aster Agreement” or “all disputes shall be resolved
pursuant to Articles X to XIII of the [relevant trade association’s rules].” Provisions
incorporating arbitration clauses from other instruments give rise to issues of both formal and
substantive validity.
The formal validity of incorporated arbitration agreements usually involves straightforward
issues: the “writing” requirements of the Convention and national law are simply applied to
the incorporating instrument (e.g., to determine whether it has a signature or is an exchange of
letters). In addition, some national laws contain provisions specifically addressing the formal
validity of incorporated arbitration agreements. For example, Article 7(2) of the 1985 Model
Law provides “The reference in a contract to a document containing an arbitration clause
constitutes an arbitration agreement provided that the contract is in writing and the reference
is such as to make that clause part of the contract.” The provision confirms that the
incorporated arbitration provisions need not separately satisfy requirements for a signature
or exchange of letters (although it must be contained in a “document”).

[F] Substantive Validity of International Arbitration Agreements

An arbitration agreement, like other contracts, also gives rise to issues of substantive validity.
The categories of substantive invalidity of arbitration agreements contained in the Convention
and most arbitration legislation are limited to cases where such agreements are invalid on
generally-applicable contract law grounds (e.g., mistake, fraud, unconscionability, waiver).
These grounds for challenging the substantive validity of arbitration agreements are exclusive:
they provide exceptions to the presumptive validity of agreements to arbitrate.
In addition, special rules of unenforceability apply to some categories of disputes. These
rules are reflected in the language of Articles II(1) and V(2)(a) of the Convention, which
provide that certain categories of disputes are “not capable of settlement by arbitration.”
These “non-arbitrability” rules are discussed separately below.18

[1] “Null and Void,” “Inoperable” and “Incapable of Being Performed”

Article II(3) of the Convention and Article 8(2) of the UNCITRAL Model Law provide that
an arbitration agreement need not be recognized and enforced if it is “null and void,”
“inoperative,” or “incapable of being performed.” Similar provisions exist in other
jurisdictions.19 These categories of substantive invalidity have been interpreted by reference
to traditional rules of general contract law. The term “null and void” permits defenses based
on unconscionability, fraud, mistake, lack of capacity and illegality. The term “inoperative”
permits defenses based on termination, waiver, changed circumstances and repudiation. The
term “incapable of being performed” refers to impossibility and similar defenses.
Each of these defenses focuses, by reason of the separability presumption, on the
arbitration agreement itself, rather than the underlying contract. For example, in considering
claims of unconscionability, the only relevant question is whether the terms of the arbitration
clause – not the commercial terms of the underlying contract – are oppressive and
unconscionable. Similarly, in considering claims of impossibility, the relevant question is
whether it is possible to perform the agreement to arbitrate – not to perform the underlying
commercial contract. Finally, in considering each of these defenses, the governing law is that
applicable to the agreement to arbitrate, not necessarily the law applicable to the underlying
contract.

[2] Unconscionability and Duress

Basic principles of contract law provide that unconscionable agreements are invalid. Although
formulations of unconscionability vary, unconscionability generally requires grossly unfair
substantive terms of an agreement and an abuse of significantly stronger bargaining power.
As a consequence of the separability presumption, courts and tribunals almost always
hold that claims that the parties’ underlying contract is unconscionable do not implicate the
validity of the associated arbitration clause. Unconscionability is a ground for challenging an
agreement to arbitrate only in cases where a party challenges the terms of the arbitration
agreement itself (e.g., a grossly unfair seat, biased means of selecting the arbitral tribunal,
grossly one-sided arbitral procedures) and/or the manner in which the arbitration agreement
was negotiated (e.g., undue pressure tactics or deception);20 unconscionable commercial
terms in the underlying contract (e.g., price) are generally irrelevant to these inquiries.
 Courts are generally skeptical of unconscionability challenges directed at arbitration
agreements in commercial settings. The fact that an arbitration clause was included in a form
contract or general terms and conditions; the fact that there was a disparity of bargaining
power; and the fact that the contract was in a foreign language are virtually never grounds for
finding unconscionability. In rare cases, often involving individuals or small businesses,
courts have found that grossly one-sided arbitration procedures are invalid as unconscionable
(for example, clauses permitting one party to unilaterally select the arbitrator(s)).
A few courts have held that so-called “asymmetrical” or “non-mutual” arbitration
agreements are void on unconscionability or lack of mutuality grounds. These agreements
provide that one party, but not the other, has the option of requiring arbitration of the
parties’ disputes. The weight of authority takes a contrary view and upholds asymmetrical
arbitration clauses.21

Asymmetrical Arbitration Agreement

“The courts of [England] shall have exclusive jurisdiction to resolve all disputes relating
to this Agreement, provided that [Party A] shall have the option of submitting any such
dispute for resolution by arbitration under the UNCITRAL Arbitration Rules.”

The validity of arbitration agreements may also be challenged on the grounds of duress (or
wrongful threat). Duress has generally required the showing of a wrongful act or threat
compelling involuntary submission. In practice, most efforts to meet this standard for
arbitration agreements in commercial settings have failed, although there are exceptions
(particularly in cases involving individuals). Claims of duress must, in principle, be directed
at the agreement to arbitrate itself, as opposed to the underlying contract; in some instances,
however, it is difficult to distinguish between duress directed at the arbitration clause and
duress directed at the underlying contract (i.e., signature of a contract at gunpoint).

[3] Fraudulent Inducement or Fraud

Fraud and fraudulent inducement are not specifically mentioned as grounds for non-
enforcement of an arbitration agreement in the Convention or most arbitration statutes.
Nonetheless, courts and arbitral tribunals have uniformly concluded that fraud and fraudulent
inducement are bases for holding an arbitration agreements invalid or null and void.
Under the separability presumption, claims that the parties’ underlying contract was
fraudulently induced do not affect the validity of an arbitration clause included in the
contract. The fact that one party may have fraudulently misrepresented the quality of its
goods, services, or balance sheet generally does not impeach the parties’ separable dispute
resolution mechanism.22 As a consequence, only fraud directed at the agreement to arbitrate
itself will impeach that agreement. These circumstances seldom arise: in practice, it is very
unusual that a party will seek to procure an agreement to arbitrate by fraud.

[4] Impossibility and Frustration

Impossibility and frustration are grounds for challenging the substantive validity of
arbitration agreements.23 As with other generally-applicable contract law defenses, the
relevant issue is whether the separable agreement to arbitrate has been frustrated, not whether
the underlying contract has become impossible to perform. Claims of impossibility or
frustration typically arise where an arbitrator, named specifically in the arbitration agreement,
dies or becomes unable to fulfill his or her mandate; alternatively, the arbitral institution
specified in the parties’ agreement may cease to exist or be merged into another institution. In
both cases, courts have generally been reluctant to find frustration or impossibility, often
appointing a substitute arbitrator or holding that another institution (or ad hoc arbitration)
implements the parties’ basic agreement to arbitrate.

[5] Illegality

It is elementary in most jurisdictions that an illegal agreement is not enforceable. In most

instances, courts and tribunals rely on the separability presumption to conclude that claims
attacking the legality of the underlying contract do not affect the arbitration agreement.24 In
rare cases, courts have suggested that some types of illegality of the underlying contract may
also render the associated arbitration agreement invalid: “The English court would not
recognize an agreement between ... highwaymen to arbitrate their differences any more than it
would recognize the original agreement to split the proceeds.”25 Claims of illegality are also
sometimes directed at the parties’ arbitration agreement itself. These claims typically involve
the doctrine of “non-arbitrability,” discussed below.

[6] Lack of Capacity

The existence of capacity to conclude an arbitration agreement is a requirement in most legal

systems for the validity of the resulting agreement. Article V(1)(a) of the New York
Convention permits a national court to deny recognition of an award if the parties to the
arbitration agreement “were, under the law applicable to them, under some incapacity.” 26
Although Article II of the Convention does not refer expressly to incapacity as a defense, it
has been held to incorporate Article V(1)(a)’s reference to a lack of capacity. Articles 8, 34(2)
(a)(i) and 36(1)(a)(i) of the UNCITRAL M odel Law contain parallel provisions.
Neither the Convention nor the Model Law prescribe additional substantive or choice-of-
law rules with regard to capacity. In the absence of legislative guidance, the requirement that a
party have capacity to enter into an arbitration agreement is often identical to requirements
for capacity for other contracts. For example, generally-applicable contract defenses going to
capacity – such as mental incompetence, minority and limitations in constitutive corporate
documents – apply to arbitration agreements, just as they do to other acts.
A recurrent issue arises from agreements entered into by states or state-related entities. In
some instances, states attempt to disavow their international arbitration agreements, citing
provisions of national law restricting the power of government entities to conclude such
agreements. Most authorities disfavor such efforts, providing that a state may not invoke its
own law to deny its capacity to have made a binding agreement to arbitrate.27

[7] Termination and Repudiation

An agreement to arbitrate may be challenged on grounds of termination or repudiation. Like

other issues of validity, questions of termination and repudiation must be considered in the
context of the separability presumption. Most courts and tribunals have held that the
termination, expiration, rescission, or repudiation of the underlying contract does not affect
the separable arbitration agreement. In the words of a leading Swiss decision:

the arbitration agreement does not necessarily share ... the outcome of the main contract.
... [T]his also applies where the parties terminate the principal contract by mutual
agreement, but in that case, as a general rule, one should accept that insofar as the parties
have not expressly provided otherwise, they also intend to retain their arbitration
agreement for disputes concerning the consequences of the termination of the contract.28

Although termination of the underlying contract does not terminate the separable arbitration
clause, it is possible for parties to separately terminate an arbitration agreement. Doing so
typically requires express agreement by both parties.
In some legal systems, an arbitration agreement may also be terminated by a repudiation,
or a repudiatory breach, which is accepted; of course, the repudiation must involve the
arbitration agreement, not the underlying contract. In general, only the commencement of
litigation in deliberate breach of an agreement to arbitrate will constitute a repudiatory breach;
lesser breaches, such as failure to comply with a tribunal’s procedural directions, will not
ordinarily constitute a repudiation of the arbitration agreement (although it may result in the
arbitral tribunal imposing procedural sanctions against the non-complying party).29

[8] Waiver of Right to Arbitrate

It is clear that rights to arbitrate may be waived, just as other contractual rights may be
waived. The Convention does not expressly refer to waiver of the right to arbitrate, but
Article II(3) arguably includes waiver when referring to arbitration agreements that are
“inoperable.”
Article 8(1) of the Model Law is more specific, providing for the enforcement of
arbitration agreements by national courts (through a stay of litigation), subject to the
requirement that the party invoking the agreement has requested its enforcement “not later
than when submitting his first statement on the substance of the dispute” in the national
court proceedings. Article 8 establishes a reasonably definite definition of waiver, which
applies regardless of the intentions of the “waiving” party or prejudice to the “non-waiving”
party. Failure to comply with Article 8(1)’s requirement has frequently been held to result in
the loss of a party’s right to invoke the arbitration agreement with regard to a particular
dispute.
Some legal systems are more reluctant to find the waiver of an arbitration agreement. For
example, the FAA has been interpreted by U.S. courts as disfavoring waivers of a party’s
right to arbitrate. A finding of waiver under the FAA typically requires knowledge of a right
to arbitrate, actions inconsistent with that right (typically, commencement of litigation or
protracted delay) and (less clearly) prejudice to the adverse party. Moreover, the party
seeking to establish waiver bears a heavy burden of proof under the FAA and doubts are
resolved against finding a waiver.

[9] Inconvenient Arbitral Seat

An arbitration agreement will sometimes select an arbitral seat that is (or becomes) highly
inconvenient to one party. It is occasionally suggested that this inconvenience provide
sufficient grounds for challenging the validity of the arbitration agreement, including on the
basis of unconscionability or mistake. In practice, national courts and arbitral tribunals have
virtually always rejected such claims (at least outside the consumer context), frequently
questioning whether applicable international or national instruments even recognize such a
basis for challenging the validity of an arbitration agreement.30 In contrast, where national
hostilities or radical political changes result in serious doubts about the impartiality of courts
in the arbitral seat, the contractual specification of the seat is more likely to be invalidated.31
§3.02 THE NON-ARBITRABILITY DOCTRINE

As described above, the New York Convention contains various exceptions to the general
obligation, set forth in Article II, to enforce written arbitration agreements. One of these
exceptions is the so-called non-arbitrability doctrine, which provides that certain types of
disputes may not be arbitrated, notwithstanding an otherwise valid arbitration agreement.

[A] Basis for Non-Arbitrability Doctrine

Article II(1) of the Convention provides an exception to the presumptive obligation of
Contracting States to recognize arbitration agreements. Under Article II(1), a state is not
obligated to refer disputes to arbitration if they are not “capable of settlement by
arbitration.” Similarly, Article V(2)(a) provides that an award need not be recognized if “[t]he
subject matter of the difference is not capable of settlement by arbitration under the law” of
the state where recognition is sought. Together, these provisions permit the assertion of non-
arbitrability defenses to both arbitration agreements and awards under the Convention.
Like the Convention, legislation in most states treats some categories of claims as incapable
of resolution by arbitration. The Model Law is representative, with Article 1(5) providing
that specified types of disputes may be treated as not capable of settlement by arbitration
(or “nonarbitrable”). Virtually all states have provided, by legislation or judicial decisions,
that certain categories of disputes are non-arbitrable: even if the parties have concluded a
valid arbitration agreement, which extends to a dispute, the agreement will not be enforceable
as applied to these “non-arbitrable” matters.

[B] Applications of Non-Arbitrability Doctrine

The types of disputes that are non-arbitrable differ from nation to nation. In general, disputes
or claims are deemed “non-arbitrable” because of their public importance or a perceived need
for judicial protections. Among other things, various nations refuse to permit arbitration of at
least some disputes concerning criminal law, labor grievances; intellectual property; real
estate; bankruptcy; and domestic relations.
The non-arbitrability doctrine was frequently invoked during the 20th century. National
courts concluded that a variety of claims were non-arbitrable, applying expansive, sometimes
ill-defined, conceptions of public policy. More recently, courts in most developed
jurisdictions have materially narrowed the non-arbitrability doctrine, typically applying it
only where statutory provisions expressly require.32 In most instances, this has involved a
limited set of “mandatory law” claims, which parties are not free to contract out of in
advance and which fairly clearly require resolution in judicial or other specialized forums.
[1] Competition and Antitrust Claims

During the mid-20th century, many national courts sometimes held antitrust and competition
claims non-arbitrable. More recently, that approach has been rejected by U.S., EU and other
courts; as a consequence, many categories of civil antitrust claims are now arbitrable. Thus, in
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., the U.S. Supreme Court held that
federal antitrust claims were arbitrable, provided that they arose from an “international”
transaction. The Court reasoned that “[t]he utility of the [New York] Convention in
promoting the process of international commercial arbitration depends upon the willingness
of national courts to let go of matters they normally would think of as their own.”33 A
similar approach has been taken by the European Court of Justice, which declared in Eco
Swiss China Time Ltd v. Benetton Int’l NV, that an arbitration agreement could validly be
given effect with respect to EU competition claims.34 Courts in EU Member States have also
held that EU and Member State competition law claims may validly be the subject of an
international arbitration agreement.

[2] Securities Claims

Like competition claims, claims arising from securities regulations were historically regarded
as non-arbitrable in many jurisdictions. In the United States, early decisions held that private
civil claims under U.S. securities laws were non-arbitrable, at least in domestic transactions.
In Scherk v. Alberto-Culver Co., however, the U.S. Supreme Court held that claims under the
securities laws were arbitrable, again provided they arose from an “international” transaction.
The Court reasoned that “[a] parochial refusal by the courts of one country to enforce an
international arbitration agreement would not only frustrate [the Convention’s] purposes, but
would invite unseemly and mutually destructive jockeying by the parties to secure tactical
litigation advantages.”35 Approaches in other jurisdictions are mixed, with some states
providing that arbitration agreements are unenforceable as applied to future disputes arising
under domestic securities regulatory legislation; in other jurisdictions, securities claims may
be the subject of a valid agreement to arbitrate.

[3] Bankruptcy

In most jurisdictions, only courts (often specialized courts) have the authority to commence,
administer and conclude bankruptcy cases, including proceedings that liquidate a bankrupt
company, reschedule its debts, operate it under some form of receivership, or distribute pro
rata payments to creditors. Disputes concerning these “core” bankruptcy functions are
almost universally considered non-arbitrable, whether in domestic or international
arbitrations.36
It is much more controversial, however, whether disputes merely involving a bankrupt
entity as a party (e.g., a dispute arises between the debtor and a counter-party, under a
contract containing an arbitration clause) or raising questions of bankruptcy law (e.g., the
continued effect of a contract), may be resolved in arbitration. Different legislative regimes
reach different conclusions about these types of disputes. In many such cases, the
desirability of a centralized, usually “pro-debtor,” forum for resolving all or most disputes
involving the debtor is weighed against that entity’s pre-existing commitment to resolve
disputes by international arbitration, with different legal systems adopting different
resolutions. The weight of authority supports narrow non-arbitrability rules in this context,
with international arbitration agreements of bankrupt entities often being given effect.

[4] Employment Contracts

Historically, many legal systems treated some employment-related claims as non-arbitrable.

Despite the evolution of the non-arbitrability doctrine in other contexts, that remains the case
in a number of jurisdictions, including Belgium, Italy and Japan.37 In contrast, U.S. law
affirmatively encourages arbitration of many labor disputes, while imposing only limited non-
arbitrability restrictions on employer-employee disputes. Thus, §1 of the U.S. FAA excludes
from the Act’s coverage agreements arising from a limited range of employment relations –
involving “contracts of employment of seamen, railroad employees, or any other class of
workers engaged in foreign or interstate commerce.” Consistent with its text, this exclusion
has been limited exclusively to transportation workers.38

[5] Consumer Disputes

As with employment disputes, different legal systems take different approaches towards the
arbitration of “consumer” disputes.39 U.S. law currently recognizes the validity of
agreements to arbitrate between consumers and businesses and permits the arbitration of both
existing and future consumer disputes, subject to fairly limited restrictions based on
principles of unconscionability and due notice. The FAA has been interpreted as extending to
agreements between consumers and merchants, with the U.S. Supreme Court repeatedly
upholding both the validity of such agreements and the arbitrability of consumer claims.40
In contrast, other jurisdictions forbid or regulate (through statutory provisions) agreements
to arbitrate future consumer disputes. Under the EU’s Unfair Terms in Consumer Contracts
Directive, a provision in a standard form consumer contract is prima facie invalid if it
“requir[es] the consumer to take disputes exclusively to arbitration not covered by legal
provision.”41 Various EU Member States have implemented this provision by adopting
legislation that deems arbitration clauses in standard form contracts unfair (and therefore
invalid) if they require binding arbitration of future disputes involving claims for less than
specified sums (e.g., approximately $10,000). Legislation in other jurisdictions, including
Quebec, Ontario, New Zealand and Japan, also provides for the unenforceability of specified
categories of consumer contracts.

[6] Other Non-Arbitrable Disputes

Legislation in other states provides for a variety of categories of non-arbitrable disputes,

although these are usually limited in scope and practical importance. Virtually all states
regard criminal matters as non-arbitrable (in the sense that arbitrators may not impose
criminal sanctions, although in deciding civil disputes they may consider allegations of
conduct that would amount to a criminal offense). A few states treat limited issues of
intellectual property law as non-arbitrable (e.g., patent validity), while allowing other civil
disputes over IP rights to be arbitrated (e.g., royalty disputes, infringement claims). Other
states treat disputes arising from trade sanctions or embargoes as non-arbitrable, although the
more frequent approach is to treat such disputes in the same manner as antitrust disputes.

[C] Choice of Law Governing Non-Arbitrability

The law applicable to questions of non-arbitrability is addressed in Article V(2)(a) of the

Convention, which provides that an award need not be recognized in a Contracting State if
“the subject matter of the dispute is not capable of settlement by arbitration under the law of
that country.” The same rule is reflected in Article 36(1)(b)(i) of the Model Law. As
discussed above, most authorities have applied this rule by analogy to the enforcement of
arbitration agreements, holding that, when a court is requested to refer a dispute to
arbitration, it may apply its own non-arbitrability rules.42

[D] Non-Arbitrability Issues in Annulment or Enforcement of Awards

The non-arbitrability doctrine is also relevant at the stage of enforcing arbitral awards. In
particular, as discussed below, awards may be either annulled or denied recognition if they
concern a matter that is non-arbitrable (“not capable of settlement by arbitration”).43
 Although national courts have held that competition, securities and other mandatory law
claims are arbitrable, they have also suggested that awards dealing with these matters may be
subject to heightened judicial review. In Mitsubishi Motors, for example, the U.S. Supreme
Court held that U.S. courts would take a “second look” at an arbitrator’s decision applying
the antitrust laws at the stage of award enforcement: “Having permitted the arbitration to go
forward, the national courts of the United States will have the opportunity at the award
enforcement stage to ensure that the legitimate interest in the enforcement of the antitrust
laws has been addressed.”44 The Eco Swiss decision of the ECJ attached the same caveat to
the enforcement of an arbitration agreement with regard to EU competition claims. Similar
approaches have been adopted in other contexts.45
The level of judicial review of awards dealing with mandatory law claims has been
relatively limited. Courts have sometimes scrutinized the substance of the arbitrators’
decisions, but typically afforded awards a substantial measure of discretion, even in deciding
mandatory law claims.46
_________________________
1. Article II of the New York Convention applies only to an “ agreement ... under which the parties undertake to
submit to arbitration,” while Article 8 of the Model Law applies only where there is an “ arbitration agreement,”
defined as requiring “ an agreement by the parties to submit to arbitration all or certain disputes.” These
provisions require the existence of a validly-formed agreement to arbitrate, failing which there will be nothing for
national courts or arbitrators to enforce.
2. G. Born, International Commercial Arbitration 639–41 (2009).
3. Issues of formal validity of the arbitration agreement are discussed below. See infra pp. 73–77. See also G. Born,
International Commercial Arbitration 579 et seq., 642–43 (2009).
4. G. Born, International Commercial Arbitration 671–73 (2009).
5. G. Born, International Commercial Arbitration 644–55 (2009).
6. See supra pp. 34–39.
7. G. Born, International Commercial Arbitration 659–60 (2009). Some national arbitration legislation permits
judicial assistance in selecting an arbitral tribunal even for a blank clause, provided the parties have some
connection to the judicial forum. Id. at 1703–38.
8. See, e.g., G. Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing (3d ed.
2010); J. P aulsson et al., The Freshfields Guide to Arbitration Clauses in International Contracts (3d ed. 2010).
9. G. Born, International Commercial Arbitration 674–78 (2009).
10. Marnell Corrao Assoc. Inc. v. Sensation Yachts Ltd, (2000) 15 P RNZ 608 (Auckland High Court).
11. W arnes SA v. Harvic Int’l Ltd, 1993 WL 228028 (S.D.N.Y. 1993).
12. Preliminary Award in Zurich Chamber of Commerce of 25 November 1994, XXII Y.B. Comm. Arb. 211 (1997).
13. Preliminary Award in ICC Case No. 2321, I Y.B. Comm. Arb. 133 (1976).
14. See G. Born, International Commercial Arbitration 682–86 (2009).
15. See, e.g., Three Shipping Ltd v. Harebell Shipping Ltd [2004] All E.R. (D) 152 (Q.B.); Thorn Security ( Hong
Kong) Ltd. v. Cheung Fee Fung Cheung Constr. Co ., [2005] 1 HKC 252 (H.K. Court of Appeal, High Court);
Austin v. Owens-Brockway Glass Container Inc ., 78 F.3d 875, 880 (4th Cir. 1996) (agreement that “ all disputes
... may be referred to arbitration” triggers mandatory arbitration when dispute is referred to arbitration).
16. See G. Born, International Commercial Arbitration 613–14 (2009). In some states (e.g., Switzerland), written
form requirements are a condition or requirement for contractual validity, while in other jurisdictions ( e.g.,
United States, England), arbitration agreements may be valid under general contract law principles even if the
formal requirements for application of national arbitration legislation are not satisfied.
17. UN General Assembly Resolution No. 61/33, Recommendation regarding the Interpretation of Article II,
paragraph 2, and Article VII, paragraph 1, of the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards(2006), available at www.uncitral.org.
18. See infra pp. 82–86.
19. See, e.g., FAA, 9 U.S.C. §2 (a written arbitration agreement “ shall be valid, irrevocable and enforceable, save
upon such grounds as exist at law or in equity for the revocation of any contract”); English Arbitration Act,
1996, §7; Singapore International Arbitration Act, §§3(1), 31(2)(b).
20. G. Born, International Commercial Arbitration 723–31 (2009).
21. G. Born, International Commercial Arbitration 731–35 (2009).
22. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (U.S. S.Ct. 1967) (claim that the parties’
underlying contract (containing an arbitration clause) had been fraudulently induced did not involve a challenge
to the arbitration clause itself; arbitral tribunal, rather than a U.S. court, was competent under U.S. FAA to rule
upon the fraudulent inducement claim); Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40 (House of
Lords) (“ the doctrine of separability requires direct impeachment of the arbitration agreement before it can be set
aside. This is an exacting test.”).
23. There are references to the impossibility doctrine in Article II(3) of the Convention, which contemplates non-
recognition of arbitration agreements which are “ incapable of being performed,” and Article 8 of the UNCITRAL
Model Law, which contains the same formula. See G. Born, International Commercial Arbitration 751–53
(2009).
24. See, e.g., Buckeye Check Cashing, Inc. v. Cardegna , 546 U.S. 440 (U.S. S.Ct. 2006) (claim that underlying
contract was void for illegality did not impeach arbitration clause); Fincantieri-Cantieri Navali Italiani SpA v.
M and Arbitration Tribunal, XX Y.B. Comm. Arb. 766 (Swiss Federal Tribunal) (1995).
25. Soleimany v. Soleimany [1998] Q.B. 785, 797 (English Court of Appeal).
26. See infra pp. 384–86.
27. G. Born, International Commercial Arbitration 630–35 (2009).
28. Judgment of 15 March 1990, Sonatrach v. K.C.A. Drilling Ltd , 1990 Rev. arb. 921 (Swiss Federal Tribunal). See
also Unionmutual Stock Life Ins. Co. of Am. v. Beneficial Life Ins. Co., 774 F.2d 524, 528–29 (1st Cir. 1985)
(“ [t]he arbitration clause is separable from the contract and is not rescinded by ... [defendant]’ s attempt to rescind
the entire contract based on ... frustration of purpose.”); Commonwealth Edison Co. v. Gulf Oil Corp., 541 F.2d
1263, 1271 (7th Cir. 1976).
29. G. Born, International Commercial Arbitration 750–51 (2009).
30. G. Born, International Commercial Arbitration 764–65, 1723–28 (2009).
31. G. Born, International Commercial Arbitration 1728–32 (2009).
32. See G. Born, International Commercial Arbitration 787–90, 836–40 (2009).
33. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 639 n.21 (U.S. S.Ct. 1985).
34. Eco Swiss China Time Ltd v. Benetton Int’l NV, C-126/97 [1999] E.C.R. I-3055 (E.C.J.).
35. Scherk v. Alberto-Culver Co., 417 U.S. 506, 515–16 (U.S. S.Ct. 1974).
36. G. Born, International Commercial Arbitration 808–16 (2009).
37. G. Born, International Commercial Arbitration 816–19 (2009).
38. See, e.g., Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 107 (U.S. S.Ct. 2001) (“ As for the residual exclusion of
‘ any other class of workers engaged in foreign or interstate commerce,’ it would be rational for Congress to
ensure that workers in general would be covered by the FAA, while reserving for itself more specific legislation
for transportation workers”).
39. “ Consumer” disputes are defined generally as disputes between a consumer (or a non-merchant) and a merchant
or commercial party, sometimes with a limited amount in controversy.
40. See Allied-Bruce Terminix Co. v. Dobson , 513 U.S. 265 (U.S. S.Ct. 1995) (consumer contract for pest control);
Green Tree Fin. Corp. v. Randolph, 531 U.S. 79 (U.S. S.Ct. 2000) (mobile home financing agreement).
41. EU Council Directive 93/13/EEC, O.J. L 095, 23/04/1993, at 29, Annex 1(q) (“ Requiring the consumer to take
disputes exclusively to arbitration not covered by legal provision.”).
42. G. Born, International Commercial Arbitration 515–22, 833–34 (2009).
43. See infra pp. 326–27.
44. Mitsubishi Motors, 473 U.S. at 638.
45. These include securities and IP disputes. G. Born, International Commercial Arbitration 788–834 (2009).
46. See infra pp. 322–23.
Chapter 4
Interpretation of International Arbitration Agreements

Agreements to arbitrate are endlessly varied. As a practical matter, arbitration clauses can be
very short (a few words) or quite long; they may be drafted in various languages and with
varying degrees of skill and linguistic proficiency. Arbitration agreements may incorporate
model clauses, either in whole or part, or start from scratch; they may provide for arbitration
of some contractual disputes, all contractual disputes, or virtually all disputes (contractual,
tort, or otherwise) connected to the parties’ relationship; they may provide for ad hoc or for
institutional arbitration; they may designate an arbitral seat; and they may otherwise
structure the arbitral process.
The variety of arbitration agreements frequently gives rise to questions of interpretation.
Questions of interpretation most often concern the “scope” of arbitration clauses, but can
also include other topics (such as the incorporation of institutional rules or the treatment of
procedural provisions). The interpretation of arbitration agreements also gives rise to
questions regarding the allocation of competence between national courts and arbitral
tribunals.

§4.01 SCOPE OF ARBITRATION AGREEMENTS

The most frequent, and important, issue that arises in the interpretation of arbitration
agreements concerns the “scope” of the agreement; that is, assuming that the parties are
bound by a valid arbitration agreement, what categories of disputes or claims have the parties
agreed to submit to arbitration? In particular, are particular contract claims, or non-
contractual claims based upon tort or statutory protections, subject to arbitration pursuant to
the parties’ arbitration agreement or not?

“S cope” of Arbitration Agreement

– “All disputes arising under this First Sales Agreement shall be finally resolved
by arbitration...”
– Seller’s fraudulent misrepresentation of quality of goods delivered under
Agreement
– Seller’s failure to provide goods that comply with statutory product quality and
safety regulations
 – Unfair competition and/or slander/libel claims because buyer publicly criticized
seller’s goods
– Claims for breach of Second Sales Agreement

[A] Rules of Construction

General rules of interpretation and presumptions about the parties’ intent play an important
role in ascertaining the meaning of arbitration agreements. In most jurisdictions, the starting
point for the interpretation of international arbitration agreements is generally-applicable
contract law and its principles of contract interpretation. In the words of an Australian court,
“[a]rbitration clauses are contractual provisions ... and are governed by the ordinary rules of
contractual interpretation.”1 These principles typically include the contra preferentem rule,
specific terms prevailing over general terms, giving effect to all parts of the parties’
agreement, and trade usage of terms. In addition to these generally-applicable rules, some
states apply rules of construction relevant specifically to international arbitration agreements.

[1] Pro-Arbitration Rules of Construction

In many jurisdictions, national law provides that international arbitration agreements should
be construed in light of a “pro-arbitration” presumption. This presumption provides that an
arbitration clause should be interpreted expansively and, in cases of doubt, extended to
encompass disputed claims. That is particularly true where an arbitration clause encompasses
some of the parties’ disputes and the question is whether the clause also applies to related
disputes, so that all such controversies can be resolved in a single proceeding (rather than in
multiple proceedings in different forums).
In the United States, the Supreme Court has declared that “any doubts concerning the
scope of arbitrable issues should be resolved in favor of arbitration.”2 In England, the House
of Lords reasoned similarly: “The proposition that any jurisdiction or arbitration clause in an
international commercial contract should be liberally construed promotes legal certainty. It
serves to underline the golden rule that if the parties wish to have issues as to the validity of
their contract decided by one tribunal and issues as to its meaning or performance decided by
another, they must say so expressly. Otherwise they will be taken to have agreed on a single
tribunal for the resolution of all such disputes.”3 Courts in other states adopt similar
presumptions.

[2] Anti-Arbitration Rules of Construction

A few authorities have held that arbitration clauses must be interpreted restrictively,
resolving doubts about the coverage of particular disputes against coverage. The “restrictive”
presumption is generally explained on the grounds that arbitration is a derogation from
otherwise available access to civil justice, and that such derogations must be construed
narrowly. Thus, in an older decision, a French appellate court declared that “[t]he arbitration
agreement must be strictly interpreted as it departs from the norm – and in particular from
the usual rules as to the jurisdiction of the courts.”4 This anti-arbitration interpretative
presumption is archaic and generally not applied in contemporary decisions.

[B] Recurrent Issues

In practice, a number of issues recur in interpreting the scope of arbitration agreements.

These issues involve the application of a number of relatively standard contractual formulae.

[1] Commonly-Used Formulae in Arbitration Agreements

The most common terms used in arbitration agreements include (a) “all” or “any”; (b)
“disputes,” “differences,” “claims,” or “controversies”; (c) “arising out of,” “in connection
with,” “under,” or “relating to”; (d) the parties’ “agreement,” “contract,” the “works,” or
some broader set of contractual arrangements between the parties.5

Model ICC Arbitration Clause

“All disputes arising out of or in connection with the present contract shall be finally
settled under the [ICC] Rules.”

Model UNCITRAL Clause

“Any dispute, controversy or claim arising out of or relating to this contract, or the
breach, termination or invalidity thereof, shall be settled by arbitration in accordance
with the UNCITRAL Arbitration Rules.”

Some arbitration clauses provide for arbitration of “all” or “any” disputes or differences
without any further qualification or description. For example, an agreement may provide
“[a]ll disputes relating to this contract shall be decided by arbitration.” In contrast, other
arbitral clauses refer only to “disputes” (as in, “Disputes relating to this contract ...”). Some
authorities have interpreted the “all disputes” or “any disputes” formulae more broadly than
a simple reference to “disputes,” concluding that these terms extend to all disputes having
any plausible factual or legal relation to the parties’ agreement or dealings.6
Most arbitration clauses refer to “disputes” and “differences.” A few courts have held that
a “dispute” does not exist unless there is a genuine controversy between the parties,
sometimes examining the merits of the parties’ positions and holding that an arbitrable
“dispute” does not exist where one party’s position is frivolous. 7 In contrast, most courts
have adopted broad interpretations of the terms “dispute,” “difference” and “controversy,”
and refused to inquire into the reasonableness or plausibility of either party’s position.
Many arbitration agreements use the phrase “relating to” (as in “disputes relating to this
contract”). Courts in most jurisdictions have held that this term extends an arbitration clause
to a broad range of disputes. U.S. courts have repeatedly concluded that the “relating to”
formula encompasses non-contractual, as well as contractual, claims and that it reaches any
disputes that “touch” or have a factual relationship to the parties’ contract. 8 Courts in other
jurisdictions have also interpreted the phrase “relating to” broadly. 9 Similar conclusions have
been reached with respect to the phrase “in connection with.”
Authorities have reached divergent interpretations of agreements to arbitrate all disputes
“arising under” or “arising out of” a contract. Some courts have concluded that clauses using
the formulation “arising under” or “arising out of” are broad (comparable to “relating to”)
while other courts have held that the formulation is “narrow.” In the latter category, some
courts have concluded that the “arising under” formula does not encompass tort claims that
did not directly involve application of the parties’ contractual commitments, claims based on
pre-contractual conduct, or claims about contract formation.10

[2] “Broad” versus “Narrow” Arbitration Clauses

Some U.S. courts have distinguished between “broad” and “narrow” arbitration clauses.
Among other things, some courts have said that a “broad” (but not a “narrow”) clause will
attract a “pro-arbitration” rule of construction and grant the arbitrators competence-
competence to decide disputes over the clause’s scope. Other authority holds that a sharp
distinction between “broad” and “narrow” clauses is difficult to justify and that the general
pro-arbitration approach to construction of arbitration agreements should apply in all cases.

[3] Tort Claims

There is no prohibition in most jurisdictions against the arbitration of non-contractual claims.

On the contrary, Article II(1) of the New York Convention (and many arbitration statutes)
defines an arbitration agreement as including differences arising from a relationship “whether
contractual or not.” National courts have generally approached the question whether a
particular non-contractual claim falls within an arbitration clause by applying the pro-
arbitration presumptions and other rules of construction that are used in other contexts.
National courts have frequently addressed cases where conduct relating to the parties’
contractual relationship leads to tort claims (such as fraud, defamation, or unfair
competition). The “pro-arbitration” presumption under most national laws is generally
applicable to these tort claims. In addition, it is frequently said that a party may not defeat
an arbitration clause by casting its claims in tort, rather than contract. Taking this approach,
many decisions have held on particular facts that various tort claims were within the scope of
particular arbitration agreements.11 In other cases, tort claims have been held to fall outside
the scope of the parties’ arbitration agreement.12

[4] Statutory Claims

There is also generally no prohibition against arbitration of claims based on statutory

protections.13 The U.S. Supreme Court has also held that the application of arbitration
clauses to statutory claims should be subject to no different rules of interpretation than
contract claims. The Court declared in Mitsubishi Motors that “[t]here is no reason to depart
from these [pro-arbitration interpretative] guidelines where a party bound by an arbitration
agreement raises claims founded on statutory rights.”14 A number of courts have also said
that the scope of an arbitration clause is determined by reference to the factual allegations
underlying the parties’ claims, regardless of the “legal labels” for those claims.15
On the other hand, some national courts have remarked that “an arbitration clause is no
doubt designed primarily to cover claims for breach of contract.”16 This view is archaic, and
reflects a minority position that is no longer followed in most jurisdictions.

[5] Multiple Contracts

A recurrent factual setting involves the same parties entering into a series of contracts related
to a single enterprise, some of which contain dispute resolution provisions. In these cases,
the question arises whether an arbitration clause in one agreement covers disputes under other
agreements. In general, so long as the parties to the contracts are the same, and the underlying
contracts relate to a single project, courts have usually held that an arbitration clause in one
agreement extends to related agreements (e.g., Contract A with an LCIA arbitration clause;
Contract B with no dispute resolution clause) – provided that the other agreements do not
contain inconsistent arbitration or forum selection clauses (e.g., Contract A with an ICC
arbitration clause; Contract B with a New York forum selection clause). 17 Despite this,
where the agreements lack a sufficiently close relationship, then an arbitration clause in one
contract is likely to be held inapplicable to disputes under the other contract.
Different conclusions apply if the identities of the parties to related contracts differ. In
these circumstances, except where all parties can be bound through non-signatory principles
to an arbitration agreement (as discussed in Chapter 5 below), there is little prospect for
applying an arbitration clause in one agreement to disputes under a different contract with
different parties.
Similarly, the existence of dissimilar arbitration provisions in related agreements has
generally been held to be strong evidence that disputes under the various agreements were
meant to be resolved under different dispute resolution provisions. This is particularly true
where different contracts contain different arbitration clauses (e.g., Contract A with an ICC
clause and Contract B with an AAA clause; Contract A with a Swiss arbitral seat and
Contract B with a Tokyo seat). Even where an identical arbitration clause is repeated
verbatim in multiple contracts, that clause is sometimes said not to be the “same” clause,
giving rise to the possibility of separate arbitrations (and arbitral tribunals) under each
separate substantive contract, with each arbitration limited to a single, specific agreement.
Arbitral tribunals have often sought to avoid this latter result, at least where different
contracts involve the same parties.18
A related factual scenario involves successive contracts entered into at different times
between the same or similar parties (as distinguished from related contracts entered into at
the same time). Where one, but not all, of the successive contracts contains an arbitration
clause, questions can arise as to whether such a clause extends to disputes under subsequent
(or earlier) contracts. As in other contexts, courts have looked to the language and
relationship of the parties’ agreements in order to determine their intent, while presuming
that the parties desired a single, efficient dispute resolution mechanism. In general, courts
have held that an arbitration clause in the earlier of two or more related agreements extends to
disputes under the later contracts, provided that there is a sufficiently close connection
between the agreements; if the subsequent contracts have their own different, inconsistent
dispute resolution provisions, the opposite conclusion is much more likely.19

§4.02 INCORPORATION OF INSTITUTIONAL ARBITRATION RULES

As discussed elsewhere, arbitration clauses frequently refer to institutional arbitration rules
and provide that the arbitration shall be conducted in accordance with those rules. The
incorporation of institutional rules by reference is in principle effective in all developed
jurisdictions: parties that agree to arbitrate under institutional rules are bound by those rules.
 Many institutional rules grant the administering institution the power to interpret and
apply its rules, typically with an exclusion of judicial review. 20 Courts have generally
afforded arbitral institutions broad discretion in interpreting their own rules.21 In limited
instances, exclusions of judicial review may be ineffective (e.g., precluding judicial
consideration of challenges to arbitrators on grounds of partiality).
A recurrent practical question is whether a general reference to a set of institutional
arbitration rules (e.g., “All disputes shall be resolved by arbitration under the ICC Arbitration
Rules”) refers to the version of the institutional rules in force at the time the contract was
concluded or the version in force at the time the arbitration is commenced. Some institutional
rules specifically address the issue (often providing for application of the version of
institutional rules in force at the time an arbitration is commenced22 ). Absent such language,
courts and arbitrators reach divergent results.

§4.03 ALLOCATION OF COMPETENCE TO INTERPRET

INTERNATIONAL ARBITRATION AGREEMENTS

As discussed above, different legal systems take different approaches to the allocation of
competence to decide jurisdictional disputes. The same rules that apply generally to the
allocation of jurisdictional competence also apply to interpretation of the scope of arbitration
agreements.
As discussed above, U.S. courts have held that parties may agree to submit jurisdictional
disputes to the arbitrators for final resolution, applying the standard adopted by the U.S.
Supreme Court in First Options v. Kaplan.23 Most courts have held that an agreement to
arbitrate under institutional rules, which grant the arbitrators competence to decide their own
jurisdiction, satisfies the First Options requirement for “clear and unmistakable” evidence,
particularly for disputes over the scope of a concededly valid arbitration clause.24 In the
words of one U.S. court, when “parties explicitly incorporate rules that empower an
arbitrator to decide issues of arbitrability, the incorporation serves as clear and unmistakable
evidence of the parties’ intent to delegate [jurisdictional disputes] to an arbitrator.”25
_________________________
1. W alter Rau Neusser Oel und Fett AG v. Cross Pac. Trading Ltd , XXXI Y.B. Comm. Arb. 559 (Australian Fed. Ct.
2005) (2006).
2. Mitsubishi Motors, 473 U.S. at 626.
3. Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40 (House of Lords). See also G. Born, International
Commercial Arbitration 1067–76 (2009).
4. Judgment of 11 March 1986, Compagnie d’assurance La Zurich v. Bureau central français, Gaz. P al. 1986 1.298
(Paris Cour d’ appel).See also Hi-Fert Pty Ltd v. Kiukiang Maritime Carriers Inc., (1998) 90 FCR 1 (Australian
Fed. Ct.).
5. The intent of most model institutional arbitration clauses is to expansively encompass all disputes relating to a
 particular contract, regardless of legal formulation. That is consistent with the practical objective of providing a
single, neutral and expert forum for efficiently resolving the parties’ disputes.
6. Most arbitration clauses provide for arbitration of all “ disputes” or “ differences,” while some clauses also (or
instead) refer to “ claims” or “ controversies.” These formulations encompass any sort of disagreement, dispute,
difference, or claim that may be asserted in arbitral proceedings.
7. See, e.g., Guangdong Agri. Co. v. Conagra Int’l ( Far East) Ltd , XVIII Y.B. Comm. Arb. 187 (H.K. High Court,
S.Ct. 1992) (1993). As discussed above, leading international arbitration conventions and national arbitration
legislation apply only to agreements to arbitrate “ disputes.” See supra pp. 35–36, 46. See also G. Born,
International Commercial Arbitration 1091–92 (2009).
8. See, e.g., Pennzoil Explor. and Prod. Co. v. Ramco Energy Ltd, 139 F.3d 1061 (5th Cir. 1998) (“ relating to”
language in arbitration agreement is “ broad”; clause reaches claims that “ ‘ touch’ matters covered by” the
contract); McDonnell Douglas Corp. v. Kingdom of Denmark , 607 F.Supp. 1016, 1019 (E.D. Mo. 1985)
(“ ‘ relating to’ is generally regarded as broad rather than narrow language”).
9. G. Born, International Commercial Arbitration 1092–93 (2009).
10. G. Born, International Commercial Arbitration 1095–96 (2009).
11. See, e.g., Ferro Corp. v. Garrison Indus., Inc ., 142 F.3d 926, 927–18 (6th Cir. 1998) (refusing to interpret
arbitration agreement to exclude fraudulent inducement claims); Mar-Len of La., Inc. v. Parsons-Gilbane , 773
F.2d 633, 637 (5th Cir. 1985) (arbitration agreement covering “ any dispute arising under” the agreement or
“ with respect to the interpretation or performance of” the agreement held to cover duress claims); Ulysess
Compania Naviera SA v. Huntingdon Petroleum Serv., The Ermoupolis [1990] 1 Lloyd’ s Rep. 160 (Q.B.).
12. See, e.g., Tracer Research Corp. v. National Env. Serv. Co ., 42 F.3d 1292 (9th Cir. 1994) (misappropriation of
trade secrets claim not within scope of arbitration agreement covering disputes “ arising hereunder”); Judgment
of 4 September 1987, JLMB 88/309, 309–10 (Liege Cour d’ appel) (arbitration clause covering disputes
“ arising out of the contract” does not cover tort claims related to the main contract).
13. As discussed above, in limited circumstances, claims based on mandatory law protections may be treated as non-
arbitrable, but these are exceptions.
14. Mitsubishi Motors, 473 U.S. at 626.
15. J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, SA , 863 F.2d 315, 319 (4th Cir. 1988); Osteomed, LP v. Koby
Indus., LP, 2006 U.S. Dist. LEXIS 84639, at *3 (N.D. Tex. 2006) (“ whether a claim is subject to the arbitration
clause depends on the factual allegations contained in the complaint, not the causes of action asserted”).
16. Lonrho Ltd v. Shell Petroleum Co. Ltd, IV Y.B. Comm. Arb. 320, 321–22 (Ch. D. 1978) (1979).
17. G. Born, International Commercial Arbitration 1109–17 (2009). See also B. Hanotiau, Complex Arbitrations
§281 (2005).
18. Institutional arbitration rules also sometimes permit consolidation of arbitrations in these circumstances. G.
Born, International Commercial Arbitration 1110–11 (2009).
19. G. Born, International Commercial Arbitration 1115–17 (2009).
20. See, e.g., ICC Rules 2012, Art. 1(2); LCIA Rules, Art. 29(1); ICDR Rules, Art. 36.
21. See, e.g., Koch Oil, SA v. Transocean Gulf Oil Co., 751 F.2d 551 (2d Cir. 1985) (AAA Commercial Rules give
AAA reasonable discretion to interpret time limits in Rules); Reeves Bros., Inc. v. Capital-Mercury Shirt Corp.,
962 F.Supp. 408 (S.D.N.Y. 1997) (“ Where ... the parties have adopted [institutional] rules, the parties are also
obligated to abide by the [relevant institution’ s] determinations under those rules.”); Judgment of 15 May 1985,
Raffinerie de pétrole d’Homs et de Baninas v. Chambre de commerce internationale , 1985 Rev. arb. 141 (Paris
Cour d’ appel) (“ the provisions of the [ICC Rules], which constitute the law between the parties, must be applied
to the exclusion of all other rules”).
22. E.g., UNCITRAL Rules, Art. 1(2); LCIA Rules, P reamble.
23. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942 (U.S. S.Ct. 1995).
24. For example, a number of decisions rely on Article 6(3) of the 2012 ICC Rules (or its predecessors), which
provides that “ any question of jurisdiction ... shall be decided directly by the arbitral tribunal.” See Qualcomm,
Inc. v. Nokia Corp., 466 F.3d 1366, 1374 (Fed. Cir. 2006) (“ the parties clearly and unmistakably intended to
delegate arbitrability questions to an arbitrator as evidenced by their incorporation of the AAA Rules”);Shaw
Group Inc. v. Triplefine Int’l Corp., 322 F.3d 115, 118 & 125 (2d Cir. 2003) (ICC arbitration clause “ clearly and
 unmistakably evidences the parties’ intent to arbitrate questions of arbitrability”).
25. Contec Corp. v. Remote Solutions Co., 398 F.3d 205, 208 (2d Cir. 2005).
Chapter 5
International Arbitration Agreements: Non-signatory Issues

As discussed above, international arbitration is fundamentally consensual. As a consequence,

an arbitration agreement binds (and benefits) only the agreement’s parties, and not others.
Presumptively, and in most instances, the parties to an arbitration agreement are its formal
signatories. Nonetheless, there are circumstances in which non-signatories may be held to be
parties to – and consequently both bound and benefited by – an arbitration agreement.

§5.01 NON-SIGNATORIES TO ARBITRATION AGREEMENTS

As already noted, the parties to an arbitration agreement are usually its formal signatories.
Conversely, it is also clear that entities that have not formally executed an arbitration
agreement, or the underlying contract containing an arbitration clause, may be bound by the
agreement to arbitrate. As one court explained: “Arbitration is consensual by nature .... It
does not follow, however, that ... an obligation to arbitrate attaches only to one who has
personally signed the written arbitration provision. ... A non-signatory party may be bound
to an arbitration agreement if so dictated by the ‘ordinary principles of contract and
agency.’”1
A variety of legal theories have been invoked under different legal systems to bind entities
that have not executed an arbitration agreement. These include alter ego, agency (actual and
apparent), “group of companies,” estoppel, legal succession, third-party beneficiary,
guarantor, ratification, assignment and assumption theories. In each instance, non-signatories
of a contract can be bound by, and may invoke, the contract’s arbitration clause.

Bases for S ubjecting Non-S ignatory to Arbitration Agreement

1. Agency
2. Alter Ego and Veil-Piercing
3. “Group of Companies”
4. Succession (M erger, Business Combination)
5. Assignment or Transfer
6. Estoppel
7. Corporate Officers and Directors
8. Other
[A] Agency

The simplest circumstance in which a non-signatory is bound by an arbitration agreement is

when an agent executes a contract for its principal. It is well-settled, in most legal systems,
that one party (an “agent”) may in certain circumstances legally bind another party (a
“principal”) by its acts. Among other things, an agent may enter into contracts, including
arbitration agreements, which will be legally-binding on its principal, although not necessarily
on the agent. For the most part, general principles of agency law have been applied in the
specific context of international arbitration agreements. In the words of one court, “[the]
theories under which non-signatories may be bound to the arbitration agreements of others ...
arise out of common law principles of contract and agency law.”2
Closely related to agency is the doctrine of ostensible or apparent authority. Under this
doctrine, a party may be bound by another entity’s acts, even where those acts were
unauthorized, if the putative principal created the appearance of authorization, leading a
counter-party reasonably to believe that an agency relationship existed. The theory of
apparent authority can bind the “apparent” principal to a contract (including an arbitration
agreement) entered into putatively on its behalf by the “apparent” agent.

[B] Alter Ego and Veil-Piercing

Many authorities hold that a party who has not assented to a contract containing an
arbitration clause may nonetheless be bound by the clause if that party is an “alter ego” of an
entity that did execute, or was otherwise a party to, the agreement. The alter ego doctrine is
referred to in German as “Durchgriff,” in French as “levee du voile social” and in some
English language contexts as “veil-piercing” or “lifting the corporate veil.”
Definitions of “alter ego” vary widely and are applied in a number of different contexts. In
the context of arbitration agreements, demonstrating an “alter ego” relationship in most legal
systems requires convincing evidence that one entity dominated the day-to-day actions of
another and that it exercised this power to work fraud or other injustice on a third party or to
evade statutory or other obligations.3 The alter ego doctrine differs from principles of agency,
in that the parties’ intentions are not decisive; rather, the doctrine rests on overriding
considerations of fairness and equity, which mandate disregarding an entity’s separate legal
identity in specified circumstances. Courts are circumspect in applying the alter ego doctrine:
an alter ego relationship may generally be found only in exceptional cases, where the
corporate form is abused to evade mandatory legal obligations or frustrate legitimate third
party rights.
[C] Group of Companies

A significant, but controversial, basis for binding non-signatories to an arbitration agreement

is the “group of companies” doctrine. Under this principle, non-signatories of a contract may
be deemed parties to the associated arbitration clause based on factors which are roughly
comparable to those relevant to alter ego analysis. In particular, where a company is part of a
corporate group, is subject to the control of (or controls) a corporate affiliate that has
executed a contract, and is involved in the negotiation or performance of that contract, then it
may in some circumstances invoke or be subjected to an arbitration clause contained in that
contract, notwithstanding the fact that it has not executed the contract.4
A seminal group of companies decision was Interim Award in ICC Case No. 4131. There,
an arbitral tribunal concluded that “irrespective of the distinct juridical identity of each of its
members, a group of companies constitutes one and the same economic reality,” and that the
arbitration clause bound all of the companies in a corporate group, which, “by virtue of their
role in the conclusion, performance, or termination of the contracts containing said clauses,
and in accordance with the mutual intention of all parties to the proceedings, appear to have
been veritable parties to these contracts or to have been principally concerned by them and
the disputes to which they may give rise.”5 Other awards (and in a few cases, court
decisions) have adopted similar conclusions.
In contrast, a number of national courts have rejected the group of companies doctrine,
albeit often with limited analysis. One English court held that “the Group of Companies
doctrine ... forms no part of English law”6 and other courts have annulled awards which relied
on the group of companies doctrine to hold a non-signatory party bound by an arbitration
agreement.7

[D] Succession

An entity that does not execute an arbitration agreement may become a party thereto by way
of legal succession. The most common means of such succession is by a company’s merger or
combination with the original party to an agreement. In many states, the consequence of a
“merger” between two companies is that the “surviving” entity will be the owner of all the
assets and liabilities (including contract rights and obligations) of the previously-existing
entities. When such a combination occurs, most national laws provide that the surviving
entity succeeds by operation of law as a party to the contracts, including the arbitration
agreements, of the previously-existing entities. Thus, if A and B enter into a contract,
containing an arbitration clause, and B later merges into C, then C ordinarily becomes a party
to both the contract and the arbitration agreement, by operation of law.
[E] Assignment or Transfer

Contracts are frequently transferred from one party to another by way of assignment,
novation, or assumption. Some early decisions suggested that arbitration agreements were not
capable of being transferred, apparently on the theory that they were “personal” obligations,
which were binding upon only the original parties.8 These decisions have been superseded,
and it is now universally accepted that parties have the contractual autonomy to transfer or
assign arbitration agreements, just as they have the power to transfer other types of
contracts.
In principle, the assignment of a contract should have the effect of conveying the
arbitration clause associated with the underlying contract to the assignee (at least absent a
contractual or legal prohibition that renders the assignment ineffective).9 Thus, in many
jurisdictions, there is a presumption of “automatic” assignment of the arbitration clause
together with the underlying contract.10
There are often contractual limits on assignment in commercial agreements that may forbid
one party from assigning the underlying contract, either absolutely or without its counter-
party’s consent. If the assignment of the underlying contract and the arbitration clause are in
violation of a contractual restriction, then the putative assignee arguably has no rights under
the arbitration clause (since the contract and arbitration clause were arguably never
assigned).11

[F] Estoppel
A number of authorities have recognized estoppel or related doctrines as a basis for either
permitting a non-signatory to invoke an arbitration agreement or holding that a non-signatory
is bound by an arbitration agreement. These authorities have held that, where a non-signatory
claims or exercises rights as a party under a contract, which contains an arbitration clause, the
non-signatory will typically be estopped from denying that it is a party to the arbitration
clause. As one U.S. court put it: “In short, [plaintiff] cannot have it both ways. It cannot rely
on the contract when it works to its advantage and ignore it when it works to its
disadvantage.”12 Similarly, where a party invokes an arbitration clause in national court
proceedings, claiming rights under that clause, it will ordinarily be estopped from
subsequently denying that it is bound by the arbitration agreement in other proceedings.13
Some U.S. courts have gone further, adopting a theory of “equitable estoppel” and holding
that a party that receives a “direct benefit” under a contract is estopped from denying that it
is a party to the contract’s arbitration clause. 14 Outside the United States, courts are often
more reluctant to apply estoppel principles broadly in the context of arbitration agreements.
[G] Corporate Officers and Directors

Some U.S. courts have permitted the officers and directors of a corporate party to invoke the
arbitration clause in that party’s underlying commercial contracts, notwithstanding the fact
that individual officers and directors are not parties to the underlying contract under ordinary
contractual principles; for example, if Company A and Company B conclude an arbitration
agreement, then the Chief Executive of Company B may be permitted to invoke the
agreement if he or she is sued personally by Company A. 15 Decisions in a few other
jurisdictions adopt similar reasoning.16
These decisions are not unanimously followed even in the United States. One U.S. court
rejected them on the following grounds: “courts must not offer contracts to arbitrate to
parties who failed to negotiate them before trouble arrives. To do so frustrates the ability of
persons to settle their affairs against a predictable backdrop of legal rules – the cardinal
principle to all dispute resolution.”17 Outside the United States, and a few other
jurisdictions, this approach of permitting corporate employees or agents to invoke arbitration
agreements, to which they are not parties, has not been widely considered.

§5.02 FORMAL VALIDITY AND NON-SIGNATORIES

Application of an arbitration agreement to a non-signatory raises questions of formal

requirements, under many legal regimes, for a “written” arbitration agreement. Those
authorities which have addressed the issue have adopted a variety of means of satisfying or
avoiding applicable form requirements in non-signatory contexts.
There is no rule forbidding an agreement from being signed by one entity on behalf of
another entity (most obviously, in the case of agency relations). For example, although
Article II(2) of the New York Convention requires an arbitration agreement “signed by the
parties,” it is clear that a “party’s” signature can be provided by another entity on its behalf
(most obviously, an agent, alter ego or merger partner). To the same effect, one may also
reason that the “writing” requirement of the Convention and most national laws can be
satisfied by the existence of a written arbitration agreement, which is consented to by a non-
signatory via an “exchange” of writings (e.g., guarantees, assignments, agency agreements,
other written communications). More broadly, some authorities have held that form
requirements apply only to the initial arbitration agreement itself and not to extra-contractual
mechanisms by which an entity may succeed to or assume a party’s obligations and rights
under that agreement (e.g., by merger, group of companies, alter ego); this reduces the
relevance of form requirements in non-signatory contexts to a very small set of cases.18
§5.03 CHOICE OF LAW GOVERNING NON-SIGNATORY ISSUES

The choice of law governing non-signatory issues is poorly-defined. Some authorities have
held that non-signatory issues are governed by the law governing the existence and
substantive validity of the arbitration agreement.19
In many instances, however, courts and tribunals have not applied the law governing the
substantive validity of the arbitration agreement to non-signatory issues. Instead, courts and
tribunals have frequently applied international principles to claims made under the group of
companies, estoppel and alter ego doctrines. In other contexts, involving issues of agency,
assignment, merger and guarantee/ratification, courts and tribunals have generally applied
national law to non-signatory issues – typically applying a national law chosen to govern the
agency, assignment, succession or guarantee relationship itself, rather than the law governing
the substantive validity of the arbitration agreement.

§5.04 ALLOCATION OF COMPETENCE TO DECIDE NON-

SIGNATORY ISSUES

Determining the identities of the parties to an arbitration agreement gives rise to questions
concerning the allocation of jurisdictional competence between courts and arbitrators.
Consistent with the competence-competence doctrine, courts and arbitral tribunals have
uniformly concluded that arbitrators have the authority to consider whether the arbitration
agreement was binding on particular entities (under Article 16 of the Model Law and
equivalent provisions in other arbitration statutes20 ). Similarly, courts have applied
generally-applicable principles of national law to the allocation of competence between
courts and tribunals to decide non-signatory issues.21 In practice, arbitral tribunals frequently
consider and resolve claims that non-signatories are subject to their jurisdiction, hearing
evidence and argument in the same manner that other jurisdictional and substantive issues are
considered.

§5.05 NON-SIGNATORY ISSUES AND INSTITUTIONAL

ARBITRATION RULES

Non-signatory issues often arise in the course of institutional arbitrations, particularly at the
outset of arbitral proceedings. Some institutional rules contain provisions regarding selection
of arbitrators in multi-party cases22 or consolidation and intervention,23 which can affect the
handling of non-signatory issues. Moreover, some institutional rules contain provisions
regarding institutional review of prima facie jurisdiction, which can also affect the handling of
non-signatory issues.24 For the most part, however, it is the arbitral tribunal, rather than the
arbitral institution, that has the authority to address non-signatory issues in institutional
arbitrations, as well as in ad hoc arbitrations.
_________________________
1. Thomson-CSF, SA v. Am. Arbitration Ass’n, 64 F.3d 773, 776 (2d Cir. 1995).
2. Thomson-CSF SA, 64 F.3d at 776. See G. Born, International Commercial Arbitration 637–38, 1142–48 (2009).
3. See G. Born, International Commercial Arbitration 1152–54 (2009). In the United States, overcoming the
presumption of separateness requires showing: (a) the domination and control of a corporate affiliate, including
disregard of corporate formalities, such that it has no separate identity or existence, and (b) fraudulent or collusive
misuse of that control, or equivalent misconduct, to the injury of other parties. Id. at 1156–61.
4. G. Born, International Commercial Arbitration 1165–77 (2009).
5. Interim Award in ICC Case No. 4131, IX Y.B. Comm. Arb. 131 (1984).
6. Peterson Farms Inc. v. C& M Farming Ltd [2004] 2 Lloyd’ s Rep. 603 (Q.B.).
7. Judgment of 20 January 2006, C04/174HR (Netherlands Hoge Raad) (affirming annulment of arbitral award
binding non-signatory affiliates). See G. Born, International Commercial Arbitration 1175–76 (2009).
8. See, e.g., Cotton Club Estates Ltd v. W oodside Estates Co. [1928] 2 K.B. 463 (K.B.).
9. G. Born, International Commercial Arbitration 1187–91 (2009).
10. See, e.g., Asset Allocation and Mgt. Co. v. W estern Employers Ins. Co., 892 F.2d 566, 574 (7th Cir. 1989)
(arbitration agreement may be invoked against the assignee); Star-Kist Foods, Inc. v. Diakan Hope, SA, 423
F.Supp. 1220, 1222–23 (C.D. Cal. 1976); Judgment of 9 May 2001, 20 ASA Bull. 80 (Swiss Federal Tribunal)
(2002).
11. See, e.g., Judgment of 16 October 2001, 2002 Rev. arb. 753 (Swiss Federal Tribunal). In some jurisdictions,
however, an assignment in breach of a contractual prohibition is presumptively not invalid, even if it is wrongful,
but rather is effective while giving rise to a damages claim for breach of the anti-assignment provision. See, e.g.,
Bel-Ray Co. v. Chemrite Ltd , 181 F.3d 435 (3d Cir. 1999) (following “ general rule that contractual provisions
limiting or prohibiting assignment operate only to limit a party’ s right to assign the contract, but not their
power to do so, unless the parties manifest an intent to the contrary with specificity”; assignment in violation of
contractual provision ordinarily “ remains valid and enforceable against both the assignor and the assignee”).
12. Tepper Realty Co. v. Mosaic Tile Co., 259 F.Supp. 688, 692 (S.D.N.Y. 1966).
13. See G. Born, International Commercial Arbitration 1192–97 (2009).
14. See, e.g., Am. Bureau of Shipping v. Tencara Shipyard SPA, 170 F.3d 349, 353 (2d Cir. 1999) (“ A party is
estopped from denying its obligation to arbitrate when it receives a ‘ direct benefit’ from a contract containing an
arbitration clause.”). See also G. Born, International Commercial Arbitration 1195 (2009).
15. See, e.g., Hirschfeld Prod. Inc. v. Mirvich , 88 N.Y.2d 1054 (N.Y. 1996); Pritzker v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 7 F.3d 1110 (3d Cir. 1993) (company can only act through employees and officers, and “ an
arbitration agreement would be of little value if it did not extend to them”).
16. See G. Born, International Commercial Arbitration 1198–1200 (2009). Examples include Canada and Germany.
17. W estmoreland v. Sadoux, 299 F.3d 462, 467 (5th Cir. 2002).
18. See Judgment of 16 October 2003, 22 ASA Bull. 364 (Swiss Federal Tribunal) (2004) (“ this formal [writing]
requirement only applies to the arbitration agreement itself, that is to the agreement ... by which the initial parties
have reciprocally expressed their common will to submit the dispute to arbitration. As to the question of the
subjective scope of an arbitration agreement formally valid [under this writing requirement] the issue is to
determine which are the parties which are bound by the agreement and eventually determine if one or several third
parties which are not mentioned therein nevertheless enter into its scope ratione personae ....”).
19. See G. Born, International Commercial Arbitration 1210–19 (2009).
20. See supra pp. 52–54; G. Born, International Commercial Arbitration 1220–23 (2009).
21. See supra pp. 44, 100 (para. above); G. Born, International Commercial Arbitration 877 et seq., 1219–22
(2009).
22. See, e.g., 2012 ICC Rules, Arts. 12(6–8), 13.
23. See, e.g., 2012 ICC Rules, Arts. 12(6–8), 13.
24. See, e.g., 2012 ICC Rules, Art. 6(3–7); ICSID Convention Art. 36 (3).
Part II
International Arbitral Proceedings

At the heart of the international arbitral process are the arbitration proceedings and
procedures. It is the procedural conduct of international arbitrations, as much as other
factors, that leads parties to agree to arbitrate their disputes. In particular, parties agree to
arbitrate in order to obtain fair and neutral procedures which are expert, efficient and tailored
to the needs of their particular dispute, without being bound by the formalities and
technicalities of procedural rules applicable in national courts.
In many cases, the aspirations of the parties are realized, with the arbitrators adopting
prompt, fair and predictable procedures, without adhering to any particular domestic
approach to national court litigation. In some cases, however, obstructionist parties,
inexperienced arbitrators, or other factors can produce chaotic, arbitrary, slow, or
inappropriately parochial arbitral proceedings. The Chapters in this Part examine the
procedural conduct and practice of international commercial arbitrations.
Chapter 6 examines the legal framework applicable to the arbitral proceeding and, in
particular, the importance of the “arbitral seat” and the “procedural law” (also referred to as
the “curial law” or “lex arbitri”) of the arbitration. The Chapter describes the concept of the
arbitral seat and the issues governed by the law of the arbitral seat, as well as the role of the
New York Convention in limiting the effects of the arbitral seat’s law. The Chapter then
addresses the procedural law of the arbitration and the various issues that are governed by
that law. Finally, the Chapter discusses the selection of the arbitral seat (typically, by
agreement of the parties) and the arbitral seats that are commonly selected in practice by
parties in international commercial arbitrations.
Chapter 7 addresses the selection of arbitrators and constitution of the arbitral tribunal in
international commercial arbitration. It addresses the parties’ autonomy to select arbitrators
(or to agree upon a means of selecting arbitrators), the number of arbitrators, limitations on
the choice of arbitrators (including nationality, capacity and contractual limitations or
requirements) and the related topic of the impartiality and independence of arbitrators. The
Chapter also considers the procedures which are commonly utilized in practice for selecting
the members of the arbitral tribunal and for challenging and removing arbitrators, under both
national arbitration statutes and institutional rules. Finally, the Chapter considers the rights,
duties and immunities of arbitrators.
Chapter 8 discusses the procedural conduct of the contemporary practice of international
commercial arbitration. It addresses the parties’ autonomy to agree upon the procedural rules
governing the arbitration and the arbitral tribunal’s discretion to order particular procedures
(absent contrary agreement); it also considers mandatory procedural requirements imposed
by many national arbitration statutes (or judicial decisions) and the general principle,
recognized under most developed national laws, of judicial non-interference in arbitral
proceedings. Finally, the Chapter discusses how, as a practical matter, international arbitral
tribunals actually exercise their procedural authority to deal with subjects such as written
submissions, disclosure or discovery, hearings, evidence presentation, and the other major
procedural steps in an arbitration.
Chapter 9 examines the role of disclosure (or, as sometimes termed, discovery) in
international commercial arbitration. The Chapter first addresses the disclosure or discovery
powers of arbitral tribunals under leading national arbitration statutes and institutional
arbitration rules, and the exercise of this authority in practice. It also discusses the role of
national courts in ordering discovery or disclosure in connection with or in aid of international
arbitrations.
Chapter 10 deals with the confidentiality of international arbitrations and arbitral
proceedings. It examines the nature and scope of confidentiality obligations in international
commercial arbitration, including the divergent approaches that are taken on the subject in
different national jurisdictions and institutional arbitration rules.
Chapter 11 deals with the subject of provisional (or interim) relief in international
commercial arbitrations. The Chapter first explores the extent to which international arbitral
tribunals are authorized to grant provisional relief and the circumstances in which, as a
practical matter, they will do so. Next, the Chapter considers when national courts may grant
provisional relief in aid of international arbitrations (whether concurrently with arbitral
tribunals or independently). Finally, the Chapter considers the enforceability in national
courts of provisional measures ordered by international arbitral tribunals.
Chapter 12 addresses the procedural treatment of multi-party disputes in international
commercial arbitrations, including the subjects of consolidation, intervention and joinder. The
Chapter first considers when two or more different arbitrations may be consolidated into a
single arbitral proceeding. It then considers the joinder of parties, and the intervention of
parties, into an international arbitration. In each case, the Chapter addresses the treatment of
consolidation, joinder and intervention by both arbitral tribunals and national courts.
Chapter 13 examines the choice of the substantive law applicable to the merits of the
parties’ underlying dispute in an international commercial arbitration. It first considers the
arbitrators’ authority to select the applicable law. The Chapter also addresses the choice of
substantive law by international arbitrators in the absence of express agreement by the
parties as to the governing law, and the choice of substantive law where the parties have
agreed upon an applicable law, including the validity and interpretation of choice-of-law
agreements and the role of mandatory laws and public policies. In both situations, the
Chapter examines what conflict of law principles apply – both to selecting the applicable
substantive law and to determining the enforceability and meaning of a governing law clause.
Chapter 14 examines the subject of representation of the parties in international arbitral
proceedings. It also examines the rules of professional conduct governing legal representatives
in international arbitrations, including issues of conflict of interest, privilege, witness
preparation and candor to the tribunal, as well as related forum selection issues.
Chapter 6
International Arbitral Proceedings: Legal Framework

A concept of central importance to the international arbitral process is that of the arbitral seat
(alternatively referred to as the “place of arbitration,” “siège,” or arbitral forum). The location
of the arbitral seat is fundamental to defining the legal framework for international arbitral
proceedings and can have profound legal and practical consequences in an international
arbitration. In the words of one decision, “[i]n international commercial arbitration the place
or seat of arbitration is always of paramount importance.”1

§6.01 MEANING AND IMPORTANCE OF THE ARBITRAL SEAT

The “arbitral seat” or “place of arbitration” is a legal construct, not a geographic location. The
arbitral seat is the nation where an international arbitration has its legal domicile or juridical
home. As a practical matter, in virtually all cases, the seat will be the state that the parties
have specified in their arbitration agreement as the place or seat of the arbitration (or, in the
absence of agreement between the parties, the place that the arbitrators or an arbitral
institution has selected as the seat of the arbitration).
Under the New York Convention and most national arbitration legislation, the arbitral seat:
(a) provides the national arbitration legislation applicable to the arbitration, which governs a
wide range of “internal” and “external” procedural issues in the arbitration; (b) provides the
law presumptively applicable to the substantive validity of the arbitration agreement; and (c)
determines where the arbitral award is “made” for purposes of the New York Convention. In
addition, the law of the seat can sometimes indirectly affect other aspects of the arbitral
process, which again can be of substantial importance, including: (d) the nationality and other
characteristics of the arbitrators; (e) the general national tenor of the arbitral procedure; and
(f) the location of hearings in the arbitration and consequently, the availability of logistical,
technical and other resources for conduct of the arbitral hearings.

S ignificance of Arbitral S eat

1. National Legislation Applicable to Arbitration
a. “Internal” Procedures of Arbitration
b. “External” Relationship between Arbitration and National Courts
2. National Law Presumptively Applicable to Arbitration Agreement
 3. Place Where Arbitral Award is “M ade”
4. Influences Nationalities/Background of Arbitrators
5. Influences Tenor of Arbitral Procedures
6. Influences Location of Hearings in Arbitration

[A] Location of Arbitral Seat

The Model Law provides in Article 20(1) that the “place of arbitration” is located where the
parties have agreed or, absent agreement on a seat by the parties, where the tribunal has
specified.2 The Model Law also provides in Article 31(3) that the arbitral award will specify
the place of arbitration as determined under Article 20(1) and that “[t]he award shall be
deemed to have been made at that place.” The same rule is prescribed by Article I(1) of the
New York Convention (providing that the Convention applies to awards “made” in the
territory of a foreign state).

[B] Arbitral Seat Distinguished from Location of Hearings

It is important to distinguish between the legal “seat” or “place” of the arbitration and the
geographic location of the hearings or meetings. The arbitral seat is the legal or juridical home
(or domicile) of the arbitration, the choice of which results in a number of significant legal
consequences; the arbitral seat is not necessarily the geographic location where arbitral
hearings are conducted. Rather, virtually all national laws and institutional rules permit
hearings and meetings to be conducted outside the arbitral seat, for reasons of convenience.
Thus, Article 20(2) of the Model Law provides that, unless otherwise agreed, the tribunal
may “meet at any place it considers appropriate for consultation among its members, for
hearing witnesses, experts or the parties, or for inspection of goods, other property or
documents.”3 The conduct of hearings outside the arbitral seat does not affect the location of
the seat or the applicability of the arbitration legislation of the seat to the arbitration.

[C] Territorial Structure of National Arbitration Legislation

The importance of the arbitral seat in international commercial arbitration is well-illustrated
by the UNCITRAL Model Law and its territorial structure. Other arbitration legislation
generally parallels the Model Law’s treatment of the concept of the seat and the supervisory
authority of the courts of the seat. The New York Convention requires the same results,
albeit less explicitly.
The Model Law adopts an essentially territorial approach to the legal framework for
international arbitrations, providing that the law of the “place of arbitration” (or arbitral seat)
governs a range of highly-important issues arising in the arbitral process. Specifically, Article
1(2) of the Model Law provides that “the provisions of this Law, except Articles 8, 9, 35
and 36, apply only if the place of arbitration is in the territory of this State.”4
Under Article 1(2), a state’s version of the Model Law will apply “ only” if the “place of
arbitration is in the territory” of a state. That is confirmed by the Model Law’s drafting
history, which refers to the legislation’s “territorial scope” and provides that the Law “as
enacted in a given State applies only if the place of arbitration is in the territory of that
State.”5
Under Article 1(2) of the Model Law, virtually all aspects of an international arbitration’s
“external” relationship with national courts are determined by where the “place” or “seat” of
arbitration is located. Among other things, the law of the arbitral seat applies to provisions
regarding judicial power to appoint and remove arbitrators (Articles 11–13), to consider
jurisdictional issues (Article 16), to assist in evidence-taking (Article 27) and to annul arbitral
awards (Article 34). These various judicial powers may be exercised by – and only by – the
courts in the arbitral seat: in particular, as discussed below, only the courts in the seat of an
arbitration may remove an arbitrator or annul an award made in the arbitration.6
The same conclusion applies, also by virtue of Article 1(2) of the Model Law, to
“internal” procedural issues including the applicability of basic guarantees regarding party
autonomy and due process. Thus, Articles 18 and 19 of the Model Law provide mandatory
requirements regarding the equal treatment of the parties and the recognition of the parties’
procedural autonomy, from which the parties may not deviate – in each case applicable only
to arbitrations seated locally and not to foreign arbitrations.7 Conversely, the laws of states
other than the arbitral seat cannot impose mandatory requirements regarding the arbitral
procedures.
It is doubtful that parties may contract out of the Model Law’s basic legal framework
insofar as an arbitration seated on local territory is concerned. (That is true notwithstanding
the fact that parties may contract out of specific M odel Law provisions with regard to a wide
range of arbitral procedures, where the Model Law expressly or impliedly recognizes the
parties’ autonomy.8 ) The Model Law’s drafting history confirms the mandatory character of
the arbitration legislation of the arbitral seat, explaining that, in “most legal systems, the place
of arbitration is the exclusive criterion for determining the applicability of national law.” 9 In
particular, the Model Law arguably does not permit parties to contract out of, or exclude, the
judicial supervision functions specified in Articles 13(3) (removal of arbitrators), 14(1)
(removal of arbitrators), 27 (provisional measures), 34 (annulment) and 35 (recognition).
[D] Issues Governed by Law of Arbitral Seat

The law of the arbitral seat governs a number of significant issues in an international
arbitration (by virtue of Article 1(2) of the Model Law and the basic territorial structure of
most national arbitration legislation). These issues include: (a) issues concerning the
“internal” procedures in the arbitration, and particularly basic standards of procedural
fairness; and (b) issues concerning the “external” relationship between the arbitration and the
courts of the seat, which exercise supervisory authority with regard to the arbitration.

[1] “Internal” Procedures in the Arbitration: Due Process Requirements of

Arbitral Seat

One subject-matter that is ordinarily governed by the law of the seat consists of the various
procedural issues that arise “internally” in the arbitral proceedings. These issues include: (a)
any required procedural steps and timetable of an arbitration; (b) evidentiary and pleading
rules; (c) oaths for witnesses; (d) conduct of hearings, including opportunity to be heard and
examination of witnesses; (e) disclosure and “discovery” powers of arbitrators; (f) rights of
lawyers to appear and their ethical obligations; (g) parties’ autonomy to agree on substantive
and procedural issues in the arbitration; (h) arbitrators’ procedural discretion; (i) arbitrators’
relations with the parties, including liability, ethical standards, appointment and removal; (j)
arbitrators’ remedial powers, including to order provisional relief; and (k) form, making and
publication of the award.10
National laws can differ significantly in their treatment of the internal procedures of the
arbitration. Under most arbitration statutes, the internal procedures of an international
arbitration are not regulated in any detail, but are instead left almost entirely to the parties’
agreement and the tribunal’s discretion: national law typically mandatorily imposes only a
general requirement that the tribunal treat the parties equally and afford them an opportunity
to be heard. Articles 18 and 19 of the UNCITRAL Model Law, referred to above, are a
representative example (which apply to an arbitration seated locally by virtue of Article 1(2)
of the M odel Law).11
In contrast, in a few jurisdictions, many aspects of the internal procedure of an arbitration
will be dictated in some detail by local law (including by imposing time limits, arbitrator
qualifications, procedural codes and the like). As a consequence, the selection of the arbitral
seat and the content of the arbitration legislation in the seat have potentially significant
practical consequences in international arbitration.

[2] “External” Relationship with National Courts: Supervisory Authority of

 Courts of Arbitral Seat

As noted above, the law of the seat also govern “external” issues, concerning the relationship
between the arbitral proceeding and national courts (particularly the courts of the seat).
These issues include: (a) competence-competence and allocation of competence to consider
and decide jurisdictional challenges between arbitral tribunals and courts; (b) judicial
assistance in constitution of a tribunal, including the selection, removal and replacement of
arbitrators; (c) judicial assistance in issuing provisional measures in aid of the arbitration; (d)
judicial assistance in evidence-taking or discovery in aid of the arbitration; (e) judicial review
(if any) of procedural rulings of the tribunal; and (f) often most importantly, judicial review
of awards in annulment actions. In addition, the law of the seat will also generally address,
explicitly or impliedly, the extent to which parties may contract out of that law, by selecting
foreign law to govern the internal and external aspects of the arbitral proceedings (or
otherwise).

“External” Relationships between Arbitration and National Courts

1. Allocation of Competence over Jurisdictional Objectives
2. Judicial Assistance in Constitution of Arbitral Tribunal
3. Judicial Assistance in Providing Provisional Relief
4. Judicial Assistance in Evidence Taking
5. Judicial Non-Intervention
6. Annulment of Arbitral Award

Again, different national laws address these “external” subjects in different ways. Various
jurisdictions provide different forms of judicial assistance to, or allow interlocutory judicial
interference in, an international arbitration. Moreover, in some jurisdictions, arbitration
legislation provides that local courts are the exclusive forum for providing such judicial
assistance; in other jurisdictions, parties may select a foreign procedural law, and foreign
courts, to resolve one or more of these issues. This diversity among national laws in their
treatment of “external” procedural issues is another reason that the selection of the arbitral
seat is of critical practical importance in international arbitrations.

[i] Annulment of Award

As discussed below, the courts in the seat are usually competent – and exclusively
competent – to entertain actions to annul or set aside arbitral awards made in the seat.
Moreover, in considering whether to annul awards made locally, the courts of the seat are
authorized to apply domestic law (not the international standards of the New York
Convention).12 This annulment authority is the most significant supervisory power of courts
in the seat.
This result is prescribed by the arbitration legislation in most states, including Articles
1(2), 5 and 34 of the Model Law; the same result is contemplated by Article V(1)(e) of the
New York Convention, which permits courts in the arbitral seat (and only courts in the seat)
to annul an award, applying domestic law. 13 The only exception to this is the (rare) case
where parties agree that actions to annul awards may be pursued outside the arbitral seat –
usually where the parties select a foreign procedural law of the arbitration (also discussed
below14 ). In practice, however, such agreements are virtually never made; moreover, in some
jurisdictions, mandatory law may preclude parties from validly agreeing for a foreign court to
consider applications to annul awards made locally.

[ii] Qualifications, Selection and Removal of Arbitrators

As discussed below, most arbitration legislation prescribes requirements regarding the

qualifications, independence and impartiality of arbitrators in arbitrations seated on national
territory.15 Most legislation also provides (absent other agreement by the parties) that courts
in the arbitral seat have the competence to appoint, and entertain applications to remove,
arbitrators.16 That is true under Articles 1(2), 11, 13 and 14 of the Model Law, as well as
under other arbitration regimes.
Virtually no arbitration legislation purports to permit local courts to remove arbitrators in
foreign arbitrations (seated outside national territory). Again, the only exception to this is the
(rare) case where parties agree to confer authority on a court outside the arbitral seat to
appoint or remove arbitrators, typically by selecting the law of that state as the procedural
law of the arbitration. The validity of such agreements is not recognized in some jurisdictions.

[iii] Interlocutory Jurisdictional Disputes

The law of the seat generally governs the extent to which the arbitrators possess competence-
competence to determine their own jurisdiction, as well as the circumstances in which courts
may consider jurisdictional objections to the arbitration agreement. That is true under Articles
1(2) and 16 of the Model Law, as well as most other arbitration regimes. (When litigation on
the merits of the parties’ dispute is commenced in courts outside the seat those courts will
typically consider issues of competence-competence under their own law.)

[iv] Provisional Measures and Evidence-Taking

The courts in the seat often possess an exclusive, or at least favored, position with regard to
granting court-ordered provisional measures. The original Model Law suggested (in Articles
5, 9 and 17) that the courts of the seat possessed exclusive competence over court-ordered
provisional measures. That approach was altered by the 2006 revisions to Article 17, which
provide the possibility for courts outside the seat to grant provisional measures in aid of
arbitration, while leaving the courts of the seat as the presumptive situs for such actions.
Other arbitration legislation is similar.17

[v] Procedural and Other Mandatory Requirements

The courts of the seat will generally be the appropriate (but not necessarily exclusive) forums
for enforcing disclosure orders made by an arbitral tribunal and for issuing disclosure orders in
aid of the arbitration. The Model Law (in Article 27) provides for judicial assistance by
courts in the seat in the evidence-taking process, as does other national arbitration
legislation.18 In practice, judicial assistance in evidence-taking outside the seat is unusual.

[E] Civil Procedure Rules of Arbitral Seat Not Applicable

Although the law of the arbitral seat generally applies to a number of issues in the arbitral
proceedings, this does not mean that the domestic civil procedure rules of the seat apply to
the arbitration. Instead, the law of the seat that applies to an international arbitration is the
arbitration legislation of the seat – which establishes a general legislative framework for the
conduct of international arbitrations, without prescribing detailed procedural codes.
Historically, it was sometimes said that international arbitrators were obliged to apply the
civil procedure rules applicable in local courts. This view is reflected in the commentary, as
late as 1989, by two distinguished English authors:

It is widely believed that an arbitrator, merely because he is an arbitrator, is empowered

to act on evidence which would not be strictly admissible in a Court of Law. This is not
so. Arbitrators are bound by the law of England, and the rules regarding admissibility of
evidence are part of that law.19

In contrast, contemporary authorities reject the view that the local procedural rules of the
arbitral seat’s domestic courts must be applied in international arbitrations. Over the past
several decades, the “procedural law” of the arbitration has come to be understood as
referring to the arbitration law of the selected state, rather than its national procedural code.
And, as the Model Law illustrates, an arbitration statute generally (a) will not specify
detailed procedural rules that apply in arbitral proceedings, (b) will instead allow the parties
broad autonomy to agree upon procedural rules, failing which agreement, the tribunal will be
granted wide discretion to adopt appropriate procedures, and (c) will also set out a few
mandatory procedural principles (e.g., equality of treatment, opportunity to be heard).20

§6.02 APPLICABLE PROCEDURAL LAW IN INTERNATIONAL

ARBITRATION

The procedural law of the arbitration is almost always the arbitration legislation of the
arbitral seat. Nonetheless, there are rare exceptions where the parties attempt to agree upon a
foreign procedural law, rather than that of the seat. Where it is permitted, the application of a
foreign procedural law can have significant consequences, altering the legal rules applicable to
the internal and external aspects of the arbitral process, including on matters such as
annulment of awards, challenges of arbitrators and mandatory rules regarding the procedural
conduct of the arbitration.

[A] Definition of Procedural Law

The various “internal” and “external” procedural issues that arise in international arbitration
are sometimes said to be governed by the “procedural law” of the arbitration. The concept of
a “procedural law” of the arbitration is also variously termed the curial law, lex arbitri, or loi
de l’arbitrage. In general, the procedural law of the arbitration is the arbitration legislation of
the arbitral seat, which provides rules governing the external relationship between the arbitral
process and the courts of the seat and the internal conduct of the arbitration.
The procedural law of the arbitration is distinguishable from the law governing the
arbitration agreement and the law governing the underlying contract. Instead, the procedural
law of the arbitration is the law governing the arbitral proceedings themselves, with regard to
both internal and external issues. In principle, this law may be that of a different state than
the law governing either the arbitration agreement or the underlying contract. For example,
parties may agree that State A’s law governs their contract and that State B’s law governs
their arbitration agreement, while seating the arbitration in State C, whose law will
presumptively provide the procedural law of the arbitration.
It is also important to distinguish between the procedural law governing the arbitration and
t h e procedures applied in the arbitral proceedings. As detailed below, most arbitration
statutes impose virtually no specific procedural requirements on the arbitral proceedings, and
prescribe only general due process requirements.21 In most cases, the parties and arbitrators
are left almost entirely free by national arbitration legislation to formulate whatever
procedures and procedural rules they deem best-suited for their arbitration.
[B] Procedural Law of Arbitration Is Not Local Civil Procedure Rules

The choice of a procedural law of the arbitration does not refer to the local rules of civil
procedure of the chosen state. Rather, the choice of a procedural law refers to the arbitration
law (including the arbitration statute) of the chosen state. For example, if parties agree that
the procedural law of the United States applies to an arbitration, that does not mean that the
Federal Rules of Civil Procedure apply in the arbitration; rather, it means that U.S. arbitration
law (including the FAA and case law interpreting the Act) apply to the arbitration.22

[C] Choice of Procedural Law Other than That of Arbitral Seat

In virtually all cases, the procedural law of the arbitration is the law of the arbitral seat.
Usually by virtue of choosing the seat, the parties will simultaneously have chosen the
procedural law or lex arbitri of the seat to govern the arbitral proceedings and the courts of
the seat to exercise supervisory authority over the arbitration; that is because of the territorial
structure of most arbitration legislation (discussed above) and the parties’ implied choice of
the procedural law of the seat.
Nonetheless, in very unusual cases, parties agree to the application of a procedural law to
the arbitration which differs from that of the arbitration legislation or other laws of the place
of the arbitration. The parties’ autonomy to select a procedural law other than that of the
arbitral seat is controversial, with some authorities denying such autonomy (notwithstanding
the general acceptance of party autonomy in international arbitration).23 In any event, as a
practical matter, the parties’ asserted freedom to select a foreign procedural law is exercised
only very rarely. When the parties do select a procedural law other than that of the seat, it
gives rise to significant uncertainties and risks (discussed below). The choice of a foreign
procedural law also may be subject to substantial limitations (imposed by mandatory local
laws in the seat, the jurisdiction chosen by the parties to provide the “procedural law,” or the
geographic location of the arbitral hearings).
In practice, the procedural law of the arbitration is virtually never different from that of the
arbitral seat. In the absence of language clearly requiring the contrary, most courts hold that
the parties should be assumed to have intended the procedural law of the arbitration to be
that of the arbitral seat. In the words of one court, “where the parties have failed to choose
the law governing the conduct of the arbitration it will prima facie be the law of the country
in which the arbitration is held because that is the country most closely connected with the
proceedings.”24 This observation is correct: in practice, parties virtually never select a foreign
procedural law.
[D] Consequences of Choice of Foreign Procedural Law

The choice of a foreign procedural law has potentially significant consequences. Most
important, the choice of a foreign procedural law creates the possibility that a foreign court,
other than a court in the arbitral seat, may annul the award. The choice of a foreign procedural
law of the arbitration also results in the application of a law other than that of the seat to the
internal and external procedural aspects of the arbitration. Both of these possibilities produce
substantial uncertainties, which parties ordinarily do not intend or desire.
The choice of a foreign procedural law creates the possibility that foreign courts, outside
the arbitral seat, may annul an award made in the seat. The New York Convention provides
(in Article V(1)(e)) that an award may only be annulled by a court in the seat or by a court of
the nation “under the law of which [the] award was made.” Most authorities agree that the
reference in Article V(1)(e) to “the law [under] which [the] award was made” is to the
procedural law of the arbitration.25 That is, if an arbitration is conducted in State A, under
the procedural law of State B, the Convention permits the courts of State B to set aside the
award. Further, if State B’s courts annul an award, then Article V(1)(e) permits other national
courts to refuse to recognize the award.
The possibility that a court outside the place of arbitration can annul the award produces
substantial uncertainty. Using this possibility, Pakistani and Indonesian courts have rendered
decisions purportedly holding that they may annul awards made abroad on the grounds that
the procedural law of arbitrations seated abroad (e.g., in London or Singapore) was Pakistani
or Indonesian; they have done so even in instances where there is little, if any, indication that
the parties intended to select a foreign procedural law.26
The choice of a foreign procedural law also results in the possibility that foreign courts
may supervise other aspects of the arbitration (e.g., select and remove arbitrators; provide
judicial assistance) and that foreign law may govern procedural aspects of the arbitration (e.g.,
due process, fairness). This possibility again produces substantial uncertainty: two different
sets of national courts, applying potentially different laws, may purport to supervise the
same arbitration.

§6.03 SELECTION OF ARBITRAL SEAT

In practice, there are a variety of mechanisms for choosing the arbitral seat in an international
arbitration. In the vast majority of cases, the arbitration agreement will expressly specify the
seat, which, under all developed national laws, will be given effect. If the parties have not
agreed directly upon a seat, it will in most instances be chosen by either the arbitral
institution (in many institutional arbitrations) or the arbitrators (in most ad hoc and some
institutional arbitrations). Only in rare instances will national courts play a role in selecting
the arbitral seat in an international arbitration.

[A] Selection of Arbitral Seat by Parties’ Agreement

The New York Convention (in Article II) and almost all national arbitration regimes recognize
the parties’ autonomy to agree upon an arbitral seat in international matters. Article 20(1) of
the Model Law is representative, providing: “The parties are free to agree on the place of
arbitration. Failing such agreement, the place of arbitration shall be determined by the arbitral
tribunal having regard to the circumstances of the case ....” Other arbitration legislation is
similar, as are most institutional rules.27 In contrast, virtually no national laws deny the
parties’ autonomy to select the arbitral seat.
The drafting of a clause selecting the arbitral seat is straightforward. It need provide only
“The seat [or place] of the arbitration shall be [CITY, COUNTRY].” It is unwise to provide
instead that “The arbitral hearings shall be conducted in [CITY, COUNTRY]”; this
formulation can be interpreted as specifying only where hearings shall be conducted for
convenience, and as not designating the legal seat of the arbitration.

Provision of Arbitration Agreement S electing Arbitral S eat

“The seat of the arbitration shall be Stockholm, Sweden.”
NOT: “Hearings shall be conducted in Stockholm, Sweden.”

[B] Selection of Arbitral Seat by Arbitrators or Arbitral Institution

Parties occasionally (and unwisely) fail to directly specify an arbitral seat in their arbitration
agreement, either because they neglect to or are unable to reach agreement. When this occurs,
most institutional rules contain a mechanism for selecting the seat, with the selection
typically being made by either the institution that administers the arbitration or the tribunal.
Article 18(1) of the 2012 ICC Rules is representative of rules providing for an institutional
choice, providing that the ICC Court shall select the seat in the absence of agreement by the
parties.28
Other institutional rules authorize the arbitral tribunal to select the seat, in the absence of
choice by the parties. Thus, the UNCITRAL Rules provide that the tribunal is to select the
seat (absent contrary agreement),29 while the ICDR Rules adopt a mechanism that provides
for the ICDR to provisionally select the seat, subject to subsequent confirmation or revision
by the tribunal.30 Some institutional rules permit the parties to select the seat, but contain a
presumption favoring a particular location if no such agreement exists. The LCIA Rules are
representative, providing for London as the seat unless otherwise decided by the LCIA
Court.31 A number of other institutional rules, typically promulgated by national or
specialized arbitral institutions, are similar.32
Most arbitration legislation recognizes the parties’ autonomy to agree upon means for
indirectly selecting the seat, thereby giving effect to agreements permitting the arbitral
institution or tribunal to select the seat.33 Even in the absence of agreement to such a
mechanism, most arbitration statutes provide for the selection of the seat (absent agreement
by the parties) by the tribunal. Article 20(1) of the Model Law is representative, providing
that, failing agreement by the parties, “the place of arbitration shall be determined by the
arbitral tribunal having regard to the circumstances of the case.”34

[C] Selection of Arbitral Seat by National Courts

Only in rare cases, where the parties have not incorporated any institutional rules and cannot
agree upon the constitution of the tribunal, do national courts play a role in selecting the
arbitral seat. The selection of the seat by national courts is potentially problematic, because
of the risks of overlapping judicial competence of courts in different states and the
possibility of conflicting decisions from courts in different states.
Very few arbitration statutes grant local courts the power to select an seat. No such power
is expressly granted, for example, under the UNCITRAL Model Law (see Article 20). As
discussed above, where the parties have not otherwise agreed, most arbitration statutes
provide for either the tribunal or an arbitral institution to select the seat; virtually no statute
permits a national court to select the seat.
In one important respect, these statutory provisions are circular. Most arbitration statutes
apply only to arbitrations with their seat in national territory; this territorial limitation
extends to the statutes’ provisions regarding the arbitral tribunal’s default authority to select
the seat (for example, in Articles 1(2) and 20 of the UNCITRAL Model Law). As a result,
when there is no agreement by the parties on the seat, legislative grants of default authority
to an arbitral tribunal to select the seat are, by their terms, inapplicable. Moreover, where the
parties are unable to agree upon the identity of the arbitrator(s) and have not agreed upon a
method for making such a choice, then there will be no tribunal to select the seat and (in many
cases) no designated national court with power to select the arbitrators. In part as a
consequence, some authorities hold that “blank” arbitration clauses, which do not specify a
seat or a means of selecting the seat, are invalid.35
In a few legal regimes (e.g., Sweden, Japan), arbitration legislation provides for local courts
to select the seat in circumstances where the parties have neither agreed upon a seat nor a
means for selecting a seat. Thus, the Swedish Arbitration Act provides: “Arbitral proceedings
in accordance with this Act may also be commenced in Sweden against a party which is
domiciled in Sweden or is otherwise subject to jurisdiction of the Swedish courts with regard
to the matter in dispute, unless the arbitration agreement provides that the proceedings shall
take place abroad.”36 If the statutorily-prescribed jurisdictional nexus is satisfied, then an
arbitration may be initiated in Sweden, subject to the Swedish Arbitration Act – thereby
permitting Swedish courts to select an arbitral tribunal (in the absence of agreement by the
parties).
In contrast to legislation in most countries, the FAA grants U.S. courts a potentially
significant role in the selection of the arbitral seat in international arbitrations. In particular,
the FAA grants U.S. courts the power to compel arbitration (under §4, §206 and §303 of the
FAA) in a particular place. In issuing orders compelling arbitration under the FAA, U.S.
courts have therefore sometimes specified the place where the arbitration is to proceed. In
some cases, U.S. courts have issued orders compelling arbitration within the United States,
even where parties have agreed to arbitration in accordance with institutional rules specifying
an alternative means of selecting a seat.37 This approach is at odds with the overwhelming
weight of authority, with U.S. obligations under Article II of the Convention and with
principles of party autonomy.

§6.04 CHOICE OF ARBITRAL SEAT

There are a variety of different, but generally related, factors that are relevant to the choice of
the arbitral seat. Parties (and arbitral institutions or arbitrators) should consider these various
factors in selecting the seat in particular cases. In practice, these considerations frequently
lead to the selection of one of a limited number of jurisdictions with proven, well-established
pro-arbitration legal regimes.

[A] Considerations Relevant to Choice of Arbitral Seat

[1] Contracting Party of New York Convention

First, the arbitral seat must virtually always be a state that has acceded to the New York
Convention (or, exceptionally, a comparable international instrument). The seat is almost
always the place where the award will be “made” for purposes of determining the
applicability of the Convention (under Article I(2)). This has significant legal consequences
for the recognition and enforceability of awards outside the country where they are rendered.
If a state is party to the Convention, awards made within its territory will generally be
subject to the Convention’s pro-enforcement rules in other Contracting States; conversely, if
a state is not party to the Convention, its awards often will not enjoy the benefits of the
Convention, and may instead be subject only to parochial or archaic domestic arbitration
legislation when sought to be enforced abroad.38 With 146 states having ratified the
Convention, there is no excuse for ignoring this requirement.

[2] Standards for Annulment of Arbitral Awards

Second, the courts in the seat are usually competent (and exclusively competent) to entertain
actions to annul the award. Further, the scope and extent of judicial review of an award is
primarily a matter of national law that varies from country to country. Under many national
arbitration regimes, an award is subject to little or no review of the merits of the tribunal’s
decision and little review of the arbitral procedures.39 In contrast, other states permit
relatively extensive review of the merits of awards and the procedures in the arbitration,
either explicitly or in the form of extensive public policy inquiries. Selecting a seat with the
desired level of judicial review of the arbitrators’ award is therefore of overriding importance;
equally, avoiding a seat where courts may favor one party vis-à-vis the other in annulment
proceedings is also of critical importance.

[3] Supportive National Arbitration Regime

Third, the seat should have both arbitration legislation and courts that are supportive of
international arbitration. As discussed above, the courts of the seat have supervisory
authority over locally-seated arbitrations and a wide range of “internal” and “external”
procedural issues relating to the arbitration will be governed by the law of the seat. These
include the authority to annul awards, the selection, qualifications and removal of the
arbitrators, the arbitrators’ power to order provisional measures or disclosure, and mandatory
procedural requirements applicable in the arbitral proceedings.
Selecting an arbitral seat whose arbitration legislation supports the arbitral process, rather
than obstructs or invalidates it, is essential. Among other things, the local arbitration law in
the seat must provide unequivocally for the effective enforcement of arbitration agreements,
for the parties to be able freely to choose their legal representatives and party-nominated
arbitrators (e.g., not being limited to locally-qualified lawyers or particular religious groups),
for minimal judicial “supervision” of ongoing arbitrations (e.g., by considering interlocutory
appeals from interim procedural orders by tribunals), for limited after-the-fact judicial review
of the arbitral procedures, and for a supportive approach by local courts to requests by
arbitrators for judicial assistance in aid of the arbitration.
[4] Effect on Selection of Arbitrators

Fourth, the selection of a seat will often have a material influence on the selection of the
arbitrators and the arbitral procedures. As discussed below, some states impose idiosyncratic
nationality or religion requirements on the arbitrators.40 Beyond this, choosing the seat often
has an important effect on the identity, nationality and legal training of the arbitrators, who
are more likely to be drawn from the seat than otherwise.41 In turn, this will often influence
the parties’ selections of co-arbitrators or their agreement on a sole or presiding arbitrator.
Further, as a practical matter, the nationality and legal training of the arbitrators may
indirectly influence their procedural and substantive approach to the arbitration (e.g., a civil
law arbitrator may have a narrower approach to discovery or cross-examination than a
common law arbitrator). Depending on a parties’ preferences with regard to the arbitral
procedures, different arbitral seats will be appropriate.

[5] Effects on Procedural and Substantive Laws

Fifth, in some countries, the local law of the seat may have a material influence on the
substantive or procedural issues that arise in the arbitration. For example, local law may
impose particular choice-of-law, statute of limitations, confidentiality, disclosure, provisional
relief and consolidation or joinder rules. Further, local procedural rules and practices may
influence an arbitral tribunal’s procedural decisions (e.g., an international arbitration seated in
England, with English substantive law applying, will more likely also entail relatively fulsome
common law document disclosure and cross-examination than an arbitration seated in
Switzerland with Swiss substantive law applying). Similarly, local conflict of laws rules may
be applied with respect to choice-of-law issues.

[6] Convenience and Cost

Finally, issues of logistics, cost and convenience are also relevant to selection of an arbitral
seat. These considerations should virtually never be decisive, both because of the greater
importance of the legal consequences of selection of the seat and the possibility of conducting
hearings outside the seat for convenience. Nonetheless, logistical concerns may eliminate or
weigh against the selection of particular locations as a seat in some cases.
If the hearings are conducted in an expensive place (e.g., where hotels, meetings rooms, or
support services are costly), this might preclude some parties from pursuing their claims or
presenting their defenses. Conversely, an inconvenient forum without developed support
facilities can make the arbitral process inefficient. Factors such as availability of
transportation, accommodations, support staff (stenographers, secretaries), and the like can
bear heavily on the smooth progress of an arbitration. Another consideration can be visa
requirements, which may make attendance at arbitral hearings in some locations difficult for
both arbitrators and counsel.

*****

All of the foregoing factors must be evaluated by parties (or an arbitral institution or tribunal)
in selecting a seat in particular cases. Taking these considerations into account, commercial
parties and arbitral institutions ordinarily select arbitral seats with a legal regime and track
record that ensures a reasonably predictable and efficient arbitration (e.g., France, England,
Switzerland, the United States, Canada, Sweden, Singapore or Hong Kong) and a sizeable
community of international arbitration practitioners, from which one or more of the
arbitrators may be drawn. In addition, parties often consider whether a particular seat offers
systemic advantages to it (or its counter-party) in the kinds of disputes expected to arise
under their agreement. In general, however, parties frequently content themselves with
selecting (or compromising on) a seat that will be neutral, objective and efficient, without
providing either party a systemic advantage of one sort or the other.

[B] Arbitral Seats Commonly Chosen in Practice

As discussed above, a number of considerations affect the parties’ decision as to what seat to
specify in a particular transaction. Although the application of these considerations in
particular cases can be complex, the overall results are reasonably straightforward. As the
following chart (reflecting the choice of seats in ICC arbitrations) indicate, in the
overwhelming majority of cases, parties exercise their autonomy to select the seat by
choosing a leading arbitral center – specifically, Paris, London, Switzerland (Geneva or
Zurich), Singapore, the United States (New York, Washington, M iami) or Hong Kong.
The following statistics show the arbitral seats of ICC arbitrations between 1997 and
2010, in cases where the parties selected the place of arbitration.
These statistics confirm the enduring popularity of a number of leading arbitral seats, but also
reflect some relative changes in the popularity of leading seats, at least in ICC arbitrations. In
particular, they indicate a marked increase in the frequency with which Hong Kong,
Singapore and Germany (with an exception of 2010) are selected as seats in ICC arbitrations
and a noticeable increase in London’s popularity. 42 A breakdown by region shows that some
70% of the places of arbitration selected in 2010 were in Europe, 14% in Asia, 14.5% in the
Americas, and 1.5% in Africa, as compared with, respectively, 77.5%, 9%, 13% and 0.5%
ten years ago. One can anticipate that new arbitral seats will continue gaining relative
popularity in coming decades, as experience with the international arbitral process increases
and provides assurances of neutrality and expertise to commercial parties and arbitral
institutions.
_________________________
1. Star Shipping AS v. China Nat’l Foreign Trade Trans. Corp. [1993] 2 Lloyd’ s Rep. 445 (English Court of
Appeal).
2. UNCITRAL Model Law, Art. 20(1). The Model Law’ s applicability where the arbitral tribunal selects the seat
involves an element of circularity. See infra pp. 114–117. That is, the Model Law of a jurisdiction provides the
tribunal power to select the seat, but can only apply (by virtue of Article 1(2)) if the seat is in that jurisdiction.
This circularity can arguably be reconciled by treating the Model Law as ratifying the arbitrators’ choice of the
seat after the fact.
3. See also English Arbitration Act, 1996, §34(2)(a); Japanese Arbitration Law, Art. 28(3); UNCITRAL Rules, Art.
18(2); LCIA Rules, Art. 16(2); ICC Rules 2012, Art. 18(2–3); ICDR Rules, Art. 13(2); G. Born, International
Commercial Arbitration 1308–10 (2009); H. Holtzmann & J. Neuhaus, A Guide to the UNCITRAL Model Law on
International Commercial Arbitration: Legislative History and Commentary 592–95 (1989).
4. Articles 8, 9, 35 and 36 deal with a limited range of issues, consisting of stays of litigation, provisional measures
and recognition of foreign awards. See supra pp. 62–64 (Article 8) & infra pp. 215–16 (Article 9) & 373–74
(Articles 35 and 36).
5. Explanatory Note by the UNCITRAL Secretariat on the Model Law on International Commercial Arbitration, as
amended in 2006, ¶13, available at www.uncitral.org (emphasis added).
6. See infra pp. 140–41, 307–11.
7. See infra pp. 152–54.
8. See, e.g., UNCITRAL Model Law, Arts. 3(1) (“ unless otherwise agreed”), 10(1)(2), 11(2)(3), 13(1)(2), 17, 19(1),
20(1), 21, 22(1), 23(2), 24(1) (“ subject to any contrary agreement”), 25, 26(1).
9. Ibid.
10. See infra pp. 111–12, 156–73, 197–98; G. Born, International Commercial Arbitration 1241–42 (2009).
11. See infra pp. 152–54.
12. See infra pp. 311–12. The arbitral seat will typically be where an award is “ made.” That is contemplated by
Articles 20(1) and 31(3) of the UNCITRAL Model Law, and by other leading arbitration legislation.
13. See infra pp. 307–11. As discussed below, a few states have adopted different approaches, with local courts
purporting to annul awards made in foreign arbitral seats, but this contradicts the Convention and the
overwhelming weight of authority. See infra pp. 308–15.
14. See infra pp. 112–13.
15. See infra pp. 129–36.
16. See infra pp. 129, 140.
17. See, e.g., English Arbitration Act, 1996, §§2, 3, 30; Swiss Law on Private International Law, Arts. 176(1),
186(1); Japanese Arbitration Law, Arts. 3, 23(5). See also G. Born, International Commercial Arbitration 1286
(2009).
18. See G. Born, International Commercial Arbitration 1289 (2009).
19. M. Mustill & S. Boyd, Commercial Arbitration 352 (2d ed. 1989).
20. See infra pp. 152–54.
21. See infra pp. 152–54.
22. As discussed below, national arbitration legislation (including the FAA) generally does not prescribe any
detailed procedural code for arbitral proceedings and instead leaves the parties and arbitrators free to adapt
procedures for a particular case. See infra pp. 152–54.
23. See, e.g., Guatemalan Code of Civil and Commercial Procedure (1995); Colombian Decree No. 1808 of 7
September 1998; Indonesian Law No. 30 of 1999 Concerning Arbitration and Alternative Dispute Resolution;
Rules for the Implementation of the Saudi Arabian Arbitration Regulation, 1985. See G. Born, International
Commercial Arbitration 1314–25 (2009).
24. Am. Diagnostica, Inc. v. Gradipore Ltd , XXIVa Y.B. Comm. Arb. 574, 581 (N.S.W. S.Ct. 1998) (1999). A recent
U.S. decision put the matter more vividly, observing that “ an agreement providing that one country will be the
site of the arbitration but the proceedings will be held under the arbitration law of another country [is]
‘ exceptional’ ; ‘ almost unknown’ ; a ‘ purely academic invention’ ; ‘ almost never used in practice’ ; a possibility
‘ more theoretical than real’ ; and a ‘ once-in-a-blue-moon set of circumstances.’ ” Karaha Bodas Co. v.
Perusahaan Pertambangan Minyak Das Gas Bumi Negara, 364 F.3d 291 (5th Cir. 2004).
25. See G. Born, International Commercial Arbitration 1337–40, 2409–16 (2009).
26. See G. Born, International Commercial Arbitration 1338–42 (2009).
27. See, e.g., Swiss Law on Private International Law, Art. 176(3); English Arbitration Act, 1996, §3(c); German
ZP O, §1043; Singapore International Arbitration Act, §3(1); Japanese Arbitration Law, Art. 28; UNCITRAL
Rules, Art. 18(1); 2012 ICC Rules, Art. 18(1); LCIA Rules, Art. 16(1). See also G. Born, International
Commercial Arbitration 1317–18, 1689–95 (2009).
28. 2012 ICC Rules, Art. 18(1) (“ The place of arbitration shall be fixed by the Court, unless agreed upon by the
parties.”).
29. See UNCITRAL Rules, Art. 18.
30. See, e.g., ICDR Rules, Art. 13 (“ If the parties disagree as to the place of arbitration, the administrator may
initially determine the place of arbitration, subject to the power of the tribunal to determine finally the place of
arbitration within 60 days after its constitution. All such determinations shall be made having regard for the
contentions of the parties and the circumstances of the arbitration.”).
31. LCIA Rules, Art. 16(1).
32. VIAC Rules, Art. 2 (“ Unless the parties have agreed otherwise (a) the place of arbitration shall be Vienna.”);
Milan Rules, Art. 4(2) (“ In the absence of such determination, the seat of the arbitration shall be Milan.”).
33. See, e.g., UNCITRAL Model Law, Arts. 2(d), 20(1); Swiss Law on P rivate International Law, Art. 176(3).
34. Other legislation adopts the same approach. See, e.g., Swiss Law on Private International Law, Art. 176(3);
Japanese Arbitration Law, Art. 28(2). See also G. Born, International Commercial Arbitration 1695–1703
(2009).
35. See supra p. 71.
36. Swedish Arbitration Act, §47. See also Japanese Arbitration Law, Art. 8(1) (“ Even if the place of arbitration has
not been designated, [applications for specified judicial assistance] may be made when there is a possibility that
the place of arbitration will be in the territory of Japan and the applicant or counterparty’ s general forum ... is in
the territory of Japan.”).
37. See G. Born, International Commercial Arbitration 1704–17 (2009). See, e.g., Tolaram Fibers, Inc. v. Deutsche
Eng’g Der Voest-Alpine Industrieanlagenbau GmbH, 1991 U.S. Dist. LEXIS 3565 (M.D.N.C. 1991).
38. Many parties to the New York Convention (including the United States) have adopted “ reciprocity”
reservations and will only apply the Convention to awards “ made” in another Contracting State. See infra pp.
374–75.
39. See infra pp. 303–07, 311–27.
40. See infra p. 136.
41. See supra p. 105. An arbitration seated in France is more likely to have a French sole or presiding arbitrator than
an arbitration seated in Korea or Mexico.
42. See C. Drahozal & R. Naimark, Towards a Science of International Arbitration: Collected Empirical Research
85–87, 355–60 (2005).
Chapter 7
Selection and Removal of Arbitrators in International
Arbitration

One of the characteristic features of international arbitration is the absence of any standing
“court.” This contrasts markedly with national and international courts, which have a
permanent existence, a pre-existing complement of judges who are assigned randomly to cases
and generally-applicable procedural rules. Rather, for most arbitral proceedings, a tribunal
must be separately constituted by the parties (or otherwise) for every dispute.
The selection and removal of arbitrators is one of the most important aspects of arbitral
proceedings. As discussed below, the parties’ autonomy to select arbitrators of their own
choosing, who they consider appropriate to their particular dispute, is an essential
characteristic of arbitration. That autonomy is recognized, and given effect, by the New York
Convention and most arbitration statutes. When parties are unable to agree upon the
identities of the arbitrator(s) for their dispute, both institutional rules and national law
provide for selection of the arbitrator(s) by the parties’ agreed arbitral institution or a
national court.
A critical issue in the selection and removal of arbitrators is the arbitrators’ independence
and impartiality. As discussed below, most arbitration legislation and institutional rules
require that arbitrators be independent from the parties and impartial. The content of these
requirements, and the procedures by which these obligations are enforced, play a vital role in
the arbitral process.

§7.01 SELECTION OF ARBITRATORS IN INTERNATIONAL

ARBITRATION

As with other aspects of the international arbitral process, a dominant feature of the selection
of the arbitrators is party autonomy. As discussed below, the New York Convention,
national arbitration statutes and institutional rules all accord parties broad autonomy both to
agree directly upon the arbitrators in “their” arbitration and to agree on indirect mechanisms
for selecting such arbitrators. Utilizing this freedom, many arbitration agreements provide a
procedural mechanism for the selection of the arbitrator(s) – either expressly or by
incorporating institutional rules. The almost universal contractual mechanism for selecting an
arbitrator is designation of a neutral “appointing authority” – like the ICC or PCA – to
choose the arbitrator(s) if the parties cannot agree directly on their identities. Most
institutional rules provide for the institution to play this role when parties agree to arbitrate
under the institution’s rules.

[A] Parties’ Autonomy in Selection of Arbitrators

The New York Convention and national arbitration legislation guarantee the parties’
autonomy to select the arbitrators who will resolve their dispute (or, alternatively, to
indirectly choose a means by which this selection is to be made on their behalf). The parties’
autonomy is subject to only limited exceptions (discussed below), directed at ensuring
impartial arbitrators and safeguarding other similarly-important public policies.

[1] Party Autonomy to Select Arbitrators under New York Convention

Article V(1)(d) of the Convention provides that recognition of an award may be refused if
“the composition of the arbitral authority ... was not in accordance with the agreement of the
parties, or, failing such agreement, was not in accordance with the law of the country where
the arbitration took place.” Article V(1)(d) requires recognition of the parties’ agreement on
the constitution of the tribunal, without reference to the law of the seat, save that the law of
the seat is applicable as a supplementary source if (but only if) the parties reached no
agreement concerning aspects of the constitution of the tribunal (in Article V(1)(d)’s phrase,
“failing such agreement ...”). Article V(1)(d) gives effect, in the context of award recognition,
to the parties’ autonomy in selecting the arbitrators. The provision parallels the
Convention’s requirement, in Article II, that Contracting States enforce agreements to
arbitrate – including provisions of arbitration clauses regarding the selection of arbitrators.

[2] Party Autonomy to Select Arbitrators under National Arbitration

Legislation

Consistent with the Convention, most arbitration statutes confirm the parties’ autonomy to
select “their” arbitrators, either directly or indirectly, subject only to limited mandatory
requirements of equality and due process. Article 11(2) of the UNCITRAL Model Law is
representative and provides that “the parties are free to agree on a procedure of appointing
the arbitrator or arbitrators.” In the words of the Explanatory Note on the Model Law,
Article 11 “recognizes the freedom of the parties to determine, by reference to an existing set
of arbitration rules or by an ad hoc agreement, the procedure to be followed, subject to the
fundamental requirements of fairness and justice.”1 Other arbitration legislation confirms the
parties’ autonomy to select the tribunal, either directly or indirectly.2
 As discussed below, the parties’ autonomy to select arbitrators in an international
arbitration is subject to limited exceptions under many arbitration statutes (and some
institutional rules). These exceptions generally concern the impartiality and independence of
the arbitrators, the fairness of the arbitral process and (in some states) limited requirements
regarding the arbitrator’s qualifications. In general, the parties’ autonomy to select the
arbitrators will be overridden only in exceptional cases.

[3] Party Autonomy to Select Arbitrators under Institutional Rules

Parties frequently agree to arbitrate pursuant to institutional rules, incorporated by reference

into their arbitration agreement. One of the major reasons for this choice is the role of an
arbitral institution in constituting the tribunal and replacing arbitrators.
Most institutional rules grant parties broad autonomy to select the arbitrators in their
arbitrations.3 Articles 7 through 10 of the UNCITRAL Rules, Articles 12 through 14 of the
2012 ICC Rules, and Rules 11 through 16 of the AAA Commercial Rules adopt the same
general approach to selection of arbitrators. Under each of these sets of rules, the parties are
permitted to agree directly upon a proposed sole arbitrator; in the case of three-person
tribunals, most rules provide for each party unilaterally to nominate a co-arbitrator and to
mutually agree upon a presiding arbitrator. Under some rules (such as the UNCITRAL
Rules), the two co-arbitrators are also granted the power jointly to select the presiding
arbitrator, while other rules (such as the ICC Rules), permit such an approach if the parties’
agreement provides for it, but, absent such agreement, provide that the arbitral institution will
select the presiding arbitrator.4

[4] Consequences of Failure to Comply with Contractual Appointment

Mechanism for Arbitrator

The corollary of the parties’ autonomy to agree upon an arbitrator, or on mechanisms for
selecting an arbitrator, is that these mechanisms must then be complied with. If an arbitrator
is selected in a way that does not comply with the parties’ contractual procedures, then his
or her appointment is potentially invalid, subjecting the arbitrator to challenge and any
resulting award to possible annulment and non-recognition.
The removal of an arbitrator selected in violation of the parties’ agreement is provided for
by many arbitration statutes (for example, Article 12(2) of the Model Law). Less
consistently, the annulment of an award made by a tribunal which includes improperly-
selected arbitrators is contemplated by some arbitration statutes (Article 34(2)(a)(iv) of the
Model Law).5 Consistent with this, national courts have either removed arbitrators or
annulled awards where arbitrators were appointed in violation of contractual appointment
mechanisms. That includes cases where arbitrators were appointed after expiry of contractual
deadlines, without contractually-prescribed consultations, or without contractually-required
qualifications.6

[B] Exercise of Parties’ Autonomy to Select Arbitrators

The parties’ autonomy to select “their” arbitrators requires parties to make important
decisions. These include decisions about the number of arbitrators on a tribunal, the means or
method of selecting the arbitrators, qualifications of the arbitrators and other issues.

[1] Number of Arbitrators

National arbitration statutes recognize the parties’ autonomy to select the number of
arbitrators. Article 10(1) of the Model Law is representative, providing that “the parties are
free to determine the number of arbitrators.” Legislation and judicial decisions in other
jurisdictions are to the same effect.7
Despite the general principle of party autonomy, some nations have prohibitions against
arbitration by an even number of arbitrators (for example, the Netherlands, Belgium, Italy).8
In a number of these states, local legislation (or judicial authority) converts agreements on
even numbers of arbitrators into agreements on odd numbers of arbitrators, by requiring the
appointment of an additional arbitrator. In other countries, local legislation invalidates
arbitration agreements that specify an even number of arbitrators (rather than substituting an
odd number). The purpose of these restrictions is to avoid deadlocked tribunals.

[i] Sole Arbitrator

In practice, almost all international commercial arbitration tribunals consist of either one or
three arbitrators. One arbitrator is easier, in some respects, to select than a larger number of
arbitrators, while he or she generally costs less and can act more quickly than multiple
arbitrators. Particularly in smaller cases, parties frequently find these advantages decisive and
opt for a sole arbitrator. Thus, in roughly 40% of ICC arbitrations, the parties’ arbitration
agreement provides for a sole arbitrator.9

[ii] Three Arbitrators

Despite the advantages of a sole arbitrator, the preferred solution in most reasonably-sized
international arbitrations (i.e., disputes in excess of $5 million) is a three-person tribunal. A
tribunal consisting of three arbitrators has the advantage of permitting each party (in a two-
party and many multi-party contexts) to select an arbitrator. Additionally, a three person
tribunal can combine individuals with different specialities (e.g., legal, business), linguistic and
cultural backgrounds; it also provides the benefits of collegiality and “extra sets of eyes.”

[iii] Default Rules on Number of Arbitrators

It is generally advisable for parties to agree on the number of arbitrators (and, as noted above,
if such an agreement exists, it will be given effect). Nonetheless, parties often do not do so,
either in their arbitration agreement or afterwards. In the absence of an agreement, the number
of arbitrators will be selected by a court (in the case of ad hoc arbitrations) or arbitral
institution (in institutional arbitrations). In these circumstances, national law and institutional
rules provide fall-back rules regarding the number of arbitrators.
Different national laws take different approaches to selecting the number of arbitrators
when the parties have not agreed. The Model Law provides that, absent agreement, “the
number of arbitrators shall be three.” Similarly, a number of civil law jurisdictions provide for
three arbitrators where the parties have not otherwise agreed.10 In contrast, many common
law jurisdictions provide for a sole arbitrator as a fall-back solution. Under §5 of the U.S.
FAA, where the parties have not agreed upon the number of arbitrators, “the arbitration shall
be by a single arbitrator.”11
Like arbitration statutes, institutional rules adopt a variety of differing approaches to
selecting the number of arbitrators. Article 7(1) of the UNCITRAL Rules provides that,
where the parties have not otherwise agreed, “the number of arbitrators shall be three.” A few
other institutional rules contain a presumption in favor of three arbitrators.12 In contrast,
most institutional rules (including the ICC, LCIA, Swiss International and AAA Commercial
Rules) provide presumptively for a sole arbitrator, with the institution being granted
discretion to appoint three arbitrators in appropriate cases.13 In these cases, institutions will
appoint sole arbitrators in smaller cases and three person tribunals in larger (or otherwise
complex) disputes.

[2] Method of Selection of Arbitrators

As discussed above, there is ordinarily no standing tribunal in international arbitration: rather,

a new tribunal must be selected for each arbitration. The freedom, and responsibility, for
selecting the tribunal for every case is one of the distinguishing features of the arbitral
process. Exercising this freedom wisely is a very significant responsibility of the parties (and
their counsel); indeed, selection of the arbitrators is among the most important decisions that
a party will make in an arbitration.

[i] Selection of Co-Arbitrator

It is common for arbitration clauses to provide for a three-person tribunal, with each party
nominating one co-arbitrator. As discussed below, the co-arbitrator must (in most contexts)
be impartial and independent; at the same time, the co-arbitrator is designated unilaterally by
one party, in large part because that party believes he or she will view its case positively.
Choosing a co-arbitrator who satisfies both requirements can be challenging.
The mechanics of the arbitrator nomination process vary, depending on the applicable law,
institutional rules and parties’ agreement. In general, a party will provide written notice to
the opposing party of its designation of a specified individual as co-arbitrator. Upon receipt
of the notice, and unless otherwise agreed, the arbitrator’s appointment is effected. In some
institutional rules, however, a party’s designation of an arbitrator is a “nomination,” which
must be confirmed by the arbitral institution. This approval occurs only after the institution
receives a declaration of independence from the nominee, solicits the parties’ views and
reviews the nominee’s independence and suitability.14

[ii] Interview of Prospective Arbitrators

It is common practice for parties, or their counsel, to contact potential choices for a co-
arbitrator, to ascertain their suitability, availability and interest and, where appropriate, to
discuss the selection of a presiding arbitrator. This process is sometimes referred to as
“interviewing” the co-arbitrator.
The IBA’s Guidelines on Conflicts of Interest in International Arbitration address the
appropriate contacts between a party and potential co-arbitrator. Among other things,
Article 1.5.1 of the Guidelines provides: “the arbitrator [is not disqualified by, or required to
disclose, that he or she] has had an initial contact with the appointing party ... prior to
appointment, if this contact is limited to the arbitrator’s availability and qualifications to
serve or to the names of possible candidates for a chairperson and did not address the merits
or procedural aspects of the dispute.”15 The contact between parties and prospective co-
arbitrator is important to the arbitral process and, with appropriate safeguards (including
equal opportunities for both parties to have such contacts), do not undermine that process.
They instead serve as a valuable form of quality control, to ensure that a co-arbitrator has
experience with arbitration or a particular substantive field, does not have relations with an
adverse party or law firm, is available and interested in serving, and has the personal and
intellectual abilities to function well on a tribunal. (Despite this, a few jurisdictions
presumptively regard “interviews” with co-arbitrators with disfavor, potentially subjecting
co-arbitrators who participate in interviews to challenge.)
When they occur, the co-arbitrator’s obligations of impartiality must not be compromised
by contacts with the nominating party. As the IBA Guidelines and IBA Ethics provide, there
may be no discussion of the merits of the dispute, other than a general description sufficient
to allow the party and prospective co-arbitrator to consider issues of experience and
suitability. In particular, there should be no “pleading” of the case by a party nor any
indications of views by the co-arbitrator. As a rule, parties and co-arbitrators should conduct
themselves as if the other party were present during their discussions.

[iii] Party’s Failure to Select Co-Arbitrator

If a party fails to nominate a co-arbitrator, in accordance with the arbitration agreement, it

may suffer serious consequences. These differ depending on whether the parties’ arbitration
agreement incorporates institutional rules, which will then govern, or whether no rules are
adopted, in which case national law applies directly.
Under many institutional rules, a party’s failure to designate a co-arbitrator within the
allotted time period under the rules entitles its counter-party to request the appointing
authority to appoint an arbitrator. 16 This is the loss of a significant right: a co-arbitrator
selected by the arbitral institution may be competent, but the party’s ability to select its
preferred co-arbitrator is a key feature of the arbitral process with substantial practical
importance. Alternatively, some arbitration clauses provide that, if a party fails to nominate
an arbitrator, the other party may make the nomination itself – thus permitting that party to
choose both co-arbitrators (who would in turn ordinarily select the presiding arbitrator); this
has substantial practical implications.
Some jurisdictions may not enforce agreements that, in the event a party fails to appoint a
co-arbitrator, its counter-party may make the appointment. Common law jurisdictions have
typically given effect to such agreements, notwithstanding the substantial hardship it causes
the defaulting party; some civil law authorities reach the same conclusion, at least in
recognition actions.17 On the other hand, some states require that the parties possess equal
rights in constitution of the tribunal and there is a substantial argument that a mechanism
granting one party the right to choose both co-arbitrators is contrary to those rights.18
If neither institutional rules nor the parties’ agreement address the issue, national law can
impose serious consequences if a party fails to nominate an arbitrator within the time limits
in an arbitration clause. For example, §17 of the English Arbitration Act provides that, if a
party fails to nominate a co-arbitrator within the agreed time limit, then (absent contrary
agreement) its counter-party may elect to treat its co-arbitrator as a sole arbitrator. This is
even more imbalanced than agreements permitting a party to nominate a defaulting counter-
party’s co-arbitrator, because it allows one party directly to select the entire tribunal.19
In contrast, in most jurisdictions, a party’s failure to appoint an arbitrator in accordance
with an ad hoc arbitration agreement permits its counter-party to apply for judicial
appointment of the defaulting party’s co-arbitrator. The Model Law is representative,
providing in Article 11(4) that, if one party fails to nominate a co-arbitrator, the other party
may apply to local courts for a substitute appointment. Other arbitration statutes are
similar.20

[iv] Selection of Sole or Presiding Arbitrator by Parties

In addition to selecting the co-arbitrators (in the case of a three-person tribunal), parties will
often also participate in selecting the sole or presiding arbitrator. In many instances, parties
are able to agree on the identity of the sole or presiding arbitrator; doing so is the simplest
and best means of selecting an arbitrator. Agreement on the identity of the arbitrator(s) can be
reached either in the original arbitration clause (before a dispute arises) or in negotiations
during the arbitral proceedings. In the latter case, agreement can be sought either in direct
contacts between the parties, or indirectly, through discussions between the parties’ lawyers
or party-nominated arbitrators (in cases involving three-person tribunals). In both cases,
arbitral institutions and national courts will give effect to the parties’ agreement (subject to
narrow exceptions for disqualification for lack of impartiality).21
Parties often agree that the presiding arbitrator will be chosen by the co-arbitrators.
Involvement of the co-arbitrators in selecting a presiding arbitrators offers advantages not
present with direct discussions between the parties. In particular, the co-arbitrators will often
have had personal experience with candidates for presiding arbitrator and can offer
reassurance to parties concerned about selecting a competent and impartial individual.22
When the co-arbitrators are to select the presiding arbitrator, the parties will ordinarily
have no right to veto the arbitrators’ agreement on a chairman. Nonetheless, absent contrary
agreement, co-arbitrators are generally permitted to confer with their respective nominating
parties about suitable presiding arbitrators (to ensure that he or she has appropriate
experience, availability and independence). In general, however, it is inappropriate for either
of the parties independently to “interview” a prospective presiding arbitrator.

[v] Selection of Arbitrator by Arbitral Institution

If the parties are unable to agree upon a sole or presiding arbitrator, arbitration agreements
often provide a mechanism for selecting one – either expressly or by incorporating
institutional rules. The usual contractual mechanism for selecting an arbitrator is designation
of a neutral “appointing authority” to choose the arbitrator(s) if the parties and/or co-
arbitrators cannot agree. Failure to provide for an appointing authority in an arbitration
agreement can result in the process of constituting the tribunal being deadlocked or, more
likely, a national court designating the arbitrator(s).
Parties can (and usually do) agree to the use of an appointing authority simply by agreeing
to arbitrate under a set of institutional rules. Most institutional rules provide for such a role
by an institution when parties agree to arbitrate under that institution’s rules: incorporating
institutional rules selects an appointing authority, which in turn chooses the sole or presiding
arbitrator (if the parties are unable to do so by agreement). As noted above, national law
uniformly gives effect to the parties’ autonomy to agree to the designation of an appointing
authority. For example, Article 11(3)(a) of the Model Law provides for selection of the sole
or presiding arbitrator by an agreed appointing authority; other authorities are similar.23

[vi] Selection of Sole or Presiding Arbitrator by National Court

Most arbitration statutes permit the appointment of arbitrators by a national court, in the
arbitral seat, in limited circumstances. Judicial selection of arbitrators is typically limited to
cases where the parties have not agreed upon an alternative means for selecting the tribunal or
where their agreed means has not functioned. The availability of judicial appointment of
arbitrators as a default mechanism ensures that arbitral proceedings can be pursued, even in
the face of difficulties in constituting the tribunal.
Article 11 of the Model Law is representative in its treatment of judicial appointment of
arbitrators. Article 11(3) provides for appointment of arbitrators by a court in the arbitral
seat if, in an arbitration with a three-person tribunal, “a party fails to appoint the [co-
]arbitrator within thirty days of receipt of a request to do so from the other party, or if the
two [co-]arbitrators fail to agree on the third arbitrator within thirty days of their
appointment.” Article 11(4) goes on to provide for judicial appointment of an arbitrator if,
under the procedure in the arbitration agreement: “(a) a party fails to act as required under
such procedure, or (b) the parties, or two arbitrators, are unable to reach an agreement
expected of them under such procedure, or (c) a third party, including an institution, fails to
perform any function entrusted to it under such procedure.”
Judicial appointment may only occur under the Model Law where the parties have not
“provide[d] other means for securing the appointment” of the arbitrator(s). For example, the
parties may have agreed upon neither institutional rules nor an appointing authority, the
agreed appointing authority may have gone out of existence or refused to act, or an arbitrator
specified in the parties’ agreement may have refused to act. Other arbitration legislation is
similar, permitting appointment of arbitrator(s) only where the parties have not otherwise
provided for such appointments or where their agreed appointment mechanism has failed.24
 Arbitration legislation generally provides little guidance to courts for choosing arbitrators
in international arbitrations. Article 11(5) of the UNCITRAL Model Law provides that “in
appointing an arbitrator, [the court] shall have due regard to any qualifications required of the
arbitrator by the agreement of the parties and to such considerations as are likely to secure
the appointment of an independent and impartial arbitrator”; the same provisions require the
court to “take into account as well the advisability of appointing an arbitrator of a nationality
other than those of the parties.” In practice, national courts frequently appoint local
practitioners or retired judges, often with limited international experience – which is one
reason that parties typically prefer institutional arbitration, and experienced appointing
authorities, to ad hoc arbitration.

[C] Restrictions Concerning Arbitrators’ Impartiality, Nationality,

Qualifications and Experience under National Law

Although party autonomy is central to the selection of arbitrators, there are limits to the
parties’ freedom. These limits can arise from the arbitration agreement (together with any
applicable institutional rules), international arbitration conventions and national law. These
restrictions concern the arbitrators’ impartiality, nationality and qualifications, as well as
requirements for disclosure regarding the arbitrators’ independence and impartiality.

[1] Requirements for Arbitrators’ Independence and Impartiality

Arbitrators in international arbitrations are subject to important requirements of

independence and impartiality, arising from both national and international sources. These
requirements are fundamental to the arbitral process, which is an adjudicatory procedure
requiring a neutral and objective tribunal.

[i] Requirements for Arbitrators’ Independence and Impartiality under National Arbitration
Legislation

M ost arbitration statutes impose requirements of impartiality on arbitrators. The M odel Law
is representative, with Article 12(2) providing that: “An arbitrator may be challenged only if
circumstances exist that give rise to justifiable doubts as to his impartiality or
independence....” Article 12(2) imposes a substantive standard of impartiality and
independence, which all members of the tribunal must satisfy and which provides a basis for
challenging an arbitrator or proposed arbitrator. In addition, Articles 34(2)(a)(iv) and 36(1)(a)
(iv) of the Model Law provide for annulment or non-recognition of awards, based upon an
arbitrator’s lack of independence or impartiality under the law of the arbitral seat, while
Articles 34(2)(b)(ii) and 36(1)(b)(ii) provide for annulment or non-recognition of the award,
based on a violation of the forum’s public policies (which often include minimum standards
of impartiality and independence).
Other national arbitration regimes adopt similar standards. One U.S. decision concluded
that an award would be annulled where “a reasonable person would have to conclude that an
arbitrator was partial to one party to the arbitration.”25 Similarly, the prevailing standard of
impartiality under English law is whether there is a “real likelihood, in the sense of a real
possibility, of bias,” or whether a “fair-minded and informed observer” would conclude that
there was a “real possibility” that the tribunal was not impartial.26

[ii] Requirements for Arbitrators’ Independence and Impartiality under Institutional

Arbitration Rules

In addition to obligations of impartiality under national law, most institutional rules impose
similar obligations, together with mechanisms for appointing and challenging arbitrators.
Where applicable, these provisions play a central role in the process of constituting a
tribunal, largely (but not entirely) superseding the role of national courts and legislative
standards.
Leading institutional rules adopt broadly similar approaches to the substantive and
procedural aspects of an arbitrator’s impartiality. Article 12(1) of the UNCITRAL Rules is
representative, providing that “[a]ny arbitrator may be challenged if circumstances exist that
give rise to justifiable doubts as to the arbitrator’s impartiality or independence.” Articles 11
and 12 of the Rules go on to provide that the challenge will be considered by the tribunal (or
by any other means agreed by the parties, generally an appointing authority). These
provisions establish a largely stand-alone mechanism whereby objections to arbitrators may
be resolved expeditiously by a contractually-agreed appointing authority, without recourse to
national courts, under prescribed contractual standards of impartiality. (As discussed below,
however, Article 13(3) of the Model Law and some other arbitration statutes permit national
courts to reconsider a challenge to an arbitrator, notwithstanding the parties’ agreement to the
challenge procedures of institutional rules.27 )
Likewise, Article 11(1) of the 2012 ICC Rules provides that “every arbitrator must be and
remain impartial and independent of the parties involved in the arbitration.” The Rules also
provide procedures for objections to proposed arbitrators and challenges to existing
arbitrators to be submitted to, and decided by, the ICC Court of Arbitration. Article 11(4) of
the Rules provides that the ICC Court’s decision “shall be final,” and that no reasons for the
decision will be given. Other rules are generally similar, although some institutions (including
the LCIA and PCA) publish challenge decisions.28
[iii] Standards of Impartiality and Independence for Co-Arbitrators and Presiding
Arbitrator

A recurrent issue is whether co-arbitrators (in a three-person tribunal) are subject to the same
standards of impartiality as a presiding (or sole) arbitrator. Historically, party-nominated
arbitrators in many jurisdictions were presumed (absent contrary agreement) to have a
considerable measure of partiality towards their appointing parties. The practice of partisan
party-nominated co-arbitrators was particularly common in the United States. Thus, until
2003, the AAA Commercial Rules provided for presumptively different standards of
impartiality for co-arbitrators and presiding arbitrators (called, tellingly, “neutrals”), while
prevailing U.S. ethical guidelines for arbitrators adopted the same approach.29
In contrast, outside the United States, many modern arbitration statutes formally impose
the same standards of independence on both party-nominated co-arbitrators and presiding (or
sole) arbitrators. Article 12 of the Model Law is representative, making no distinction
between party-nominated and presiding (or sole) arbitrators. Other arbitration legislation is
similar (and, as discussed below, most institutional rules adopt the same approach).30
More recently, practice in the United States has begun to abandon historic presumptions
that party-nominated co-arbitrators need not be impartial. The 2004 AAA/ABA Code of
Ethics for Arbitrators in Commercial Disputes was amended to alter historic domestic U.S.
approaches and impose duties of impartiality on co-arbitrators. Canon X of the AAA/ABA
Code of Ethics was revised to impose the same ethical obligations on all arbitrators, including
co-arbitrators, unless the parties expressly agreed to the contrary. At the same time, the
AAA amended its domestic Commercial Rules to provide that (absent express contrary
agreement) all arbitrators were required to be independent and impartial.31
Importantly, however, under both the AAA/ABA Code of Ethics and the AAA
Commercial Arbitration Rules, parties are permitted to agree upon the use of “non-neutral”
co-arbitrators. Thus, the revised AAA/ABA Code of Ethics provides, in Canons IX and X,
that parties may, by express agreement, accept “non-neutral” co-arbitrators. Canon IX(B)
declares that “there are certain types of tri-partite arbitration in which it is expected by all
parties that the two arbitrators appointed by the parties may be predisposed toward the
party appointing them,” and then provides a mechanism by which the parties’ expectations
and agreement in this regard will be unambiguously ascertained at the outset. Rule 12(b) of
the AAA Commercial Rules takes the same approach, permitting parties to agree to non-
neutral co-arbitrators.
Contemporary U.S. practice continues to differ from that in some other jurisdictions. In
particular, some jurisdictions do not permit parties to agree upon “non-neutral” co-
arbitrators, as permitted under the AAA Commercial Rules and AAA/ABA Code of Ethics.
In particular, some Model Law jurisdictions impose mandatory obligations of independence
and impartiality on all arbitrators regardless of the parties’ contrary agreement.32

[iv] IBA Guidelines on Conflicts of Interest

As discussed above, the IBA has adopted two sets of guidelines concerning conflicts of
interest of international commercial arbitrators – the 1987 IBA Ethics for Arbitrators in
International Commercial Disputes (“IBA Ethics”) and the 2004 IBA Guidelines on Conflicts
of Interest in International Arbitration (“IBA Guidelines”). Neither the IBA Ethics nor the
IBA Guidelines have the force of law (although they will be contractually-binding if
incorporated by an arbitration clause).33 The IBA Ethics and IBA Guidelines have also not
been formally adopted by arbitral institutions, either as binding rules or advisory guidelines;
in practice, however, institutions frequently consider their provisions.
The IBA Ethics were adopted in 1986. They set forth general principles regarding the
ethical obligations of international arbitrators, including in particular the arbitrators’
impartiality. The IBA Ethics set forth nine articles, resting on the “Fundamental Rule” that
“[a]rbitrators shall proceed diligently and efficiently to provide the parties with a just and
effective resolution of their disputes, and shall be and shall remain free from bias.”34 The
Ethics elaborate on this basic principle with relatively general provisions regarding
substantive standards of impartiality, disclosure, communications with parties and fees.35
The IBA Guidelines elaborated on the IBA Ethics’ treatment of the arbitrators’
independence and impartiality. Adopted in 2004, the IBA Guidelines consist of two basic
parts. The first part formulates seven “General Principles” of impartiality, together with
explanatory notes; the second part sets out specific types of potential “conflicts” in which
issues of impartiality frequently arise, categorizing such circumstances into forbidden
(“Red”), permitted (“Green”) and other (“Orange”) lists of arguable conflicts. The
Guidelines’ General Principles articulate rules concerning impartiality, disclosure and waiver,
focusing on two related sets of obligations: (a) an obligation for arbitrators and prospective
arbitrators to disclose certain circumstances that might give rise to doubts concerning their
impartiality or independence (General Principle 3); and (b) an obligation that arbitrators be
impartial and independent (General Principle 2).
The fundamental “General Principle” of the IBA Guidelines is that “[e]very arbitrator
shall be impartial and independent of the parties at the time of accepting an appointment to
serve and shall remain so during the entire arbitration proceeding until the final award has
been rendered ....” This principle applies to “every” arbitrator, adopting the same standard
for co-arbitrators and presiding arbitrators.
This basic standard is elaborated upon by the General Principles concerning
disqualification of arbitrators. General Principle 2(a) provides that an arbitrator shall decline
to accept nomination “if he or she has any doubts as to his or her ability to be impartial or
independent.” Additionally, General Principle 2(b) provides that an arbitrator must withdraw
or resign if “facts or circumstances exist, or have arisen since the appointment, that, from a
reasonable third person’s point of view having knowledge of the relevant facts, give rise to
justifiable doubts as to the arbitrator’s impartiality or independence .” This provision requires
withdrawal, or permits disqualification, based on an objective standard – in particular,
disqualification is provided for if a “reasonable” third person would have “justifiable doubts”
as to the arbitrator’s impartiality or independence.
The heart of the IBA Guidelines are its Red, Orange and Green lists. As discussed above,
these categories elaborate on the general requirements of impartiality and independence, by
providing specific instances of relationships that warrant disqualification (“Red”), divided
into waivable and non-waivable conflicts. The Guidelines also set forth lists of relationships
that raise possible grounds for disqualification (“Orange”) and relationships that do not
warrant disqualification of an arbitrator, or even disclosure to the parties (“Green”). Although
the IBA Guidelines do not have the force of law, number of courts have relied upon them in
decisions regarding removal of arbitrators or annulment of awards.

[v] Disclosure Obligations of Arbitrators

An essential aspect of constituting a tribunal is the disclosure by arbitrators of circumstances

which could raise justifiable doubts regarding their impartiality. Most national laws and
institutional rules obligate arbitrators to make such disclosures, both prior to accepting a
nomination and (in the event of new developments) during the course of the arbitration.
Many national laws require arbitrators to disclose matters that might compromise their
impartiality prior to accepting appointment. Article 12(1) of the Model Law is
representative, providing: “[w]hen a person is approached in connection with his possible
appointment as an arbitrator, he shall disclose any circumstances likely to give rise to
justifiable doubts as to his impartiality or independence.” Article 12(1) imposes an objective
standard: if facts are “likely to give rise to justifiable doubts” as to the arbitrator’s impartiality
or independence, they must be disclosed. Similarly, Article 12(2) provides that an arbitrator
may be challenged if circumstances actually do “give rise to justifiable doubts” as to
impartiality and independence. There is, however, a clear difference between the two
standards in Articles 12(1) and 12(2), with the former requiring a lower threshold of
probability (“likely to give rise”) than the latter (“give rise”).36
Most institutional rules require arbitrators to disclose circumstances bearing on their
impartiality prior to accepting appointment. Article 11 of the UNCITRAL Rules provides
“[w]hen a person is approached in connection with his or her possible appointment as an
arbitrator, he or she shall disclose any circumstances likely to give rise to justifiable doubts as
to his or her impartiality or independence.” Like Article 12(1) of the Model Law, Article 11
of the UNCITRAL Rules imposes a broader disclosure standard than the standard required
for removal of an arbitrator under Article 12(1). Other institutional rules impose similarly
broad disclosure obligations.37
Both national law and many institutional rules also impose a continuing obligation on
arbitrators to disclose possible conflicts that arise during the arbitral proceedings. For
example, Article 12(1) of the Model Law provides that “...[a]n arbitrator, from the time of
his appointment and throughout the arbitral proceedings, shall without delay disclose any
such circumstances to the parties unless they have already been informed of them by him.”
Institutional rules contain similar provisions.38

[vi] Grounds for Finding Lack of Impartiality

In practice, a number of specific categories of “conflicts” recurrently arise in assessing an

arbitrator’s impartiality. These various can be considered independently, or in conjunction
with other grounds, as a basis for challenging an arbitrator’s impartiality.

Judge in Own Cause. It is elementary that a party may not be an arbitrator in its own case
(“nemo debet esse judex in propria causa”). Even where parties have expressly agreed to
arrangements where one party, or its representative, is to resolve the parties’ future disputes,
courts have often refused to give effect to such agreements.

Financial Interest in the Dispute. One of the clearest bases for finding a lack of impartiality is
the arbitrator’s material financial interest in the outcome of the arbitration. This includes
cases where the arbitrator would profit financially from his or her own decision or has an
ownership interest in a party to the arbitration.

Present Employment by Party. An arbitrator’s present employment by a party – as an

employee, officer, or director – is a presumptive basis for finding a lack of independence.

Prior Involvement in the Dispute. Another presumptive basis for finding a lack of
independence is an arbitrator’s prior involvement in the parties’ dispute, either as a corporate
officer, lawyer, or witness. The IBA Guidelines provide that an “arbitrator [who] has
previous involvement in the case” is subject to a waivable, Red List conflict (in Article 1.2).

Family or Personal Relationship with Party. A family relationship between an arbitrator and
one of the parties, the parties’ principals (or lawyers), or a key witness, can also sustain a
finding of lack of independence. A personal relationship between an arbitrator and a party,
principal, or lawyer can also result in disqualification of an arbitrator.
Business Dealings with Party. If an arbitrator has non-trivial business dealings with a party, a
lack of independence will presumptively be found. Conversely, if the business dealings are
insignificant, and unrelated to the dispute, they are unlikely to constitute grounds for
removal.

Prior Representation of Party. If an arbitrator has previously provided legal (or similar)
services on other matters to one of the parties, this may provide grounds for finding lack of
independence, depending on the circumstances.

Law Firm Conflicts. Although the arbitrator himself or herself may not represent, or have
previously represented, one of the parties to the arbitration, colleagues in his or her law firm
may do so, or have done so. In most legal systems, the arbitrator’s law firm’s conflicts will
be relevant to assessing his or her impartiality. In general, courts have been reluctant to
uphold challenges where an arbitrator was not personally involved in representations that
were wholly unrelated to the arbitration.

Ex Parte Contacts During Arbitration. Many institutional rules, as well as the IBA and
AAA/ABA codes of arbitrator ethics, forbid ex parte contacts between an arbitrator and a
party concerning the substance of the arbitration.39 Even absent such rules, undisclosed ex
parte contacts between an arbitrator and a party during the arbitration concerning the merits
of the parties’ dispute are presumptively regarded as improper under many national laws.

Recurrent Arbitral Appointments by Same Party. If an arbitrator is repeatedly appointed by

the same party or lawyer, this may give rise to justifiable doubts concerning his or her
impartiality. The IBA Guidelines (in Article 3.1.3) require disclosure of repeat appointments
of an arbitrator by the same party or the same counsel if they are sufficiently frequent (e.g.,
more than three appointments in the past three years), and provide for the possibility of
challenges in these circumstances.

Adversity to One Party. Another possible basis for finding lack of impartiality involves an
arbitrator’s current adverse representation against a party in an unrelated (or related) matter.
The IBA Guidelines provide (in Article 3.1.2) for disclosure, and the possibility of a
challenge, in cases of current adverse representation by the arbitrator (or his or her law firm).

Issue Conflicts. It is sometimes argued that a prospective arbitrator has an “issue conflict”
because he or she has previously expressed a position on a legal issue likely to arise in an
arbitration. Such claims have been particularly common in investment arbitration, where
arbitral awards and submissions are often public and a limited number of common legal issues
are likely to recur. Most authorities have rejected such claims on the basis that lawyers,
judges and arbitrators inevitably encounter and form views on particular issues in the course
of their work.

[2] Nationality of Sole and Presiding Arbitrators

M ost institutional rules contain limitations on the nationality of sole and presiding arbitrators
(but not the nationality of co-arbitrators). These limitations are designed to implement one of
the basic objectives of international arbitration, being to provide an internationally-neutral
means of resolving disputes between parties from different countries.
Article 6(7) of the UNCITRAL Rules is representative, providing that, in appointing a
sole or presiding arbitrator, the appointing authority shall “have regard to such considerations
as are likely to secure the appointment of an independent and impartial arbitrator and shall
take into account the advisability of appointing an arbitrator of a nationality other than the
nationalities of the parties.” Other rules are more stringent on the subject of the sole or
presiding arbitrator’s nationality. The ICC Rules provide that, when the ICC Court selects a
sole or presiding arbitrator, he or she “shall be of a nationality other than those of the parties.
However, in suitable circumstances and provided that neither of the parties objects within the
time limit fixed by the Court, the sole arbitrator or the chairman of the Arbitral Tribunal may
be chosen from a country of which any of the parties is a national.” These restrictions,
intended to ensure the tribunal’s neutrality, have been upheld by national courts.40
Many arbitration statutes expressly guarantee parties the right to appoint arbitrators of a
foreign nationality. Article 11(1) of the Model Law is representative, providing that “[n]o
person shall be precluded by reason of his nationality from acting as an arbitrator, unless
otherwise agreed by the parties.” Other arbitration statutes are comparable.41
Arbitration legislation in a few countries imposes mandatory nationality or religion
requirements – requiring that arbitrators be of a particular nationality or religion – which are
fundamentally different from those contained in institutional rules. Examples include the
Saudi Arabian Arbitration Regulation (§3): “The arbitrator shall be a Saudi national or
Muslim expatriate from the free professional section or others.” It is doubtful that such
legislative requirements are consistent with the Convention’s requirement, in Articles II and
V(1)(d), that arbitration agreements be recognized and enforced. The requirements imposed
by these national laws are typically applicable regardless whether the parties agree to them
and cannot be overridden by party agreement; they also apply to all arbitrators, regardless of
their mechanism of selection (e.g., co-arbitrators, as well as sole and presiding arbitrators).

[3] Natural Persons and Legal Capacity

In some states, arbitrators must be natural persons (as distinguished from corporations), at
least in domestic arbitrations. For example, Article 1450 of the French Code of Civil
Procedure provides, for domestic arbitration, that “the mission of arbitrator may only be
entrusted to a natural person.” Most other jurisdictions permit juridical persons to serve as
arbitrators, although in practice this is unusual. In many countries, it is either expressly or
impliedly required that arbitrators have legal capacity.42

[4] Legally Qualification and Civil Rights

Some arbitration regimes require that the arbitrators (or, at least, the presiding arbitrator) be
legally qualified. In other states, local law requires that arbitrators be capable of exercising
their civil rights (e.g., not having been convicted of serious crimes or declared bankrupt).43

[5] Arbitrator Must Not Be a National Court Judge

In a number of countries, an active judge may not serve as an arbitrator (or may do so only
with specified permissions).44

[D] Contractual Limitations on Arbitrators’ Qualifications

It is not uncommon for arbitration agreements to impose requirements of various types
regarding the arbitrators’ qualifications, either directly or through incorporation of
institutional rules containing such provisions. When they exist, contractual requirements
regarding arbitrators’ qualifications typically concern nationality, language, legal training (e.g.,
either requiring or prohibiting lawyers), or background (e.g., experience in a particular
commercial field). Depending on the parties’ agreement, these requirements can apply to
either all arbitrators or only the sole or presiding arbitrator.

[1] Contractual Nationality Requirements

It is common for parties to agree, indirectly, to limitations on the nationality of sole or

presiding arbitrators, often by incorporating institutional rules into their agreements. As
discussed above, these rules impose either absolute or presumptive requirements that the sole
or presiding arbitrator have a nationality different from that of the parties. These consensual
provisions, designed to ensure the neutrality of the arbitral process, will be given full effect.
[2] Contractual Language Requirements

It is also common for arbitration agreements to impose language requirements, such as

requiring the arbitrators to speak a specified language (in addition to the language of the
arbitration); these requirements can significantly affect the pool of available arbitrators. In
principle, language requirements will be given full effect.

[3] Expertise and Accreditation Requirements

Arbitration agreements also sometimes impose requirements that arbitrators have expertise,
experience, or qualifications in specific fields (e.g., insurance, shipping). These sorts of
requirements are intended to further one of the core objectives of arbitration, being to ensure a
tribunal that has particular expertise useful in resolving the parties’ dispute efficiently and
soundly. Again, these sorts of provisions will generally be enforced in accordance with the
parties’ agreement.
It is preferable to draft such requirements by reference to an objectively-verifiable standard
(e.g., “a Certified Public Accountant”) rather than to subjective formulae (e.g., “having
accounting experience”). This reduces the risk of disputes as to whether an arbitrator satisfies
the parties’ requirements. Regardless how they are drafted, parties should avoid excessive
requirements (e.g., an Uzbek national, experienced in telecommunications joint venture
projects).

[4] Legal Qualifications

Arbitration agreements sometimes require, directly or by incorporating institutional rules,

that arbitrators be qualified to practice law. Other institutional rules or arbitration agreements
require that the arbitrators have legal or commercial experience.45 These sorts of requirements
are almost always superfluous, because in practice parties seldom appoint non-lawyers in
international arbitrations, but, where they exist, they will be given effect.

[5] Prohibitions against Legal Qualifications

Conversely, some institutional rules preclude arbitrators who are legally qualified. 46
Although such agreements often make little sense, they will usually be given effect (save for
exceptional cases where a lay arbitrator cannot adequately resolve a complex dispute).
§7.02 PROCEDURES FOR CHALLENGING ARBITRATORS

On occasion, a party may become dissatisfied with a sitting arbitrator, typically because of
real or professed doubts about the arbitrator’s impartiality, and will seek to “challenge” the
arbitrator. Challenges can be raised against any arbitrator, including arbitrators who have been
selected by an appointing authority, by agreement between the parties, by another party, or
(less commonly) by the challenging party itself. Challenges can be asserted either in
accordance with institutional rules (typically, to the appointing authority) or national law (to
the courts in the arbitral seat).

[A] Institutional Challenges

Most institutional rules contain provisions for dealing with challenges to arbitrators. Article
13 of the UNCITRAL Rules provides that a party may send notice that it challenges an
arbitrator within a short time period (e.g., fifteen days) from his or her appointment or of
learning of circumstances prompting the challenge. The notice must be sent to the challenged
arbitrator, other members of the tribunal and other parties to the arbitration, and must state
the reasons for the challenge. If a challenge is made, the non-challenging party may agree to
the challenge or the challenged arbitrator may withdraw (without in either case thereby
accepting the validity of the challenge). If neither the non-challenging party nor the arbitrator
accept the challenge, Article 13(4) provides that the challenge will be resolved by any
appointing authority selected by the parties.
The same basic structure is followed by other institutional rules. Parties wishing to make a
challenge are required to do so within a short period of time from an arbitrator’s appointment
or receiving knowledge of grounds for the challenge. Challenges must be made in writing,
ordinarily to the appointing authority (as well as the tribunal and opposing parties). The
non-challenging party is ordinarily permitted to respond (in writing) to the challenge and the
appointing authority will also ordinarily solicit the views of the challenged arbitrator;
typically, no opportunity is provided for discovery, evidence-taking, or oral submissions to
the appointing authority.47
The appointing authority will ordinarily resolve the challenge quickly (typically in a
matter of days or (more likely) a few weeks). The authority’s decision is generally announced
without reasons, in a letter; a few arbitral institutions provide for reasoned decisions on
challenges but this is unusual.48 No avenue of objection or further recourse (within the
arbitral institution) is available, although, as discussed below, there is the possibility of
limited judicial review by, or independent challenges in, national courts in the arbitral seat in
some legal systems.
Institutional rules contain broadly similar substantive standards for challenges to an
arbitrator. The principal focus of these standards is on an arbitrator’s impartiality and
independence, but other bases for removal are also prescribed. These include incapacity,
failure to conduct or participate in the arbitral proceedings, and failure to satisfy the
qualifications required by the parties’ arbitration agreement.
Thus, the UNCITRAL Rules provide for challenges to an arbitrator based upon
“justifiable doubts as to his impartiality or independence” (in Article 12(1)), and also permit
removal of an arbitrator due to the “de jure or de facto impossibility of his performing his
functions” (in Article 2(3)). Similarly, Article 14(1) of the 2012 ICC Rules permits challenges
to an arbitrator who allegedly lack “impartiality, independence or otherwise,” and also
provide that an arbitrator may be removed (on the ICC Court’s own initiative, without a
challenge) if “... the arbitrator is prevented de jure or de facto from fulfilling the arbitrator’s
functions, or [if] the arbitrator is not fulfilling those functions in accordance with the Rules or
within the prescribed time limits.” (Article 15(1)). Other institutional rules are similar.49
Finally, as discussed below, most institutional rules require that challenges be brought
promptly (or within specified time periods) following discovery of grounds for a challenge.
Failure to comply with these limits will typically result in waiver.50

[B] Interlocutory Challenges in National Courts

Institutional challenge mechanisms are not necessarily the exclusive means of seeking to
remove an arbitrator. It is also generally possible to pursue an interlocutory judicial challenge
to an arbitrator in a national court in ad hoc arbitrations; additionally, it is also possible in
some jurisdictions to pursue an interlocutory judicial challenge even in institutional
arbitrations. Moreover, it is generally possible to seek to annul an award on the grounds that
the arbitrator was not independent.51
The Model Law provides for interlocutory judicial removal of arbitrators in both ad hoc
and institutional arbitrations. As noted above, if parties have not agreed upon a procedure for
challenging arbitrators, Article 13(2) provides for challenges to be made in writing to the
tribunal itself, which shall, unless the challenged arbitrator or the other party agree with the
challenge, decide upon the application. In addition, Article 13(3) provides:

If a challenge under any procedure agreed upon by the parties or under the procedure of
paragraph (2) of this article is not successful, the challenging party may request, within
thirty days after having received notice of the decision rejecting the challenge, the court
... to decide on the challenge, which decision shall be subject to no appeal; while such
request is pending, the arbitral tribunal, including the challenged arbitrator, may continue
the arbitral proceedings and make an award.
Article 13(3) permits judicial challenges to arbitrators in both ad hoc arbitrations, where no
contractually-agreed challenge procedure exists, and in institutional arbitrations, where the
parties have agreed upon a mechanism for resolving challenges. Parties may not contract out
of Article 13(3)’s provision for interlocutory judicial consideration of challenges.
In other jurisdictions, arbitration legislation generally permits interlocutory judicial removal
of arbitrators sitting in an international arbitration located within national territory, but only
if the parties have not agreed to any institutional challenge mechanism. Where the parties
have agreed upon an institutional challenge procedure, that procedure is exclusive and national
courts have no power to remove an arbitrator. As noted above, Articles 179 and 180 of the
Swiss Law on Private International Law provide that arbitrators in international arbitrations
seated in Switzerland may be removed by Swiss courts, but only in the absence of contrary
agreement by the parties.52 Legislation in a number of other jurisdictions is similar.53
In contrast to most jurisdictions, U.S. courts generally permit only the most limited
interlocutory judicial challenges of arbitrators (regardless whether or not an institutional
challenge procedure exists).54 In the words of a leading decision, which reflects the weight of
U.S. authority, “it is well established that a district court cannot entertain an attack upon the
qualifications or partiality of arbitrators until after the conclusion of the arbitration and the
rendition of the award.”55 The only judicial forum for challenging an arbitrator’s impartiality,
in the United States, is in annulment proceedings, after a final award is made.

[C] Waiver of Rights to Object to Arbitrator

As noted above, most institutional rules provide that a party must assert any objections to
an arbitrator, whether based on lack of impartiality or otherwise, promptly after the
arbitrator’s nomination or, alternatively, after a party learns of the basis for a challenge.
Thus, Article 13(1) of the UNCITRAL Rules provides that a challenge must be notified by a
party within 15 days of learning of grounds for the challenge: “A party who intends to
challenge an arbitrator shall send notice of its challenge within 15 days after it has been
notified of the appointment of the challenged arbitrator, or within 15 days after the
circumstances [on which the challenge is based] became known to that party.” Similar
provisions are contained in other institutional rules.56
The rationale underlying these requirements is non-controversial. Parties should not be
permitted to proceed with an arbitration, while retaining secret grounds for objection to the
decision-makers. As one court said, this “Heads I win, tails you lose” approach is unfair and
unseemly.57 Rather, if a party does not promptly raise a challenge, it will be deemed to have
waived its challenge. Both arbitral institutions and national courts have repeatedly upheld
such time limits.58
 Most arbitration statutes require that objections to an arbitrator be raised promptly, failing
which they are waived. Article 13(2) of the Model Law provides that challenges must be
asserted either “without delay” or within specified time periods from learning of the basis for
the challenge. Similarly, common law decisions have held, outside the context of institutional
rules containing requirements for timely challenges, that a party must make any challenge to
an arbitrator in a timely fashion, or risk waiving the challenge.59 Although some U.S. courts
have required that a party have actual knowledge of the basis for an arbitrator’s alleged
conflict of interest, the weight of authority is that a party’s failure to raise an objection,
notwithstanding constructive knowledge of an alleged conflict, will waive its rights
subsequently to challenge the arbitrator (or the arbitrator’s final award).60

§7.03 REPLACEMENT OF ARBITRATORS

When an arbitrator is removed or resigns, he or she must be replaced. Some arbitration

agreements contain provisions regarding vacancies: the typical approach is that vacancies will
be filled in the same manner the original arbitrator was selected. That is, if a party-nominated
co-arbitrator is removed, then the party that originally nominated that arbitrator is entitled to
nominate a replacement (rather than, for example, the appointing authority doing so).
Conversely, if the presiding arbitrator is removed, then the appointing authority (or,
depending on the parties’ agreement, the co-arbitrators, acting jointly) will nominate the
replacement. Where an arbitration agreement contains express provisions to this effect, they
will be enforced by national courts.
Institutional rules take a similar approach, providing that vacancies will be filled in the
same manner in which the arbitrator who is being replaced was originally selected. For
example, Article 14(1) of the UNCITRAL Rules provides: “... in any event where an
arbitrator has to be replaced during the course of the arbitral proceedings, a substitute
arbitrator shall be appointed or chosen pursuant to the procedure provided for in articles 8 to
11 [of the UNCITRAL Rules] that was applicable to the appointment or choice of the
arbitrator being replaced.” The rationale of this approach is obvious: the prospect that a
party could be deprived of an opportunity to select a co-arbitrator, in the event of a
successful challenge, would create undesirable incentives for challenges and would cause
disproportionate damage to a party whose nominee was removed (by denying it the
opportunity to nominate an arbitrator, while permitting its counter-party to do so).
National arbitration legislation adopts the same approach. Article 15 of the Model Law
provides:

Where the mandate of an arbitrator terminates under article 13 or 14 [of the Model Law,
providing for institutional and judicial challenges] or because of his withdrawal from
 office for any other reason or because of the revocation of his mandate by agreement of
the parties or in any other case of termination of his mandate, a substitute arbitrator
shall be appointed according to the rules that were applicable to the appointment of the
arbitrator being replaced.

Other statutes are similar.61

§7.04 TRUNCATED TRIBUNAL

There are circumstances in which a three-person tribunal continues an arbitration with either
only two members or with three members, one of whom refuses to participate in the
tribunal’s actions. In these circumstances, the tribunal is referred to as a “truncated tribunal.”
It very occasionally occurs that one co-arbitrator on a three-person tribunal either refuses
to participate in deliberations, resigns at a critical juncture, or is similarly obstructive; further,
where the co-arbitrator resigns, the replacement co-arbitrator nominated by the same party
may either continue to obstruct the proceeding or himself resign. There have been several
well-publicized instances of such behavior in past decades.62 This sort of (mis)conduct can
bring the arbitral proceedings to a stand-still and frustrate the arbitration entirely.
Some institutional rules address this problem by expressly permitting “truncated
tribunals” to proceed to an award without the participation of an obstructive co-arbitrator.
Article 15(5) of the 2012 ICC Rules provides a comparatively narrow example of such a
provision:

Subsequent to the closing of the proceedings, instead of replacing an arbitrator who has
died or been removed by the Court pursuant to Articles 15(1) and 15(2), the Court may
decide, when it considers it appropriate, that the remaining arbitrators shall continue the
arbitration. In making such determination, the Court shall take into account the views of
the remaining arbitrators and of the parties and such other matters that it considers
appropriate in the circumstances.

Article 15(5) only permits truncated tribunals after the tribunal has formally closed the
proceedings under Article 27 of the ICC Rules (thereby precluding further submissions by
the parties), which is a relatively narrow category of cases. Prior to the close of proceeding,
the solution for obstruction by a co-arbitrator is removal (with the possibility of the
replacement being made by the ICC Court, rather than the party that nominated the original
co-arbitrator).
Other institutional rules provide broader possibilities for a truncated tribunal. Article 12(1)
of the LCIA Rules provides:
 If any arbitrator on a three-member Arbitral Tribunal refuses or persistently fails to
participate in its deliberations, the two other arbitrators shall have the power, upon their
written notice of such refusal or failure to the LCIA Court, the parties and the third
arbitrator, to continue the arbitration (including the making of any decision, ruling or
award), notwithstanding the absence of the third arbitrator.

Similar provisions exist under other institutional rules (but, notably, not the UNCITRAL
Rules).63 These provisions permit a truncated tribunal to proceed, absent one member, at any
stage of the arbitration, provided that one arbitrator has clearly demonstrated a refusal to
participate in the tribunal’s work.
There is little authority addressing the enforceability of these provisions. In the absence of
statutory provisions addressing the question, there are substantial arguments that national
law should give effect to institutional rules providing for truncated tribunals. Just as parties
are free to agree upon a sole arbitrator, or a tribunal of three or five arbitrators, so they should
be free to agree upon a truncated tribunal of two arbitrators in specified circumstances.
Another issue is presented when the parties have not agreed to institutional rules providing
for a truncated tribunal. In this case, the appointing authority and/or tribunal must decide,
without specific authorization, how to deal with an obstructive arbitrator. The predominant
response has been to permit truncated tribunals, in which two arbitrators proceed with their
mandate, without the participation of the obstructive arbitrator. 64 Other tribunals have taken
similar approaches, concluding that non-obstructive members of a tribunal have an obligation
to continue with the arbitral proceedings notwithstanding the absence of an obstructive
arbitrator.65
Despite this almost uniform tendency in awards, national courts are divided in their
treatment of ad hoc awards made by truncated tribunals. Some courts have held that, where
the parties’ arbitration agreement provided for a three-person tribunal, not a two-person
truncated tribunal, an award by a truncated tribunal was invalid (regardless of the abusive
actions of an obstructive arbitrator); other courts have upheld awards by truncated
tribunals.66

§7.05 ARBITRATORS’ RIGHTS AND DUTIES

National laws seldom expressly address the question of the status of the international
arbitrator and his or her relationship with the parties. The subject has been left almost
entirely to national courts and commentators. For example, the Model Law is silent on the
status of arbitrators and the relations between arbitrators and parties, containing no reference
to contractual or other forms of legal relations between the arbitrators and the parties. Other
arbitration legislation is similar.67
In the absence of guidance from national law (or institutional rules), courts have formulated
alternative theories for defining the arbitrators’ relations with the parties. The most widely-
accepted rationale is contractual: under the contractual theory, the arbitrators and the parties
to an arbitration agreement enter into a separate agreement pursuant to which the arbitrators
undertake to perform specified functions vis-à-vis the parties in return for remuneration,
cooperation and defined immunities.68
The contract between the parties and the arbitrators is referred to as the “arbitration
contract” or “arbitrator contract.” M ost legal systems have adopted similar approaches to the
substance of the arbitrators’ rights and duties, treating it as a sui generis form of contract.
The arbitrator contract is typically regarded as requiring an arbitrator to perform the
following contractual duties: (a) resolve the parties’ dispute in an adjudicatory manner; (b)
conduct the arbitration in accordance with the arbitration agreement; (c) maintain the
confidentiality of the arbitration; (d) in some contexts, propose settlement to the parties; and
(e) complete the arbitrators’ mandate. These obligations are enforced through a variety of
mechanisms, including civil liability, loss of entitlement to remuneration, termination of the
arbitrators’ mandate and removal, and prohibitions against further appointments.69
At the same time, arbitrators also enjoy important rights and protections by virtue of the
arbitrator contract and applicable law. These include rights to remuneration, cooperation from
the parties in the arbitral proceedings and immunities from liability. In most instances, these
various rights are subject to the parties’ agreement, with the parties and arbitrator(s) enjoying
broad autonomy to structure the arbitrators’ rights and obligations as they think best.

§7.06 ARBITRAL IMMUNITY

An arbitrator is entitled to various immunities from civil claims by the parties arising out of
his or her conduct of the arbitration. The nature and scope of these immunities varies
depending upon the parties’ agreement, any applicable institutional rules and applicable
national law. These immunities are only available to “arbitrators” engaged in “arbitration,”
and not to others (such as mediators or experts in an expert determination). In some
instances, immunity extends to arbitral institutions (as well as to arbitrators).
Most arbitration regimes provide arbitrators with statutory or common law immunities
from civil claims against them based on the performance of their adjudicative functions. (One
notable exception is the M odel Law, which is silent on the subject of arbitrator immunity.)
A leading example of legislation addressing the issue of arbitrator immunity in the English
Arbitration Act, which provides in §29 that “[a]n arbitrator is not liable for anything done or
omitted in the discharge or purported discharge of his functions as an arbitrator unless the act
or omission is shown to have been in bad faith.” An alternative approach is that of the
Spanish Arbitration Law, which provides that arbitrators who fail to “faithfully fulfill” their
mandate are “liable for the damage and losses they cause by reason of bad faith, recklessness
or fraud.”70 Recently-enacted arbitration statutes have generally provided affirmative grants
of arbitrator immunity, sometimes with exceptions for bad faith or fraudulent actions.71
Judicial decisions in many states adopt similar approaches. For example, in the United
States, courts have reasoned that arbitrators should be granted virtually absolute immunity
because of their adjudicative function: “An arbitrator is a quasi-judicial officer ... exercising
judicial functions. There is as much reason in his case for protecting and insuring his
impartiality, independence, and freedom from undue influence, as in the case of a judge or
juror.”72
Many national courts historically held that arbitrators were entitled to extremely broad
immunities, extending to negligence, bad faith or intentional misconduct, non-disclosure of
conflicts and similar malfeasance. More recent decisions suggest that the scope of arbitrator
immunity may be somewhat more limited, with some courts denying arbitrators immunity
for failing to issue an award in a timely manner, for failing to make decisions, or for fraud or
similar misconduct. Whatever the precise scope of arbitrator immunity, however, most courts
recognize broad immunities, subject to exceptions only for failure to act and fraudulent
misconduct.73
Most institutional rules provide for contractual exclusions of arbitrators’ civil liability.
One significant exception is the UNCITRAL Rules, which are silent on the subject of
arbitrator liability (and immunity). In contrast, the 2012 ICC Rules (in Article 40) provide
broadly that neither arbitrators nor the ICC “shall be liable to any person for any act or
omission in connection with the arbitration.” Other institutional rules also contain exclusions
of liability, although typically not applying to either deliberate wrongdoing or (less
commonly) gross negligence.74 Most institutional rules also extend immunity to the arbitral
institution and its staff.
_________________________
1. Explanatory Note by the UNCITRAL Secretariat on the Model Law on International Commercial Arbitration, as
amended in 2006, ¶23, available at www.uncitral.org.
2. G. Born, International Commercial Arbitration 1377–81 (2009). Section 5 of the U.S. FAA provides: “ If in the
[arbitration] agreement provision be made for a method of naming or appointing an arbitrator or arbitrators ... such
method shall be followed....”.
3. As discussed below, most institutional rules subject the parties’ autonomy to only neutral procedural
requirements (regarding the timing and form of parties’ actions) and restrictions designed to ensure the arbitrators’
impartiality and/or independence and minimal competence. In a few instances, arbitral institutions place more
significant restrictions on the parties’ autonomy ( e.g., nationality limitations or requirements that arbitrators be
selected from a pre-existing list or have specified expertise), but these are exceptions.
4. A few institutional rules take different approaches. For example, the LCIA Rules provide (in Articles 5(6) and 7(1))
that the LCIA itself (rather than the parties) is responsible for selecting the sole arbitrator or chairman, without
 making any provision for joint or agreed proposals by the parties. LCIA Rules, Art. 5(6). See also LCIA Rules,
Art. 7(1) (treating any agreement to appoint an arbitrator as an agreement to “ nominate” an arbitrator and
providing that the “ LCIA Court may refuse to appoint any such nominee if it determines that he is not suitable or
independent or impartial”).
5. See G. Born, International Commercial Arbitration 1383–85, 2602 (2009). Arbitration legislation and the
Convention also generally provide for the non-recognition of awards based on violation of the parties’ arbitration
agreement regarding constitution of the tribunal. See, e.g., New York Convention, Art. V(1)(d); UNCITRAL
Model Law, Art. 36(1)(a)(iv).
6. See G. Born, International Commercial Arbitration 1383–85, 2602 (2009).
7. See G. Born, International Commercial Arbitration 1350–51 (2009).
8. See G. Born, International Commercial Arbitration 1351–53, 1368–74 (2009).
9. See G. Born, International Commercial Arbitration 1353 (2009).
10. See G. Born, International Commercial Arbitration 1359–62 (2009).
11. Legislation in other common law jurisdictions is similar. Section 15(3) of the English Arbitration Act, 1996,
provides “ if there is no agreement as to the number of arbitrators, the tribunal shall consist of a sole arbitrator.”
See G. Born, International Commercial Arbitration 1360–61 (2009).
12. SCC Rules, Art. 16(1).
13. ICC Rules 2012, Art. 12(2); LCIA Rules, Art. 5(4); ICDR Rules, Art. 5; VIAC Rules, Art. 9 (2); AAA Commercial
Rules, R-17; NAI Rules, Art. 12(2).
14. See, e.g., ICC Rules 2012, Art. 13(2); LCIA Rules, Art. 7(1).
15. IBA Guidelines, Green List, ¶1.5.1. See also IBA Ethics, Art. 5(1); AAA/ABA Code of Ethics, Canon III(B).
16. UNCITRAL Rules, Art. 7(2); 2012 ICC Rules, Art. 12(4); LCIA Rules, Art. 7(2).
17. See G. Born, International Commercial Arbitration 1394–98 (2009). For discussion of recognition of awards
made by sole arbitrator selected by one party, see id. at 1373–77 & n.110.
18. See G. Born, International Commercial Arbitration 1395–98 (2009).
19. English awards, rendered by a sole arbitrator appointed by one party in a default context, have frequently been
resisted in foreign recognition proceedings on the grounds that they denied the defaulting party an impartial
tribunal and/or opportunity to be heard. Most courts have rejected such challenges in recognition actions. G.
Born, International Commercial Arbitration 1372–73, 1397–98 (2009).
20. G. Born, International Commercial Arbitration 1398, 1423–24 (2009). See, e.g., Swiss Law on Private
International Law, Art. 179(2); Japanese Arbitration Law, Art. 17(2); U.S. FAA, 9 U.S.C. §5.
21. G. Born, International Commercial Arbitration 1398–1407 (2009). See infra pp. 134–35.
22. In practice, co-arbitrators (or parties) are able to agree on the presiding arbitrator in a significant number of cases;
agreement on a presiding arbitrator is also much more likely than agreement on a sole arbitrator. See G. Born,
International Commercial Arbitration 1356, 1402 (2009).
23. G. Born, International Commercial Arbitration 1382–84, 1407–16 (2009).
24. G. Born, International Commercial Arbitration 1398–99, 1416–23 (2009).
25. Morelite Constr. Corp. v. N.Y.C. Dist. Council Carpenters’ Benefit Funds, 748 F.2d 79 (2d Cir. 1984).
26. ASM Shipping Ltd of India v. TTMI Ltd of England [2005] EWHC 2238 (Comm.) (Q.B.). See also Porter v.
Magill [2002] 2 A.C. 357 (House of Lords) (“ The test is whether the fair-minded and informed observer, having
considered the facts, would conclude that there was a real possibility that the tribunal was biased.”).
27. See infra pp. 140–41.
28. LCIA Rules, Art. 5(2); ICDR Rules, Art. 7(1); Swiss International Arbitration Rules, Art. 9(1).
29. 1977 AAA/ABA Code of Ethics, Canon X.
30. See infra pp. 132–33; G. Born, International Commercial Arbitration 1464–72, 1491–1506 (2009).
31. AAA Commercial Rules, R-12(b), R-17.
32. See G. Born, International Commercial Arbitration 1498–1500, 1508–15 (2009).
33. G. Born, International Commercial Arbitration 1534 et seq. (2009).
34. IBA Ethics, Art. 1.
35. G. Born, International Commercial Arbitration 1535–36 (2009).
36. Other arbitration regimes are similar. G. Born, International Commercial Arbitration 1542–47 (2009).
37. Article 11(2) of the 2012 ICC Rules provides that “ The prospective arbitrator shall disclose in writing to the
Secretariat any facts or circumstances which might be of such a nature as to call into question the arbitrator’s
independence in the eyes of the parties, as well as any circumstances that could give rise to reasonable doubts as
to the arbitrator’ s impartiality.” See also LCIA Rules, Art. 5(3) (“ he shall sign a declaration to the effect that
there are no circumstances known to him likely to give rise to any justified doubts as to his impartiality or
independence, other than any circumstances disclosed by him in the declaration”); ICDR Rules, Art. 7(1).
38. See, e.g., 2012 ICC Rules, Art. 11(3) (“ An arbitrator shall immediately disclose ... any facts or circumstances ...
concerning the arbitrator’ s impartiality or independence which may arise during the arbitration.”); ICDR Rules,
Art. 7(1) (“ If, at any stage during the arbitration, new circumstances arise that may give rise to such doubts, an
arbitrator shall promptly disclose such circumstances ....”); LCIA Rules, Art. 5(3) (“ continuing duty forthwith to
disclose any such circumstances ... if such circumstances should arise ...”).
39. See, e.g., ICDR Rules, Art. 7(2); LCIA Rules, Art. 13; AAA Commercial Rules, R-18; WIP O Arbitration Rules,
Arts. 21, 45; IBA Ethics, Art. 5; AAA/ABA Code of Ethics, Canon III.
40. Jivraj v. Hashwani [2011] UKSC 40 (U.K. S.Ct.).
41. G. Born, International Commercial Arbitration 1441 (2009). See, e.g., Netherlands Code of Civil Procedure,
Art. 1023; Belgian Judicial Code, Art. 1680; Italian Code of Civil P rocedure, Art. 812.
42. G. Born, International Commercial Arbitration 1447 (2009). See, e.g., Netherlands Code of Civil Procedure,
Art. 1023; Belgian Judicial Code, Art. 1680; P olish Code of Civil P rocedure, Art. 1170.
43. G. Born, International Commercial Arbitration 1447–48 (2009).
44. G. Born, International Commercial Arbitration 1448 (2009).
45. G. Born, International Commercial Arbitration 1447, 1456–57 (2009).
46. G. Born, International Commercial Arbitration 1447, 1456 (2009).
47. G. Born, International Commercial Arbitration 1552–54 (2009).
48. G. Born, International Commercial Arbitration 1559–60 (2009).
49. See, e.g., LCIA Rules, Art. 10(3); ICDR Rules, Art. 8; SIAC Rules, Art. 12; HKIAC Rules, Arts. 7, 8.
50. See infra p. 141.
51. See supra pp. 130–31 &infra pp. 323–25. Also as noted below, if a party seeks to reserve judicial challenge
based on lack of independence until an action to annul a final award, questions of waiver will arise. See infra p.
141.
52. See infra pp. 154–55.
53. G. Born, International Commercial Arbitration 1561–65 (2009). See Swedish Arbitration Act, §§10–11;
Belgian Judicial Code, Art. 1691; Netherlands Code of Civil P rocedure, Art. 1035.
54. See, e.g., Gulf Guar. Life Ins. Co. v. Connecticut Gen. Life Ins. Co ., 304 F.3d 476, 490 (5th Cir. 2002) (“ Even
where arbitrator bias is at issue, the FAA does not provide for removal of an arbitrator from service prior to an
award, but only for potential vacatur of any award.”); Larry’s United Super, Inc. v. W erries, 253 F.3d 1083, 1085
(8th Cir. 2001) (no judicial removal of arbitrator under FAA).
55. Aviall, Inc. v. Ryder Sys., 110 F.3d 892 (2d Cir. 1997).
56. See, e.g., ICC Rules 2012, Art. 14(2); LCIA Rules, Art. 10(4); ICDR Rules, Art. 8(1); P CA Rules, Art. 11(1);
VIAC Rules, Art. 16(2); SIAC Rules, Art. 11(1).
57. Technostroyexport v. Int’l Dev. and Trade Serv., Inc., 139 F.3d 980 (2d Cir. 1999).
58. G. Born, International Commercial Arbitration 1556–58, 1575–79 (2009).
59. G. Born, International Commercial Arbitration 1556–58, 1575–79 (2009).
60. G. Born, International Commercial Arbitration 1576–79 (2009).
61. G. Born, International Commercial Arbitration 1581–82 (2009).
62. See, e.g., Final Award of 16 October 1999, Himpurna California Energy Ltd v. Republic of Indonesia , XXV
Y.B. Comm. Arb. 186 (2000) (co-arbitrator nominated by Indonesia state party resigns at critical stage of
deliberations); Uiterwyk Corp. v. Islamic Republic of Iran , Award No. 375-381-1 (6 July 1988), 19 Iran-US
C.T.R. 107 (1988) (Iranian co-arbitrator refuses to participate in deliberations).
63. ICDR Rules, Art. 11(1); P CA Rules, Art. 13(3); WIP O Arbitration Rules, Art. 35(a).
64. This approach has been justified as follows by one chamber of the Iran-U.S. Claims Tribunal: “ this is in
accordance with the established practice of the Tribunal to continue its work and make awards despite the failure
 of one arbitrator to participate. The practice of the Tribunal in this respect is necessary to prevent disruption and
frustration by one Member of the Tribunal’ s performance of its functions and is fully in accordance with
recognized principles of international law.” Uiterwyk Corp. v. Islamic Republic of Iran, Award No. 375-381-1 (6
July 1988), 19 Iran-US C.T.R. 107, 116, ¶30 (1988).
65. G. Born, International Commercial Arbitration 1589 (2009).
66. G. Born, International Commercial Arbitration 1590–91 (2009).
67. G. Born, International Commercial Arbitration 1595–96 (2009).
68. G. Born, International Commercial Arbitration 1596–98, 1602–14 (2009).
69. G. Born, International Commercial Arbitration 1614–44 (2009).
70. Spanish Arbitration Act, Art. 21(1).
71. G. Born, International Commercial Arbitration 1651–59 (2009).
72. Hoosac Tunnel Dock & Elevator Co. v. O’Brien , 137 Mass. 424, 426 (Mass. 1884). See also Sutcliffe v.
Thackrah [1974] 1 All E.R. 859, 881 (House of Lords) (“ Since arbitrators are in much the same position as
judges, in that they carry out more or less the same functions, the law has for generations recognized that public
policy requires that they too shall be accorded the immunity to which I have referred.”)
73. G. Born, International Commercial Arbitration 1651–59 (2009). See, e.g., Australian International Arbitration
Act, §28; Bermuda International Conciliation and Arbitration Act, §34.
74. See, e.g., LCIA Rules, Art. 31(1); ICDR Rules, Art. 35; WIP O Arbitration Rules, Art. 77; SCC Rules, Art. 48.
Chapter 8
Procedural Issues in International Arbitration

As discussed above, parties agree to arbitrate with the objective of obtaining fair, neutral
procedures which are efficient and tailored to their particular dispute, without reference to
the formalities of procedural rules applicable in national courts. The principal means of
pursuing these objectives are through the substantial autonomy that parties enjoy, under the
New York Convention and national arbitration legislation, to agree upon arbitral procedures,
and the broad discretion that arbitrators are granted by the same sources to prescribe arbitral
procedures.

Procedures in International Arbitration

1. Parties’ Procedural Autonomy (Absent Contrary Agreement by Parties)
2. Arbitrators’ Procedural Discretion
3. Judicial Non-Interference
4. Principle of Limited M andatory Procedural Requirements of Arbitral Seat
a. Opportunity to Be Heard
b. Equality of Treatment

§8.01 APPLICABLE PROCEDURAL LAW IN INTERNATIONAL

ARBITRATION
As discussed above, arbitral proceedings are subject to the procedural law of the arbitration.
An arbitration’s procedural law is distinguished from the law governing the parties’
underlying contract and the law governing the arbitration clause, and may be different from
both of these laws. The procedural law of an arbitration is almost always the arbitration
legislation of the arbitral seat; for example, if an arbitration is seated in Austria, the
procedural law of the arbitration will almost always be the Austrian version of the
UNCITRAL Model Law (and Austrian court decisions interpreting the Law). In general, the
procedural law of the arbitration will provide rules governing the external relationship
between the arbitral process and the courts of the seat (e.g., concerning annulment, selection
of arbitrators) and the internal conduct of the arbitration (e.g., requiring equal treatment).
As also discussed above, there are rare exceptions where the parties attempt to agree upon
a foreign procedural law. This virtually never occurs in practice and, when it does, there may
be important respects in which the courts of the seat will not give effect to the choice of a
foreign procedural law (i.e., by refusing to permit parties to contract out of the authority of
local courts to annul awards or remove arbitrators).1

§8.02 PARTIES’ PROCEDURAL AUTONOMY IN INTERNATIONAL

ARBITRATION

One of the fundamental characteristics of international arbitration is the parties’ freedom to

agree upon the arbitral procedure. This principle is acknowledged in the New York
Convention and other international arbitration conventions; it is guaranteed by arbitration
statutes in virtually all jurisdictions; it is contained in and facilitated by the rules of most
arbitral institutions; and it is of fundamental practical importance. The parties’ procedural
autonomy is qualified only by the mandatory requirements of applicable national law and,
under most arbitration statutes, these requirements are very limited in scope.

[A] New York Convention

The New York Convention gives effect to the central role of the parties’ autonomy to fashion
the arbitral procedure, and provides for the non-recognition of awards following proceedings
that did not follow the parties’ agreed procedures. Thus, Article V(1)(d) permits non-
recognition of an award if “[t]he composition of the arbitral authority or the arbitral
procedure was not in accordance with the agreement of the parties, or, failing such agreement,
was not in accordance with the law of the country where the arbitration took place.” Article
V(1)(d) recognizes the parties’ autonomy to agree upon the arbitral procedures, including
procedures different from the default procedures prescribed by the laws of the seat: where
the parties have made such an agreement, Article V(1)(d) requires that their agreement be
followed, notwithstanding contrary procedural rules in the seat.
Even more directly, and applicable outside the recognition context, Article II of the
Convention requires courts to recognize valid arbitration agreements and refer the parties to
arbitration pursuant to such agreements. As discussed above, this obligation under Article II
extends to all material terms of an agreement to arbitrate – including agreements regarding
arbitral seat, number of arbitrators, and arbitral procedures.2 This obligation is arguably
subject to a limited exception where the parties’ procedural agreement violates mandatory
national public policies guaranteeing an opportunity to be heard or equality of treatment; any
such mandatory law limitations are, however, construed narrowly.
[B] National Arbitration Legislation

Arbitration legislation in most states implements the Convention by guaranteeing parties the
freedom to agree on the procedural rules governing the conduct of the arbitration (subject to
limited mandatory restrictions of national law). The UNCITRAL Model Law is
representative, providing, in Article 19(1), that “[s]ubject to the provisions of this Law, the
parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting
the proceedings.” More specifically, the parties’ freedom to agree on matters relating to the
presentation of their cases and the taking of evidence is recognized in Articles 18, 19(1) and
24(1) of the Law.
Other arbitration regimes are similar in according broad procedural autonomy. 3 For
example, a U.S. court observed that “[p]arties may choose to be governed by whatever rules
they wish regarding how an arbitration itself will be conducted,”4 while another remarked,
more colorfully, that even procedures such as “flipping a coin, or, for that matter, arm
wrestling” are enforceable.5 For their part, English authorities have upheld sui generis
procedural mechanisms, such as selecting arbitrators by drawing names by lot.6

[C] Institutional Rules

One element of the parties’ procedural autonomy is the freedom to agree to arbitration
pursuant to institutional rules. This is explicit in many arbitration statutes, which make
specific reference to institutional arbitration. For example, the Model Law provides that,
“where a provision of this Law ... leaves the parties free to determine a certain issue, such
freedom includes the right of the parties to authorize a third party, including an institution, to
make that determination.”7 Consistent with this, in practice a substantial proportion of
international arbitrations are conducted under institutional rules of some sort.
Most institutional rules parallel and complement the procedural provisions of the Model
Law and other arbitration legislation. The rules of most arbitral institutions permit parties, by
agreement, to adopt such procedures as they choose. For example, Article 19 of the 2012
ICC Rules provides that “the proceedings before the arbitrator shall be governed by the
Rules, and, where the Rules are silent, by any rules which the parties or, failing them, the
Arbitral Tribunal may settle on, whether or not reference is thereby made to the rules of
procedure of a national law to be applied to the arbitration.”8

§8.03 ARBITRATORS’ PROCEDURAL DISCRETION IN

INTERNATIONAL ARBITRATION
Although most arbitration laws permit the parties to agree upon the arbitral procedures,
subject only to minimal due process requirements, parties in practice often do not agree in
advance on detailed procedural rules. Instead, arbitration agreements ordinarily provide
simply for arbitration pursuant to a set of institutional rules, which supply only a broad
procedural framework. Filling in the considerable gaps in this framework is left to the parties’
subsequent agreement or, if they cannot agree, the tribunal. The arbitrators’ discretion to
determine the arbitral procedure, in the absence of agreement by the parties on such matters,
is another foundation of the international arbitral process.

[A] New York Convention

The New York Convention makes no direct reference to the tribunal’s authority to conduct
the proceedings, only indirectly acknowledging such powers in Articles V(1)(b) and (d). At
the same time, Article II(3) of the Convention requires giving effect to the parties’ agreement
to arbitrate, an essential element of which is either express or implied authorization to the
arbitrators to conduct the arbitral proceedings as they deem best (absent contrary agreement
by the parties on specific matters). (In contrast, but to the same effect, Article IV(4)(d) of
the European Convention provides that, where the parties have not agreed upon arbitral
procedures, the tribunal may “establish directly or by reference to the rules and statutes of a
permanent arbitral institution the rules of procedure to be followed by the arbitrators.”)

[B] National Arbitration Legislation

Consistent with the New York Convention, most national arbitration statutes provide
tribunals with substantial discretion to establish the arbitral procedures in the absence of
agreement between the parties, subject only to general due process requirements. For
example, Article 19(2) of the Model Law provides that, where the parties have not agreed
upon arbitral procedures, “the arbitral tribunal may ... conduct the arbitration in such a
manner as it considers appropriate.” Article 24(1) is similar, providing “[s]ubject to any
contrary agreement by the parties, the arbitral tribunal shall decide whether to hold an oral
hearing for the presentation of evidence or for oral argument....”
Although the FAA does not expressly address the subject, U.S. courts uniformly hold that
arbitrators possess broad powers to determine arbitral procedures (absent agreement on such
matters by the parties). As one U.S. court held:

Unless a mode of conducting the proceedings has been prescribed by the arbitration
agreement ... arbitrators have a general discretion as to the mode of conducting the
proceedings and are not bound by formal rules of procedure and evidence, and the
 standard of review of arbitration procedures is merely whether a party to an arbitration
has been denied a fundamentally fair hearing.9

Other states take similar approaches.10 In practice, the arbitrators’ broad procedural
discretion is of fundamental practical importance, leaving to the arbitral tribunal virtually all
aspects of the arbitral procedure that have not been agreed by the parties, subject to
extremely limited judicial review.

[C] Institutional Rules

Most institutional rules parallel the procedural approach of the Convention and Model Law.
With no material exceptions, these rules confirm the arbitrators’ authority to determine the
arbitral procedures, subject only to limited mandatory protections of procedural fairness.
Article 17(1) of the UNCITRAL Rules provides “[s]ubject to these Rules, the arbitral
tribunal may conduct the arbitration in such manner as it considers appropriate, provided
that the parties are treated with equality and that at an appropriate stage of the proceedings
each party is given a reasonable opportunity of presenting its case.” Similar provisions are
contained in other rules.11 Article 14(a) of the LCIA Rules provides, for example, “[i]n the
absence of procedural rules agreed by the parties or contained herein, the Tribunal shall have
the widest discretion allowed under such law as may be applicable to ensure the just,
expeditious, economical, and final determination of the dispute.”
The arbitrators’ procedural discretion under institutional rules is not unlimited. Rather, as
with most national laws, institutional regimes subject the arbitrators’ procedural authority to
overarching obligations to treat the parties fairly and to permit them reasonable opportunities
to present their cases. Thus, Article 17(1) of the UNCITRAL Rules requires that “the
parties [be] treated with equality and that at an appropriate stage of the proceedings each
party is given a reasonable opportunity of presenting its case.” Similarly, the ICC and LCIA
Rules require that each party be afforded “the right to be heard” and a “fair opportunity to
present its case.”12 As discussed below, national law (and, indirectly, the New York
Convention) impose similar due process requirements on the tribunal’s exercise of its
procedural discretion.13
Unlike other institutional rules, the ICC Rules expressly provide (in Article 19) that the
tribunal may determine procedural rules “whether or not reference is thereby made to the
rules of procedure of a national law to be applied to the arbitration.” This proviso affirms the
meaning implicit in other institutional rules and ad hoc arbitration agreements: arbitrators are
free, but not obliged, to adopt procedural rules used in domestic litigations in national legal
systems. This rejects the archaic view, adopted by some early authorities, that arbitrators are
bound to apply the civil procedure rules of the arbitral seat, either mandatorily or because the
parties are deemed to have selected those rules by agreeing to arbitrate in the seat.
In practice, tribunals rarely expressly adopt national procedural rules, instead either
fashioning ad hoc procedural rules or adopting international procedural rules (such as the IBA
Rules on the Taking of Evidence14 ). It is only in unusual cases that an international arbitral
tribunal will adopt wholesale the civil procedure code of a national legal system: indeed, one
of the reasons parties agree to international arbitration is to avoid this approach.

§8.04 MANDATORY PROCEDURAL REQUIREMENTS IN ARBITRAL

PROCEEDINGS

The parties’ freedom to agree upon the arbitral procedures, and the tribunal’s discretion to
adopt such procedures (absent contrary agreement), are subject to the mandatory
requirements of applicable national law. In most cases, mandatory law imposes only very
general, albeit important, guarantees of procedural fairness and regularity.

[A] New York Convention

The New York Convention indirectly recognizes and gives effect to mandatory requirements
of procedural fairness and regularity of the arbitral proceedings. It does so by permitting
awards to be denied recognition if basic international requirements of procedural fairness have
not been satisfied, while also leaving scope for application of non-discriminatory rules of
mandatory national law to deny recognition.
Thus, Article V(1)(b) of the Convention permits non-recognition of an award where “[t]he
party against whom the award is invoked was not given proper notice of the appointment of
the arbitrator or of the arbitration proceedings or was otherwise unable to present his case.”
Article V(2)(b) is also potentially applicable in cases of serious procedural unfairness,
permitting non-recognition of awards for violations of local public policy, including
procedural public policies (sometimes termed “international procedural public policy”).15
As discussed below, Articles V(1)(b) and V(2)(b) have been interpreted to afford the
parties and arbitrators broad freedom to establish the arbitral procedures. Nonetheless, these
provisions permit national courts to deny recognition to awards that are based on unfair,
arbitrary, or unbalanced procedures, applying either a uniform international standard of
procedural fairness under Article V(1)(b) or procedural protections guaranteed by mandatory
national law under Article V(2)(b). Both of these provisions provide limited grounds on
which either the parties’ procedural agreements, or a tribunal’s procedural orders, can be
overridden by national law in recognition proceedings.
[B] National Arbitration Legislation

Consistent with the Convention, most legal systems do not impose significant mandatory
limitations on the freedom of the parties or tribunal to conduct an arbitration: within very
deferential mandatory limits, parties are free to agree to arbitral procedures that suit their
interests, and arbitrators are empowered to prescribe arbitral procedures when the parties
have made no agreement. Nevertheless, legislation and/or judicial decisions in many
jurisdictions require that arbitral proceedings seated on local territory satisfy minimal
standards of procedural fairness and equality; these standards are variously referred to as
requiring “due process,” “natural justice,” or “procedural regularity.”
The UNCITRAL Model Law is illustrative of this basic, mandatory requirement of
procedural fairness. Article 18 of the Model Law requires that “[t]he parties shall be treated
with equality and each party shall be given a full opportunity of presenting his case;” the
Model Law also makes clear, in Article 19(1), that this is a mandatory provision for locally-
seated arbitrations, which overrides contrary agreement by the parties (or actions by a
tribunal). Other national arbitration regimes are similar.16
Every jurisdiction has its own national standard of “due process” or “natural justice”
which is mandatorily applicable to arbitrations with their seats in local territory. Both in
verbal formulation and in specific application, these standards differ from state to state.
There are also divergences in procedural formalities (oaths, transcripts) in different legal
systems.17
For the most part, however, there are only limited differences in the standards of due
process which are applied to the international arbitral process in developed jurisdictions.
That is in part because of the very deferential approach which is taken in most legal systems
to the parties’ procedural autonomy in international arbitrations. (It is also in part because of
the steps towards “convergence” that have occurred with regard to litigation procedures in
developed jurisdictions over the past decade.18 )
Thus, in most jurisdictions, mandatory national law imposes only limited restrictions on
the parties’ autonomy to agree upon arbitral procedures. In general, only agreements to
egregiously unfair, unconscionable, or wholly arbitrary procedures will be held unenforceable.
As one U.S. decision, which adopted a particularly robust view of the parties’ autonomy,
put it:

Short of authorizing trial by battle or ordeal or, more doubtfully, by a panel of three
monkeys, parties can stipulate to whatever procedures they want to govern the
arbitration of their disputes; parties are as free to specify idiosyncratic terms of
arbitration as they are to specify any other terms in their contract.19
Only somewhat less expansively, the 1996 English Arbitration Act declares: “the parties
should be free to agree how their disputes are resolved, subject only to such safeguards as are
necessary in the public interest.”20
There is an important distinction between the application of mandatory law limits to the
parties’ procedural agreements and to the arbitral tribunal’s procedural directions. Although it
is of course possible for parties’ procedural agreements to be unconscionably one-sided,
courts are very reluctant to reach such a conclusion in cases involving commercial parties.
National courts are deferential, but less so, to procedural directions made by arbitral
tribunals, in the absence of the parties’ consent to those directions. Although the parties’
arbitration agreement will ordinarily grant the arbitrators broad procedural discretion, this is
not intended to be, and cannot be regarded as, unlimited. A tribunal’s imposition of unfair or
arbitrary procedures, over a party’s objection, is very different from a party’s informed
acceptance of such procedures, either for reasons of its own or in return for other benefits.

§8.05 LIMITED GROUNDS FOR INTERLOCUTORY JUDICIAL

REVIEW OF ARBITRATORS’ PROCEDURAL DECISIONS

In addition to addressing the content of the procedures that are used in international
arbitrations, the New York Convention, arbitration legislation and institutional rules all adopt
a basic principle of judicial non-interference in the conduct of the arbitral proceedings. This
principle ensures that an arbitration can proceed, pursuant to the parties’ agreement or under
the tribunal’s direction, without the delays and second-guessing resulting from interlocutory
judicial review of procedural decisions. In practice, such judicial interference virtually never
occurs, with the procedural conduct of the arbitration being left almost entirely to the parties
and the arbitrators.

[A] Principle of Judicial Non-Interference in Arbitral Proceedings

Nothing in the New York Convention provides expressly that national courts shall not
entertain interlocutory procedural applications concerning ongoing international arbitrations
(e.g., to dispute a tribunal’s procedural timetable or evidentiary rulings). Nonetheless, Article
II(3) of the Convention provides that national courts shall “refer the parties to arbitration”
after ascertaining the existence of a valid arbitration agreement, without providing for any
further judicial role in the arbitral proceedings. At the same time that neither Article II(3) nor
any other part of the Convention provides for judicial involvement in monitoring or
overseeing the procedures used in the arbitration, Article V of the Convention defines the role
of national courts with exclusive reference to recognition and enforcement of awards.
As discussed above, Article II(3) is a mandatory provision, requiring that national courts
either dismiss or stay claims that are subject to a valid arbitration agreement and refer the
parties to arbitration. The only exception to this principle involves interlocutory judicial
decisions on jurisdictional challenges to arbitration agreements, which are contemplated by
Article II. The effect of this requirement is to forbid the courts of Contracting States from
supervising the ongoing procedural conduct of arbitrations: absent contrary agreement by the
parties, Article II(3) requires that courts simply “refer the parties to arbitration,” with any
subsequent judicial involvement limited to annulment or recognition proceedings, and does
not permit them to supervise procedural decisions in the arbitration.21
Arbitration statutes and judicial decisions in most jurisdictions even more emphatically
adopt the principle of judicial non-interference. Article 5 of the Model Law provides “[i]n
matters governed by this Law, no court shall intervene except where so provided in this
Law.” The Model Law then sets forth limited circumstances involving judicial support for
the arbitral process (e.g., resolving jurisdictional objections, assisting in constitution of the
tribunal, provisional relief, award annulment), but not permitting judicial supervision of
procedural decisions through interlocutory appeals or otherwise. In the words of one court,
asked to review interim decisions by a tribunal:

It is premature, in effect, at this stage of proceedings, to ask the Superior Court of

Quebec to intervene on questions that can eventually, and only, be remitted to it after a
final arbitral award has been made. ... The Quebec Superior Court is not clothed with the
power to examine [these questions] at this moment, but only once the final arbitral
decision has been rendered.22

Arbitration legislation in other jurisdictions is similar, either excluding judicial supervision of

arbitral procedures,23 or omitting any provision for interlocutory judicial review or
supervision of arbitrators’ procedural rulings.24
In the United States, the text of the FAA does not expressly provide for judicial non-
interference in arbitral proceedings. Nonetheless, U.S. courts have repeatedly held that
judicial intervention in a pending arbitration, to correct procedural errors or evidentiary
rulings, is improper: “[n]othing in the [FAA] contemplates interference by the court in an
ongoing arbitration proceeding.”25 Decisions in other jurisdictions are similar. 26 In practice,
as already noted, national courts virtually never intervene in the procedural conduct of
international arbitrations.

[B] Limited Grounds for Judicial Intervention or Assistance

There are limited grounds for judicial intervention or assistance in ongoing international
arbitral proceedings. As discussed elsewhere, these are: (a) jurisdictional objections (e.g., to
the existence, validity, or scope of an arbitration agreement); (b) challenges to arbitrators; (c)
provisional measures in aid of arbitral proceedings; (d) assistance in taking of evidence for use
in arbitral proceedings; (e) annulment of awards; and (f) recognition of awards.27 As noted
above, Article 5 of the UNCITRAL Model Law contemplates judicial intervention and/or
assistance in these instances, as do other arbitration statutes. In each of these instances,
judicial intervention or assistance is intended to facilitate the arbitral process (by providing
limited support or supervision).
In a few instances, national courts have issued so-called “anti-arbitration” injunctions or
orders, forbidding the conduct of international arbitral proceedings. Such orders contravene
the principle of judicial non-interference and there is substantial doubt whether they are
consistent with the New York Convention or most national arbitration regimes.28

§8.06 ARBITRATORS’ EXERCISE OF PROCEDURAL AUTHORITY IN

INTERNATIONAL ARBITRATION

As discussed above, the procedural conduct of international arbitrations is largely in the

hands of the parties and tribunal. In practice, parties frequently reach agreement on only the
broad outlines of the arbitral process (typically, by agreeing to institutional rules) and on a
few specific issues (e.g., how witness testimony will be adduced). As a consequence, many
aspects of the arbitral process will be subject to the tribunal’s directions, with the arbitrators
exercising the discretion granted under national law and institutional rules. This is a
characteristic feature of arbitration, distinguishing it from national court litigation where pre-
existing and relatively fixed, formal procedural rules apply generally to all cases.

[A] No General Procedural Code for International Arbitrations

In most international arbitrations, there is no pre-existing or generally-applicable code of
procedural rules. As discussed above, it is well-settled that arbitrators are not generally
required to apply domestic civil procedure rules in international arbitrations. Further, in ad
hoc arbitrations, there will often be no procedural rules of any sort incorporated into the
parties’ arbitration agreement. As a practical matter, the tribunal and the parties will
ordinarily have full discretion to establish the arbitral procedures on a case-by-case basis
(subject only to very limited restrictions of mandatory law in the arbitral seat).
In institutional settings, most institutions have promulgated rules, which apply to
arbitrations where the parties have adopted those rules in their arbitration agreement. In
addition, the UNCITRAL Rules are available to parties who desire an essentially ad hoc
arbitration, but supplemented by a skeletal procedural framework and an appointing
authority. These rules give structure and predictability to the arbitral process by providing a
general procedural framework for the arbitration, but they leave the overwhelming bulk of
issues relating to the arbitral process for resolution by the parties and tribunal.
Most institutional rules do not provide a detailed procedural timetable for the arbitral
procedure (e.g., timing and nature of written submissions, presentation of evidence,
organization of hearings). Rather, institutional rules establish the broad outline of a
procedural framework, with only key events identified (e.g., the request for arbitration, the
hearing, the award). Within that framework, the parties and tribunal are left to work out the
details of arbitral procedures in particular cases as they see fit.

[B] Arbitral Tribunal’s Exercise of Discretion Over Arbitral Procedures

One of the reasons that tribunals are afforded broad discretion over the arbitral procedures is
to tailor those procedures to the needs of particular cases, disputes and parties. The objective
of any arbitral procedure should be to allow the parties the opportunity to present the
relevant facts (through documentary, witness and other evidence) in the most reliable,
efficient and fair manner. This objective is affirmed in leading arbitration regimes, including
the UNCITRAL M odel Law (Articles 18 and 19).
A tribunal’s selection of one approach to procedural matters, rather than another, will be
influenced significantly by the need for evidentiary inquiry in particular cases, the parties’
backgrounds and desires, the applicable law and the nature of the dispute. These factors can
produce procedures ranging from: (a) extensive discovery, oral depositions and witness
testimony with broad cross-examination to (b) no disclosure and written witness statements
with limited (or no) cross-examination by parties’ counsel to (c) “documents only”
arbitrations, with no oral proceedings. Although these procedures differ radically, each is
capable of being fair and efficient in the circumstances of particular cases.
In a matter involving modest amounts in dispute, where defined legal issues predominate,
limited (or no) disclosure and limited witness testimony may be appropriate. Conversely, in
a matter involving substantial amounts in dispute, with complex factual issues, extensive
disclosure and witness examination will often be appropriate. Similarly, in cases where one
party is in possession of evidence required by its counter-party (e.g., fraud claims),
disclosure will be more appropriate than in other matters. One of the procedural benefits of
arbitration is its ability to permit procedures to be tailored to the needs of each specific case.
In practice, many intangible factors affect a tribunal’s exercise of its procedural discretion.
The willingness of opposing counsel to work together, and their preferences, dramatically
impact the arbitral process. Similarly, the characteristics of the arbitrators – age,
temperament, intelligence, time commitments and background – influence their procedural
preferences.
One factor that affects the tribunal’s procedural decisions is the legal training and
experience of the arbitrators – whether they have common law, civil law, Islamic, or other
backgrounds. Although generalizations are overly-simplistic, arbitrators with civil law
backgrounds (e.g., Continental Europe, Japan, Korea, China) often adopt somewhat more
“inquisitorial” procedures, with the tribunal being primarily responsible for identifying issues
and eliciting evidence. Under this approach, there will be less scope for adversarial
procedures – such as party-initiated discovery, depositions, lengthy oral hearings, counsel-
controlled witness examination and the like – than is familiar to common law lawyers.29 In
contrast, arbitrators from common law jurisdictions (e.g., United States, England and the
former Commonwealth) will often adopt “adversarial” procedures with each party having
relative freedom to present its own version of the facts and law.30
Nonetheless, as a practical matter, the importance of the differences between civil and
common law backgrounds is sometimes exaggerated. There is no fixed procedural formula for
either “common law” or “civil law” arbitrations, with arbitrations in the United States,
England and other common law jurisdictions varying widely among themselves in procedural
approaches, as is the case with arbitrations in Continental Europe, which also follow no set
“civil law” pattern. Further, civil law procedures are frequently no less “adversarial” than
common law procedures, while common law arbitrators are often at least as “inquisitorial” as
their civil law counterparts (for example, in questioning witnesses or counsel).
At the same time, efforts to bridge differences between traditional common and civil law
procedures have been at least partially successful. These efforts are reflected in the
development of internationally-accepted guidelines, such as the IBA Rules on the Taking of
Evidence and the IBA Guidelines on Conflicts of Interest. Equally important, if less visible,
has been the development of a body of customarily used and internationally-neutral
procedures, frequently used as starting points in international commercial arbitrations, which
blend aspects of common law, civil law and other traditions. The use of “witness-
conferencing” to hear expert testimony or “Redfern Schedules” to resolve disclosure disputes
are good examples.
There is – and should be – no “standard” or “usual” procedural approach in international
arbitration, whether common law, civil law, or something else. Every case has its own needs
and dynamics, that produce its own procedural approach. That is one of the objectives of
arbitration – to permit efficient, internationally-neutral and expert procedures tailored to
particular parties’ needs and specific disputes.

§8.07 MAJOR PROCEDURAL STEPS IN INTERNATIONAL ARBITRAL

PRACTICE
Most international arbitrations involve a number of procedural steps, which are summarized
below. The descriptions are only general. There is no “average” or “typical” international
arbitration, and many individual arbitrations omit some (or many) such steps or adopt sui
generis approaches that differ from common practices. Nonetheless, as a benchmark, the
following descriptions are a useful starting point in describing the actual practice of
international arbitration.

[A] Notice of Arbitration or Request for Arbitration

The first procedural step in most arbitrations is the filing of a “request for arbitration” or
“notice of arbitration.” This serves the same basic functions as a civil complaint, writ, or
claim form under national litigation rules – that is, “to inform the respondent ... that arbitral
proceedings have been started and that a particular claim will be submitted for arbitration”
and to “apprise the respondent of the general context of the claim asserted against him.”31
In practice, the required contents of a request for arbitration vary depending on the parties’
arbitration agreement, applicable institutional rules and national law. These sources may
require that a request for arbitration (or notice of arbitration) include specified information.
Typically, only skeletal information is required, including the parties’ identities, specification
of the arbitration agreement, a summary of the dispute or claims and (sometimes) nomination
of an arbitrator. 32 As a practical matter, parties sometimes include more detailed allegations
about their claims, but this is usually optional, for tactical reasons, not mandatory.
Ordinarily, the request for arbitration must be delivered to the respondent to commence
the arbitration. In general, requirements for the service of process which apply in national
court litigations do not apply to international arbitrations. In some institutional arbitrations
(e.g., ICC), the institution is responsible for delivering the request for arbitration to the
respondent.
Key Procedural Events in many International Arbitrations
[B] Reply and Counterclaims

National law generally does not address the procedures relating to replies to a request for
arbitration or the assertion of counterclaims, instead leaving this to the arbitration agreement
or the arbitrators’ procedural discretion. Under most institutional rules, the respondent will
be afforded an opportunity, within a time-limit, to reply to the request for arbitration and
assert counterclaims. The time for replying is ordinarily short: Article 5 of the 2012 ICC
Rules permits 30 days, as does Article 3 of the ICDR Rules. These deadlines are often
extended, either by agreement between the parties or leave of the institution.

[C] Constitution of Arbitral Tribunal and Challenges

The constitution of the tribunal is a critical procedural step at the outset of any arbitration.
There are a variety of mechanisms for appointing arbitrators, in both institutional rules and
arbitration agreements. These mechanisms are discussed in Chapter 7 above.

[D] Presiding Arbitrator’s Procedural Authority

In three (or five) person tribunals, one of the arbitrators will be the “presiding arbitrator,”
also called the “president” or “chair.” The presiding arbitrator plays a significant role in the
arbitral process – particularly in speaking for the tribunal, ruling on procedural matters during
hearings, overseeing the tribunal’s deliberations, (often) holding a decisive vote and drafting
the award.
Some arbitration statutes and institutional rules grant the presiding arbitrator specific
authority – generally in terms of a decisive vote in case of deadlocks on the tribunal.33 The
parties may usually agree to grant the presiding arbitrator broader authority (for example, to
rule independently on certain procedural matters). The presiding arbitrator also possesses a
degree of inherent authority, by virtue of his or her role in leading deliberations and speaking
for the tribunal (both at hearings and otherwise).34

[E] Written Communications with Arbitral Tribunal during Proceedings

After a tribunal is appointed, the parties and their representatives are generally obliged to
refrain from ex parte communications about the substance of the case with the arbitrators.
This is impliedly required by most national arbitration regimes, by virtue of their
requirements regarding the impartiality of the tribunal. The prohibition on ex parte
communications is made express in ethical standards for international arbitrators. Thus, the
IBA’s Rules of Ethics for International Arbitrators provide, in Article 5.3: “[t]hroughout the
arbitral proceedings, an arbitrator should avoid any unilateral communications regarding the
case with any party or its representatives.” Exceptions are made for scheduling or similar
logistical issues or, unusually, where the adverse parties have specifically consented.
A tribunal will usually take care at the outset to organize communications made during the
arbitration. This includes providing a circulation list for all communications (with addresses
and email addresses) and giving directions regarding submissions (e.g., number of copies,
mode of transmission). These steps are ministerial, but they can prevent disputes as to
whether particular documents were or were not properly sent.

[F] Jurisdictional Objections

As discussed above, disputes often arise over the validity or scope of arbitration agreements.
Although national courts sometimes resolve such disputes, the tribunal itself also often
addresses questions of jurisdiction. The timing of such jurisdictional proceedings is discussed
in detail in Chapter 2 above.35 National law in the arbitral seat will sometimes regulate the
timing of both the consideration of jurisdictional issues by national courts and the making of a
jurisdictional award by the arbitrators. Most national laws and institutional rules leave the
timing of a jurisdictional award to the tribunal’s discretion, sometimes with a presumption in
favor of interlocutory resolution of jurisdictional challenges.36

[G] Language of the Arbitration

Many arbitration agreements specify the language of the proceedings (and, less frequently,
the award). Absent such agreement, most institutional rules authorize the tribunal to select a
language (or languages) for the arbitration.37 Arbitrators will often select the language of the
underlying contract to govern the arbitral proceedings. There are exceptions, however, where
institutional rules dictate a language.38
The language of the arbitral proceedings is an issue of substantial practical importance.
Among other things, the language of the arbitration affects the choice (and performance) of
counsel and arbitrators, the effectiveness of witness testimony, and similar matters.

[H] Initial Procedural Conference

Tribunals usually conduct a preliminary conference with the parties and counsel. The
purpose of the conference is to discuss and establish the procedural timetable and rules for
the arbitration, and to introduce the arbitrators, parties and counsel personally. In practice,
tribunals increasingly dispense with physical meetings, in favor of video or tele-conferences.
[I] Procedural Timetable and Time Limits

It is customary for the tribunal to establish a procedural timetable at the outset of the
arbitration. For the most part, arbitration statutes do not address the contents of procedural
timetables, which are left to the parties’ agreement or, absent agreement, the tribunal’s
directions. The most significant exceptions to this are, in some states, statutory time limits
for a final award (which must be complied with in order to avoid annulment of the award).39
Similarly, in practice, few arbitration agreements deal with procedural timetables.
Exceptions are so-called “fast-track” provisions (fixing a highly-expedited timetable for
written submissions, hearing and award) and provisions specifying initial steps in the arbitral
process. Alternatively, some arbitration agreements impose deadlines, either for making an
award, holding a hearing or taking other steps. Most institutional rules contain time limits for
the parties’ initial pleadings, such as replies and counterclaims, but do not specify the timing
of any further submissions. Instead, institutional rules usually authorize tribunals to set time
limits for written submissions, production of evidence and other subjects.
Some institutional rules require that awards be rendered within a particular time period.
For example, under the ICC Rules, an award is required within six months of the Terms of
Reference (subject to extensions).40 The ICDR Rules, in contrast, require that an award be
made “promptly,” and, unless otherwise agreed, within 30 days of the close of hearings. 41
M ost other institutional rules impose no time limit for the issuance of an award.
Arbitrators will generally draw up a timetable for the arbitration at an early stage in the
proceedings. This typically occurs at or in conjunction with an initial conference with the
parties, where procedural matters can be discussed and calendars consulted. The timetable
will ordinarily set out a schedule pursuant to which the parties must make written
submissions, file evidence and present their cases at a hearing (all discussed below). It will
also address issues such as the availability and form of disclosure (as well as timing issues),
expert evidence, post-hearing submissions and the like.
In establishing a timetable, it is essential that the tribunal consider the parties’ preferences,
the nature of the claims and expected evidence. This involves a balance between complying
with the parties’ preferences as to how the case should proceed and judging the extent to
which those preferences make sense. This may also entail discussion between the tribunal
and the parties, including (the relatively rare cases) where the parties desire to adopt a
procedural approach and timetable that the arbitrators consider inappropriate.

[J] Bifurcation or Other Segmentation of Proceedings

The efficient organization of the arbitration sometimes occurs by identifying preliminary or
“cut-across” issues, whose prompt resolution will avoid wasted expense. Typical examples
are jurisdictional issues, choice-of-law questions and separation of liability and damages. It is,
for example, common for tribunals to request separate briefing on jurisdiction, and to hear
evidence and oral submissions, before issuing an interim award confined to jurisdiction.
If the parties do not agree on whether or not to bifurcate the presentation of a case, the
tribunal will be responsible for deciding whether to do so. Bifurcating a case requires
particular care, to avoid ambiguity or confusion about definitional issues (e.g., what exactly is
included in a “liability” or a “damages” phase?).

[K] ICC Terms of Reference

The ICC Rules formalize the process of case management through a relatively unusual
“Terms of Reference” mechanism and a mandatory requirement for a procedural timetable.
Under Article 23 of the 2012 ICC Rules, the tribunal is required to prepare a document
entitled “Terms of Reference.” The Terms of Reference usually contain a variety of formal
details (e.g., identities and addresses of parties, legal representatives), as well as “a summary
of the parties’ respective claims,” a “definition of the issues to be determined,” and
“particulars of the applicable procedural rules.”
The Terms of Reference are typically reviewed in draft form by the parties (almost always
based on a proposal from the tribunal); this can occur without actual meetings, with
comments exchanged by emails, or in conjunction with an initial procedural meeting. The
parties and arbitrator(s) must sign the Terms of Reference, which is then submitted to the
ICC. The ICC Rules also require (in Article 24) the tribunal to convene a case management
conference to consult the parties on procedural measures that may be adopted, and to
establish a “procedural timetable” when completing the Terms of Reference or soon
thereafter. This provision is intended to require the tribunal to address issues of scheduling,
case management and the like at the outset of the case, rather than leaving this entirely to the
tribunal’s discretion.42
Some critics regard the Terms of Reference as an unnecessary bureaucratic device that
produces little of value. That criticism is misconceived: the ICC Rules perform a useful
function by ensuring that tribunals attend at the beginning of a case to routine house-keeping
(e.g., the parties’ identities, representatives and contact details) and to less routine case of
management and timetabling. An experienced tribunal will usually address all of the issues
required by the ICC Rules, even without a formal requirement. Nonetheless, no harm, and
potentially much benefit, comes from requiring less experienced tribunals to do so.

[L] Advance on Costs or Deposits

Once a tribunal is in place, the parties are generally required to advance security towards the
fees of the arbitrators. Most institutional rules contain provisions for payment of an advance
on costs,43 and arbitrators often have the power under national law to require payment of an
advance even absent express provision to that effect. The amount of the advance is based on
the expected total amount of fees and expenses of the arbitrators (sometimes deposited in
phases, as the arbitration progresses). If the parties do not pay the advance, the arbitration
will not go forward; if one party fails to make payment, the other may do so on its behalf (so
the arbitration will proceed, hopefully to an award in its favor).44

[M] Introduction of New Claims and Defenses

Most national laws and institutional rules contemplate liberal amendments to the parties’
initial claims and defenses. Article 22 of the UNCITRAL Rules is illustrative: “During the
course of the arbitral proceedings, a party may amend or supplement its claim or defense,
including a counterclaim or a claim for the purpose of a set-off, unless the arbitral tribunal
considers it inappropriate to allow such amendment or supplement having regard to the delay
in making it or prejudice to other parties or any other circumstances.” Other institutional
rules are to the same effect.45 The decision whether to permit an amendment is a matter for
the tribunal’s discretion (subject to annulment only in cases where a party is denied an
opportunity to be heard).46 Of course, an amendment (or counterclaim) may only be
permitted if it is within the scope of the arbitration agreement.

[N] Disclosure or Discovery

As discussed in Chapter 9 below, “discovery” or “disclosure” plays an important role in

international arbitration. In practice, although generalizations are difficult, a measure of
document discovery is available in many contemporary international arbitrations, either
pursuant to voluntary agreement or by order of the tribunal. At the same time, in many
senses, the very term “discovery” can be misleading in the context of international arbitration:
discovery in international arbitration is usually materially less extensive than in common law
litigation.
There is no automatic right to disclosure in international arbitration. Rather, parties must
seek leave from the tribunal to obtain procedural orders providing for disclosure. Ordinarily,
this should be done in conjunction with establishing the initial procedural timetable for the
case (given the potential impact of disclosure on other aspects of the timetable). The timing
and format for any disclosure will be set forth in advance in procedural orders from the
tribunal (or, less frequently, agreement(s) between the parties). The tribunal’s orders will
usually establish a procedure for the parties to make requests for disclosure and to respond
to such requests (with either production or objections), and for the tribunal to rule on the
requests and order disclosure.
A tribunal must also decide when the parties may seek disclosure. This requires
considering whether the parties have sufficiently defined the issues (so the tribunal can assess
materiality of requests), as well as whether the parties will have sufficient time to digest
materials which are disclosed and incorporate them into their submissions. Frequently,
tribunals will provide for disclosure requests and objections to be made immediately
following the parties’ submission of reasonably detailed statements of their claims and
defenses. This permits requests for disclosure to focus on relevant issues, while allowing the
parties to review materials produced in disclosure before the oral evidentiary hearing.
Finally, as discussed below, it is possible under some national laws for either the parties,
or the tribunal, to seek judicial assistance in obtaining coercive discovery. Depending on
national law, such court-ordered disclosure can be obtained from other parties or (less
frequently) non-party witnesses. A party’s efforts to obtain court-ordered disclosure can
have a serious impact on the timetable of the arbitration: court proceedings may be time-
consuming, and tribunals will be concerned about delaying the arbitration pending such
litigation.

[O] Written Submissions

During most international arbitrations, the parties will file further written submissions with
the tribunal, in addition to the request for arbitration, answer/counterclaims and any defense
to counterclaims. Some institutional rules (such as the UNCITRAL Rules) provide
specifically for further submissions (e.g., a statement of claim and defense).47
Written submissions are usually filed prior to the evidentiary hearing, but may also be filed
after the hearing (so-called “post-hearing written submissions”). Further written submissions
will typically elaborate on the factual allegations and legal arguments contained in the parties’
initial request for arbitration and answer, and will ordinarily attach evidence (e.g., documents,
written witness statements) and/or legal materials (e.g., copies of judicial or arbitral decisions
and statutes). As one experienced advocate has described, “the phase of written advocacy is
increasingly important [in arbitration], and much can be done at this stage to affect the
outcome.”48
As a practical matter, the content, form and timing of written submissions vary. In some
arbitrations (particularly smaller ones), written submissions are brief, informal documents
submitted shortly before the evidentiary hearing; most of the parties’ submissions will be
oral, made at the hearing itself. In other arbitrations (typically larger disputes), written
submissions will require several months to prepare and will be hundreds of pages long (not
including exhibits, which will entail thousands of additional pages). The timetables adopted
for the arbitration will obviously vary substantially, depending on whether the written
submissions fall closer to one end of this spectrum or the other.

[P] Documentary Evidence

In general, international arbitration relies more heavily on documentary evidence than oral
testimony. Indeed, it is sometimes said that documentary evidence is “preferred,” or of
superior weight, to witness evidence in international arbitrations: “Probably the most
outstanding characteristic of [international arbitral practice] is the extent to which reliance is
placed in it upon the written word... It may be said that evidence in written form is the rule
and direct oral evidence the exception.”49
In practical terms, each party will typically submit, to adverse parties and the tribunal,
documents on which it intends to rely in support of its case. Often, many relevant
documents are attached to the parties’ initial written submission in the case (typically in
accordance with procedural directions to this effect from the tribunal). Other documents will
be attached as exhibits to particular witness statements or submitted apart from any pleading
or statement.

[Q] Written Witness Statements

It is common for witness testimony in international arbitrations to be submitted in the first
instance by written witness statements (comparable to “affidavits” in common law practice).
T hes e are statements, which are signed and attested, containing the witness’s direct
testimony on the issues as to which the party proffering that witness wishes to rely. The
statements are submitted at a designated time before any oral hearing (to adverse parties and
the tribunal).
Witness statements were historically unknown in many civil law systems. Despite this,
the UNCITRAL Rules provided expressly for written witness statements (in Article 27(2)).
Similarly, the IBA Rules on the Taking of Evidence (and some institutional rules) also
provide for witness statements (including acknowledgement that counsel may interview
witnesses in preparation for testimony).50 As discussed below, this reflects the
overwhelming practice in contemporary international arbitrations.
The IBA Rules provide useful criteria for the approach to be taken in witness statements.
They require that a statement provide “a full and detailed description of the facts, and the
source of the witness’s information as to those facts, sufficient to serve as that witness’s
evidence in the matter in dispute.”51 It is rare that a witness statement which ignores these
principles will be struck from evidence; it is even rarer, however, that such a statement will
advance a party’s case.

[R] Evidentiary Hearings and Time Limits

Oral hearings are mandatory in virtually all international arbitrations (save where the parties
agree otherwise). Conducting an oral hearing when requested by a party is required by many
institutional rules52 and some national laws53 (unless the parties’ arbitration agreement
excludes oral hearings). Failure to hear oral evidence, when requested by a party to do so,
would invite annulment of the award for failure to afford an opportunity to be heard.
Consequently, if a party requests a hearing, it will almost invariably be granted. This does
not mean that a party may request a separate hearing on every issue to arise in a case. Rather,
a tribunal may make many procedural decisions based on written submissions (or telephonic
“hearings”) or may consider multiple (or all) disputed substantive issues at a single hearing.
Most arbitrations of any consequence will involve at least one main evidentiary hearing,
and perhaps also shorter hearings, at which particular witnesses or issues are heard. Hearings
can last anywhere from a few hours, for one or two witnesses, to many months, for dozens
(or even hundreds) of fact and expert witnesses on multiple issues.
In practice, hearings are typically conducted in law firm offices, hotel conference rooms, or
specialized centers catering to the arbitration community. An evidentiary hearing in even
medium-sized arbitrations involves substantial logistical effort. Facilities must be provided
for a hearing room to accommodate many people (often, three arbitrators, several
stenographers, two teams of lawyers (of two to two dozen), translator(s), and witnesses), as
well as “break-out” rooms for the tribunal, parties and (sometimes) witnesses. The hearing
room must be equipped with audio-visual capabilities (microphones, projectors, screens,
video equipment and the like).
The central event at most hearings will be the presentation of evidence, and, in particular,
witness examination. In addition, there will typically be presentations at the evidentiary
hearing from parties’ counsel, often organized as “openings” or “closings.” There will also be
not-infrequent procedural issues that arise (regarding issues ranging from time-tabling, to
admissibility of evidence, to objections to witness examination questions).
Prior to the hearing, and after consultation with the parties, the tribunal will typically issue
procedural directions for organization of the hearing. The directions will fix the length of the
hearings (usually based on earlier reservations in the arbitrators’ and counsels’ diaries), the
order of oral submissions, the order of witnesses and (ordinarily) the estimated time for
counsels’ oral statements and witness examination. The evidentiary portion of the hearing
will usually be divided, between the two parties’ witnesses, based on equal sharing of
available time. It is essential that the identities of the witnesses who will testify be fixed in
advance, to avoid surprise and permit proper preparation.
The allocation of time at the hearing is often a controversial issue. On the one hand, both
parties will be anxious to be afforded the maximum opportunity to present their case, and
will be suspicious about their counter-party’s efforts to disadvantage them, to intrude upon
“their” time, or (sometimes) to delay the proceedings. On the other hand, the tribunal will be
mindful that time is the scarcest resource in arbitral proceedings. Determining how much time
to allocate for the hearing, and how that time should be divided between the parties, is one of
the tribunal’s most challenging procedural tasks.
Legal traditions differ in their approaches to hearing time. Many common law traditions
permit, in effect, virtually unlimited time for counsel to present their cases; in contrast, civil
law traditions impose strict limits on the parties’ time to present their cases. International
arbitral tribunals usually do not adopt either approach and instead adopt a model that
permits meaningful witness examination and advocacy, while also imposing time limits and
forcing the parties to manage their time wisely. An illustration of a “normal time” allocation
from the Iran-U.S. Claims Tribunal, which is similar to that in many other contexts, is
instructive:

“Introduction by the Chairman 9:30

Claimant’s First Round Presentation 1½ hour maximum
Respondent’s First Round Presentation 1½ hour maximum Lunch
Questions by Arbitrators 15:00
Rebuttal Presentation by Claimant 45 minutes maximum
Rebuttal Presentation by Respondent 45 minutes maximum
Further Questions by Arbitrators, if any”54

The basis of the timetable is that each party is allocated equal amounts of time, which is
planned in advance and which it is free to utilize as it chooses (within general limits).

[S] Transcripts and Minutes

As with domestic litigations, it is essential that some record be kept of evidentiary hearings in
international arbitration. In cases with common law tribunals, verbatim stenographic records
of hearings are often taken. Civil law tribunals were historically less likely to provide for
stenographic records, but would prepare written minutes summarizing the proceedings.
 The strong tendency in contemporary international arbitration is to provide for verbatim
transcripts of significant evidentiary hearings, save where the size of the case does not justify
the cost. Court reporters or stenographers from common law jurisdictions, as well as
specialized services elsewhere, routinely attend arbitral proceedings and record the witness
examination, just as in common law litigation. A transcript will be circulated to the parties for
correction shortly after the hearing, and a corrected final version can be relied on in any post-
hearing submissions. In many cases, the tribunal’s award will quote testimony and cite the
transcript. In smaller cases, a tape-recording may be taken, which may subsequently be
reviewed or (infrequently) transcribed at lower cost.

[T] Fact Witnesses

The central event in most evidentiary hearings is the examination of the witnesses – usually
direct, cross and redirect. As with other aspects of arbitral procedure, there is wide diversity
in approaches towards witness testimony.
In some legal systems, interested parties and corporate officers are not permitted to
present testimony in judicial proceedings. That position is very different from common law
evidentiary rules, where testimony by interested parties is admissible, but subject to
impeachment as to credibility. Parties to international arbitrations sometimes rely on
domestic legal rules to argue against the admission of testimony from “interested” witnesses,
contending that such evidence is inherently unreliable.
Despite this, arbitral tribunals virtually always refuse to exclude testimony from
“interested” parties or their employees.55 Tribunals invariably hold that parties are entitled
to the opportunity to prove their case, including with testimony from the parties themselves
or their representatives. They also permit adverse parties a full opportunity to challenge the
reliability of such testimony, taking such challenges into account in weighing the evidence.
In dealing with witness testimony, tribunals use care to avoid “surprise” or “ambush”
testimony. In principle, parties are required to provide written witness statements or to
identify witnesses and the substance of their testimony before the hearing. Parties should not
be permitted, save in exceptional circumstances, to adduce testimony from a previously-
unidentified witness, during the evidentiary hearing, and significant direct testimony not
mentioned in a witness statement should be viewed with caution.56
The manner in which evidence is presented at a hearing depends significantly on the legal
backgrounds of the tribunal and counsel for the parties. For example, if opposing counsel and
the chairman are English lawyers, the hearing may be run much like an English High Court
action, complete with barristers, English-style pleadings and disclosure of documents.
Conversely, a tribunal of retired German judges will tend to conduct hearings involving
German counsel along the lines of a German litigation. On the other hand, if a multinational
tribunal and legal advisers from different nations are involved, as is often the case, departures
from particular national legal customs are almost inevitable.
Although every arbitration is unique, the following procedure for witness testimony
(derived from the IBA Rules on the Taking of Evidence) is common. Under this approach,
each party is free to nominate whatever witnesses it wishes to support its case. Only
exceptionally will the tribunal require that a particular witness be designated or authorize the
parties to request that their adversary produce designated witnesses.57
As discussed above, parties will frequently submit written witness statements (often
attached to their written submissions) setting forth the direct testimony of the witnesses on
whom they rely. If a witness who has submitted a witness statement refuses to testify at the
oral hearing, the tribunal will usually disregard the statement. This is provided for expressly
by the IBA Rules,58 and is common in practice. If a witness has a compelling excuse (e.g.,
illness), then the tribunal may choose to admit the witness statement – although its
credibility will be affected by the lack of cross-examination.
The tribunal has full control over the conduct of witness examination at the hearing.59
Where a common law approach is followed, counsel presumptively conducts the (direct and
cross) examinations and the tribunal adds follow-up questions. In civil law jurisdictions,
examination was historically the responsibility of the arbitrators (although counsel would
also often follow-up with questions). In most contemporary arbitrations, the tribunal will
presumptively permit the parties’ attorneys to conduct the direct and cross-examinations,
with occasional interjections and follow-up questions by the tribunal. Tribunals with a civil
law orientation tend to impose greater limits on cross-examination, in terms of length, scope
and counsel’s “control” of a witness. Nevertheless, tribunals with a common-law focus also
impose time limits on cross (and direct) examination (to expedite proceedings).
In contemporary practice, counsel for the party producing a witness who has submitted a
witness statement will typically conduct a brief direct examination, limited to confirmation of
the statement. In some cases, this “direct” examination will be conducted by the presiding
arbitrator. Tribunals ordinarily disfavor lengthy direct examination, on the grounds that such
matters should have been included in the witness’s written statement and may encourage
ambush testimony. Exceptions will be permitted, but only for good reason (such as recently-
occurring events).60
Following direct examination, opposing counsel will have the opportunity for cross-
examination, often relatively detailed, and which in most respects is the central event in the
hearing. Cross-examination is sometimes limited to matters addressed in the witness’s
statement, but more frequently may address any matter relevant to the dispute. In practice,
tribunals tend to be reasonably firm in enforcing time limits on cross-examination and other
scheduled events during the hearing.
At any stage in the process of examination, the arbitrators may intervene with their own
questions. In some cases, arbitrators will tend to hold their queries until the parties’ counsel
have finished with their examination. When the tribunal puts questions to a witness, counsel
will generally be permitted to ask follow-up questions arising out of the tribunal’s questions.

[U] Expert Witnesses

Expert testimony can be presented through experts presented by each party and/or by an
expert appointed by the tribunal. Most arbitration statutes and institutional rules expressly
permit the appointment of experts by both the parties and the tribunal.61
In practice, different arbitral tribunals take different approaches to the subject of expert
evidence. Tribunals with a common law tenor will ordinarily permit the parties to present
“their” expert witnesses, consistent with the adversarial traditions of common law systems.
In contrast, civil law tribunals may be more skeptical about the benefits of party-nominated
experts. Instead, civil law practitioners, particularly more traditionally-minded ones, may
incline towards the use of only tribunal-appointed experts, which the tribunal will select and
instruct. In general, however, tribunals permit parties to provide “their” own expert
testimony if that is the course desired by one or both parties; a contrary approach risks
denying one or both parties an opportunity to be heard.

[V] Witness-Conferencing

Various procedural innovations have been suggested to improve the quality of witness
examination in contemporary international arbitration practice. One such innovation is
“witness-conferencing,” where two or more witnesses are simultaneously examined
concerning the same set of issues or events. The purpose of witness-conferencing is to
confront two or more witnesses on the same topic with potentially-contradictory testimony,
in order to identify areas of agreement, force concessions and evaluate the credibility of
differing contentions.
Witness-conferencing requires careful preparation and firm control of both witnesses and
counsel by the tribunal but, properly-implemented, can effectively expose evasions and
inaccuracies. At the same time, witness-conferencing seldom genuinely saves time. On the
contrary, witness-conferencing can take more time, because it is often best used in addition
to, rather than instead of, traditional cross-examination. This enables cross-examination to
identify key areas of disagreement, which can then be focused on in a witness conference.62
[W] Post-Hearing Written Submissions

It is common in many international arbitrations for there to be post-hearing written

submissions. These submissions will be prepared after the transcript of the evidentiary
hearing has been circulated, and will provide a final summation of each party’s position on
the complete evidentiary record. Post-hearing briefs are often submitted simultaneously,
although some tribunals prefer a sequential process (to avoid “ships passing in the night”).

[X] Closing of Arbitral Proceedings

It is important for the tribunal to make an unequivocal close to the submission of evidence
and legal argument by the parties. This gives the parties notice of the date beyond which they
will not be permitted to further argue their case, ensuring that they focus their energies when
the opportunity is available. It also ensures that there will be a definite end to the arbitral
process, after which the award will be rendered.
Some institutional rules expressly provide for the tribunal to close the proceedings. Article
27 of the 2012 ICC Rules provides that the tribunal will declare the proceedings closed “[a]s
soon as possible after the last hearing concerning matters to be decided in an award or the
filing of the last authorized submissions concerning such matters, whichever is later.” Even
absent such provisions, experienced tribunals will notify parties in advance of a date after
which new evidence will not be permitted (a “cut-off” date) and a date on which no further
submissions of any sort will be permitted (“closing of the proceedings”).

[Y] Ex Parte Proceedings and Default Awards

Although it is almost always a bad idea, some parties boycott arbitration proceedings. Such
maneuvers are usually regretted in the end, after a default award is made and enforcement
efforts begin. A sensible alternative to defaulting, in most cases, is to proceed under protest
while expressly recording objections to the tribunal’s jurisdiction (including its competence-
competence) and/or seeking immediate judicial recourse. Nonetheless, parties sometimes take
an alternative course and simply default in the arbitration.
Most arbitration statutes provide for the possibility of default proceedings. Article 25 of
the UNCITRAL Model Law provides that, “[u]nless otherwise agreed by the parties, if,
without sufficient cause, ... (b) the respondent fails to communicate his statement of defense
[within the relevant time period], the arbitral tribunal shall continue the proceedings without
treating such failure in itself as an admission of the claimant’s allegations.” Other legislation is
similar.63 In practice, tribunals frequently make default awards and national courts routinely
reject annulment and non-recognition defenses to default awards.64
 Most institutional rules also provide that arbitral proceeding may go forward without the
defaulting party’s presence to a default award. For example, the UNCITRAL Rules provide
that, if the claimant fails to communicate its claim in due time, the tribunal shall terminate the
arbitration; if the respondent fails to defend, the tribunal “shall order that the proceedings
continue.”65 The ICC Rules similarly provide for the appointment of an arbitrator on behalf
of the defaulting party and: “If any of the parties, although duly summoned, fails to appear
without valid excuse, the arbitral tribunal shall have the power to proceed with the
hearing.”66
Even without express authorization by national law or institutional rules, a tribunal has the
inherent authority to conduct proceedings in the absence of one party and to make a default
award. Doing so is an essential element of adjudicatory power and is necessary to ensure an
effective arbitral process which one party cannot frustrate through a refusal to participate.
If a party defaults, the tribunal will ordinarily proceed with the arbitration on an ex parte
basis, ensuring that the defaulting party receives notice of steps in the proceedings.
Importantly, however, a tribunal is not a court, empowered to issue a default judgment
predicated simply on one party’s non-participation. Rather, the tribunal is responsible for
assessing the issues presented to it; a party’s non-participation does not abrogate that
obligation.67 A tribunal will therefore usually direct the claimant to make written
submissions, present evidence, and, where appropriate, appear at a hearing with its
witnesses. The tribunal will also, without substituting itself for the defaulting party,
generally seek to satisfy itself that the claimant’s claims are well-founded and thereafter
render a reasoned award, setting forth the facts and basis for its decision.

[Z] Deliberations of Arbitrators

After all submissions are completed, the tribunal will retire to deliberate, reach a decision and
make an award. The arbitrators are generally required by mandatory law – and certainly by
custom and contractual intention – to “deliberate” together in a collegial way in order to reach
their final decision.68 Under most legal systems, arbitral deliberations are confidential, not to
be revealed by the arbitrators to either the parties or others.69
As a practical matter, in multi-member tribunals, the arbitrators’ deliberations can be a
complicated, sometimes slow process. Initially, the tribunal must establish a procedure for its
deliberations, deciding how they wish to go about deciding the substantive issues. The
process of establishing the procedures for deliberations is often informal, with the arbitrators
cooperating together, making and changing their thinking as discussions unfold. In some
instances, particularly where the tribunal has failed to establish collegiate working relations,
procedures will be relatively formal. In principle, the presiding arbitrator will determine the
format and timetable for deliberations.
In many cases, the tribunal will reach a unanimous award. Sometimes, all three arbitrators
will agree from the outset on the outcome and analysis and, often with little debate, the
presiding arbitrator can draft the award. In other cases, consensus will be achieved only after
protracted discussion (in which one arbitrator is persuaded to abandon initial thoughts or in
which the tribunal gradually clarifies issues to reach a common position). In some
deliberations, there is a substantial amount of what might look like “negotiation,” in which
different issues are resolved through give-and-take; this sometimes derives from a purely-
objective assessment of the merits of different issues and sometimes from other factors
(including personal egos, partisanship and the like).
The nature of the deliberations among the arbitrators in difficult cases can be affected by
the provisions of the applicable procedural law (or terms of the arbitration agreement). In
some circumstances, a majority award is required (meaning that the chairman must “win” the
vote of at least one of the co-arbitrators), while in many cases the chairman is able, if
necessary, to make an award independently. 70 In the latter case, the chairman’s influence in
the deliberations is much more substantial.
In any event, most presiding arbitrators will want to produce a unanimous award. This
may require substantial patience, listening carefully to the views of one (or two) unconvinced
co-arbitrator(s). Nevertheless, this is an essential part of a chairman’s function – to ensure
that the tribunal has fairly considered all sides of the parties’ cases before reaching a decision.

[AA] Making and Notification of Award

The final step in most arbitrations is the making and notification of the award. In virtually all
cases, the award is a formal instrument, signed by the members of the tribunal, reciting the
procedural history, facts, legal arguments and conclusions. In practice, many awards in
international arbitration compare favorably to judicial opinions in national courts; they
include discussions of the parties’ positions and the tribunal’s factual and legal analysis.
Depending on the case, an award may range from 10 or 20 pages to several hundred pages.
As discussed below, the formal aspects of awards are generally regulated by national law
(in the seat), any applicable institutional rules and (rarely) the arbitration agreement. In most
jurisdictions, and under most institutional rules, awards need only be written, reasoned,
signed and dated, and indicate the place of arbitration.71 This typically means that multiple,
identical copies of the award will be prepared, signed and dated by the tribunal. In some
jurisdictions, further formalities are required, such as depositing the award with a court.72
Some institutional rules impose further requirements, like the ICC Rules (in Articles 33–
34), which require that awards be scrutinized by the ICC Court. Some institutional rules also
provide that the award will be notified to the parties by the arbitral institution, rather than
the tribunal – which will circulate executed copies of the award to the parties. As discussed
below, arbitration statutes and institutional rules often prescribe time limits for correcting
errors in an award, seeking interpretations, or commencing actions to annul the award.73

§8.08 EVIDENTIARY RULES AND BURDEN OF PROOF

Some legal systems are characterized by detailed rules of evidence and admissibility. These
rules are sometimes invoked in international arbitration; like courts in litigation, arbitral
tribunals must resolve a considerable range of evidentiary issues, often during the disclosure
or discovery process and witness hearing. These issues include the admissibility and weight
of evidence, the relevance of certain lines of questioning, privilege claims and the like.
In general, arbitration statutes grant arbitrators broad authority to decide these evidentiary
issues. For example, Article 19(2) of the Model Law provides that “[t]he power conferred
upon the arbitral tribunal includes the power to determine the admissibility, relevance,
materiality and weight of any evidence.” Other legislation is similar, and, even in the absence
of statutory provisions to this effect, national courts affirm the tribunal’s inherently broad
discretion.74
Institutional rules also typically contain general provisions confirming that the tribunal has
control over the arbitral procedure or that the tribunal has the power to determine the
admissibility and weight of evidence.75 Similarly, the IBA Rules on the Taking of Evidence
provide that “[t]he Arbitral Tribunal shall determine the admissibility, relevance, materiality
and weight of evidence.”76 Again, even in the absence of such provisions, tribunals clearly
have implied authority to resolve issues of admissibility and weight of the evidence.
In practice, tribunals typically do not apply strict rules of evidence, particularly rules of
evidence applicable in domestic litigations. As discussed above, one of the hallmarks of
international arbitration is the freedom from procedural and evidentiary technicalities.77 As
one court put it: “The arbitrators appear to have accepted hearsay evidence as they were
entitled to do. If parties wish to rely on such technical objections, they should not include
arbitration clauses in their contracts.”78 On the other hand, tribunals are also free to apply
evidentiary rules applicable in national courts (subject to general due process constraints).
Issues of burden of proof frequently arise in arbitration, as in domestic litigation. There is
little authority on the allocation of burdens of proof in arbitral contexts. As one commentator
concludes, “[i]nternational arbitration conventions, national arbitration laws, compromis,
arbitration rules and even the decisions of arbitral tribunals are almost uniformly silent on the
subject of the standard of proof.”79 Nevertheless, a few institutional rules address the issue,
at least at an abstract level, providing that each party bears the burden of providing the facts
necessary to its claims or defenses.80 This is consistent with arbitral awards and
commentary, which cite the general rule of actori incumbit probatio: each party bears the
burden of proving the facts relied on in support of its case.81
In some legal systems, certain allegations require more convincing evidence than others; the
same approach is adopted in international arbitration. For example, allegations of wrongdoing,
particularly serious wrongdoing such as criminal acts, fraud, and the like, require more
convincing evidence than other facts. The Iran-U.S. Claims Tribunal summarized this
approach with regard to bribery: “if reasonable doubts remain, such an allegation cannot be
deemed to be established.”82 Other awards are to the same effect.83

§8.09 COSTS OF THE ARBITRATION

International arbitral tribunals generally possess the authority to award the prevailing party
the costs of the arbitration, including its legal costs. In practice, this authority is frequently
exercised; awards of costs can involve substantial financial amounts (not infrequently
involving fees exceeding $10 million) and can have significant tactical importance.
Many arbitration statutes are silent on the topic of awards of legal costs. For example, the
Model Law, like legislation in the U.S., Switzerland and elsewhere, does not expressly
address the costs of legal representation.84 Nonetheless, most courts and tribunals give effect
to the parties’ agreement with regard to awards of legal costs. That is true where the parties
agree that the arbitrators shall have the power to make such awards, as well as where they
exclude such awards.85
Most institutional rules expressly grant tribunals the power to award the costs of legal
representation; in addition, arbitration agreements sometimes specifically address the issue.86
For example, the UNCITRAL Rules provide the tribunal with the authority to “fix the costs
of arbitration” in its award.87 Article 40 defines the costs of arbitration to include the “legal
and other costs incurred by the parties in relation to the arbitration,” but only “to the extent
that the arbitral tribunal determines that the amount of such costs is reasonable.” The 2010
UNCITRAL Rules also provide, in Article 42, that “the costs of the arbitration shall in
principle be borne by the unsuccessful party” and that “the arbitral tribunal may apportion
each of such costs between the parties if it determines that apportionment is reasonable,
taking into account the circumstances of the case.” These provisions grant arbitrators broad
discretion with regard to awards of legal costs, starting from the principle that the prevailing
party will be entitled to its costs.
The 2012 ICC Rules provide (in Article 37(4)) that the final award “shall fix the costs of
the arbitration and decide which of the parties shall bear them or in what proportion they
shall be borne by the parties.” The “costs of the arbitration” are defined to include “the fees
and expenses of the arbitrators and the ICC administrative expenses fixed by the Court, ... as
well as the fees and expenses of any experts appointed by the arbitral tribunal and the
reasonable legal and other costs incurred by the parties for the arbitration.”88 Unlike the
UNCITRAL Rules, the ICC Rules do not prescribe standards for awarding legal costs,
leaving this to the tribunal’s discretion and applicable law. Under the ICC Rules (Article 37),
the arbitrators’ fees and expenses are fixed by the ICC Court (rather than the arbitrators),
while the allocation of liability for such fees and expenses between the parties is made by the
arbitrators.
The overriding theme of these institutional rules is to grant the tribunal broad powers to
award legal costs; the exercise of these powers is left largely to the arbitrators, with general
references to the degree of a party’s success on its claims and the reasonableness of a party’s
expenses. Most institutional rules also confirm the arbitrators’ authority to “apportion” legal
costs, allowing awards of less than 100% of a party’s costs.
Even where applicable institutional rules do not expressly grant the tribunal power to
award legal costs, the arbitration agreement should be interpreted to impliedly grant such
authority. An implied agreement granting the arbitrators power to award the costs of the
arbitration, including legal costs, is an inherent aspect of the tribunal’s authority (absent
contrary agreement). That position is adopted by the overwhelming weight of authority.89
In order to fulfil its mandate with regard to an award of costs, a tribunal will almost always
direct the parties to make submissions regarding their legal expenses. Such submissions will
usually be written, often consisting principally of documents (substantiating cost claims);
parties are usually reluctant to submit invoices from their lawyers, for fear of waiving
privilege or disclosing confidential information, but statements from in-house personnel or
lawyers’ attestations can provide adequate alternative proof.
Tribunals frequently permit the parties to make comments on their adversary’s cost
claims, typically by challenging the reasonableness of such claims. Such comments are often
only in writing, with little or no opportunity for oral submission. The tribunal’s decision
with regard to costs will typically be included in either its final award or, alternatively, in a
separate award on costs, made after the final award dealing with the merits. As a practical
matter, arbitrators in international cases routinely award the costs of legal representation,
usually without detailed substantive or choice of law analysis. Most awards either rely
exclusively on grants of discretion (or other standards) pursuant to applicable institutional
rules, or simply award a “reasonable” or “appropriate” amount.90
Where the parties’ agreement addresses legal costs, tribunals will virtually always give
effect to its terms. More frequently, the parties will not have addressed legal costs, or will
have simply granted the tribunal discretion to make an award of legal costs. In exercising their
discretion, tribunals have often awarded some of the costs of legal representation to the
“prevailing party.” In doing so, arbitrators take into account the extent to which that party
recovered what it initially claimed, the extent to which each party’s position was
substantively reasonable, the extent to which a party’s conduct needlessly complicated the
proceedings and similar factors.91
_________________________
1. See supra pp. 112–14.
2. See supra pp. 48–49.
3. G. Born, International Commercial Arbitration 1750–52 (2009).
4. UHC Mgt. Co. v. Computer Scis. Corp., 148 F.3d 992, 995 (8th Cir. 1998).
5. Team Design v. Gottlieb, 104 S.W.3d 512 (Tenn. Ct. App. 2002).
6. Re Shaw and Sims (1851) 17 LTOS 160 (Bail Court).
7. UNCITRAL Model Law, Art. 2(d). Judicial authorities are to the same effect. G. Born, International Commercial
Arbitration 704, 1121–24 (2009).
8. See LCIA Rules, Art. 14(1) (“ parties may agree on the arbitral procedure, and are encouraged to do so”).
9. In re Arbitration Between U.S. Turnkey Exploration, Inc. and PSI, Inc., 577 So.2d 1131 (La. App. 1991).
10. See G. Born, International Commercial Arbitration 1759–61 (2009).
11. See, e.g., 2012 ICC Rules, Art. 22; ICDR Rules, Art. 16(1).
12. See, e.g., 2012 ICC Rules, Art. 22; LCIA Rules, Art. 14(1)(i).
13. See infra pp. 152–54.
14. See supra p. 149 & infra p. 185.
15. Mantilla-Serrano, Towards A Transnational Procedural Public Policy, 20 Arb. Int’ l 333 (2004); Schwarz &
Ort n er, Procedural Ordre Public and the Internationalization of Public Policy in Arbitration, in C.
Klausegger et al. (eds.), Austrian Arbitration Yearbook 133 (2008).
16. Article 182(3) of the Swiss Law on Private International Law provides, in mandatory terms, that: “ Whatever
procedure is chosen [by the parties or tribunal], the arbitral tribunal shall assure equal treatment of the parties
and the right of the parties to be heard in an adversarial procedure.” See G. Born, International Commercial
Arbitration 1770 (2009).
17. See G. Born, International Commercial Arbitration 1769–75 (2009).
18. See, e.g., IBA Rules on the Taking of Evidence; ALI/UNIDROIT Principles of Transnational Civil Procedure
(2004); infra p. 185.
19. Baravati v. Josephthal, Lyon & Ross, 28 F.3d 704, 709 (7th Cir. 1994). See also B. Berger & F. Kellerhals,
Internationale and interne Schiedsgerichtsbarkeit in der Schweiz ¶1018 (2006) (parties cannot generally waive
right to fair hearing and equal treatment, but can waive minimum requirement of due process in specified
circumstances). See also infra p. 390.
20. English Arbitration Act, 1996, §1(b).
21. See G. Born, International Commercial Arbitration 1775–76 (2009).
22. Cie Nationale Air France v. Libyan Arab Airlines, [2000] R.J.Q. 717 (Quebec S.Ct.).
23. English Arbitration Act, 1996, §1(c) (“ in matters governed by this Part the court should not intervene except as
provided by this P art”).
24. See, e.g., Belgian Judicial Code, Arts. 1693–1698; Swiss Law on P rivate International Law, Arts. 180–187.
25. Stanton v. Paine W ebber Jackson & Curtis, Inc., 685 F.Supp. 1241, 1242 (S.D. Fla. 1988).
26. See G. Born, International Commercial Arbitration 1777–80 (2009).
27. See supra pp. 43–44 and 140–41 & infra pp. 189–93, 213–18, 303–67 and 369–409.
28. See G. Born, International Commercial Arbitration 1047–56, 1780, 2920–22, 2943–46 (2009).
29. See G. Born, International Commercial Arbitration 1785–91 (2009).
30. Ibid.
31. Report of the Secretary-General on Preliminary Draft Set of Arbitration Rules for Optional Use in Ad Hoc
 Arbitration Relating to International Trade, UNCITRAL Eighth Session, UN Doc. A/CN.9/97, VI UNCITRAL
Y.B. 163, 167 (1975).
32. See UNCITRAL Rules, Art. 3; 2012 ICC Rules, Art. 4; ICDR Rules, Art. 2.
33. UNCITRAL Model Law, Art. 29; Swiss Law on Private International Law, Art. 189(2); Japanese Arbitration
Law, Art. 37(3). See also G. Born, International Commercial Arbitration 1663–70 (2009).
34. G. Born, International Commercial Arbitration 1664–67 (2009).
35. See supra pp. 43–67.
36. See supra pp. 154–55; G. Born, International Commercial Arbitration 988–90, 1805–06 (2009).
37. See, e.g., UNCITRAL Rules, Art. 19(1); 2012 ICC Rules, Art. 20; LCIA Rules, Art. 17; ICDR Rules, Art. 14.
38. Polish Chamber of Commerce Arbitration Rules, Art. 20(1) (presumption of Polish); Hungarian Chamber of
Commerce Court of Arbitration Rules, Art. 8(5) (Hungarian); DIAC Arbitration Rules, Art. 43 (Arabic).
39. G. Born, International Commercial Arbitration 1812–14 (2009).
40. 2012 ICC Rules, Art. 30(1).
41. ICDR Rules, Art. 27(1).
42. G. Born, International Commercial Arbitration 1816–18 (2009).
43. See, e.g., UNCITRAL Rules, Art. 43; 2012 ICC Rules, Art. 36; LCIA Rules, Art. 24.
44. See, e.g., 2012 ICC Rules, Art. 36(5); ICDR Rules, Art. 34.
45. See, e.g., ICDR Rules, Art. 4; LCIA Rules, Art. 13(1)(d).
46. G. Born, International Commercial Arbitration 1818–20, 2579–80, 2754 (2009).
47. UNCITRAL Rules, Art. 25 (providing for further submissions after 45-day period).
48. Crawford, Advocacy Before the International Court of Justice and Other International Tribunals in State-to-
State Cases, in R. Bishop (ed.), The Art of Advocacy in International Arbitration 11, 28 (2004).
49. D. Sandifer, Evidence Before International Tribunals 197 (1975).
50. See IBA Rules on the Taking of Evidence, Art. 4(3); LCIA Rules, Art. 20(6).
51. IBA Rules on the Taking of Evidence, Art. 4(5).
52. See, e.g., 2012 ICC Rules, Art. 25(6); LCIA Rules, Art. 19(1); UNCITRAL Rules, Art. 17(3).
53. Article 24(1) of the UNCITRAL Model Law provides that, “ unless the parties have agreed that no hearings shall
be held, the arbitral tribunal shall hold such hearings at an appropriate stage of the proceedings, if so requested
by a party.” UNCITRAL Model Law, Art. 24(1). See G. Born, International Commercial Arbitration 1830–32
(2009).
54. Memorandum from Prof. K.-H. Böckstiegel to Mr. M.K. Eshragh, Agent of the Government of the Islamic
Republic of Iran, and Mr. J.R. Crook, Agent of the Government of the United States , 26 May 1987, quoted in
Holtzmann, Streamlining Arbitral Proceedings: Some Techniques of the Iran-U.S. Claims Tribunal, 11 Arb.
Int’ l 39, 47 (1995).
55. See G. Born, International Commercial Arbitration 1838–40 (2009).
56. See G. Born, International Commercial Arbitration 1827–29, 1838–40 (2009).
57. See G. Born, International Commercial Arbitration 1791–93, 1842–45 (2009).
58. IBA Rules on the Taking of Evidence, Arts. 4(7), 4(8).
59. See G. Born, International Commercial Arbitration 1757–64, 1843 (2009).
60. See G. Born, International Commercial Arbitration 1843–44 (2009).
61. See G. Born, International Commercial Arbitration 1859–61 (2009). Article 26(1) of the UNCITRAL Model
Law authorizes an arbitral tribunal to appoint “ one or more experts to report to it on specific issues to be
determined by the arbitral tribunal,” while Article 23(1) guarantees the parties’ general right to submit evidence.
Other national laws are similar. See also UNCITRAL Rules, Arts. 17(3), 27; 2012 ICC Rules, Art. 25(4); ICDR
Rules, Art. 23; LCIA Rules, Art. 12; IBA Rules on the Taking of Evidence, Art. 5(1).
62. See G. Born, International Commercial Arbitration 1849–50 (2009).
63. See G. Born, International Commercial Arbitration 1864–65 (2009).
64. See G. Born, International Commercial Arbitration 1865, 2438–39, 2592, 2752–53 (2009).
65. UNCITRAL Rules, Art. 30(1). Article 30(2) provides that “ If a party, duly notified under these Rules, fails to
appear at a hearing, without showing sufficient cause for such failure, the arbitral tribunal may proceed with the
arbitration.”
66. 2012 ICC Rules, Art. 26(2). See also ICDR Rules, Arts. 10(1), 23; LCIA Rules, Art. 15(8); AAA Commercial
Rules, R-29; JCAA Rules, Art. 35(2), (3).
67. See, e.g., UNCITRAL Model Law, Art. 25(c) (“ the arbitral tribunal may continue the proceedings and make the
award on the evidence before it”).
68. See G. Born, International Commercial Arbitration 1867–68 (2009). For annulment and non-recognition of
awards based on inadequate deliberations, see id. at 2590–92, 2756.
69. See G. Born, International Commercial Arbitration 1630–32, 1868, 2268–70 (2009).
70. See infra pp. 289–90; G. Born, International Commercial Arbitration 1665–66, 1869, 2458–62 (2009).
71. See infra pp. 282–84; G. Born, International Commercial Arbitration 1870–71, 2443–49 (2009).
72. See infra p. 294; G. Born, International Commercial Arbitration 1870–71, 2470–76 (2009). Non-compliance
with these formalities may result in annulment of the award, id. at 2655–56, or impede recognition, id . at 2814–
25.
73. See infra pp. 342–67.
74. See G. Born, International Commercial Arbitration 1850–55 (2009).
75. See, e.g., 2012 ICC Rules, Arts. 22, 24; LCIA Rules, Arts. 20(2), 22(1)(f); UNCITRAL Rules, Art. 27(4) (“ The
arbitral tribunal shall determine the admissibility, relevance, materiality and weight of the evidence offered.”).
76. IBA Rules on the Taking of Evidence, Art. 9(1).
77. See G. Born, International Commercial Arbitration 1850–55 (2009).
78. Petroleum Separating Co. v. Interamerican Refining Corp., 296 F.2d 124 (2d Cir. 1961).
79. Pietrowski, Evidence in International Arbitration, 22 Arb. Int’ l 373, 374, 379 (2006). See also M. Kazazi,
Burden of Proof and Related Issues: A Study on Evidence Before International Tribunals passim(1996).
80. See, e.g., UNCITRAL Rules, Art. 27(1) (“ Each party shall have the burden of proving the facts relied on to
support its claim or defense.”); ICDR Rules, Art. 19(1).
81. See, e.g., D. Sandifer, Evidence Before International Tribunals 127 (1975). In general, although there is little
discussion of the issue, the burden of proof appears to be (or assumed to be) a “ balance of probabilities” or “ more
likely than not” standard. See G. Born, International Commercial Arbitration 1855–58 (2009).
82. Oil Field of Texas, Inc. v. Islamic Republic of Iran , Award No. 258-43-1 (8 October 1986), 12 Iran-US C.T.R.
308, ¶25 (1986).
83. See G. Born, International Commercial Arbitration 1857–58 (2009).
84. A number of states that have adopted the Model Law have added provisions regarding awards of the costs of
arbitration. See G. Born, International Commercial Arbitration 2487–93 (2009).
85. See G. Born, International Commercial Arbitration 2487–93 (2009). One limited exception is England, where
parties are precluded from agreeing, prior to the dispute arising, that one party pay “ the whole or part of the costs
of the arbitration in any event,” regardless of the outcome. G. Born, International Commercial Arbitration 2488
(2009).
86. Virtually all arbitration regimes give effect to the provisions of institutional rules and arbitration agreements
concerning the tribunal’ s power to make an award of legal costs and the amount of such award. See G. Born,
International Commercial Arbitration 1872, 2496–98 (2009).
87. 1976 UNCITRAL Rules, Art. 38; 2010 UNCITRAL Rules, Art. 40.
88. ICC Rules, Art. 37(1). The ICC Rules authorize tribunals to take the parties’ procedural conduct into account in
awarding costs: “ [i]n making decisions as to costs, the arbitral tribunal may take into account such
circumstances as it considers relevant, including the extent to which each party has conducted the arbitration in
an expeditious and cost-effective manner.” 2012 ICC Rules, Art. 37(5).
89. See G. Born, International Commercial Arbitration 2497, 2489–94 (2009).
90. See G. Born, International Commercial Arbitration 2497–2500 (2009).
91. Ibid.
Chapter 9
Disclosure and Evidence-Taking in International Arbitration

The arbitral tribunal’s power to require the parties to produce documentary or other
materials, relevant to resolving the matters in dispute, is a critical aspect of the arbitral
process. The existence and scope of disclosure or discovery arises in many international
arbitrations, with parties often disagreeing over the existence and proper exercise of
disclosure authority.

§9.01 AUTHORITY OF ARBITRAL TRIBUNAL OVER DISCLOSURE

AND EVIDENCE-TAKING
Virtually all decisions about disclosure in international arbitration are made in the arbitration
itself, by the parties or tribunal, as distinguished from national courts. (This reflects the
general principle of judicial non-interference (discussed in Chapter 8 above).) As with other
aspects of evidence-taking, disclosure in international arbitration is governed in the first
instance by the procedural law of the arbitration and the arbitration agreement (including any
institutional rules). These sources define the extent and scope of the tribunal’s power to
order disclosure.
Typically, national law gives effect to the parties’ agreements regarding disclosure and, in
the absence of agreement, recognizes the arbitrators’ inherent authority to order the parties to
disclose evidentiary materials. Less frequently, arbitrators are authorized by national law to
request third parties to provide disclosure and, in some instances, obtain judicial assistance in
enforcing such requests. Of equal importance, as a practical matter, a tribunal’s actual exercise
of its disclosure authority depends on a range of factors (including the circumstances and
needs of particular cases, the backgrounds of the arbitrators and parties, the arbitration
agreement and the law and practice of the seat).
Questions about the scope of the arbitrators’ authority arise in two contexts. First, they
may arise in the arbitral proceeding, when the parties make or resist requests for tribunal-
ordered discovery; in these circumstances, decisions about the scope of disclosure will be
made by the tribunal. Second, as discussed below, a tribunal can generally only coercively
enforce its disclosure orders by seeking the assistance of national courts, particularly vis-à-
vis third parties; in such enforcement actions, the extent of the tribunal’s disclosure authority
can also arise before a national court.
[A] National Arbitration Legislation

The arbitral tribunal’s power to order discovery or disclosure is defined in the first instance
by the procedural law of the arbitration (virtually always, the law of the arbitral seat). Most
arbitration legislation recognizes the parties’ autonomy to agree upon the existence, scope
and timing of disclosure (as an aspect of the parties’ general procedural autonomy); in
practice, parties not infrequently agree upon the scope and manner of disclosure, either in
their original arbitration agreement or subsequent discussions. Where the parties do not agree
upon the scope of disclosure, most arbitration statutes recognize the inherent power of
arbitral tribunals to order disclosure by the parties to the arbitration, including to determine
the scope and procedures for such disclosure.

[1] UNCITRAL Model Law

The UNCITRAL Model Law does not deal specifically with the subject of disclosure.
Instead, Article 19(1)’s general recognition of the parties’ procedural autonomy applies to
disclosure, just as to other procedural matters.1 Where the parties’ agreement addresses
issues of disclosure, directly or by incorporating institutional rules, Article 19(1) requires
giving effect to that agreement.
In the absence of any agreement, Articles 19(2) and 27 of the Model Law grant tribunals
broad authority with respect to “taking evidence”2 and evaluating evidence,3 but make no
specific reference to “disclosure” or “discovery.” However, the M odel Law’s drafting history
leaves no question but that a tribunal’s powers include the authority to order disclosure by
the parties.4 Nothing in the Model Law limits the scope of disclosure that a tribunal is
entitled to order from the parties, with this being left to the arbitrators’ procedural discretion.

[2] Other National Legislation

The general approach in most civil law jurisdictions to disclosure parallels the Model Law.
As discussed above, most civil law jurisdictions give effect to agreements by parties regarding
procedural matters;5 this rule extends to matters of disclosure, notwithstanding the fact that
disclosure was historically almost unknown in domestic civil law litigation systems.
Where no agreement exists, civil law arbitration statutes do not ordinarily address the
subject of disclosure. For example, the Swiss Law on Private International Law is largely
silent on matters of disclosure, only providing generally that the tribunal has authority over
the arbitral procedure and the power to seek judicial assistance in evidence-taking from
national courts.6 Some civil law arbitration statutes are more explicit than the Model Law in
authorizing the arbitrators to exercise disclosure powers. Thus, the French Code of Civil
Procedure expressly authorizes arbitrators to order the parties to produce evidentiary
materials (without addressing disclosure by non-parties).7 Other civil law statutes are similar
(either expressly or impliedly authorizing orders that the parties disclose evidentiary
materials).8
Legislation in common law jurisdictions is often more specific in its treatment of
disclosure. The U.S. FAA expressly addresses the arbitrators’ powers, in U.S.-seated
arbitrations, with regard to both parties and non-parties. Section 7 authorizes arbitrators, in a
“proper case,” to “summon in writing any person to attend before them or any of them as a
witness and in a proper case to bring with him or them any book, record, document or paper
which shall be deemed material as evidence in the case,” and to seek judicial assistance if their
disclosure orders are not complied with. Additionally, U.S. state law frequently provides
parties to locally-seated arbitrations with the authority to request the attendance of
witnesses and production of documents (for example, in §17 of the Revised Uniform
Arbitration Act or §7505 of the N.Y. C.P.L.R.).
The English Arbitration Act is even more detailed with regard to disclosure than the FAA.
It provides that a tribunal has the power to determine “whether any and if so which
documents or classes of documents should be disclosed between and produced by the parties
and at what stage.” There is no question but that this provision grants tribunals broad powers
to order disclosure by parties to an arbitration. Where the parties have agreed to particular
disclosure provisions, the Act’s general respect for party autonomy requires giving effect to
such agreements.9 Other common law arbitration legislation is similar.10

[3] Arbitral Tribunal’s Implied Authority

Even in the absence of statutory grants of disclosure powers, most national arbitration
regimes afford tribunals broad inherent authority over the fact-finding process, which
includes authority to order parties to the arbitration to make disclosure. This is consistent
with the historically broad discretion of arbitrators with regard to procedural and evidence-
taking matters, and with the arbitrators’ mandate to resolve disputes in the manner they deem
expedient and just.11 In principle, the only limitations under most national laws on the
disclosure powers of international arbitral tribunals are those imposed by the arbitration
agreement or principles of equality and due process. That is true even if applicable arbitration
legislation is silent on the subject of disclosure: the arbitrators’ authority is inherent as part
of their overall mandate.
 Arbitral tribunals have repeatedly exercised the authority to order disclosure, virtually
never even questioning whether such power exists. One award addressed the issue as follows:

[W]hile the ICC Rules do not contain any provision dealing with “discovery” properly
speaking, it is enough to recall here that according to article 4(1), “[t]he arbitrator shall
proceed within as short a time as possible to establish the facts of the case by all
appropriate measures.” This provision allows the arbitrators to ask the parties to
produce the documents in their possession or control, which in their view are relevant to
the case.12

Consistent with this, virtually no reported arbitral awards deny the existence of an
arbitrator’s authority to order the parties to disclose materials relevant to the dispute.

[4] Arbitral Tribunal Not Limited to Disclosure and Evidence-Taking

Authority of Local Courts

There are sometimes suggestions that the discovery, or other evidence-taking, powers of
tribunals should be limited to those of local courts in the arbitral seat under domestic rules of
civil procedure. Almost all authorities have rejected such arguments. As discussed above, the
procedural law of the arbitration is prescribed by the arbitration legislation of the arbitral
seat, which ordinarily gives effect to the parties’ procedural autonomy and grants broad
procedural discretion to the tribunal, rather than by domestic court procedures. This
principle applies specifically to the disclosure powers of tribunals – which are not limited by
the powers granted to local courts by domestic rules of civil procedure. As one commentator
has observed, “[d]iscovery which is ordered by international arbitral tribunals is very
different from the discovery ordered by national courts.”13

[B] Institutional Arbitration Rules

Most institutional rules provide arbitrators, in language of varying degrees of clarity, with
express authority to order disclosure by the parties. Where parties have agreed to arbitrate
pursuant to these rules, there is little question regarding the tribunal’s authority to order
disclosure in accordance with them. In practice, tribunals virtually never conclude that they
lack authority to order disclosure under leading institutional rules, although the scope of the
disclosure that is ordered may be very limited.

[1] LCIA Rules

Among leading institutional rules, the LCIA Rules are most explicit. Articles 22(1)(c) and
22(1) (d) of the LCIA Rules empower the tribunal “to conduct such enquiries as may appear
to the Arbitral Tribunal to be necessary or expedient ... and to order any party to make any
property, site or thing under its control and relating to the subject matter of the arbitration
available for inspection by the Arbitral Tribunal, any other party, ... or any expert.”14 Article
22(1)(e) goes on to provide the tribunal with specific powers to order the disclosure of
documents, including: “to order any party to produce to the Arbitral Tribunal, and to the
other parties, for inspection, and to supply copies of, any documents or classes of
documents in their possession, custody or power which the Arbitral Tribunal determines to
be relevant.”15
These provisions grant an LCIA tribunal broad authority to order the parties to the
arbitration (but not non-parties) to make disclosure to one another. They do not address the
procedures by which disclosure is to be ordered, including whether the parties may make
disclosure requests, instead leaving this to the arbitrators’ discretion.

[2] UNCITRAL Rules

The UNCITRAL Rules also confirm the tribunal’s disclosure authority. Article 27(3) of the
Rules permits the tribunal to order the production of “documents, exhibits or other
evidence.” This provision is directed towards the arbitrators’ powers, and does not expressly
provide the parties with the right to request (much less compel) disclosure by their counter-
parties. However, there is nothing in the UNCITRAL Rules that precludes a tribunal from
ordering discovery of relevant documents, if that is what the tribunal concludes is most
appropriate. Thus, as the practice of the Iran-U.S. Claims Tribunal confirms, a tribunal may
order discovery of all “relevant” or “material” documents.16 Nor is there anything in Article
27(3) that would prevent a tribunal from providing for the parties to make discovery requests
to one another, with the tribunal granting or denying such requests. Applying procedural
rules modeled on Article 27(3) (formerly Article 24(3) of the 1976 UNCITRAL Rules), the
Iran–U.S. Claims Tribunal not infrequently adopted such an approach, ordering parties to
produce documents requested by a counter-party.17

[3] ICC Rules

Other institutional rules are less explicit, but nonetheless clearly authorize tribunals to order
disclosure. Article 25(1) of the 2012 ICC Rules is representative, providing that “[t]he
Arbitral Tribunal shall proceed within as short a time as possible to establish the facts of the
case by all appropriate means,” while Article 25(5) provides that the tribunal “may summon
any party to provide additional evidence.” This language does not expressly empower
arbitrators to order disclosure, but in practice ICC tribunals almost uniformly hold such
authority is implicit.18 Similarly, as with the UNCITRAL Rules, it is clear that the tribunal’s
authority over the evidence-taking and disclosure processes extends to permitting the parties
to make requests for disclosure from their counter-parties, upon which the tribunal may base
its disclosure orders.19

[C] Arbitral Tribunal’s Disclosure Powers Generally Limited to Parties

The disclosure powers of the tribunal in international arbitration are ordinarily limited to the
parties to the arbitration and do not extend to non-parties. This limitation is in substantial
part a result of the consensual nature of arbitration. In principle, the powers conferred by an
arbitration agreement (and any institutional rules it incorporates) extend only to the parties to
that agreement. Accordingly, the tribunal will generally lack authority to order third parties to
provide disclosure in the arbitration, just as it will generally lack the power to grant
provisional measures or final relief against non-parties to the arbitration.
Nonetheless, there are exceptions to this general rule. As discussed below, there are
instances in which national law grants arbitrators power to take evidence from non-parties
with the judicial assistance from national courts. The UNCITRAL Model Law, the FAA in
the United States and the Swiss Law on Private International Law are leading examples of
this approach. Under these statutes, tribunals have the power to order disclosure from third
parties and, if refused, the parties or the arbitrators may seek judicial enforcement of the
tribunal’s orders.20

[D] Arbitral Tribunal’s Exercise of Discretion to Order Disclosure and

Structure Evidence-Taking
As discussed above, arbitration statutes and institutional rules almost universally permit
arbitral tribunals to order the parties to the arbitration to make disclosure of documents and
other materials as part of the evidence-taking process. At the same time, national law and
institutional rules provide virtually no guidelines regarding the scope or use of a tribunal’s
disclosure authority. Rather, as a practical matter, scope and procedures for disclosure in an
international arbitration depend on the parties’ agreement and the tribunal’s exercise of its
discretion, largely unconstrained by national law limitations.
Preliminarily, in international arbitration, disclosure not infrequently proceeds with a
measure of agreement, reached between the parties in their arbitration agreement or during the
arbitral proceedings. Arbitration agreements sometimes address the subjects of disclosure on
evidence-taking, for example, by forbidding any disclosure or by providing for disclosure in
accordance with a set of standards (e.g., IBA Rules on the Taking of Evidence in International
Arbitration or Federal Rules of Civil Procedure). Even if no such provision is included in the
parties’ agreement to arbitrate, the parties may agree to use of the IBA Rules on the Taking
of Evidence before decisions are made by the tribunal as to disclosure. The parties’ agreement
may, for example, select the IBA Rules (together with a timetable for discovery requests and
responses), define the scope and character of disclosure by reference to a national law, or
establish a tailor-made set of procedures (including standards for disclosure and a timetable
for implementation).
Where no agreement between the parties is reached, the arbitrators are required to decide
whether disclosure is appropriate and, if so, what its scope should be and when and how it
should proceed. The tribunal will generally do so after hearing from the parties what legal and
factual issues the case presents, why disclosure is necessary (or not) and how each would
prefer any disclosure be structured. In practice, the tribunal’s decisions will usually be issued
in procedural orders defining the scope, mechanisms and timetable of disclosure.

[1] Availability and Scope of Disclosure: Civil Law versus Common Law

A tribunal’s approach to disclosure (like other aspects of evidence-taking) will inevitably be

significantly influenced by the legal training and experience of its members. In particular,
there historically have been, and still remain, important differences between civil law and
common law approaches to disclosure and discovery.21
In most civil law jurisdictions, inquisitorial traditions do not provide for party-initiated (or
other) disclosure. Evidence-taking is largely controlled by the court and the parties have
virtually no rights to demand relevant materials from one another or from witnesses; equally,
civil law courts seldom order parties to produce materials which they had not voluntarily
proffered as evidence. Consequently, a tribunal composed entirely of civil lawyers,
particularly civil lawyers with limited international experience, will not infrequently be
reluctant to order disclosure and skeptical about the benefits of such a procedure.
On the other hand, common law practitioners have historically viewed a broad, party-
initiated disclosure process as an inevitable feature of dispute resolution and are often
reluctant to deny either party the use of that right. Thus, a tribunal of three English or U.S.-
trained arbitrators will, in all likelihood, assume that the parties should be permitted to
exchange disclosure requests and that some substantial measure of document disclosure is
essential to a fair and reliable proceeding.
Despite these generalizations, the importance of the differences between civil and common
law backgrounds to the disclosure process is often exaggerated. While influenced by their legal
training, experienced arbitrators in cases with parties of diverse nationalities will usually seek
to arrive at procedural decisions that are “international,” rather than replicating parochial
procedural rules in local courts. Moreover, individual characteristics of the arbitrators – age,
experience, temperament, intelligence, time commitments – influence their procedural
preferences. Also important are the identities and procedural preferences of counsel to the
parties: where both parties’ counsel have similar expectations and legal backgrounds, this will
significantly influence the tribunal’s procedural decisions.
As a practical matter, the specifics of the parties’ dispute also significantly affect the
availability and nature of disclosure. Indeed, one of the advantages of arbitration is the
possibility of tailoring procedures to a specific set of factual and legal issues to provide an
efficient and accurate fact-finding mechanism. In cases where one party alone has access to
essential factual materials (e.g., a licensee’s sales of a product, the value/profitability of a
business in a post-M&A dispute), discovery may be particularly appropriate. On the other
hand, where a party seeks to conduct a fishing expedition into its adversary’s files in order to
challenge a witness’s credibility, discovery will usually be inappropriate.
The foregoing considerations make it impossible to identify a single “standard” approach
to disclosure in international arbitration. Nevertheless, there is an emerging consensus that a
measure of document disclosure is desirable in most commercial disputes. Justice is almost
always best served by a degree of transparency, which brings the relevant facts before the
arbitrators; justice, as well as efficiency, is also best served by ensuring disclosure of the
relevant facts sufficiently in advance of the hearing so that the parties can prepare their cases
in light of these facts. This consensus is reflected in the IBA Rules on the Taking of Evidence
(discussed below), as well as in the weight of contemporary arbitral practice.22

[2] No Automatic Right of Parties to Request Disclosure

As discussed above, even where disclosure is permitted, institutional rules and national law
generally do not grant the parties any automatic right to make disclosure demands on other
parties (or non-parties) as a matter of course. As a practical matter, disclosure instead
generally occurs only if ordered by the tribunal (see the excerpt below), usually as part of its
initial procedural timetable for the arbitration; if disclosure is contemplated, that timetable
will provide the parties with specified opportunities to make requests for disclosure (but not
a general, unqualified right to seek discovery). This reflects the practice in international
arbitration for the tribunal to retain reasonably close control over the proceedings (as
distinguished from the party-directed procedures in some common law jurisdictions).
 Procedural Order of 21 June 2004 in ICC Case 1229623
“4. On or before May 14, 2004, each Party shall submit to the Arbitral Tribunal and to
the other Party any Request to Produce Documents. The Request to Produce
Documents shall follow the procedures identified in Article 3 of the IBA Rules. The
Party to whom a Request to Produce Documents is directed shall: (1) within 15 calendar
days of receipt of the Request produce to the other Party all documents in its
possession, custody or control as to which no objection is made; and (2) within 15
calendar days of receipt of the Request submit to the other Party and the Arbitral
Tribunal any objections to the Request to Produce Documents. The Arbitral Tribunal
shall, in consultation with the Parties and in a timely fashion, consider the Request to
Produce Documents and the objections and may enter such orders as authorized by
Article 3 of the IBA Rules. The Parties shall, prior to the submittal of any Request to
Produce Documents to the Tribunal, make a good faith effort to resolve issues regarding
the production of documents without resort to the Arbitral Tribunal.

5. On or before August 13, 2004, the Parties shall take whatever steps are legally
available to obtain production of documents from a person or organization who is not a
Party to the Arbitration. Any requests to produce documents directed to a person or
organization who is not a Party to the Arbitration shall follow the procedures set forth
in Article 3.8 of the IBA Rules. The Parties stipulate that the Federal Arbitration Act
(FAA) shall govern the obtaining of documents and testimony from third parties. Each
Party shall reasonably cooperate in the efforts of the other Party to obtain evidence
from third parties, including, where appropriate, consenting to the release of information
by third parties. The Arbitral Tribunal shall have authority to resolve any dispute
between the Parties over such cooperation and shall have the authority to order either
Party to consent to the release of information by third parties.”

[3] Commonly-Used Procedural Frameworks for Document Disclosure

Although generalizations are risky, the IBA Rules on the Taking of Evidence in International
Arbitration set forth a relatively frequently-used, and sensible, procedure for tribunal-ordered
document disclosure in international arbitration, which seeks to bridge differences between
different legal traditions. Under this procedure, each party will disclose in advance all of the
documents on which it intends to rely in support of its case (usually appended to its
principal written submission). Thereafter, under Article 3 of the IBA Rules, each party will
be permitted (on or by a date fixed by the tribunal) to request that specified documents or
categories of documents be disclosed by its adversary. The parties’ document requests are
required to detail the relevance and materiality of the requested documents, by reference to
the parties’ submissions regarding their claims and defenses.
The parties will then typically be allowed a specified time period (generally, a few weeks)
to respond to the document requests, either by producing the requested documents or setting
forth reasons for refusing to do so, including objections on grounds of immateriality,
privilege, or burdensomeness.24 These objections are sometimes ordered to be presented in
the form of a table (occasionally termed a “Redfern Schedule,” after the arbitrator credited
with introducing this format) listing categories of documents that are requested and the
objections to production. The requesting party is often permitted a brief period of time in
which to respond to objections (often also in tabular form).
If a party’s discovery requests are not voluntarily complied with by the adverse party, an
application requesting an order compelling disclosure can be made to the tribunal. The
tribunal will typically encourage the parties to comply voluntarily with one another’s
requests; if its encouragement is not heeded, the tribunal will make an order either granting or
denying the parties’ requests and providing summary explanations for the tribunal’s
rulings.25

[4] Scope of Disclosure

One of the most significant issues to arise if disclosure is permitted in an arbitration is the
scope or extent of the materials that must be produced by a party. Although disclosure in
international arbitration is common, the scope of such disclosure continues to differ
significantly from its counterpart in common law courts. As one U.S. court succinctly put it:

The fundamental differences between the fact-finding process of a judicial tribunal and
those of a panel of arbitrators demonstrate the need of pretrial discovery in the one and
its superfluity and utter incompatibility in the other.26

These comments are in fact overbroad. There are cases where disclosure is not
“incompatible” with the arbitral process, but instead essential. Equally, there are many cases
where, for precisely this reason, arbitrators order a considerable measure of disclosure.
Nonetheless, as a practical matter, arbitral tribunals are often reluctant to order disclosure as
readily, or to the same extent, as in many common law litigations.
Rather, in ordering disclosure, arbitrators typically require only production of reasonably
well-identified documents or categories of documents that are material to disputed issues.
Tribunals do not typically require broader document discovery (absent agreement to this
effect by the parties), and sometimes order even more limited disclosure. These limitations
are reflected in the IBA Rules on the Taking of Evidence. The basic standard established
under the IBA Rules is that parties will be required to produce documents in their
possession, custody, or control that are relevant and material to issues in dispute between the
parties in the arbitration. According to Article 3(6) of the IBA Rules:

The Arbitral Tribunal may order the Party to whom such Request is addressed to
produce to the Arbitral Tribunal and to the other Parties those requested documents in
its possession, custody or control as to which the Arbitral Tribunal determines that (i)
the issues that the requesting Party wishes to prove are relevant and material to the
outcome of the case, and (ii) none of the reasons for objection set forth in Article 9.2
apply.

In practice, tribunals generally exercise their disclosure powers consistently with the IBA
Rules. Tribunals are usually unwilling to permit “fishing expeditions” aimed at identifying
possible claims or sources of further inquiry, rather than at adducing evidence in support of
existing claims. Instead, in most instances, disclosure is ordered only of documents that are
“relevant and material” to issues that are decisive to the “outcome of the case.”27

[5] Privilege in International Arbitration

Most national litigation systems recognize various sorts of privilege. Issues of privilege and
related matters often arise in international arbitrations when disclosure is ordered. These can
include traditional testimonial privileges or rules of confidentiality (such as attorney-client
privileges, doctor-patient privileges, or state secrets), as well as the admissibility of
settlement communications and communications between counsel.28
There is limited authority concerning the treatment of privileges in international arbitration.
Arbitration statutes are uniformly silent regarding the treatment of issues of privilege. Neither
the Model Law, nor other arbitration legislation, address the subject. The same is true of
many institutional rules, including the UNCITRAL, ICC, LCIA and ICSID Rules.
Nonetheless, tribunals almost uniformly recognize parties’ rights to rely on evidentiary
privileges. This is consistent with the general principle that, unless otherwise agreed, the
tribunal in an international arbitration will give effect to the parties’ legal rights under
applicable law. Similarly, national courts have generally assumed that otherwise-applicable
privileges are unaffected either by the parties’ agreement to arbitrate or the fact that it is the
tribunal (rather than a court) that has ordered disclosure.29
Assuming that privileges can, in principle, be asserted in international arbitration, the
question arises as to what law governs the existence and scope of a privilege.30 Potentially
applicable laws include the procedural law of the arbitration, the law governing the parties’
arbitration agreement and the law most closely connected to the allegedly privileged
communication.
The conflict of laws principles developed in the context of international litigation should,
in principle, be relevant in international arbitral proceedings. This litigation has usually
concerned the privileges associated with legal advisers. In the United States, courts have
looked to the center of gravity of communications, often applying the law of the jurisdiction
in which the lawyer whose communications are at issue is qualified.31 Other authorities have
looked to the jurisdiction with which communications have their “closest connection,” often
applying the law of the place where the communication was made or the client is located.32
In contrast, a few tribunals have adopted a different approach, applying the most protective
privilege standard applicable to either party to both parties on the apparent theory of
equality of treatment.33

[6] Electronic Disclosure

An increasingly common issue in international arbitration is so-called “electronic disclosure”

of emails and other electronic documents.34 As in national court litigations, electronic
disclosure raises important issues of cost, practicality and timing. In general, arbitral tribunals
have been willing to order, and efficiently manage, the disclosure of electronic documents as
part of their broader mandate of ascertaining the facts at issue in the arbitration.

[E] Sanctions for Failure to Comply with Disclosure and Other Orders
Parties sometimes fail to comply with an arbitral tribunal’s disclosure orders (for example, by
refusing to produce requested documents). When this occurs, the question arises as to what
sanctions, if any, a tribunal may impose.
In most jurisdictions, arbitrators lack the power to impose criminal or quasi-criminal
sanctions (i.e., civil contempt, monetary fines) like those which may be imposed by a
national court in domestic litigation. Nothing in the UNCITRAL Model Law or other leading
common law or civil law arbitration legislation empowers arbitrators to impose fines or other
penalties on either parties or non-parties to an arbitration; there are few exceptions to this
approach (Belgium being most notable). On the contrary, commentary and awards frequently
observe that arbitrators lack coercive authority. 35 Despite this, a number of courts have
upheld the authority of tribunals to impose monetary sanctions on a party for its refusal to
comply with disclosure orders; it is difficult to see why, if the parties’ arbitration agreement
permits such sanctions, tribunals should not be free to impose them.36
It is possible, but unusual, for arbitrators to seek enforcement of their discovery orders in
national courts. (As discussed below, many national laws authorize the tribunal and/or the
parties to seek judicial assistance in obtaining disclosure of evidentiary materials that have
not been voluntarily produced to the tribunal).37 In general, however, the delays and
uncertainty that arise from applications to national courts ordinarily make this an
unattractive option.
Rather than impose sanctions or seek judicial enforcement of discovery orders, arbitrators
are more likely to draw adverse inferences from a party’s refusal to produce requested
documents or witnesses. This authority is recognized in some institutional rules, as well as
the IBA Rules.38 The tribunal’s power to draw adverse inferences is also well-recognized in
arbitral authority and national court decisions.39 There are cases where national courts have
concluded that a tribunal exceeded its authority in drawing adverse inferences, but this is rare.

§9.02 ROLE OF NATIONAL COURTS IN OBTAINING EVIDENCE FOR

USE IN INTERNATIONAL ARBITRATIONS

As discussed above, most disclosure in international arbitration occurs within the context of
the arbitration, between the parties and under the control of the tribunal. Nevertheless, there
are instances in which the tribunal (or, more rarely, the parties) may seek the assistance of a
national court in obtaining disclosure for use in the arbitration. This is particularly likely
where disclosure is sought from non-parties to the arbitration, but is also available against
parties. Judicial assistance of this sort is available only when provided for by national law
and, as a practical matter, is infrequently sought.

[A] National Arbitration Legislation

Arbitration legislation in many jurisdictions provides that a tribunal may obtain the
assistance of a national court in taking evidence. These legislative provisions are broadly
similar to statutes providing for judicial assistance in granting provisional relief (discussed
below).40

[1] UNCITRAL Model Law

Article 27 of the UNCITRAL Model Law is representative of arbitration statutes providing

for judicial assistance in evidence-taking. Article 27 provides “[t]he arbitral tribunal or a
party with the approval of the arbitral tribunal may request from a competent court of this
State assistance in taking evidence. The court may execute the request within its competence
and according to its rules on taking evidence.”
The Model Law provides for the tribunal, or a party “with the approval of the arbitral
tribunal,” to seek judicial assistance in evidence-taking. Importantly, Article 27 does not
permit a party – acting without the tribunal’s approval – to seek judicial assistance in taking
evidence. Rather, as with other aspects of the arbitral procedure, the arbitrators retain control
over applications for judicial assistance. It also appears that Article 27 is available only for
tribunals seated within national territory (and not in foreign-seated arbitrations).
It is generally accepted that the tribunal enjoys broad discretion over evidence-taking and
determining whether particular items are, or are not, evidence. The purpose of Article 27 of
the Model Law is to enable tribunals to seek assistance from courts in enforcing a discovery
order (not to disable tribunals from ordering and receiving the production of evidence). The
drafting history of the Model Law underscores this point by explaining that a court “may
take the evidence itself ... or it may order that the evidence be provided directly to the arbitral
tribunal, in which case the involvement of the court is limited to exerting compulsion.”41

[2] Other National Arbitration Legislation

Likewise, Article 184 of the Swiss Law on Private International Law provides that arbitral
tribunals seated in Switzerland may seek the assistance of Swiss courts in taking evidence:

If the assistance of state judiciary authorities is necessary for the taking of evidence, the
Arbitral Tribunal or a party with the consent of the Arbitral Tribunal, may request the
assistance of the state judge at the seat of the Arbitral Tribunal; the judge shall apply his
own law.

Swedish law is similar, with §26 of the Swedish Arbitration Act granting parties to an
arbitration seated in Sweden the right, with the approval of the arbitrators, to seek the
assistance of local courts in sworn witness testimony or the production of documents (“as
evidence”). Other arbitration legislation is comparable.42

[3] United States

The FAA adopts a somewhat different approach to court-ordered discovery than the Model
Law. Section 7 of the FAA grants a tribunal seated in the United States authority to order
testimony and document production, including by third parties, in certain circumstances. At
the same time, §7 also provides for judicial assistance in taking evidence at the request of one
of the parties to the arbitration (as distinguished from the arbitrators). If the arbitrators’
orders are not complied with, §7 authorizes the tribunal to seek judicial assistance in
compelling compliance.
U.S. courts have adopted divergent approaches to the scope of judicial assistance in
ordering “discovery” under §7. Some lower courts have held that §7 does not permit a
tribunal to obtain judicial assistance in obtaining pre-hearing “discovery” from third parties
(whether document discovery or depositions), but instead only permits a tribunal to require
the production of “evidence” at an evidentiary hearing.43 Other U.S. courts appear to have
held that §7 allows an arbitrator, in principle, to obtain judicial assistance to compel third
parties to provide pre-hearing discovery, but have limited the scope of such assistance,
requiring either showings of need or materiality.44 In one court’s words:

However great a respect we owe the arbitrators, it is a fact that when the statute [§7 of
the FAA] imposed upon the District Court the duty to determine whether or not to
compel the attendance of a witness and his production of papers, it imposed upon the
Court the duty to determine whether or not the proposed evidence is material.45

Some U.S. courts have been reluctant to second-guess arbitrators’ determinations concerning
materiality, and have enforced what appear to be fairly broad pre-hearing discovery orders
issued by arbitrators pursuant to §7, including orders requiring disclosure from third
parties.46
Section 7 of the FAA is the leading exception to the general rule that parties (as
distinguished from an arbitral tribunal) cannot independently obtain judicial assistance from
national courts in taking evidence for use in an international arbitration. Applying the FAA, a
number of U.S. courts have held that §7 permits court-ordered discovery at the request of a
party in “exceptional circumstances.”47 These courts have generally required a fairly
compelling need for particular evidence, that otherwise will likely be unavailable, in an
arbitration, as well as a showing that the tribunal itself is unable to take or safeguard the
evidence.
Nonetheless, a few lower U.S. courts have found what appear to be fairly routine requests
for pre-arbitration discovery by parties to the arbitration to be sufficiently “exceptional” to
grant relief. These decisions have typically placed emphasis on the absence of any delay to
the arbitral process resulting from court-ordered discovery.48 Despite the foregoing decisions,
some U.S. courts have refused requests by parties for court-ordered discovery in aid of
arbitration.49 They have generally cited the concerns identified above regarding judicial
assistance to parties (rather than the arbitrators).
In addition to the FAA, state law in the United States often provides local courts with
authority to order disclosure in connection with locally-seated arbitrations. For example,
§7505 of the N.Y. C.P.L.R. authorizes arbitrators and parties to arbitrations seated in New
York to issue subpoenas demanding the testimony of witnesses or production of documents;
enforcement of the subpoena is, in principle, available in New York courts. Similar authority
exists under §17 of the Revised Uniform Arbitration Act.

[B] Judicial Assistance in Evidence-Taking in “Foreign” Arbitrations

[1] Section 1782

In addition to §7 of the FAA, 28 U.S.C. §1782 grants U.S. courts the power to order
discovery “for use in a proceeding in a foreign or international tribunal.”50 Section 1782 was
designed principally to provide U.S. judicial assistance in connection with foreign judicial
proceedings. Nevertheless, the provision has been relied upon for court-ordered discovery in
aid of foreign arbitrations. This has raised several interpretative issues under §1782, focusing
on the provision’s applicability in the context of international arbitration.
First, there is controversy as to whether an arbitral tribunal may be a “foreign or
international tribunal” within the meaning of §1782. The plain language of §1782 would
certainly indicate that the provision extends to arbitral “tribunal[s].” Nevertheless, a number
of U.S. courts initially rejected this conclusion, reasoning that “the fact that the term ‘foreign
or international tribunals’ is broad enough to include both state-sponsored and private
tribunals fails to mandate a conclusion that the term, as used in §1782, does include both”:
“we are confident that a significant congressional expansion of American judicial assistance to
international arbitral panels [sic] created exclusively by private parties would not have been
lightly undertaken by Congress without at least a mention of this legislative intention.”51 On
the other hand, more recent U.S. judicial decisions have generally concluded that §1782 does
apply to international arbitral proceedings.52
Second, assuming that §1782 applies in principle to arbitral tribunals, application of the
provision then presents the question of who may seek judicial assistance from a U.S. court.
As noted above, §1782 is by its terms available to both foreign “tribunals” and “interested
person[s]” in such foreign proceedings.
Despite the provision’s expansive text, §1782 should generally not be interpreted to grant
discovery applications by a party to foreign arbitral proceedings, but rather by the tribunal
itself. Except in rare cases, party-initiated discovery in U.S. courts under §1782 could delay
and complicate arbitral proceedings, and would be contrary to the parties’ commitment, in
their arbitration agreement, to forego dispute resolution mechanisms outside the arbitral
process. These risks are particularly serious where a U.S. court is asked – without the
approval of the tribunal – to “assist” a foreign arbitration. Only in exceptional cases (where
no tribunal has been constituted and where urgent assistance by a U.S. court is critical to
prevent irreparable harm) should a party’s request for judicial assistance under §1782 in aid
of a foreign arbitration be granted.
Third, §1782 is limited to providing U.S. judicial assistance in connection with proceedings
before a “foreign or international” tribunal. Although the matter is not settled, it is doubtful
that this definition would encompass an arbitral tribunal sitting in the United States; rather,
§1782 is likely limited to providing assistance to tribunals sitting abroad.

[2] Other National Arbitration Legislation

Some arbitration legislation provides for judicial assistance by local courts only to
arbitrations seated locally, not to “foreign” arbitrations. That is true of the UNCITRAL
Model Law (Articles 1(2) and 27) and the Swiss Law on Private International Law (Articles
176(1), 184(2)). Other states adopt a more liberal approach. The judicial assistance
authorized by §43 of the English Arbitration Act, 1996, is in general available only in aid of
arbitrations seated in England, and only as to witnesses located in the United Kingdom.53
Nonetheless, §2(3) of the Arbitration Act provides for the possibility of discretionary
judicial assistance in aid of a foreign arbitration.
The most liberal approach to the provision of judicial assistance in aid of a foreign
arbitration is that of the United States. In several decisions, U.S. courts have ordered
discovery in aid of foreign arbitrations under §7 of the FAA.54 As discussed above, judicial
assistance in aid of foreign arbitrations has generally been ordered by U.S. courts under §7
only in “exceptional circumstances,” comparable to those justifying court-ordered provisional
measures. Similarly, as already discussed, at least some U.S. courts have permitted the use of
§1782 in connection with “foreign” arbitrations, seated outside the United States.

[C] Inapplicability of Hague Evidence Convention to Evidence-Taking in

International Arbitration
A leading mechanism for obtaining judicial assistance in taking evidence for use in litigations
in national courts is the Hague Evidence Convention.55 It is sometimes suggested that the
Hague Evidence Convention is available in aid of international arbitral proceedings. The text
of the Convention provides little support for such suggestions.56 In practice, the Convention
is virtually never raised, much less used, in international arbitral proceedings.
_________________________
1. See supra pp. 148–49.
2. UNCITRAL Model Law, Art. 27 (“ The arbitral tribunal or a party with the approval of the arbitral tribunal may
request from a competent court of this State assistance in taking evidence. The court may execute the request within
its competence and according to its rules on taking evidence.”). See infra pp. 189–90.
3. UNCITRAL Model Law, Art. 19(2) (“ The arbitral tribunal may, subject to the provisions of this Law, conduct the
arbitration in such a manner as it considers appropriate. The power conferred upon the arbitral tribunal includes
the power to determine the admissibility, relevance, materiality and weight of any evidence.”).
4. See Report of the Secretary-General on the Analytical Commentary on Draft Text of a Model Law on
International Commercial Arbitration, UN Doc. A/CN.9/264, Art. 19, ¶6, XVI Y.B. UNCITRAL 104 (1985).
5. See supra pp. 148–49.
6. The same is true for German and Austrian law, see German ZP O, §1042; Austrian ZP O, §594. The right to seek
judicial assistance in obtaining evidence implies a power to order disclosure of evidence by the parties.
7. French Code of Civil Procedure, Art. 1467(3) (“ Where a party has in his possession an item of evidence, the
arbitrator may enjoin him to produce the same.”).
8. See, e.g., Belgian Judicial Code, Art. 1696(1) (“ [The tribunal] may also order the production of documents held by
a party ....”); Japanese Arbitration Law, Art. 32(3) (“ hearings for the purpose of ... inspection of goods, other
property or documents”).
9. English Arbitration Act, 1996, §§1(b), 34(1).
10. See G. Born, International Commercial Arbitration 1877–84, 1890–95 (2009).
11. See supra pp. 149–51.
12. Order in ICC Case No. 5542, in D. Hascher (ed.), Collection of Procedural Decisions in ICC Arbitration 1993–
1996 62, 64–65 (1997). See G. Born, International Commercial Arbitration 1887–91 (2009).
13. Order in ICC Case No. 5542, in D. Hascher (ed.), Collection of Procedural Decisions in ICC Arbitration 1993–
1996 62 (1997).
14. LCIA Rules, Art. 22(1)(c).
15. LCIA Rules, Art. 22(1)(e).
16. D. Caron, L. Caplan & M. Pellonpää, The UNCITRAL Arbitration Rules: A Commentary 576 (2006) (“ Rather
than a standard of possibly relevant, the party requesting the production must establish the materiality of the
documents to a claim or defense.”).
17. See, e.g., INA Corp. v. Islamic Republic of Iran , Award No. 184-161-1 (13 August 1985), 8 Iran-US C.T.R. 373,
382 (1985).
18. See G. Born, International Commercial Arbitration 1886–90 (2009).
19. See, e.g., Order in ICC Case No. 5542, in D. Hascher (ed.), Collection of Procedural Decisions in ICC
Arbitration 1993–1996 62 (1997); Preliminary Award in ICC Case No. 6401, 7(1) Mealey’ s Int’ l Arb. Rep. B-1
(1992); Judgment of 6 September 1996, 15 ASA Bull. 291, 305 (Swiss Federal Tribunal) (1997). See also D.
Caron, L. Caplan & M. Pellonpää, The UNCITRAL Arbitration Rules: A Commentary 592–601 (2006)
(miscellaneous disclosure orders).
20. Under the IBA Rules on the Taking of Evidence, a party seeking disclosure from third-parties may request the
tribunal to exercise whatever powers it may have under relevant national law. IBA Rules on the Taking of
Evidence, Art. 3.8 (“ If a Party wishes to obtain the production of documents from a person or organization who
is not a Party to the arbitration and from whom the Party cannot obtain the documents on its own, the Party may,
within the time ordered by the Arbitral Tribunal, ask it to take whatever steps are legally available to obtain the
requested documents. ... The Arbitral Tribunal shall decide on this request and shall take the necessary steps if in
its discretion it determines that the documents would be relevant and material.”).
21. See G. Born, International Commercial Arbitration 1892–94 (2009).
22. See G. Born, International Commercial Arbitration 1895–98, 1905–08 (2009).
23. Special Supplement 2010: Decisions on ICC Arbitration Procedure: A Selection of Procedural Orders issued by
Arbitral Tribunals acting under the ICC Rules of Arbitration (2003–2004).
24. IBA Rules on the Taking of Evidence, Arts. 3(4), 3(5), 9(2).
25. See G. Born, International Commercial Arbitration 1896–98 (2009).
26. Comm. Solvents Corp. v. Louisiana Liquid Fertilizer Co., 20 F.R.D. 359 (S.D.N.Y. 1957).
27. Documents need only be prima facie relevant and material to resolution of the parties’ dispute – in the sense that
they appear likely to contain information material to resolving what appear to be disputed issues. At the stage of
document disclosure it is impossible to be certain that particular documents will in fact contain relevant
information, or that this information will be material: the most that can be done is make prima facie judgments of
likely materiality. See G. Born, International Commercial Arbitration 1905–08 (2009).
28. See G. Born, International Commercial Arbitration 1909–15, 2314–15 (2009).
29. See G. Born, International Commercial Arbitration 1911–12 (2009).
30. Although most developed states recognize the existence of privileges, there are significant differences in the
nature and scope of privileges in different legal systems. In particular, there are differences in the categories of
privilege that are recognized, the treatment of waiver of privileges, the persons entitled to invoke privileges (e.g.,
in-house counsel) and the scope of privileges. As a consequence, choice-of-law disputes frequently arise
regarding the existence and contents of privileges in international arbitration.
31. G. Born & P . Rutledge, International Civil Litigation in United States Courts 1022–23 (5th ed. 2011).
32. G. Born, International Commercial Arbitration 1912–13 (2009).
33. Investment arbitrations can raise particular issues of privilege concerning the effects of “ state secrets” or similar
claims to governmental secrecy.
34. See Devey, Electronic Discovery/Disclosure: From Litigation to International Commercial Arbitration, 74
Arb. 369 (2008).
35. G. Born, International Commercial Arbitration 1917 (2009).
36. E.g., Superadio Ltd P’ship v. W instar Radio Prods., LLC , 844 N.E.2d 246 (Mass. 2006) (“ The [provisions of
the AAA Rules granting arbitrators’ remedial and discovery authority], construed together, and supported by
the broad arbitration provision in the agreement and the absence of any limiting language prohibiting a monetary
sanction for discovery violations, authorized the panel to resolve discovery dispute by imposing monetary
sanctions.”).
37. See infra pp. 189–91.
38. See IBA Rules on the Taking of Evidence, Arts. 4.8, 5.5, 9.4, 9.5 (“ If a Party fails without satisfactory
explanation to make available any other relevant evidence, including testimony, sought by one Party to which
the Party to whom the request was addressed has not objected in due time or fails to make available any evidence,
including testimony, ordered by the Arbitral Tribunal to be produced, the Arbitral Tribunal may infer that such
evidence would be adverse to the interests of that P arty.”).
39. See, e.g., INA Corp. v. Islamic Republic of Iran , Award No. 184-161-1 (13 August 1985), 8 Iran-US C.T.R. 373,
382 (1985); Final Award in ICC Case No. 6497, XXIV Y.B. Comm. Arb. 71, 75–79 (1999); Forsythe Int’l, SA v.
Gibbs Oil Co., 915 F.2d 1017, 1023 n.8 (5th Cir. 1990). See also G. Born, International Commercial
Arbitration 1918–20 (2009).
40. See infra pp. 211–13.
41. Report of the Secretary-General on the Analytical Commentary on Draft Text of a Model Law on International
Commercial Arbitration, UN Doc. A/CN.9/264, XVI Y.B. UNCITRAL 104 (1985).
42. G. Born, International Commercial Arbitration 1924–25 (2009).
43. See, e.g., Hay Group, Inc. v. E.B.S. Acquisition Corp ., 360 F.3d 404, 406 (3d Cir. 2004) (no third party pre-
hearing discovery orders by arbitrators in any circumstances). See G. Born, International Commercial
Arbitration 1925–28 (2009).
44. See, e.g., COMSAT Corp. v. Nat’l Science Found., 190 F.3d 269, 271 (4th Cir. 1999) (§7 “ does not authorize an
arbitrator to subpoena third parties during pre-hearing discovery, absent a showing of special need or
hardship”). See G. Born, International Commercial Arbitration 1925–28 (2009).
45. Oceanic Transp. Corp. of Monrovia v. Alcoa Steamship Co., 129 F.Supp. 160 (S.D.N.Y. 1954).
46. See G. Born, International Commercial Arbitration 1925–28 (2009).
47. See, e.g., In re Deiulemar Compagnia di Navigazione SpA v. M/V Allegra, 198 F.3d 473, 479–81 (4th Cir. 1999)
(extraordinary circumstances before permitting court-ordered pre-hearing discovery); COMSAT Corp. v. Nat’l
Science Found., 190 F.3d 269, 278 (4th Cir. 1999).
48. See, e.g., Int’l Ass’n of Heat and Frost Insulators and Asbestos W orkers v. Leona Lee Corp ., 434 F.2d 192 (5th
 Cir. 1970) (apparently not requiring any showing of exceptional circumstance); Bigge Crane & Rigging Co. v.
Docutel Corp., 371 F.Supp. 240 (E.D.N.Y. 1973) (relying principally on size of claim, minimal cost of court-
ordered discovery, and absence of any showing that arbitration would be delayed).
49. See, e.g., Nat’l Broadcasting Co. v. Bear Stearns & Co., 165 F.3d 184 (2d Cir. 1999) (“ §7 explicitly confers
authority only upon arbitrators; by necessary implication, the parties to an arbitration may not employ this
provision to subpoena documents or witnesses.”); Suarez-Valdez v. Shearson Lehman/American Exp., Inc ., 858
F.2d 648 (11th Cir. 1988).
50. 28 U.S.C. §1782 (“ The district court of the district in which a person resides or is found may order him to give
his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or
international tribunal. The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or
international tribunal or upon the application of any interested person and may direct that the testimony or
statement be given, or the document or other thing be produced, before a person appointed by the court.”).
51. Nat’l Broadcasting Co. v. Bear Stearns & Co., 165 F.3d 184 (2d Cir. 1999).
52. See G. Born, International Commercial Arbitration 1932–34 (2009).
53. English Arbitration Act, 1996, §43(3)(a).
54. See, e.g., In re Deiulemar Compagnia di Navigazione SpA v. M/V Allegra , 198 F.3d 473 (4th Cir. 1999)
(permitting discovery in aid of a foreign arbitration in “ exceptional circumstances”); Comm. Solvents Corp. v.
Louisiana Liquid Fertilizer Co., 20 F.R.D. 359 (S.D.N.Y. 1957) (state court will not grant examinations before
trial in arbitration proceedings except under “ extraordinary circumstances”); In re Compañía Chilena de
Navegacion, 2004 WL 1084243, at *3 (E.D.N.Y. 2004) (observing that one of the “ exceptional circumstances”
in which discovery has been deemed proper is where a foreign vessel is about to leave port”).
55. Under the Convention, a “ judicial authority” in one Contracting State may send a “ letter of request” to the
Central Authority of another Contracting State, seeking assistance in obtaining evidence. The receiving state is,
in general, obliged to assist the requesting judicial authority. See G. Born & P. Rutledge, International Civil
Litigation in United States Courts 964–70 (4th ed. 2007).
56. Article I(2) of the Convention provides that “ A Letter [of Request] shall not be used to obtain evidence which is
not intended for use in judicial proceedings, commenced or contemplated.” Despite the arbitrators’ adjudicatory
powers and responsibilities, it is difficult to describe an arbitral tribunal as “ judicial authority.” It is equally
difficult to conceive that the Convention’ s drafters contemplated that arbitral tribunals would be permitted to
directly send letters of request to foreign Central Authorities or courts.
Chapter 10
Confidentiality and Transparency in International
Arbitration

Many proponents of international arbitration cite confidentiality as an important advantage

of the arbitral process. Among other things, as discussed in Chapter 1, confidentiality is
perceived as encouraging efficient, dispassionate dispute resolution, rather than emotive “trial
by press release”; reducing damaging disclosure of commercially-sensitive information to
competitors and others; and facilitating settlement by minimizing the role of public posturing.

§10.01 “CONFIDENTIALITY” VERSUS “PRIVACY”

It is important to distinguish between “privacy” and “confidentiality” in arbitration.

“Privacy” refers to the fact that, under virtually all arbitration statutes and institutional rules,
only parties to the arbitration agreement – and not third parties – may attend arbitral hearings
and participate in the proceedings. In contrast, “confidentiality” is typically used to refer to
the obligation not to disclose information concerning the arbitration to third parties.
Obligations of confidentiality extend not only to prohibiting third parties from attending the
arbitral hearings, but also to a party’s disclosure to third parties of hearing transcripts, as
well as written pleadings and submissions in the arbitration, evidence adduced in the
arbitration, materials produced during disclosure and arbitral award(s).
Proponents of confidentiality in international arbitration frequently argue that the
uniformly-accepted privacy of the arbitral process necessarily requires that the process also
be confidential (absent contrary agreement by the parties). One commentator has reasoned
“the concept of privacy would have no meaning if participants were required to arbitrate
privately by day while being free to pontificate publicly by night.”1 Critics of confidentiality
reject this analysis, treating the privacy of arbitral hearings as a comparatively narrow
concept, that does not necessarily entail or require broader confidentiality obligations.

§10.02 CONFIDENTIALITY UNDER NATIONAL ARBITRATION

LEGISLATION

The New York Convention does not address the confidentiality of international arbitral
proceedings. In the absence of international norms, national legal systems take differing
approaches to the question whether international arbitrations are presumptively confidential,
as well as to the scope of any implied confidentiality obligations.

[A] National Arbitration Legislation Generally Silent on Confidentiality

The UNCITRAL Model Law is representative of most arbitration legislation, being silent on
the subject of the confidentiality of the international arbitral process.2 Other arbitration
legislation is also silent with regard to confidentiality. This is true of the FAA, the Swiss Law
on Private International Law, the English Arbitration Act, the Japanese Arbitration Law and
most other contemporary legislation. Nonetheless, in adopting the Model Law, a few
jurisdictions have included confidentiality provisions for arbitral proceedings, including both
New Zealand and Spain, which modified their versions of the Model Law to include
requirements of confidentiality (absent contrary agreement by the parties).3

[B] Choice of Law Governing Confidentiality

The parties’ obligations of confidentiality in international arbitration are generally defined by

the law governing their arbitration agreement. This view is clearly correct in cases where the
parties’ arbitration agreement expressly addresses the subject of confidentiality: in these
instances, the validity and scope of confidentiality obligations are almost certainly governed
by the law applicable to the arbitration agreement. Similarly, the parties’ implied
confidentiality obligations are derived from their agreement to arbitrate, and it is therefore the
law governing this agreement that defines related, and implied, confidentiality obligations. In
many cases, as discussed in Chapter 2 above, the law governing the arbitration agreement will
be that of the arbitral seat, which is particularly appropriate with regard to issues of the
confidentiality of arbitral hearings and proceedings.

[C] Parties’ Autonomy with Regard to Confidentiality

Despite the silence of most arbitration legislation, legal systems almost uniformly recognize
the parties’ autonomy with regard to the confidentiality of international arbitral proceedings.
This is an application of the parties’ broader procedural autonomy, which, as discussed
above, is recognized under the New York Convention and most modern arbitral regimes.
Thus, consistent with the UNCITRAL Model Law’s general affirmation of the parties’
procedural autonomy, the Model Law’s drafting history makes clear that the parties’
agreements with regard to confidentiality will be given effect.4 Similarly, decisions in non-
Model Law jurisdictions have upheld the parties’ right to agree upon the confidentiality of
the arbitral proceedings.5 As one court held (in rejecting arguments for an implied obligation
of confidentiality): “If the parties wished to secure the confidentiality of the materials
prepared for or used in the arbitration and of the transcripts and notes of evidence given, they
could insert a provision to that effect in their arbitration agreement.”6
Any confidentiality provisions in the parties’ arbitration agreement are, of course, binding
only on the parties themselves, and not on third parties. Even as between the parties, there
are circumstances where an agreement requiring confidentiality will be unenforceable on
public policy grounds (e.g., securities reporting obligations).7

[D] Implied Obligations of Confidentiality

In many instances, the parties do not agree to confidentiality provisions in their arbitration
agreement. In these cases, national courts have reached a variety of conclusions with regard to
the confidentiality (or privacy) of international commercial arbitrations. Some courts have
recognized relatively extensive confidentiality obligations – implied from the existence of an
agreement to arbitrate. In contrast, other courts have rejected the notion of a general implied
obligation of confidentiality, holding that any such agreement must be express.

[1] Recognition of Implied Confidentiality Obligations

English courts have repeatedly held that arbitration agreements give rise to implied
obligations of confidentiality. One English court reasoned: “[t]he concept of private
arbitration derives simply from the fact that the parties have agreed to submit to arbitration
particular disputes arising between them and only them,” and “it is implicit in this that
strangers shall be excluded from the hearings and conduct of the arbitration.”8 In turn, the
privacy of the arbitral proceedings is held to imply the confidentiality of what is disclosed in
those proceedings to third parties, as an implied obligation of the arbitration agreement.
Subsequent English decisions affirmed this implied obligation of confidentiality, explaining
it as a general principle implied by law, while articulating guidelines regarding the nature of
confidentiality obligations for particular categories of materials. Under these decisions,
English courts have emphasized the confidentiality of non-public materials submitted in
arbitral proceedings (e.g., briefs, pleadings) or produced in the proceedings (e.g., documents
produced in disclosure), while permitting more liberal disclosure of arbitral awards in order to
protect a party’s legal rights.9
Recent judicial authority in Singapore adopts the English view of implied confidentiality
obligations. The Singapore High Court explained: “Rather than to say there is nothing
inherently confidential in the arbitration process, it is more in keeping with the parties’
expectations to take the position that the proceedings are confidential and that disclosures
can be made in the accepted circumstances.”10

[2] Non-Recognition of Implied Confidentiality Obligations

In contrast, decisions in a few jurisdictions have rejected claims of implied confidentiality

obligations. In a highly-publicized decision, an Australian court held that arbitration
proceedings in Australia were “private,” but that this did not mean that they were
“confidential.”11 The Court also held that if parties desired their arbitrations to be
confidential, they were free to agree to express confidentiality obligations (and that such
agreements would in principle be respected).
U.S. lower courts that have addressed the issue have been skeptical of claims that arbitral
proceedings are impliedly confidential, while indicating that express confidentiality
agreements would be given effect. For example, one U.S. court rejected a party’s objections
to producing submissions, documentary evidence and transcripts from an ICC arbitration in
discovery sought by a counter-party in a U.S. litigation.12 Other U.S. decisions have also
been skeptical of implied confidentiality obligations in connection with the arbitral process.13

§10.03 CONFIDENTIALITY UNDER INSTITUTIONAL ARBITRATION

RULES

As with national laws, there is diversity in the treatment of confidentiality in institutional

rules. Many institutional rules – particularly those which have recently been revised –
contain relatively broad confidentiality provisions. For example, the recently-adopted Swiss
Rules of International Arbitration provide, in Article 43(1):

Unless the parties expressly agree in writing to the contrary, the parties undertake as a
general principle to keep confidential all awards and orders as well as all materials
submitted by another party in the framework of the arbitral proceedings not otherwise
in the public domain, save and to the extent that a disclosure may be required of a party
by a legal duty, to protect or pursue a legal right or to enforce or challenge an award in
legal proceedings before a judicial authority.

Other institutional rules, including the LCIA and SCC rules, contain similar provisions,
forbidding the parties (or arbitrators) from disclosing materials from the arbitration to third
parties.14 One of the most extensive set of such confidentiality provisions is in the WIPO
Arbitration Rules, Articles 73 to 76 of which were tailored for intellectual property disputes,
where confidentiality concerns are especially acute.
 A few sets of institutional rules (particularly rules which have not recently been revised)
contain very limited confidentiality provisions, applicable only to specific aspects of the
arbitral process. The UNCITRAL Rules exclude non-parties from hearings, absent contrary
agreement, and forbid the disclosure of awards, again absent contrary agreement, while not
addressing other aspects of confidentiality.15 Similarly, after considerable debate, the drafters
of the 1998 and 2012 revisions to the ICC Rules rejected proposals for general confidentiality
obligations and instead provided only for the privacy of the arbitral hearings and
confidentiality of awards.16 Despite the limited scope of confidentiality provisions in the
ICC Rules, tribunals have generally concluded that ICC arbitrations are impliedly
confidential. One award reasoned that, “[w]hile the confidentiality of ICC arbitral
proceedings is not mentioned in the ICC Rules ... as a matter of principle, arbitration
proceedings have a confidential character which must be respected by everyone who
participates in such proceedings.”17
The IBA Rules on the Taking of Evidence contain a limited confidentiality provision,
requiring that documents produced by a Party or non-Party in the arbitration shall “be kept
confidential by the Arbitral Tribunal and the other Parties, and shall be used only in
connection with the arbitration.”18 In contrast, in some specialized market sectors (e.g.,
maritime), institutional rules provide for the publication of arbitral awards unless the parties
have agreed to the contrary. 19 The purpose of such publication is to provide precedential
authority and guidance for future disputes.

§10.04 CONFIDENTIALITY OF ARBITRATORS’ DELIBERATIONS

Under most national laws and institutional rules the deliberations of the arbitral tribunal are
treated as confidential.20 The same obligations of confidentiality are imposed by ethical and
professional guidelines for international arbitrators. The confidentiality of the arbitrators’
deliberations extends to draft awards, internal communications regarding disposition of a case
or comments on draft awards, and the content of oral deliberations.

§10.05 CONFIDENTIALITY IN INVESTOR-STATE ARBITRATION

The confidentiality provisions in many investor-state arbitrations are different from those in
most commercial settings. In general, arbitral proceedings and submissions in investment
arbitrations are significantly more “transparent,” and less confidential, than in international
commercial arbitrations.
The North American Free Trade Agreement (“NAFTA”) mechanisms for investor-state
arbitrations did not originally address the topics of confidentiality and transparency.
However, the NAFTA parties subsequently excluded most confidentiality obligations in
relation to investor-state arbitrations under Chapter 11. A joint statement of the NAFTA
parties purportedly interpreting Chapter 11 declared that “[n]othing in NAFTA imposes a
general duty of confidentiality on the disputing parties to a Chapter Eleven arbitration, and
subject to the application of Article 1137(4), nothing in the NAFTA precludes the Parties
from providing public access to documents submitted to, or issued by, a Chapter Eleven
tribunal.”21 Similarly, NAFTA tribunals have underscored the absence of any general
confidentiality obligation with regard to submissions and awards in such proceedings,
although noting that arbitral hearings may be confidential and that some documents submitted
in Chapter 11 proceedings may be confidential.22
Similarly, ICSID tribunals have frequently held that there is no general obligation of
confidentiality in ICSID arbitrations.23 Tribunals have distinguished between the obligations
of confidentiality in commercial arbitrations and in investor-state arbitrations under ICSID or
similar rules. According to one frequently-cited award:

The Tribunal considers that, whatever may be the position in private consensual
arbitration between commercial parties, it has not been established that any general
principle of confidentiality exists in an arbitration such as that currently before this
tribunal. The main argument in favor of confidentiality is founded on a supposed
implied term in the arbitration agreement. The present arbitration is taking place
pursuant to a provision in an international treaty, not pursuant to an arbitration
agreement between disputing parties.24

Another award put the matter even more directly, declaring that “[c]onsiderations of
confidentiality and privacy have not played the same role in the field of investment
arbitration, as they have in international commercial arbitration” and that “there is now a
marked tendency towards transparency in treaty arbitration.”25
At the same time, ICSID tribunals have displayed reservations concerning the publication
of materials from arbitral proceedings. In particular, a number of awards have, while
acknowledging a trend towards transparency in investor-state arbitrations, relied on concerns
of procedural integrity and non-aggravation of the parties’ dispute in imposing restrictions on
the parties’ publication of information concerning the arbitration. ICSID tribunals have
emphasized that “it would be of advantage to the orderly unfolding of the arbitral process if
during the proceedings [the parties] were to limit public discussion of the case to what is
considered necessary,” 26 and that their “mandate and responsibility includes ensuring that
the proceedings will be conducted in the future in a regular, fair and orderly manner,
[including] ensuring that potential inhibitions and unfairness do not arise ... [and] attempting
to reduce the risk of future aggravation and exacerbation of the dispute.”27 Relying on these
concerns, several tribunals have forbidden disclosure of materials submitted in the arbitration,
and have limited the parties’ public discussion of the arbitration, based on a mere risk of
aggravation, procedural disorder, or public pressure being exerted against one party.28
_________________________
1. Fortier, The Occasional Unwarranted Assumption of Confidentiality, 15 Arb. Int’ l 131 (1999) (emphasis in
original). See G. Born, International Commercial Arbitration 2250–53 (2009).
2. The drafters of the Model Law rejected even relatively narrow proposals to provide for the confidentiality of
awards and hearings, reasoning: “ It may be doubted whether the Model Law should deal with the question
whether an award may be published. Although it is controversial since there are good reasons for and against such
publication, the decision may be left to the parties or the arbitration rules chosen by them.” See Report of the
Secretary-General on Possible Features of a Model Law on International Commercial Arbitration, XII Y.B.
UNCITRAL 75, 90 (1981).
3. New Zealand Arbitration Act, Art. 14 (“ an arbitration agreement, unless otherwise agreed by the parties, is deemed
to provide that the parties shall not publish, disclose, or communicate any information relating to arbitral
proceedings under the agreement or to an award made in those proceedings”); Spanish Arbitration Act, Art. 24(2)
(“ The arbitrators, the parties and the arbitral institutions, if applicable, are obliged to maintain the confidentiality
of information coming to their knowledge in the course of the arbitral proceedings.”).
4. See Report of the Secretary-General on Possible Features of a Model Law on International Commercial
Arbitration, XII Y.B. UNCITRAL 75, 90 (1981) (confidentiality “ may be left to the agreement of the parties or the
arbitration rules chosen by the parties”).
5. G. Born, International Commercial Arbitration 2254–57 (2009).
6. Esso Australia Resources Ltd v. Plowman, XXI Y.B. Comm. Arb. 137, 151 (Australian High Court 1995) (1996).
See also Biwater Gauff ( Tanzania) Ltd v. United Republic of Tanzania, Procedural Order No. 3, ICSID Case No.
ARB/05/22 ( 29 September 2006), ¶115, available at http://icsid.worldbank.org (“ Parties are free, of course, to
conclude any agreements they choose concerning confidentiality. Any such agreements would give rise to rights
that are susceptible of protection by way of provisional measures or other appropriate relief.”).
7. G. Born, International Commercial Arbitration 2254–57 (2009).
8. Hassneh Ins. Co. of Israel v. Mew [1993] 2 Lloyd’ s Rep. 243 (Q.B.) (award is presumptively confidential, but is
also “ potentially a public document for the purposes of supervision by the courts or enforcement in them,” and
therefore may be disclosed if reasonably necessary to protect a party’ s legal rights; pleading, submissions and
evidence is presumptively confidential). See also Dolling-Baker v. Merrett [1991] 2 All E.R. 891, 896 (English
Court of Appeal); G. Born, International Commercial Arbitration 2258–60 (2009).
9. Hassneh Ins. Co. of Israel v. Mew [1993] 2 Lloyd’ s Rep. 243 (Q.B.); Ali Shipping Corp. v. Shipyard Trogir
[1998] 2 All E.R. 136 (English Court of Appeal) (exceptions to confidentiality include the “ establishment or
protection of an arbitrating party’ s legal rights vis-à-vis a third party”).
10. Myanma Yaung Chi Oo Co. v. W in W in Nu [2003] S.L.R. 547 (Singapore High Court). French courts have also
held that there is an implied obligation of confidentiality with regard to arbitral proceedings and awards. One
court held that a party’ s filing of an annulment action in Paris, in relation to an award made in London, for the
purposes of publicizing the decision, was a breach of the parties’ implied duties of confidentiality; the court
remarked that it is in the “ very nature of arbitral proceedings that they ensure the highest degree of discretion in
the resolution of private disputes, as the two parties had agreed.”Judgment of 18 February 1986, Aïta v. Ojjeh,
1986 Rev. arb. 583 (P aris Cour d’ appel) (emphasis added).
11. Esso Australia Resources Ltd v. Plowman, XXI Y.B. Comm. Arb. 137, 151 (Australian High Court 1995) (1996)
(refusing to recognize implied obligation of confidentiality on grounds that confidentiality was not “ an
essential attribute” of Australian-seated arbitrations).
12. United States of America v. Panhandle Eastern Corp., 118 F.R.D. 346 (C.D. Cal. 1988).
13. See, e.g., Caringal v. Karteria Shipping, Ltd , 2001 WL 874705 (E.D. La. 2001) (granting discovery request for
documents used in London arbitration); Contship ContainerLines, Ltd v. PPG Indus., Inc ., 2003 WL 1948807
 (S.D.N.Y. 2003) (same).
14. SCC Rules, Art. 46 (“ Unless otherwise agreed by the parties, the SCC Institute and the Arbitral Tribunal shall
maintain the confidentiality of the arbitration and the award.”); LCIA Rules, Art. 30.1 (“ Unless the parties
expressly agree in writing to the contrary, the parties undertake as a general principle to keep confidential all
awards in their arbitration, together with all materials in the proceedings created for the purpose of the arbitration
and all other documents produced by another party in the proceedings not otherwise in the public domain – save
and to the extent that disclosure may be required of a party by legal duty, to protect or pursue a legal right or to
enforce or challenge an award in bona fide legal proceedings before a state court or other judicial authority.”);
JCAA Rules, Art. 40(2).
15. UNCITRAL Rules, Arts. 28(3), 34(5).
16. The 2012 ICC Rules provide that the tribunal may make orders regarding the confidentiality of the proceedings
(Article 22(3)).
17. Award in ICC Case ( Unidentified), quoted in Fortier, The Occasional Unwarranted Assumption of
Confidentiality, 15 Arb. Int’ l 131, 132–33 (1999).
18. IBA Rules on the Taking of Evidence, Art. 3(13).
19. Society of Maritime Arbitrators Maritime Arbitration Rules, Art. 1 (“ Unless stipulated in advance to the
contrary, the parties, by consenting to these Rules, agree that the Award issued may be published by the Society
of Maritime Arbitrators, Inc. and/or its correspondents.”); Association of Maritime Arbitrators of Canada
P rocedural Rules, Art. 28.
20. See, e.g., French Code of Civil P rocedure, Art. 1479; AT& T Corp. v. Saudi Cable Co . [2000] 2 Lloyd’ s Rep. 127,
137 (English Court of Appeal). See also LCIA Rules, Art. 30(2); Swiss International Arbitration Rules, Art.
43(2); G. Born, International Commercial Arbitration 1630–32, 2268–69 (2009).
21. NAFTA Free Trade Commission, Notes of Interpretation of Certain Chapter 11 Provisions §A1 (31 July 2001),
available at www.international.gc.ca/trade-agreements-accords-commerciaux/disp-diff/nafta-interpr.aspx?
lang=en. Recent U.S. bilateral investment treaties contain similar provisions. Chile-U.S. Free Trade Agreement, 6
June 2003, Art. 10-20(1); Singapore-U.S. Free Trade Agreement, 6 May 2003, Art. 15.20(1), (2).
22. Metalclad Corp. v. United Mexican States , ICSID Award No. ARB( AF)/97/1 ( NAFTA) ( 30 August 2000), 40
Int’ l Legal Mat. 36, 39 (2001); The Loewen Group v. United States of America , Decision on Competence and
Jurisdiction, ICSID Case No. ARB( AF)/98/3 ( NAFTA) ( 5 January 2001), ¶26, at www.state.gov/s/l/c3439.htm.
23. Biwater Gauff ( Tanzania) Ltd v. United Republic of Tanzania , Procedural Order No. 3, ICSID Case No.
ARB/05/22 ( 29 September 2006), ¶¶121, 133, at http://icsid.worldbank.org; Amco Asia Corp. v. Republic of
Indonesia, Decision on Request for Provisional Measures, ICSID Case No. ARB/81/1 ( 9 December 1983), XI
Y.B. Comm. Arb. 159, 161 (1986).
24. S.D. Myers Inc. v. Gov’t of Canada , in NAFTA Procedural Order No. 16, (13 May 2000), ¶8, reprinted in,
Methanex Corp. v. United States of America, Final Submission in Support of Application for Amicus Standing –
IISD, (16 October 2000), ¶26, at www.naftaclaims.com.
25. Biwater Gauff ( Tanzania) Ltd v. United Republic of Tanzania , Procedural Order No. 3, ICSID Case No.
ARB/05/22 ( 29 September 2006), ¶114, at http://icsid.worldbank.org.
26. The Loewen Group v. United States of America , Decision on Competence and Jurisdiction, ICSID Case No.
ARB( AF)/98/3 ( NAFTA) ( 5 January 2001), ¶26, at www.state.gov/s/l/c3439.htm; Metalclad Corp. v. United
Mexican States, ICSID Award No. ARB( AF)/97/1 ( NAFTA) ( 30 August 2000), 40 Int’ l Legal Mat. 36, 39
(2001).
27. Biwater Gauff ( Tanzania) Ltd v. United Republic of Tanzania , Procedural Order No. 3, ICSID Case No.
ARB/05/22 ( 29 September 2006), ¶145, at http://icsid.worldbank.org.
28. See, e.g., Metalclad Corp. v. United Mexican States , ICSID Award No. ARB( AF)/97/1 ( NAFTA) ( 30 August
2000), 40 Int’ l Legal Mat. 36, 39 (2001); The Loewen Group v. United States of America , Decision on
Competence and Jurisdiction, ICSID Case No. ARB( AF)/98/3 ( NAFTA) ( 5 January 2001), ¶26, at
www.state.gov/s/l/c3439.htm.
Chapter 11
Provisional Measures in International Arbitration

Provisional measures play a significant role in international arbitration. Provisional measures

(also referred to as conservatory, protective, or interim relief), involve awards or orders
issued for the purpose of protecting a party from damage during the course of the arbitral
process. Most often, provisional measures are “intended to preserve a factual or legal
situation so as to safeguard rights the recognition of which is sought from the [tribunal]
having jurisdiction as to the substance of the case.”1 As discussed below, provisional
measures are potentially available from either an arbitral tribunal or a national court.

§11.01 ARBITRATORS’ AUTHORITY TO ORDER PROVISIONAL

RELIEF

The availability of provisional measures in international arbitration is dealt with principally

by national arbitration legislation and the parties’ arbitration agreement. In practice, as
discussed below, arbitral tribunals generally possess broad authority to order provisional
measures which arbitrators frequently exercise.

[A] Effect of National Arbitration Legislation on Arbitrators’ Authority to

Order Provisional Measures
National arbitration legislation has a significant impact on the availability of provisional relief
from international arbitral tribunals. An arbitrator will seldom grant provisional relief unless
satisfied that the law applicable to the arbitration (typically, the arbitration legislation of the
arbitral seat) allows the tribunal to do so. Likewise, tribunal-ordered provisional relief will
often not be enforceable in a national court unless the law(s) governing the arbitral
proceedings permits such relief.
Historically, national law frequently denied arbitrators the power to order interim
measures, notwithstanding the well-settled authority of other international tribunals to order
such relief.2 This was the case, for example, in Switzerland, where the 1969 Cantonal
Concordat reserved the power to issue provisional relief to Swiss courts (although arbitrators
were permitted to recommend interim relief).3 Legislation in other states imposed similar
prohibitions against tribunal-granted provisional measures.4 Over the past several decades,
most jurisdictions rejected prohibitions against provisional measures by arbitral tribunals.
Instead, they adopted legislation that confirms the arbitrators’ power to issue provisional
relief (provided this is consistent with the parties’ agreement); this power is subject to limits,
which vary from jurisdiction to jurisdiction. Most national legal systems also provide that
the parties will be presumed, absent contrary indication, to have agreed to permit the
arbitrators to grant provisional measures.
Although historic limitations on arbitrators’ power have been removed in most states,
some nations continue to impose mandatory prohibitions that forbid arbitrators from
ordering provisional relief. That remains the case, for example, in Italy, China, Quebec and
Argentina, where local law provides that the granting of provisional measures is reserved to
local courts, which are authorized to issue provisional relief in aid of arbitration.5
The UNCITRAL Model Law is a leading example of the trend towards arbitral authority
to grant interim relief. Article 17 of the Law, as adopted in 1985, provides that “[u]nless
otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any
party to take such interim measure of protection as the arbitral tribunal may consider
necessary in respect of the subject-matter of the dispute.” While the original text of Article
17 placed restrictions on a tribunal’s powers to order interim relief (i.e., such relief must be
“necessary” and “in respect of the subject-matter of the dispute”), it expressly confirms the
power of a tribunal to order a significant range of provisional measures (provided the parties’
arbitration agreement is not to the contrary).
Article 17 of the Model Law was extensively revised in 2006. Among other things, Article
17(1) was amended to provide that, “[u]nless otherwise agreed by the parties, the arbitral
tribunal may, at the request of a party, grant interim measures.” This formulation confirms
the expansive scope of Article 17, by omitting the provision’s original language that interim
measures may be granted where a tribunal considers them “necessary” and “in respect of the
subject-matter of the dispute.” Article 17 also presumes that the parties intended to confer
the power to order specified “interim measures of protection” on the tribunal and effectively
requires evidence of a contrary agreement to deny a tribunal such power.
In the United States, the FAA is silent on arbitrators’ powers to order provisional
measures. Although some early U.S. decisions held that arbitrators lacked authority to issue
provisional relief, more recent U.S. lower court decisions have consistently held that
arbitrators may issue provisional relief (absent contrary agreement).6 U.S. courts generally
hold that the parties’ agreement that the arbitrators have the power to grant interim measures
will be implied, absent F.Supp.2d 926, 937 (N.D. Cal. 2003) (“There is no question that an
arbitration panel has the authority to require contrary indication. As one U.S. decision
reasoned: “in general ..., in the absence of an agreement or statute to the contrary, an
arbitrator has inherent authority to order a party to provide security while the arbitration is
continuing.”7
Many other jurisdictions have taken courses similar to that under the Model Law and
FAA. Most such national laws rest on the premise that the arbitrators’ authority to grant
provisional measures will be implied and that an express agreement is required to withdraw
such power.8

[B] Law Applicable to Arbitrators’ Authority to Order Provisional Measures

In many cases, the law applicable to the tribunal’s power to grant provisional measures will
be the procedural law of the arbitration, typically the arbitration legislation of the seat. Most
awards look to the law of the seat as defining the arbitrators’ power to grant provisional
relief, as does most national court authority. 9 Likewise, arbitration statutes that address the
issue of the tribunal’s power to grant provisional measures are generally applicable (and only
applicable) in arbitrations seated within national territory. 10 As a practical matter, where the
law of the seat forbids arbitrators from ordering provisional measures, they will ordinarily
not do so.

[C] Effect of Institutional Arbitration Rules on Authority of Arbitrators to

Order Provisional Relief

Many institutional rules address the power of the arbitrators to grant provisional measures.
For the most part, these rules specifically provide arbitrators power to grant provisional
measures, usually in relatively broad terms.
The UNCITRAL Rules are representative of many institutional regimes. Article 26 of the
1976 UNCITRAL Rules grants a tribunal the power to issue “interim measures” which it
deems “necessary in respect of the subject matter of the dispute, including measures for the
conservation of the goods forming the subject matter of the dispute.” This provision grants
arbitrators broad powers to order provisional measures which they deem necessary, imposing
a modest limitation that such measures be “in respect of the subject-matter of the dispute.”
The 2010 UNCITRAL Rules provide more broadly that tribunals may issue interim relief
and that “[a]n interim measure is any temporary measure by which, at any time prior to the
issuance of the award by which the dispute is finally decided, the arbitral tribunal orders a
party, for example and without limitation,” to preserve the status quo, to refrain from actions
that cause imminent harm, or to preserve assets to satisfy an award.
More expansively than the original UNCITRAL Rules, Article 28 of the 2012 ICC Rules
grants a tribunal authority to order “interim or conservatory measure it deems appropriate,”
absent contrary agreement. To the same end, Article 25(1) of the LCIA Rules authorizes an
LCIA tribunal to order various provisional measures (including security for claims,
preservation of property, and any other relief which could be made in a final award), subject
to contrary agreement by the parties. The LCIA Rules also (unusually) grant the arbitrators
authority to order security for a party’s claim to recover its legal costs.

[D] Limitations on Arbitrators’ Authority to Order Provisional Relief

Although most jurisdictions now recognize the power of arbitral tribunals to order
provisional measures, there are significant limitations on this power. These limitations arise
in part from the nature of the arbitral process, which is a contractual mechanism between
particular parties, and which requires constitution of a tribunal for each dispute that arises;
these limitations also arise from the terms of some national arbitration statutes.

[1] Arbitrators’ Authority Limited to Parties

First, an arbitral tribunal’s powers are virtually always limited to the parties to the
arbitration. As a consequence, an arbitrator generally can (and will) order provisional
measures only against the parties to the arbitration. He or she will not have the power to
order, for example, attachment or preservation of property held by a third party.11

[2] Arbitrators’ Lack of Enforcement Authority

Second, an arbitral tribunal ordinarily lacks the authority directly to enforce its provisional
measures. Rather, as with final awards, such enforcement is the responsibility of national
courts, at the application of a party. 12 This is evident, for example, in the language of the
Swiss Law on Private International Law, which provides in Article 183(2) that “[i]f the party
so ordered [by the arbitral tribunal to take specified provisional measures] does not comply
therewith voluntarily, the arbitral tribunal may request the assistance of the competent
court.”

[3] Limitations on Arbitrators’ Authority

Third, arbitration legislation also sometimes limits a tribunal’s power to grant provisional
measures. For example, the original text of Article 17 of the 1985 UNCITRAL Model Law
grants arbitral tribunals the power to issue provisional measures which they “consider
necessary in respect of the subject matter of the dispute.” It is sometimes said that this
language limits the arbitrators’ authority to grant provisional measures to the particular
objects that are in dispute in an arbitration (e.g., disputed goods in a sale of goods case).13
Similarly, the English Arbitration Act provides tribunals power to grant provisional measures
“in relation to any property which is the subject of the proceedings or as to which a question
arises in the proceedings.”14 Other arbitration statutes are comparable.15

[4] No Interim Relief Until Tribunal is Constituted

Fourth, a tribunal cannot issue provisional measures until it has been constituted. This is
implied by arbitration legislation limiting the power to grant provisional measures to “arbitral
tribunals.” In any case, until a tribunal has been constituted, it has no powers and cannot
issue provisional measures. Institutional rules impose similar requirements, while sometimes
providing for “Emergency Arbitrators” or “referees” to issue interim relief prior to
constitution of a full tribunal.16

[E] Arbitrators’ Exercise of Authority to Order Provisional Relief

Most national laws do not address the standards that arbitrators apply in considering
whether to order provisional measures. That was true under Article 17 of the original
UNCITRAL Model Law and most other arbitration legislation.17 The 2006 revisions to the
Model Law adopt an alternative approach, with revised Article 17A providing that a party
seeking interim measures must satisfy the tribunal that specified conditions exist (irreparable
harm, outweighing possible injury to other parties; reasonable prospect of success on the
merits); as discussed below, these requirements parallel those applied in practice by arbitral
tribunals.
Institutional rules also typically do not provide meaningful standards for the grant of
provisional measures, usually providing only that a tribunal may issue the provisional relief
that it “deems necessary” or “appropriate.”18 These formulations merely confirm the
tribunal’s broad authority to grant provisional relief, and do not establish standards for when
that authority should be exercised.
In practice, most tribunals require showing of (a) serious or irreparable harm; (b) urgency;
and (c) no prejudgment of the merits, while some tribunals also require the claimant to
establish a prima facie case on the merits. Most tribunals also look to the nature of the
provisional measures that are requested, and the relative injury to be suffered by each party,
in deciding whether to grant such measures. In particular, some provisional measures (e.g.,
preserving the status quo or ordering performance of a contract) will typically require strong
showings of serious injury, urgency and a prima facie case, while other provisional measures
(e.g., preservation of evidence, confidentiality) are unlikely to demand the same showings.

[1] “Irreparable” or “Serious” Injury

First, tribunals frequently require that a party seeking provisional measures demonstrate that
it may suffer either “irreparable” or “serious” injury unless provisional relief is granted. In
the words of one award, “the Arbitral Tribunal may only order provisional measures, if the
requesting party has substantiated the threat of a not easily reparable prejudice.”19 Some
authorities suggest that “irreparable” harm is required for a grant of provisional measures. As
the tribunal in a leading ICSID award observed, “a provisional measure is necessary where
the actions of a party ‘are capable of causing or of threatening irreparable prejudice to the
rights invoked.’”20 In contrast, other authorities require only a showing of “serious” or
“substantial” harm, without requiring that the injury be “irreparable.”21 In reality, most
decisions which state that damage must be “irreparable” do not appear to apply this formula,
but instead require that there be a material risk of serious damage to the plaintiff.

[2] Urgency

Second, many authorities declare that interim relief requires a showing of “urgency.” That is,
the tribunal must be persuaded that immediate (or at least prompt) action is necessary in
order to prevent serious damage to the claimant. This requirement has been formulated as
follows:“The Arbitral Tribunal agrees that the criterion of urgency is satisfied when... ‘a
question cannot await the outcome of the award on the merits. This is in line with ICJ
practice.’”22 (In contrast, the 2006 revisions to Article 17A of the Model Law omit any
express reference to urgency.)
As with the requirement of “irreparable” harm, the “urgency” requirement is not
interpreted mechanically. Tribunals typically do not delay granting provisional measures
until dire consequences are only days away, but rather take a realistic view of the risk that
serious damage will occur prior to the end of the proceedings.23 As one award explained, “[a]
measure is urgent where action prejudicial to the rights of either party is likely to be taken
before such final decision is taken.”24

[3] No Prejudgment of the Merits

Third, it is often said that provisional measures must not “prejudge the merits” of the
underlying dispute. As a practical matter, tribunals do not adopt any uniform approach to
this requirement, although some awards conclude that it precludes issuance of interim relief in
the same terms as the final relief sought by a party.25

[4] Prima Facie Case or Probability of Success on Merits

Fourth, some tribunals have held that the party requesting provisional measures must
demonstrate a prima facie case on the merits of its claim (or, in other formulations, a
probability of prevailing on its claim).26 As formulated by one award, the tribunal should
undertake an “appreciation, although on a provisional basis, of the respective arguments of
the parties.”27 At the same time, other awards have refused to consider whether a party has
stated a prima facie case, saying that this conflicts with the requirement that provisional
measures not prejudge the merits of the tribunal’s final award.28

[5] Jurisdiction

It is also sometimes said that a tribunal requires jurisdiction in order to be able to issue
provisional measures. In fact, most authorities hold that a tribunal is able to issue provisional
measures notwithstanding the existence of a jurisdictional challenge. Thus, tribunals have not
infrequently ordered provisional relief notwithstanding an unresolved (and therefore possibly
well-founded) jurisdictional challenge. One commentary cited “the well-settled position in
international adjudication ... that an international tribunal may decide on provisional measures
prior to establishing its jurisdiction over the dispute if it appears that there is, prima facie, a
basis for asserting such jurisdiction.”29

[6] Tribunal’s “Discretion” Regarding Type of Provisional Measures

Assuming that the general criteria for granting provisional measures are satisfied, then
tribunals often say that they have substantial discretion in selecting and ordering appropriate
provisional relief. According to one commentator, “arbitral tribunals have very wide
discretion in determining the appropriate measure.”30 Despite this, the granting of
provisional measures is not a purely “discretionary” exercise, but must instead conform to
principled standards and the evidentiary record. Although the standards applicable to the
granting of provisional measures continue to develop, it is wrong to treat the subject as a
matter of discretion, and not of legal right.

[7] Categories of Provisional Measures

In practice, a wide variety of provisional measures are encountered in international

arbitration. These include (a) maintaining the status quo; (b) taking action, or not taking
action, that would cause harm; (c) preserving assets; (d) preserving evidence or providing for
inspection of property; (e) preventing aggravation of the dispute; (f) performing contractual
obligations; (g) providing security for underlying claims; (h) providing security for costs; and
(i) complying with confidentiality obligations.31 Although the party seeking provisional
measures almost always bears the burden of proof, the standards of proof that tribunals
require often varies, depending on the character of the relief sought: more onerous and
intrusive relief (e.g., providing security or performing a contract) often requires a stronger
showing than less onerous relief (e.g., preserving evidence, complying with confidentiality
obligations); tribunals also often inquire into the balance of hardships between the parties
resulting from provisional measures (or from refusal to grant such measures).32

[8] Ex Parte Provisional Measures

The 2006 revisions to the UNCITRAL Model Law permit ex parte provisional measures in
limited circumstances. The amendments (to Article 17B of the Law) provide for “preliminary
orders” that may be applied for “without notice to any other party.” Article 17B and 17C
provide that ex parte preliminary orders may be issued where the arbitrators conclude that
“prior disclosure of the request for the interim measure to the party against whom it is
directed risks frustrating the purpose of the measure.”33 It is doubtful that these provisions
have much practical attraction; Article 17C provides that ex parte orders are not enforceable,
which leaves them without practical importance in the vast majority of cases. Most
institutional rules expressly or impliedly exclude the possibility of ex parte interim relief.34

[F] Specialized Institutional Arbitration Rules for Expedited Action

Some arbitral institutions have adopted specialized rules that seek to provide a non-judicial
mechanism for obtaining urgently-needed provisional relief at the outset of arbitral
proceedings. The ICC Rules for a Pre-Arbitral Referee Procedure were an early example of
such efforts, but required that the parties agree in writing to the use of a specialized
procedure; in practice, this seldom occurred.35
 A more effective approach was taken by subsequent innovations which included, as part
of generally-applicable institutional rules, an “emergency arbitrator” mechanism. This
approach was originally adopted by the Netherlands Arbitration Institute’s Rules and the
ICDR Rules, and subsequently incorporated by the ICC and other arbitral institutions. Each
of these sets of rules provides for the appointment, in cases of urgency, of a sole “arbitrator”
to resolve requests for provisional measures prior to constitution of the arbitral tribunal.36
As soon as the tribunal is constituted, the arbitrator responsible for considering initial
requests for provisional measures ceases to play any further role in the proceedings.

§11.02 JUDICIAL ENFORCEMENT OF PROVISIONAL MEASURES

ORDERED BY ARBITRATORS

Many arbitration statutes do not expressly address the judicial enforceability of tribunal-
ordered provisional measures, leaving enforcement of such measures to general statutory
provisions regarding arbitral awards. That was the case with the original text of the 1985
Model Law, as well as most other arbitration statutes. 37 Under such legislation, the
enforcement of tribunal-ordered provisional relief gave rise to significant uncertainties. As a
result, some jurisdictions have enacted specialized legislation providing for judicial
enforcement of tribunal-ordered provisional measures, including many Model Law
jurisdictions.38 Likewise, the Model Law was revised in 2006 along similar lines (in Article
17) to permit specialized enforcement of “orders” of provisional relief.

[A] Status of Provisional Measures as “Final” Awards

A significant question with regard to the enforceability of tribunal-ordered “provisional”
measures is whether such decisions can qualify for enforcement as “awards” under the
provisions of national arbitration statutes. Some authorities hold that only “final” awards can
be enforced and that “provisional” measures are not “final.” In the words of one decision,
“whilst it is true that a valid interlocutory order is in one sense ‘binding’ on the parties to the
arbitration agreement ... an interlocutory order which may be rescinded, suspended, varied or
reopened by the tribunal which pronounced it is not ‘final’ and binding on the parties.”39
In contrast, a number of recent authorities hold that the grant of provisional measures
finally disposes of the request for such measures and that judicial enforcement of such
measures is important to the arbitral process. In the United States, the FAA provides no
express guidance as to the enforceability of arbitral decisions granting provisional measures,
but a number of courts have held that decisions granting provisional measures are “final”
awards and subject to enforcement. According to one U.S. decision, an order of provisional
measures should be enforced because “such an award is not ‘interim’ in the sense of being an
‘intermediate’ step toward a further end. Rather, it is an end in itself, for its very purpose is
to clarify the parties’ rights in the ‘interim’ period pending a final decision on the merits.”40
The better view is that provisional measures should be enforceable as arbitral awards under
generally-applicable provisions for the enforcement of awards. Provisional measures are
“final” in that they dispose of a request for relief pending conclusion of the arbitration.
Orders granting provisional relief are meant to be complied with, and to be enforceable; they
are in this respect different from interlocutory decisions that merely decide certain subsidiary
legal issues (e.g., choice of law, liability) or establish procedural timetables. It is also
important to the efficacy of the arbitral process for national courts to be able to enforce
provisional measures. If this possibility does not exist, then parties will be more willing to
refuse to comply with provisional measures, resulting in precisely the harm that such
measures were meant to foreclose.

[B] Specialized National Arbitration Legislation Permitting Enforcement of

Provisional Measures

Given the uncertainty concerning the enforceability of provisional measures, some states
have adopted legislation that authorizes judicial enforcement of tribunal-ordered provisional
measures, outside the context of final awards. These statutes typically provide for
enforcement of tribunal-ordered provisional measures by courts in the arbitral seat (as
opposed to other states). These provisions materially enhance the enforceability of
provisional measures ordered by tribunals, but do not deal with enforcement abroad.
One of the first such provisions was Article 183(2) of the Swiss Law on Private
International Law, which provides that, if a party does not comply with tribunal-ordered
provisional measures, “the arbitral tribunal may request the assistance of the competent
court.” Similarly, the German version of the UNCITRAL Model Law provides that “the
court may, at the request of a party, permit enforcement of a measure ... unless application
for a corresponding interim measure has already been made to a court.”41 The German
legislation also provides for judicial review of interim measures ordered by a tribunal, as well
as judicially-ordered damages for unjustified grants of provisional relief (against the party
that requested such relief). Legislation in a number of other jurisdictions is similar.42
The 2006 revisions to the Model Law adopted a specialized enforcement regime for
provisional measures issued by arbitral tribunals. Article 17H(1) provides that “[a]n interim
measure issued by an arbitral tribunal shall be recognized as binding and, unless otherwise
provided by the arbitral tribunal, enforced upon application to the competent court.” The
provision provides that enforcement may be sought “irrespective of the country in which it
was issued,” permitting provisional measures to be enforced outside the arbitral seat. The
enforceability of provisional measures under Article 17H is subject to exceptions (in
particular those applicable to the recognition and enforcement of final awards).43

§11.03 PROVISIONAL MEASURES ORDERED BY NATIONAL COURTS

IN AID OF ARBITRATION

An arbitral tribunal is not the only source of provisional relief in connection with an
international arbitration: in addition, national courts generally possess concurrent authority to
grant provisional measures in connection with arbitral proceedings. In some instances,
national courts are the only realistic source of provisional measures.
As noted above, until the tribunal is in place, there is no prospect of obtaining provisional
relief from it. Moreover, at least to date, non-judicial mechanisms for obtaining provisional
measures before tribunals that have been constituted (like the ICC Pre-Arbitral Referee) have
generally been ineffective. In addition, where attachments and other provisional measures
binding third parties are concerned, arbitrators can virtually never provide effective relief. As
a consequence, parties who require urgent provisional relief at the outset of a dispute must
often seek the assistance of national courts.
Arbitration legislation generally provides national courts with concurrent power to order
provisional measures in aid of an international arbitration (absent agreement to the contrary).
The existence of concurrent jurisdiction, shared by arbitral tribunals and national courts, is an
exception to the general principles of arbitral exclusivity and judicial non-interference in the
arbitral process. Concurrent jurisdiction in this field is nonetheless well-recognized and is
essential to the efficacy of the arbitral process.44

[A] Effect of the New York Convention on the Authority of National Courts
to Grant Provisional Relief in Aid of International Arbitrations
The New York Convention contains nothing dealing expressly with provisional relief
(whether granted by a tribunal or court). This silence has contributed to divergent
interpretations of the Convention, as it affects court-ordered provisional measures in
connection with arbitral proceedings. A few U.S. courts have interpreted Article II(3) of the
Convention as forbidding national courts from ordering provisional measures in connection
with an international arbitration. In contrast, most other U.S. and non-U.S. decisions and
commentary have refused to adopt that reading of Article II(3).

[1] Judicial Decisions Holding That Article II(3) Forbids Court-Ordered

 Provisional Measures

The first decision suggesting that Article II(3) forbids court-ordered provisional relief in aid
of arbitration was McCreary Tire & Rubber Co. v. CEAT, S.p.A.45 In McCreary, a U.S. Court
of Appeals held that a request for court-ordered attachment of assets, putatively in aid of an
international arbitration, should be denied. The court concluded that McCreary’s judicial
action for provisional relief was designed to frustrate (“bypass”) the parties’ arbitration
agreement and, therefore, that the Convention precluded the request for attachment: “The
Convention forbids the courts of a Contracting State from entertaining a suit which violates
an agreement to arbitrate. ... Permitting a continued resort to foreign attachment in breach of
the agreement is inconsistent with [the] purpose [of the Convention].”46
McCreary was followed, and its holding substantially extended, in a few subsequent U.S.
cases. In particular, the New York Court of Appeals held in Cooper v. Ateliers de la
Motobecane,47 that the Convention foreclosed an attachment action that was apparently part
of an effort to circumvent arbitration. Among other things, the court declared broadly that
“[t]he purpose and policy of the Convention will be best carried out by restricting
prearbitration judicial action to determining whether arbitration should be compelled.”48

[2] Judicial Decisions Holding That Article II(3) Permits Court-Ordered

Provisional Measures

Other U.S. courts have refused, correctly, to follow the broad rationale stated in Cooper.
Instead, they have concluded that Article II(3) does not forbid court-ordered provisional
relief in aid of arbitration. In Carolina Power & Light Co. v. Uranex,49 the district court
declared that it did “not find the reasoning of McCreary convincing,” and that “nothing in the
text of the New York Convention itself suggests that it precludes prejudgment attachment. ...
There is no indication in either the text or the apparent policies of the Convention that resort
to prejudgment attachment was to be precluded.”50
The decisive weight of other U.S. authority follows Uranex and rejects Cooper’s apparent
interpretation of the Convention.51 Indeed, some U.S. decisions bluntly (but correctly)
describe the more extreme Cooper interpretation of Article II(3) as “facially absurd.” 52
Judicial decisions from all developed jurisdictions other than the United States reject the
notion that the Convention imposes a blanket prohibition on court-ordered provisional
measures. As Lord M ustill put it, writing in the House of Lords:

I am unable to agree with those decisions in the United States (there has been no citation
 of authority on this point from any other foreign source) which form one side of a
division of authority as yet unresolved by the [U.S.] Supreme Court. These decisions
are to the effect that interim measures must necessarily be in conflict with the
obligations assumed by the subscribing nations to the ... Convention, because they
“bypass the agreed upon method of settling disputes”: see McCreary Tire & Rubber Co.
v. CEAT .... I prefer the view that when properly used such measures serve to reinforce
the agreed method, not to bypass it.53

The weight of authority is correct in rejecting the McCreary/Cooper view that the
Convention precludes court-ordered provisional measures in aid of arbitration.54

[B] Effect of National Arbitration Legislation on Authority of National Courts

to Grant Provisional Relief in Aid of International Arbitration

The concurrent jurisdiction of national courts and arbitral tribunals to issue provisional
measures is confirmed by most arbitration statutes. Although a few statutes are to the
contrary (reserving provisional measures to national courts alone55 ), the overwhelming
approach of national arbitration legislation and judicial authority is that both tribunals and
courts may (absent contrary agreement) issue provisional measures in connection with an
international arbitration.
The UNCITRAL Model Law is a representative example. Article 17 of the 1985 Model
Law provides tribunals the power to order provisional relief (as discussed above), while
Article 9 provides that parties do not (ordinarily) violate their agreement to arbitrate simply
by seeking provisional measures from a court. The Model Law thereby contemplates that
both tribunals and courts will have concurrent power to order provisional measures in
connection with international arbitrations (unless otherwise agreed). Article 17J of the 2006
Model Law revisions goes further, providing that a court “shall have the same power of
issuing an interim measure in relation to arbitration proceedings” as exist with regard to
judicial proceedings.
Likewise, the Swiss Law on Private International Law recognizes (albeit less expressly) the
concurrent powers of national courts and tribunals to order provisional measures, unless
otherwise agreed; legislation in other jurisdictions is similar.56 Even where legislation does not
provide for concurrent jurisdiction to order provisional measures, courts have reached this
result. In the United States, §8 of the FAA only grants courts the power to order provisional
measures with regard to a narrow category of maritime disputes. Nonetheless, outside the
context of the New York Convention, the overwhelming weight of authority under the FAA
concludes that federal courts possess jurisdiction to issue provisional measures (absent
contrary agreement by the parties) to protect the parties and the arbitral process.57
In some jurisdictions, national law limits the circumstances in which court-ordered
provisional measures may be ordered in connection with a dispute that is subject to
arbitration. Under §44 of the English Arbitration Act, for example, an English court is granted
power to order provisional measures in aid of arbitration only in specified circumstances
(e.g., preservation of evidence or assets); in all other circumstances, the court may grant
provisional measures only with the “permission” of the tribunal or if the tribunal is unable to
act. Alternatively, some legislation qualifies national court authority to grant provisional
measures with the condition that the applicant demonstrate that an application to the arbitral
tribunal for similar measures would prejudice its rights.58
In many jurisdictions, a party is free to seek provisional measures from either the arbitral
tribunal or a court (as a corollary of the principle of concurrent jurisdiction). Most arbitration
statutes – including the 1985 and 2006 Model Law – simply provide for concurrent
jurisdiction without requiring a party to seek provisional measures in one forum, rather than
another. Absent contrary agreement, parties arbitrating pursuant to such legislation are free to
seek provisional measures from either the tribunal or a court.
Other legislation sometimes requires parties to seek provisional relief in a preferred forum.
For example, the English Arbitration Act provides that a court may only grant provisional
measures: (a) if urgently required, to preserve evidence or assets; (b) if the tribunal permits;
or (c) if the tribunal lacks the power (at the time) to act effectively. 59 Other legislation is
similar, preferring tribunals as the forum for provisional measures.60

[C] Effect of Institutional Rules on Authority of National Courts to Grant

Provisional Relief in Aid of International Arbitration
Most institutional rules provide that parties may seek provisional measures in aid of
arbitration in a national court, at least in specified circumstances. For example, Article 26(9)
of the 2010 UNCITRAL Rules provides that “a request for interim measures addressed by
any party to a judicial authority shall not be deemed incompatible with the agreement to
arbitrate, or as a waiver of that agreement.” This provision has been interpreted as
permitting parties to apply to national courts for provisional measures without material
qualifications (such as, for example, permitting applications for court-ordered provisional
measures only before the tribunal has been formed).61
Similarly, Article 23(2) of the 2012 ICC Rules provides that parties may seek provisional
measures from a national court either “[b]efore the file is transmitted to the arbitral tribunal,”
or “in appropriate circumstances even thereafter.” The LCIA Rules also permit (in Article
25(3)) applications for provisional measures in national courts, providing that parties may
seek provisional relief from national courts “before the formation of the Arbitral Tribunal
and, in exceptional cases, thereafter.” These provisions make it plain that the tribunal is the
preferred forum for provisional measure applications once it is constituted.

[D] Application for Court-Ordered Provisional Measures Does Not Ordinarily

Waive Right to Arbitrate

Most arbitration legislation provides that an application for court-Ordered provisional

measures does not generally waive rights under an arbitration agreement. This is a corollary to
the principle of concurrent jurisdiction to grant provisional measures.
As noted above, Article 9 of the Model Law provides that, as a general rule, parties do not
violate an agreement to arbitrate simply by seeking court-ordered provisional measures.
Similar provisions exist in other statutes.62 Likewise, most institutional rules provide that a
request for court-ordered provisional measures does not independently constitute a waiver of
rights under an arbitration agreement.63
This does not mean that no request for court-ordered provisional measures can constitute a
waiver of a right to arbitrate. Rather, it means that, where the parties have simply agreed to
arbitrate (without excluding court-ordered provisional measures), an application for court-
ordered provisional measures is not necessarily a waiver of the right to arbitrate. Nonetheless,
if the parties have agreed to exclude court-ordered provisional measures or if a party seeks
court-ordered provisional measures in an effort to circumvent an arbitration clause, a parties’
application for court-ordered provisional measures may well be contrary to its agreement to
arbitrate and may be deemed a waiver of its arbitration rights.

[E] Choice of Law Applicable to Court-ordered Provisional Measures

Assuming that a court has the power to issue provisional measures in connection with an
arbitration, the question arises what law will apply to requests for such relief. National
courts will virtually always apply their own law to the availability and form of court-ordered
provisional measures. In particular, the relief requested in aid of an arbitration must be a
category of relief available under the law of the judicial forum.
The foregoing conclusion is made explicit in Article 183(2) of the Swiss Law on Private
International Law, which provides that “[t]he court shall apply its own law” to requests for
court-ordered provisional measures. The 2006 revisions to the UNCITRAL Model Law are
identical (in Article 17J). Courts in other jurisdictions take the same approach, applying local
law to requests for court-ordered provisional relief.64
In principle, most courts apply generally-applicable local standards for pre-judgment relief
to requests for court-ordered provisional measures in aid of arbitration.65 Nevertheless, some
courts have suggested that special requirements apply to requests for court-ordered
provisional measures, given the special characteristics of international arbitration and the
possibility of relief from the tribunal. Thus, some authorities hold that court-ordered
provisional relief will not be granted unless it is absolutely necessary to protect the arbitral
process.66 To the same effect, the Hong Kong Arbitration Ordinance has been interpreted as
disfavoring requests for court-ordered provisional measures if the tribunal has been
constituted and could provide relief.67 These prudential restraints reflect sound policy, to
avoid judicial interference with the arbitral process.

§11.04 APPROPRIATE NATIONAL COURT TO GRANT PRE-AWARD

PROVISIONAL MEASURES IN AID OF AN INTERNATIONAL
ARBITRATION

Assuming that the parties’ agreement does not exclude court-ordered provisional measures in
aid of an international arbitration, the question arises as to which national court(s) have
jurisdiction to grant such measures. In particular, should jurisdiction be limited to the courts
of the arbitral seat, or should provisional measures also be available in other courts?
In some cases, parties agree upon a contractual forum for provisional measures in aid of
arbitration. When this occurs, most national laws give effect to the parties’ choice-of-forum.
It is, however, often unwise for parties to limit themselves to a single contractual forum for
provisional measures: there may be instances where immediate applications for provisional
measures in the place of the expected wrongful actions are required. As a consequence, most
contracts are silent about the appropriate judicial forum for court-ordered provisional relief.
In most states, courts have statutory authority to issue provisional measures in aid of
arbitrations with their seat within national territory. That is, if an international arbitration is
seated in State A, then the courts of State A will ordinarily have the power to order
provisional measures in relation to the arbitration. This is the case under the 2006 revisions
of the M odel Law, as well as under a few other arbitration statutes.68
As a practical matter, however, the courts of the arbitral seat may not be in a position to
grant effective provisional relief. Particularly where attachment or similar remedies are
sought, only the jurisdiction where the defendant’s assets are located may be able to grant
meaningful remedies. That is because security measures often have only territorial effect and,
even when they purport to apply extraterritorially, enforcement may be impossible. In those
circumstances, according exclusive jurisdiction to courts in the seat may not be warranted.
In part for these reasons, some courts have concluded that they have the power to order
provisional relief in connection with a foreign arbitration (absent contrary agreement). Thus, a
number of U.S. courts have granted provisional measures in aid of arbitrations seated
abroad.69 Similarly, the House of Lords has concluded that English courts have the power to
grant provisional measures in connection with a non-English arbitration (but that this power
should be used sparingly).70 Other courts have also affirmed their inherent authority to issue
provisional measures in aid of foreign arbitrations.71
These results are consistent with Articles 1(2) and 9 of the Model Law, which provide
that an arbitration agreement does not preclude a party from applying to “a court” for
provisional measures, without suggesting that “a” court is only a court in the arbitral seat.
Judicial decisions in Model Law jurisdictions affirm this result.72 The 2006 revisions of the
M odel Law make the point even more explicitly.73
In contrast, other statutes appear to deny local courts the power to grant provisional
measures in connection with foreign arbitrations. Indian decisions initially adopted this view
(but have more recently held that interim relief may be granted in aid of a foreign
arbitration).74
Even if a national court has the power to issue provisional measures in aid of a foreign
arbitration, there are strong reasons for exercising such authority with circumspection. When
a court in State A issues provisional measures in connection with an arbitration seated in
State B, it runs a double risk, of interfering in (a) the arbitral proceedings, and (b) the (limited)
supervisory jurisdiction of the courts in the seat. For example, the English House of Lords
declared in Channel Tunnel Group Ltd v. Balfour Beatty Constr. Ltd , that “the court should
bear constantly in mind that English law, like French law, is a stranger to this Belgian
arbitration,” and the court therefore “should be very cautious in its approach both to the
existence and to the exercise of supervisory and supportive measures, lest it cut across the
grain of the chosen curial law.”75 Other courts have also demonstrated caution in granting
provisional measures in aid of foreign arbitrations.76
_________________________
1. Van Uden Maritime BV v. Kommanditgesellschaft in Firma Deco-Line, C-391/95 [1998] E.C.R. I-7091, 7133
(E.C.J.).
2. See S. Rosenne, Provisional Measures in International Law: The International Court of Justice and The
International Tribunal of the Law of the Sea (2005). As discussed below, Article 47 of the ICSID Convention
authorizes ICSID tribunals to order provisional measures. See infra pp. 416–18.
3. Swiss Cantonal Concordat, Art. 26(1) (“ The public judicial authorities alone have jurisdiction to make
provisional orders.”), Art. 26(2).
4. See G. Born, International Commercial Arbitration 1948–50 (2009) (Austria, Italy, Spain).
5. Argentinean National Code of Civil and Commercial Procedure, Art. 753 (“ Arbitrators cannot order compulsory
measures or measures leading to enforcement. They must request them from the judge who will have to lend the
support of his jurisdictional powers for the most swift and effective carrying out of the arbitral proceedings.”);
Italian Code of Civil P rocedure, Art. 818; Chinese Arbitration Law, Art. 68.
6. See, e.g., Pacific Reins. Mgt. Corp. v. Ohio Reins. Corp., 935 F.2d 1019, 1022–23 (9th Cir. 1991) (“ Temporary
equitable relief in arbitration may be essential to preserve assets or enforce performance which, if not preserved or
 enforced, may render a final award meaningless.”); Certain Underwriters at Lloyd’s, London v. Argonaut Ins. Co .,
264 escrow to serve as security for an ultimate answer [which] may be either derived explicitly from the arbitration
agreement or implicitly from the panel’ s power to ensure the parties receive the benefit of their bargain.”).
7. Charles Constr. Co. v. Derderian, 586 N.E.2d 992, 994 (Mass. 1992).
8. See G. Born, International Commercial Arbitration 1951–57 (2009).
9. See G. Born, International Commercial Arbitration 1960–63 (2009).
10. See, e.g., UNCITRAL Model Law, Arts. 1(2), 17; Swiss Law on Private International Law, Arts. 176(1), 183;
English Arbitration Act, 1996, §§2(1), 38(3), 38(4).
11. See G. Born, International Commercial Arbitration 1965–66 (2009).
12. See G. Born, International Commercial Arbitration 1966–68 (2009).
13. The better view is that this requirement does not limit a tribunal’ s power to particular items whose ownership is
in dispute. Instead, Article 17 can readily be interpreted as extending to preservation of contractual rights or of
the equilibrium between the parties (e.g., the maintenance of a contractual relationship for licensing intellectual
property or purchase/sale of goods); where the parties’ dispute concerns the continued existence or nature of
their contractual relationship, then provisional measures preserving all or aspects of that relationship are
properly regarded as being “ in respect of the subject matter of the dispute.” See G. Born, International
Commercial Arbitration 1967–69 (2009).
14. English Arbitration Act, 1996, §38(4). The Act also permits parties by agreement to grant the arbitrators broader
power to order provisional measures. English Arbitration Act, 1996, §25(4).
15. Swedish Arbitration Act, §25(4) (“ interim measures to secure the claim”); Japanese Arbitration Law, Art. 24(1)
(“ necessary in respect of the subject matter of the dispute”) (emphasis added). See G. Born, International
Commercial Arbitration 1967–69 (2009).
16. See, e.g., UNCITRAL Rules, Art. 26(1); LCIA Rules, Art. 25; ICDR Rules, Art. 21; ICC Rules, Art. 29; ICDR
Rules, Art. 37. See infra pp. 210–11.
17. See G. Born, International Commercial Arbitration 1979–92 (2009).
18. UNCITRAL Rules, Art. 26(1); 2012 ICC Rules, Art. 28.
19. Interim Award in ICC Case No. 8786, 11(1) ICC Ct. Bull. 81, 83–84 (2000). See G. Born, International
Commercial Arbitration 1980–84 (2009).
20. Tokios Tokelés v. Ukraine , Procedural Order No. 3, ICSID Case No. ARB/02/18 ( 18 January 2005), ¶8,
available at http://icsid.worldbank.org.
21. UNCITRAL Model Law, 2006 Revision, Art. 17A(1)(a).
22. Burlington Resources Inc. v. Republic of Ecuador, Procedural Order No. 1, ICSID Case No. ARB/08/5 (29 June
2009) ¶73. See also P artial Award in ICC Case ( Unidentified), in Schwartz, The Practices and Experience of the
ICC Court, in ICC, Conservatory and Provisional Measures in International Arbitration 45, 60 (1993).
23. See G. Born, International Commercial Arbitration 1985–87 (2009).
24. Tokios Tokelés v. Ukraine , Procedural Order No. 3, ICSID Case No. ARB/02/18 ( 18 January 2005), ¶8,
available at http://icsid.worldbank.org (emphasis added).
25. See G. Born, International Commercial Arbitration 1987–88 (2009).
26. UNCITRAL Model Law, 2006 Revision, Art. 17A(1)(b). See G. Born, International Commercial Arbitration
1988–91 (2009).
27. Partial Award in ICC Case ( Unidentified), in Schwartz, The Practices and Experience of the ICC Court, in ICC,
Conservatory and Provisional Measures in International Arbitration 45, 60 (1993).
28. See, e.g., Partial Award in ICC Case No. 8113 , 11(1) ICC Ct. Bull. 65 (2000) (“ the granting of the measure
requested by Claimant implies a pre-judgment of the dispute”).
29. Shihata & Parra, The Experience of the International Centre for Settlement of Investment Disputes, 14 ICSID
Rev.-For. Inv. L.J. 299, 326 (1999). See also D. Caron et al., The UNCITRAL Arbitration Rules: A Commentary
551 (2006).
30. Yesilirmak, Interim and Conservatory Measures in ICC Arbitral Practice, 11(1) ICC Ct. Bull. 31, 33 (2000).
31. See G. Born, International Commercial Arbitration 1994–2011 (2009); Y. Derains & E. Schwartz, A Guide to
the ICC Rules of Arbitration 296–97 (2005).
32. See G. Born, International Commercial Arbitration 1993–2010 (2009).
33. UNCITRAL Model Law, 2006 Revision, Art. 17B(2).
34. ICSID Arbitration Rules, Rule 39(4); Y. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration 299
(2005).
35. See G. Born, International Commercial Arbitration 1958 (2009).
36. 2012 ICC Rules, Art. 29, Appendix V; NAI Rules, Art. 42; ICDR Rules, Art. 37 (“ Emergency Measures of
P rotection,” involving appointment of special “ emergency arbitrator”).
37. The FAA in the United States and the Code of Civil Procedure in France are prime examples. See G. Born,
International Commercial Arbitration 2018–19, 2023–25 (2009).
38. See, e.g., Singapore International Arbitration Act, §12(7); English Arbitration Act, 1996, §44(2); Indian
Arbitration and Conciliation Act, Art. 9; G. Born, International Commercial Arbitration 2018–19, 2023–25
(2009).
39. Resort Condominiums Int’l Inc. v. Bolwell, XX Y.B. Comm. Arb. 628 (Queensland S.Ct. 1993) (1995).
40. Southern Seas Nav. Ltd v. Petroleos Mexicanos of Mexico City , 606 F.Supp. 692 (S.D.N.Y. 1985) (“ [I]f an
arbitral award of equitable relief based upon a finding of irreparable harm is to have any meaning at all, the parties
must be capable of enforcing or vacating it at the time it is made.”). See also Metallgesellschaft AG v. M/V
Capitan Constante, 790 F.2d 280, 282–83 (2d Cir. 1986).
41. German ZP O, §1041(2).
42. See G. Born, International Commercial Arbitration 2024–25 (2009).
43. See G. Born, International Commercial Arbitration 2025–26 (2009).
44. See G. Born, International Commercial Arbitration 2028–66 (2009).
45. McCreary Tire & Rubber Co. v. Ceat S.p.A., 501 F.2d 1032 (3d Cir. 1974).
46. 501 F.2d at 1038.
47. Cooper v. Ateliers de la Motobecane, SA, 442 N.E.2d 1239 (N.Y. 1982).
48. Cooper, 442 N.E.2d at 1243.
49. Carolina Power & Light Co. v. Uranex, 451 F.Supp. 1044 (N.D. Calif. 1977).
50. Uranex, 451 F.Supp. at 1051–52.
51. See, e.g., Borden, Inc. v. Meiji Milk Prods. Co., 919 F.2d 822, 826 (2d Cir. 1990) (“ We hold that entertaining an
application for a preliminary injunction in aid of arbitration is consistent with the court’ s powers pursuant to
[the Convention].”); Bahrain Telecomm. Co. v. Discoverytel, Inc., 476 F.Supp.2d 176, 181 (D. Conn. 2007)
(agreeing “ with those courts that have rejected McCreary’s reasoning and holding”); China Nat’l Metal Prods.
Imp./Exp. Co. v. Apex Digital, Inc., 155 F.Supp.2d 1174, 1179 (C.D. Cal. 2001).
52. Filanto SpA v. Chilewich Int’l Corp., 789 F.Supp. 1229 (S.D.N.Y. 1992), app. dismissed, 984 F.2d 58 (2d Cir.
1993).
53. Channel Tunnel Group Ltd v. Balfour Beatty Constr. Ltd [1993] A.C. 334, 354 (House of Lords).
54. A different analysis is required where an arbitration agreement forbids court-ordered provisional measures. In
those instances, Article II requires giving effect to the prohibitions on court-ordered provisional relief.
55. See supra pp. 203–05 (Italy, Argentina, China).
56. See Swiss Law on Private International Law, Arts. 183, 185; G. Born, International Commercial Arbitration
2042–47 (2009).
57. See, e.g., Teradyne, Inc. v. Mostek Corp., 797 F.2d 43, 51 (1st Cir. 1986) (“ court can grant injunctive relief in an
arbitrable dispute pending arbitration”); Rose-Lino Bev. Distrib. v. Coca-Cola Bottling Co. , 749 F.2d 124, 125
(2d Cir. 1984) (“ fact that a dispute is to be arbitrated ... does not absolve the court of its obligation to consider
the merits of a requested preliminary injunction”);Albatross S.S. Co. v. Manning Bros., 95 F.Supp. 459, 463
(S.D.N.Y. 1951) (“ The Courts are not limited in their equity powers to the specific function of enforcing
arbitration agreements but may exercise those powers required to preserve the status quo of the subject matter in
controversy pending the enforcement of the arbitration provision. To rule otherwise would in effect permit a party
to take the law into its own hands while the proceeding is carried on as a result of the specific direction of the
Court [compelling arbitration].”). See G. Born, International Commercial Arbitration 2044–45 (2009).
58. Ohio Rev. Code, Ann. §2712.36. See also UNCITRAL Model Law, Art. 17J (national courts have the same
power to grant provisional relief in aid of arbitration as they have “ in relation to proceedings in court”); Revised
Uniform Arbitration Act, §8(b) (2000) (“ After an arbitrator is appointed and is authorized and able to act: ... (2) a
 party to an arbitration proceeding may move the court for a provisional remedy only if the matter is urgent and the
arbitrator is not able to act timely or the arbitrator cannot provide an adequate remedy.”).
59. English Arbitration Act, 1996, §44.
60. See Revised Uniform Arbitration Act, §8(b) (2000) (“ After an arbitrator is appointed and is authorized and able
to act: ... (2) a party to an arbitration proceeding may move the court for a provisional remedy only if the matter is
urgent and the arbitrator is not able to act timely or the arbitrator cannot provide an adequate remedy.”); Ohio
Rev. Code, Ann. §2712.36.
61. See G. Born, International Commercial Arbitration 2063–64 (2009).
62. See, e.g., Netherlands Code of Civil P rocedure, Art. 1022(2); Swedish Arbitration Act, §25; Japanese Arbitration
Law, Art. 14.
63. See UNCITRAL Rules, Art. 26(9); LCIA Rules, Art. 25(3); 2012 ICC Rules, Art. 28(2).
64. See, e.g., Commerce and Indus. Ins. Co. of Canada v. Certain Underwriters at Lloyd’s of London [2002] 1 WLR
1323 (Q.B.) (request for interim relief in aid of foreign arbitration is inappropriate where it seeks a form of relief
not contemplated by English law);Puerto Rico Hosp. Supply, Inc. v. Boston Scientific Corp., 426 F.3d 503, 507
(1st Cir. 2005) (“ district court properly applied federal law [to injunction], leaving for the arbitrator the choice-
of-law determination”).
65. For example, many U.S. courts apply generally-applicable standards for granting provisional relief in federal
courts. See, e.g., Teradyne, Inc. v. Mostek Corp., 797 F.2d 43, 51 (1st Cir. 1986); Roso-Lino Beverage Dist., Inc. v.
Coca-Cola Bottling Co., 749 F.2d 124 (2d Cir. 1984); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Kramer,
816 F.Supp. 1242 (N.D. Ohio 1992) (granting preliminary injunction in aid of arbitration, applying generally-
applicable preliminary injunction standards, forbidding disclosure of trade secrets and solicitation of clients).
Compare authorities cited infra p. 218, notes 66–67.
66. See, e.g., Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bradley , 756 F.2d 1048, 1053 (4th Cir. 1985) (“ where a
dispute is subject to mandatory arbitration under the Federal Arbitration Act, a district court has the discretion
to grant a preliminary injunction to preserve the status quo pending the arbitration of the parties’ dispute if the
enjoined conduct would render that process a ‘ hollow formality.’ ”).
67. Leviathan Shipping Co. Ltd v. Sky Sailing Overseas Co. Ltd [1998] HKC 347 (H.K. Court of First Instance, High
Court).
68. See UNCITRAL Model Law, 2006 Revision, Art. 17J; English Arbitration Act, 1996, §§3, 44; Swiss Law on
P rivate International Law, Arts. 176(1), 183(2).
69. E.g., Deiulemar Compagnia di Navigazione S.P.A. v. M/V Allegra , 198 F.3d 473 (4th Cir. 1999) (inspection of
vessel, located in United States, ordered in aid of arbitration seated in London); Tampimex Oil Ltd v. Latina
Trading Corp., 558 F.Supp. 1201 (S.D.N.Y. 1983) (granting attachment of New York bank account in aid of
arbitration in London); Atlas Chartering Services Inc. v. W orld Trade Group , Inc., 453 F.Supp. 861, 863
(S.D.N.Y. 1978) (granting attachment of funds in two accounts in New York banks in aid of arbitration in
London).
70. Channel Tunnel Group Ltd v. Balfour Beatty Constr. Ltd [1993] A.C. 334 (House of Lords).
71. Judgment of 20 October 1989, 1991 RSDIE 368 (Zug District Court) (Swiss courts can order provisional
measures even if the seat of the arbitration is abroad); The “Lady Muriel” v. Transorient Shipping Ltd , 10(7)
Mealey’ s Int’ l Arb. Rev. J-1 (H.K. Court of Appeal, S.Ct.) (1995) (granting provisional relief in aid of foreign
arbitration based on presence of assets in Hong Kong).
72. See, e.g., TLC Multimedia Inc. v. Core Curriculum Tech., Inc., [1998] B.C.J. No. 1656 (B.C. S.Ct.) (court has
power under Article 9 of Model Law to grant provisional measures in aid of foreign arbitration); Silver Standard
Resources Inc. v. JSC Geolog, 168 D.L.R.(4th) 309 (B.C. S.Ct. 1998) (same).
73. UNCITRAL Model Law, 2006 Revision, Art. 17J (“ irrespective of whether their place is in the territory of this
State”).
74. Indian Arbitration and Conciliation Act, Art. 9. Compare Marriott Int’l Inc. v. Ansal Hotels Ltd , XXVI Y.B.
Comm. Arb. 788 (Delhi High Court 2000) (2001) (“ the Court has no jurisdiction to entertain such a petition for
grant of interim measures in relation to an arbitration being held outside India”) and Bhatia Int’l v. Bulk Trading
SA, XXVII Y.B. Comm. Arb. 234 (Indian S.Ct. 2002) (2002) (Indian courts can provide judicial assistance in aid
of arbitration seated outside India).
75. Channel Tunnel Group Ltd v. Balfour Beatty Constr. Ltd [1993] A.C. 334, 358 (House of Lords) (emphasis
added).
76. See G. Born, International Commercial Arbitration 2059–62 (2009).
Chapter 12
Multiparty and Multicontract Issues in International
Arbitration

International commercial disputes frequently involve either multiple parties or multiple

contracts.1 These proceedings raise a number of complex procedural issues in international
arbitration.

§12.01 CONSOLIDATION, JOINDER AND INTERVENTION: GENERAL

CONSIDERATIONS

In national court litigations, a variety of mechanisms exist for consolidating arguably separate
disputes between the same or different parties into a single proceeding, or for permitting
intervention, joinder, or “vouching in” of additional parties into an ongoing proceeding. For
example, if A, B and C enter into related contracts (A with B and B with C), separate actions
between A versus B and B versus C can often be consolidated into a single action;
alternatively, C can either intervene in, or be joined in, an existing action between A and B. In
each of these instances, there is generally no requirement that all parties consent to such
consolidation, joinder, or intervention. Rather, typically based on perceived considerations of
fairness and efficiency, courts have broad discretion to order consolidation or joinder or to
permit intervention.
Consolidating separate international arbitrations, and permitting joinder or intervention of
additional parties into an international arbitration, can provide some obvious advantages. As
with litigations, a single arbitration can in some circumstances be more efficient than two or
more separate arbitrations. A single proceeding permits the same savings of overall legal fees,
arbitrators’ fees, witness’s time, preparation efforts and other expenses that exist in
litigation. Further, a consolidated arbitration reduces the risk of inconsistent results in two or
more separate proceedings.2
On the other hand, consolidation, joinder and intervention in arbitration also have
disadvantages, which may outweigh their perceived benefits or favor one party at the expense
o f another. Although “[l]ack of chronological coordination, potentially conflicting findings
and the possibility of diverging judgments may cast disfavor upon arbitration,” care must be
taken to ensure that “the remedy [is not] worse than the evil.”3
First, consolidating arbitrations or permitting joinder can raise significant problems with
respect to the appointment of arbitrators. Many arbitrations involve three-person tribunals,
with each party nominating one member of the tribunal, and the two party-nominated
arbitrators agreeing upon a third arbitrator. If there are three (or more) parties to the
arbitration, who have distinct interests, this model often does not work.4
Second, parties frequently have expectations that their arbitral proceedings will be
confidential; as discussed above, some national laws and institutional rules require such
treatment, absent contrary agreement. The joinder of additional parties into an existing
dispute between two (or more) parties entails an obvious, albeit limited, loss of
confidentiality, raising concerns not present in national court litigations.
Third, although multiparty arbitral proceedings may be more efficient as a general matter,
the savings in cost and time will not always be distributed evenly among the parties. In
particular instances, some parties’ arbitration costs may actually increase because of
consolidation or joinder, even though other parties’ legal costs (or total legal costs) are
decreased. Moreover, a multiparty arbitration may well take longer than a simple two-party
proceeding, thus potentially delaying enforcement of a party’s rights.

§12.02 CONSOLIDATION, JOINDER AND INTERVENTION UNDER

NATIONAL ARBITRATION LEGISLATION

As discussed below, consolidation and joinder/intervention in international arbitration are

generally possible only where all parties have agreed to such a result, typically in their
original arbitration agreement. In instances where such an agreement exists, the New York
Convention and national law ordinarily permit consolidation, joinder and/or intervention,
notwithstanding subsequent objections of a party. Where the parties have not consented,
however, national law generally does not permit consolidation or joinder/intervention – either
through orders of an arbitral tribunal or a national court.
As discussed below, a few states diverge from this approach by permitting non-consensual
arbitration, citing considerations of efficiency and fairness. These jurisdictions are exceptions
to the general recognition of the parties’ autonomy (and the approaches they adopt should be
seen as contrary to the New York Convention).

[A] Consolidation and Joinder/Intervention Pursuant to Parties’ Arbitration

Agreement
In almost all cases, the approach taken by national law is that consolidation and
joinder/intervention may be ordered by an arbitral tribunal or a national court, but only
pursuant to the parties’ agreement. If the parties have not so agreed, both the tribunal and
local courts will lack the authority to order either consolidation or joinder/intervention.
 The Model Law is silent on the subjects of consolidation and joinder/intervention. In the
absence of specific statutory provisions, consolidation and joinder/intervention is subject to
the Model Law’s basic requirement (in Article 8) that arbitration agreements be recognized
and enforced. That is, consolidation and joinder/intervention are required – as an element of
the parties’ agreement to arbitrate – where that is what the parties have agreed, but are not
otherwise either required or permitted.
In adopting the Model Law, some states have included amendments specifically addressing
consolidation, generally providing either courts or tribunals the power (where the parties
have so agreed) to consolidate arbitrations. These statutory provisions vary, with a few
providing the tribunal,5 but the majority providing local courts,6 with the power to order
consolidation. The essential condition for consolidation or joinder/intervention under virtually
all of these statutes is the parties’ agreement to such actions. For example, British Columbia
legislation provides for consolidation of arbitral proceedings by the tribunal “[w]here the
parties to two or more arbitration agreements have agreed, in their respective arbitration
agreements or otherwise to consolidate the arbitrations arising out of those arbitration
agreements.”7
Similarly, the English Arbitration Act, 1996, modified the UNCITRAL Model Law to
include provisions regarding consolidation. Section 35 of the Act provides “the parties are
free to agree” upon the consolidation of arbitral proceedings or that concurrent hearings shall
be held, but that “[u]nless the parties agree to confer such power on the tribunal, the tribunal
has no power to order consolidation of proceedings or concurrent hearings.”
Like the original Model Law, the FAA’s text does not address consolidation or
joinder/intervention. Historically, some U.S. courts held that the FAA contains an implied
grant of authority permitting courts to order the consolidation of separate arbitrations – even
if the parties had not agreed to allow court-ordered consolidation. The seminal decision was
Compania Espanola de Petroleos, SA v. Nereus Shipping,8 where the Second Circuit ordered
three parties to participate in a consolidated arbitration. The court reasoned: “we think the
liberal purposes of the [FAA] clearly require that this Act be interpreted so as to permit and
even to encourage the consolidation of arbitration proceedings in proper cases.”9 The court
did not rely on the existence of any agreement on consolidation in reaching this conclusion,
and instead cited only interests of efficiency. After Nereus, a number of U.S. court decisions
ordered consolidation in the absence of either an agreement authorizing consolidation or even
a common arbitration agreement binding all the parties.10
Despite these decisions, the overwhelming weight of U.S. precedent, including in the
Second Circuit, now rejects the stated reasoning in Nereus, instead holding that the FAA does
not authorize the consolidation of multiple arbitrations in the absence of the parties’
agreement to such consolidation; rather, the FAA gives effect to the parties’ procedural
autonomy to structure the arbitration as they think best.11 As the Second Circuit later held in
Government of the United Kingdom v. Boeing Co.:

“A court is not permitted to interfere with private arbitration arrangements in order to

impose its own view of speed and economy. This is the case even where the result would
be the possibly inefficient maintenance of separate proceedings.” ... If contracting
parties wish to have all disputes that arise from the same factual situation arbitrated in a
single proceeding, they can simply provide for consolidated arbitration in the arbitration
clauses to which they are a party. 12 The rationale is that the FAA provides for
recognition of agreements to arbitrate – including agreements with regard to consolidated
or non-consolidated arbitrations. Under this view, the FAA provides that courts (and
arbitral tribunals) may not order the consolidation of arbitrations unless this is what the
parties have agreed. Almost all subsequent U.S. decisions have reached the same
conclusion.13

An important corollary of holding that the FAA forbids court-ordered consolidation if the
arbitration agreement does not so provide is that the same principle requires consolidation if
all the parties have so agreed. Several U.S. courts have concluded in particular cases that, if
the parties agree upon consolidation, judicial orders for consolidation are required.14
The general approach taken by national law in most jurisdictions to issues of consolidation
and joinder/intervention parallels that which should apply under the New York Convention.
As discussed above, Article II of the Convention requires giving effect to all material terms of
arbitration agreements – a requirement that extends to agreements regarding consolidation and
joinder/intervention.15 Consequently, where the parties have not agreed to permit
consolidation, the Convention forbids court-ordered consolidation; conversely, where the
parties have agreed to consolidation, the Convention requires Contracting States to respect
that agreement.

[B] Nature of Agreement Required for Consolidation and Joinder/Intervention

In most cases, the parties’ arbitration agreement will not expressly address consolidation or
joinder/intervention: it will neither expressly preclude or expressly authorize consolidation.
That is particularly true of ad hoc arbitration agreements, but also applies to many
agreements incorporating institutional rules (which often do not address issues of
consolidation and joinder/intervention). Accordingly, in the majority of cases, there will not
be any express statement of intentions by the parties regarding consolidation and
joinder/intervention.
 There is no reason, however, that agreement to consolidation (or joinder/intervention)
cannot be implied. For example, a number of U.S. courts have held that an agreement to
consolidation can be implied – where the parties’ contract is silent – from contractual
provisions and structure, as well as from considerations of efficiency.16 In one court’s words,
a court has “no power to order ... consolidation if the parties’ contract does not authorize it
... [b]ut in deciding whether the contract does authorize it the court may resort to the usual
methods of contract interpretation.”17
An implied agreement to consolidation arguably exists where three (or more) parties agree
to the same arbitration agreement contained in the same underlying contract. In these
circumstances, there is a substantial argument that the parties impliedly accepted the
possibility of consolidation of arbitrations under their multiparty arbitration agreement
and/or joinder of other contracting parties into such arbitrations. This implied agreement
would not either require or forbid consolidation in all cases, but would instead leave the
decision whether to consolidate two (or more) arbitrations to the tribunal’s judgment in
particular cases (taking into account efficiency, fairness and the like).
A more difficult question arises when three (or more) parties agree to parallel arbitration
agreements in related (but different) underlying contracts. The better view in these
circumstances is that agreement to substantially similar dispute resolution provisions (i.e.,
the same institutional rules, seat, and number of arbitrators) implies acceptance of a
consolidated arbitration with joinder and intervention rights as among parties to the relevant
arbitration agreements.18
On the other hand, where the parties have entered into contracts containing different
dispute resolution provisions (e.g., ICC Rules in one arbitration clause and CIETAC Rules in
another; Hong Kong seat in one clause and New York in another), there will be little basis for
concluding that they impliedly consented to consolidation or joinder/intervention. On the
contrary, by selecting divergent procedures, seats and/or appointing authorities, the parties
expressed their preference for incompatible dispute resolution mechanisms which ordinarily
do not admit of the possibility of mandatory consolidation. Likewise, where the parties have
entered into different contracts, some of which contain no dispute resolution provisions, it is
difficult to imply any agreement to consolidation, joinder, or intervention.19

[C] Consolidation or Joinder/Intervention under National Law in Absence of

Parties’ Agreement

A few arbitration statutes provide for consolidation of arbitrations even absent the parties’
affirmative agreement (express or implied). Article 1046(1) of the Netherlands Code of Civil
Procedure provides, among other things, that
 If arbitral proceedings have been commenced before an arbitral tribunal in the
Netherlands concerning a subject matter which is connected with the subject matter of
arbitral proceedings commenced before another arbitral tribunal in the Netherlands, any
of the parties may, unless the parties have agreed otherwise, request the President of the
District Court in Amsterdam to order a consolidation of the proceedings.

Although the Netherlands statute provides for consolidation in the absence of affirmative
agreement, it does not permit consolidation where the parties’ agreement excludes this.
Similar legislation has been adopted in New Zealand and Hong Kong.20 Notably, under most
such statutes, parties may agree to exclude the possibility of consolidation, with the
statutory consolidation power constituting a default rule that the parties are at liberty to
alter.
Some U.S. state arbitration statutes provide for court-ordered consolidation of related
arbitrations,21 in some cases even where the parties’ agreement excludes consolidation. 22
More recently, the Uniform Arbitration Act was revised to include a statutory consolidation
provision granting courts in the arbitral seat power to order consolidation (even absent
agreement by the parties) in specified circumstances.23 Some U.S. courts have relied on such
authority to consolidate arbitrations (without the parties’ agreement). To the extent that state
law consolidation rules provided for consolidation notwithstanding the parties’ contrary
agreement, they would be preempted by the FAA (and contrary to the New York
Convention), which requires enforcement of the parties’ arbitration agreement in accordance
with its terms.

§12.03 CONSOLIDATION, JOINDER AND INTERVENTION UNDER

INSTITUTIoNAL RULES

As noted above, most arbitration agreements are silent on consolidation and

joinder/intervention. In unusual cases, an agreement will contemplate multiparty arbitration
and include specially-drafted provisions for commencing arbitration, appointing arbitrators,
consolidation and/or joinder and the like. Nevertheless, as a practical matter, it is rare to find
tailor-made contractual provisions dealing with consolidation, intervention, or joinder.
Similarly, many institutional rules do not provide for consolidation, intervention, or joinder.
The original UNCITRAL Rules are silent on the subject, as are the ICDR, AAA Commercial
and VIAC Rules. Moreover, as discussed below, those rules which do deal with the topic are
generally limited to consolidation, as distinguished from joinder or intervention.

[A] Consolidation under ICC Rules

Those institutional rules which do address the subject of consolidation generally permit the
arbitral tribunal (or institution) to consolidate arbitrations in limited circumstances. Article
4(6) of the 1998 ICC Rules provides that the ICC Court may “consolidate” two ICC
arbitrations if a party commences an ICC arbitration “in connection with a legal relationship
in respect of which arbitration proceedings between the same parties are already pending
under [the ICC Arbitration] Rules.” This provision was limited, permitting consolidation
only if two (or more) arbitrations are proceeding under the ICC Rules, in connection with the
“same parties” and if the arbitrations arise from the same “legal relationship.”24
In contrast, the 2012 ICC Rules contain more detailed provisions on multiparty issues.
Under Article 7, an “additional party” may be joined into an arbitration if an existing party
files a “Request for Joinder” with the ICC before the arbitrators have been confirmed by ICC.
Similarly, Articles 10 and 23(4) permit more liberal consolidation of separate arbitrations; in
particular, the ICC is authorized to consolidate two or more separate ICC arbitrations if (a)
there is an agreement of the parties to that effect, (b) all of the claims in the arbitrations are
made under the same arbitration agreement, or (c) the claims are made under different
arbitration agreements, but “the arbitrations are between the same parties, the disputes in the
arbitrations arise in connection with the same legal relationship, and the Court finds the
arbitration agreements to be compatible.”25 These provisions permit relatively liberal
consolidation of arbitrations brought under a single ICC arbitration agreement or under
multiple, but compatible, ICC arbitration agreements; they do not permit consolidation of
ICC arbitrations and non-ICC arbitrations.

[B] Joinder and/or Intervention under LCIA Rules

Some institutional rules provide for joinder and/or intervention, instead of consolidation.
Article 22(1)(h) of the LCIA Rules provides that a tribunal may, unless otherwise agreed,
“allow ... one or more third persons to be joined in the arbitration as a party, provided any
such third person and the applicant party have consented thereto in writing, and thereafter to
make a single final award, or separate awards, in respect of all parties so implicated in the
arbitration.” This provision permits joinder of a party even when only one of the existing
parties to the arbitration (the applicant) and the party to be joined agree to such joinder; the
consent of other parties to the existing arbitration is not required. Article 22(1)(h) permits
additional parties to be joined in an existing arbitration, but not for two (or more) LCIA
arbitrations to be joined together as a single arbitration.26

[C] Consolidation under Swiss Rules of International Arbitration

Under the Swiss Rules of International Arbitration, the Swiss Chambers’ Arbitration
Institution has unusually broad discretion with respect to consolidation and
joinder/intervention. The Institution may refer a new case to a tribunal which has previously
been constituted for arbitral proceedings under the Swiss Rules.27 The parties are deemed to
have given their consent to consolidation in advance by submitting the dispute to the Swiss
Rules. While the institution has wide discretion when deciding whether to consolidate
proceedings, it is required to consider (a) the relationship between the cases, and (b) the
progress already made in the existing proceedings. Article 4(1) of the Swiss Rules provides
that the parties to a “new” arbitration shall be deemed to have waived their right to
participate in selection of the tribunal (being required to accept the tribunal in the existing
arbitration into which their arbitration is consolidated).
The Swiss Rules also contain a broad provision regarding joinder/intervention. In effect,
Article 4(2) of the Swiss Rules grants the tribunal far-reaching discretion, “after consulting
with all of the parties, including the person or persons to be joined, taking into account all
relevant circumstances” to order joinder or intervention of a third party into an existing
arbitration. A forced joinder of a third party under this provision raises issues with regard to
consent to the arbitration agreement, which must be resolved in accordance with general rules
applicable for the determination of the parties to an arbitration clause.

§12.04 CONSOLIDATION AND JOINDER/INTERVENTION: SELECTION

OF ARBITRAL TRIBUNAL(S)
One of the most complex aspects of consolidation and joinder/intervention in arbitration is
the selection of the arbitral tribunal. In particular, the selection of a three-person arbitral
tribunal presents difficult questions when different arbitrations, involving multiple parties,
are consolidated or when new parties are joined in, or intervene in, an existing arbitration.
A representative problem arises where a respondent joins additional parties to an
arbitration. In this case, the tribunal will (often) already have been selected by the (pre-
existing) parties, and the new counterclaim-respondents or additional respondents may have
had no role in choosing any of the arbitrators. The same issues can arise when a “new”
arbitration involving parties B and C (without a tribunal) is consolidated with an existing
arbitration between parties A and B (with a tribunal), where A and B have already selected
the arbitrators in the existing arbitration, without C having had any participation in the
choice.
As these examples suggest, the selection of a tribunal in multiparty cases raises important
due process concerns. As discussed above, many jurisdictions require that the parties be
treated equally in the arbitral proceedings; this principle applies with particular force to the
parties’ participation in the constitution of the tribunal. It is, however, difficult to ensure
equality of treatment in selecting arbitrators in cases involving consolidation or
joinder/intervention.
The principle of equality of treatment was applied in Siemens AG and BKMI
Industrieanlagen GmbH v. Dutco Construction Co.,28 where the French Cour de cassation
annulled an award entered in a three-party arbitration in which the two “respondents” had
each claimed the right to appoint a separate arbitrator. The respondents had made a joint
appointment, but only under protest. In annulling the resulting award, the Cour de cassation
reasoned that “the principle of the equality of the parties in the designation of arbitrators is a
matter of public policy; it can be waived only after the dispute has arisen.”29 The court
apparently held that, if one party is entitled under the parties’ agreement to nominate a co-
arbitrator, but the other parties are not, this constitutes unequal treatment of the parties
(“equality of the parties”), which violates principles of procedural public policy.
Under this standard, it will ordinarily not be acceptable to consolidate arbitrations, or to
join a party to an existing arbitration, if that entails denying one party its right to appoint an
arbitrator (and participate in selection of a presiding arbitrator), while the other party (or
parties) retain(s) that right; in each case, one party is denied an equal opportunity to
participate in selection of the tribunal, at best (where institutional rules so provide) on the
basis of an advance waiver. Under the rationale of the Dutco decision, such advance waivers
are unenforceable.
On the other hand, parties arguably can be expected to have anticipated that consolidation
or joinder may result in the loss of the party’s opportunity to nominate an arbitrator and in
an appointing authority or national court appointing all the arbitrators; that is particularly
true where a party has agreed to institutional rules, such as the LCIA, Swiss or NAI Rules,
permitting consolidation and joinder/intervention over a party’s objections. Again, however,
the rationale of the Dutco decision, forbidding advance waivers of rights to equal participation
in constituting a tribunal, would invalidate such provisions.
In part as a reaction to the Dutco decision, most institutional rules have (fairly recently)
adopted provisions dealing with appointment of arbitrators in multiparty cases. Thus,
Article 10 of the 1998 ICC Rules was amended to provide that, in multiparty cases involving
a three-person tribunal, the claimants shall jointly nominate a co-arbitrator, and the
respondents shall then do the same. If any such joint nominations are not possible, the ICC
Court is then authorized by Article 10(2) to “appoint each member of the Arbitral Tribunal”
– giving the ICC, rather than the parties, authority to appoint all the arbitrators.
The 2012 ICC Rules did not significantly change this approach. Under Article 12 of the
2012 ICC Rules, co-claimants and co-respondents are required to jointly nominate co-
arbitrators and the ICC Court retains the discretion to appoint the entire tribunal where either
the co-claimants or co-respondents are unable to agree upon a joint nomination. Article 12
provides for a similar procedure where an additional party is joined to the arbitration
(requiring that party’s agreement with the nomination of either the co-claimants or co-
respondents).
The ICC Court has substantial discretion in constituting tribunals under Article 12. The
Court is free, where the respondents have not replied to a Request for Arbitration or where
respondents under common control have refused to jointly nominate a co-arbitrator, to
permit the claimant(s) to nominate a co-arbitrator; this preserves to a substantial extent the
parties’ right to participate in the selection of the tribunal. Where, however, the respondents
(or the claimants) have different interests, and cannot agree on a joint nomination for a co-
arbitrator, Article 12 grants the ICC power to select all three arbitrators who will comprise
the tribunal (designating one as chairman), without regard to any party’s nomination and
without identifying any of the three as the “claimant’s” or “respondent’s” nomination.
Similarly, Article 8 of the LCIA Rules provides that, in multiparty cases, the LCIA Court
“shall appoint the Arbitral Tribunal without regard to any party’s nomination.” The only
exception is where all parties agree to treat the multiple parties as “represent[ing] two
separate sides,” each of which may nominate an arbitrator. 30 Other institutional rules are
broadly similar in their approaches to the appointment of arbitrators in multiparty cases.31

§12.05 MULTICONTRACT ISSUES IN INTERNATIONAL ARBITRAL

PROCEEDINGS
In practice, arbitral proceedings frequently involve multiple contracts, as well as multiple
parties. These proceedings raise less complicated procedural issues than multiparty
arbitrations. They also raise issues of interpretation of the arbitration agreement(s),
particularly as to question of scope (i.e., does an arbitration clause in one contract extend to
disputes under other contracts); these issues are discussed above.32
A threshold procedural issue concerns whether an arbitral institution will accept a request
for arbitration involving claims under more than a single contract. This issue is particularly
acute where the institution, like the ICC, SCC, or ICSID, must perform a preliminary prima
facie jurisdiction review. 33 Even where the arbitral institution permits a multicontract
arbitration to proceed, however, the arbitral tribunal will be required to determine (subject to
possible subsequent judicial review) whether the scope of the parties’ arbitration
agreement(s) permits the proposed multicontract arbitration.
_________________________
1. Empirical evidence indicates that a significant and increasing number of international arbitrations involve
multiparty disputes, with roughly a third of all ICC arbitrations now involving multiple parties. Nearly 33% of all
new ICC Requests for Arbitration involve multiple parties. See ICC Statistical Report 2010, at www.iccdrl.com; G.
Born, International Commercial Arbitration 2067–72 (2009).
2. One party to a tripartite dispute may be found liable to another party in one arbitration, while in a second
arbitration the same party may be denied recovery from a different party on a theory inconsistent with the rationale
of the first proceeding. That result is unlikely in a consolidated arbitration.
3. Bernini, Overview of the Issues, in ICC, Multiparty Arbitration 161, 163 (1991).
4. All the members of the tribunal could be appointed by the appointing authority. However, this would deny each
party the opportunity to participate directly in selecting the tribunal. That is a significant change in customary
practice, which not all parties may desire.
5. See, e.g., Australian International Arbitration Act, §24; Irish Arbitration (International Commercial) Act, 1998, §9
(if “ the parties agree to confer such powers on th[e] tribunal”); Singapore Arbitration Act, §26 (if “ the parties
agree to confer such power on the arbitral tribunal”).
6. See, e.g., Bermuda Arbitration Act, §9; New Zealand Arbitration Act, Second Schedule, §2; British Columbia
Commercial Arbitration Act, §21.
7. British Columbia International Commercial Arbitration Act, §27(2) (emphasis added). Most other arbitration
legislation which deals expressly with the subject of consolidation or joinder/intervention is similar. See G. Born,
International Commercial Arbitration 2075–82 (2009).
8. 527 F.2d 966 (2d Cir. 1975).
9. Compañía Española de Petoleos, 527 F.2d at 975 (emphasis added).
10. See G. Born, International Commercial Arbitration 2079–81 (2009).
11. See, e.g., Champ v. Siegel Trading Co., 55 F.3d 269 (7th Cir. 1995) (no consolidation of arbitration without
consolidation provision in arbitration agreement); Am. Centennial Ins. Co. v. Nat’l Cas. Co., 951 F.2d 107 (6th
Cir. 1991) (“ a district court is without power to consolidate arbitration proceedings, over the objection of a
party to the arbitration agreement, when the agreement is silent regarding consolidation”). See G. Born,
International Commercial Arbitration 2078–80 (2009).
12. Gvn’t of U.K. v. Boeing Co., 998 F.2d 68, 73–74 (emphasis added).
13. See G. Born, International Commercial Arbitration 2080–81 (2009).
14. See, e.g., Connecticut Gen. Life Ins. Co. v. Sun Life Assur. Co . of Canada, 210 F.3d 771, 775 (7th Cir. 2000)
(interpreting arbitration agreement to permit court-ordered consolidation); Protective Life Ins. Corp. v. Lincoln
Nat’l Life Ins. Corp., 873 F.2d 281 (11th Cir. 1989) (“ the sole question for the district court is whether there is a
written agreement among the parties providing for consolidated arbitration”).
15. See supra pp. 48–49.
16. See G. Born, International Commercial Arbitration 2082–86 (2009).
17. Connecticut Gen. Life Ins. Co. v. Sun Life Assur. Co. of Canada, 210 F.3d 771 (7th Cir. 2000).
18. This view is not free from doubt, because the parties also can be assumed to have impliedly expected that their
arbitral proceedings with one another would be confidential and that they would be able to participate in
selection of the tribunal in such proceedings (in accordance with customary practice). Nevertheless, where all the
parties are involved in the same transaction, with interrelated contractual obligations, their agreement to
identical dispute resolution provisions can fairly be interpreted as impliedly accepting consolidation and/or
joinder or intervention by other parties to such dispute resolution provisions. That conclusion is supported by
the parties’ general obligation to resolve their disputes by arbitration in good faith, which can be interpreted as
including cooperation in an efficient dispute resolution process that avoids the risks of inconsistent decisions.
19. If an agency, alter ego, guarantor, or similar relationship permits treating a non-signatory as party to the
arbitration agreement in one contract, then there will be arguable grounds for permitting or ordering
joinder/intervention or consolidation. See supra pp. 95–99. That is because all “ parties” (including non-
signatories) have acceded to the same arbitration agreement. Absent such circumstances, however, the parties
who are sought to be joined will not even be party to the arbitration agreement, much less able to require (or be
subject to) joinder or consolidation in relation to arbitral proceedings under such agreement.
20. New Zealand Arbitration Act, Schedule 2, §2; Hong Kong Arbitration Ordinance, Schedule 2, 2(1).
21. See, e.g., Cal. C.C.P . §1281.3.
22. See, e.g., Mass. Gen. Laws Ann., C. 251, §2A (“ A party aggrieved by the failure or refusal of another to agree to
consolidate one arbitration proceeding with another or others, for which the method of appointment of the
arbitrator or arbitrators is the same, or to sever one arbitration proceeding from another or others, may apply to the
 superior court for an order for such consolidation or such severance. The court shall proceed summarily to the
determination of the issue so raised. ... No provision in any arbitration agreement shall bar or prevent action by
the court under this section.”) (emphasis added); Fla. Stat. Ann. §684.12; Tex. Civ. Prac. & Rem. Code Ann.
§172.173; Ore. Rev. Stat. §36.506 (Supp. 2002).
23. Revised Uniform Arbitration Act, §10(a) (2000).
24. As interpreted by the ICC Court, the 1998 ICC Rules almost entirely prohibited joinder or intervention of an
additional party in an existing arbitration (save where the parties agree separately thereto). Thus, institutional
practice accorded the claimant in an ICC arbitration freedom to structure “ its” arbitration as it chooses, naming
(or not naming) the other parties to the arbitration that it thinks fit (provided that they are parties to the
arbitration agreement). Historically, this meant that the parties named as respondents could not join additional
parties as co-respondents, nor implead additional parties as claimants or counter-claim respondents; it also meant
that other parties could not intervene in the arbitration if they had not been named in the request for arbitration.
See Y. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration 70–72 (2d ed. 2005).
25. Article 8 of the 2012 ICC Rules allows for cross-claims between multiple parties (“ made by any party against
any other party”), which also includes claims made by co-parties in the same role, such as one respondent against
another respondent. Similarly, Article 9 confirms that claims under multiple contracts may be asserted in a single
arbitration (regardless whether they are asserted under a single arbitration agreement or multiple arbitration
agreements).
26. Under the CEP ANI Rules, consolidation may be ordered if the relevant contracts contain CEP ANI arbitration
clauses and if the underlying disputes are “ closely related or indivisible.” CEP ANI Rules, Art. 11. Similarly,
Article 11 of the SCC Rules provide that the Board of the SCC Arbitration Institute may “ decide to include the
claims contained in [a] Request for Arbitration [under the SCC Rules] in ... pending proceedings [under the SCC
Rules].”
27. Swiss International Arbitration Rules, Art. 4(1).
28. Judgment of 7 January 1992, Sociétés BKMI et Siemens v. Société Dutco , 119 J.D.I. (Clunet) 707 (French Cour
de cassation civ. 1e) (1992), Jarrosson, Note.
29. Judgment of 7 January 1992, Sociétés BKMI et Siemens v. Société Dutco , 119 J.D.I. (Clunet) 707, 708 (French
Cour de cassation civ. 1e) (1992).
30. LCIA Rules, Art. 8(1). The LCIA Rules parallel the ICC Rules, but make it more likely that the LCIA will
appoint all the members of the tribunal, without regard to the parties’ nominations.
31. See, e.g., ICDR Rules, Art. 6(5); SCC Rules, Art. 13(4) (“ Where there are multiple Claimants or Respondents and
the Arbitral Tribunal is to consist of more than one arbitrator, the multiple Claimants, jointly, and the multiple
Respondents, jointly, shall appoint an equal number of arbitrators. If either side fails to make such joint
appointment, the Board shall appoint the entire Arbitral Tribunal.”); JCAA Rules, Art. 45.
32. See supra pp. 91–92.
33. In most cases, arbitral institutions will inquire whether the relevant agreements all involve the parties to the
arbitration, relate to a single transaction and do not contain irreconcilable dispute resolution provisions. For
example, where different contracts contain provisions for ICC arbitration and national court jurisdiction,
provisions for arbitration in Geneva (in English) and Paris (in French), the ICC has refused to permit an
attempted multicontract arbitration to proceed. Whitesell & Silva-Romero, Multiparty and Multicontract
Arbitration: Recent ICC Experience, in ICC Complex Arbitrations 7, 14–18 (ICC Ct. Bull. Spec. Supp. 2003).
Chapter 13
Choice of Substantive Law in International Arbitration

Parties often choose international arbitration to resolve their disputes because they desire
enhanced certainty concerning their legal rights. Among other things, parties want a stable
substantive legal regime and neutral procedural framework. These objectives are particularly
important in international contexts, where differences between national laws and procedures
can be great and where the needs for predictability are particularly acute.
International arbitration seeks to provide predictability with respect to both substantive
and procedural law, often by combining a choice-of-law clause with an arbitration agreement.
As explained by the U.S. Supreme Court in Scherk v. Alberto-Culver Company:

[U]ncertainty will almost inevitably exist with respect to any contract touching two or
more countries, each with its own substantive laws and conflict-of-laws rules. A
contractual provision specifying in advance the forum in which disputes shall be
litigated and the law to be applied is, therefore, an almost indispensable precondition to
achievement of the orderliness and predictability essential to any international business
transaction. [Absent such agreements, one enters] the dicey atmosphere of ... a legal no-
man’s-land [which] would surely damage the fabric of international commerce and trade,
and imperil the willingness and ability of businessmen to enter into international
commercial agreements.1

As discussed above, it is important to distinguish several different applicable laws which are
relevant in international arbitration: (1) the substantive law applicable to the merits of the
parties’ dispute, including the underlying contract and non-contractual claims; (2) the
substantive law applicable to the parties’ arbitration agreement, including its existence,
validity and interpretation; (3) the law applicable to the arbitral proceeding (i.e., the
“procedural law”); and (4) the conflict of laws rules for selecting each of the foregoing laws.2
As also discussed above, it is possible for each of these laws to be that of a different state.
This Chapter concerns only the substantive law applicable in international arbitration to the
merits of the parties’ dispute (and not the law applicable to the arbitration agreement or the
procedural law of the arbitration).
In considering the choice of substantive law it is essential to distinguish two circumstances:
(1) situations where there is no choice-of-law agreement and the tribunal must select the
substantive law solely by applying conflict of laws rules or directly choosing an applicable
substantive law; and (2) situations where the parties have agreed upon the applicable
substantive law. Virtually all legal systems and all arbitral tribunals give effect to choice-of-
law agreements in accordance with their terms; the approach to the choice of law in the
absence of a choice-of-law agreement is less uniform, with different courts and tribunals
taking different approaches.

§13.01 ARBITRAL TRIBUNAL’S AUTHORITY TO SELECT APPLICABLE

SUBSTANTIVE LAW

Absent contrary agreement, arbitrators generally possess broad power – comparable to that
which exists for arbitrators’ decisions regarding application of substantive law rules – to
select and apply choice-of-law rules for selecting the applicable substantive law in an
arbitration.

[A] National Arbitration Legislation

National arbitration legislation generally provides that arbitral tribunals have the authority to
select the law governing the substance of the parties’ dispute. As detailed below, most
arbitration statutes distinguish between situations where the parties have agreed to a choice-
of-law clause, selecting a specified law, and cases where they have not; in both situations,
however, arbitrators are empowered to select the substantive law governing the parties’
dispute.3 For example, Article 28 of the UNCITRAL Model Law provides for the arbitrators
to apply either the law chosen by the parties (in Article 28(1)) or, absent a choice-of-law
agreement, the law chosen by the tribunal (in Article 28(2)). Virtually all other arbitration
legislation is similar; even absent statutory provisions, case law in most states recognizes the
arbitrators’ authority to select the law governing the substance of the parties’ dispute.4
In most jurisdictions, the arbitrators’ choice of substantive law is subject to only limited
judicial review in annulment proceedings. As discussed below, judicial review of arbitral
awards in many states does not involve any scrutiny of the merits of the arbitrators’
substantive decisions; this generally extends to arbitrators’ decisions regarding the selection
and application of choice-of-law rules.5

[B] Institutional Arbitration Rules

Institutional rules generally parallel national arbitration legislation in recognizing the authority
of arbitral tribunals to select the law governing the merits of the parties’ dispute. Again, most
institutional rules distinguish between cases involving choice-of-law agreements and cases
involving the application of conflict of laws rules in the absence of agreement. In both
instances, however, most institutional rules grant the arbitrators broad authority to choose
the applicable law (e.g., Article 35 of the UNCITRAL Rules; Article 21 of the 2012 ICC
Rules). These provisions further limit the extent of any judicial review of arbitrators’ choice-
of-law decisions, by affirming the parties’ acceptance of the tribunal’s broad authority.

§13.02 CHOICE OF SUBSTANTIVE LAW IN ABSENCE OF AGREEMENT

ON APPLICABLE LAW

In some cases, the parties to an international dispute will not have agreed, either in their
underlying contract or otherwise, upon the substantive law governing their relations. In these
circumstances, the arbitral tribunal will be required to select the applicable substantive law,
either applying some set of conflict of laws rules or “directly” applying a substantive law.

[A] Choice of Substantive Law under National Arbitration Legislation in

Absence of Choice-of-Law Agreement

Arbitration statutes take differing approaches to selection of the applicable substantive law
in the absence of a choice-of-law agreement. Many statutes grant arbitrators substantial
discretion to select an appropriate set of conflict of laws rules and, applying these rules, to
choose a substantive law. In contrast, other statutes take a different approach, prescribing a
specific choice-of-law rule for all arbitrations seated in national territory. In principle, five
basic choice-of-law approaches can be identified.

Basic Choice-of-Law Approaches

1. Mandatory Application of Generally-Applicable Conflict of Laws Rules of Arbitral
Seat
2. M andatory Application of Specialized Conflict of Laws Rules of Arbitral Seat
3. “Applicable” or “Appropriate” Conflict of Laws Rules Chosen by Arbitral Tribunal
4. “Direct” Application of Substantive Law by Arbitral Tribunal
5. M andatory Law Rules

First, although long regarded as archaic, the law of the arbitral seat may mandatorily require
arbitrators to apply generally-applicable local conflict of laws rules or local substantive law.
For example, in England, prior to the 1996 Arbitration Act, arbitrators were said to be
required to apply the conflicts rules applicable in English courts.6 Alternatively, in some
states, either law or practice require the application of local substantive law by arbitrators;
this approach has largely been abandoned in contemporary legislation and practice.7
Second, some legislation imposes specialized choice-of-law rules on arbitral tribunals
seated within national territory (albeit ordinarily via general formulae that leave tribunals with
broad freedom to select an applicable law). For example, Article 187(1) of the Swiss Law on
Private International Law provides that “[t]he arbitral tribunal shall decide the dispute
according to the rules of law chosen by the parties or, in the absence of such a choice,
according to the rules of law with which the case has the closest connection.” Other states
have adopted comparable statutory provisions, including Germany, Italy and Japan.8
Third, some statutes authorize arbitrators to apply the choice-of-law rules they consider
“applicable” or “appropriate.” Thus, Article 28(2) of the UNCITRAL Model Law provides:
“failing any designation by the parties, the arbitral tribunal shall apply the law determined by
the conflict of laws rules which it considers applicable.” The English Arbitration Act, 1996, is
similar, providing in §46(3) that: “[i]f or to the extent that there is no ... choice or agreement
[on the applicable substantive law,] the tribunal shall apply the law determined by the
conflict of laws rules which it considers applicable.” To comparable effect, U.S. courts
almost uniformly hold that arbitral tribunals possess broad freedom to select the applicable
choice-of-law rules and applicable substantive law.9
By its terms, this approach does not require the tribunal to apply the conflict of laws rules
of the seat (nor any other specified jurisdiction); nor does this approach impose any specific
choice-of-law rules on the arbitrators. Instead, this approach grants the tribunal broad power
to apply those conflicts rules that it concludes are most appropriate to the case.
Fourth, some legislation grants tribunals the power “directly” to apply whatever
substantive rules of law they consider appropriate, without applying conflict of laws rules.
For example, Article 1511 of the French Code of Civil Procedure provides that in the absence
of party-chosen rules of law, the tribunal may resolve the dispute “in accordance with the
rules of law it considers appropriate.” Other legislation, in Europe and elsewhere, is similar.10
These statutory regimes putatively require no conflict of law analysis at all and permit the
“direct” application of substantive rules of law.
Finally, and exceptionally, a nation’s law may dictate that particular claims or defenses
must be heard by the arbitrator under mandatory national law. For example, where certain
statutory protections – like antitrust, securities, or labor protection laws – are involved,
national courts have held that arbitrators are required to consider claims based on those
laws.11 This can be regarded as a type of specialized choice-of-law rule, mandating
application of a specific substantive rule in particular cases.

[B] Choice of Substantive Law under Institutional Arbitration Rules in

 Absence of Choice-of-Law Agreement

Institutional rules generally grant the arbitrators broad freedom in selecting an applicable
substantive law (in the absence of agreement by the parties). For example, Article 35(1) of
the UNCITRAL Rules provides that, failing agreement by the parties, “the arbitral tribunal
shall apply the law which it determines to be appropriate.” A few other institutional rules are
essentially identical.12
In contrast, most institutional rules permit the tribunal to apply directly the substantive
law it considers “appropriate,” without requiring express reference to any conflict of laws
principles. For example, Article 21(1) of the 2012 ICC Rules provides “[t]he parties shall be
free to agree upon the rules of law to be applied by the Arbitral Tribunal to the merits of the
dispute. In the absence of any such agreement, the Arbitral Tribunal shall apply the rules of
law which it determines to be appropriate.” Other institutional rules are similar.13
Finally, a few sets of institutional rules require the arbitrators to apply the law of the state
with the “closest connection” to the parties’ dispute.14 These rules not only require a choice-
of-law analysis, but prescribe the particular conflict of laws rule that must be applied.

[C] Relationship between Institutional Arbitration Rules and National Law

As discussed above, some arbitration legislation provides a specialized conflict of laws rule
for international arbitrations seated within national territory (e.g., Switzerland, Germany).
This gives rise to questions as to whether the provisions of institutional rules (such as Article
33(1) of the UNCITRAL Rules), granting arbitrators authority to select the “appropriate”
conflicts rule or substantive law, permit a tribunal to apply a conflict of laws system other
than that which is statutorily specified. For example, can an ICC arbitrator in an arbitration
seated in Switzerland (without an express choice-of-law clause) apply a conflicts rule other
than the “closest connection” formula in Article 187(1) of the Swiss Law on Private
International Law (excerpted above)?
The resolution of this issue is in the first instance a question of national law. In most
instances, national law should be interpreted as providing that the parties’ agreement to the
ICC Rules’ choice-of-law formula supersedes the statutory formula (in light of the strong
deference to party autonomy, discussed below). That is confirmed by the fact that each of
these statutory regimes permits the parties to select the law applicable to their relations
directly, and there is no reason that an indirect choice of law, through the choice of a conflict
of laws rule, is not equally valid. Nonetheless, authorities in some jurisdictions with
statutory choice-of-law formulae reach contrary conclusions, holding that such formulae are
mandatorily applicable in arbitrations conducted on local territory.15
[D] Choice-of-Law Rules Applied by Arbitral Tribunals in Absence of
Choice-of-Law Agreement
Within the foregoing legal framework, arbitral tribunals must make decisions in individual
cases regarding the selection of the applicable substantive law (absent a choice-of-law
agreement). Those decisions require the application of relevant international conventions,
arbitration legislation and institutional rules, as well as general conflict of laws principles.
In some cases, those sources may provide relatively clear guidance for the tribunal – as, for
example, in an arbitration where the parties have agreed to institutional rules prescribing a
choice-of-law rule16 or seated the arbitration in a jurisdiction with a mandatory conflicts rule
for international arbitrations.17 In most cases, however, arbitrators are either expressly or
impliedly granted broad powers with regard to choosing the applicable substantive law
(absent a choice-of-law agreement) – including authority to apply the conflicts rules that they
deem “applicable”18 or the substantive rules that they deem “appropriate.”19 The resulting
latitude has produced a considerable range of choice-of-law decisions by arbitral tribunals.

[1] Choice-of-Law Rules of Arbitral Seat

The historic view in many states was that arbitral tribunals were mandatorily required to
apply the arbitral seat’s choice-of-law rules. A variation (discussed below) was the view that
the seat’s substantive laws were mandatorily applicable to the merits of the parties’ dispute.
This approach derives from historic views of international arbitration, which regarded a
tribunal as bound by the “procedural” law of the arbitral seat, generally regarded as including
the seat’s choice-of-law rules. Resolutions adopted by the Institute of International Law in
1957 reflected this approach, providing that “[t]he rules of choice of law in the state of the
seat of the arbitral tribunal must be followed to settle the law applicable to the substance of
the difference.”20 Consistent with this, a leading English authority (written prior to the
English Arbitration Act, 1996), observed “[n]or can an English arbitrator apply any conflict
of laws rules other than English rules.”21 A number of judicial decisions and arbitral awards
(particularly older ones) from civil law jurisdictions reached similar results, directly applying
the conflict of laws rules of the seat.22
A comparable, but distinct, view was taken in the United States, where the traditional
position was that, in the absence of a choice-of-law agreement, the arbitrators should apply
the substantive law of the state in which the arbitration was seated to the merits of the
parties’ dispute. In the words of one commentator, it was “widely held that the parties who
have chosen a place of arbitration have thus impliedly agreed on the applicability of both the
procedural and substantive law of that place.”23 Little reference was made to what conflict of
laws rules dictated this result, or were to be applied by the arbitrator. Rather, the parties’
selection of the seat was deemed to be an implied choice of the seat’s substantive law.
The traditional view that the seat’s choice-of-law or substantive law rules must be applied
by arbitrators has been eroded substantially in recent decades. Commentators, courts and
other authorities have rejected the “arbitral seat” rule for less mechanical approaches.
According to one commentator, there has been an “almost total abandonment of the
application of the rules of conflict of the so-called arbitral forum.”24 The same skepticism
was exhibited towards authorities treating agreement on the seat as an implied choice of
substantive law. As a frequently-cited award put it: “[i]t is appropriate to eliminate
forthwith the law of the forum, whose connection with the case is purely fortuitous.”25

[2] Choice-of-Law Rules that Arbitral Tribunal Considers “Appropriate”

As discussed above, Article 28(2) of the UNCITRAL Model Law and similar legislation, as
well as some leading institutional rules, provide that the tribunal shall “apply the law
determined by the conflict of laws rules which it considers appropriate.” A number of awards,
including awards not subject to the M odel Law, also adopt this standard.26
The arbitrators’ freedom to select the “appropriate” conflicts rule should not be
understood to permit unfettered discretion. On the contrary, the arbitrators remain obligated
to select the conflicts rules that are “appropriate” in light of the procedural law of the
arbitration and the arbitration agreement; this is a selection with right answers and wrong
answers, and not a purely discretionary matter. For example, an arbitrator cannot select the
conflicts rules of his home jurisdiction, if it has no connection to the dispute, merely because
it is familiar.
In many cases, for reasons discussed elsewhere, the law of the arbitral seat or the parties’
implied choice-of-law agreement will require application of the conflicts rules of the seat.
Consistent with this, a number of contemporary awards have applied the choice-of-law rules
of the seat; other awards have looked to the various other choice-of-law rules outlined below
(e.g., cumulative, international standards).27

[3] “Cumulative” Application of Choice-of-Law Rules

Arbitrators sometimes apply the conflicts rules of each of the states with a connection to the
dispute. As a practical matter, this “cumulative” approach virtually always concludes that all
potentially relevant conflicts rules select the same law. Alternatively, some awards apply a
variation of this analysis that considers application of all potentially applicable national (or
other) substantive laws.28 When either of these results occurs, it demonstrates a particular
type of “false conflict.” Proponents of the analysis cite its “internationalizing” effects, which
are seen (rightly) as well-suited for application in international contexts.29

[4] Application of Substantive Law of State with Closest Connection to

Dispute

As discussed above, some arbitration legislation prescribes a “closest connection” standard

for tribunals seated on national territory;30 where such legislation is applicable, tribunals
typically have applied the closest connection standard. Indeed, even where no such statutory
rule applies, some awards have applied a “closest connection” choice-of-law rule.31 This
approach draws support, as to the choice-of-law analysis applicable to contracts, from the
related approaches of the Rome I Regulation on the Law Applicable to Contractual
Obligations and its predecessor, Rome Convention, both adopting a “closest connection”
standard, and the Restatement (Second) Conflict of Laws adopting a “most significant
relationship” standard.32

[5] Choice-of-Law Rules of the State Most Closely Connected to Underlying

Dispute

Another approach applied by arbitral tribunals is selecting the conflict of laws rules of the
state that is most closely connected to the parties’ dispute. This approach suffers important
difficulties. In particular, it requires identifying what state is most “closely connected” to a
dispute – itself a potentially complex matter; then identifying what that state’s conflicts rules
are – again, not necessarily straightforward; and finally applying those conflicts rules to
select a substantive law – requiring a further, sometimes complex analysis.

[6] “International” Choice-of-Law Rules

Some arbitral decisions derive choice-of-law rules from non-national sources – either
“international” conflict of laws rules or perceived “general” principles of law. If a predictable
body of international choice-of-law rules could be identified or developed, it would comport
well with the objectives that lead parties to agree to international arbitration as a means of
resolving their disputes – neutrality, predictability and effective international enforcement.
One recent award explained these rationales well:
 [M]uch [is] to be said in favour of adopting generally accepted principles of
international conflict of laws. The fact that the dispute arises out of dealings between
one government and an instrumentality of another government gives them a unique
international flavour. Hence, the parties could reasonably have contemplated that
arbitrators would apply generally accepted international conflicts-of-law rules in arriving
at the applicable law by which their dispute would be resolved.... In the circumstances
of the present arbitration, which is truly international in character, the Arbitral Tribunal
is of the opinion that it should adopt generally accepted international conflict of laws
rules.33

Regrettably, however, there is as yet no such body of international conflict of laws rules.
Indeed, there are very different approaches to conflict of laws in different legal systems. This
may change over time, as common choice-of-law principles are articulated in international
conventions, awards and elsewhere, but for the time being this is an aspiration, rather than a
reality.
In practice, tribunals that have applied “international” conflicts principles have generally
looked to international treaties addressing choice-of-law issues, even when those agreements
are not, by their terms, directly applicable. In particular, tribunals have relied on the U.N.
International Sale of Goods Convention, the 1955 Hague Sales Convention and the Rome
Regulation on the Law Applicable to Contractual Obligations and the Rome Convention. 34
Alternatively, some tribunals have relied on general principles that they have discerned in
earlier awards considering conflict of laws matters.35

[7] Application of Non-National Legal System in Absence of Parties’

Choice-of-Law Agreement

Application of either a choice-of-law system or “direct” application of the appropriate

substantive law results in application of some set of legal rules. In most cases, this will be the
national law of a particular state, selected through the application of a conflict of laws
system. Nonetheless, a few international tribunals have applied so-called non-national legal
systems or rules of law – including lex mercatoria, general principles of law, the UNIDROIT
Principles of International Commercial Contracts, or the Principles of European Contract
Law (“PECL”). The content of these various non-national systems is discussed below.36
It is unclear whether the selection of a non-national legal system will result in a valid award
(at least absent a choice-of-law agreement selecting such a system). As discussed below,
Article 28(1) of the M odel Law (as well as some other arbitration statutes37 ) provides for the
tribunal to apply the “rules of law” selected by the parties. The reference to “rules of law,”
rather than merely “law,” has been interpreted as permitting parties to select non-national
legal systems in their choice-of-law agreements. In contrast, Article 28(2) of the Model Law
provides for the arbitrators to apply the “law” determined by applicable conflicts rules. That
difference in the text of Articles 28(1) and 28(2) suggests that arbitrators may not – absent a
choice-of-law agreement selecting such a legal system – apply non-national rules of law.38
A few jurisdictions, including Switzerland and Canada, have modified Article 28(2) of the
Model Law to refer to “rules of law.”39 This change is intended to authorize arbitrators to
select a set of non-national rules to govern a dispute, even absent an agreement to this effect.
Nonetheless, several influential jurisdictions have declined to follow this approach when
adopting versions of the M odel Law, including England, Germany and Japan.
Assuming that arbitrators may select a non-national legal system, as a practical matter,
they have nonetheless refused to do so in most commercial cases. Non-national legal systems
generally fail to provide predictable results, particularly insofar as complex commercial affairs
are concerned.40 That is confirmed by the reluctance of commercial parties to agree to choice-
of-law clauses selecting non-national legal systems. Given this reluctance, tribunals are
generally very hesitant to impose non-national legal systems on commercial parties.

[E] “Direct” Application of Substantive Law

Some authorities conclude that international arbitrators are free to “directly” apply
substantive law rules, supposedly without first engaging in any choice-of-law analysis. As
discussed above, Article 1511 of the French Code of Civil Procedure authorizes arbitrators in
an international arbitration to “directly” apply the substantive law that they consider
appropriate. Similar legislation has been adopted in a few other states (as discussed above).41
Similarly, many institutional rules also permit “direct” application of substantive laws,
putatively without any conflict of laws analysis. Article 21(1) of the 2012 ICC Rules is
representative: “[i]n the absence of any such agreement [by the parties as to applicable law],
the Arbitral Tribunal shall apply the rules of law which it determines to be appropriate.”
Although frustration with contemporary choice-of-law rules is understandable, “direct”
application of national law is not an appropriate response. The purpose of conflict of laws
rules includes structuring the decision-maker’s discretion and providing parties with a
measure of certainty about the substantive law governing their conduct. “Directly” applying
a substantive law, putatively without conflict of laws analysis, leaves the parties’
substantive rights to turn on subjective, unarticulated instincts of individual arbitrators and
does little to further interests of predictability and fairness.

[F] Distinction between Matters of Substance and Procedure

A recurrent issue in conflict of laws analysis is identifying what issues are subject to (a) the
“substantive” law selected by the arbitrators’ choice-of-law analysis, and (b) the
“procedural” law governing the arbitration. Among other things, this question of
characterization applies to issues such as burden of proof, evidentiary matters, statutes of
limitations and remedies.42 The distinction between substantive and procedural issues is
elusive even within national legal systems. In the international context, where multiple
differing characterizations may exist, the distinction is even more complex.

[1] Burden of Proof

A recurrent question in international arbitration is what party bears the burden of proving a
particular issue. In general, the better view is that questions of burden of proof should not be
assimilated solely with either the substantive law governing the merits of the dispute or the
procedural law of the arbitration, but instead selected in light of both.

[2] Statutes of Limitations

Most nations impose limitations periods within which civil claims must be brought.
Choosing between various potentially applicable statutes of limitations in international
arbitration raises significant choice-of-law questions.
In some (particularly U.S.) jurisdictions, statutes of limitations are regarded as
“procedural,” and therefore governed by the law of the forum.43 In contrast, civil law states
generally regard statutes of limitations as “substantive,” and hold that limitations issues are
governed by the law applicable to the merits of the parties’ claims. 44 Although the historic
(U.S.) common law position has eroded somewhat in recent years, the potential for
inconsistent results remains substantial. In general, the better and, in practice, more common
approach is to assimilate limitations issues to the substantive law governing the dispute,
rather than to look to the law of the arbitral seat.

[3] Damages and Remedies

Issues of characterization and choice of law also arise with regard to the law governing
damages and other remedies. Again, the historic position in many common law jurisdictions
was that questions of remedy (including damages) were governed by the law of the forum.
The civil law position was generally that issues of remedy were assimilated to the substance.
As with limitations issues, the more common approach is to treat damages as an aspect of the
substantive law governing the parties’ dispute.

[G] Trade Usages

Many national arbitration statutes and institutional rules provide that international arbitral
tribunals either may or must consider “trade usages” in reaching their decision. Article 28(4)
of the UNCITRAL Model Law is representative, providing that “in all cases, the arbitral
tribunal shall decide in accordance with the terms of the contract and shall take into account
the usages of the trade applicable to the transaction.” Other legislation is similar, as are
institutional rules.45 These provisions underscore arbitration’s historic roots in, and objective
of, providing resolutions of international business disputes in a manner that accords with
commercial expectations and practices.

§13.03 CHOICE OF LAW GOVERNING THE MERITS OF THE PARTIES’

DISPUTE PURSUANT TO CHOICE-OF-LAW AGREEMENTS

International arbitration agreements typically include, or accompany, a choice-of-law

provision addressing the substantive law applicable to the parties’ contract (or, more
broadly, their entire relationship). 46 As noted above, a choice-of-law clause provides
enhanced predictability regarding the parties’ contractual obligations and is ordinarily a
critical aspect of any international transaction.47 Prior agreement on the substantive law may
also provide important advantages to one party (for example, by securing a foreign investor
against a state’s unilateral changes in its own local law or providing a lender with greater
security).48
Where a choice-of-law clause exists, three significant issues arise: (a) is the choice-of-law
agreement enforceable; (b) if so, subject to what exceptions; and (c) how is the choice-of-law
clause interpreted? These issues all require application of conflicts rules to determine what
effect to give to and how to interpret the parties’ choice-of-law agreement. Each of the
foregoing questions can arise both in the course of the arbitration and in any related judicial
enforcement proceedings. These issues will often be decided, in the first instance, by the
arbitrators (as opposed to a national court); the principal exception is where challenges based
on non-arbitrability of particular types of claims or disputes are made in a court.

[A] Presumptive Validity of Choice-of-Law Agreements

As a general proposition, international conventions, national laws and institutional rules
unequivocally affirm the parties’ freedom to select the substantive law applicable to their
dispute. Decisions by international arbitrators are to the same effect: as discussed below, in
most awards, a dominant feature is respect for party autonomy. Indeed, it is fair to say that
the parties’ autonomy to select the substantive law governing their commercial relations is a
general principle of international law, and, in practice, the almost invariable rule.
Preliminarily, the formation, validity, enforceability and interpretation of a choice-of-law
agreement are not solely matters of contract and instead necessarily depend on the
application of rules of law; to enforce a choice-of-law agreement, there must be reference to
some legal system that gives validity (or, in some instances, withholds validity) to the
agreement. This, in turn, requires the choice (explicit or implicit) and application of a set of
conflicts rules.
As discussed below, virtually all developed legal systems adopt similar approaches to
choice-of-law agreements selecting the substantive law, generally giving them full effect.
Accordingly, although the existence of a choice-of-law agreement does not obviate the need
for a conflict of laws analysis, it makes the results largely uniform.

[1] Presumptive Validity of Parties’ Choice-of-Law Agreement Selecting

Substantive Law under International Conventions

Leading international conventions recognize the parties’ autonomy to select the substantive
law governing their commercial relations. Although the New York Convention does not
expressly address the choice of the substantive law governing the parties’ commercial
relations, it acknowledges the parties’ freedom to select the law governing the arbitration
agreement and the arbitral proceedings.49 More directly controlling, Article VII(1) of the
European Convention provides: “The parties shall be free to determine, by agreement, the
law to be applied by the arbitrators to the substance of the dispute.”50
Other international treaties, not focused on arbitration, confirm the parties’ presumptive
autonomy to select the law governing their relations. The Rome Convention and Regulation
both provide, in Article 3(1) (titled “Freedom of Choice”), that “[a] contract shall be
governed by the law chosen by the parties.” As discussed below, the presumptive validity of
choice-of-law agreements under Article 3(1) is subject to the mandatory law of the forum (in
Article 7(2) of the Rome Convention and Article 9(2) of the Rome Regulation) and
potentially other states with a closer connection to the matter (in Article 7(1)).51
Similarly, the U.N. International Sale of Goods Convention contains provisions
recognizing the parties’ freedom to select the governing law. Article 6 of the Convention
provides “[t]he parties may exclude the application of this Convention or, subject to Article
12, derogate from or vary the effect of any of its provisions.” As with the Rome Convention,
this provision is not a binding rule of law unless an arbitral tribunal determines it to be
applicable through a conflict of laws analysis.

[2] Presumptive Validity of Parties’ Choice-of-Law Agreements Selecting

Substantive Law under Arbitration Legislation

The laws of most states recognize and enforce agreements as to the choice of law applicable
to the substance of parties’ commercial contracts. The presumptive validity of choice-of-law
agreements is subject only to limited exceptions under national law (which are more clearly
specified than under most international conventions).
The UNCITRAL Model Law directly addresses the subject of choice-of-law agreements
selecting the substantive law in international arbitrations. Article 28(1) provides that “the
arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by
the parties as applicable to the substance of the dispute.”52 Similarly, Article 1511 of the
French Code of Civil Procedure provides: “The arbitral tribunal shall resolve the dispute in
accordance with the rules of law chosen by the parties.” Other arbitration legislation is to the
same effect.53
Some states do not (expressly) provide a specific conflicts rule regarding choice-of-law
agreements in international arbitrations, but have adopted substantive rules of law applicable
to choice-of-law agreements generally. The United States is a prime example. The FAA is
silent with regard to the validity of choice-of-law agreements, but, under the laws of most
U.S. states, and under federal common law rules applicable in matters subject to the New
York Convention, such agreements are presumptively valid.54
Despite this almost universal position, a few nations (typically those without a history of
market economies) will not enforce choice-of-law agreements. Instead, they prescribe
mandatorily applicable conflict of laws rules, regardless of what the parties have agreed.55
Finally, some states take expansive views of the areas in which public policy will not give
effect to choice-of-law agreements. This is discussed below.

[3] Presumptive Validity of Parties’ Choice-of-Law Agreement Selecting

Substantive Law under Institutional Arbitration Rules

Recognition of party autonomy in the choice of substantive law is the unanimous approach
of institutional rules. For example, the UNCITRAL Rules provide, in Article 35(1), that
“[t]he arbitral tribunal shall apply the rules of law designated by the parties as applicable to
the substance of the dispute.” Similarly, Article 21(1) of the 2012 ICC Rules provides “[t]he
parties shall be free to determine the rules of law to be applied by the Arbitral Tribunal to the
merits of the dispute.” Most other institutional rules are similar. 56 These rules do not
override mandatory law limitations on the enforceability of choice-of-law agreements, but
they confirm the importance attached to party autonomy in international arbitration.

[B] Public Policy Limitations on Parties’ Choice of Law in International

Arbitration

Many national conflict of laws systems recognize that mandatory rules or public policy will
in some circumstances override an otherwise valid choice-of-law agreement. The broad
principles of this public policy exception are similar in most developed legal systems, but
application of the exception differs from jurisdiction to jurisdiction.

[1] Mandatory Laws and Public Policy

Most legal systems recognize that choice-of-law agreements may be rendered invalid or
unenforceable by over-riding public policy or mandatory law. Thus, while the Rome
Convention and Rome Regulation affirm the parties’ autonomy to select the substantive law
governing their relations, both instruments also provide, in Article 7(2) and Article 9(2), for
exceptions to that autonomy. Thus Article 9(2) of the Regulation (much like Article 7(2) of
the Convention) provides that “[n]othing in this regulation shall restrict the overriding
mandatory provisions of the law of the forum.” Similarly, Article 21 of the Rome Regulation
(like Article 16 of the Rome Convention) provides “[t]he application of a provision of the
law of any country specified by this Regulation may be refused only if such application is
manifestly incompatible with the public policy (‘ordre public’) of the forum.” These
provisions permit a court to deny effect to a choice-of-law clause, selecting a foreign law, on
the grounds that the chosen law violates the mandatory law or public policy of the forum.
U.S. choice-of-law rules are similar. Section 187 of the Restatement (Second) Conflict of
Laws provides that the parties’ chosen law will not be applied if it is “contrary to a
fundamental policy” of the forum (or, as discussed below, a foreign state in certain
circumstances).57 Other states apply comparable rules.58

[2] Content of “Public Policy” and “Mandatory Law”

There is considerable debate as to the content of “public policies” and “mandatory laws”
which are applicable under the foregoing standards. As in other contexts, the public
policy/mandatory law exception is potentially unpredictable (“an unruly horse”).59
 Partially in reaction to this, courts in many jurisdictions have taken very restrictive and
demanding views of public policy, limiting it to the status of an exceptional escape device.
The U.S. Supreme Court has emphasized even in domestic matters that a public policy
cannot be derived from “general considerations of supposed public interest,” but must be
based upon explicit and clearly-defined “laws and legal precedents”60 ; equally, the public
policy in question must, for these purposes, be “fundamental” and “substantial.”61
Definitions of “mandatory laws” under most civil law systems are similar. According to one
authority: “[A] mandatory rule (loi de police in French) is an imperative provision of law
which must be applied to an international relationship irrespective of the law that governs
that relationship.”62 For the most part, national courts have identified public policies,
capable of overriding a choice-of-law agreement, only in rare and narrowly-limited
instances.63

[3] “Foreign” Mandatory Laws and Public Policies

In addition, there are circumstances in which the mandatory law and public policies of a state
other than the forum state will be given effect under leading conflict of laws systems. This is
provided for in a number of legal systems.
Thus, Article 7(1) of the Rome Convention permits the forum state to disregard a
contractual choice-of-law clause and instead apply a foreign mandatory law. Article 7(1)
provides that “effect may be given to the mandatory rules of the law of another country with
which the situation has a close connection, if and in so far as, under the law of the latter
country, those rules must be applied whatever the law applicable to the contract.” More
recently, the Rome Regulation has also permitted application of foreign mandatory laws,
albeit in narrower circumstances, providing in Article 9(3) that “[e]ffect may be given to the
overriding mandatory provisions of the law of the country where the obligations arising out
of the contract have to be or have been performed, in so far as those overriding mandatory
provisions render the performance of the contract unlawful.”
In the United States, state common law, reflected in §187(2) of the Restatement (Second)
Conflict of Laws, is broadly similar to the Rome Convention, but more restrictive:

The law of the state chosen by the parties to govern their contractual rights and duties
will be applied, even if the particular issue is one which the parties could not have
resolved by an explicit provision in their agreement directed to that issue, unless ... b)
application of the law of the chosen state would be contrary to a fundamental policy of
a state which has a materially greater interest than the chosen state in the determination
of the particular issue and which, under the [general choice-of-law] rule of §188, would
 be the state of the applicable law in the absence of an effective choice-of-law by the
parties.

Like the Rome Convention, this provision permits a forum court to disregard a choice-of-law
agreement based on the public policies of a state other than the forum. The Restatement
(Second) is less expansive than the Convention with regard to both the forum’s and a foreign
state’s mandatory laws, in that it requires that the relevant state have a “materially greater
interest” with respect to a particular issue and that the foreign state’s laws would be selected
by otherwise applicable conflicts rules in the absence of a choice-of-law clause. Conversely,
the Restatement (Second) approach appears somewhat broader than the Rome Regulation,
which is limited to cases of illegality, in the place of performance.

[4] Authority of Arbitrator to Consider Mandatory Law or Public Policy

Issues of public policy have arisen with increasing frequency in international arbitration in
recent decades. In large part, this is due to expanding notions of arbitrability, which have
resulted in more frequent consideration of statutory claims by arbitral tribunals.
Public policy can play both a defensive and an offensive role in international arbitration.
First, mandatory law or public policy can render part or all of the parties’ underlying
contract, whether choosing an applicable law or otherwise, unenforceable. For example,
contractual restrictions can be void under competition laws, contractual waivers can be
unenforceable (for violations of statutory protections), or choice-of-law provisions may be
ineffective.
Second, mandatory laws or public policy can also be important in international arbitration
because it can provide the basis for an affirmative claim. Examples include antitrust, securities
and similar “public law” claims based on statutory protections, which may be available
regardless of the terms of the parties’ agreement.
As discussed elsewhere, arbitration is a creature of contract and the arbitrators are, in very
important respects, mandated to fulfill contractual functions. Given this, questions arise as to
the legal basis for an arbitrator to resolve a dispute based on a “mandatory” public policy or
statutory right, not incorporated in (and instead, in some cases, excluded by) the parties’
arbitration and choice-of-law agreement. In particular, queries are sometimes raised
concerning an arbitrator’s power to override the substantive terms of the parties’ contract or
the choice-of-law agreement (in both cases, based upon the application of mandatory laws).
Despite these queries, almost all contemporary authorities have concluded that, if the
parties’ arbitration agreement encompasses statutory or public law claims, that agreement
will ordinarily be a sufficient justification for the arbitrators’ power to resolve such claims.
Under this view, the parties will have granted the arbitrator the authority to resolve all
disputes, including mandatory law or public policy disputes, and unless some specific
legislative act forbids that grant, it should be enforced. As the U.S. Supreme Court reasoned
in its classic Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. decision:

[T]he international arbitral tribunal owes no prior allegiance to the legal norms of
particular states [and] has no direct obligation to indicate their statutory dictates. The
tribunal, however, is bound to effectuate the intentions of the parties. Where the parties
have agreed that the arbitral body is to decide a defined set of claims which includes, as
in these cases, those arising from the application of American antitrust law, the tribunal
therefore should be bound to decide that dispute in accord with the national law giving
rise to the claim.64

Following this reasoning, courts and tribunals have generally concluded that, when arbitrable
public law claims fall within an arbitration clause, arbitrators not only can but must resolve
them.65

[C] Implied Choice-of-Law Agreements

Choice-of-law agreements may be implied or tacit, as well as express. This has particular
importance in the context of international commercial arbitration.
As with most legal systems, Article 3(1) of the Rome Regulation (and, earlier, the Rome
Convention) recognizes the possibility of implied choice-of-law agreements, providing that a
choice-of-law agreement must be “expressed or demonstrated with reasonable certainty by
the terms of the contract or the circumstances of the case.”66 U.S. authority is even less
demanding, with the Restatement (Second) Conflict of Laws providing:

[E]ven when the contract does not refer to any state, the forum may nevertheless be able
to conclude from its provisions that the parties did wish to have the law of a particular
state applied. So the fact that the contract contains legal expressions, or makes reference
to legal doctrines, that are peculiar to the local law of a particular state may provide
persuasive evidence that the parties wished to have this law applied.67

A recurrent question is whether the parties’ selection of the arbitral seat constitutes an
implied choice of the seat’s substantive law. As discussed above, this was the historic
approach in some legal systems. More recent authority generally rejects this approach,
holding instead (as discussed above) that the selection of an arbitral seat is not necessarily a
choice of either the conflict of laws rules or the substantive law of the seat.68
As also discussed above, however, a considerable body of authority holds that the
selection of the seat presumptively indicates the choice-of-law rules that are applicable in the
arbitration.69 At the same time, some contemporary authorities treat the parties’ selection of
the seat as a simultaneous presumptive, albeit implied, choice of the substantive law
governing their contact. In the words of one English decision:

An agreement to refer disputes to arbitration in a particular country may carry with it,
and is capable of carrying with it, an implication of inference that the parties have
further agreed that the law governing the contract (as well as the law governing the
arbitral procedure) is to be the law of that country. But I cannot agree that this is a
necessary or irresistible inference or implication.70

Thus, in particular cases, the selection of the arbitral seat, together with other factors (such as
the nature of the transaction, language of the contract and arbitral institution) may constitute
an implied choice of the law governing the parties’ contract. Nonetheless, there are often
instances where selection of the seat is not held to be an implied choice of substantive law.71

[D] Defects in Formation of Choice-of-Law Agreement

As with other contracts, the validity of choice-of-law agreements may be challenged,
including for defects in formation. Thus, misrepresentation, duress, unconscionability,
mistake and other contract law defenses can be relied upon to challenge the existence or
validity of a choice-of-law clause. In principle, these defenses should be applied to the
choice-of-law clause as a separable agreement (comparable to the arbitration agreement).72

[E] Other Grounds for Challenging Choice-of-Law Agreements

In addition to objections based upon public policy or mandatory laws, tribunals have rejected
a wide variety of other arguments (impressive in the ingenuity that they reflect) objecting to
the validity of choice-of-law agreements. Thus, tribunals have refused to conclude that a
choice-of-law agreement was invalid because it selected a law that lacked a reasonable relation
to the parties’ transaction, that the chosen law was not “complete,” that the chosen law was
not sufficiently explicit, that the parties had picked a law that was “surprising,” or that the
parties had chosen a law that was unfair. 73 For the most part, arbitral practice and other
authorities reject these arguments.

§13.04 CHOICES OF SUBSTANTIVE LAW IN CHOICE-OF-LAW

AGREEMENTS
The most vital element of almost any choice-of-law agreement is the law that it selects. As a
practical matter, there is no single answer to the question of what substantive law a party
should prefer in a particular commercial relationship. The answer is influenced by a variety of
considerations concerning the parties’ identities and interests, the nature of the transaction
and the potentially applicable laws. Nonetheless, several general guidelines are useful.

[A] Considerations Affecting Choice of Substantive Law

Parties to international transactions often instinctively desire their own national law to
apply, in part because it is familiar to them. This view is, however, often uninformed by the
consequences of the application of local law to the types of disputes most likely to arise
between the parties. In some instances, a party’s “home” state law will provide it with no
benefits and may actually be detrimental to it.74
Failing selection of their home country’s law, parties often prefer a law that is developed,
stable and well-adapted to commercial dealings. In practice, parties pay particular attention
to the existence of a well-articulated body of commercial and corporate law. Conversely,
parties ordinarily avoid the law of states that are newly-formed or that has limited authority
on commercial issues. Equally important, parties typically avoid jurisdictions which are
potentially subject to future sea changes in legal order.
It is important to select a law with which the parties are either familiar or whose content
they can ascertain with reasonable ease. That typically means the law of a jurisdiction where
a party conducts business or where it can consult reliable counsel efficiently. Of course,
parties usually select the law of a state with published statutes and judicial decisions, as well
as commentaries, rather than only expert opinion.
Parties sometimes attempt to bargain for application of a law that will be “favorable” to
them. This effort is often chimerical, because of the difficulty of predicting what issues will
arise in some future dispute and on what side of these issues a party may be. Nonetheless, in
specialized fields, such an effort can be worthwhile. For example, the laws of financial
centers, such as New York and London, frequently are desirable for lenders or insurers.
In dealings with foreign states, parties will generally insist, rightly, on application of the
laws of a different jurisdiction. This reduces risks that the foreign state will enact legislative
or other measures that are designed to improve its position in a contractual dispute.
Finally, some issues may be subject to mandatory national law applicable to local aspects
of a transaction. Matters relating to real estate, corporate organization and security interests
are familiar examples of matters which ordinarily cannot be contracted out of by a choice-of-
law clause. Particular care must be devoted to this issue in joint venture or similar shareholder
transactions, where the local law of the place where the parties’ corporate vehicle is
incorporated may mandatorily apply to certain matters relating to corporate organization.
[B] Choice of Multiple or Overlapping National Laws

Parties sometimes agree to choice-of-law agreements selecting the laws of two or more states
to govern the same contractual provisions. These agreements can be either outright choices of
two laws (i.e., “this contract shall be governed by the laws of State A and State B”) or
overlapping choices (i.e., “this contract shall be governed by the rules common to the laws of
State A and State B”). Choice-of-law provisions of this nature should not be confused with
“split” choice-of-law clauses, which select different laws to apply to different sets of
contractual provisions within a single contractual relationship (discussed below).
The former types of provisions are likely valid in most developed jurisdictions.75 Despite
that, overlapping choice-of-law provisions are almost always ill-advised compromises that
produce few of the advantages of a choice-of-law clause (predictability, efficiency), and are
instead an invitation to unproductive disputes. A leading English judge remarked, of a clause
selecting “the principles in common to both English and French law,” that “the hybrid
system of law ... has a superficial attraction, but I suspect that it will lead to lengthy and
expensive dispute.”76 His observation was correct, and also has broader force: an overlapping
choice-of-law clause invites disputes over the contents of two legal systems, as well as
introducing a further, unpredictable question of how the two systems interact and fails to
address issues of public policy and mandatory laws.

[C] “Split” Choice-of-Law Clauses

Some choice-of-law agreements attempt to specify different substantive laws for different
aspects of the parties’ relationship. (This process is sometimes referred to as “ depeçage.”)
One law may be applied to payment obligations, or intellectual property rights, while
another law applies to other matters. A leading example of this approach is the so-called
Bermuda Form insurance policy, which contains a choice-of-law clause providing for the
application of New York law, save for specific issues which are governed by English law.77
“Split” choice-of-law clauses generally give rise to no serious questions as to validity.
They are expressly permitted under most legal systems, including the Rome I Regulation (and
Rome Convention) and the Restatement (Second) Conflict of Laws.78 That said, split choice-
of-law agreements also involve significant risks: inevitably, determining the interaction and
“border” between the two legal systems which are selected can give rise to disputes.

[D] Choice of “Floating” National Law

Parties sometimes draft choice-of-law agreements to provide a “floating” choice of law, which
may vary with future developments. In particular, choice-of-law clauses may provide that, in
a claim brought by Party A, the parties’ dispute will be governed by the laws of Party B’s
home jurisdiction. The notion underlying these provisions is one of “rough justice,” that also
seeks to discourage the bringing of claims.
Whatever the merits of this objective, its implementation via a “floating” choice-of-law
clause is defective: the purpose of a choice-of-law agreement is to provide predictability,
efficiency and neutrality. A “floating” choice-of-law clause contradicts these goals, by
producing a changing calculation that rewards gamesmanship and creates uncertainty. Despite
the broad deference to party autonomy with regard to choices of substantive law generally,
some courts have viewed “floating” choice-of-law agreements with disfavor.79

[E] Non-National Choice-of-Law Agreements

Although it is unusual, parties occasionally agree to choice-of-law clauses selecting rules not
derived from a national legal system. A wide array of alternatives are encountered, including
general principles of law; lex mercatoria or law merchant; the UNIDROIT Principles of
Contract Law; “principles common to the laws of states A and B”; “principles of
international law”; or “the laws of state A, to the extent not inconsistent with international
law.”
“Non-national” choice-of-law formulae give rise to significant questions of validity and
interpretation, and, as a consequence, are ordinarily used only in contracts with states or
state-entities. Some authorities take the view that a choice-of-law agreement can only validly
select a national legal system to provide the “law” governing a contract.80 In contrast,
legislation enacted in a number of jurisdictions in the past three decades provides for the
validity of non-national choice-of-law clauses in international arbitrations. This approach was
followed by Article 28(1) of the UNCITRAL Model Law, which provides that an arbitral
tribunal shall decide the parties’ dispute in accordance with the “ rules of law” which they
have selected.81 A number of other international and national instruments have confirmed the
validity, in international arbitrations, of choice-of-law clauses selecting at least some non-
national legal systems.82

[1] General Principles of Law

Some non-national choice-of-law clauses provide for application of “general principles of

law,” particularly in contracts with states or state entities. The meaning of this formula is
controversial, but it is generally intended to refer to principles of law common to leading legal
systems. There are inevitable difficulties in identifying the contents of such principles,
particularly with sufficient specificity to provide meaningful guidance in commercial
contexts. These difficulties lead parties, in most cases, to avoid such provisions.83

[2] Lex Mercatoria

Some academic commentators have been attracted to the concept of a lex mercatoria, or
“merchants’ law,” that organically develops out of commercial dealings and judicial or arbitral
decisions concerning such dealings. The concept of lex mercatoria is ill-defined and has given
rise to controversy regarding issues of validity and interpretation.
Virtually no arbitral agreements select, and very few awards have been based on, lex
mercatoria. This paucity of authority is not surprising: parties are well-advised not to select
lex mercatoria as the “law” governing their contractual relations. Whatever else may be said,
in its current form, lex mercatoria lacks the detail, comprehensiveness and predictability that
parties to most commercial transactions require. There are also doubts about the validity and
enforceability of choice-of-law agreements selecting lex mercatoria.84

[3] UNIDROIT Principles of International Commercial Contracts

The International Institute for the Unification of Private Law (“UNIDROIT”) first published
a set of “UNIDROIT Principles of International Commercial Contracts” in 1994, which were
revised in 2004.85 The UNIDROIT Principles were designed to establish a neutral set of
international rules of contract law, including interpretation, validity, performance and
negotiation of contracts. The UNIDROIT Principles are optional: they do not purport to
apply generally, but are available for parties to select through their choice-of-law agreements.
Nonetheless, arbitral tribunals have looked to the UNIDROIT Principles in some instances,
for persuasive guidance.86 As one ICC award explained, “[r]ather than argue principles or
general guidelines, the UNIDROIT Principles are mostly constituted by clearly enunciated
and specific rules coherently organized in a systematic way.”87
In general, commercial parties have been reluctant to adopt the UNIDROIT Principles in
choice-of-law agreements, notwithstanding the efforts devoted to them. That is in part due to
doubts about the interaction between a non-national legal system and generally-applicable
national law. It is also in part due to the lack of detail and judicial precedent, compared to
legal systems in leading commercial centers.

[F] Stabilization Clauses

In some transactions, parties may seek protection against future changes in the applicable
law. This protection can take the form of “freezing” or “stabilization” clauses, which fix the
legal system applicable to the parties’ agreement as that system stands at a specified date
(without regard to subsequent legislative or other developments) or that, alternatively, either
forbid giving effect to specified legislative changes or require compensation for such changes.
Such provisions are generally used only in agreements between foreign investors and states or
state-owned entities, where the possibilities for legislative interference are most substantial.
M ost authorities that address the issue conclude that stabilization clauses are valid.88

[G] Amiable Composition and Ex Aequo et Bono

A few dispute resolution clauses provide for arbitration “ex aequo et bono” or for an
arbitrator to act as “amiable compositeur.” The essential meaning of each term is that
arbitrators are not obliged to decide the parties’ dispute in accordance with legal rules; rather,
the arbitrators are to decide in light of general notions of fairness, equity and justice.89
The enforceability of agreements calling for an arbitrator to act as amiable compositeur, or
ex aequo et bono, is largely settled. The European Convention provides, in Article VII(2),
that“ the arbitrators shall act as amiables compositeurs if the parties so decide and if they
may do so under the law applicable to the arbitration,” recognizing both the use of
agreements to arbitrate amiable compositeur, as well as some doubts as to the validity of
such agreements. Most national laws also give effect to agreements vesting arbitrators with
powers as amiables compositeurs or ex aequo et bono. The Model Law does so expressly, in
Article 28(3), as do other national laws.90 There are a few exceptions to this general
acceptance, for example, where states have omitted Article 28(3) from their version of the
M odel Law.91
Neither national laws nor other sources of authority lightly presume that parties have
agreed to amiable composition or arbitration ex aequo et bono. Both national laws and
institutional rules generally authorize arbitrators to act as amiable compositeurs, or to decide
ex aequo et bono, only if the parties expressly agree to such provisions.92

§13.05 INTERPRETATION OF CHOICE-OF-LAW AGREEMENTS

Assuming that a choice-of-law clause is valid and enforceable, it also must be interpreted. A
number of interpretive issues arise with regard to choice-of-law agreements.

[A] “Stand-Alone” Character of Choice-of-Law Clause

In general, choice-of-law provisions are included in a separate clause of the parties’ contract,
rather than as part of an arbitration or choice-of-forum clause. Inclusion of a choice-of-law
clause within the arbitration agreement can, particularly if not drafted clearly, give rise to
arguments that the clause was intended to apply only to the arbitration agreement itself or to
the arbitral procedures, rather than to select the applicable substantive law; a stand-alone
choice-of-law clause helps avoid these concerns.

[B] The Legal Rules Selected by Choice-of-Law Agreements

The existence of a choice-of-law clause, selecting the law of a particular state, sometimes
gives rise to questions about what legal rules the parties have selected.

[1] Renvoi versus “Whole Law”: Does the Choice-of-Law Agreement Select
Substantive Rules or Conflict of Laws Rules?

A recurrent question is whether the selection of a legal system (e.g., “laws of State X”) refers
only to the substantive rules of the chosen system, or also to that system’s conflict of laws
rules. If the latter, then a separate conflicts analysis would be required, notwithstanding the
choice-of-law agreement, applying the conflicts rules of the chosen state (in the above
example, State X). This renvoi would very seldom accord with the expectations of parties,
who specify the law governing their relations in significant part to avoid any conflict of laws
analysis and to procure the benefits of a specifically-identified, predictable legal system.
Accordingly, authorities in most jurisdictions interpret choice-of-law clauses as specifying
the applicable substantive (and not conflict of laws) rules, even if an anti-renvoi provision is
not included in the text of the clause. For example, Article 28(1) of the UNCITRAL Model
Law provides that “[a]ny designation of the law or legal system of a given State shall be
construed, unless otherwise expressed, as directly referring to the substantive law of that
State and not to its conflict of laws rules.” Virtually all other international instruments and
national authorities are similar, as are awards on the subject.93

[2] Procedural Law of the Arbitration

It is sometimes argued that a choice-of-law clause selects the procedural law of the
arbitration, but not the substantive law governing the parties’ underlying dispute. This raises
questions of interpretation that turn in part on the wording of the choice-of-law clause. In
general, however, authorities have properly concluded that when parties choose a law, they
intend to choose the substantive law governing the merits of their dispute.94 This accords
with the likely intentions of commercial parties, who will not ordinarily appreciate conflict of
laws complexities and who will be most focused on the substance (not the procedure) of their
dispute. This is particularly true if the parties’ chosen law is different from that of the
arbitral seat – and interpreting the choice-of-law clause as selecting the procedural law of the
arbitration would produce undesirable and dangerous complexities.

[3] “Procedural” Issues

Questions also arise as to the extent to which a choice-of-law clause, that selects the
substantive law governing the parties’ dispute, also applies to “procedural” issues (such as
burdens of proof, pleading requirements). Choice-of-law clauses are often not interpreted as
extending to “procedural” issues, which are instead considered to be subject to the generally-
applicable rules of civil procedure of the parties’ contractual forum.
Some national courts have held that a “contractual” choice-of-law provision is “deemed to
import only substantive law, ... not procedural law.” 95 For example, most choice-of-law
clauses have not been regarded as extending to burdens of proof, pleading requirements,
discovery mechanisms, or joinder of parties. Other questions, such as statutes of limitations,
rights to legal expenses and interest raise more difficult issues; they are sometimes regarded as
substantive (and subject to commonly-used choice-of-law provisions) and sometimes treated
as procedural (and arguably subject to the forum’s rules).96

[4] Non-Contractual Issues

It is also frequently argued that a chosen law applies only to issues or claims based directly
on the parties’ contract, and not to “extra-contractual” issues (like tort claims or unfair
competition claims). This parallels issues concerning the scope of arbitration clauses and their
application to extra-contractual claims (discussed above).
The scope of a choice-of-law clause is primarily a matter of the parties’ intent and the
language of their agreement. In general, international arbitrators tend to err on the side of
expansiveness in interpreting the scope of choice-of-law provisions. While nice points
concerning the precise meaning of particular choice-of-law clauses can be diverting, most
tribunals take the practical view that, in selecting a particular law to govern their contract, the
parties intended that law to govern all of their dealings relating to the contract.97
In practice, choice-of-law clauses are sometimes drafted in narrower terms than arbitration
clauses. As discussed above, arbitration agreements often extend to all disputes “relating to”
or “arising in connection with” the parties’ contract. These formulations usually reach non-
contractual claims, such as those sounding in tort, as well as contractual ones. In contrast,
choice-of-law clauses are often drafted along the following lines: “This agreement shall be
interpreted in accordance with, and governed by, the laws of [State X].” Formulations such as
this can be interpreted as extending solely to the parties’ contractual rights and duties, and
not to non-contractual issues.
Alternatively, choice-of-law clauses can be drafted even more narrowly, such as: “This
agreement shall be construed in accordance with the laws of [State Z].” This formulation
arguably applies only to questions of contract interpretation, and not to issues of validity,
enforceability, excuses for non-performance and capacity, much less to questions of tort or
other non-contractual rights. By leaving unresolved the choice of law applicable to such
issues, this formulation fails to provide the predictability that motivates such agreements.

§13.06 MINIMAL JUDICIAL REVIEW OF ARBITRATORS’ CHOICE OF

LAW DECISIONS

Neither the New York Convention nor most arbitration statutes expressly permit non-
recognition of an award because the arbitrators erred in their choice-of-law analysis. Rather,
as noted above, and in the absence of a choice-of-law agreement, the arbitrators’ choice-of-
law decisions are subsumed within their rulings on the merits of the parties’ dispute, and thus
subject to the general presumption in favor of recognition under the Convention and most
arbitration legislation. Thus, except where statutory protections or public policy issues are
involved, judicial review of arbitrators’ choice-of-law decisions concerning the substantive
law applicable to the merits of the parties’ dispute is usually minimal.98
There are grounds under the Convention and many arbitration statutes for non-recognition
of arbitral awards that could be invoked to permit a national court to reject an arbitrator’s
choice of the applicable substantive law. In particular, awards that either violate applicable
public policy by refusing to apply a mandatory law would be subject to non-recognition
under Article V(2) (b), while awards that plainly misapply applicable conflicts rules may be
liable to setting aside in the seat where some form of merits review is available (as discussed
below). In practice, however, the arbitrators’ selection of the substantive law applicable to
the parties’ dispute is virtually never invoked as grounds for annulling or denying recognition
of an award.99
_________________________
1. Scherk v. Alberto-Culver Co., 417 U.S. 506, 516 (U.S. S.Ct. 1974).
2. See supra pp. 55–58.
3. See infra pp. 235–36, 245–46.
4. See G. Born, International Commercial Arbitration 2113–16 (2009).
5. See infra pp. 311–15; see G. Born, International Commercial Arbitration 2111–12 (2009). Articles II and V(1)
(a) of the New York Convention provide choice-of-law rules for the law governing the arbitration agreement. In
 contrast, the Convention does not expressly address the choice-of-law applicable to the substance of the parties’
dispute. Nonetheless, the Convention requires Contracting States to recognize awards without engaging in any
substantive review of the merits of the award; that obligation applies equally to the arbitrators’ choice-of-law
decisions concerning the substantive law applicable to the merits of the parties’ dispute.
6. L. Collins (ed.), Dicey, Morris & Collins on The Conflict of Laws ¶16-010 (14th ed. 2006).
7. See G. Born, International Commercial Arbitration 2113–14, 2121–25 (2009).
8. See German ZP O, §1051(2) (“ Failing any designation by the parties, the arbitral tribunal shall apply the law of
the State with which the subject-matter of the proceedings is most closely connected.”); Japanese Arbitration Law,
Art. 36 (absent agreement, arbitrators to apply “ the substantive law of the State with which the civil dispute
subject to the arbitral proceedings is most closely connected”); Italian Code of Civil P rocedure, Art. 834.
9. See G. Born, International Commercial Arbitration 2114–16, 2133–35 (2009). See also New Zealand
Arbitration Act, 28(2) (“ apply the law determined by the conflict of laws rules which it considers applicable”).
10. Indian Arbitration and Conciliation Act, Art. 28(1)(b)(iii) (“ apply the rules of law it considers to be appropriate
given the circumstances surrounding the dispute”); Netherlands Code of Civil Procedure, Art. 1054(2) (“ in
accordance with the rules of law it considers appropriate”). See G. Born, International Commercial Arbitration
2116, 2135–36 (2009).
11. See supra pp. 83–84 & infra pp. 248–49.
12. See, e.g., IACAC Rules, Art. 30(1); P CA Rules, Art. 33(1); CIDRA Rules, Art. 32(1) (“ apply the law determined
by the conflict of laws rules which it considers applicable”).
13. See, e.g., ICDR Rules, Art. 28(1); LCIA Rules, Art. 22(3); SCC Rules, Art. 24(1); WIP O Arbitration Rules, Art.
59(1).
14. See, e.g., DIS Rules, §23(2) (“ the law of the State with which the subject-matter of the proceedings is most
closely connected”); Swiss International Arbitration Rules, Art. 33(1) (“ the law of the State with which the
subject matter of the proceedings is most closely connected”).
15. See G. Born, International Commercial Arbitration 2117–18 (2009).
16. See, e.g., DIS Rules, §23(2); Swiss International Arbitration Rules, Art. 33(1); supra p. 237.
17. See supra pp. 235–36; Swiss Law on P rivate International Law, Art. 187; Japanese Arbitration Law, Art. 36.
18. See supra p. 234. As discussed above, this is what the UNCITRAL Model Law and most institutional rules
provide. See supra p. 236.
19. French New Code of Civil P rocedure, Art. 1496; supra p. 236.
20. Institute of International Law, Resolution on Arbitration in Private International Law 1957 ( Amsterdam),
Tableau des Résolutions Adoptées (1957–1991) 237, at Art. 11(1) (1992) (emphasis added).
21. L. Collins (ed.), Dicey, & Morris on The Conflict of Laws 543 (11th ed. 1987). See also Mann, Lex Facit
Arbitrum, reprinted in, 2 Arb. Int’ l 241, 251 (1986).
22. See G. Born, International Commercial Arbitration 2119–21, 2122–25 (2009).
23. A. Ehrenzweig, Conflict of Laws 540 (1962) (emphasis added).
24. Goldman, La lex mercatoria dans les contrats et l’arbitrage internationaux: réalité et perspectives, 106 J.D.I.
(Clunet) 475, 492 (1979).
25. Award in ICC Case No. 1422, 101 J.D.I. (Clunet) 884 (1974).
26. See, e.g., Partial Award on Jurisdiction and Admissibility in ICC Case No. 6474, XXV Y.B. Comm. Arb. 279,
291 (2000) (“ Having no ‘ lex fori’ as such, the Arbitral Tribunal appears thus to enjoy a wide discretion with
regard to both the characterizations of the question and of the choice of the applicable law.”). See G. Born,
International Commercial Arbitration 2133–35 (2009).
27. See G. Born, International Commercial Arbitration 2135 (2009).
28. See G. Born, International Commercial Arbitration 2127–29 (2009).
29. Grigera Naón, Choice-of-Law Problems in International Commercial Arbitration, 289 Recueil des Cours 9,
191 (2001) (“ Arbitral Tribunals normally make special efforts to show that the substantive solution found for the
dispute is either one pointed out by the private international law systems of the national jurisdictions
reasonably connected with the dispute (false ‘ conflit de systèmes’ ) or by a generally accepted conflict-of-laws
rule.”). On a practical level, the cumulative approach also provides some insulation against a challenge for failure
to apply the proper conflict of laws or substantive rules.
30. See supra pp. 237–38.
31. See G. Born, International Commercial Arbitration 2132 (2009).
32. See supra pp. 237–39 for a discussion of these standards in selecting the law applicable to the arbitration
agreement.
33. Award in ICC Case No. 7071, in Grigera Naón, Choice-of-Law Problems in International Commercial
Arbitration, 289 Recueil des Cours 9, 236 n. 249 (2001).
34. See G. Born, International Commercial Arbitration 2112–13, 2129–31 (2009).
35. See, e.g., Award in ICC Case No. 4237, X Y.B. Comm. Arb. 52 (1985) (“ The decided international awards
published so far show a preference for the conflict rule according to which the contract is governed by the law of
the country with which it has the closest connection.”); Harnischfeger Corp. v. Ministry of Roads & Trans.,
Partial Award No. 144-180-3 (13 July 1984), 7 Iran-US C.T.R. 90, 99 (1984) (applying “ under general choice of
law principles, the law of the United States, the jurisdiction with the most significant connection with the
transaction and the parties”).
36. See infra pp. 242–43.
37. See G. Born, International Commercial Arbitration 2142–44, 2227–29 (2009); infra pp. 245–46, 254.
38. See G. Born, International Commercial Arbitration 2142–44 (2009); infra pp. 254–83.
39. Swiss Law on Private International Law, Art. 187(1) (emphasis added); Indian Arbitration and Conciliation
Act, Art. 28(b)(iii); Ontario Arbitration Act, §32(1).
40. See G. Born, International Commercial Arbitration 2142–44, 2230, 2235–36 (2009).
41. See supra pp. 235–36, 239.
42. See G. Born, International Commercial Arbitration 2148–49 (2009).
43. Restatement ( Second) Conflict of Laws §142 e, §143 comment c (1971).
44. See Schwenzer & Manner, The Claim is Time-Barred: The Proper Limitation Regime for International Sales
Contracts in International Commercial Arbitration, 23 Arb. Int’ l 293 (2007).
45. See European Convention, Art. VII(1); UNCITRAL Rules, Art. 35(3); G. Born, International Commercial
Arbitration 2146–48 (2009).
46. In ICC arbitrations, the parties’ contract reportedly contained choice-of-law clauses in 88% of all cases in 2009
(81% in 2005). In 99% of cases filed in 2010, parties chose state law. Other choices were the United Nations
Convention on Contracts for the International Sale of Goods (7 contracts), ICC’ s Incoterms rules (2 contracts)
and amiable composition (1 contract). ICC, 2005 Statistical Report, ICC Ct. Bull. 16(1); ICC, 2010 Statistical
Report, ICC Ct. Bull. 22(1).
47. See supra p. 233.
48. For discussion of the drafting of choice-of-law clauses, see G. Born, International Arbitration and Forum
Selection Agreements: Drafting and Enforcing 119 et seq. (3d ed. 2009); J. Paulsson et al., The Freshfields
Guide to Arbitration and ADR Clauses in International Contracts(1999).
49. New York Convention, Arts. V(1)(a) & V(1)(d). See supra pp. 147–50.
50. European Convention, Art. VII(1). The ICSID Convention also expressly recognizes the parties’ general freedom
to agree upon the substantive law governing their dispute. Article 42 of the Convention provides that “ [t]he
Tribunal shall decide a dispute in accordance with such rules of law as may be agreed by the parties.”
51. See infra p. 247.
52. As with the European Convention, Article 28(1) applies not merely to contractual matters, but also to non-
contractual claims or defenses.
53. See G. Born, International Commercial Arbitration 2156–59 (2009).
54. G. Born & P . Rutledge, International Civil Litigation in United States Courts 468–78, 758–60 (5th ed. 2011).
55. Saleh, The Recognition and Enforcement of Foreign Arbitral Awards in the States of the Arab Middle East, in
J. Lew (ed.), Contemporary Problems in International Arbitration 340, 341–42 (1986); A. El-Ahdab,
Arbitration with the Arab Countries 111, 307, 382, 763 (2d ed. 1999).
56. See, e.g., LCIA Rules, Art. 22(3); ICDR Rules, Art. 28(1); WIP O Arbitration Rules, Art. 59(1); JCAA Rules, Art.
41(1).
57. See G. Born & P . Rutledge, International Civil Litigation in United States Courts 760–61 (5th ed. 2011).
58. See G. Born, International Commercial Arbitration 2169–72 (2009).
59. Richardson v. Mellish [1823–34] All E.R. Rep. 258 (Common Pleas) (“ a very unruly horse, and when once you
get astride it you never know where it will carry you”).
60. W .R. Grace & Co. v. Local Union 749, 461 U.S. 757 (U.S. S.Ct. 1983).
61. Restatement ( Second) Conflict of Laws § 187 comment g (1971).
62. Mayer, Mandatory Rules of Law in International Arbitration, 2 Arb. Int’ l 274 (1986) (“ Mandatory rules of law
are a matter of public policy (ordre public), and moreover reflect a public policy so commanding that they must be
applied even if the general body of law to which they belong is not competent by application of the relevant rule
of conflict of laws.”).
63. See G. Born, International Commercial Arbitration 2172–74 (2009).
64. Mitsubishi Motors, 473 U.S. at 636–37 & n.19.
65. See G. Born, International Commercial Arbitration 2176–83 (2009).
66. See also Hague Convention of 15 June 1955 on the Law Applicable to International Sales of Goods, Art. 2(2)
(“ unambiguously result from the provision of the contract”).
67. Restatement ( Second) Conflict of Laws §187 comment a (1971). Authority in other jurisdictions is to the same
effect. See G. Born, International Commercial Arbitration 2206–07 (2009).
68. See supra p. 239.
69. See supra p. 238.
70. Compagnie d’Armement Maritime SA v. Compagnie Tunisienne de Nav. [1971] A.C. 572, 588 (House of Lords).
71. See, e.g., Mitsubishi Corp. v. Castletown Nav. Ltd [1989] 2 Lloyd’ s Rep. 383 (Q.B.) (where all other connections
pointed towards Japanese substantive law, selection of London as arbitral seat did not constitute choice of
English substantive law: “ This is one of those exceptional cases where the other indications of choice-of-law are
so strong that they displace the inference to be drawn from the printed arbitration clause [specifying an English
arbitral seat].”).
72. See G. Born, International Commercial Arbitration 2165–67, 2184–85, 2205–06 (2009).
73. See G. Born, International Commercial Arbitration 2197 (2009).
74. Conversely, parties often wish to avoid the law of the place where their counter-party has its principal place of
operations. That predisposition rests on the assumption that this law will be favorable to that party. In reality,
this often is not the case, although a party can be presumed to be reasonably well informed about “ its” law and to
have advantages in the future in ascertaining its content (by reason of established relations with counsel).
75. See G. Born, International Commercial Arbitration 2221–22 (2009).
76. Channel Tunnel Group Ltd v. Balfour Beatty Constr. Ltd [1992] 1 Q.B. 656, 675 (English Court of Appeal).
77. R. Jacobs, L. Masters & P. Stanley, Liability Insurance in International Arbitration – The Bermuda Form
¶¶3.19 et seq. (2004).
78. Rome Convention, Art. 3(1) (“ By their choice the parties can select the law applicable to the whole or a part
only of the contract.”); Rome I Regulation, Art. 3(1) (same); Restatement ( Second) Conflict of Laws §187 (1971);
G. Born, International Commercial Arbitration 2222–23 (2009).
79. See, e.g., Amin Rasheed Shipping Corp. v. Kuwait Ins. Co [1983] 2 All E.R. 884, 890–91, 895 (House of Lords);
Astro Vencedor Compania Naviera SA of Panama v. Mabanaft GmbH, The Damianos [1971] 2 All E.R. 1301
(English Court of Appeal). Contra Black Clawson Int’l Ltd v. Papierwerke W aldhof Aschaffenburg AG [1981]
2 Lloyd’ s Rep. 446 (Q.B.).
80. See G. Born, International Commercial Arbitration 2227–29 (2009). Outside the arbitration context, some
courts have held that the contract.”); Rome I Regulation, Art. 3(1) (same); Restatement from agreeing to a non-
national legal system. Shamil Bank of Bahrain v. Beximco Pharm. Ltd [2004] EWCA Civ. 19 (English Court of
Appeal) (Arts. 1(1) and 3(1) refer to “ a choice between the laws of different countries”).
81. UNCITRAL Model Law, Art. 28(1). In contrast, Article 28(2) provides that, in the absence of agreement by the
parties, the tribunal shall “ apply the law determined by the conflict of laws rules which it considers applicable.”
The latter formulation refers specifically to “ the law,” selected by “ conflict of laws rules,” in contrast to the
“ rules of law” permitted by Article 28(1). See also supra pp. 234, 241, 242. The validity of non-national choice-
of-law clauses was first addressed by Article 1511 of the former French Code of Civil Procedure, which provided
that parties are free to agree upon the “ rules of law” governing their contract. This formula was designed
specifically to permit parties to contract for the application of non-national legal systems, rather than only
 national “ laws.” See G. Born, International Commercial Arbitration 2227 (2009).
82. See G. Born, International Commercial Arbitration 2227–29 (2009).
83. See G. Born, International Commercial Arbitration 2230–31 (2009).
84. See G. Born, International Commercial Arbitration 2231–36 (2009).
85. UNIDROIT, UNIDROIT Principles of International Commercial Contracts (2004).
86. See G. Born, International Commercial Arbitration 2242–43 (2009).
87. Partial Awards in ICC Case No. 7110, 10(2) ICC Ct. Bull. 39 (1999).
88. See G. Born, International Commercial Arbitration 2224–26 (2009); Texaco Overseas Petroleum Co. v. Libyan
Arab Republ ic, Ad Hoc Award ( 19 January 1977), IV Y.B. Comm. Arb. 177, 183 (1979) (“ The recognition by
international law of the right to nationalize is not sufficient ground to empower a State to disregard its
commitments because the same law also recognizes the power of a State to commit itself internationally, especially
by accepting the inclusion of stabilization clauses in a contract entered into with a foreign private party.”).
89. See G. Born, International Commercial Arbitration 2237–42 (2009). There is debate about what precisely the
arbitrators’ mandate is under such provisions. Some authorities suggest that arbitrators are freed entirely from
legal rules and left to decide according to their own sense of fairness, while other authorities suggest that the
arbitrators should first apply national law and then adjust its results if they consider that appropriate and fair.
90. Swiss Law on Private International Law, Art. 187(2) (“ The parties may authorize the arbitral tribunal to decide
ex aequo et bono.); French New Code of Civil Procedure, Art. 1497 (“ The arbitrator shall rule as amiable
compositeur if the agreement of the parties conferred this mission upon him or her.”).
91. See G. Born, International Commercial Arbitration 2238–39 (2009).
92. See G. Born, International Commercial Arbitration 2239 (2009); UNCITRAL Rules, Art. 33(2) (“ The arbitral
tribunal shall decide as ‘ amiable compositeur’ or ‘ ex aequo et bono’ only if the parties have expressly
authorized the arbitral tribunal to do so and if the law applicable to the arbitral procedure permits such
arbitration.”); 2012 ICC Rules, Art. 21(3) (“ The arbitral tribunal shall decide as amiable compositeur or ex
aequo et bono only if the parties have expressly authorized the arbitral tribunal to do so.”); LCIA Rules, Art.
22(4).
93. See G. Born, International Commercial Arbitration 2211–12 (2009). Nonetheless, many choice-of-law clauses
contain exclusions for the conflicts rules of the chosen state, providing, for example, “ This Agreement is
governed by the law of New York, to the exclusion of its conflict of laws rules.”
94. See G. Born, International Commercial Arbitration 2212–13 (2009).
95. W oodling v. Garrett Corp., 813 F.2d 543, 551 (2d Cir. 1987).
96. See G. Born, International Commercial Arbitration 2213–14 (2009).
97. See G. Born, International Commercial Arbitration 2214–17 (2009).
98. See G. Born, International Commercial Arbitration 2150–51 (2009); supra p. 247 & infra pp. 325–26.
99. See G. Born, International Commercial Arbitration 2150–51 (2009).
Chapter 14
Legal Representatives and Professional Responsibility in
International Arbitration

The rights of parties to legal representation and the standards of professional conduct
applicable to party representatives are recurrent issues in international arbitral proceedings.
These issues are of substantial practical importance and have attracted increasing attention in
recent years.

§14.01 RIGHT TO COUNSEL IN INTERNATIONAL ARBITRATION

A party’s right to representation in international arbitral proceedings, by lawyers or others,

is of fundamental importance. The quality and vigor of a party’s representatives can have
substantial practical consequences for the party’s case, for the outcome of the arbitral
process and for the parties’ perceptions of the fairness of the process.

[A] Rights to Legal Representation of Party’s Choice

The New York Convention, and most other international arbitration conventions, lack
express provisions guaranteeing parties the right to representation of their choice. The Inter-
American Convention is an exception. Article 3 of Convention provides that, absent contrary
agreement, “the arbitration shall be conducted in accordance with the rules of procedure of
the Inter-American Commercial Arbitration Commission”; in turn, Article 4 of the IACAC
Rules provides that “[t]he parties may be represented or assisted by persons of their choice.”
The effect of these provisions is that, absent contrary agreement, the Convention guarantees
a party to an international arbitration the right to legal representation of its choice.1
As with international arbitration conventions, many arbitration statutes contain no express
guarantee of freedom to select representatives in international arbitrations. The UNCITRAL
Model Law contains no reference to the subject, and U.S., French, Swiss, Japanese and other
legislation is similar. An exception is the English Arbitration Act, which provides that,
“unless otherwise agreed by the parties, a party to arbitral proceedings may be represented in
the proceedings by a lawyer or other person chosen by him.”2 A few other states also make
freedom of representation explicit in national arbitration legislation.3
Despite the absence of statutory guarantees, most states impose no (or virtually no)
limitations on the persons who may serve as a legal representative in an international
arbitration. Even in states where local legislation does not expressly guarantee the parties’
right to select their representatives, this right is implied: it has historically been acknowledged
in the arbitral process, is an inherent aspect of a party’s internationally-guaranteed
opportunity to present its case and is what commercial parties expect when agreeing to
arbitrate. Indeed, this is so well-accepted that it seldom arises in practice.
Consistent with this, many institutional rules recognize the parties’ rights of
representation in the arbitral proceedings, expressly providing that a party is entitled to be
represented by persons of its own choice. Thus, Article 5 of the UNCITRAL Rules
provides: “[t]he parties may be represented or assisted by persons of their choice.” Other
institutional rules are similar.4
Some institutional rules expressly provide for the possibility of representation by non-
lawyers as well as lawyers.5 Conversely, and unusually, institutional rules in some
specialized trade settings exclude lawyers from arbitral proceedings, putatively to ensure a
focus on commercial, not legal, issues.6 Where parties accept such rules, it is a valid exercise
of their procedural autonomy and not generally subject to challenge.

[B] National Law Restrictions on Legal Representation

There have been a few deviations from recognition of the parties’ freedom to be represented
by counsel of their choice in international arbitrations. At various times, Japan, China,
Singapore, Turkey, Portugal, Thailand and the former Yugoslavia have forbidden foreign
lawyers from appearing in arbitrations sited locally – even in international arbitrations.7
These restrictions were sometimes defended on the grounds that they were aspects of local
bar regulations, aimed at ensuring the integrity and quality of legal advice. In reality, the
restrictions were largely the product of protectionist lobbies, aimed at excluding foreign
competition. In virtually all cases, these restrictions have been relaxed or abandoned in the
face of sustained international (and domestic) criticism.
A representative example was a highly-publicized 1988 decision in Builders Federal (Hong
Kong) Ltd v. Turner (East Asia) Pte Ltd, where the Singapore High Court enjoined a New
York law firm from representing a long-standing client in an international arbitration seated in
Singapore.8 Construing the Singapore Legal Profession Act, the Court concluded that the
client’s “common law right to retain whomsoever (from the category of unauthorized
persons) they desire or prefer for their legal services in arbitration proceedings in Singapore
has ... been taken away by the Act.” 9 The decision was the object of extensive criticism and,
for a time, damaged Singapore’s credibility as an international arbitration venue.
In response, Singapore’s Parliament amended local law to permit foreign lawyers to
represent parties in international arbitrations seated in Singapore. At first, the amended
legislation permitted foreign lawyers to appear in Singapore-seated international arbitrations,
but required that local Singapore co-counsel also be retained in matters involving Singapore
law. More recently, however, that requirement was dropped and Singaporean law now
guarantees the parties’ full freedom to select their representatives in locally-seated
international arbitrations. Singapore’s Minister for Law explained the amendment by
reference to the importance of giving effect to the parties’ freedom of representation to
Singapore’s position as an international arbitral center.10
In the United States, the Federal Arbitration Act does not expressly address the rights of
representation in international arbitrations. In most states, local law forbids out-of-state
lawyer from engaging in the “unauthorized practice of law,” 11 which could arguably include
representation in a locally-seated arbitration.
Despite this, the American Bar Association’s (“ABA”) Model Rules of Professional
Conduct and many state professional responsibility statutes expressly permit lawyers
admitted in one U.S. state to represent clients in arbitrations conducted in other U.S. states.12
A number of states have adopted the ABA’s approach, although a few jurisdictions have
imposed stricter limitations. In particular, New York, Florida and Washington DC have all
adopted legislation or bar association rules making it clear that non-U.S. lawyers may
represent parties in locally-seated international arbitrations. The few U.S. judicial decisions
to address the issue likewise generally allow out-of-state lawyers to act in domestic
arbitrations; these U.S. state law restrictions are generally inapplicable, by their terms, to
international arbitrations (and, were they to so apply, would very likely be preempted by the
U.S. FAA and the New York Convention).13
In one example of a restrictive judicial decision, Birbrower, Montalbano, Condon & Frank,
PC v. Superior Court, the California Supreme Court held that a New York law firm engaged
in the “unauthorized practice of law” by advising a client in California in preparation for a
possible domestic arbitration (to be conducted in California).14 The Court held that California
law “articulates a strong public policy favoring the practice of law in California by licensed
State Bar members. In the face of the Legislature’s silence, we will not create an arbitration
exception under the facts presented.”15
The California legislature promptly responded to Birbower by enacting a statute that
permits out-of-state lawyers to represent parties in domestic arbitrations conducted in
California, subject to certain registration requirements and, most notably, the identification of
a California lawyer to serve as “the attorney of record.”16 In what critics view as an
oversight, these requirements do not apply expressly to international arbitrations seated in
California. Indeed, the Birbrower Court suggested in dicta that international arbitrations
seated in California were governed by separate legislation, under which a party’s
representative “need not be a member of the legal profession or licensed to practice law in
California.”17 If adopted, this view reflects the general, and liberal, approach towards
representation in international arbitrations in the United States.

§14.02 EXERCISE OF RIGHTS TO REPRESENTATION

In practice, parties virtually always retain legal counsel to represent them in international
arbitrations, often seeking specialized international arbitration counsel. This is in large part
because international arbitration almost invariably involves the application of law to an
evidentiary record in the context of an adjudicatory procedure that is similar in important
respects to litigation. Although non-lawyers may play important roles on a party’s team in
an international arbitration (e.g., as technical advisers), there are few instances where lawyers
are not included in, and responsible for directing, the team.18
There are a variety of possible choices for legal representatives in international arbitrations.
As a practical matter, in larger cases, parties usually retain specialized international
arbitration counsel. International arbitration can involve complex legal issues, both
substantive and procedural, as well as logistical challenges in obtaining and presenting
evidence. Specialized counsel are frequently best-placed to deal with these sorts of issues.19
As discussed above, there is generally no requirement that parties retain local counsel from
the arbitral seat. Nonetheless, depending on the nature of the dispute and the tribunal, parties
sometimes choose to include local counsel on their legal teams. That is particularly true where
local court proceedings (such as jurisdictional challenges or applications for provisional
measures) are foreseen. Additionally, some parties instinctively want lawyers from their
home jurisdiction, for reasons of trust and familiarity, and such counsel are often included on
the legal team.

§14.03 STANDARDS AND SUPERVISION OF PROFESSIONAL

CONDUCT

International arbitration raises issues of professional conduct by legal representatives during

the arbitral proceedings. These issues parallel those that arise in national court litigation, but
involve significant additional complexities. As one commentator describes, “[i]nternational
arbitration dwells in an ethical no-man’s land.”20
In national court litigation, the rules of professional conduct for legal representatives are
prescribed by local statute or regulation and are enforced by the local judiciary or regulators
(such as a bar association, bar society, or barreau). These approaches to professional
conduct are not readily transposed to international arbitration. International arbitration raises
specialized and complex ethical issues, while a local lawyer’s conduct in a foreign-seated
arbitration is often not easily supervised by domestic professional bodies.

[A] Recurrent Professional Conduct Issues

National rules of professional conduct for lawyers generally regulate: (a) the quality of
representation (including requirements of “zealous” representation of client interests and the
definition of malpractice); (b) conflicts of interest; (c) compensation (including the
permissibility (or impermissibility) of contingent or conditional fee arrangements); (d)
confidentiality; (e) attorney-client privilege; (f) relations with other counsel and courts; and
(g) publicity and advertising. International arbitrations not infrequently give rise to issues
under a variety of these types of regulation.

[1] Witness Interviews and Preparation

The subject of witness preparation in international arbitration was historically controversial.

Much of that controversy has subsided, through the development of international standards
addressing the subject, but disputes nonetheless occasionally arise.21
In most common law settings, lawyers routinely interview witnesses and assist them in
preparing for testimony. Even within the common law world, however, there are differences
in approach. The basic principle in the United States is that:

[A] lawyer may not prepare, or assist in preparing, testimony that he or she knows, or
ought to know, is false or misleading. So long as this prohibition is not transgressed, a
lawyer may properly suggest language as well as the substance of testimony, and may –
indeed, should – do whatever is feasible to prepare his or her witnesses for
examination.22

In contrast, in England, lawyers may familiarize witnesses with issues that may arise at a
hearing, but are not permitted to “coach” a witness or to suggest testimony to him or her:
“There is a dramatic distinction between witness training or coaching, and witness
familiarization. Training or coaching for witnesses ... is not permitted.”23 The distinction
between permissible “familiarization” and impermissible “coaching” is not always clearcut,
but it is very likely less liberal than that permitted in U.S. practice.
In contrast, in some civil law jurisdictions, it is unethical (and in some cases potentially
criminal) to attempt to affect a witness’s testimony in local judicial proceedings. 24 Although
the trend in recent decades has been towards greater involvement by counsel in the
presentation of facts, rules of professional conduct in France, Belgium, Switzerland and Italy
appear to prohibit lawyers from interviewing witnesses in national court litigations; on the
other hand, a different approach is reportedly taken in litigation in Austria, Germany,
Sweden and the Netherlands, where witness preparation is permitted.25 In many cases,
however, ethical prohibitions against witness interviews state (or are interpreted as stating)
that they do not apply in international arbitrations. Nonetheless, the precise extent to which
witness preparation is permitted in different civil law jurisdictions often remains uncertain –
at least as a formal matter.
The IBA Rules on the Taking of Evidence address the problems arising from different
approaches to witness interviews and preparation. Article 4(3) of the IBA Rules provides:
“It shall not be improper for a Party, its officers, employees, legal advisors or other
representatives to interview its witnesses or potential witnesses.”26 By its terms, Article
4(3) permits witness interviews, but does not address the subject of witness “preparation.”
Although the IBA Rules do not override otherwise-applicable rules of professional
responsibility, they reflect the expectations and practice of parties and tribunals, as well as
the attitude of most courts in leading arbitral seats. In these circumstances, it would be
unusual, and arguably inconsistent with the New York Convention, for a state to apply its
local bar rules to forbid witness interviews in a locally-seated international arbitration.
Despite this, as with standards of professional conduct under national law, the precise
character of the witness “interviews” which are approved by the IBA Rules remains
uncertain.

[2] Conflicts of Interest

Most rules of professional responsibility contain provisions regarding conflicts of interest,

which preclude lawyers from representing clients in certain matters because of their
responsibilities to other parties. As with other ethical issues, different jurisdictions have
different conflict of interest rules (with some imposing stricter conflicts rules than others).
Different legal systems also adopt different mechanisms for enforcing conflict of interest
rules. In some states, courts bear primary responsibility for “disqualification” motions, to
prevent a lawyer from proceeding with a representation in breach of his or her ethical duties;
in other states, a local bar association has responsibility for disciplinary proceedings, which
can force counsel not to proceed with a representation, and impose other sanctions.27
There is uncertainty whether an arbitral tribunal has the authority to consider counsel’s
alleged conflict of interest. There are several instances in which tribunals have done so, but
there is little dispositive authority on the issue and, as a practical matter, formal steps to
disqualify or sanction counsel for conflicts of interest in international arbitration are seldom
taken. The better view is that, in appropriate cases, a tribunal has the authority to protect the
integrity of the arbitral process by disqualifying counsel (with the regulatory authority of the
bar association or to which the relevant lawyers are admitted or responsible court having
concurrent authority).

[3] Contingent Fees and Other Fee Arrangements

The terms of compensation for legal representatives in international arbitral proceedings can
also give rise to issues under national law or ethical standards. These issues are most likely to
arise in connection with the permissibility and terms of “contingent fee” arrangements.
In some jurisdictions, contingent fee arrangements are permitted. Under these
arrangements, a lawyer is only compensated if he or she is successful in obtaining a recovery
(in which case a fee based on the amounts awarded, or a multiple of the lawyer’s usual
charge, is payable). In the United States, contingent fees are considered essential to ensure
legal representation for parties with limited resources; in other jurisdictions, however,
contingent fee arrangements are either prohibited or stringently regulated (e.g., to limit the
size of the contingency fee or when such arrangements may be used).28
There are circumstances in which a contingent fee agreement could violate local
prohibitions or restrictions in the arbitral seat, exposing either a party or counsel to civil or
criminal liability in local courts.29 In addition, a violation of these limitations may result in
disallowance of a party’s claim for its legal costs in the arbitral proceedings (by the arbitral
tribunal).30

[4] Lawyer-Client Privilege and Communications with Opposing Counsel

The privileged character of lawyer-client communications is an important feature of most

legal systems. Nevertheless, states take very different approaches to the types of
communications (and actors) entitled to privilege, the scope of privilege and waivers of
privilege. For example, in some jurisdictions, privileges are relatively narrow (e.g.,
communications with an in-house lawyer may not be privileged in Switzerland and some
other European jurisdictions); in other cases, privileges may be unexpectedly broad (e.g.,
communications between opposing counsel may be inadmissible, as in France). Issues of
privilege frequently arise in the arbitral proceedings, during the disclosure process, as
discussed above; these issues can theoretically also arise in disciplinary proceedings against
counsel before local courts or regulatory bodies, although they virtually never do.
[5] Settlement Communications

In many jurisdictions, settlement communications are generally not admissible in legal

proceedings. At the same time, the rules governing disclosure of settlement communications
differ materially among jurisdictions. There may be instances in which one jurisdiction’s
ethical rules forbid certain uses of a communication, while another jurisdiction’s ethical rules
require counsel to introduce the communication (as part of his or her obligation to represent
the client zealously).31 Disputes over settlement communications can arise in both arbitral
proceedings (during the disclosure process) and in disciplinary proceedings.

[6] Candor and Honesty

Most rules of professional conduct require lawyers to comply with obligations of candor and
fairness towards tribunals and counter-parties. Violations of these standards of candor can
result in the discipline of attorneys by the local bar associations to which they are admitted.
In addition, national law in the arbitral seat may impose obligations of honesty on counsel (as
well as witnesses).32
In addition, an arbitral tribunal that detects fraud or perjury may take appropriate
measures in its procedural decisions or final award against the parties responsible, such as by
drawing adverse inferences, imposing sanctions, or withdrawing or correcting a prior award.
Many tribunals conclude, however, that they lack the authority to discipline or impose
sanctions on legal counsel (as opposed to parties) who engage in misconduct.33

[B] Choice of Law Governing Professional Conduct Issues

The question of what law applies to issues of professional conduct is of substantial practical
importance in international arbitration – but surprisingly unsettled. For example, suppose
that an English lawyer and a German lawyer represent opposing parties in an arbitration
seated in Stockholm, Sweden, under a contract governed by New York substantive law. In
these circumstances, questions arise as to what law governs the various lawyers’ professional
obligations, including their obligations with respect to conflicts of interest, the interviewing of
witnesses, the use of settlement communications and candor towards the tribunal. In
particular, in the foregoing hypothetical, is it English, German, Swedish, or New York law
that governs each of these issues? M oreover, does a single national law apply uniformly to all
counsels’ conduct (e.g., Swedish law, as the law of the seat) or does the choice-of-law
depends on which lawyer’s conduct is at issue (e.g., the German lawyer is subject to German
professional conduct standards and the English lawyer is subject to English professional
conduct standards)?
There is little authority addressing these issues. In practice, counsel generally proceed on
the assumption that they are subject to the rules of professional conduct of their “home”
jurisdiction; this produces the anomalous results that different counsel in the same arbitration
will be subject to different standards of professional conduct (e.g., in the above hypothetical,
English and German rules). In some legal systems, counsel may also be subject to local
standards of professional conduct in the arbitral seat; again, this produces anomalous results,
because local rules may have been designed for domestic litigations, not international
arbitrations, and foreign lawyers will often be unfamiliar with such rules. A more satisfactory
approach would be development of a uniform international code of conduct governing counsel
in international arbitrations; efforts in this direction have been undertaken, but they remain
aspirational.

[C] Choice of Forum Governing Professional Conduct Issues

The choice of forum for enforcing standards of professional conduct in international

arbitration is also of practical importance – but, again, surprisingly unsettled. In particular,
questions arise as to whether rules of professional conduct should be applied or enforced by
the arbitral tribunal, the national courts (or bar association) of the arbitral seat, or the national
courts (or bar association) of the lawyers’ respective states of legal qualification.
There are few authorities and little commentary with regard to these questions, and the
answer varies from jurisdiction to jurisdiction. One U.S. judicial decision held that only the
courts where the relevant lawyer was admitted to practice, and not the arbitral tribunal, could
consider conflict of interest claims. The court reasoned:

[T]he regulation of attorneys, and determinations as to whether clients should be

deprived of counsel of their choice as a result of professional responsibilities and ethical
obligations, implicate fundamental public interests and policies which should be reserved
for the courts and should not be subject to arbitration.... [D]isqualification in a particular
matter should be sought in the court in which the motion is pending, or, if no action is
pending, at a Special Term of the Supreme Court ... [T]he issue of attorney
disqualification is not appropriate for arbitration.34

More recently, however, other U.S. courts have reached the opposite conclusion, declining to
entertain applications to disqualify lawyers from representing parties in arbitrations because
the applicant’s “sole remedy was to obtain relief from the arbitrators.”35
In other jurisdictions, local bar associations will entertain applications to disqualify local
lawyers from representations in foreign arbitrations.36 The theory of such actions is that a
lawyer’s local bar association is competent – and best situated – to enforce local rules of
professional conduct with regard to the lawyer, even as to arbitrations sited abroad. This
reflects the notion that bar regulations involve a considerable element of regulatory discretion.
In practice, however, bar associations have only rarely sought to impose local professional
conduct rules on local lawyers engaged as counsel in international arbitrations.
Alternatively, as discussed above, the courts of some states will consider applications to
disqualify foreign-qualified attorneys from representing parties in arbitrations seated within
the state.37 The theory of such actions is that the arbitral seat’s courts are competent to
enforce local rules of professional conduct against legal representatives, including foreign legal
representatives, in an arbitration conducted on national territory. The same theory would
extend to the application of local ethical rules to the conduct of counsel in international
arbitrations seated locally (although, in many cases, local ethical rules may not apply to
lawyers admitted only in foreign jurisdictions). Again, in practice, most national courts and
bar associations have not typically sought to regulate the conduct of foreign-qualified lawyers
appearing in locally-seated international arbitrations.38
It is also possible, for arbitral tribunals to enforce standards of professional conduct on
counsel appearing before them. That would have the benefit of permitting the decision-maker
with the most direct exposure to, and greatest knowledge of, the lawyer’s conduct to apply
standards of professional conduct. In practice, however, tribunals have generally been
unwilling either to consider applications to “disqualify” counsel from representation in the
arbitration or to enforce other sanctions on counsel.39 Some tribunals have also regarded
claims of lawyers’ conflicts as non-arbitrable, even if encompassed by the arbitration
agreement. The same rationale generally precludes claims for damages against counsel from
being asserted in the arbitration.40
Despite this, in egregious cases, a tribunal may sanction a party for (mis)conduct by its
counsel in the arbitration, such as disclosure abuses, misstatements, wrongful
communications with witnesses, or failure to obey procedural directions.41 A tribunal should
also have the power to “disqualify” counsel for grave abuses; although the exercise of this
authority is controversial, it is inherent in the tribunal’s authority over (and responsibility to
ensure the fairness of) the arbitral proceedings. Alternatively, a tribunal may send a report of
the alleged misconduct to the appropriate legal regulatory authority or local law enforcement
officers.
1. Although the New York Convention does not expressly address the issue of legal representation, there is a
substantial argument that the effect of Articles II(1) and II(3) of the Convention, in combination with institutional
rules providing for freedom to select legal representatives (discussed below) or the parties’ implied agreement, is
to guarantee such freedom: as discussed elsewhere, Article II requires the enforcement of agreements to arbitrate,
including the material elements of such agreements, such as guarantees for the freedom to select legal
representation.
2. English Arbitration Act, 1996, §36.
3. See, e.g., Swiss Cantonal Concordat, Art. 25(d) (“ The selected rules of procedure ... must permit both parties: ... d.
to be represented or assisted by a representative of their choice.”). See G. Born, International Commercial
Arbitration 2291–92 (2009).
4. 2012 ICC Rules, Art. 26(4) (“ The parties may appear in person or through duly authorized representatives. In
addition, they may be assisted by advisers.”); LCIA Rules, Art. 18(1) (“ Any party may be represented by legal
practitioners or any other representatives.”); WIP O Rules, Art. 13(a) (“ The parties may be represented by persons
of their choice, irrespective of, in particular, nationality or professional qualification.”). Japanese and Chinese
institutional arbitration rules were recently amended to confirm that foreign counsel may appear in international
arbitrations seated locally. See G. Born, International Commercial Arbitration 2294 (2009).
5. See UNCITRAL Rules, Art. 5; 2012 ICC Rules, Art. 26(4); LCIA Rules, Art. 18(1); WIP O Rules, Art. 13(a).
6. See, e.g., LME Rules and Regulations, Art. 8(1) (lawyer may not attend arbitral hearing without leave of tribunal);
GAFTA Arbitration Rules (2003 Version), Art. 16:2 (“ Where there is no [express agreement between the parties
that they may engage legal representatives] they are nevertheless free to engage legal representatives to represent
them in the written proceedings but not to appear on their behalf at oral hearings.”).
7. See G. Born, International Commercial Arbitration 2293–95 (2009).
8. Builders Federal ( Hong Kong) Ltd v. Turner ( East Asia) Pte Ltd, 5 J. Int’ l Arb. 139 (Singapore High Court 1988)
(1988) (construing §§29(1) and 30(1) of Singapore Legal P rofession Act; act subsequently amended).
9. Id. at 139, 147 (1988).
10. See G. Born, International Commercial Arbitration 2294 (2009).
11. See, e.g., Superadio L.P. v. W instar Radio Prod., LLC, 844 N.E.2d 246 (Mass. 2006) (rejecting attempt to vacate
award on grounds that prevailing party was represented by counsel not authorized to practice law in
Massachusetts); Mscisz v. Kashner Davidson Sec. Corp., 844 N.E.2d 614 (Mass. 2006) (rejecting request for
declaration that counsel not authorized to practice law in Massachusetts could not appear in pending
arbitration).
12. ABA, ABA Model Rules of Professional Conduct, Rule 5.5(c) (“ A lawyer admitted in another United States
jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services on a
temporary basis in this jurisdiction that ... (3) are in or reasonably related to a pending or potential arbitration,
mediation or other alternative dispute resolution proceeding in this or another jurisdiction, if the services arise
out of or are reasonably related to the lawyer’ s practice in a jurisdiction in which the lawyer is admitted to
practice and are not services for which the forum requires pro hac vice admission.”).
13. See G. Born, International Commercial Arbitration 2295–99 (2009).
14. Birbrower, Montalbano, Condon & Frank, PC v. Superior Court, 949 P .2d 1 (Cal. 1998).
15. Birbrower, 949 P .2d at 9.
16. Cal. C.C.P . §1282.4(c)(11).
17. Birbrower, 949 P .2d at 9 (Cal. C.C.P . §1297.351).
18. As noted above, there are some specialized industry context (e.g., maritime, commodities) where arbitrations
customarily do not involve (or permit) legal representatives. See supra p. 262.
19. That is reflected in reports on counsel in significant international arbitrations. See M. Goldhaber, Arbitration
Scorecard 2011: the Biggest Cases You Never Heard of, The American Lawyer (July/August 2011).
20. Rogers, Fit and Function in Legal Ethics: Developing A Code of Conduct for International Arbitration, 23
Mich. J. Int’ l L. 341, 342 (2002).
21. See G. Born, International Commercial Arbitration 2307–10 (2009).
22. D.C. Bar. Op. 79 (1979), reprinted in, D.C. Bar, Code of Professional Responsibility and Opinions of the D.C.
Bar Legal Ethics Comm. 138, 139 (1991).
23. Momodou ( Practice Note) [2005] 1 WLR 3442, at 61–62 (English Court of Appeal).
24. See G. Born, International Commercial Arbitration 2307–10 (2009).
25. See G. Born, International Commercial Arbitration 1785–88, 2308–09 (2009).
26. Some institutional rules are similar. See LCIA Rules, Art. 20(6); HKIAC Administered Arbitration Rules, Art.
23(9); SIAC Rules 2010, Art. 22(5).
27. See G. Born, International Commercial Arbitration 2313 (2009).
28. See G. Born, International Commercial Arbitration 2310–12 (2009).
29. Some common law jurisdictions still impose relatively stringent prohibitions against contingency fee
arrangements. See Bevan Ashford v. Geoff Yeandle [1998] 3 All E.R. 238 (Q.B.) (prohibition on contingency fees
on the basis of champerty extends to arbitration); Unruh v. Seeberger, [2007] 2 HKLRD 414 (H.K. Court of Final
Appeal); Otech Pakistan Pvt Ltd v. Clough Eng’g Ltd, [2006] SGCA 46 (Singapore Court of Appeal) (doctrine of
champerty applies to arbitration proceedings as well as litigation).
30. As a practical matter, most contingent fee agreements must be disclosed in submissions on costs at the
conclusion of the arbitration.
31. See G. Born, International Commercial Arbitration 2313–14 (2009).
32. For example, it is a criminal offense in Switzerland to provide false testimony as to factual matters or false expert
evidence to a tribunal seated in Switzerland. Swiss Penal Code, Arts. 307, 309. Legislation in other countries is
similar. See, e.g., Austrian P enal Code, Art. 146; English Arbitration Act, 1996, §68.
33. See G. Born, International Commercial Arbitration 2315–16 (2009).
34. Bidermann Indus. Licensing, Inc. v. Avmar NV, 570 N.Y.S.2d 33 (N.Y. App. Div. 1991).
35. Pour le Bebe, Inc. v. Guess? Inc., 112 Cal.App.4th 810, 819 (2003) (summarizing basis for trial court’ s refusal to
hear a motion to disqualify an opponent’ s arbitration counsel due to an alleged conflict of interest).
36. See G. Born, International Commercial Arbitration 2316–23 (2009).
37. See supra pp. 262–64; Builders Federal ( Hong Kong) Ltd v. Turner ( East Asia) Pte Ltd , 5 J. Int’ l Arb. 139
(Singapore High Court 1988) (1988);Lawler, Matusky & Skeller v. Attorney General of Barbados , Civ. Case
No. 320 of 1981 (Barbados High Court 22 August 1983).
38. As discussed above, many national rules of professional conduct do not appear to apply to foreign-qualified
lawyers appearing in locally-seated international arbitrations. See supra pp. 262–69.
39. See, e.g., Partial Award in ICC Case No. 8879, in Grigera Naón, Choice-of-Law Problems in International
Commercial Arbitration, 289 Recueil des Cours 9, 158 (2001) (refusing to exclude counsel from arbitral
proceedings, on grounds of alleged conflict of interest arising from past representation of adverse party).
40. See G. Born, International Commercial Arbitration 2319–23 (2009).
41. See, e.g., Pope & Talbot, Inc. v. Gov’t of Canada , in NAFTA Decision of 27 September 2000, available at
www.naftaclaims.com/disputes.htm (tribunal imposing costs on party because of its counsel’ s disclosure of
confidential materials from arbitration).
Part III
International Arbitral Awards

The final step in an international arbitration is for the arbitral tribunal to make an arbitral
award. The “making” of an “award” refers to the tribunal’s rendering of its decision, in a
manner satisfying the formal requirements of the arbitration legislation in the arbitral seat –
typically, requiring completion of a written, signed, dated award and delivery of the award to
the parties. Once a final arbitral award is made, the tribunal’s original mandate is substantially
concluded. The tribunal becomes functus officio and its remaining responsibilities (and
powers) are highly circumscribed. Thereafter, compliance with, and enforcement of, the
award becomes a matter for the parties and national courts.
Arbitral awards are not “advisory” instruments. In many jurisdictions, an award will have
res judicata and other preclusive effects as soon as it has been made. It will also be capable of
enforcement (as discussed below).
In most cases, parties voluntarily comply with international arbitral awards: empirical
studies and anecdotal evidence indicates that the percentage of voluntary compliance with
international commercial arbitration awards exceeds 90% of international cases.1 This reflects
the parties’ contractual undertakings to arbitrate and to comply with the resulting arbitral
award, the efficacy of the arbitral process (which leaves parties believing that their dispute
has been fairly resolved) and the likelihood that the award can be coercively enforced under
the New York Convention and national arbitration legislation. Moreover, in particular
contexts, there are specific commercial or related pressures for parties to comply with arbitral
awards, such as with ICSID awards (issued under World Bank auspices) or awards under the
arbitration rules of various trade associations.
Nevertheless, not all international arbitral awards are voluntarily complied with. The
ultimate test of any arbitration is therefore its ability to render an award which, if necessary,
will be recognized and enforced in relevant national courts – including, if necessary, through
coercive mechanisms of executive, attachment and garnishment. If an award cannot be
successfully enforced, then the parties’ arbitration agreement and investment in the arbitral
proceedings will have been for naught and the entire process will be questioned. Fortunately,
in most cases, the recognition and enforcement of arbitral awards is straightforward and
speedy.
At the same time, like other legal proceedings, arbitrations may be imperfect and can leave
one party feeling aggrieved. A party in this position may wish to take steps to have the
arbitral award corrected or, alternatively, judicially reviewed and set aside – just as a party
that has lost in first instance litigation may seek appellate review. In contrast to the relative
ease and efficiency of recognizing and enforcing foreign arbitral awards, efforts to set aside or
annul an international arbitral award frequently face substantial obstacles and succeed only in
rare cases.
After an international arbitral award is made, international arbitration conventions and
national arbitration statutes provide five basic legal avenues which may be taken with respect
to the award in the national courts in the arbitral seat. These five avenues can be taken
independently or, on occasion, pursued in parallel, sometimes with different parties initiating
different proceedings.
First, after an award is made, it may be “confirmed” (or granted “exequatur”) in the courts
of the arbitral seat. The “confirmation” of an award is typically effected through a summary
enforcement procedure, which produces a national court judgment, incorporating the terms of
the award (e.g., an order that the award debtor pay a specified sum to the award creditor),
that is capable of enforcement in national (and foreign) courts in the same manner as other
judgments.
Alternatively, after an award is made, it may be “annulled” (alternatively termed “set
aside” or “vacated”), virtually always only by a court in the arbitral seat. The annulment or
setting aside of an award has the effect of rendering the award null and void or non-existent,
at least under local law in the place of annulment. Although the effects of annulment of an
award outside the jurisdiction where such annulment occurs are disputed, the effects within
the annulment forum are comparable to vacatur of a lower court judgment.
Third, an award may be “corrected,” “interpreted,” or “supplemented” by the arbitral
tribunal. These actions involve additional decisions by the arbitrators, generally pursuant to
either institutional rules or national arbitration legislation in the arbitral seat, to correct or
clarify aspects of their earlier award.
Fourth, an award may also be “recognized,” either in the arbitral seat or outside the seat.
Recognition of an award (sometimes referred to as “domestication” or “homologation”)
generally has the effect of giving the award the status of a national court judgment in the
jurisdiction where the award is recognized. Recognition of an award is generally required in
order for it to be capable of enforcement within a jurisdiction (see below), and may be
relevant to the preclusive effects of the award.
Finally, an award may be “enforced,” again either in the seat or elsewhere. Enforcement of
an award involves the exercise of coercive state sanctions (e.g., execution upon assets,
attachment or garnishment). In contrast to recognition of an award, which can occur simply
by according the award preclusive effect in a local litigation (e.g., to bar a claim or defense),
enforcement of an award typically occurs through affirmative actions to enforce a local court
judgment recognizing the award.
The Chapters in this Part address the status, effects and treatment of arbitral awards in
international arbitration. Chapter 15 discusses the legal framework, both national and
international, which is applicable to international arbitral awards. In particular, it addresses
the definition of an arbitral “award,” and the “jurisdictional” requirements which determine
when this international legal framework for arbitral awards is applicable. The Chapter also
discusses the form and content of international arbitral awards. Among other things, it
addresses the requirements under leading national arbitration statutes concerning the form and
publication of arbitral awards. It also discusses the issues of relief, costs and interest in
international arbitral awards.
Chapter 16 examines the setting aside or annulment of international arbitral awards. It
addresses the judicial forums in which annulment or setting aside can be sought, and the
permissible standards for granting such relief, under both international arbitration conventions
and leading national arbitration legislation. The Chapter also examines the various substantive
grounds which are available for setting aside an award, as well as the legal consequences of
setting aside an award. Finally, the Chapter discusses the correction, interpretation and
supplementation of international arbitral awards.
Post-Award Proceedings
 Chapter 17 discusses the recognition and enforcement of international arbitral awards. It
examines the presumptive obligation of national courts, under most international arbitration
conventions and national arbitration statutes, to recognize and enforce foreign arbitral awards.
It also discusses the exceptions to this presumptive obligation to recognize foreign awards,
including on grounds of lack of jurisdiction, procedural defects, bias of the arbitrators, public
policy and non-arbitrability. The Chapter also examines possible limits on the judicial forums
in which recognition of arbitral awards may be sought. Finally, the Chapter discusses the role
of preclusion in international arbitration, including principles of res judicata, collateral (or
issue) estoppel and precedent.
Finally, Chapter 18 addresses the subjects on investor-state and state-to-state arbitration.
It outlines the characteristics of each form of dispute resolution (including similarities and
differences from international commercial arbitration). It also examines the jurisdictional
requirements, procedures, applicable law and awards in each setting, again as compared with
international commercial arbitration.
_________________________
1. See van den Berg, The New York Convention: Its Intended Effects, Its Interpretation, Salient Problem Areas, in M.
Blessing (ed.), The New York Convention of 1958 25 (ASA Special Series No. 9 1996) (only 5% of the cases
brought before national courts refuse enforcement or recognition of an award).
Chapter 15
International Arbitral Awards: Legal Framework

International arbitral awards are given effect by a highly-developed legal framework of

international and national sources. On the international level, the New York Convention and
other international conventions address various substantive and forum selection aspects of
the annulment, recognition and enforcement of arbitral awards. On the national level,
arbitration statutes provide procedural mechanisms and substantive criteria for making,
correcting, confirming, annulling, recognizing and enforcing awards. The effect of these
national and international instruments is to establish a strong “pro-enforcement” legal regime
for the recognition and enforcement of international arbitral awards.

§15.01 LEGAL FRAMEWORK FOR INTERNATIONAL ARBITRAL

AWARDS

[A] New York Convention

As outlined above, one of the principal purposes of the New York Convention was to make
it easier to enforce an arbitral award made in one Contracting State in other states.1 This
objective was accomplished through several related provisions of the Convention, which
apply to awards that satisfy the Convention’s jurisdictional requirements.2

[1] Elimination of “Double Exequatur”

First, as discussed below, where the Convention is applicable, it eliminated the previously-
existing “double exequatur ” requirement. That requirement necessitated the confirmation of
an award in the courts of the arbitral seat (the first “exequatur”) before it could be recognized
abroad (the second “exequatur”). The Convention specifically eliminated this double
exequatur requirement, in order to make international arbitral awards more readily
enforceable, subject to fewer opportunities for judicial challenge and fewer delays in
enforcement.

[2] Presumptive Obligation to Recognize and Enforce Awards

Second, the Convention imposes a general obligation on Contracting States to recognize and
enforce awards. In particular, Article III of the Convention requires Contracting States to
presumptively recognize awards made in other countries, subject to procedural requirements
no more onerous than those for domestic awards. Article IV of the Convention implements
this obligation by prescribing mandatory, streamlined requirements for proof of the existence
of an award.

[3] Limited, Exclusive Grounds for Non-Recognition with Burden of Proof

on Award Debtor

Third, Article V of the Convention sets forth a limited set of grounds for non-recognition of
an award. Importantly, Article V’s exceptions are exclusive and exhaustive; outside the
Contracting State where an award is made, recognition of a Convention award can be denied
only on one of the grounds contained in Article V. These grounds are narrowly-defined and,
importantly, the party resisting recognition bears the burden of demonstrating that one of the
exceptions applies.

[4] Limits on Forums for Annulment

Fourth, the Convention narrowly limits the places in which an award may be annulled,
permitting actions to annul an award to be brought only in the place of arbitration or the
country under whose laws the award was made (virtually always, the arbitral seat). In such a
forum – sometimes referred to as the award’s “country of origin,” or the state with “primary
jurisdiction” – the Convention is generally held to permit an award to be annulled for any
reason, including reasons not contained in Article V of the Convention. In other judicial
forums, outside the country of origin, an award cannot be annulled and can only be denied
recognition (and only if one of Article V’s enumerated exceptions is satisfied).

[5] Optional and Permissive Non-Recognition

Fifth, the Convention does not require non-recognition of an award even if one of Article V’s
grounds permitting non-recognition is satisfied. Rather, both Article V and Article VII of the
Convention permit a Contracting State to voluntarily recognize an award, in accordance with
its local law, even if one of Article V’s exceptions applies and the Convention does not
require recognition.
In light of the foregoing features, courts in most jurisdictions have emphasized the “general
pro-enforcement bias informing the Convention.”3 In general, the Convention’s regime
improves materially on the conditions for recognition of foreign awards otherwise available
under national law.

[B] National Arbitration Legislation

Most nations have enacted legislation which, among other things, implements the pro-
arbitration regime of the New York Convention for arbitral awards. 4 These statutes contain a
variety of provisions prescribing the status and legal effects of awards, as well as mechanisms
for annulling, correcting, recognizing and enforcing such awards.
First, arbitration legislation typically addresses a number of issues relating to the making of
awards in arbitrations seated on local territory. Among other things, most arbitration statutes
prescribe formal requirements for awards made on local territory. Article 31 of the
UNCITRAL Model Law is representative, requiring that awards made in locally-seated
arbitrations be written, signed by the arbitrators, reasoned and dated, and state the place of
the arbitration. Arbitration statutes also often contain provisions for delivery to the parties
of awards in locally-seated arbitrations (as under Article 31(4) of the Model Law). In
addition, most arbitration statutes (for example, Article 31 and 33 of the Model Law) address
the correction, interpretation and supplementation of awards, again applicable only to awards
made locally.5
Second, most arbitration legislation also provides a statutory regime for the recognition
and/or confirmation and the annulment of awards made locally. Arbitration statutes typically
set forth substantive standards and procedures for confirming awards, as well as the grounds
for annulling awards made locally. The Model Law is illustrative of such statutory
provisions, providing in Article 34 for the setting aside of awards made in national territory
(on limited grounds, such as excess of jurisdiction, procedural irregularity and public policy),
and in Article 35 for the recognition and enforcement of awards made in both national
territory and elsewhere.6 In general, the confirmation of awards in locally-seated arbitrations
occurs through summary proceedings.
Some arbitration legislation provides that actions to set aside awards made locally must be
brought in specialized courts. In some states, the annulment and confirmation of international
awards are subject to a different statutory regime from domestic awards; in other states, a
single statute governs the annulment and confirmation of both domestic and international
awards.
Third, many arbitration statutes also provide for the confirmation and enforcement of
awards made locally, subject to only limited exceptions (again, for excess of jurisdiction,
procedural regularity and public policy). In some jurisdictions, there is no requirement or
mechanism for judicially “confirming” an award made in the jurisdiction, which can instead be
immediately enforced. In many developed jurisdictions, arbitration legislation also provides
that arbitral awards have immediate binding effect, including res judicata effect.7
Fourth, most arbitration legislation also contains pro-enforcement provisions governing the
recognition and enforcement of foreign awards, made outside the territory of the recognizing
state. These statutory provisions set forth the substantive grounds for recognizing, or
denying recognition to, foreign arbitral awards. In most jurisdictions, these standards either
incorporate by reference or repeat verbatim the pro-arbitration regime of the New York
Convention (or other applicable treaties); in some instances, arbitration statutes provide even
more liberal grounds for recognition of foreign awards than required by the Convention.8
Once an award has been confirmed or recognized by a court in a particular jurisdiction, it is
then typically the national court’s judgment that will be used as the basis for executing
against assets or taking other coercive steps against the judgment-debtor’s assets. The
enforcement of both foreign and local awards is typically governed by generally-applicable
national law relating to judicial enforcement, rather than arbitration-specific legislation.

§15.02 DEFINITION OF ARBITRAL “AWARD”

Categorization of a decision as an arbitral “award,” rather than something else, is of vital

importance under both the New York Convention and national arbitration legislation. The
Convention applies only to arbitral “awards,” with Article I(1) providing that the
Convention applies to “the recognition and enforcement of arbitral awards,” and Article III
also dealing only with “arbitral awards.” As a consequence, the “pro-enforcement”
provisions of the Convention are applicable only to arbitral awards, and not to other
categories of decisions (such as expert determinations, judgments, or conciliation
recommendations).9
Similarly, arbitration legislation in most jurisdictions is also generally applicable only to
awards (and not other instruments). That is true under the UNCITRAL Model Law (in
particular, Articles 31, 33, 34–36) and other arbitration legislation. 10 As a consequence, the
provisions of national arbitration legislation regarding the form, correction, annulment,
recognition and preclusive effects of arbitral decisions apply only to arbitral awards and not
to other instruments.
Both the New York Convention and national arbitration legislation impose three basic
conditions in conjunction with the concept of an arbitral “award”: (a) the award must result
from an agreement to “arbitrate”; (b) the award must have certain minimal characteristics that
are inherent in the concept of an “award”; and (c) the award must resolve a substantive issue,
not a procedural matter. Unless these conditions are satisfied, an instrument will not be an
award and will not be subject to the provisions of the Convention or national arbitration
legislation.

[A] Decision Resulting from an Agreement to Arbitrate

The award must be the result of the implementation of an agreement to “arbitrate,” rather
than an agreement to do something else (such as to mediate). Unless this is the case, no
“arbitral” award is involved and neither the Convention nor national arbitration legislation is
applicable. A conciliator’s recommendation, an expert determination, or a national court
judgment is not the result of “arbitration” and is therefore not an “arbitral award.” The
definition of an “arbitration agreement” is discussed in Chapter 2 above, and is equally
applicable in the context of awards.11

[B] “Award” by the Arbitral Tribunal

Not every action during an arbitration, nor every communication from an arbitral tribunal,
constitutes an “award.” Most authorities agree that an award is a written instrument, drafted
and signed by the arbitrator(s), stating the tribunal’s final decision on particular claims or
disputes.12 This requirement is implied in the Convention (Article IV), and is explicit in most
arbitration legislation.13
It is clear that an award is only an instrument made by the arbitrators, not by the arbitral
institution, the appointing authority, or the secretary to the tribunal. The nomination or
removal of an arbitrator, selection of the place of arbitration, and other administrative
decisions by an arbitral institution are not “awards.” Equally, a document prepared and
executed by persons other than the arbitrators – whether a tribunal-appointed expert,
secretary, or otherwise – cannot constitute an “award.”
It is also clear that only an instrument that the tribunal intends to be the final expression of
its decision on some or all of the parties’ claims can be regarded as an award. A tribunal’s
oral, or even written, statement of what conclusion it has reached and will later set forth in a
final award is not itself an award. Rather, it is merely advance indication of what the award
will say. Similarly, in arbitral regimes that provide for internal institutional review, the
tribunal’s initial decision is not necessarily an award; only the final decisions, either
confirming the first-instance decision or arriving at a different resolution, constitute awards.

[C] “Awards” Distinguished from “Procedural Orders”

An award must set forth the arbitrators’ resolution of a substantive claim in the arbitration.
Purely procedural or administrative decisions are not awards within the meaning of the
Convention or national arbitration legislation.14
Arbitral tribunals frequently issue decisions that are not denominated as awards, but are
instead characterized as “orders,” “procedural decisions,” or “directions.” These decisions
almost always deal with logistical matters, scheduling of hearings or submissions, disclosure
issues and the like. For the most part, decisions which constitute “orders” are not subject to
annulment, recognition, or enforcement like “awards,” and are also not subject to the
procedural and formal requirements that attach to awards. Thus, a letter scheduling a hearing
or directing the parties to make submissions in accordance with a time-table, is not an award
(and will instead be either an “order” or simply a communication from the tribunal).15
In the vast majority of cases, there is little dispute about what is an award and what is an
order. Most arbitrations end with a formal written document, titled “Final Award,” that the
arbitrator(s) sign and that disposes of all the parties’ substantive claims in a reasoned manner;
there is no doubt but that such an instrument is an “award.” Likewise, most arbitrations
include numerous letters, directions and similar communications from the tribunal addressing
administrative, logistical, or time-tabling issues; again, there is virtually never any doubt that
such communications are not awards.
Most authorities agree that in determining whether a particular instrument is or is not an
award the label attached by the tribunal (and/or the parties) is not dispositive.16 According to
one decision, “[t]he qualification of [a decision as an] award does not depend on the terms
used by the arbitrators or by the parties [and] notwithstanding its qualification as an ‘order,’
the decision ... is thus indeed an award.”17 Merely labelling a procedural direction an award
does not convert it into one, while failing to label an award as such does not alter its status.
Instead, courts have considered the substance of the tribunal’s decision in determining
whether it should be treated as an award, and thereby subject to recognition or annulment.18
Some authorities have treated decisions on disclosure, stays and similar requests as
procedural dispositions, and not awards. It is said that treating these decisions as awards
would subject the arbitral process to delays for interlocutory applications to annul such
“awards”; it is also said that, by their nature, these decisions do not resolve parts of the
parties’ underlying dispute and therefore cannot be final decisions. The better view is that
interlocutory decisions by the arbitrators on disputed issues should generally be regarded as
awards, under both the New York Convention and arbitration legislation, provided they
finally dispose of a request for relief by one of the parties through an application of legal
rules to a factual record. This conclusion applies, for example, to arbitral decisions on
requests for provisional measures, stays of arbitral proceedings and disclosure.19
[D] Jurisdictional Awards

As discussed above, arbitral tribunals not infrequently resolve jurisdictional disputes,

rendering either positive or negative decisions. The better view is that a positive jurisdictional
decision constitutes an “award,” subject to the annulment, recognition and other provisions
of local arbitration legislation. Although there are contrary authorities, the same conclusion
should apply to negative jurisdictional awards: a tribunal’s determination that it lacks
jurisdiction should be subject to annulment, as well as recognition, as an award under both
national arbitration legislation and the New York Convention.20

[E] Decisions Concerning Preliminary Substantive Issues

Arbitral decisions that decide only one substantive issue also presumptively constitute
“awards,” including when the tribunal does not grant specific monetary or injunctive relief.
For example, if a tribunal decides what law applies to a contract, decides issues of liability, or
otherwise resolves disputed substantive issues, while not making a final disposition of all of
the parties’ claims, these rulings should generally be considered awards. 21 Critical to this
conclusion, however, is the grant of declaratory relief, rather than merely providing reasoning
in support of a conclusion; unless the tribunal makes a declaration (e.g., the respondent
breached Article 4, but not Article 5, of the contract), then its reasoning is not an award.22

§15.03 FORMAL REQUIREMENTS FOR INTERNATIONAL ARBITRAL

AWARDS
Like an arbitration agreement, an arbitral award is subject to form requirements. Unless these
requirements are complied with, the award is potentially subject to annulment (in the place of
arbitration) or non-recognition (in other jurisdictions). The form requirements applicable to
international arbitral awards are generally set forth in the arbitration legislation of the arbitral
seat, and the parties’ arbitration agreement, including any applicable institutional rules.
In contrast to its treatment of arbitration agreements, the New York Convention does not
generally impose form requirements with respect to awards.23 It is implicit in the Convention
that an award will be a written instrument: in particular, Article IV(1)(a) requires
presentation of a “duly authenticated original award or a duly certificated copy thereof” as a
condition of recognition, presupposing the existence of a written instrument.24 Beyond this
reference, however, the Convention does not impose form requirements or address what form
requirements Contracting States may impose on awards.
Many national laws prescribe mandatory form requirements for awards. In general, these
provisions require that any award made in a locally-seated arbitration be in the form of a
written and (almost always) reasoned instrument, signed by some or all of the arbitrators,
which is dated. In some cases, these requirements are mandatory and parties are not capable
of altering them by agreement; in other instances, parties may by agreement alter statutory
form requirements. In general, these requirements are non-controversial and readily complied
with, thus giving rise to few issues of interpretation.
The UNCITRAL Model Law’s treatment of form requirements is representative. Article
31 of the Model Law provides that an award (a) “shall be made in writing,” (b) “shall be
signed by the arbitrator or arbitrators,” (c) “shall state its date and the place of arbitration,”
and (d) “shall state the reasons upon which it is based, unless the parties have agreed that no
reasons are to be given or the award is an award on agreed terms.” With the exception of the
requirement for a reasoned award, Article 31’s requirements are mandatory. Although every
jurisdiction imposes its own particular form requirements for awards made locally, other
arbitration legislation is broadly similar.25
In some jurisdictions, the parties’ autonomy to agree upon the form requirements
applicable to awards is expressly recognized. In contrast to the generally mandatory
provisions of the Model Law, §52(1) of the English Arbitration Act provides that “the
parties are free to agree on the form of the award.” Absent contrary agreement, §52 (3) of the
English Arbitration Act provides (like the Model Law) that the award shall be in writing,
signed and reasoned, and shall provide the date of the award and seat of the arbitration.

[A] Writing, Place, Date and Signature Requirements

It is not controversial that awards must generally be in writing. This is essential both to
ensure due reflection by the tribunal and to record with clarity precisely what the tribunal has
decided, for the parties and for enforcement or annulment proceedings.
In most legal systems, all of the arbitrators are in principle required to sign the award.
Where such a requirement exists, it is ordinarily mandatory and prevails over inconsistent
institutional rules.26 Nonetheless, most national laws also provide that the award may, if
necessary, be signed by either a majority of the arbitrators 27 or by the chairman alone.28
Where one arbitrator refuses to sign the award, an explanation of the refusal is generally
required (by the chairman of the tribunal).29 There is no requirement that the arbitrators all
sign the award at the same time or in the same place.
As discussed elsewhere, the place where an award is made can have significant
consequences (including in determining the forum for any annulment action).30 To minimize
uncertainties, most arbitration legislation requires arbitrators to confirm the place of the
arbitration by specifying it in the award. As discussed above, the place where an award is
physically signed has been held, in a few older decisions, as the place where the award is
“made” for purposes of the New York Convention and arbitration legislation. 31 More recent
legislation and judicial authority reject this and deems the award to be made in the seat,
specified by the parties’ agreement, regardless of where it is signed.32
As noted above, most arbitration legislation requires that awards be dated. The date on
which the award is made may have consequences for the commencement of the time period
for seeking to annul (or confirm) the award under applicable national law.33

[B] Reasons for Award

Historically, most legal systems imposed no requirement that awards be reasoned. 34

Nonetheless, modern arbitration legislation in many jurisdictions has superseded the
historical rule and requires that arbitrators give reasons for awards made within national
territory, unless otherwise agreed by the parties. Article 31(2) of the UNCITRAL Model
Law is representative, providing that “the award shall state the reasons upon which it is
based, unless the parties have agreed that no reasons are to be given ....” Under the Model
Law, reasoned awards are the default rule, unless the parties affirmatively agree to the
contrary. Other arbitration legislation is similar, 35 while some statutes go further,
mandatorily requiring reasons to be given (regardless of the parties’ agreement). 36 Failure to
comply with requirements for reasoning may expose an award to annulment.
The requirement for reasons does not demand that the arbitrators write a learned article,
nor deliver an award of any particular length. The essential requirement is that the tribunal
identify the issues that were dispositive in the dispute and explain, concisely, the thought-
process underlying its decision. One of the most satisfactory formulations for what
constitutes a reasoned award is: “All that is necessary is that the arbitrators should set out
what, on their view of the evidence, did or did not happen and should explain succinctly
why, in the light of what happened, they have reached their decision and what that decision
is. This is all that is meant by a ‘reasoned award.’”37
The requirement for a reasoned award is also not a requirement for a well-reasoned award:
bad or unpersuasive reasons are still reasons, and satisfy statutory requirements for reasoned
awards.38 As discussed below, in a limited number of jurisdictions, awards made in locally-
seated arbitrations may be annulled if they are internally-contradictory. This requirement
focuses on the dispositive portions, rather than the reasoning, of the award and should not be
seen as a form of requirement for clear or consistent reasoning.
A principal exception to the consensus presumptively requiring reasoned awards is the
United States, where older authority has preserved the historic rule permitting unreasoned
awards. A 1960 opinion of the U.S. Supreme Court is representative, remarking that
“[a]rbitrators have no obligation to the court to give their reasons for an award.”39 Similarly,
U.S. courts have generally held that unreasoned awards are enforceable (provided that the
parties’ agreement do not require a reasoned award). 40 On the other hand, where the parties’
agreement or applicable institutional rules require a reasoned award (as is generally the case),
U.S. courts require compliance with this requirement and vacate unreasoned awards.41
Significant questions arise concerning the recognition and enforcement of unreasoned
foreign awards that are made in places where local law permits unreasoned awards (e.g., the
United States). There is substantial authority for the proposition that unreasoned awards will
be recognized in foreign courts, including in states that require reasoned awards in arbitrations
seated on their territory, provided that unreasoned awards were permitted in the arbitral
seat.42 Where the parties to a foreign arbitration have agreed that awards may be unreasoned,
it is particularly difficult to see what grounds would exist for denying recognition of an
unreasoned foreign award. Even where a recognition court requires that foreign awards be
reasoned, courts proceed from the premise that different legal systems adopt different
approaches to the arbitral process, including with regard to the methods of drafting awards
and will find awards unreasoned only in extreme cases.43

[C] Consequences of Non-Compliance with Statutory Form Requirements

As noted above, statutory form requirements for awards are often mandatory. In some
jurisdictions, arbitration legislation does not provide for annulment based on technical formal
defects in the award.44 In other states, failure to satisfy a formal requirement (e.g., to sign or
date the award or indicate the place of arbitration) will be capable of invalidating the award in
annulment proceedings.45 Such errors are readily capable of correction, where applicable
arbitration legislation or institutional rules permit, and this is obviously the preferable course
to annulling an otherwise valid award.

[D] Form Requirements under Institutional Rules

Awards must also comply with any form requirements set forth in the arbitration agreement.
In general, arbitration clauses themselves seldom impose form requirements. In contrast,
however, institutional rules typically do prescribe form requirements for awards. The
UNCITRAL Rules do so, imposing requirements that track precisely those of the Model
Law;46 most other institutional rules are similar. 47 In contrast, some rules impose more
detailed form requirements (which are not difficult to satisfy, but which require attention by
the tribunal).48 Non-compliance with these requirements may expose the award to annulment
or non-recognition on the grounds that the parties’ agreed arbitral procedures were not
complied with.49

[E] Language of Award

Typically, parties will specify (in the arbitration agreement) the language of the arbitration,
which will impliedly extend to the award. Where the parties have not selected the language of
the arbitration, the tribunal will do so, again generally encompassing the language of the
award. In both instances, failure to make the award in the requisite language may well
constitute a defect of form and a basis for annulment or non-recognition of the award.

§15.04 TYPES OF AWARDS

Most national laws and institutional rules contemplate a variety of different types of
“awards,” including final awards, partial awards, interim awards, consent awards and default
awards. Each of these categories of awards is discussed below.50

[A] “Final” Awards

The term “final award” is used in different senses, which has sometimes led to confusion.
First, the concept of a “final award” refers to the last award in an arbitration, which disposes
of all (or all remaining) claims and terminates the tribunal’s mandate. This is a “final” award
in the sense used by Article 32(1) of the UNCITRAL Model Law. 51 A “final” award in this
sense is to be distinguished from a “partial award,” which resolve part (but not all) of the
parties’ claims.
Second, some arbitration conventions and arbitration statutes provide for the recognition of
only those awards that are “final” (and not other, “non-final” awards). Used in this sense, a
“final” award refers to those awards that have achieved a sufficient degree of finality in the
arbitral seat (most obviously, by being granted confirmation or exequatur) or that are no
longer subject to annulment in the seat. Used in this sense, partial awards and jurisdictional
awards may well be “final,” notwithstanding the fact that they do not fully resolve the
parties’ dispute or conclude the arbitration.

[B] “Partial” Awards

A “partial award” is an arbitral decision that finally disposes of part, but not all, of the
parties’ claims in an arbitration, leaving some claims for further consideration and resolution
in future proceedings in the arbitration. As to the claims that it disposes of, a partial award
may become final and binding on the parties and may be recognized and enforced (or
annulled). Under many national laws, a “partial” award differs from an “interim” award in
that it finally disposes of a particular claim (e.g., awards damages for a particular breach of
contract), while an interim award decides an issue (e.g., choice of law, liability) relevant to
disposing of a claim, but does not finally dispose of the claim.52
Many national laws provide expressly that a tribunal has the power to make partial
awards (absent contrary agreement). For example, the Swiss Law on Private International
Law provides (in Article 188) that “unless the parties have agreed otherwise, the arbitral
tribunal may make partial awards.” Other arbitration statutes are similar.53
Institutional rules also generally provide for partial awards. Article 34(1) of the
UNCITRAL Rules provides that, “[t]he arbitral tribunal may make separate awards on
different issues at different times.” Other rules are similar. 54 Such provisions grant the
arbitrators authority to make partial awards, even in the absence of statutory authorization.
In any event, even absent statutory authorization or institutional rules permitting partial
awards, a tribunal has the power to take such an approach (except in the case of contrary
agreement).55 This authority is inherent in the arbitrators’ mandate to resolve the parties’
dispute in an efficient manner.
In practice, partial awards are typically used for separate determinations of specified
claims (with other claims reserved for further proceedings). For example, a tribunal might
render an award rejecting certain contractual claims or upholding such claims and awarding
damages, while leaving for subsequent proceedings the parties’ non-contractual claims.

[C] Interim Awards

As noted above, national law and institutional rules provide for “interim awards” (also
sometimes referred to as “interlocutory” awards). As a practical matter, the term “interim
award” is often used synonymously with “partial award,” in the sense that an award is made,
disposing of certain claims for relief, prior to disposition of all the issues (i.e., the award is
made at an interim stage in the arbitration). In this usage, an interim award is no different than
a partial award.
The term “interim award” is sometimes used more narrowly to refer to an award that does
not dispose finally of a particular claim (e.g., one of several claims for damages), but instead
decides a preliminary issue relevant to disposing of such claims (e.g., choice of law,
construction of a contractual provision). In this sense, an award is “interim” because it is a
step towards disposing of some of the parties’ claims (like a partial award), but does not
purport to make a final decision either granting or rejecting any of those claims.
The phrase “interim award” is also sometimes used with respect to decisions granting
provisional relief. In this sense, an award is “interim” because it is subject to subsequent
revision by the tribunal (either in the final award or in a revised decision on provisional
measures). In this usage, an “interim award” is distinguishable from a “partial award” in that
the former does not provide final resolution of part of the dispute, but resolution of all of a
claim for provisional relief (subject to later revision).

[D] Consent Awards

In practice, parties not infrequently arrive at agreements to settle arbitrations. If parties

succeed in reaching a negotiated resolution of their dispute(s), one option is to dismiss the
arbitration, recording the terms of the settlement in an agreement to this effect. Alternatively,
parties may wish to obtain a “consent award” (or “award on agreed terms”), which records
their settlement.
Many arbitration statutes provide for the possibility of consent awards. Article 30(1) of
the UNCITRAL Model Law provides that, if the parties reach a settlement during the
arbitration, the tribunal “shall,” “if requested by the parties and not objected to by the
arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms.”
Similar approaches are adopted in other arbitration legislation and judicial decisions.56 Most
institutional rules also provide that tribunals may make consent awards if requested to do so
by the parties.57 Both national laws and institutional rules provide that the general
requirement that awards be “reasoned” does not apply to consent awards.58
The prevailing approach of both institutional rules and national law is to permit a tribunal
to make a consent award if requested by the parties, but not to require the arbitrators to do
so. On the contrary, arbitrators are generally given the choice whether or not to make a
consent award. For example, a tribunal may refuse to make a consent award because it would
improperly affect the rights of third parties, or public interests, which had not been spoken
for in the arbitration. In practice, however, tribunals rarely decline to make consent awards.59

[E] Default Awards

As discussed above, one party sometimes fails to appear and present its case in the
arbitration.60 A party’s default does not prevent the tribunal from considering and resolving
the parties’ dispute. On the contrary, most arbitration legislation provides that tribunals may
make default awards and that such awards are subject to confirmation (and annulment), just
as contested awards are.61 The fact that a party refuses to participate in arbitral proceedings,
and a default award is rendered against it, has also repeatedly been held not to constitute a
denial of procedural rights under either Article V(1)(b) of the New York Convention or
national arbitration statutes.62

[F] Additional Awards

As discussed below, many arbitration statutes and institutional rules provide for the making
of “additional awards,” after what was intended as the final award is made. These additional
awards are typically made, at the request of a party, when a tribunal’s final award mistakenly
fails to dispose of a claim that had been asserted in the arbitration. An additional award is
treated no differently from other “awards,”63 and is subject to generally-applicable
provisions regarding annulment, recognition and enforcement.64

[G] Corrections and Interpretations

As also discussed below, many arbitration statutes and institutional rules provide for the
possibility of corrections or interpretations of awards by the arbitral tribunal. These
corrections and interpretations themselves have the same status as an award and are capable
of annulment, recognition and enforcement like awards.65

[H] Termination of Arbitral Proceedings Without An Award

Arbitrations are occasionally concluded without an award. This is typically because the
parties agree to settle their dispute (but without a consent award) or because the claimant
abandons its claims.
Most arbitration regimes permit the tribunal to terminate an arbitration without an award
in some circumstances. Article 32(2) of the UNCITRAL Model Law provides for the
termination of arbitral proceedings by “order” if: (a) the claimant withdraws its claims,
“unless the respondent objects thereto and the arbitral tribunal recognized a legitimate
interest on his part in obtaining a final settlement of the dispute”; (b) the parties agree to
terminate the proceedings; or (c) continuation of the arbitration has “become unnecessary or
impossible.” Most legislation is silent concerning termination of arbitral proceedings without
an award.66 For the most part, however, judicial decisions provide results comparable to
those under the Model Law. That is, the arbitrators have implied authority – in limited cases
of settlement, impossibility and claimant’s withdrawal of its claims – to terminate
proceedings without an award.67
Most institutional rules make express provision for the termination of arbitral proceedings
without an award. The UNCITRAL Rules provide, in Article 36(1) and (2), for the tribunal
to “issue an order for the termination of the arbitral proceedings” if the parties agree upon a
settlement, or if “the continuation of the arbitral proceedings becomes unnecessary or
impossible.” These provisions allow the tribunal, in appropriate cases, to terminate the
arbitration (and the arbitrators’ mandate) without making an award. Similarly, the LCIA
Rules provide for the tribunal to be “discharged” and “the arbitration proceedings concluded”
in the event of a settlement between the parties.68 The ICC Rules also (impliedly)
contemplate termination of arbitral proceedings in the case of a settlement that is not
recorded in a consent award.69 Again, however, even absent express authorization, the power
to terminate proceedings without an award is generally implicit in the tribunal’s procedural
authority.

[I] Majority Awards and Awards by Presiding Arbitrator

Most arbitration legislation permits awards to be made by a majority of the arbitrators (i.e.,
non-unanimous or majority awards). Article 29 of the Model Law is representative: “In
arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall
be made, unless otherwise agreed by the parties, by a majority of all of its members.”
Legislation in other jurisdictions also provides that an award may be made by less than all the
members of the tribunal.70 If not all the arbitrators sign an award, national law generally
requires that a statement of the reasons for the omitted signatures be appended to the
award.71
There are instances in which all three arbitrators may have different views about the
appropriate resolution of a dispute (for example, regarding quantum of relief or where more
than two claims are asserted). Where this occurs, there may be no majority position, and
instead three different views. In this event, some arbitration statutes and institutional rules72
provide for the decisive position to be that of the presiding arbitrator, who is then authorized
to make an award alone. Other arbitration statutes and institutional rules do not expressly
provide for awards by the presiding arbitrator alone (and it is doubtful that such authority is
implied); in these circumstances, an award can be made only if the presiding arbitrator and
one of the co-arbitrators compromise their initial views and agree upon a common position.73

[J] Dissenting, Concurring and Separate Opinions

Most arbitration legislation is silent on the subject of separate or dissenting opinions,
although a few such statutes expressly permit dissenting opinions. During the drafting of the
UNCITRAL Model Law, proposals were made to permit dissenting opinions, but
insufficient need was seen to do so.74 In jurisdictions where arbitration legislation does not
expressly permit separate opinions, judicial or academic authority usually approves the
practice.75
A number of institutional rules provide for dissenting or separate opinions,76 although
there are some notable exceptions.77 Even where institutional rules provide for the
possibility of a dissenting or separate opinion, it is sometimes suggested, usually by civil law
practitioners, that such an opinion may only be attached to an award or issued separately if
the majority of the tribunal permits it. In very rare instances, tribunals have refused to release
a dissenting opinion, notwithstanding the dissenting arbitrator’s request that they do so.78
Even absent express authorization in national law or applicable institutional rules, the right
to submit a dissenting or separate opinion is a concomitant of the arbitrator’s adjudicative
function and the obligation to make a reasoned award. Although there are legal systems where
dissenting or separate opinions are not permitted, these domestic rules have little application
in the context of party-nominated co-arbitrators, diverse tribunals and reasoned awards.
Indeed, the right of an arbitrator to deliver a dissenting opinion is properly considered as an
element of his or her adjudicative mandate, particularly in circumstances where a reasoned
award is required. Only explicit prohibitions should preclude the making of a dissenting
opinion, which serves an important role in the deliberative process and can provide a valuable
check on arbitrary or indefensible decision-making.79
The fact that arbitrators are permitted to issue dissenting or separate opinions does not
mean that they should – or even are permitted to – issue any dissenting or separate opinion
that they choose. On the contrary, the arbitrator’s personal duties of impartiality,
confidentiality and diligence require that any separate or dissenting opinion respect the
secrecy of the arbitral deliberations (i.e., not disclose or comment upon statements made
during deliberations or prior drafts of awards), respect the collegiality of the tribunal (i.e., not
make offensive comments) and respect the arbitrator’s duties of impartiality (i.e., not adopt a
partisan approach merely advocating one party’s position).
There have inevitably been instances where the foregoing principles were not observed.
Classic examples include a variety of the separate and/or dissenting opinions issued by
members of the Iran-United States Claims Tribunal and bilateral investment treaty
tribunals.80 These opinions have included personal accusations and efforts to undermine the
enforceability of the award. Opinions of this character are inappropriate and arguably a
breach of the arbitrators’ obligations of impartiality.
Finally, a separate or dissenting opinion is only an “opinion,” not an “award.” A separate
or dissenting opinion reflects only the views of the arbitrator publishing it, and is not an act
of the tribunal.81 It forms no part of the award and is not subject to annulment or recognition.
§15.05 TIME LIMITS, SERVICE AND PUBLICATION OF
INTERNATIONAL ARBITRAL AWARDS
National law, institutional rules and arbitration agreements often prescribe requirements with
regard to time limits for making an award, service and notification of an award, and related
matters. These requirements are generally non-controversial and as a practical matter give rise
to few disputes.

[A] Time Limits for Making Awards

M ost arbitration statutes impose no time limits for making an award.82 This leaves the timing
of an award to the parties’ procedural autonomy or the arbitrators’ procedural discretion
(absent contrary agreement). In contrast, a few (older) arbitration statutes prescribe time
limits within which a tribunal must make its final award: a few statutes provide that
arbitrations must be concluded within six months.83
Statutory time limits apply only to arbitrations seated within national territory, not to
arbitrations seated abroad.84 Moreover, in some instances, a statutory time limit will apply,
or be interpreted to apply, only to domestic, and not to international, arbitrations. In
practice, statutory time limits play a very limited role in international arbitration; where they
apply, however, failure to comply with a time limit can result in annulment of an award
and/or removal of the arbitrators.
Some institutional rules prescribe deadlines for the making of an award.85 Less frequently,
the parties’ arbitration agreement may itself prescribe a time limit for making an award. Most
arbitration legislation gives effect to such agreements, as an element of the parties’ general
procedural autonomy. As one French decision explains: “the principle that the time-limit
fixed by the parties, either directly or by reference to arbitration rules, cannot be extended by
the arbitrators themselves is a requirement of both domestic and international public policy,
in that it is inherent in the contractual nature of arbitration.”86
The consequences of violation of the parties’ agreed time-limit vary. In some jurisdictions,
such violations may be excused (for example, on the theory that “time was not of the
essence”87 ), while in other jurisdictions the violation of a time-limit will result in the
invalidity and potential annulment of the award. A few jurisdictions adopt statutory
mechanisms for either the tribunal or local courts to extend a contractual time-limit.88

[B] Delivery, Service, or Notification of Awards

Once an award has been made, it must be provided to the parties in some fashion. Most
arbitration legislation prescribes a requirement for delivery, notification and/or service of
awards on the parties. Thus, Article 31(4) of the Model Law provides “after the award is
made, a copy signed by the arbitrators ... shall be delivered to each party.” Under §55 of the
English Arbitration Act, 1996, the parties are “free to agree on the requirements as to
notification of the award,” failing which “the award shall be notified to the parties by service
on them of copies of the award, which shall be done without delay after the award is made.”
Other arbitration statutes make similar provision, for awards to be “delivered,”
“transmitted,” “communicated” or “notified” to the parties.89
The FAA is silent on the topic of delivery of arbitral awards. However, U.S. courts have
generally held that in the absence of agreement by the parties, awards should be served on
parties according to any applicable institutional rules or other methods permitted by law.90
The delivery or communication of an award to the parties often has significant procedural
consequences: in particular, it frequently triggers the time period for applying to correct or
modify the award91 and for filing an action to annul the award.92 In the case of final awards,
the delivery of the award also defines when a tribunal becomes functus officio.93
Arbitration statutes almost uniformly require that awards be delivered to both (or all) of
the parties, and not to only one of them. Even where not expressly provided by statute, this
is an implied, but mandatory, requirement. It reflects the equality of the parties, as well as
concerns that the parties have equal opportunities to challenge or seek correction of awards.
Arbitration legislation also generally provides that awards will be delivered only to the
parties, and not to others, consistent with the confidentiality of the arbitral process.94
Arbitration statutes sometimes contain provisions regarding the mode of delivery of an
award to the parties, including delivery by hand, mail, courier, or otherwise. Arbitral
institutions or tribunals sometimes informally provide the parties with copies of the award
(denominated as advance or courtesy copies) in a means other than the statutorily-defined
manner. Informal provision of awards to both parties is entirely proper, but generally does
not suffice to trigger statutory time periods for applications to annul or correct the award.
It is very common in international arbitration that the award must be delivered to persons
residing outside the arbitral seat. That raises the question whether there is any requirement
for “service abroad” of an award in accordance with national or international requirements for
serving documents in national court litigation abroad.95 The better view is that there is no
requirement that an award be served abroad pursuant to such requirements. That is in part
because national arbitration legislation uniformly provides only that awards must be
“delivered” or “communicated,” and not “served”; this is in keeping with the practical,
commercially-oriented objectives of the arbitral process.96
Institutional rules almost invariably address the question of delivery of an award. Such
rules often provide that the arbitral institution itself (rather than the arbitrators) will notify
the award to the parties.97 Given the central role of party autonomy in defining arbitral
procedures, there should be no question regarding the validity of delivery provisions
established by institutional rules.

[C] Registration of Awards

Some legal systems continue to require that an award made in a locally-seated arbitration be
“registered” or “deposited” with a local court or notary. 98 This provision was more frequent
under older arbitration legislation, and was related to the requirement for confirmation or
exequatur of the award. The trend over the past half-century has been away from such
requirements and towards simply notifying the parties of the making of the award.

§15.06 RELIEF GRANTED IN ARBITRAL AWARD

As a practical matter, the most critical aspect of any award is the relief that it grants. In many
cases, this is a straightforward matter, which gives rise to few difficulties. If one party seeks
amounts due in payment for goods, or satisfaction of a debt, then there will typically be little
basis for disagreement over the nature of the relief or the tribunal’s power to grant it. In other
cases, involving requests for injunctive or declaratory orders, or unusual forms of monetary
relief (e.g., punitive or multiple damages), disputes can arise regarding the tribunal’s power to
award such relief and the standards for doing so.

[A] Arbitrator’s Remedial Authority

The remedial powers of an international arbitral tribunal are defined in the first instance by
the arbitration agreement. This is an element of the parties’ general autonomy with respect to
the arbitrators’ jurisdiction and arbitral procedures. In principle, parties should be free to
confer authority on the arbitrators to grant any form of civil remedy calculated to resolve
their dispute.99
Under most arbitration regimes, arbitrators have broad discretion in fashioning relief.
Indeed, it is frequently said that “arbitrators have broad powers to grant relief that a court
could not”100 and that “arbitrators have broad discretion in fashioning remedies and ‘may
grant equitable relief that a Court could not.’”101 These views reflect in part judicial deference
to the arbitrators’ commercial expertise, which is considered peculiarly well-suited to
fashioning workable remedies, as well as the discretion which is granted to first instance
courts in remedial matters in many legal systems. These views also accord with commercial
parties’ presumptive intentions, being to grant the arbitrators broad powers to fully resolve
their dispute in a practical manner.
Despite this, relief ordered by an arbitrator can be challenged in annulment or recognition
proceedings, including on the grounds that it exceeds the arbitrator’s authority. Given the
breadth of the arbitrator’s remedial powers, such challenges are difficult to sustain: most
courts have concluded that purported “excess of authority” challenges to an arbitrator’s
remedial orders are merely (groundless) substantive objections to the tribunal’s decision on
the merits.102

[B] Monetary Awards

Most awards involve determinations that a specified monetary sum is payable by one party
to another. There is no question but that (unless agreed otherwise) arbitrators have the power
to make an award of monetary damages.
Most national laws grant tribunals the power to denominate an award in any currency for
which the parties’ contract and/or the governing law provides. Section 48 of the English
Arbitration Act is specific in this regard, providing that the arbitrators may “order the
payment of a sum of money in any currency.” Other legal systems generally follow similar
approaches, either in legislative provisions or judicial practice.103

[C] Other Relief

International arbitration conventions and legislation are generally silent on the tribunal’s
authority to order injunctive or declaratory relief. Nonetheless, national courts have
repeatedly upheld awards that order injunctive or declaratory relief if the parties’ agreement,
or the institutional rules that it incorporates, provide such authority. Even absent an express
agreement conferring such powers, courts have routinely upheld injunctive relief (including
orders of specific performance); this conclusion has been reached by common law courts
(where specific performance is an exception), as well as civil law courts.104
There has been debate concerning the power of arbitrators to award punitive (or
exemplary) damages and statutory damages. Even in the United States, where punitive
damages are well-accepted New York courts historically held that arbitrators were precluded
by considerations of public policy from awarding punitive damages, which were regarded as
exclusively the province of state courts.105 These doubts were resolved, as a matter of U.S.
law, in favor of the arbitrability of punitive damage claims by the U.S. Supreme Court in
Mastrobuono v. Shearson Lehman Hutton, Inc.106 The Court held that the FAA preempted
New York’s prohibition against the arbitrability of punitive damages claims. 107 Applying
Mastrobuono, U.S. courts have repeatedly held that particular arbitration agreements validly
provide for the arbitration of punitive damages claims.108
In contrast, punitive damages are arguably contrary to public policy in some civil law
states. This has the possible result that tribunals seated in those jurisdictions may not validly
award punitive damages and that foreign awards granting punitive damages will not be
recognized. For example, a tribunal seated in Switzerland, applying New York law pursuant
to a New York choice-of-law clause, refused to award punitive damages, holding:

Damages that go beyond compensatory damages to constitute a punishment of the

wrongdoer (punitive or exemplary damages) are considered contrary to Swiss public
policy, which must be respected by an arbitral tribunal sitting in Switzerland even if the
arbitral tribunal must decide a dispute according to a law that may allow punitive or
exemplary damages.109

The better view is that the public policies of the arbitral seat should not automatically apply
to limit an arbitral tribunal’s remedial authority; arbitrators should instead undertake a
conflict of laws analysis, applying the public policy of the jurisdiction most closely
connected to the parties’ dispute and request for relief. Thus, where the public policy of the
state where a dispute occurred forbids punitive damages, tribunals could arguably decline to
award such damages; conversely, where the only public policy which forbids punitive
damages is that of the arbitral seat, with no other connection to the parties’ dispute, then a
tribunal should consider claims for punitive damages and, if justified under applicable law,
grant them.110

[D] Interest

International arbitral tribunals routinely award interest, doing so on a variety of legal grounds.
Many arbitration statutes are silent on the subject of awards of interest by tribunals. The
UNCITRAL Model Law contains no provisions regarding interest, nor do the FAA, Swiss
Law on Private International Law, or French Code of Civil Procedure. 111 A number of states
that have adopted the Model Law have modified the statute, to include an express
authorization for the arbitrators to award interest, but typically without specifying standards
governing such awards. A typical formulation is “[u]nless otherwise agreed by the parties,
the arbitral tribunal may award interest.”112 Even where legislation in the arbitral seat does
not expressly authorize arbitrators to award interest, this is invariably regarded as part of
their mandate of resolving the parties’ dispute.
Many legal systems have statutory provisions regulating awards of interest in domestic
litigation. These provisions typically establish statutory interest rates that are payable, either
on “pre-judgment” liabilities or “post-judgment” awards of monetary damages. These
provisions are generally not, by their terms, expressly applicable in international arbitrations,
although tribunals sometimes either apply them or look to them by analogy. Alternatively,
tribunals look to contractually-specified rates of interest or treat interest as an element of
contractual damages, looking to commercially-prevailing interest rates during the period in
question.

[E] Costs

[1] Awards of Costs of Arbitration under National Arbitration Legislation

M ost national arbitration legislation is silent regarding awards of legal costs incurred during an
international arbitration. The UNCITRAL Model Law is representative, not expressly
addressing the question. A few states that have adopted the Model Law have added
provisions regarding awards of the costs of arbitration, but these are exceptions.113
Nonetheless, there is no question but that the Model Law (and other national arbitration
regimes) permit arbitrators to make awards of the costs of the arbitration and legal costs
(absent contrary agreement by the parties).114 This reflects the general principle that, absent
contrary agreement, international arbitrators are presumed to have the authority to fully
resolve the parties’ dispute.
Like the Model Law, the FAA is silent regarding the costs of the arbitration and the
parties’ legal representation. In contrast to most other jurisdictions, however, some U.S.
courts have held that arbitrators lack the power to award legal fees incurred in an arbitration
seated in the United States unless the parties have expressly conferred this authority. 115
These decisions, rendered principally in domestic U.S. arbitrations, reflect the “American
Rule” against fee-shifting in U.S. civil litigations. In contrast, a few U.S. courts have taken a
broader view and concluded that arbitrators have implied authority to award attorneys’
fees.116
As discussed below, most institutional rules grant tribunals the power to award the costs
of legal representation.117 In addition, arbitration agreements sometimes specifically address
the issue of the costs of legal representation. Virtually all nations, including the United States,
give effect to the parties’ agreements regarding awards of legal costs. 118 That is true where
the parties agree that the arbitrators shall have the power to make such awards, as well as
where they agree to exclude the possibility of such awards.119 This is an application of the
broader principle of party autonomy in international arbitration and generally raises no
questions of enforceability. (One limited exception is England, where parties are precluded
from agreeing, prior to the dispute arising, that one party pay “the whole or part of the costs
of the arbitration in any event,” regardless of the outcome.120 )

[2] Awards of Costs of Arbitration under Institutional Rules

As already noted, most institutional rules address the subject of awards of legal costs. The
UNCITRAL Rules are representative, providing (in Article 40) the tribunal with the
authority (and duty) to “fix the costs of arbitration” in its award.121 The UNCITRAL Rules
also provide (in Articles 42(1)-(2)) that “the costs of arbitration shall in principle be borne
by the unsuccessful party,” except that, in fixing the costs of legal representation, “the
arbitral tribunal may apportion each of such costs between the parties if it determines that
apportionment is reasonable, taking into account the circumstances of the case.” These
provisions grant arbitrators broad discretion with regard to awards of legal costs, starting
from the principle that the prevailing party will be entitled to its costs.
Similarly, the LCIA Rules provide, in Article 28, for the tribunal to “determine the
proportions in which the parties shall bear all or part of the arbitration costs” (as fixed by the
LCIA Court), as well as to order “that all or part of the legal or other costs incurred by a
party be paid by another party.” The LCIA Rules prescribe a general standard (in Article
28(4)) that, absent contrary agreement, the tribunal shall “make its orders on both arbitration
and legal costs on the general principle that costs should reflect the parties’ relative success
and failure in the award or arbitration, except where it appears to [the tribunal] that in the
particular circumstances this general approach is inappropriate.” The LCIA Rules reflect the
English approach towards legal costs (e.g., the prevailing party is presumptively entitled to
its costs), while authorizing the tribunal to adopt a different standard if appropriate.
The 2012 ICC Rules provide that the final award “shall fix the costs of the arbitration and
decide which of the parties shall bear them or in what proportion they shall be borne by the
parties.”122 Unlike the UNCITRAL and LCIA Rules, the ICC Rules provide very limited
standards for awarding legal costs, leaving this largely to the tribunal’s discretion and any
relevant rules of national (or other) law. 123 Under the ICC Rules, the arbitrators’ fees and
expenses are fixed by the ICC Court (rather than the arbitrators), while allocation of fees and
expenses between the parties is fixed by the arbitrators.
The common theme of most institutional rules is to grant the tribunal broad powers to
award legal costs, largely according to standards established by the arbitrators; the exercise of
these powers is left almost entirely to the arbitrators, with general references to the degree of
a party’s success on its claims and the reasonableness of a party’s legal expenses. Most
institutional rules also expressly confirm the arbitrators’ authority to “apportion” legal costs,
allowing awards of less than 100% of a party’s reasonable costs.124
Even where applicable institutional rules do not expressly grant arbitrators’ power to
award legal costs, arbitration agreements should be interpreted to impliedly grant such
authority (absent contrary agreement). That follows from the basic principle that the right to
compensation for wrongful damage includes the costs of righting that damage, which is
recognized by the weight of authority.125
As a practical matter, arbitrators in international cases routinely award the costs of legal
representation, usually without discussing questions of applicable law or detailed substantive
analysis. Most awards either rely on grants of discretion in applicable institutional rules or
simply award a “reasonable” or “appropriate” amount.126
As noted above, where the parties’ agreement addresses legal costs, tribunals will virtually
always give effect to its terms. More frequently, the parties do not address the subject, or
will have simply granted the tribunal discretion to make an award of legal costs. In exercising
their discretion, tribunals usually make some award of the costs of legal representation to the
“prevailing party.”127 In doing so, arbitrators generally take into account the extent to which
that party recovered what it initially claimed, the extent to which each party’s position was
reasonable, the extent to which a party’s conduct needlessly complicated the proceedings and
similar factors.128 In the words of one award:

The [ICC] Rules do not contain any rules or criteria for the decision that the Tribunal
must take [regarding costs]. The decision is left to the discretion of the arbitrator.
Nevertheless, the results of the arbitration play a predominant role in the exercise of this
discretion by the arbitrator. A party who loses his case is, in principle ordered to pay
the costs of the arbitration. However, other criteria can be taken into account, and
notably the manner in which the case was conducted and the costs caused by reckless or
abusive requests or delaying tactics.129

A study of ICC awards made between 1989 and 1991 (under the 1998 ICC Rules) reports
that where claimants were largely successful, they were awarded a substantial portion of the
arbitration costs in most cases (i.e., in 39 of 48 cases) and a substantial portion of their legal
costs in about half of all cases (i.e., in 24 of 38 cases).130 Where claimants were partially
successful, or where both parties obtained relief, arbitrators typically ordered the parties to
bear their own legal costs and shares of the arbitration costs; in some cases, however,
claimants were awarded a proportion of their legal costs relative to the extent of their success
vis-à-vis their claims.
Finally, in ICC cases where claimants obtained substantially less than half of the amounts
claimed (or where the respondent recovered larger amounts), tribunals generally either left the
arbitration and legal costs with the party that incurred them or ordered the unsuccessful
claimant to pay some or all of the respondents’ costs. 131 Where one of the parties was
uncooperative or inefficient, it was less likely to recover its full costs; in some cases, a party
that adopted unnecessary litigation tactics was liable for costs.132 On the other hand, where
there was a good faith basis for the parties’ differing positions, ICC tribunals were more
likely to leave the parties to bear their own costs.133

§15.07 FUNCTUS OFFICIO DOCTRINE

It was historically the case, under many legal systems, that an arbitral tribunal lost its
capacity to act – including its power to reconsider, correct, or supplement an award it had
made – after the arbitrators had rendered their final award. In the phrase used in common law
jurisdictions, the tribunal became “functus officio.”134 In one court’s words: “The term
[functus officio] is Latin for ‘office performed’ and in the law of arbitration means that once
an arbitrator has issued his final award he may not revise it.”135
Most arbitration legislation expressly addresses the functus officio doctrine, typically
adopting the same basic approach to the topic; these statutes generally provide that
arbitrators complete their mandate after making a final award, and thereby lose the authority
to take further action in the arbitration, save for narrowly-prescribed powers to correct or
interpret the award.136 This approach confirms the essence of the historic functus officio rule,
while ameliorating its potential harshness and regulating the exceptional circumstances in
which a tribunal may exercise authority after making a final award.
The UNCITRAL Model Law sets forth a well-structured set of rules regarding termination
of the arbitrators’ mandate. The Model Law provides in Article 32 that “the arbitral
proceedings are terminated by the final award or by an order of the arbitral tribunal [to that
effect],” and that “the mandate of the arbitral tribunal terminates with the termination of the
arbitral proceedings”; this general provision is subject to carefully-defined exceptions (in
Articles 33 and 34) for corrections and interpretation. Save for the particular statutory
authorizations contained in the Model Law for corrections or interpretations of the award, a
tribunal loses its capacity to act in an arbitration (becomes “functus officio”) after the final
award has been made.
A number of states, including most Model Law jurisdictions, have adopted the same basic
approach to the tribunal’s mandate. These statutory provisions define the termination of the
arbitrators’ powers, while also allowing a narrow category of residual arbitral authority to
address errors or omissions in the final award.137
In the United States, the FAA does not expressly provide for either the functus officio
doctrine or termination of the arbitrators’ mandate. Nonetheless, U.S. courts have affirmed
the functus officio doctrine, holding that it is a “shorthand term for the common-law doctrine
barring an arbitrator from revisiting the merits of an award once it has issued.”138 U.S. courts
reason that the doctrine is related to principles of res judicata and rests on the “unwillingness
to permit one who is not a judicial officer and who acts informally and sporadically, to re-
examine a final decision which he has already rendered, because of the potential evil of
outside communication and unilateral influence which might affect a new conclusion.”139
U.S. courts have held that, as a consequence of the functus officio doctrine, a tribunal loses
the authority to grant further requests for relief after its final award.140 At the same time, as
discussed below, U.S. courts have also held that the functus officio doctrine is subject to
common law exceptions for the arbitrators to: (a) correct obvious mistakes; (b) decide issues
deliberately left open by an interim or partial final award; and (c) clarify ambiguities.141 This
view of the arbitrators’ implied authority is both appropriate and representative of
approaches in other jurisdictions where legislation does not expressly address termination of
the arbitrators’ mandate.
_________________________
1. See supra p. 11.
2. See G. Born, International Commercial Arbitration 2336, 2346–96 (2009).
3. Yusuf Ahmed Alghanim & Sons v. Toys “R” Us, Inc., 126 F.3d 15, 22 (2d Cir. 1997).
4. See G. Born, International Commercial Arbitration 2340, 2726–29 (2009).
5. See G. Born, International Commercial Arbitration 2341, 2511–50 (2009).
6. See G. Born, International Commercial Arbitration 2341–42, 2418–19, 2561–64, 2726–29 (2009).
7. See G. Born, International Commercial Arbitration 2342 (2009).
8. See G. Born, International Commercial Arbitration 2342–43, 2726–29 (2009).
9. See G. Born, International Commercial Arbitration 2348 (2009).
10. French Code of Civil Procedure, Arts. 1478–1486, 1513; English Arbitration Act, 1996, §§52–58; Netherlands
Code of Civil Procedure, Arts. 1049–1061; Belgian Judicial Code, Arts. 1699–1710. See G. Born, International
Commercial Arbitration 2348 (2009).
11. See supra p. 43.
12. See G. Born, International Commercial Arbitration 2349–55 (2009).
13. See infra p. 281; UNCITRAL Model Law, Art. 31; Swiss Law on Private International Law, Art. 189; English
Arbitration Act, 1996, §§52–54; Japanese Arbitration Law, Art. 39.
14. See G. Born, International Commercial Arbitration 2354 (2009).
15. See G. Born, International Commercial Arbitration 2354–55, 2726–29 (2009).
16. G. Born, International Commercial Arbitration 2350, 2355 (2009).
17. Judgment of 1 July 1999, Brasoil v. GMRA, XXIVa Y.B. Comm. Arb. 296, 297–98 (P aris Cour d’ appel) (1999).
18. See, e.g., Judgment of 1 July 1999, Brasoil v. GMRA , XXIVa Y.B. Comm. Arb. 296 (Paris Cour d’ appel) (1999)
(decision labeled “ order” was in fact an “ award” because it resolved aspect of dispute finally after five months of
deliberations); Publicis Comm. v. True North Comm., Inc., 206 F.3d 725 (7th Cir. 2000). See also G. Born,
International Commercial Arbitration 2354–55 (2009).
19. See G. Born, International Commercial Arbitration 2356–59 (2009).
20. See G. Born, International Commercial Arbitration 893–98, 901–06, 953–63, 984–85, 2358 (2009).
21. See G. Born, International Commercial Arbitration 2358–60, 2427–34 (2009).
22. Some authorities reject this position, holding that a decision is only an award if it finally disposes of a “ claim.”
On this theory, a substantive ruling on choice-of-law or liability issues is only a “ preparatory” or
 “ interlocutory” decision, not an award, unless it grants (or rejects) a claim for monetary damages or other relief
requested by a party. For the reasons discussed above, this view is disfavored. A decision that declares the
applicable law, decides issues of liability, or finally resolves a significant aspect of the parties’ dispute should
be entitled to both preclusive effects and judicial recognition (and subject to judicial review) like other awards.
See G. Born, International Commercial Arbitration 2358–60 (2009).
23. See supra pp. 73–75.
24. Nonetheless, oral arbitral awards were historically valid at common law in England. R. Merkin, Arbitration Law
¶¶18, 19 (2004 & Update 2007) (citing Cocks v. Macclesfield (1562) 2 Dyer 218 (K.B.); Oates v. Bromell , 87
Eng. Rep. 931 (K.B.)).
25. See, e.g., Netherlands Code of Civil Procedure, Art. 1057(4) (“ In addition to the decision, the award shall
contain in any case: (a) the names and addresses of the arbitrator or arbitrators; (b) the names and addresses of the
parties; (c) the date on which the award is made; (d) the place where the award is made; (e) the reasons for the
award, unless the award concerns merely the determination only of the quality or condition of goods ....”); Swiss
Law on Private International Law, Art. 189 (award must be in writing, reasoned, signed and dated); Japanese
Arbitration Law, Art. 39. See G. Born, International Commercial Arbitration 2444–45 (2009).
26. Report of the Secretary-General on the Revised Draft Set of Arbitration Rules, UNCITRAL, Ninth Session, UN
Doc. A/CN.9/112/Add.1, VII Y.B. UNCITRAL 166, 178 (1976) (“ In some jurisdictions the applicable
arbitration law may require that an arbitral award be signed by all the arbitrators before it becomes valid and
enforceable; in such a case the applicable national law would prevail over the provision” of the UNCITRAL
Rules.). See G. Born, International Commercial Arbitration 1254–74, 1446–47, 2764–77 (2009).
27. See, e.g., UNCITRAL Model Law, Art. 32(4); English Arbitration Act, 1996, §52(3); Netherlands Code of Civil
Procedure, Art. 1057(3); Japanese Arbitration Law, Art. 39(1). See G. Born, International Commercial
Arbitration 2447, 2459–60 (2009).
28. See, e.g., Swiss Law on Private International Law, Art. 189 (requiring only signature of chairman); ICDR Rules,
Art. 27.
29. Although well-intentioned, this requirement (in Article 34(4) of the UNCITRAL Rules) was misused in the Iran-
U.S. Claims Tribunal, which saw “ numerous attempts by Iranian judges to turn this rule on its head. In many
cases, the Iranian judges insisted on supplying their own statement of reasons for why they refused to sign an
award, with the apparent aim of invalidating the award and undermining the Tribunal’ s legitimacy.” D. Caron, L.
Caplan & M. P ellonpää, The UNCITRAL Arbitration Rules: A Commentary 810 (2006).
30. See infra pp. 307–12.
31. See supra p. 281.
32. Most arbitration legislation provides that the award will be deemed to have been made at the place of the
arbitration. See, e.g., UNCITRAL Model Law, Art. 31(3); English Arbitration Act, 1996, §53; Japanese
Arbitration Law, Art. 39(4). Institutional rules are generally similar. See, e.g., UNCITRAL Rules, Art. 34(4); ICC
Rules 2012, Art. 31(3); LCIA Rules, Art. 26(1); ICDR Rules, Art. 27(3); VIAC Rules, Art. 27(2). See G. Born,
International Commercial Arbitration 1240–43, 1246–52, 2368–70, 2373–74, 2448 (2009).
33. UNCITRAL Model Law, Art. 34(3), U.S. FAA, 9 U.S.C. §§9–10; English Arbitration Act, 1996, §70(3);
Japanese Arbitration Law, Art. 44(2). Institutional arbitration rules are to the same effect. See, e.g., UNCITRAL
Rules, Art. 34(4); LCIA Rules, Art. 26(1). See G. Born, International Commercial Arbitration 2448, 2670–71
(2009).
34. The New York Convention does not expressly address the subject of reasoned awards. In contrast, Article VIII of
the European Convention provides that the parties “ shall be presumed to have agreed that reasons shall be given
for the award,” except where: (a) the parties “ expressly declare” to the contrary, or (b) the parties “ have assented
to an arbitration procedure under which it is not customary to give reasons for awards” and neither party requests
reasons.
35. See, e.g., Swiss Law on Private International Law, Art. 189(2); English Arbitration Act, 1996, §52(4);
Netherlands Code of Civil Procedure, Arts. 1057(4)(e), 1065(1)(d) (annulment of award if “ the award is not
signed or does not contain reasons in accordance with the provision of Article 1057”); Japanese Arbitration
Law, Art. 39(2). See G. Born, International Commercial Arbitration 2450–56 (2009).
36. See, e.g., Belgian Judicial Code, Art. 1701; Netherlands Code of Civil Procedure, Arts. 1057(4)(e), 1065(1)(d);
 Russian Federation Law on International Commercial Arbitration, Art. 31(2) (omitting Model Law phrase
“ unless otherwise agreed by the parties”); Ukraine Law on International Commercial Arbitration, Art. 31(2).
Similarly, institutional rules generally require reasoned awards, either on a mandatory basis or unless otherwise
agreed. See, e.g., 2012 ICC Rules, Art. 31(2); ICAC Rules, Art. 41(1); CIETAC Rules, Art. 43(2); ICSID
Arbitration Rules, Rule 47(1)(i); NAI Rules, Art. 49(2)(e). See, e.g., UNCITRAL Rules, Art. 34(3); LCIA Rules,
Art. 26(1); ICDR Rules, Art. 27(2); SCC Rules, Art. 36(1); WIP O Arbitration Rules, Art. 62(c).
37. Bremer Handelsgesellschaft v. W estzucker [1981] 2 Lloyd’ s Rep. 130, 132 (English Court of Appeal).
38. If an award reaches a badly wrong result, it may be exposed to annulment in states where judicial review of the
substance of arbitrators’ decisions is available. See infra pp. 329–32. In these instances, annulment results from
the tribunal’ s erroneous conclusions, rather than an absence of reasons in the award.
39. United Steelworkers of Am. v. Enter. W heel & Car Corp. , 363 U.S. 593 (U.S. S.Ct. 1960). See G. Born,
International Commercial Arbitration 2451–52, 2456–57 (2009).
40. See, e.g., Virgin Islands Nursing Asso’s Bargaining Unit v. Schneider , 668 F.2d 221 (3d Cir. 1981) (rejecting
argument that court should “ exercise [its] supervisory power to enunciate a new requirement that arbitrators file
written opinions, or, at least, findings of fact”); Dunhill Franchisees Trust v. Dunhill Staffing Systems, Inc., 513
F.Supp.2d 23, 32 (S.D.N.Y. 2007) (“ Arbitrators are not required to give reasoned analysis for their decisions, or
any particular aspect of them.”).
41. See Choice Hotels Int’l, Inc. v. Patel , 2004 WL 57658, at *6 (D. Md. 2004) (AAA’ s Commercial Arbitration
Rules, which governed the arbitration, provided that “ the arbitrator need not render a reasoned award unless the
parties request such an award in writing prior to the appointment of the arbitrator or unless the arbitrator
determines that a reasoned award is appropriate.”).
42. See infra p. 311.
43. See, e.g., Judgment of 30 September 1999, XXXI Y.B. Comm. Arb. 640, 648 (Hanseatisches Oberlandesgericht
Bremen) (2006) (foreign award was scantily-reasoned (“ would hardly meet the requirements of German domestic
procedural public policy”), but this was not grounds for non-recognition under Article V(2)(b): “ In the case of
foreign arbitral awards, it must be borne in mind that the deciding arbitrators come from different legal cultures
and follow the customs of their procedural systems when writing reasons.”); Judgment of 10 July 2002, XXVIII
Y.B. Comm. Arb. 821 (Vardo Enforcement Court) (2003) (“ arbitral tribunals in some countries have different
traditions for wording awards than Norwegian arbitral tribunals ... an award lacking a clear dispositive part,
which is a characteristic of Norwegian awards, should be enforced in Norway if its conclusions are evident”). See
G. Born, International Commercial Arbitration 1765–75, 1782–92, 2457–59, 2737–40, 2851–55 (2009).
44. See, e.g ., UNCITRAL Model Law, Art. 34(2); Japanese Arbitration Law, Art. 44; U.S. FAA, 9 U.S.C. §10. See G.
Born, International Commercial Arbitration 2449 (2009).
45. See, e.g., English Arbitration Act, 1996, §68(2)(h); Belgian Judicial Code, Art. 1704(2)(h); Netherlands Code of
Civil P rocedure, Art. 1065(1)(d).
46. UNCITRAL Rules, Art. 34(4).
47. See, e.g., LCIA Rules, Art. 26(1); ICAC Rules, Art. 37; WIP O Arbitration Rules, Art. 62; AAA Commercial
Rules, R-42; Swiss International Arbitration Rules, Art. 32.
48. ICSID Arbitration Rules, Rule 47; CIETAC Rules, Art. 43.
49. See infra pp. 332–33 & 393–95.
50. See infra pp. 286–92; G. Born, International Commercial Arbitration 2427–40 (2009).
51. UNCITRAL Model Law, Art. 32(1) (“ The arbitral proceedings are terminated by the final award or by an order of
the arbitral tribunal in accordance with paragraph (2) of this article.”); supra pp. 174.
52. See G. Born, International Commercial Arbitration 2429–34 (2009).
53. See, e.g., English Arbitration Act, 1996, §47; German ZP O, §§301, 1042; Chinese Arbitration Law, Art. 55;
Indian Arbitration and Conciliation Act, Art. 31(6).
54. 2012 ICC Rules, Art. 2(v) (defining “ award” as including “ an interim, partial or final award”); LCIA Rules, Art.
26(7) (“ The Arbitral Tribunal may make separate awards on different issues at different times.”).
55. See, e.g., Photopaint v. Smartlens, 335 F.3d 152 (2d Cir. 2003); Judgment of 8 March 1988, Sociétés Sofidif v.
OIAETI, 1989 Rev. arb. 481 (French Cour de cassation civ. le); Judgment of 25 June 1992, XXII Y.B. Comm. Arb.
619 (Austrian Oberster Gerichtshof) (1997).
56. See, e.g., English Arbitration Act, 1996, §51; German ZP O, §1053; Indian Arbitration and Conciliation Act,
Art. 30(2); Japanese Arbitration Law, Art. 38(1); Dutch Code on Civil Procedure, Art. 1069(1); G. Born,
International Commercial Arbitration 2435–38 (2009). The New York Convention and other leading
arbitration conventions are silent on the question of consent awards.
57. See, e.g., UNCITRAL Rules, Art. 36(1); 2012 ICC Rules, Art. 32; LCIA Rules, Art. 26(8).
58. See, e.g ., UNCITRAL Model Law, Art. 30(1); English Arbitration Act, 1996, §51(2); UNCITRAL Rules, Art.
36(1) (“ The arbitral tribunal is not obliged to give reasons for such an award.”); LCIA Rules, Art. 26(8).
59. In principle, the tribunal’ s mandate should include the obligation to issue a consent award, absent a principled
reason for declining to do so. The fundamental purpose of arbitration is to provide a means for resolving disputes
and tribunals are not only obliged, but almost always wish, to contribute to this objective insofar as possible,
including by making a consent award. Only if there are well-founded bases for refusing to approve a settlement –
such as fraud, corruption, or violation of applicable law (e.g., exchange controls, money-laundering regulations,
competition laws) should a tribunal refuse a request for a consent award.
60. See supra pp. 171–72.
61. See G. Born, International Commercial Arbitration 2438–39 (2009).
62. See infra pp. 389–93.
63. UNCITRAL Model Law, Art. 33(5) (“ The provisions of Article 31 [concerning the form and contents of an
award] shall apply to a correction or interpretation of the award or to an additional award.”).
64. See infra pp. 343–44.
65. See, e.g., UNCITRAL Model Law, Art. 33(5); English Arbitration Act, 1996, §57(7); German ZP O, §1058;
Austrian ZP O, §610; Netherlands Code of Civil Procedure, Art. 1060(5); Swedish Arbitration Act, §32. See G.
Born, International Commercial Arbitration 2511–41 (2009).
66. That is true of the U.S. FAA, Swiss Law on P rivate International Law and French Code of Civil P rocedure.
67. See G. Born, International Commercial Arbitration 1610–12, 1633–37, 2440–41 (2009).
68. LCIA Rules, Art. 26(8).
69. 2012 ICC Rules, Art. 32.
70. Some arbitration legislation provides for majority decisions unless otherwise agreed by the parties. See Belgian
Judicial Code, Art. 1701(2); Netherlands Code of Civil Procedure, Art. 1057(1); Swiss Law on Private
International Law, Art. 189(2); Italian Code of Civil Procedure, Art. 823. Other legislation simply provides for
majority decisions, without reference to the parties’ agreement. See, e.g., English Arbitration Act, 1996, §52(3);
Japanese Arbitration Law, Art. 39(1); Chinese Arbitration Law, Art. 53. See G. Born, International Commercial
Arbitration 2459–60 (2009).
71. Institutional rules also generally permit awards by a majority of the arbitrators, with an explanation for the
omitted signature. See, e.g., UNCITRAL Rules, Arts. 33(1), 34(4); 2012 ICC Rules, Art. 31(1); LCIA Rules, Art.
26(3); ICDR Rules, Art. 26(1); CIETAC Rules, Arts. 43(4), 43(5); VIAC Rules, Art. 26(1).
72. See, e.g., English Arbitration Act, 1996, §20(4); Swiss Law on Private International Law, Art. 189(2); Chinese
Arbitration Law, Art. 53; 2012 ICC Rules, Art. 31(1); LCIA Rules, Art. 26(3); SCC Rules, Art. 35(1).
73. See, e.g., French Code of Civil Procedure, Art. 1513 (“ The award is rendered by majority.”); German ZP O,
§1052(1) (“ [In] an arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall
be made, unless otherwise agreed by the parties, by a majority of all its members.”); Japanese Arbitration Law,
Art. 39(1); UNCITRAL Rules, Art. 33(1); ICDR Rules, Art. 26(1). See G. Born, International Commercial
Arbitration 2641 (2009).
74. H. Holtzmann & J. Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration:
Legislative History and Commentary 837, 856 (1989).
75. See G. Born, International Commercial Arbitration 2464–65 (2009).
76. See, e.g., ICSID Arbitration Rules, Rule 47(3); SCC Rules, Art. 32(4); CIETAC Rules, Art. 43(4).
77. UNCITRAL Rules, Arts. 34(3), (4). The Iran-United States Claims Tribunal adopted the UNCITRAL Rules with
an amendment to permit dissenting and separate opinions. Iran-U.S. Claims Tribunal, Rules of Procedure, Art. 32
(“ any arbitrator may request that his dissenting vote and the reasons therefore be recorded”).
78. Noble China Inc. v. Lei, [1998] O.T.C. LEXIS 2175 (Ontario Court of Justice) (court rejected application to annul
award, but ordered release of dissenting opinion; court also refused to admit into evidence in annulment
 proceeding the dissenting arbitrator’ s affidavit regarding tribunal’ s deliberations and refusal to release
dissenting opinion).
79. It has been suggested that the confidentiality of the tribunal’ s deliberations forbids any separate or dissenting
opinion, because this would reveal that the tribunal was non-unanimous. This is misconceived. The
confidentiality of the arbitral deliberations does not extend to a formal statement of an arbitrator’ s views
concerning the claims submitted to the tribunal; indeed, the same argument would prevent an arbitrator from
refusing to do anything other than sign an award with which he or she disagrees (which is both unacceptable
and not the law). See G. Born, International Commercial Arbitration 2458–60, 2466–69 (2009).
80. See, e.g., Granger Assoc. v. Islamic Republic of Iran, Award No. 320-184-1 ( 20 October 1987) , 16 Iran-US
C.T.R. 317 (1988) (“ It is also wrong for my colleagues to confirm the improper actions of the Claimant in
pestering the Chamber Clerk....”; “ It is completely unjustifiable to contend, as my colleagues do, ...”); CME Czech
Republic BV v. Czech Republic, Partial Award ( 13 September 2001), 14 WTAM 288 (2002) (“ The mistakes and
errors in the legal conclusions have been basically [produced] by the fact that the two arbitrators seem to have
firstly agreed upon the final decision as it is expressed in the Award and only thereafter they looked for the
arguments to the favor of the Claimant.”).
81. See G. Born, International Commercial Arbitration 2466–69 (2009).
82. This is true of the UNCITRAL Model Law, FAA, Swiss Law on Private International Law and English
Arbitration Act.
83. See, e.g., Belgian Judicial Code, Art. 1698(2) (six months); Brazilian Arbitration Law, Art. 23 (six months unless
otherwise agreed); Italian Code of Civil Procedure, Art. 820 (domestic arbitration; 240 days unless otherwise
agreed).
84. A statutory time limit might also, exceptionally, apply to an arbitration seated abroad, if the parties had chosen
the relevant jurisdiction’ s law as the procedural law of the arbitration – but this is very unusual.
85. See, e.g., 2012 ICC Rules, Art. 30(1) (six months, subject to extensions); LMAA Terms, Art. 20 (six weeks). Most
institutional rules are to the contrary, containing no time limits (including the UNCITRAL, LCIA, ICDR and
AAA Commercial Rules).
86. Judgment of 15 June 1994, Communauté urbaine de Casablanca v. Degrémont, 1995 Rev. arb. 88 (French Cour
de cassation civ. le).
87. Bradley & Sons v. Telefusion Ltd(1981) 259 EG 337 (Ch.); Art & Sound Ltd v. W est End Litho Ltd [1992] 1 EG
110 (Ch.).
88. See G. Born, International Commercial Arbitration 2470–72 (2009).
89. See G. Born, International Commercial Arbitration 2472–76 (2009).
90. See District Council 1707 v. Hope Day Nursery, Inc., 2006 WL 17791, at *3 (S.D.N.Y. 2006) (applying AAA
Labor Arbitration Rule 40 that “ [p]arties shall accept as legal delivery of the award the placing of the award or a
true copy thereof in the mail by the AAA, addressed to the party at its last known address or to its representative;
personal service of the award; or the filing of the award in any other manner that is permitted by law”); Skaarup
Shipping Corp. v. Sea Marshall Nav., Ltd , 1995 WL 110371, at *1–2 (S.D.N.Y. 1995) (applying service of
award provision in Society of Maritime Arbitrators arbitration rules as agreed by parties, such that “ [p]arties
shall accept as legal delivery of the award (a) the placing of the award or a true copy thereof in the mail by the
arbitrator(s), addressed to such party at his last known address or to his attorney, or (b) personal service of the
award”).
91. See, e.g., UNCITRAL Model Law, Art. 33(1) (“ Within thirty days of receipt of the award...”); Netherlands Code
of Civil P rocedure, Art. 1060(1); Japanese Arbitration Law, Art. 41(2).
92. See, e.g., UNCITRAL Model Law, Art. 34(3) (“ three months from the date on which the party making that
application had received the award”); Swiss Law on Private International Law, Art. 190(3) (“ the time-limit runs
from the communication of the decision”). Compare English Arbitration Act, 1996, §70(3) (date award was
rendered).
93. UNCITRAL Model Law, Art. 32(1); Japanese Arbitration Law, Art. 40(1).
94. See supra pp. 195–202.
95. These requirements can be complex and highly-formalistic. See G. Born & P. Rutledge, International Civil
Litigation in United States Courts 871–880 (5th ed. 2011); EC Regulation 1348/2000 O.J. L160, 30/06/2000,
 at 37.
96. See G. Born, International Commercial Arbitration 2476–77 (2009).
97. See, e.g., 2012 ICC Rules, Art. 34(1) (“ the Secretariat shall notify to the parties the text signed by the arbitral
tribunal”); LCIA Rules, Art. 26(5) (“ The sole arbitrator or chairman shall be responsible for delivering the award
to the LCIA Court, which shall transmit certified copies to the parties.”); ICDR Rules, Art. 27(5) (“ Copies of the
award shall be communicated to the parties by the administrator.”).
98. Belgian Judicial Code, Art. 1707; Netherlands Code of Civil P rocedure, Art. 1060(2).
99. Requests for certain forms of relief (e.g., criminal sanctions, purported declarations of bankruptcy) would be
considered non-arbitrable in most jurisdictions. See supra pp. 82–85 & infra p. 326; G. Born, International
Commercial Arbitration 766–41 (2009).
100. Avraham v. Shigur Express, Ltd , 1991 U.S. Dist. LEXIS 12267 (S.D.N.Y. 1991). See G. Born, International
Commercial Arbitration 2479 (2009).
101. Konkar Maritime Enter., SA v. Compagnie Belge d’Affretement, 668 F.Supp. 267 (S.D.N.Y. 1987).
102. See infra p. 329; G. Born, International Commercial Arbitration 2477–78, 2606–10, 2797–2802 (2009).
103. See G. Born, International Commercial Arbitration 2480 (2009).
104. See Sperry Int’l Trade, Inc. v. Gov’t of Israel, 689 F.2d 301 (2d Cir. 1982); Staklinski v. Pyramid Elec. Co., 160
N.E.2d 78, 79 (N.Y. 1959) (“ The power of an arbitrator to order specific performance in an appropriate case has
been recognized from early times.”); G. Born, International Commercial Arbitration 2479–82 (2009).
International arbitral awards affirm the same power, both in the commercial and investor-state contexts. Ibid.
105. Garrity v. Lyle Stuart, Inc., 353 N.E.2d 793, 797 (N.Y. 1976). The theory was a variation of the non-arbitrability
doctrine, which emphasized that punitive damages were intended to serve principally public, not private,
interests: “ An arbitrator has no power to award punitive damages, even if agreed upon by the parties,” because
the “ freedom of contract does not embrace the freedom to punish, even by contract.” Other authorities relied on
the asserted lack of judicial safeguards that would accompany arbitral consideration of punitive damages and the
perceived anomaly of “ private” arbitrators awarding “ public” penalties. See G. Born, International Commercial
Arbitration 2485 (2009).
106. 514 U.S. 52 (U.S. S.Ct. 1995).
107. 514 U.S. at 61, 68–69. The Supreme Court treated New York’ s Garrity rule as an instance of a state law refusal to
give effect to an agreement to arbitrate (specifically, an agreement to arbitrate punitive damage claims), which was
preempted by the FAA’ s requirement that arbitration agreements be recognized and enforced in accordance with
their terms. See G. Born, International Commercial Arbitration 2485 (2009).
108. See Sanders v. Gardner , 7 F.Supp.2d 151, 170–79 (E.D.N.Y. 1998) (analyzing and applying Mastrobuono in
confirming $10,000,000.00 punitive damages award); Mulder v. Donaldson, Lufkin & Jenrette , 648 N.Y.S.2d
535, 538 (N.Y. App. Div. 1996) (“ Mastrobuono makes it unmistakably clear that, with respect to arbitration
proceeding governed by the FAA which preempts the Garrity rule, the arbitration of punitive damage claims is
required except where the parties have unequivocally agreed otherwise.”).
109. Final Award in ICC Case No. 5946, XVI Y.B. Comm. Arb. 97, 113 (1991). See G. Born, International
Commercial Arbitration 2487 (2009).
110. As discussed below, several courts have considered claims that awards of punitive or statutory damages, by
foreign-seated tribunals, are not subject to recognition (under Article V(2)(b)’ s public policy exception). The
better view is that such awards should be denied recognition only where the parties’ underlying dispute has a
close connection to the recognition forum, and therefore implicates its policies against punitive or statutory
damages. See G. Born, International Commercial Arbitration 2487–88 (2009).
111. Institutional rules also do not ordinarily address the subject of interest. One exception is the LCIA Rules, which
provide that the tribunal may award compound interest. LCIA Rules, Art. 26(6).
112. British Columbia International Commercial Arbitration Act, §31(7). See also Australian International
Arbitration Act, §§25–26 (tribunal may award simple interest until date of award and interest at reasonable rate
following date of award); Bermuda International Conciliation and Arbitration Act, §31 (same).
113. See, e.g., Australian International Arbitration Act, §27 (parties authorized to agree that tribunal may make award
of legal costs, including fixing its own fees and expenses); Bermuda Arbitration Act, §32 (tribunal may make
award of legal costs, including fixing its own fees and expenses); Hong Kong Arbitration Ordinance, Art. 74
 (tribunal has discretion to award legal costs).
114. See G. Born, International Commercial Arbitration 2490–93 (2009).
115. See, e.g., Bacardi Corp. v. Congreso de Uniones Industriales de Puerto Rico , 692 F.2d 210 (1st Cir. 1982)
(vacating award of attorneys’ fees); Sammi Line Co. v. Altamar Nav. SA, 605 F.Supp. 72 (S.D.N.Y. 1985) (relying
on “ traditional American rule” to conclude that agreement not addressing attorneys’ fees did not permit such
award).
116. See, e.g., Prudential-Bache Sec., Inc. v. Depew , 814 F.Supp. 1081, 1082 (M.D. Fla. 1993) (in context of
arbitration, observing that “ [l]itigants in the United States must follow the so-called ‘ American rule’ for
attorneys’ fees,” and that “ [a] litigant cannot collect attorneys’ fees from the losing party unless a statute or
contract provides for the award, or the losing party willfully disobeyed a court order or brought suit in bad
faith”); MCT Shipping Corp. v. Sabet, 497 F.Supp. 1078 (S.D.N.Y. 1980) (confirming award of attorneys’ fees).
117. See infra pp. 175–76.
118. In international arbitrations seated in the United States, any relevant provision of institutional arbitration rules
or the parties’ arbitration agreement should (and will) generally be given full effect. The “ American rule”
regarding costs of legal representation does not rise to the level of U.S. public policy, so as to forbid a tribunal’ s
exercise of its authority under the parties’ arbitration agreement or applicable institutional rules to award legal
costs.
119. See G. Born, International Commercial Arbitration 2488–90 (2009).
120. English Arbitration Act, 1996, §60; R. Merkin, Arbitration Law ¶18.77 (2004 & Update 2007). See also Virdee
v. Virdi [2003] EWCA Civ. 41 (English Court of Appeal) (agreement excluded costs of legal representation);
Mansfield v. Robinson [1928] All E.R. Rep. 69, 71–73 (Q.B.).
121. The costs of arbitration are defined to include the “ costs for legal representation and assistance of the successful
party,” but only if these costs were claimed and “ only to the extent that the tribunal determines that the amount of
such costs is reasonable.”
122. 2012 ICC Rules, Art. 37(4). The “ costs of the arbitration” are defined to include the “ reasonable legal and other
costs incurred by the parties for the arbitration.”
123. Article 37(5) authorizes the tribunal to consider all “ relevant” circumstances and specifically identify the extent
to which a party has conducted the arbitration in an “ expeditious and cost-effective manner.”
124. Some institutional rules contain limits on the awards of costs for legal representation. Polish Chamber of
Commerce, Rules of the Court of Arbitration, Art. 43(4) (limiting recovery of legal costs to 20,000 Polish zlotys
(or Euro 5,000)).
125. See G. Born, International Commercial Arbitration 2495–97 (2009).
126. See G. Born, International Commercial Arbitration 2497–2500 (2009).
127. See S.D. Myers, Inc. v. Gov’t of Canada , in NAFTA Final Award on Costs ( 30 December 2002), at
www.naftaclaims.com/disputes.htm (successful claimant, who has been “ forced to go through the process in order
to achieve success, and should not be penalised by having to pay for the process itself”).
128. See, e.g., Final Award in ICC Case No. 4629, XVIII Y.B. Comm. Arb. 11 (1993) (awarding 90% of fees because of
respondent’ s delaying tactics); Final Award in ICC Case No. 6527, XVIII Y.B. Comm. Arb. 44, 53 (1993) (no
award of fees, because prevailing party claimed “ excessive” damages); Final Award in ICC Case No. 6363, XVII
Y.B. Comm. Arb. 186, 211 (1992) (awarding all fees because claimant prevailed “ in substance”); Final Award in
ICC Case No. 7006, XVIII Y.B. Comm. Arb. 58, 67 (1993) (awarding 100% of fees because of respondent’ s
procedural misconduct).
129. Final Award in ICC Case No. 11670, 22 ASA Bull. 333 (2004).
130. ICC, Statistics Concerning Awards of Legal Costs, 4 ICC Ct. Bull. 43 (1993).
131. See, e.g., Final Award in NAI Case No. 1930 ( 12 October 1999, XXVI Y.B. Comm. Arb. 181, 196 (2001)
(“ claimant succeeded only in relation to a small proportion of its total claims ... the Tribunal awards that each
party shall bear its own costs of legal assistance”); Final Award in ICC Case No. 9466, XXVII Y.B. Comm. Arb.
170 (2002) (given relative success of each party, “ the costs of the arbitration [shall] be borne by the parties in
equal proportions (50/50) and ... each party shall bear its own legal costs”).
132. See G. Born, International Commercial Arbitration 2499–2500 (2009).
133. The role of the parties’ procedural conduct during the arbitration in tribunals’ cost allocations is likely to
 become more important under the 2012 ICC Rules (and, in particular, under Article 37(5)).
134. G. Born, International Commercial Arbitration 2512–19 (2009).
135. Glass Molders, Pottery, Plastics & Allied W orkers Int’l Union, AFL-CIO, CLC, Local 182B v. Excelsior
Foundry Co., 56 F.3d 844 (7th Cir. 1995). The functus officio doctrine is distinguished from an arbitrator’ s
premature resignation or removal, thereby terminating his or her mandate before it is completed. The term functus
officio refers instead to a tribunal’ s completion of its mandate at the end of an arbitral proceeding, by making an
award with res judicata effect, while the resignation or removal of an arbitrator refers to the withdrawal of an
individual from the tribunal, before he or she has completed his mandate, with both the tribunal and the arbitral
proceedings continuing with full legal efficacy.
136. Some national arbitration statutes (the U.S. FAA and the Swiss Law on Private International Law) are silent
with regard to the termination of the arbitrator’ s mandate and the functus officio doctrine. See infra p. 342.
137. G. Born, International Commercial Arbitration 2514–15 (2009).
138. Office & Professional Employees Int’l Union v. Brownsville Gen. Hosp., 186 F.3d 326, 331 (3d Cir. 1991). See
also Local 2322, Int’l Bhd of Elec. W orkers v. Verizon New England, Inc. , 464 F.3d 93, 97 (1st Cir.
2006);Sterling China Co. v. Glass Molders, Pottery, Plastics & Allied W orkers Local 24 , 357 F.3d 546 (6th
Cir. 2004).
139. La Vale Plaza, Inc. v. R. S. Noonan, Inc., 378 F.2d 569, 572 (3d Cir. 1967).
140. See, e.g., Teamsters Local 312 v. Matlack, Inc., 118 F.3d 985 (3d Cir. 1997); Office & Professional Employees
Int’l Union v. Brownsville Gen. Hosp., 186 F.3d 326, 331 (3d Cir. 1991).
141. See U.S. Energy Corp. v. Nukem, Inc ., 400 F.3d 822 (10th Cir. 2005) (“ It is not the role of the courts to interpret
arbitration awards ... Therefore, a remand to the arbitral panel for clarification is necessary.”); Green v. Ameritech
Corp., 200 F.3d 967 (6th Cir. 2000) (“ The doctrine of functus officio, under which an arbitrator, having fulfilled
his or her function, discharged the office, or accomplished the purpose, has no further force or authority, contains
several exceptions.”). In addition, as under the Model Law, U.S. courts give effect to agreements granting
arbitrators authority to make corrections or interpretations of their awards (typically, agreements incorporating
institutional rules).
Chapter 16
Annulment of International Arbitral Awards

As discussed above, award-debtors frequently comply voluntarily with awards made against
them. Nonetheless, there are circumstances in which a party concludes, either for tactical
reasons or otherwise, that an award against it is fundamentally wrong. In these cases, parties
may seek to annul the award. Under most arbitration legislation, there are limited
circumstances in which such challenges may be made.
The presumptive rule in most jurisdictions is that an award is final and binding, with
preclusive effects on the parties broadly comparable to the preclusive effects of a national
court judgment, but no right to “appeal” the award to a national court. Nonetheless,
arbitration legislation in almost all jurisdictions provides limited avenues for challenging an
award. These avenues include seeking to annul (or “set aside” or “vacate”) an award under the
arbitration legislation, and in the courts, of the arbitral seat. They also include seeking
corrections, interpretations, or additional awards from the tribunal, typically pursuant to the
arbitration legislation of the seat or, alternatively, pursuant to any applicable institutional
rules.

§16.01 PRESUMPTIVE FINALITY OF INTERNATIONAL ARBITRAL

AWARDS
Most arbitration statutes treat arbitral awards as binding, with res judicata effect, as soon as
they are made (as discussed below). Likewise, most arbitration legislation treats awards as
presumptively valid, subject to review only in exceptional cases. The European Court of
Justice has explained the policies underlying such provisions as follows: “it is in the interest
of efficient arbitration proceedings that review of arbitration awards should be limited in
scope and that annulment of or refusal to recognize an award should be possible only in
exceptional circumstances.”1 These policies, and the presumptive validity of awards, are
reflected in most national legal systems.
Preliminarily, and as a practical matter, annulment of an international arbitral award is an
unusual result in most jurisdictions. This is the anecdotal experience of most counsel, and is
confirmed by empirical studies. Thus, reviews of annulment proceedings in Switzerland, the
United States, France and England have concluded that annulment of international awards is
a n exceptional occurrence, with the overwhelming majority of all awards being upheld in
annulment challenges.2 In practice, once an arbitration has concluded with an award, there is
little that the losing (or winning) party can do to change that outcome.

[A] Presumptive Validity of Arbitral Awards under UNCITRAL Model Law

The UNCITRAL Model Law sets forth an influential approach to the annulment of awards.
Article 34 of the Model Law provides for the presumptive validity of international awards,
subject only to specified exceptions which parallel those in Article 36 of the Model Law and
Article V of the New York Convention (dealing with recognition of foreign awards).

[1] Article 34 Provides Exclusive Grounds of Annulment

Article 34 of the Model Law provides a detailed list of grounds for “recourse to a court
against an arbitral award”; these are the exclusive, exhaustive list of grounds for annulment.
Under Article 34(2), an award may be set aside “only if” the party challenging the award
establishes one of the specified grounds set forth in the Article. National courts have made
clear, as the Model Law’s language provides, that Article 34’s grounds for annulment are
exclusive.3
The grounds set forth in Article 34 parallel those applicable to recognition of an award
under Article 36 of the Model Law and Article V of the New York Convention (save for the
provisions of Article V(1)(e) and Article 36(1)(a)(5), dealing with awards that are annulled in
the seat). Specifically, Article 34(2) provides that an award may be annulled if (a) the
arbitration agreement was invalid; (b) a party was unable to present its case, including for
lack of notice; (c) the award deals with matters outside the scope of the submission to
arbitration; (d) the composition of the tribunal or arbitral procedures were not in accordance
with the arbitration agreement; (e) the dispute was non-arbitrable; or (f) the award violates
local public policy. If none of these specified grounds is present, then the award may not be
annulled.
It is also clear that Article 34’s grounds for annulment must be narrowly construed.
According to one court:

The grounds for challenging an award under the Model Law are derived from Article V
of the New York Convention .... Accordingly, authorities relating to Article V of the
New York Convention are applicable to the corresponding provisions in Articles 34 and
36 of the Model Law. These authorities accept that the general rule of interpretation of
Article V is that the grounds for refusal of enforcement are to be construed narrowly ....4
Other authorities are to the same effect.5
[2] Article 34 Grounds for Annulment Are Discretionary

It is equally clear that the grounds specified in Article 34(2) of the Model Law are
discretionary, not mandatory. That is, a court may annul an award if one or more of the
Article 34(2) grounds is satisfied, but the court is not required to do so, even where one of
these grounds applies. This is made express by Article 34(2), which provides that an “award
may be set aside by the court ... only if” specified grounds are present.6 As a practical matter,
in many cases, the existence of one of the Article 34(2) grounds will be sufficiently serious
that annulment of the award will be virtually automatic; nonetheless, there may be instances
where, for example, a procedural error was sufficiently isolated that it is held not to affect the
award’s validity.

[3] Party Seeking Annulment under Article 34 Generally Bears Burden of

Proof

Also preliminarily, it is clear that the burden of proving that one of the exceptions under
Article 34 of the M odel Law applies is on the party seeking to set an award aside. That is the
explicit requirement with regard to the exceptions in Articles 34(2)(a)(i) to (a)(iv), as to
which Article 34(2) requires that “the party making the application [to annul] furnish[]
proof” that the exception applies.
Article 34(2)(b), which deals with non-arbitrability and public policy, is not prefaced by
the requirement that the party seeking annulment demonstrate that the exception is
applicable. This parallels Article V of the New York Convention and reflects the power of a
national court to raise these issues ex officio.7 Nevertheless, it remains the burden of the
party seeking to annul an award to demonstrate that one of these exceptions applies.

[B] Presumptive Validity of Arbitral Awards under FAA

Like the Model Law, the domestic FAA in the United States reflects a strong presumption in
favor of the validity of arbitral awards. Section 9 of the FAA provides that a U.S. “court
must grant such an order [confirming an award] unless the award is vacated, modified, or
corrected as prescribed in §§10 and 11 of [the FAA].”8 Sections 10 and 11 then sets forth
exceptions to the confirmation of awards which are broadly similar (but not identical) to
those in Article 34 of the Model Law and Article V of the Convention. U.S. courts have
interpreted these provisions in a pro-enforcement fashion. As one court explained:

The purpose of arbitration is to permit a relatively quick and inexpensive resolution of

 contractual disputes by avoiding the expense and delay of extended court proceedings.
Accordingly, it is a well-settled proposition that judicial review of an arbitration award
should be, and is, very narrowly limited.9

Other U.S. authority is to the same effect.10 Judicial authority makes it clear that the party
seeking to vacate an award bears the burden of proof under the FAA.11

[C] Presumptive Validity of Arbitral Awards under Other National Arbitration

Legislation

Other arbitration statutes are broadly similar to the Model Law and FAA in their treatment
of the presumptive validity of awards, although there are important exceptions. In particular,
most states take the same structural approach as the Model Law and FAA, providing for the
presumptive validity of awards, subject to only enumerated exceptions which generally
parallel those applicable to non-recognition of an award under the New York Convention.
Article 190 of the Swiss Law on Private International Law provides for the presumptive
(and immediate) finality of an international arbitral award made in Switzerland, subject to
annulment only on grounds parallel to those in Article V of the Convention. 12 As under the
M odel Law, Article 190’s grounds for annulment are exclusive and the award debtor bears the
burden of proof.13 Other civil law jurisdictions are similar.14
In contrast, some jurisdictions adopt less favorable standards for the confirmation of
international awards made on national territory. Particularly in states that have historically
been mistrustful of international arbitration, awards are often not presumptively valid, or are
subject to expansive judicial review. For example, awards are subject in some states to judicial
review on the same grounds as court judgments, including de novo review.15

§16.02 LIMITS ON FORUMS FOR ANNULLING INTERNATIONAL

ARBITRAL AWARDS
A central aspect of the legal regime governing international arbitral awards are limits on the
judicial forums in which such awards may be annulled. In particular, both the New York
Convention and national arbitration statutes impose restrictions on the forums where awards
may be annulled – prohibiting actions to annul awards outside the state where the award was
made (or, in some cases, the state under whose laws the award was made).

[A] New York Convention Limits on Forums for Annulling Awards

The text of the Convention does not expressly limit the forums in which an action to annul an
award may be pursued. Nonetheless, the Convention’s language and structure clearly impose
such limits, requiring that actions to annul a Convention award be pursued exclusively in the
place where the award was made or under whose laws it was made. These limits have vital
importance to the arbitral process, restricting the jurisdictional competence of national courts
to non-recognition of awards made abroad, rather than permitting annulment of such awards.

[1] Article V(1)(e) and VI Limits on Forums for Annulling Awards

Article V(1)(e) of the Convention permits a court in one Contracting State to deny
recognition to an award that has been annulled in either: (a) the country in which the award
was “made” (i.e., a country where the award is not “foreign”), or (b) the country “under the
law of which” the award was “made.” In similar fashion, Article VI of the Convention
permits a national court to stay proceedings to recognize an award if an application to annul
the award is pending before the “competent authority referred to in Article V(1)(e).” Nothing
in Articles V and VI expressly requires that actions to annul an award be brought only in the
two forums identified in Article V(1)(e). Nonetheless, the language, structure and purposes of
the Convention mandate such a conclusion.
By their terms, Articles V(1)(e) and VI provide that only decisions to annul an award
which are rendered in the Article V(1)(e) forum (by a “competent authority”) are effective for
purposes of Article V and VI; decisions annulling an award in other jurisdictions provide no
basis to either withhold recognition of an award (under Article V(1)(e)) or stay recognition
proceedings (under Article VI). In turn, these effects rest on the premise that actions to annul
an award outside the place where, in Article V(1)(e)’s terms, it was “made,” or “under whose
law” it was made, are not actions of a “competent authority”: it is for this reason that
decisions in actions in forums other than those specified in Article V(1)(e) may not be taken
into account by other courts under Articles V and VI.
The Convention’s objectives are substantially advanced by limiting actions to annul
awards to the place where the award was made. Permitting annulment in other places would
render Article V’s narrow limits on the grounds for non-recognition much less effective, and
could permit circumvention of those limits entirely, by allowing states to annul awards based
on national law grounds other than those permitted by Article V. At the same time, limiting
the forums where annulment can be pursued is necessary to furthering the goals of
international arbitration, being to permit the resolution of disputes in a single centralized,
neutral forum, without the jurisdictional and other complexities that arise from litigation in
national courts.16
Virtually all national courts have accepted this analysis, concluding that Articles V(1)(e)
and VI forbid actions to annul an award except in the state where it was “made” or “under the
law of which” it was made. For example, a U.S. court held that “[u]nder Article V(1)(e) of the
Convention, ‘an application for the setting aside or suspension of the award’ can be made
only to the courts or the ‘competent authority of the country in which, or under the law of
which, that award was made.’”17 A leading Dutch decision reached the same conclusion,
declaring “as the arbitral awards have been rendered in Israel, the Israeli courts have exclusive
jurisdiction over an application for setting aside.”18

[2] Forums Where Annulment Is Permitted

The language of Article V(1)(e) of the Convention is deceptively simple. As noted above, it
provides, in effect, that actions to annul may be pursued in either: (a) the country in which
the award was “made,” or (b) the country “under the law of which” the award was made. As
discussed in Chapter 6 above, these can be different countries (although they usually are
not).19

[i] Country Where Award Is “Made”

The first of Article V(1)(e)’s alternatives is straightforward. As discussed above, an award

may be annulled in the courts of the state in which the award was “made”; conversely, if an
award is “made” outside a particular state, then it will be “foreign” in that state and protected
by the Convention in that state – not subject to annulment and subject to non-recognition
only if one of Article V’s exceptions is applicable.20
Disputes have sometimes arisen in identifying where an award is “made.” These issues are
readily resolved. The Convention imposes a uniform international rule providing that an
award was “made” in the arbitral seat specified in the arbitration agreement (or, absent such
agreement, the seat specified by the arbitral institution or tribunal). As discussed above, a
few national courts have held that awards were “made” outside the contractually-specified
arbitral seat, variously in the place where the award was physically signed by the
arbitrator(s) or where the arbitral hearings were conducted.21 These decisions are ill-
considered and contradict the Convention’s language and objectives. The more common, and
proper, approach is that an award is “made” in the parties’ agreed seat, regardless where the
award was signed or hearings were held.22

[ii] Place “Under the Law of Which” an Award Is Made

The second of Article V(1)(e)’s alternatives is more complex. As described above, Article
V(1) (e) contemplates annulment in “[the state] under the law of which the award was made.”
The correct interpretation of Article V(1)(e)’s second alternative is that it refers to the
procedural law of the arbitration, and not to other possible laws (such as the substantive law
governing the parties’ underlying dispute or the arbitration agreement). 23 One court correctly
explained this as follows:

[The] argument, that a generalized supervisory interest of a state in the application of its
domestic substantive law (in most arbitrations, the law of contract) in a foreign
proceeding, is wholly out of step with the universal concept of arbitration in all nations.
The whole point of arbitration is that the merits of the dispute will not be reviewed in
the courts, wherever they be located. ... Accordingly, we hold that the contested
language in Article V(1)(e), “...the competent authority of the country under the law of
which, [the] award was made” refers exclusively to procedural and not substantive law,
and more precisely, to the regimen or scheme of arbitral procedural law under which the
arbitration was conducted, and not the substantive law of contract which was applied in
the case.24 Virtually all other national courts have also reached this conclusion.25 As
with the definition of where an award is “made” under Article V(1)(e), this is a uniform
international standard dictated by the Convention, not subject to divergent national law
definitions.

In some cases, a party will argue in recognition proceedings that the award was made under
the law of a state other than that of the seat, within the meaning of Article V(1)(e). As
discussed above, however, courts have been extremely reluctant to conclude that parties have
agreed upon a procedural law other than that of the seat. Consequently, although it is
theoretically possible for an award to be subject to annulment outside the seat, by virtue of
Article V(1)(e)’s second alternative, this is a highly unusual, “once-in-a-blue-moon”26 event.
Despite this, a few courts have held that an award is made, for purposes of the New York
Convention, “under” the law governing the arbitration agreement or, alternatively, the law
governing the parties’ underlying contract. For example, notwithstanding India’s enactment
of the Model Law, some Indian lower courts held that India is the proper forum for annulling
awards made abroad, apparently relying on “the overriding principle ... that the courts of the
country whose substantive laws govern the arbitration agreement are the competent courts in
respect of all matters arising under the arbitration agreement.”27 Courts in one or two other
states have adopted similar rationales, holding that awards in arbitrations seated abroad were
subject to annulment outside the arbitral seat.28
The rationale adopted in these decisions misconstrues the New York Convention and, in a
carefully-reasoned recent decision, was repudiated by the Indian Supreme Court.29 Article
V(1) (e)’s second alternative (i.e., the state “under the law of which an award is made”) refers
solely to the country whose law provides the procedural law of the arbitration. The
Convention clearly distinguishes between the law governing the arbitration agreement (Article
V(1)(a)) and the law governing the arbitral proceedings (Article V(1)(d)). Almost equally
clearly, Article V(1)(e)’s second alternative refers to the procedural law of the arbitration,
rather than the law governing the arbitration agreement or underlying contract: that is evident
from the phrase “under the law of which [the] award was made,” which refers to the process
of making the award (i.e., the arbitral proceedings), rather than to the formation or validity of
the arbitration agreement (much less the underlying contract). This is clearly the correct view
of the Convention and can be expected to prevail in future decisions.

[B] National Law Limits on Forums for Seeking to Annul International

Arbitral Awards

Most national arbitration statutes permit actions in local courts to annul awards “made”
within the forum state, and do not permit local courts to entertain actions to annul other
awards (made elsewhere). Consistent with both the New York Convention and the
“territorial” character of the Model Law, Articles 1(2) and 34 of the Law provide that, where
the “place of arbitration is in the territory of [the] State” (Article 1(2)), its courts may set
aside an award (Article 34). The Model Law does not permit a local court to entertain an
application to annul an award made in an arbitration with its seat located outside national
territory; rather, in these circumstances, Article 36 provides only for recognition or non-
recognition of the (foreign) award.30
The English Arbitration Act also adopts an essentially territorial approach to annulment
actions similar to that of the M odel Law, providing that an award may be set aside only if the
arbitral seat was in England. Section 2(1) provides that the Act (including its provisions
regarding challenges to an award) apply only where the “seat” of the arbitration is in England,
while §53 provides that, unless otherwise agreed by the parties, the “seat” is the place where
the award is made. In turn, §§67–69 of the Act provide for actions to set aside awards – but,
by virtue of §2(1), these provisions apply only where the arbitral seat was in England.
The same result applies generally in the United States. The only provision of the FAA
permitting annulment of awards is §10, which is limited to awards made within the United
States.31 Consistent with this, U.S. courts have repeatedly held that an award may only be
vacated by a U.S. court if it was “made” in the United States.32 Recent U.S. Supreme Court
interpretations of the FAA’s statutory regime for vacating awards indicate that parties may
not contract into or, less clearly, out of §10’s provisions.33
Despite the foregoing, and as discussed above, a few states have permitted local courts to
entertain actions to annul awards made abroad. The rationale for this approach – which is
typically adopted by older, and repudiated by more recent, judicial decisions – is that an
award made abroad may nonetheless be treated as “domestic” because of the character of the
parties’ dispute. As also discussed above, this analysis is incompatible with the language and
purposes of the Convention, and is properly eschewed by virtually all states.

§16.03 ANNULMENT OF INTERNATIONAL ARBITRAL AWARDS

If an annulment action can properly be brought in a particular forum, then the New York
Convention imposes no express international limits on the grounds available for annulment:
these grounds are almost exclusively matters of local law. Nonetheless, as discussed below,
most national arbitration regimes have adopted broadly similar approaches to the grounds for
annulment of international awards – generally, but not always, limiting such review to bases
paralleling those for non-recognition of awards in Article V of the Convention.

[A] Annulment Governed by Domestic Law of Arbitral Seat

The text of the New York Convention does not impose any express limits on the grounds
that may be relied upon to annul an award in the arbitral seat. Article V provides a limited
(and exclusive) list of grounds which may be relied upon in refusing “recognition or
enforcement” of an award. Article V’s limitations do not apply to actions to annul an award
in the arbitral seat, and instead apply only to the “recognition” of “foreign” and “non-
domestic” awards (as discussed above). Nor does any other provision of the Convention
expressly impose any limitation on the grounds that may be invoked to annul an award in the
arbitral seat.
Most authorities have therefore concluded that the Convention imposes no limits on the
grounds for annulling an award in the arbitral seat. A decision of a U.S. court in Yusuf Ahmed
Alghanim & Sons WLL v. Toys “R” Us, Inc., is illustrative:

We read Article V(1)(e) of the Convention to allow a court in the country under whose
law the arbitration was conducted to apply domestic arbitral law, in this case the FAA,
to a motion to set aside or vacate that arbitral award. ... There is no indication in the
Convention of any intention to deprive the rendering state of its supervisory authority
over an arbitral award, including its authority to set aside that award under domestic
law.34 Other courts have almost unanimously reached the same conclusion.35 The
weight of commentary is to the same effect, discerning no limits in the Convention on
the grounds on which the courts of the seat may annul an award.36
 Although it is true that the Convention does not expressly limit the scope of national court
review of awards in annulment actions, the better view is that the Convention does so
indirectly by requiring Contracting States to recognize agreements to arbitrate (in Article II).
Consistent with this, a few courts have concluded (typically without detailed analysis) that
actions to annul international arbitral awards must be limited either to the grounds specified
in Article V or by more general international principles.37

[B] Grounds for Annulment under National Law

As detailed below, most arbitration legislation permits the annulment of awards if: (a) there
was no valid arbitration agreement; (b) the award-debtor was denied an adequate opportunity
to present its case; (c) the arbitration was not conducted in accordance with the parties’
agreement or, failing such agreement, the law of the seat; (d) the award dealt with matters not
submitted to arbitration; (e) the award dealt with a dispute that is not capable of settlement
by arbitration; or (f) the award is contrary to public policy. In addition, many arbitration
statutes also provide for the annulment of awards: if (g) the tribunal lacked independence or
impartiality; (h) the award was procured by fraud; or (i) in some states, the arbitrator’s
substantive decision was seriously wrong on the merits.

Grounds for Annulment of Arbitral Award

1. Arbitration Agreement Invalid; No Capacity (e.g., UNCITRAL Model Law, Art.
34(2) (a)(i))
2. Party Denied Opportunity to Present Case (e.g., UNCITRAL Model Law, Art.
34(2) (a)(ii))
3. Award Deals with Matters Outside Scope of Submission to Arbitration (e.g.,
UNCITRAL M odel Law, Art. 34(2)(a)(iii))
4. Composition of Arbitral Tribunal or Arbitral Procedures Not in Accordance with
Parties’ Agreement (e.g., UNCITRAL M odel Law, Art. 34(2)(a)(iv))
5. Disputes/Claims Were Non-Arbitrable (e.g., UNCITRAL Model Law, Art. 34(2)(b)
(i))
6. Award Violates Public Policy (e.g., UNCITRAL M odel Law, Art. 34(2)(b)(ii))
7. Arbitral Tribunal Lacked Independence or Impartiality
8. Award Procured by Fraud
9. Arbitrators’ Decision Seriously Wrong on M erits

[1] No Valid Arbitration Agreement

Article 34(2)(a)(i) of the Model Law provides that an award may be annulled if one of the
parties was “under some incapacity” or if the arbitration agreement “is not valid under the
law to which the parties have subjected it or, failing any indication thereon, under the law of
[the State where the action to annul is brought].” These grounds for annulling an award
parallel those set forth, in the context of non-recognition of an award, in Article V(1)(a) of the
Convention. They are also recognized under other arbitration statutes.38

[i] Standards for Recognition of Arbitration Agreements Generally Applicable

The substantive issues relating to the validity of an arbitration agreement and the capacity of
a party are dealt with in detail in Chapters 2, 3 and 17, both in the context of international
arbitration agreements and the recognition of awards.39 In general, the same substantive
analysis that applies in these contexts is applicable in considering an application to annul an
award (and is not repeated here); nonetheless, several additional issues raise special issues in
the annulment context.

[ii] Choice of Law

First, Article 34(2)(a)(i) provides that the validity of the arbitration agreement is governed by
the law chosen by the parties and, in the absence of such choice, by the law of the state
where the annulment application is filed. The first limb of this provision (i.e., giving effect to
the parties’ choice-of-law) is consistent with the general rule in contemporary international
arbitration (and Article V(1)(a) of the Convention). 40 The second limb of Article 34(2)(a)(i),
providing for secondary application of the law of the state where the annulment application
is filed, provides a mandatory, default choice-of-law rule for arbitration agreements, requiring
application of the law of the annulment forum. In most cases, this will also be the law of the
arbitral seat, since annulment actions may only be pursued in the seat (as discussed above).
Nonetheless, as discussed above, the law of the seat is by no means the only appropriate
choice of law and, in some cases, would not be correct (e.g., the law governing an arbitration
agreement in articles of association of a foreign-incorporated company).41 Moreover, in a
number of jurisdictions, courts apply either international law principles or a validation
principle, in both cases aimed at giving effect to arbitration agreements notwithstanding
discriminatory or idiosyncratic national laws. In these circumstances, Article 34(2)(a)(i)’s
fall-back choice-of-law rule should be interpreted to include either these international
principles or a validation principle (on the basis that these principles are themselves the law
of the annulment forum). In practice, this appears to be the approach followed in states that
have adopted such principles, including France, the United States and Switzerland.42
[iii] Preclusive Effect of Arbitrators’ Jurisdictional Award: Positive Jurisdictional Awards

Second, Article 34(2)(a)(i) of the Model Law does not address the preclusive effect of a
jurisdictional award by the tribunal – whether positive or negative. If an award considers and
rejects an objection to the tribunal’s jurisdiction, then the effect of the award on a subsequent
annulment action based upon a lack of jurisdiction must be considered.
The degree of deference afforded to a tribunal’s positive jurisdictional award varies from
state to state. As discussed elsewhere, many national courts appear to apply a de novo
standard of judicial review to all positive jurisdictional awards.43 In contrast, some courts
(notably in the United States) consider the issues submitted by the parties to the arbitrators’
decision and, where those issues included jurisdictional objections, will give only the same
(very expansive) degree of deference to jurisdictional awards as is accorded to the substance
of other awards; in contrast, where no agreement was made to resolve jurisdictional disputes
by arbitration, then a jurisdictional award will be subject to de novo judicial review under the
FAA.44

[iv] Preclusive Effect of Arbitrators’ Jurisdictional Award: Negative Jurisdictional Awards

Alternatively, if a tribunal issues a negative jurisdictional award, holding that there is no valid
arbitration agreement, then the question arises as to the effect of this decision in a subsequent
action to annul the award. Again, courts have arrived at different answers to this question.
In some legal systems, a negative jurisdictional award is deemed a “non-award” which is
not capable of being set aside and which arguably has no preclusive effect.45 In other
jurisdictions, a negative jurisdictional award is held to be unreviewable on grounds that the
arbitrators erred in their jurisdictional analysis: that was the conclusion of a 2002 German
Bundesgerichtshof judgment, which reasoned that none of the grounds set forth in the
German version of the Model Law for annulment of an award included correcting a mistaken
negative jurisdictional award.46 The decision is of particular importance, because its reasoning
would apply more generally to Article 34(2) of the M odel Law.47
In contrast, other jurisdictions treat negative jurisdictional awards in the same manner as
positive jurisdictional awards. For example, Article 190(2)(b) of the Swiss Law on Private
International Law provides for judicial review in an annulment action where “the arbitral
tribunal has wrongly declared itself to have or not to have jurisdiction.” Similarly, §10(a)(4)
of the U.S. FAA applies equally to both positive and negative jurisdictional awards,
permitting the same degree of judicial review in both cases.
This latter approach is clearly superior. It makes no sense to accord a negative
jurisdictional award no, or reduced, preclusive effect and possibilities for judicial review. On
the contrary, if a tribunal considers whether there is a valid arbitration agreement, or whether
a party lacked capacity, and concludes that no valid agreement or capacity existed, then its
resolution of the relevant factual and legal issues should be no less binding and no less subject
to annulment, than other jurisdictional determinations by a tribunal.

[2] Excess of Authority

An award may be set aside in most legal systems if the tribunal has “exceeded its authority.”
Article 34(2)(a)(iii) of the Model Law is representative, providing that an award may be
annulled if it “deals with a dispute not contemplated by or not falling within the terms of the
submission to arbitration, or contains decisions on matters beyond the scope of the
submission to arbitration.” This basis for annulling an award is modeled on the grounds for
non-recognition in Article V(1)(c) of the Convention, and is paralleled by other arbitration
statutes.48 This ground is directed towards cases where a valid arbitration agreement existed,
but the matters decided by the tribunal either exceeded the scope of that agreement or the
scope of the issues presented to the tribunal by the parties in the arbitration; it also arguably
applies where the tribunal failed to decide matters presented to it in the arbitration.
The most common basis for annulling awards under Article 34(2)(a)(iii) is where the
arbitrators “rule[d] on issues not presented to [them] by the parties” – so-called extra petita
or ultra petita. Awards deciding matters outside the scope of the parties’ submissions to the
arbitrators have been annulled by courts in many jurisdictions.49 In practice, however, courts
are reluctant to accept contentions that the arbitrators exceeded the scope of the parties’
submissions.50 Nonetheless, cases arise where a tribunal’s award is annulled for addressing
issues or granting relief that exceeds the scope of claims presented to it by the parties.51
Doubts about the scope of the parties’ submissions are generally resolved in favor of
encompassing matters decided by the arbitrators. Put differently, considerable deference is
accorded the arbitrators’ interpretation of the scope of their mandate under the parties’
submissions.
Courts are particularly unwilling to accept arguments that, by misinterpreting, ignoring, or
refusing to give effect to the parties’ underlying contract, the tribunal exceeded its authority.
It is typically held that such arguments amount to an effort to obtain judicial review of the
merits of the tribunal’s decision; as such, these efforts do not constitute an excess of
authority and instead, at most, involve an allegedly incorrect decision in the exercise of such
authority.52
This was the reasoning in Lesotho Highlands Development Authority v. Impregilo SpA,
where the House of Lords rejected the argument that a tribunal’s application of English law,
rather than the terms of the parties’ contract, was an excess of authority which permitted
annulment of its award under §68 of the English Arbitration Act. Lord Steyn declared that
“nowhere in §68 is there any hint that a failure by the tribunal to arrive at the ‘correct
decision’ could afford a ground for challenge under §68.” 53 While this view is both clearly
correct and representative of most decisions, courts are nonetheless sometimes persuaded –
wrongly – to treat errors of law as an excess of authority.54
An award will also be subject to annulment if a tribunal decides issues that are not within
the scope of the arbitration agreement.55 In general, the analysis applicable to the
interpretation of the scope of arbitration agreements (dismissed in Chapter 5 above) is
equally applicable here.56 It is essential that the party relying on this ground for annulment
has raised a jurisdictional objection, and not subsequently waived it, during the arbitral
proceedings.
Finally, if a tribunal fails to consider all of the issues that have been submitted to it (so-
called infra petita), the award may be annulled under some national laws.57 As one French
authority explains, “[i]ndependently of any issue of jurisdiction, the arbitrators may also be
held to have ruled infra petita on the grounds that they failed to reach a decision on any one
of the parties’ claims, whether by omission or by deliberate refusal to do so.”58

[3] Denial of the Opportunity to Present Party’s Case

A tribunal’s failure to afford the losing party an equal and adequate opportunity to present
its case during the arbitration can provide grounds for annulling an award. Article 34(2)(a)(ii)
of the Model Law is representative, providing that an award may be annulled if the applicant
“was not given proper notice of the appointment of an arbitrator or of the arbitral
proceedings or was otherwise unable to present his case.” This provision is closely modeled
on Article V(1)(b) of the Convention, and is directed towards denial of an opportunity to be
heard and similar types of procedural unfairness. Other national arbitration legislation is
similar.59

[i] Distinguished from Violation of Parties’ Agreed Arbitral Procedures

Annulment of an award based on denial of an opportunity to be heard is related to, but

distinguishable from, annulment for failure to comply with the parties’ agreed procedural
arrangements (discussed below).60 It is fundamental that an award may be annulled based
simply on a violation of procedural protections imposed by applicable law, regardless of the
terms of the parties’ agreement. The opportunity to be heard, and the right to equal
treatment, entail mandatory procedural guarantees, which exist independently of the parties’
agreement and at least some of which are non-waivable.
At the same time, it is also essential to formulate mandatory procedural guarantees in the
context of specific agreements to arbitrate, including the parties’ procedural agreements and
expectations. This follows from the central role of party autonomy with regard to the arbitral
procedures (discussed above).61 Given the importance of the parties’ autonomy, particularly
in the context of arbitrations between commercial parties, the application of procedural
guarantees by national courts to override the parties’ agreed procedures is an exceptional act.

[ii] Applicable Standards of Procedural Fairness

A recurrent question is the appropriate standard of procedural fairness in an action to annul

an award under Article 34(2)(a)(ii) and, in particular, whether the local law of the arbitral seat
prescribes the content of such standards. Most courts have held that local standards of
procedural fairness apply in an application to annul an award;62 indeed, absent a choice of a
foreign procedural law by the parties, there is no other plausible choice of a national law. At
the same time, most courts have also emphasized that the application of local law does not
mean that procedural rules applicable in local litigations must be complied with, but only that
fundamental requirements of fairness, guaranteed under local law, must be satisfied. For
example, U.S. and Swiss courts have held that the general procedural guarantees of their
respective national constitutions apply in international arbitration, but not the particular
procedural requirements of local litigation codes.63
Several related procedural guarantees are relevant under Article 34(2)(a)(ii): (a) the right to
equal treatment;64 (b) the right to an adequate opportunity to present one’s case; 65 and (c)
the right to regular, non-arbitrary procedures.66 These guarantees reflect the basic mandatory
procedural requirements that national law imposes on locally-seated arbitrations. These
guarantees apply generally to all aspects of the arbitral procedures, including constitution of
the tribunal, presentation of factual evidence and legal argument, and opportunity to respond
to the other party’s case.

[iii] Deference to Parties’ Agreed Arbitral Procedures

Decisions under Article 34(2)(a)(ii) and analogous national laws reflect strong judicial
reluctance to annul awards based on procedural mistakes by the arbitrators. This is
particularly true with regard to procedures agreed to by the parties, where courts have upheld
almost all consensually-adopted procedures. In the words of one U.S. court, “parties are as
free to specify idiosyncratic terms of arbitration as they are to specify any other terms in
their contract.”67 This reflects the consensual nature of international arbitration, as well as
the parties’ procedural autonomy, recognized in Article V(1)(d) of the New York
Convention. There will be limited circumstances in which a procedural agreement between the
parties is so unfair or arbitrary that it will be held to violate mandatory procedural
guarantees, but such instances are very rare (particularly in cases involving commercial
parties).

[iv] Deference to Arbitrators’ Procedural Discretion

National courts have been almost as deferential to procedural and evidentiary rulings by
tribunals (in the absence of agreement by the parties). For example, Canadian courts have
been reluctant to disturb arbitrators’ procedural rulings, declaring that “a high level of
deference should be accorded to the Tribunal, especially in cases where the [award debtor] is
in reality challenging a finding of fact.”68 In the words of one English decision: “It is not a
ground for intervention that the court considers that it might have done things differently.”69

[v] Waiver

As with other types of objections during the arbitral proceedings, most arbitration regimes
require that parties object to procedural rulings during the proceedings in order to preserve
their rights subsequently to seek annulment of an award on the basis of those rulings. Many
institutional rules contain provisions requiring parties promptly to raise objections and
deeming the failure to do so a waiver,70 but even in the absence of such provisions, national
law will produce the same result. Thus, national courts have uniformly held that, if parties
fail promptly to raise an objection, they will be held to have waived objections in an
annulment action.71 As one court put it: “A party with an objection to an arbitration panel
has an affirmative obligation to raise that objection with the arbitrators or else that objection
shall be waived.”72

[4] Failure to Comply with Parties’ Agreed Procedures

A tribunal’s failure to conduct the arbitral proceedings in accordance with the parties’
arbitration agreement (or the procedural rules it incorporates) can provide grounds for
annulling an award in most jurisdictions. Article 34(2)(a)(iv) of the Model Law is
representative, providing for annulment of awards where “the arbitral procedure was not in
accordance with the agreement of the parties.” This parallels Article V(1)(d) of the
Convention, and is similar to provisions in other arbitration statutes.73 In jurisdictions where
no statutory provision addresses the subject, courts have nonetheless generally held that
awards are subject to annulment if the arbitrators fail to observe the procedures agreed by the
parties.74
The annulment of awards for failure to respect the parties’ procedural agreement is related
to, but distinguishable from, the denial of an opportunity to be heard (discussed above).75
Thus, the parties’ procedural agreement may provide for procedures that would not, absent
such agreement, be mandatory, while a party’s right to be heard can be denied even where the
tribunal does not violate any specific procedural arrangement agreed to by the parties.
As discussed above, arbitration agreements sometimes contain procedural provisions
tailored to the parties’ needs (for example, regarding disclosure, types of submissions). 76
Most courts have held that a tribunal’s (or appointing authority’s) failure to comply with
these requirements can constitute grounds for annulling the award.77 In contrast, Swiss courts
have held that violations of the parties’ agreed procedural arrangements will not be grounds
for annulment of awards.78 This view is very difficult to reconcile with the parties’
procedural autonomy or the approach of most other national courts.
At the same time, in practice, most arbitration agreements and institutional rules impose
few specific procedural requirements, while granting the tribunal broad authority to conduct
the proceedings.79 Thus, as a practical matter, it is unusual for an award to be annulled based
upon the arbitrators’ failure to comply with the agreed arbitral procedures.
Most courts inquire into the materiality and importance of the procedural requirements
which a tribunal failed to comply with, and will not set aside an award because minor
formalities were ignored. Departures from agreed arbitral procedures will often be
countenanced unless they are both extreme and prejudicial.80 Similarly, some courts have
refused to annul awards based on a tribunal’s failure to comply with the parties’ procedural
agreement save where that agreement was explicit.81 As in other contexts, a party’s failure to
object to departures from agreed procedures will virtually always waive any objection.
Another ground for challenges based on non-compliance with the parties’ agreement
involves the time limits for making an award. Some arbitration agreements include contractual
time limitations, which may be shorter than applicable statutory time limits. Historically,
awards were subject to annulment in some jurisdictions if rendered after the time specified in
the arbitration agreement.82 Even today, if the parties’ agreement provides that the
arbitrators’ power to render an award expires after a given period, that limit will generally be
enforced by annulment of “late” awards.83 In practice, however, national courts have
frequently rejected claims that a tribunal’s failure to comply with time limits imposed by the
parties’ agreement provides a basis for annulling an award.84
Finally, most courts have rejected arguments that the arbitrators failed to comply with the
parties’ arbitration agreement by applying the “wrong” substantive law. This includes
instances where arbitrators allegedly applied a substantive law other than that chosen by the
parties.85 Save where an arbitrator expressly refuses to give effect to a concededly valid
choice-of-law clause, and instead applies some other legal system, an award’s choice-of-law
decision fall within the arbitrators’ mandate to decide the substance of the dispute and is
subject to the same (very-limited or non-existent) judicial review that exists for other
substantive decisions.

[5] Failure to Comply With Procedures Prescribed by Law of Arbitral Seat

The failure of a tribunal to comply with procedural requirements imposed by the laws of the
arbitral seat may, in the absence of contrary agreement, provide grounds for annulment of the
arbitral award. Article 34(2)(a)(iv) of the Model Law is again representative, with its second
limb providing for the annulment of an award where “the arbitral procedure ... failing ...
agreement [between the parties], was not in accordance with this Law.” This mirrors Article
V(1)(d) of the Convention, and is similar to a number of other arbitration statutes.86
In contrast, a number of jurisdictions do not provide any grounds for annulment equivalent
to that contained in Article 34(2)(a)(iv)’s second limb: in these states, local law prescribes no
mandatory procedural requirements other than a guarantee of an equal opportunity to be
heard and there is therefore no basis to annul awards based solely on non-compliance with
the law of the seat. This is true in the United States, France and Switzerland.87
As discussed above, the imposition of local procedural code or detailed procedural
requirements for international arbitrations would be in tension with Articles II and V(1)(d) of
the Convention, which afford primacy to the parties’ agreed arbitral procedures. 88 That
reflects the parties’ presumptive desire for internationally-neutral arbitral procedures tailored
to individual cases, rather than a generic procedural code derived from domestic litigation
systems.
Consistent with this, there is little authority involving annulment of awards based on
violations of local statutory rules that do not implicate the parties’ equal opportunity to be
heard. One of the few exceptions involves non-compliance with statutory time limits.
Although most national laws no longer impose time limits for making awards, some states
have maintained such deadlines (as discussed above). A tribunal’s failure to make an award
within statutory time limits can provide a basis for annulling the award. A Spanish Supreme
Court decision explained this result as follows:

[T]he time limit fixed for issuing the arbitral award ought to be inexorably respected,
because it is the period of time during which the parties voluntarily waive the
determination of their differences [by courts], and grant the powers of decision to the
 arbitrators. The expiry of this period terminates the power of the arbitrators, for having
exceeded the limit, and nullifies any arbitral action outside this time.89

This reasoning reflects out-dated conceptions of arbitration, as an exceptional, rather than

typical and preferred, means of international dispute resolution. Absent clear language to the
contrary, a statutory time limit should not provide a basis for annulment of an award.

[6] Lack of Impartiality, Bias and Misconduct of the Arbitrator and Fraud

Many legal systems provide for annulment of awards if an arbitrator did not satisfy
applicable standards of independence and impartiality. This basis for annulment is not
contained in the literal terms of Article 34(2) of the Model Law, or Article V of the
Convention, and few arbitration statutes include it as an express basis for annulment.90
Nevertheless, claims of lack of impartiality can be based on Article 34(2)(a)(ii), because a
partial tribunal denies a party an opportunity to present its case; or on Article 34(2)(a)(iv),
because a partial tribunal is not constituted in accordance with the parties’ agreement or with
applicable law; or on Article 34(2)(b)(2), because a partial tribunal violates conceptions of
procedural public policy. Whatever specific provision of Article 34 is invoked, analysis of
impartiality issues is generally similar, and focuses on the issues discussed above in the
connection with the challenge of arbitrators.
In contrast to the Model Law, the FAA contains several statutory exceptions to the
obligation to confirm awards which apply when the constitution of the tribunal fails to
satisfy basic standards of fairness. Section 10(a) of the FAA permits vacatur of an award
where the “award was procured by corruption, fraud, or undue means,” while §10(b) allows
vacatur of an award if “there was evident partiality or corruption in the arbitrators”;
moreover, §10(c) permits vacatur of an award if “the arbitrators were guilty of misconduct in
refusing to postpone the hearing ... or of any other misbehavior by which the rights of any
party have been prejudiced.”
Even absent express statutory authorization, almost all national courts regard an
arbitrator’s lack of independence or impartiality as a potential basis for annulling an award.
The impartiality of the tribunal is central to the arbitral process, and it is unacceptable in
most jurisdictions that awards by biased arbitrators be enforced.91
The standards of impartiality and independence that are applicable to arbitrators are
discussed above, in the context of interlocutory challenges to arbitrators, and are the starting
point for analysis in annulment proceedings.92 Nonetheless, courts are typically reluctant to
hold that an arbitrator was biased in an annulment action initiated following lengthy and
expensive proceedings. As a practical matter, the possibility that an award will be annulled
for lack of impartiality or independence at this stage of proceedings is more remote than the
likelihood of prevailing on an institutional or judicial application to remove an arbitrator early
in the arbitral process.
Moreover, challenges to an award based on an arbitrator’s alleged lack of impartiality raise
issues of waiver and/or preclusion. As discussed above, in many jurisdictions (including
under the Model Law), an arbitrator’s lack of independence may be raised in national courts
during the arbitral proceedings, without awaiting a final award; moreover, as also discussed
above, most institutional rules provide challenge procedures, by which an arbitrator may be
removed for lack of impartiality. Under these regimes, objections based on an arbitrator’s lack
of impartiality will ordinarily be resolved before a final award.
If a party fails to challenge an arbitrator’s impartiality pursuant to either statutory or
institutional mechanisms, notwithstanding notice of the factual grounds for a challenge, it will
generally be held to have waived the right to seek annulment of an award on these grounds. A
party is not entitled to adopt a “Heads I win, tails you lose” approach by holding objections
to an arbitrator in reserve until an award is rendered.93
Nevertheless, there will be cases where a party discovers previously-unknown facts after
the making of a final award, which provide grounds for objecting to an arbitrator’s
impartiality. In these instances, there may be grounds for seeking to annul the resulting
award, even in jurisdictions (including under the Model Law), where the ordinary procedure
is to challenge an arbitrator during the course of the arbitration.94
Conversely, where a party invokes interlocutory statutory and institutional challenge
procedures during the course of the arbitration, and an arbitrator is not removed, then issues
of preclusion arise. Where a court in the arbitral seat rejects a claim that an arbitrator lacks the
requisite impartiality, in an interlocutory challenge, then that decision will very often be
preclusive, or at least persuasive evidence, in annulment proceedings on the same grounds.95
Where an institutional challenge to an arbitrator is made, and rejected, related
considerations apply, particularly in jurisdictions that permit interlocutory judicial review of
institutional decisions. Even in other jurisdictions, many courts will give effect to provisions
in institutional rules providing that institutional challenge decisions are final, concluding that
such decisions preclude relying on previously-raised objections to the arbitrator in an
annulment action.96 In a few jurisdictions, courts have held that parties may not waive the
possibility of annulment of an award based on an arbitrator’s lack of impartiality. 97 Even in
these cases, however, the institutional challenge decision will have considerable weight in later
annulment proceedings.
In some jurisdictions (particularly the United States), it is not possible to challenge an
arbitrator for lack of impartiality during the course of the arbitration, and a party’s only
recourse is to preserve an objection and seek to annul the final award. In these circumstances,
a party must record its objection to the arbitrator’s impartiality, and then raise these
objections in an action to annul the final award.98

[7] Awards Contrary to Public Policy

Article 34(2)(b)(ii) of the Model Law also provides that an award may be annulled if “the
award is in conflict with the public policy of this State.” This public policy (or “ordre
public”) exception is modeled on Article V(2)(b) of the Convention, and has parallels in other
national arbitration regimes.99 Even in jurisdictions (such as the United States) where no
statutory public policy basis for annulment exists, courts have recognized the doctrine as “a
specific application of the more general doctrine, rooted in the common law, that a court may
refuse to enforce contracts that violate law or public policy.”100
Most national courts have annulled international awards on the basis of public policy only
in limited, exceptional cases. In most jurisdictions, the public policy doctrine is not a basis
for reviewing the substance of the arbitrators’ award in an annulment action, and has
generally been invoked only in cases of clear violations of fundamental, mandatory legal rules,
not in cases of judicial disagreement with a tribunal’s substantive decisions or procedural
rulings.101 There are frequent attempts to persuade courts to deviate from this rule – where
counsel seek to garb substantive objections to a tribunal’s award in public policy dress – but
these are virtually never successful. The use of public policy as a basis for annulling an award
under French law is representative of this approach. French courts have held that “a public
policy argument can be accepted only when the enforcement of the award would violate in an
unacceptable way our public policy, such violation having to affect in a manifest manner an
essential rule of law or a principle of fundamental importance.”102
Application of the public policy doctrine in annulment actions raises choice-of-law
questions. Article 34(2)(b)(i) provides that the “public policy of this State” is applicable in
annulment actions, and most national courts have agreed. This is consistent with the general
role of public policy in private international law as an escape device, pursuant to which vital
domestic policies and mandatory laws override the parties’ agreed dispute resolution
mechanisms.
Some authorities hold that the public policy exception in the context of annulment refers to
“international” public policy, rather than local public policy. This was made explicit in the
former French Code of Civil Procedure, where Articles 1502(5) and 1504 provided for the
annulment of awards that are “contrary to international public policy.” 103 Courts in other
jurisdictions have adopted similar approaches, even absent statutory language to this
effect.104
 Different authorities have adopted varying definitions of “international” public policy,
concluding that it refers to: (a) an autonomous body of international public policies, derived
from international sources and state practice; (b) those public policies of the forum state that
are considered applicable in international contexts; or (c) those public policies of the forum
intended for international settings, but only insofar as that public policy is consistent with
applicable international law principles.105
National courts may also give effect in annulment actions to the public policy of a foreign
state, other than the annulment forum, provided applicable conflicts rules support such a
result.106 This approach is appropriate only in exceptional cases, where local public policies
demand giving effect to a foreign state’s public policy, notwithstanding the absence of any
independent local public policy.

[8] Disputes Not “Capable of Settlement” by Arbitration

The non-arbitrability doctrine provides another exceptional basis for the annulment of
awards. Article 34(2)(b)(i) of the Model Law provides that an award may be annulled if the
court finds that “the subject-matter of the dispute is not capable of settlement by arbitration”
under the law of the judicial annulment forum. This provision is modeled on Article V(2)(a)
of the New York Convention, amended only slightly to confirm that the non-arbitrability
standards of the annulment forum apply. As with other bases for annulment under Article
34, the non-arbitrability ground has close parallels in arbitration legislation in non-M odel Law
states.107
The non-arbitrability doctrine is discussed above in connection with the enforcement of
arbitration agreements.108 That discussion is also relevant to application of the non-
arbitrability doctrine in the context of annulment; in general, the same analysis applies to
non-arbitrability in the context of awards as in the context of arbitration agreements.
Nonetheless, several issues warrant (brief) separate treatment.
As noted above, the Model Law and most other arbitration legislation provides a
specialized choice-of-law rule governing application of the non-arbitrability doctrine in
annulment proceedings. Under Article 34(2)(b)(i), the non-arbitrability rules of the arbitral
seat are applicable in annulment proceedings; other legislation is identical. These provisions
are consistent with Article V(2)(a)’s escape mechanism, permitting Contracting States
exceptionally to apply local law to deny effect to arbitration agreements and awards (as
discussed below).
As also discussed above, the application of the non-arbitrability rules of the arbitral seat in
an annulment action does not necessarily mean that those rules, by their own terms, apply in
particular cases. Thus, if the arbitration concerned matters having no connection to the seat,
governed by foreign law, there would ordinarily be no reason to apply the non-arbitrability
rules of the seat to claims governed by foreign law. Conversely, as also discussed above, there
may be rare instances in which a non-arbitrability rule of a state other than the arbitral seat
could be relevant in an annulment action.109
Application of the non-arbitrability doctrine in the annulment context involves the
possible waiver of non-arbitrability objections (by a party’s failure to raise them in the
arbitration). As discussed above, most claims that are arguably non-arbitrable are capable of
being waived after a dispute has arisen, including competition, securities, consumer,
employment and other claims. By similar analysis, parties are capable of waiving non-
arbitrability objections to such claims by failing to raise them during the arbitral
proceedings.110

[9] Fraud

It is reasonably clear that fraud on the arbitrators is a ground for annulling an award under
Article 34(2) of the Model Law (and other arbitration legislation). The Model Law does not
refer expressly to fraud, but its drafting history makes clear that fraud was intended to be
permitted as a basis for annulment (under the head of public policy).111 Similarly, arbitration
legislation in some non-Model Law jurisdictions permits awards to be annulled for fraud.112
Even in the absence of express statutory authorization, courts are generally willing to
consider claims that an award be annulled for fraud.113 As discussed below, that is also the
approach in recognition actions under the Convention (where Article V lacks any reference to
fraud).
Fraud is most often invoked in cases involving perjured testimony or fabricated evidence.
“Intentionally giving false testimony in an arbitration proceeding would constitute fraud.”114
Courts have adopted demanding standards for annulling an award for fraud. Even if perjury,
or the equivalent, is shown, an award will not be annulled for fraud if the complaining party
“had an opportunity to rebut his opponent’s claims at the arbitration hearing.” 115 English
courts have required a showing of deliberate fraud (not inadvertence or negligence) which
affected the substance of the arbitrator’s decision.116 In one court’s words, “where perjury is
the fraud alleged, i.e., where the very issue before the arbitrators was whether the witness or
witnesses were lying, the evidence must be so strong that it would reasonably be expected to
be decisive at a hearing, and if unanswered must have that result.”117

[C] National Arbitration Legislation Providing Grounds for Annulment More

 Expansive than under UNCITRAL Model Law

As discussed above, the Model Law sets forth a limited, exclusive list of grounds for
annulling awards which is closely modeled on Article V of the Convention (for non-
recognition of awards). This is consistent with the approach in many jurisdictions, where
only limited grounds, either paralleling or more limited than those in the Convention, are
available for annulling an award.118
In contrast, other arbitration statutes permit awards to be annulled on additional grounds,
not contained in either the Model Law or the Convention. As noted above, most authorities
have concluded that the Convention does not limit the grounds that may be invoked to annul
an award in the arbitral seat, a position which is relied upon to justify non-Article V bases
under national law for annulling awards. Accordingly, a number of national arbitration
statutes provide for annulment of awards on more expansive grounds than those available
under the M odel Law.119
Nonetheless, the trend in recent decades has been towards adopting the Model Law’s
limited list of annulment grounds, and away from more expansive bases for annulment.
Although states have generally not abandoned any judicial review of international awards,
they have tended to strictly limit the grounds of review to those set forth in the Model Law.
This approach has been motivated by a recognition of the parties’ objectives in entering into
international arbitration agreements, and in particular their desire for prompt, expeditious
dispute resolution, with little or no judicial review of the merits of the arbitrators’ award.

[1] Substantive Review of Merits of Arbitrators’ Decision

One of the most commonly-encountered bases for annulling awards which does not exist
under the Model Law involves substantive review of the merits of the arbitrators’ decision.
Although not available under the Model Law, this type of review is available in a number of
states. Substantive review of the arbitrators’ decision can take many forms, and can involve
varying degrees of judicial deference to the arbitrators’ determinations. All of these forms of
substantive review differ fundamentally from the bases for annulment under Article 34 of the
Model Law and for non-recognition under Article V of the Convention: they concern the
correctness of the arbitrators’ ultimate decision, rather than objections to the arbitral
procedure, the arbitrators’ impartiality or jurisdiction, or matters of public policy.
The past several decades have seen a progressive abandonment of judicial review of the
substantive grounds for arbitral awards, including in the Model Law and (potentially) the
United States.120 Indeed, a central element of the contemporary international arbitral process
is the general absence of judicial review of the merits of the tribunal’s award.
 Despite a trend away from any judicial review of the merits of awards, deriving in large
part from the Model Law’s approach to the issue, a number of jurisdictions continue to
provide for annulment of international awards based upon such review. These jurisdictions
include England, Ireland, China, Australia, Singapore, Abu Dhabi, Libya, Saudi Arabia, Egypt
and the United States (arguably).121 Additionally, courts in other jurisdictions sometimes
come close to, or engage in, a form of judicial review of the merits of the arbitrators’ award in
the context of a public policy or excess of authority analysis.122
Even in states which permit judicial review of the merits of the arbitrators’ decision, this
review is usually highly circumscribed and available only to correct egregious legal (and not
factual) errors. Indeed, as discussed above, there is a substantial argument that de novo
judicial factual or legal assessment of the parties’ dispute in an annulment action violates the
Convention.123
Under the FAA, in the United States, courts have for a number of decades applied a
“manifest disregard of law” standard of review, including to applications to vacate
international awards made in the United States. There is a substantial body of U.S. authority
on the “manifest disregard” standard; the overwhelming weight of this authority recognizes a
very narrow, seldom-exercised power of judicial review of the arbitrators’ substantive legal
rulings. In one court’s colorful explanation: “Arbitrators do not act as junior varsity trial
courts where subsequent appellate review is readily available to the losing party.”124
Rather, the manifest disregard standard is akin to public policy analysis, requiring that the
tribunal have been aware of controlling legal authority and deliberately chosen to disregard it
– hence, the phrase “manifest disregard of the law.” One leading U.S. decision explains the
doctrine as follows:

The two-prong test for ascertaining whether an arbitrator has manifestly disregarded the
law has both an objective and a subjective component. We first consider whether the
“governing law alleged to have been ignored by the arbitrators [was] well defined,
explicit, and clearly applicable.” [Second,] [w]e then look to the knowledge actually
possessed by the arbitrator. The arbitrator must “appreciate[ ] the existence of a clearly
governing legal principle but decide[ ] to ignore or pay no attention to it.” Both of these
prongs must be met before a court may find that there has been a manifest disregard of
law.125

Whatever its precise formulation, “manifest disregard” concerns issues of law, and not fact or
contractual interpretation. In most instances, U.S. courts have declined to inquire at all into
the correctness of arbitrators’ factual conclusions or contract interpretations (as distinguished
from interpretations of the law).126
 Recently, the U.S. Supreme Court suggested that the FAA’s statutory grounds for vacatur
(annulment) of an award are exclusive, arguably leaving no room for the manifest disregard
doctrine.127 Subsequent lower court authority is divided, with a number of courts holding
that the FAA does not permit vacatur on “manifest disregard” grounds.128
English law provides an approach to judicial review of the merits of an award which is
broadly similar to the “manifest disregard” standard in the United States. Section 69 of the
English Arbitration Act provides that, in a limited category of cases, an award may be subject
to appellate review by the English courts for substantive errors of law. Section 69 only
applies “unless otherwise agreed by the parties,” who will be held to have impliedly excluded
§69 by incorporating institutional rules that limit the right of appeal to the extent permitted
by law (such as the ICC Rules).129 Even when the parties have not excluded its application,
§69 applies only to questions of English (not non-English) law (not facts), and then only to
issues of English law that are of public significance or where the award was obviously
wrong.130
Applying §69, English courts have emphasized that “a major purpose of the new Act was
to reduce drastically the extent of intervention of courts in the arbitral process.”131 Similarly,
an English court should not, in an annulment action, approach the award “with a meticulous
legal eye endeavoring to pick holes, inconsistencies and faults and with the objective of
upsetting the process of arbitration. Far from it. The approach is to read an arbitration award
in a reasonable and commercial way, expecting, as is usually the case, that there will be no
substantial fault that can be found with it.”132
A limited number of other legal systems provide grounds for limited substantive review of
arbitral decisions. Under Chinese law, an award may be annulled if the court concludes that
the evidence was insufficient or the application of law was truly incorrect.133 That resembles
standards in a few other jurisdictions.134 At least in verbal formulation, these provisions
contemplate only a limited appellate review of the legal (not factual) conclusions of the
arbitrators, permitting annulment only in cases involving serious errors.
As noted above, many jurisdictions do not permit annulment on the basis of substantive
review of the arbitrators’ decision. That is true under the Model Law, as well as many other
arbitration statutes.135 Court decisions in these jurisdictions underscore the fact that judicial
review of the merits of the award and reasoning is not permitted. For example, Swiss courts
have emphasized, in detailing the nature of review in an annulment proceeding, that “it is not
sufficient that the evidence be improperly weighed, that a factual finding be manifestly false,
that a contractual clause not have been correctly interpreted or applied or that an applicable
principle of law has been clearly breached.”136
At the same time, some courts which abjure inquiry into the substance of awards
nonetheless appear to permit review which is arguably similar to the “manifest disregard”
standard in the United States and comparable standards of limited judicial review in England.
Despite rejecting any substantive review of the arbitrators’ award, the Swiss Federal Tribunal
has held that the principle of pacta sunt servanda is a matter of public policy and would be
violated if a tribunal “refuse[d] to apply a contractual clause while admitting it binds the
parties or to the contrary imposing on them a clause that does not bind them.”137 This
analysis is arguably equivalent to the manifest disregard standard in the United States (and
apparently goes further by extending beyond “law” to contractual terms). Nonetheless, the
basic principle in most jurisdictions remains that an international award can be annulled on
the basis of a substantive review of the arbitrators’ decision in only the rarest cases, if at all.

[2] Internally-Contradictory Awards

Some legal regimes provide for the annulment of awards that are internally-contradictory or
inconsistent. For example, Article 1704(2)(j) of the Belgian Judicial Code provides that an
award may be annulled if it “contains conflicting provisions.” National law in several other
jurisdictions is similar.138 The rationale of these rules is that an award that is contradictory is
either not reasoned (since contradictory reasons are supposedly the equivalent of no reasons)
or violates public policy (since it mandates inconsistent results).
Courts in other jurisdictions have rejected the notion that awards may be annulled because
they are internally-inconsistent. French courts have reasoned, for example, that “the
argument based on the contradiction of the reasoning of the arbitral decision [is] not
admissible.”139 Similarly, U.S. courts have held that confused or inconsistent reasoning in an
award is insufficient grounds to vacate it, on “manifest disregard” grounds or otherwise.140
Even where this ground for annulment of an award is accepted, there are narrow limits on
internal inconsistency as a basis for annulment. Mere inconsistencies in an award’s reasoning
do not constitute grounds for annulling the award. Rather, an award’s dispositive provisions
must contain irreconcilable grants of relief (for example, both dismissing a claim and granting
relief on the same claim). In determining whether an award is internally-inconsistent, courts
generally assume that the tribunal intended to make a coherent decision and use every effort
to interpret the award’s provisions in a consistent manner.

[3] Formal Defects

Under some arbitration regimes, formal defects in an award are grounds for annulment. These
defects can include failure to sign an award,141 failure to provide reasons142 and failure to
comp ly with other formal requirements for an award (e.g., date, place).143 In other
jurisdictions, violations of form requirements may not constitute grounds for annulment or
may be waivable.144 As a practical matter, even in jurisdictions where formal defects in an
award are possible grounds for annulment, courts often permit corrections by the tribunal or
consider carefully whether formal defects have any impact on the parties’ substantive rights.

[4] Other Grounds for Annulment

Some courts also rely on grounds for annulment which nominally parallel those regarding an
opportunity to be heard (under Article 34(2) of the Model Law), but that in reality are much
broader. This approach can manifest itself through decisions based on local procedural
idiosyncrasies,145 broad non-arbitrability rules,146 non-compliance with local statutory
formalities,147 or creative constructions of local law to fashion additional grounds for
annulment.148 Other jurisdictions have permitted the annulment of awards based on a stated
objective of protecting local economic interests.149 As discussed above, many authorities
have held that the Convention does not impose any limits on a Contracting State’s annulment
of awards made on its territory. Nonetheless, as discussed above, there are substantial
arguments that many of these grounds for annulment violate the structure and purposes of
the Convention, by rendering the parties’ agreement to arbitrate ineffective.150

[D] National Arbitration Legislation Providing Grounds for Annulment Less

Expansive than under UNCITRAL Model Law

A few jurisdictions have adopted legislation providing very narrow grounds for annulling
international awards. Under French law, the grounds for annulment of an international award
made in France are identical to those available for non-recognition of foreign awards.151 In
both instances, the showings required for annulment are more limited than those under Article
V of the Convention – reflecting a pro-arbitration legislative approach. Swiss law adopts a
similar approach to annulment of awards made in Switzerland.152
In some cases, national arbitration legislation has (or has had) prohibitions against any
application to annul an award made locally. This was the approach taken for a time by
Belgium, which in 1985 enacted an innovative statute that abolished all rights to seek
annulment of awards made in Belgium between non-Belgian parties. After this legislation
attracted a reasonable amount of skepticism (and few arbitrations), Belgium amended the
statute to provide foreign parties with the option of waiving the right to seek annulment, but
retaining the availability of annulment proceedings in cases where no such waiver existed.153
 A similar approach to that in Belgium was partially adopted in Malaysia. Until recently,
the Malaysian Arbitration Act provided for no judicial review of ICSID, UNCITRAL, or
Kuala Lumpur Regional Arbitration Centre awards. 154 In 2005, however, Malaysia amended
its arbitration legislation, whose annulment provisions now parallel the UNCITRAL Model
Law.

§16.04 AGREEMENTS WAIVING RIGHT TO SEEK ANNULMENT OF

INTERNATIONAL ARBITRAL AWARD
Some arbitration agreements seek to alter the otherwise applicable standards under national
law for annulling awards. These agreements typically either waive any right to seek
annulment or restrict the grounds on which annulment can be sought. In other instances,
parties take the opposite approach and agree to permit more extensive judicial review of an
award. Both types of agreements raise questions of enforceability, as well as interpretation,
under national law and the New York Convention.

[A] Agreements Excluding or Limiting Applications to Annul International

Arbitral Award

Provisions in some arbitration agreements purport to waive or exclude any judicial review of
an award. Such provisions most frequently take the form of waivers or exclusions
incorporated from institutional rules. Thus, most leading institutional rules provide, with
varying degrees of specificity, for the waiver of judicial recourse against the arbitrators’
award.155 Alternatively, some recommended arbitration agreements include specific waivers
of rights to seek annulment or revision of the arbitrators’ award. For example, arbitration
clauses sometimes contain language to the effect that “the parties agree that any arbitral
award under this Article [X] shall be final and binding and not to appeal or seek annulment or
other review of such award.”

[1] National Arbitration Legislation Permitting Agreements to Exclude or

Limit Annulment

Some arbitration legislation addresses the enforceability of such agreements, typically by

giving effect to them in at least some circumstances. As already discussed, the English
Arbitration Act permits exclusion clauses, by which parties waive their rights to judicial
review of the substance of the award (under §69 of the Act). English law does not, however,
permit broader waivers of the right to set aside an award for either jurisdictional objections or
serious irregularity affecting the tribunal or the proceedings.156
Belgium provides a similar, but more expansive, approach, applicable in cases where the
parties have no relationship to Belgium. As discussed above, Belgium amended its arbitration
statute (in 1998) to permit annulment of awards made in Belgium, except where foreign
parties had agreed to exclude or limit annulment applications.157 The statute leaves little
question but that such agreements are presumptively valid and enforceable, between non-
Belgian parties, regardless of the grounds on which annulment might be sought.
Current Swiss law is similar to the revised Belgian legislation. Articles 190 and 192 of the
Swiss Law on Private International Law provide Swiss courts with jurisdiction over
applications to annul awards made in Switzerland, while also specifying that non-Swiss
parties may agree to exclude or limit such applications.158 Non-Swiss parties are statutorily-
authorized to waive either some or all of the grounds for annulment specified in Article 190.
A few other arbitration statutes are similar, providing that parties (typically limited to
foreign parties) may waive or limit the grounds for annulling international awards.159
National court decisions, including in Model Law jurisdictions, also uphold the validity of
agreements excluding the right to annul an award.160

[2] National Arbitration Legislation Invalidating Agreements to Exclude or

Limit Annulment

Arbitration legislation in some states provides that agreements waiving or restricting the
parties’ rights to seek annulment of an award are unenforceable. A few U.S. courts have also
reached this result, including with regard to actions to vacate awards on “manifest disregard”
grounds,161 as have some French162 and Canadian163 courts. The rationale is that it is
essential to the legal protection of the parties, and the national legal order, that there be at
least some judicial control over the arbitral process.
A limited number of U.S. authorities are to the contrary – permitting parties to waive
vacatur rights, provided the waiver is explicit.164 These decisions appear to be a minority
view, and may be contrary to the U.S. Supreme Court’s decision in Hall Street Associates
LLC v. Mattel, Inc. (discussed below), holding that the FAA’s standards for judicial review of
awards are exclusive and cannot be expanded by contract.165 Whatever its wisdom as a
matter of policy and statutory interpretation, the Supreme Court’s rationale, that the FAA is
exclusive and mandatory, arguably extends to waivers of judicial review.

[3] Interpretation of Agreements to Exclude or Limit Annulment

Assuming that agreements to waive judicial review in an annulment action are in principle
enforceable, questions arise as to what constitutes such an agreement. Most jurisdictions
have required that such waivers be relatively unequivocal and specific. In Switzerland, it is
clear that a waiver of rights to seek annulment of an award must be express: Swiss courts
have held that an agreement to arbitrate under institutional rules providing that the award is
“final and binding” or “without appeal” does not suffice to waive judicial review in an
annulment proceeding.166 Australian and Canadian courts have reached similar results. 167
Those U.S. courts which permit waiver of rights to seek vacatur of an award have also
required clear language effecting such a result.168

[B] Agreements for Heightened Judicial Review of International Arbitral

Awards

Parties sometimes enter into agreements providing for more extensive (rather than less
extensive or no) judicial review of awards. They do so because of a desire for additional
procedural rights to correct mistaken awards. Nonetheless, in many countries, agreements for
heightened judicial review are disfavored and serious doubts exist as to their enforceability.
The most extensive body of authority considering agreements for heightened judicial
review is from the United States, where some courts initially upheld such provisions,169
while others did not.170 The U.S. Supreme Court recently considered the validity of
agreements providing for heightened judicial review of domestic arbitral awards, in Hall Street
Assoc., LLC v. Mattel, Inc., holding that the FAA’s statutory grounds for vacatur were
exclusive and that the “statutory grounds for prompt vacatur and modification may [not] be
supplemented by contract.”171 Decisions in a few other jurisdictions have also refused to
give effect to agreements providing for heightened judicial review of awards.172 It is doubtful
that these decisions can be justified as a matter of policy, given the central role of party
autonomy in the arbitral process, but for the moment they reflect the prevailing view in
national courts.

§16.05 CONSEQUENCES OF ANNULLING INTERNATIONAL ARBITRAL

AWARD

As noted above, significantly different consequences flow from (a) a national court’s refusal
to recognize an arbitral award, as compared with (b) a court’s decision annulling or setting
aside the award. If an award is denied recognition outside the place of the arbitration, the
award nonetheless remains in existence as a “binding” award. The award can be taken to other
jurisdictions and applications to recognize it filed again. No judicial act has purported to
“annul” or “vacate” the award, or to render it non-existent; instead, the non-recognition
decision holds only that the award will not be recognized in a particular state.
In contrast, if an award is “annulled,” “set aside,” or “vacated” in the place where it was
made, then it arguably ceases to have legal existence (or becomes null), at least under the laws
of the state where it was annulled, just as an appellate decision vacates a trial court judgment.
When the “award” is taken by the award-holder to other jurisdictions, the award-debtor can
be expected to argue that there is no longer any award to be recognized. For some years after
the Convention came into force, this premise was accepted, albeit without analysis, and
awards which had been annulled in the seat were denied recognition elsewhere.173
More recently, however, decisions in the United States, France, Belgium and Netherlands
have all held that an award may (and in some cases must) be recognized by foreign courts
even if the award has been annulled in the seat. In contrast, other courts (including some U.S.
courts) have taken the opposite view. They have concluded either that annulment of an
award in the place of arbitration renders the award a nullity, which other states need not, and
generally should not, recognize or enforce, or that an annulment decision in the seat should
ordinarily be accorded deference in other jurisdictions.

[A] Authorities Permitting Recognition of Annulled Awards

The Convention does not prescribe the effects of either annulment or non-recognition of an
award. As discussed above, Articles V and VI of the Convention contemplate actions to
annul an award in the place of arbitration (but not elsewhere).174 Article V(1)(e) goes on to
provide that a Contracting State’s courts “may” decline to recognize an award if it has been
“set aside by a competent authority of the country in which” it was made. Article V(1)(e) is
clearly drafted to permit non-recognition of annulled awards, but its language neither requires
non-recognition of an annulled award nor articulates standards for when non-recognition of
such an award is appropriate and when it is not.
Additionally, Article VII provides that the Convention shall not “deprive any interested
party of any right he may have to avail himself of an arbitral award in the manner and to the
extent allowed by the law or the treaties of the country where such award is sought to be
relief upon.” Article VII leaves little question but that, if national law will give effect to
annulled awards (or awards otherwise not subject to mandatory recognition), nothing in the
Convention forbids this. Textually, the language of Articles V and VII strongly suggests that
an annulled or suspended award may – but need not – be denied recognition in other
Contracting States.175

[1] Recognition of Annulled Awards in European Jurisdictions

French courts have long held that a foreign award which has been annulled in the seat may be
recognized in France. In 1984, the Cour de cassation reversed a lower court judgment, which
had applied Article V(1)(e) to deny recognition to an award that had been made, and then
annulled, in the seat (Austria).176 The Cour de cassation relied on Article VII of the
Convention, which it held preserved the more liberal French regime (under Article 1502 of the
Code of Civil Procedure) for recognizing foreign awards, and remanded the case to determine
whether the annulled award was entitled to recognition under French law.
Subsequently, in the long-running “ Hilmarton affair,” French courts twice recognized an
award made in Switzerland, which had been annulled by the Swiss courts. Again, the courts’
analysis rested on Article VII and the liberal recognition standards of the French Code of
Civil Procedure.177 More recently, the Cour d’appel recognized an award, made and then
annulled in Egypt, in favor of a U.S. company (Chromalloy) and against an Egyptian state
entity. The Court reasoned:

A French judge may refuse to grant exequatur only in cases specified and limitatively
enumerated by Article 1502 of the New Code of Civil Procedure which is his national
law in this matter and on which Chromalloy is thus authorized to rely. Article 1502
does not contain a number of grounds for refusal of recognition and enforcement which
are provided in Article V of the New York Convention, the application of which,
consequently, is precluded. The award made in Egypt is an international award which,
by definition, is not integrated in the legal order of that State so that its existence
remains established despite its being annulled and its recognition in France is not in
violation of international public policy.178

A number of other civil law jurisdictions adopt the same analysis. For example, in a case not
subject to the New York Convention, a Belgian court held that annulment of an award in the
seat did not prevent its recognition in Belgium. The court relied on the omission from Article
1723 of the Belgian Judicial Code of any exception to recognition of an award that was
annulled in the seat; that rationale would apply equally under the Convention.179 Austrian
and Dutch courts have reached similar results.180

[2] Recognition of Annulled Awards in United States

U.S. courts have adopted inconsistent approaches to the recognition of awards annulled in
the seat. The best-considered U.S. decision remains a 1996 opinion in Chromalloy Gas
Turbine Corp. v. Arab Republic of Egypt. 181 There, the U.S. court recognized an award made
in Cairo, in favor of a U.S. company, against Egypt – notwithstanding the fact that an
Egyptian court had subsequently annulled the award on the grounds that the arbitrators had
supposedly misapplied Egyptian law.
The Chromalloy court relied first on the fact that Article V(1) of the Convention provides
only that a Contracting State “may” decline to recognize an award if one of the provision’s
exceptions applies: “Article V provides a permissive standard, under which this Court may
refuse to enforce an award.”182 The court reasoned that the Egyptian annulment decision
would permit – but not require – non-recognition of the award under Article V(1)(e). The
court then went on to rely on Article VII, much as French decisions have done. Consistent
with long-standing U.S. authority, the Chromalloy court interpreted the FAA as establishing
a national policy favoring enforcement of international arbitration agreements and awards.183
T h e Chromalloy court concluded its analysis by deciding that the Egyptian judicial
decision annulling the award was not entitled to recognition (and instead that the annulled
award was entitled to recognition). The court’s analysis with regard to this issue focused on
the specific grounds for the Egyptian annulment decision and the parties’ arbitration
agreement. In particular, the U.S. court reasoned that the Egyptian judicial decision violated
both a fundamental U.S. public policy (against detailed substantive judicial review of awards)
and the parties’ arbitration agreement (which had waived any such review).
Subsequent U.S. decisions have generally upheld the reasoning in Chromalloy, but
nonetheless typically concluded that particular awards, which had been annulled in the seat,
were not entitled to recognition. Thus, in Baker Marine Ltd v. Chevron Ltd, the court
accepted Chromalloy’s conclusions that Article V(1)(e) of the Convention permits (but does
not require) non-recognition of annulled awards and that Article VII allows recognition of
Convention awards under U.S. law. 184 Nonetheless, unlike Chromalloy, the Baker court held
that the award-creditor had “shown no adequate reason for refusing to recognize the
judgments of the Nigerian court” annulling the award.185
Similarly, another U.S. court refused to recognize an annulled award (made and then set
aside in Italy) in Martin I. Spier v. Calzaturificio Tecnica .186 Again, the court approved the
basic analysis in Chromalloy (with regard to Articles V(1)(e) and VII of the Convention), but
nonetheless held that the award-creditor had shown no reason to refuse recognition of the
foreign court’s annulment decision. In particular, the U.S. court emphasized that “all three
Italian courts nullified the award on the ground that in making it the arbitrators had exceeded
their powers, a ground for vacatur under the FAA.”187
In sum, the approach of U.S. courts to the recognition of annulled awards is evolving, but
appears less likely than that of French (and other European) courts to recognize awards
annulled in the seat. U.S. courts accord substantial importance to the “primary jurisdiction”
of the courts of the arbitral seat; nonetheless, U.S. courts will recognize awards that have
been annulled in the seat, although only where there are sufficient justifications for denying
effect to the foreign court’s annulment decision. In particular, U.S. courts will likely disregard
annulment decisions relying on a substantive review of the tribunal’s decision, at least where
these decisions ignore contractual waivers of judicial recourse against the substance of an
award. It also appears probable that U.S. courts would recognize foreign awards where a
foreign annulment decision relied on local public policy or non-arbitrability principles, as well
as where foreign annulment proceedings were procedurally tainted. In contrast, U.S. courts
will likely deny recognition to an annulled award, instead relying on foreign courts’
annulment decisions, where annulment was based on a ground analogous to one of the
exceptions available for non-recognition in Article V(1).

[3] Judicial Decisions Refusing to Recognize Annulled Awards

In contrast to most other authorities, a few early decisions declined to consider the
recognition of awards that were annulled in the place where they were made.188 These
decisions generally contained little analysis, apparently resting on the (mistaken) notion that
an award “ceases to exist” when it has been annulled in the arbitral seat.
As these decisions suggest, if an award is annulled where it was made, enforcement
elsewhere will be more difficult as a practical matter. Foreign courts will typically be
influenced by judicial decisions in the place of arbitration and can be expected to review an
award with particular care in these circumstances. Nonetheless, as discussed above, there is
now an impressive list of cases in which courts have recognized foreign awards even after
they have been annulled in the arbitral seat.

§16.06 CORRECTIONS, INTERPRETATION AND SUPPLEMENTATION

OF INTERNATIONAL ARBITRAL AWARDS
There will inevitably be cases where an award has an obvious mistake. Most arbitration
legislation and institutional rules therefore provide mechanisms for correcting awards. Even
where legislative mechanisms do not exist, courts have fashioned limited means of correcting
mistaken awards. These various legislative and judicial actions prevent the unacceptable
possibility that a party find itself bound by an award ordering relief that is plainly mistaken
and that the arbitrators did not intend to grant.

[A] Correction of Awards

[1] Correction of Awards under National Arbitration Legislation

Most arbitration statutes permit the correction of awards, virtually always by the arbitrators
(rather than by a national court), even where the parties have not agreed to confer such
authority. A statutory basis for corrections overcomes limitations on a tribunal’s powers
after its final award has been rendered and provides a framework (including procedures and
time-tables) for making corrections. Most arbitration statutes also narrowly limit the
circumstances in which corrections may be sought.189

[i] UNCITRAL Model Law

Article 33 of the Model Law provides that “within thirty days of receipt of the award,” a
party may “request the arbitral tribunal to correct in the award any errors in computation,
any clerical or typographical errors or any errors of similar nature.” The tribunal is required,
if it accepts the request, to “make the correction ... within thirty days of receipt of the
request.” The tribunal is also authorized to make corrections to its award “on its own
initiative,” within the same time limit (i.e., thirty days of receipt of the award by the parties).
The Model Law’s provisions regarding corrections reflect the prevailing approach towards
corrections in most jurisdictions – essentially, a necessary evil that is tolerated, but not
encouraged, and carefully regulated. Notably, corrections are only available within a very
limited time period (for both requesting and making a correction) following notification of the
award and for only very limited reasons. These restrictions safeguard the finality of awards,
limit uncertainty and prevent ongoing disputes after an award has been made.
Only narrow categories of “errors” may be corrected under the Model Law. In particular,
only “errors in computation, ... clerical or typographical errors or ... errors of similar nature”
may be corrected. Article 33(1) is directed towards arithmetic mistakes or typographical
errors (e.g., failure to include one of a number of categories of damages, which have been
found payable in the dispositive section of the award, when this was clearly intended). In
contrast, errors in the tribunal’s reasoning in the body of its award are not subject to
correction. Even if a tribunal misunderstands or overlooks some critical provision of the
parties’ agreement or some essential piece of evidence, the remedy is not correction of the
award under Article 33, but rather an application to annul.190

[ii] Other National Arbitration Legislation

Most other arbitration regimes are broadly similar to the Model Law approach, permitting
only very limited correction of mistakes in drafting the dispositive part of the award, not
corrections in the tribunal’s reasoning, while imposing very short time-limits. 191 A tribunal
itself may also correct the award on its own initiative within equally short time limits.192
[iii] Federal Arbitration Act

One significant departure from the foregoing approach is the FAA in the United States.
Section 11 of the FAA provides that a U.S. court – rather than an arbitral tribunal – may
“make an order modifying or correcting the award” if “there was an evident material
miscalculation of figures or an evident material mistake in the description of any person, thing
or property referred to in the award,” or if the award “is imperfect in matter of form not
affecting the merits of the controversy.” Section 11 does not address the parties’ ability to
agree upon alternative modes of correction, for example by incorporating institutional rules,
but U.S. courts have upheld such agreements.193

[2] Correction of Awards under Institutional Arbitration Rules

Most institutional rules provide arbitrators with authority, within specified time limits, to
make corrections, interpretation or additional awards.194 Most authorities hold that parties
are free to agree upon alternative approaches to the subject of corrections than provided in
arbitration legislation (including through agreement to institutional rules). It has been
suggested that, under the Model Law, parties may not, by agreement, exclude the possibility
of a correction, but this is difficult to square with principles of party autonomy.195
The ICC Rules adopt an effective approach to corrections of awards. The process begins
before an award is finalized and provided to the parties, when the ICC Secretariat and Court
subject the award to scrutiny, pursuant to Article 33 of the ICC Rules. Experience teaches
even the most self-confident tribunal that another set of eyes can be helpful in catching
mistakes. Once an ICC award has been made (and notified to the parties), Article 35 of the
2012 ICC Rules provides that the tribunal may, on its own initiative or at a party’s request,
“correct a clerical, computational or typographical error or any errors of similar nature.” An
application for a correction must be submitted within 30 days from the date of the award.
The ICC Rules provide for expedited submissions by the parties and an expedited decision
by the tribunal.196
The scope of corrections permitted by the ICC Rules is narrow (and closely tracks that of
the UNCITRAL Model Law). Its purpose is to permit corrections of unintended errors in
the tribunal’s statement of the relief granted in the award, as opposed to modifying reasoning
or findings. Application of this formulation is in the hands of the tribunal, and has resulted in
narrow interpretations of the corrections that are permissible under Article 35.197
Other institutional rules are similar, both in providing the arbitrators with the power to
make corrections and in narrowly limiting that authority. In almost all cases, institutional
rules provide for the tribunal to correct “computational,” “clerical” and “similar” errors,
within a limited period (typically, thirty days) from the award. 198 It is clear under most such
rules that only miscalculations and comparable slips – rather than faulty legal analysis or
factual findings – can be the subject of a correction.

[3] Status of Arbitral Tribunal’s Corrections

The decision of the tribunal to correct its award should be considered an integral part of the
initial award. Section 57(7) of the English Arbitration Act provides so explicitly: “Any
correction of an award shall form part of the award.” Other legislation is generally silent on
this point. The dominant view, nevertheless, is that a decision correcting the initial award
cannot be recognized or enforced separately, but instead forms part of the award. 199 In
virtually all cases, a correction will merely alter a portion of the text of an award, typically
substituting one figure (e.g., $ 15,950,000) for another (e.g., $19,550,000) in the relief
awarded.

[B] Interpretation of International Arbitral Awards

Related to the correction of awards is their interpretation. In contrast to a correction, an

interpretation of an award does not alter the previous award’s text, but instead more clearly
explains what such statements were intended to mean, without altering them. In practice, it is
very rare for interpretations to be either sought or granted.

[1] National Arbitration Legislation

Not all arbitration statutes authorize tribunals to make interpretations of their awards.200
Article 33 of the Model Law does so, providing that, “if so agreed by the parties,” a party
may “request the arbitral tribunal to give an interpretation of a specific point or part of the
award.” This provision is subject to the same time limits (i.e., thirty days from the award) as
apply to corrections of an award. Article 33(1)(b) is more limited in its treatment of
interpretations than Article 33’s provisions regarding corrections. Unlike a correction, a
tribunal’s interpretation of its award is only permitted where the parties have previously so
agreed (for example, by incorporating institutional rules).
Article 33(1)(b) also limits the provision of an interpretation to “a specific point or part of
the award,” rather than a review of the tribunal’s overall rationale or relief. Although not
expressly stated, it would appear that an interpretation may be made only as to the
dispositive portions of an award, and not the tribunal’s reasoning. An “interpretation” is
generally limited to cases where the requesting party “points to a portion of the award that is
ambiguous, indeed, that is, a ‘clarification.’”201
Some arbitration statutes parallel the Model Law in providing for interpretations of
awards.202 On the other hand, a number of arbitration statutes omit any provision for
interpretation of awards, including in England, Switzerland and the United States.203 Even
absent statutory authority, however, most legal systems provide some mechanism for either
“correcting” ambiguities or referring the award back to the tribunal for clarification.204

[2] Institutional Arbitration Rules

Institutional rules are broadly similar in their treatment of interpretations. Article 37 of the
UNCITRAL Rules provides that, within thirty days of the award, a party may “request that
the arbitral tribunal give an interpretation of the award.” Unlike the Model Law, the Rules
impose no limitation on the type or nature of the interpretation which may be sought. A
number of other institutional rules also provide for interpretations of awards.205 These
provisions will generally be given effect, even where applicable law in the seat is silent
regarding the subject.
A request for an interpretation may not be used to challenge the tribunal’s reasoning or
relief. In practice, requests for interpretation will ordinarily only be successful if directed to
specific portions of the dispositive part of the award. For example, interpretations have been
issued to clarify the geographic/temporal scope of royalty obligations and the claims that
have and have not been resolved.206
A few institutional rules, including the LCIA Rules and the WIPO Rules, do not expressly
provide for interpretations of awards.207 If both institutional rules and national law are silent
concerning the interpretation of an award, the better view is that this power is inherent (for a
reasonable period of time after the award) in the arbitrators’ mandate.

[C] Supplementation of International Arbitral Awards

Another category of post-award relief involves the supplementation of an award, by
addressing matters omitted from the tribunal’s decision. The making of an additional award is
generally confined to claims that were advanced during the arbitral proceedings, but which
have not been decided in the tribunal’s award. After making its final award, the tribunal has
no power to entertain a new claim, which was not previously advanced during the arbitration.
If a tribunal fails, or is unable, to make an additional award addressing a claim that was
presented during the arbitral proceedings, then its award will be subject to annulment or non-
recognition (on grounds of infra petita).

[1] National Arbitration Legislation

Many arbitration statutes authorize the making of supplementary awards (in limited
circumstances) by the tribunal. Article 33(3) of the Model Law is representative, providing
that, unless otherwise agreed by the parties, the tribunal may “make an additional award as to
claims presented in the arbitral proceedings but omitted from the award.” Applications
seeking an additional award must be made within the same thirty day time limit as applies to
corrections and interpretations of awards under the Model Law; the tribunal is empowered to
make an additional award “within sixty days.”208 In contrast to corrections, the power to
make additional awards under Article 33(3) is subject to contrary agreement by the parties.
Article 33(3) provides a mechanism for a tribunal to resolve claims that might otherwise
lead to an “excess of authority” (or infra petita) challenge to an award under Article V(1)(c) of
the Convention (and analogous national law provisions). The mere fact that a tribunal has not
expressly addressed a particular claim does not automatically require issuance of an additional
award: a tribunal may be taken to have impliedly rejected claims as to which it does not grant
relief (although the better practice is to address issues explicitly, although the failure to do so
may give rise to claims that the award is, in some respects, unreasoned).
Other arbitration legislation also includes provision for additional awards, to address
matters omitted from the arbitrators’ final award. 209 Some legislation (particularly older
enactments) omits express power on the part of a tribunal to make additional awards.210
Nonetheless, as with corrections and interpretations, most courts have permitted tribunals to
cure omissions from their awards, even absent statutory authorization.211 This accords with
the parties’ presumptive intentions (which would be to authorize the tribunal to complete
the mandate assigned to it). In the United States, a few courts have followed the common law
rule, unaltered by the FAA, that the tribunal is functus officio upon rendering its final award
and unable to make further awards, but this is unusual (and unwise).212

[2] Institutional Arbitration Rules

Many institutional rules also provide for the making of additional awards by the tribunal,
following its “final” award. For example, Article 39 of the UNCITRAL Rules provides that,
within thirty days of the award, either party may request the tribunal “to make an award or
an additional award as to claims presented in the arbitral proceedings but not decided by the
arbitral tribunal.” Other institutional rules are similar.213
 Where national arbitration legislation does not provide for supplemental awards, but
institutional rules do, there is no reason not to give effect to the latter. Indeed, a failure to do
so would disregard the parties’ agreement to arbitrate, in violation of both the New York
Convention and most developed arbitration legislation.

[D] Remission of International Arbitral Award to Arbitral Tribunal

Some arbitration legislation provides for the possibility of “remitting” an award to the
tribunal, after an application to annul the award has been filed. In effect, this permits a court,
presented with an annulment application, to allow the arbitrators an opportunity to take
further steps, which might render the annulment application unnecessary. Article 34(4) of the
UNCITRAL M odel Law is representative, providing that:

The court when asked to set aside an award, may, where appropriate and so requested
by a party, suspend the setting aside proceedings for a period of time determined by it
in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or
to take some other action as in the arbitral tribunal’s opinion will eliminate the ground
for setting aside.

The powers under Article 34(4) are rarely invoked (with there apparently being no reported
decisions applying the provision). A number of states which have adopted the Model Law
have omitted Article 34(4). Even absent statutory authority, the authority to remit an award
to the tribunal, and for the tribunal to reconsider obvious errors, ambiguities, or omissions, is
arguably implicit in the parties’ arbitration agreement.

[E] Revocation of Fraudulently-Obtained Arbitral Awards

It is possible in some jurisdictions to “revoke” an award that has been obtained by fraud. For
example, under French law, a party may seek redress from a tribunal (if it is still functioning
or “can be reconvened”), in the form of a decision revoking an award, on the grounds that it
was fraudulently obtained. According to a leading French decision:

[A]s a consequence of the general principles of law relating to fraud – notwithstanding

the exclusion of review by Article 1507 of the New Code of Civil Procedure – the
rescinding of an award made in France concerning international arbitration is, by way of
exception, to be admitted in the case of fraud, as long as the arbitral tribunal remains
constituted after the making of the award (or can be reconstituted).

Similarly, a Swiss court may return an award to a tribunal if it was influenced by criminal
acts, in order to permit the tribunal to consider such matters.214 Likewise, under English law,
an award can be challenged on the ground of serious irregularity if it had been obtained by
fraud (and the court may then remit the award to the tribunal for reconsideration).215
Under the Model Law, there is no explicit authority for a tribunal to reconsider its award
based on allegations that it was obtained by fraud or corruption. Some authorities have held,
however, that this does not exclude a claim for revision.216 A number of awards have
discussed the possibility that the arbitrators have “inherent powers,” under exceptional
circumstances involving corruption, fraud, forgery, or false testimony, to revise their awards,
although often concluding that there was insufficient evidence of such irregularity.217

[F] Internal Review and Appeal Proceedings

Some institutional arbitration rules provide for the possibility of “internal” appellate review
of an award. As discussed below, a leading example is the ICSID Convention, which provides
for the selection of a review committee to consider applications to nullify awards made by
ICSID tribunals.218 An ICSID Ad Hoc Committee is not a court of appeal. It is limited to the
specific (and narrow) grounds of annulment set forth in Article 52(1) of the ICSID
Convention, and cannot revise a tribunal’s decision even if it believes the merits have been
wrongly decided in the award.
A limited number of other institutional regimes also provide for internal appellate review
of awards. A leading example is the Grain and Feed Trade Association (“GAFTA”), whose
Rules provide that a party may appeal to a standing Board of Appeal within 30 days; in
contrast to an ICSID Ad Hoc Committee, the Board of Appeal can rehear the entire case and
consider new evidence.219 In sport-related matters, the Appellate Division of the Court of
Arbitration for Sport (“CAS”) serves as an appeals body for CAS awards pursuant to Rule
47 of the Code of Sport-Related Arbitration.
Provisions for internal institutional appeals are a departure from the general principles of
finality, and arguably compromise objectives of efficiency. Nonetheless, part of the attraction
of the arbitral process is the parties’ autonomy to adopt procedures tailored to their
particular needs.220 Where parties agree to internal appellate review, the Convention and
modern arbitration legislation generally give full effect to this mechanism.

§16.07 PRECLUSIVE EFFECTS OF ARBITRAL AWARD

Most national laws and institutional rules obligate parties to comply with awards made in
arbitrations in which they participated. In practice, awards are voluntarily respected in a
substantial majority of cases.221 Nonetheless, there are instances in which a party rejects the
outcome of an arbitration, by commencing litigation (or a new arbitration) aimed at relitigating
the parties’ dispute. Alternatively, a party may attempt to litigate related or new claims,
involving similar or identical issues to those addressed in a previous arbitration.
In these cases, most legal systems contain principles of preclusion, formulated in the
context of national court judgments and transposed to the arbitral setting, that give final,
binding effect to arbitral awards. Indeed, these rules are essential to the arbitral system’s
objective of finally resolving the parties’ dispute.

[A] Principles of Preclusion in International Arbitration

Principles of preclusion with regard to national court judgments (as distinguished from
arbitral awards) exist in all jurisdictions. Indeed, it is widely-held that the preclusive effect of
judgments is a general principle of international law. 222 Deeply-grounded considerations of
public policy underlie rules of preclusion. These policies focus on the injustice of permitting
a party to relitigate the same claims and issues against an adversary in repeated proceedings,
imposing both litigation costs and risks, as well as damage to the credibility and resources of
the legal system. These policies are reflected in the Roman maxims, often invoked in
contemporary contexts, nemo debit bis vexari pro una et eadem causae (“no one should be
proceeded against for the same claim”) and interest reipublicae ut sit finis litium (“it is in the
public interest that there should be an end to litigation”).
Although there is essentially universal acceptance of general concepts of preclusion, there
is less agreement on the details of what these principles actually provide. In most states,
there are intricate rules of preclusion, developed mainly in the context of domestic litigation,
prescribing the preclusive effects of prior court judgments (focusing mainly on other
domestic judgments). There are substantial differences in the apparent content of these
doctrines in different states, including differences between civil and common law states.223

[1] Common Law Jurisdictions

In common law jurisdictions, rules of preclusion are generally not codified, but instead based
largely on judicial authority. Most common law states recognize two basic types of
preclusion: res judicata (or “claim preclusion”) and issue estoppel (or “collateral estoppel” or
“issue preclusion”). In broad terms, neither doctrine will be applicable except where there has
been a final judicial judgment, by a tribunal of competent jurisdiction, on the merits of a
claim, involving the same parties (or closely identified “privies” of those parties).224
The doctrine of res judicata provides that a judgment accepting or rejecting a particular
“claim” is binding on the parties to the proceeding that produced the judgment. That is, a
party that has asserted a claim unsuccessfully will be precluded from asserting that same
claim again against the same defendant, while a party which has had a claim adjudicated
against it will be precluded from asserting the non-existence of the claim against the
successful plaintiff.225 Importantly, the notion of a “claim” or “cause of action,” which is
subject to preclusion, is generally defined in common law jurisdictions to include all claims or
rights of legal action that arise out of a single set of facts or a single transaction:226 this has
the effect of extending the preclusive effects of res judicata beyond those claims that were
litigated concerning a transaction in a prior litigation, to also reach claims that might have been
litigated (even if they were not).
Distinct from res judicata (claim preclusion) in common law jurisdictions is that of issue
preclusion (also termed issue estoppel or collateral estoppel). Issue preclusion prevents a
party from relitigating, against a counter-party, an issue of fact or law that was previously
contested and decided in a litigation between the same parties.227 The issue in question must
have actually been litigated between the parties and must have been significant to the court’s
decision in the earlier judgment; issues that were not litigated or that were merely obiter
dictum (not decisive) in the earlier judgment will ordinarily not be subject to issue preclusion.
In some jurisdictions (notably the United States), issue preclusion will operate not only as
between the parties to a prior litigation, but can in some instances be invoked by non-parties,
either defensively or offensively, against a party to the prior litigation.228

[2] Civil Law Jurisdictions

Principles of preclusion are generally formulated less expansively in civil law jurisdictions, as
compared to common law systems. In most civil law jurisdictions, rules of preclusion are the
subject of statutory codification.229 The rationale for rules of preclusion in civil law systems
is similar to that in common law jurisdictions.230
The basic principle of preclusion in civil law jurisdictions is that of res judicata (or claim
preclusion). This principle is statutorily expressed in France’s Code of Civil Procedure
(which parallels that in other civil law jurisdictions) in the following terms:

The judgment which decides in its holdings all or part of the main issue, or one which
rules upon the procedural plea seeking a peremptory declaration of inadmissibility or
any other incidental application, shall from the time of its pronouncement, become res
judicata with regard to the dispute which it determines.231

Additionally, “[i]t is necessary that the thing claimed be the same; that the claim be based on
the same grounds; that the claim be between the same parties and brought by them and
against them in the same capacity.”232
Consistent with these provisions, most civil law jurisdictions apply a relatively restricted
doctrine of res judicata. A “triple identity” requirement – of the same claim, same legal
grounds and same parties – must generally be satisfied before an action will be precluded by a
prior judgment.233 In general, these requirements are interpreted narrowly; among other
things, the scope of the earlier judgment is typically restricted to its dispositive portions
(and, in some cases, the reasoning essential thereto), and the definitions of a “claim” and a
“party” are comparatively narrow.234
It is frequently said that there is no doctrine of issue preclusion in civil law jurisdictions.
That conclusion has surface appeal, but appears to ignore the way in which principles of res
judicata in civil law jurisdictions give preclusive effect to aspects of a judgment’s (or an
award’s) reasoning: as one authority puts it, “the reasons for a decision may partake of the
res judicata effect that applies to the operative part, whenever such reasons are a necessary
adjunct to such operative part.”235 This rule is similar, in many respects, to principles of
issue estoppel or collateral estoppel as applied in common law jurisdictions.

[B] Preclusive Effects of International Arbitral Awards

Principles of preclusion are widely accepted as applying to the awards of international (and
domestic) arbitral tribunals. In addition to their role in national legal systems, principles of
res judicata are also recognized as either a rule of customary international law or a general
principle of law. Thus, the International Court of Justice (and international arbitral tribunals)
have repeatedly given preclusive effect to decisions of other international tribunals.236
Principles of preclusion have been applied specifically with regard to the res judicata
effects of international arbitral awards (as well as decisions by international judicial bodies).
As formulated by one award, “[t]he sanctity of res judicata attached to a final decision of an
international tribunal is an essential and settled rule of international law.” 237 The same
principle has been recognized by the ICJ with regard to arbitral awards.238
Despite widespread acceptance of this general principle, there is limited agreement on the
precise preclusion rules that apply to arbitral awards. As discussed below, rules of
preclusion in international commercial arbitration have been developed largely as a matter of
national law, by reference to preclusion rules developed for judicial judgments in national
courts.239 Consequently, in most jurisdictions, arbitral awards are accorded the same
preclusive effects that national court judgments receive under national law. As a consequence,
preclusion rules for awards vary substantially between different legal systems, with common
law jurisdictions generally affording awards broader preclusive effects than civil law
jurisdictions.

[1] Preclusive Effects of International Arbitral Awards under the New York
Convention

Most courts and commentators have ignored the Convention in considering the preclusive
effects of arbitral awards. That disregard for the Convention is mistaken: the Convention is
best understood as prescribing international standards that ensure the binding character of
arbitral awards and that preclude national courts from denying preclusive effects to such
awards. In this regard, the Convention’s effects with respect to the recognition of awards are
similar to those with respect to recognition of arbitration agreements (where international
standards limit the extent to which courts may deny effect to such agreements).
Article III is central to the Convention. Among other things, Article III provides that
“[e]ach Contracting State shall recognize arbitral awards as binding and enforce them in
accordance with the rules of procedure of the territory where the award is relied upon, under
the conditions laid down in the following articles [particularly Article V].” This commitment
demands not merely that Contracting States “enforce” awards, but also that they “recognize”
such awards as “binding.” That commitment encompasses not merely the obligation to give
formal recognition to awards, but also to give recognition of a nature that makes an award
“binding” on the parties. This type of recognition would not exist if awards did not have
preclusive effects in national courts, preventing parties from relitigating matters that had
already been decided in “binding” arbitral proceedings.240
These consequences also follow from Article II’s requirement that Contracting States give
effect to arbitration agreements. Among the most important rights resulting from an
arbitration agreement are those relating to the preclusive effects of the award: as discussed
above, the purpose and definition of an agreement to arbitrate is to finally resolve the parties’
disputes. The Privy Council has confirmed this, reasoning that an award

conferred upon [the parties] a right which is enforceable by later pleading an issue
estoppel. It is a species of the enforcement of rights given by the award just as much
would be a cause of action estoppel. It is true that estoppels can be described as rules of
evidence or as rules of public policy to stop the abuse of process by relitigation. But
that is to look at how estoppels are given effect to, not at what is the nature of the
private law right which the estoppel recognizes and protects. ... [W]here arbitrators
have, pursuant to the submission of a dispute to them, decided an issue, that decision
then binds the parties and neither can thereafter dispute that decision.241
Similar conceptions of the res judicata effect of awards as a private right conferred on parties
by virtue of their agreement to arbitrate are recognized in other jurisdictions.242 Properly
interpreted, Article II’s requirement that Contracting States recognize arbitration agreements
includes an obligation to give the preclusive effects to awards.
The precise contours of the international preclusion rules, mandated by the Convention,
must be developed by courts and tribunals in light of general principles of international law
and the parties’ expectations in particular cases. Fundamental to this analysis, however, is
the obligation presumptively to treat awards no less favorably, insofar as preclusive effects
are concerned, than national court judgments and to give effect to the terms and objectives of
the parties’ agreement to arbitrate. 243 As discussed below, most jurisdictions have applied
rules of preclusion to arbitral awards which are consistent with this analysis, generally
treating such awards as identical for preclusion purposes to national court judgments.

[2] Preclusive Effects of International Arbitral Awards under UNCITRAL

Model Law

The text of the UNCITRAL Model Law is silent on the subject of the preclusive effects of
an award. The only relevant provision is Article 35(1), providing that “[a]n arbitral award,
irrespective of the country in which it was made, shall be recognized as binding.” While
implying that an award has preclusive effects, Article 35(1) neither states this expressly nor
indicates what those effects are.
Some jurisdictions that have adopted the Model Law have added provisions addressing the
preclusive effects of an award. The German version of the Model Law provides (in §1055 of
the ZPO) that “the arbitral award has the same effect between the parties as a final and
binding court judgment.” Similarly, Article 45(1) of the Japanese Arbitration Law provides:
“[a]n arbitral award (irrespective of whether or not the place of arbitration is in the territory
of Japan ...) shall have the same effect as a final and conclusive judgment.” Consistent with
the Convention’s requirements, these provisions equate awards to judicial judgments, entitled
to the same preclusive effects as such a judgment.

[3] Preclusive Effects of International Arbitral Awards in the United States

Under U.S. law, the preclusive effects of awards are broadly similar – but not necessarily
identical – to those of judgments. There is no U.S. federal statutory provision – whether in
the FAA or otherwise – that prescribes any preclusive effects of awards, but these effects
have nonetheless been repeatedly upheld by U.S. courts. As discussed below, under U.S.
law, an award has preclusive effects both before it has been judicially confirmed under the
FAA and (even more clearly) after judicial confirmation. In any case, even where an award is
not entitled to preclusive effect, it may be admissible in evidence under U.S. law.244
Once an award is made, judicial confirmation may immediately be sought under §9 of the
FAA. If an award is judicially confirmed under §9, then §13 of the FAA provides that it has
the status of a judgment of the court, entitled to the same preclusive effect under federal Full
Faith and Credit legislation as any other civil judgment of a federal district court.
Unconfirmed awards, however, are not subject to §13 or general federal rules of preclusion
applicable to judgments. “Because federal courts are not required by statute to give res
judicata or collateral-estoppel effect to an unappealed arbitration award, any rule of
preclusion [is] necessarily ... judicially fashioned.”245 Nonetheless, despite the absence of
express statutory authority, U.S. courts have exercised common law powers to develop rules
of preclusion applicable to unconfirmed awards, both domestic and international.
The starting point for rules of preclusion for awards in the United States has been U.S. res
judicata and collateral estoppel standards for judicial judgments. The Restatement (Second) of
Judgments is illustrative, providing in §84(1) that “a valid and final award by arbitration has
the same effects under the rules of res judicata, subject to the same exceptions and
qualifications, as a judgment of a court.”246 The weight of authority adopts the same
analysis, basing preclusion rules for unconfirmed awards on standards for judgments.247
If a party attempts to litigate a claim that it previously has unsuccessfully arbitrated and
that resulted in an award, and the parties to the proceedings are identical or sufficiently
closely identified, U.S. courts have held that res judicata principles bar the subsequent
judicial action.248 Moreover, consistent with general U.S. preclusion principles, most U.S.
courts have also held that res judicata bars claims that could have been, but were not,
asserted in a prior arbitral proceeding.249
The collateral estoppel effects of awards under U.S. law are more complex. Again, the
same basic rules of collateral estoppel are applied to awards as to judgments.250 Thus, U.S.
courts have invoked collateral estoppel where an issue (necessary to a dispute’s outcome)
was raised and actually adjudicated after a full and fair hearing in an arbitration, and the same
issue then arises in subsequent litigation between the same parties.251
U.S. courts have required, for purposes of both claim preclusion and issue preclusion, that
the award be final and binding. No preclusive effects are afforded an award that has been
vacated252 or that does not satisfy the requirements for judicial confirmation (recognition).253
Moreover, an award generally has preclusive effects only as to the parties to an arbitral
proceeding, or their “privies,” save arguably in limited cases of “non-mutual offensive
collateral estoppel.”254
[4] Preclusive Effects of International Arbitral Awards in Other Common
Law Jurisdictions

As in the United States, English law deals with the preclusive effect of awards by common
law authority. English courts have long recognized that principles of res judicata and “issue
estoppel” apply to awards. As explained by a leading decision:

Issue estoppel applies to arbitration as it does to litigation. The parties, having chosen
the tribunal to determine the disputes between them as to their legal rights and duties,
are bound by the determination of the tribunal on any issue which is relevant to the
decision of any dispute referred to that tribunal.255

Applying this analysis, English and other common law courts have given both res judicata
and issue estoppel effects to awards, including in the face of contrary court judgments.256
English courts have also held generally that an award on a claim extinguishes that claim
(which is then merged into the award and capable of recognition only through the award).257
English courts have developed res judicata and issue estoppel doctrines that are broadly
similar to those in the United States. There are, however, important differences between
English and U.S. preclusion rules. In particular, English courts accord substantially narrower
effect to res judicata (or cause of action estoppel) than U.S. courts do, applying it only
where the same claim (requiring the same elements of proof) is applied to the same facts and
where the same time period is involved.258 In contrast, the treatment of issue estoppel under
English law is more similar to that in the United States, albeit with stricter requirements of
mutuality.

[5] Preclusive Effects of International Arbitral Awards in Civil Law

Jurisdictions

Arbitration statutes in many civil law jurisdictions provide that awards are binding on the
parties and have res judicata effect when they are made.259 French law is representative with
Article 1484 of the Code of Civil Procedure providing: “The arbitral award, from the moment
it has been given, shall carry the authority of res judicata in relation to the dispute which it
has determined.” Consistent with this, an award enjoys preclusive effects in most civil law
jurisdictions when it is made (or notified to the parties), regardless whether it has been
deposited with a local court or judicially confirmed.260
In principle, awards are accorded the same preclusive effects in civil law systems as those
that arise from judgments in those systems. As discussed above, this is made explicit by the
German version of the Model Law, which provides in §1055 of the ZPO: “The arbitral award
has the same effect between the parties as a final and binding court judgment.” These
provisions give res judicata effect to final awards on the merits of a dispute, as well as to
jurisdictional or interlocutory awards, insofar as they decide issues that arise in subsequent
proceedings.261
One consequence of the foregoing provisions is that the making of an award in most civil
law jurisdictions gives rise to immediate, enforceable legal rights (subject to actions to annul
the award). These rights include the right to pursue actions to recognize or enforce the award,
to invoke the preclusive effects of the award and to obtain provisional measures in support
of the rights established by the award: an award “constitutes a title in respect of which
protective measures can be sought, the only effect of the suspensive nature of an action to set
it aside being to prevent its enforcement – subject to the possibility of requesting provisional
enforcement from the court hearing the action to set the award aside.”262
The preclusion rules resulting from civil law statutory provisions are roughly comparable
to those in most common law jurisdictions. Nonetheless, important differences exist in the
two systems.
As discussed above, civil law rules of preclusion require an identity of parties. This was
illustrated in two arbitrations involving the Czech Republic – CME Czech Republic BV v.
Czech Republic and Lauder v. Czech Republic.263 There, essentially the same dispute was
arbitrated under virtually identical provisions of two different bilateral investment treaties; in
both cases, the respondent was the Czech Republic, while the claimants were, in one case, a
U.S. entrepreneur and, in another case, a company which the entrepreneur indirectly
controlled and partially owned. In one case, the tribunal issued an award, dismissing the
claims entirely; in the second case, the tribunal refused to give preclusive effect to the first
award and ruled for the claimant. The second tribunal reasoned that there was not the
requisite identity of parties in the two proceedings, because one case involved the
entrepreneur personally and the other involved a separate company. In subsequent
annulment proceedings, a Swedish court rejected challenges to the second award, concluding
that the required identity of parties was not present.264
In principle, an award should have the same preclusive effects in civil law systems in
subsequent arbitral proceedings as it has in national courts. Indeed, some civil law courts have
held that res judicata is a matter of public policy, binding in later proceedings.265

[6] Choice of Law Governing Preclusive Effect of Arbitral Awards

The preclusive effect of international arbitral awards raises important choice-of-law issues. In
particular, credible arguments can be made that the preclusive effect of an award is defined by
each of following alternatives: (a) the law of the state where a new claim is brought; (b) the
law of the place where the prior decision was made; (c) the law of some other state (e.g., the
law governing the parties’ dispute or the arbitration agreement); or (d) international
preclusion rules, either derived from the New York Convention or otherwise.266
Some authorities have assumed that the preclusive effect of an award is governed by the
law of the “new” forum, where the new claim is sought to be asserted.267 The historic
rationale for this approach was that res judicata is a procedural rule and, therefore, subject to
the law of the new forum. From a more functional perspective, the inefficiencies and new
costs of relitigation of a dispute fall principally upon the forum where relitigation is
attempted, arguably making it appropriate to apply that forum’s preclusion rules.
On the other hand, it is also argued that the preclusive effect of a judgment should not be
greater than that afforded by the forum where the judgment was rendered.268 This analysis is
supported by the notion that it is the integrity of the rendering forum’s judicial (or arbitral)
processes, and the waste of that forum’s resources, which are most directly implicated by
relitigation of disputes – and therefore that the law of the rendering forum should govern the
preclusive effects of a judgment (and, by analogy, an award).
In light of these considerations, the proper choice-of-law analysis with regard to the
preclusive effects of an international arbitral award in courts (and arbitration) should not be
to apply the preclusion rules of any particular legal system. Rather, the proper analysis is to
apply international preclusion standards derived from the New York Convention (which, in
Article II, gives effect to the arbitration agreement) and the objectives of the arbitral process.
This analysis, starts from the premise that the parties presumptively intended that their
disputes will be finally resolved in a single, expeditious proceeding. In turn, although parties
may agree otherwise, that presumptive expectation provides the basis for preclusion
principles that include both res judicata and collateral estoppel rules and that accord no less
finality to awards than is applicable to judicial judgments.269
This choice-of-law approach is consistent with the central role that the Convention plays
in prescribing the legal effects of awards. It is also consistent with the tendency of tribunals
to adopt pragmatic, non-technical approaches to issues of preclusion, relying on general
considerations of fairness and “good procedural order,” rather than on technical applications
of domestic procedural law. 270 From both perspectives, the focus should be on the parties’
expectations, rather than on intricate preclusion rules designed for domestic litigations.
The foregoing approach has the advantage of avoiding the lack of uniformity associated
with application of the enforcement forum’s preclusion rules – which would vary from state
to state. That lack of uniformity contradicts the parties’ objective, in agreeing to international
arbitration, of establishing a single, uniform international dispute resolution mechanism, and
would lead to unpredictable results, depending on where a disappointed party seeks to
relitigate a dispute. Worse, it would give the disappointed party the ability to relitigate the
parties’ dispute in whatever forum it can find that has the least effective rules of preclusion
(and widest rules of jurisdiction). This result disserves the arbitral process and frustrates the
purposes of the parties’ agreement to arbitrate.

[C] Preclusive Effects of National Court Judgments

Issues of preclusion in international arbitration are not limited to the preclusive effect of
awards in national courts. They also include the preclusive effect of both judgments and
awards in international arbitral proceedings.
In principle, judicial judgments and awards should have the same preclusive effects in
arbitral proceedings as in litigation. Although there is little reported authority on this issue,
rules of preclusion are elements of the applicable law, which the tribunal is bound to apply,
just as it is obliged to apply other rules of law.271 Nor are there serious reasons that tribunals
should not apply preclusion principles in essentially the same manner that national courts
would. The policies of fairness, efficiency, integrity of the judicial/arbitral process and
effectuating the parties’ intentions apply with equal force in arbitral, as well as judicial,
forums.
A tribunal’s failure to give preclusive effect to a prior and valid judgment would be subject
to serious enforceability challenges in many jurisdictions. One French judicial decision
annulled an award on public policy grounds, reasoning that the failure to give preclusive
effect to a prior judgment contradicted French public policy. 272 U.S. courts have reached
similar conclusions, declaring that “[a]rbitrators are not free to ignore the preclusive effect of
prior judgments under the doctrine of res judicata and collateral estoppel.”273 Likewise,
Swiss courts have treated res judicata as a principle of public policy requiring tribunals
seated in Switzerland to give effect to foreign judgments (which would properly be
recognizable under Swiss private international law rules).274
In practice, questions of the preclusive effect of judgments infrequently arise in arbitral
proceedings. That is because the substantive issues that arise before a tribunal will ordinarily
be issues that are encompassed by the parties’ arbitration agreement and which will therefore
not previously have arisen in litigation (as distinguished from arbitral proceedings).
Nonetheless, there are instances in which an issue will have been addressed in litigation
between the parties and later becomes relevant in subsequent arbitral proceedings: where that
occurs, the judicial judgment is entitled to preclusive effect in the arbitration.
Although generalizations are difficult, there has been a tendency by arbitral tribunals to
avoid mechanical application of technical domestic preclusion rules with regard to awards (or
judicial judgments). Tribunals have instead adopted pragmatic approaches that further the
objectives of the parties’ arbitration agreement, formulating sui generis international
preclusion principles. That is reflected in the following reasoning, adopted by one tribunal:

[T]he binding effect of its first award is not limited to the contents of the order thereof
adjudicating or dismissing certain claims, but that it extends to the legal reasons that
were necessary for such order, i.e., to the ratio decidendi of such award. Irrespective
from the academic views that may be entertained on the extent of the principle of res
judicata on the reasons of a decision, it would be unfair to both parties to depart in a
final award from the views held in the previous award, to the extent they were necessary
for the disposition of certain issues.275

Equally, tribunals have been reluctant to apply other requirements for res judicata under
some national laws in a restrictive or technical manner:

If it is true that the Owner was not a party to the referee procedure in the context of
which the decision of the Court of Appeal was rendered, it is nonetheless the case that
the object of the request now advanced before the arbitral tribunal is essentially identical
to that judged in that procedure ... [The party to both procedures is, therefore,] bound
by the decision of the Court of Appeal ....276

As discussed above, these approaches are consistent with a proper analysis of preclusion as
applied to awards in national courts. That analysis focuses on the objectives and expectations
of the parties’ arbitration agreement, and particularly their presumptive desire to resolve all
of their disputes in a single, centralized proceeding; in turn, for reasons already addressed,
this produces international rules of preclusion whose general terms are mandated by the
Convention, aimed at securing the final, binding character of arbitral awards.

[D] Jurisdictional Decisions

An issue that requires special consideration is the preclusive effect in international arbitral
proceedings of a national court judgment dealing with questions of the tribunal’s jurisdiction.
Although authority on the subject is divided, the better analysis is that tribunals are not
bound by national court decisions regarding the tribunal’s own jurisdiction, regardless
whether the judicial decision is by a court in the seat or elsewhere, and that tribunals are
instead both free and obliged independently to resolve jurisdictional objections.277

[1] Allocation of Competence between Arbitral Tribunals and National

 Courts to Decide Jurisdictional Issues

As discussed above, tribunals generally possess competence-competence to decide their own

jurisdiction, subject to varying levels of judicial review. 278 At the same time, many legal
systems also provide that national courts may decide questions of arbitral jurisdiction before
the arbitral tribunal itself decides the subject. This can include judicial proceedings in either
the seat or elsewhere, seeking declarations that no valid arbitration agreement exists,
injunctive relief against the arbitration, or seeking to litigate the underlying dispute. In any of
these cases, the question is what effect a previously-rendered judgment deciding jurisdictional
issues will have on subsequent decisions by the tribunal on the issue of jurisdiction.

[i] Arguable Preclusive Effect of Jurisdictional Decision by National Court

A national court may hold, on the merits and not on a prima facie basis, that there either is a
valid arbitration agreement or that there is not such an agreement. In that event, a serious
argument can be made that these national court judgments are entitled to, and must be
accorded, preclusive effect, including in related arbitral proceedings. This conclusion rests on
an application of general preclusion rules, as well as on the view that a tribunal only
possesses limited competence-competence, subject to subsequent judicial review, and that
this necessarily implies that a prior, as well as a subsequent, judicial decision in the seat must
have preclusive effect in the arbitration.279
Under this view, if a court in the arbitral seat has the power to annul an award on
jurisdictional grounds, then the tribunal should be obliged to give effect to that same court’s
jurisdictional determinations, insofar as they exist, in making an award in the first place. It
would be intolerable as a matter of the public policy of the seat, the argument would run, for
there to exist contradictory decisions regarding arbitral jurisdiction within the seat by two
authorities.
A similar analysis was adopted recently by an English decision which granted an anti-
arbitration injunction against an English-seated arbitration. The injunction was issued after an
English court had annulled the tribunal’s positive jurisdictional award, holding instead that no
valid arbitration agreement existed. The court reasoned:

No question therefore arises of the court failing to comply with obligations undertaken
pursuant to the New York Convention. In my judgment, it would be invidious to leave it
to the arbitrators to decide whether they should give preference to their own earlier
decision over that of the supervisory court on precisely the same subject matter. The
supervisory court has held in proceeding between [the parties] that there is no basis
upon which the arbitrators have been invested with jurisdiction to determine the dispute
 between those parties. That should be an end of the matter.280

Under this view, the jurisdictional decision of a court in the arbitral seat is entitled to
preclusive effect in any subsequent arbitral proceedings (and, in fact, justifies a judicial order
preventing such proceedings from continuing).
This analysis could then be extended to foreign courts. The judgments of such courts
would arguably be entitled to recognition by courts within the seat under generally-applicable
standards for recognizing foreign judgments. This would be most acute in cases involving
recognition of judgments treaties, where the courts of the seat would arguably be obligated to
give effect to the foreign court’s jurisdictional determination.281
The foregoing analysis has been adopted by Swiss courts in a number of important
decisions, affirming the applicability of res judicata in international arbitration. The first such
decision was that of the Swiss Federal Tribunal in United Arab Emirates v. Westland
Helicopters. There, the Court held that, if a national court concludes that there is no valid
arbitration agreement, in an action between parties to a subsequently-commenced arbitration,
then the tribunal is bound by the judgment in the previously-commenced litigation.282
In a subsequent decision, the Swiss Federal Tribunal extended this analysis to jurisdictional
determinations of foreign courts, subject to the important proviso that generally-applicable
principles of Swiss law regarding the recognition of foreign judgments must be satisfied and
that the foreign judgment thus had to have been rendered in conformity with the Convention
(where the foreign court was in a Contracting State).283 This approach was subsequently
confirmed by the Swiss Federal Tribunal in a controversial decision in Fomento de
Construcciones y Contratos SA v. Colon Container Terminal SA, holding that a Swiss-seated
arbitral tribunal was obliged to stay its proceedings pending a foreign litigation considering
jurisdictional objections to the validity of the arbitration agreement.284

[ii] Lack of Preclusive Effect of Jurisdictional Determination by National Court

The argument that jurisdictional decisions by national courts have preclusive effects is least
satisfactory in cases involving disputes which only concern the scope of the arbitration
clause; only slightly different are disputes which concern the termination of the arbitration
clause or the waiver of a right to arbitrate. In these circumstances, a valid arbitration
agreement is conceded, and the dispute is about the agreement’s scope or application.
As discussed in Chapter 2 above, under many institutional rules and national laws, this
scenario will therefore entail a valid agreement to arbitrate questions of scope, termination
and/or waiver, with the resulting jurisdictional determination being binding on the parties, like
other awards.285 In these instances, where the parties have committed resolution of the
jurisdictional question to the tribunal pursuant to a concededly valid arbitration agreement, a
national court decision on the same subject arguably violates the Convention. Such a decision
should not be entitled to preclusive effect in either the arbitral proceedings or elsewhere.
This analysis applies with equal force to judicial judgments regardless whether they are
pursued in the arbitral seat or elsewhere. The fact that a national court violates the
Convention by purporting to decide an issue of jurisdiction that the parties have submitted to
arbitration is not excused if the court is in the seat. As discussed above, Article II of the
Convention applies with equal force to courts in the seat and those elsewhere.286 Where a
court in the seat violates the Convention, by refusing to recognize a valid agreement to
arbitrate, then neither the tribunal nor other courts are obligated, or even permitted, to give
effect to its decision.287
Much the same conclusion also applies, although more controversially, in cases where the
validity or existence of the arbitration clause is challenged and there is no independent
agreement to arbitrate jurisdictional disputes. In these cases, it is often said or assumed that
the local courts’ jurisdictional decision will be decisive and that this jurisdictional
determination is entitled to res judicata effect. In turn, this conclusion rests on the
assumption that a judicial decision in the seat annulling an award is necessarily binding on the
tribunal or on other national courts. The better view is that this assumption is incorrect.
As discussed above, an award that is annulled on jurisdictional (or other) grounds in the
arbitral seat may nonetheless be recognized in other nations. For example, if A1, a state-
owned entity from State A, arbitrates against B in an arbitration seated in State A, and the
tribunal upholds its own jurisdiction and makes award against A1, then a subsequent judicial
decision by a State A court annulling the award would not prevent courts in other states from
recognizing the award.288 Rather, national courts would be free to consider the reasoning of
both the tribunal’s award and the annulment decision in deciding what effect (if any) to give
to the award.
This analysis necessarily implies that the tribunal is not obligated to give preclusive effect
to a jurisdictional decision by the courts of the seat. This analysis rests on the premise that,
despite their supervisory authority, the courts of the arbitral seat have no absolute priority
or superseding authority with regard to jurisdictional questions arising in an international
arbitration. It also rests on the recognition that, if a valid arbitration agreement exists,
pursuant to the Convention, then the judicial determination to the contrary was both wrong
and an improper intrusion into matters reserved by the arbitration agreement for the
tribunal’s decision. National court decisions violating the Convention are illegitimate and not
entitled to recognition, whether issued in an annulment context or otherwise.289
Under this analysis, although the courts of the seat may properly consider jurisdictional
matters, and although their decisions may be binding on other courts within the seat, those
decisions cannot properly bind either the tribunal or other national courts insofar as
application of the Convention is concerned. Rather, other national courts have an
independent, free-standing obligation under Articles II and III of the Convention to consider
the scope and effect of the arbitration agreement and to resolve those issues consistently with
the Convention: put differently, the jurisdictional determination of the courts of the seat
would only be legitimate, and potentially entitled to recognition, if it was correct. That
necessarily means not giving preclusive effect to such a judicial determination regarding
arbitral jurisdiction, and instead considering ab initio the effect of the Convention. The same
analysis applies to tribunals, charged with a mandate by the parties’ arbitration agreement,
under applicable law, including the Convention.290
These conclusions apply with particular force to jurisdictional determinations of courts
outside the seat. There is no reason for either the arbitral tribunal or other courts (including in
the seat) to give preclusive effect to the jurisdictional determinations of such courts. Those
determinations are only even potentially entitled to recognition if they are correct. Consistent
with this, both national courts and tribunals have very often refused to give binding effect to
the purported jurisdictional determinations of foreign courts (outside the seat).291
This conclusion is controversial because it rests on a premise of the tribunal’s autonomy
from the courts of the seat. Nonetheless, this analysis draws support from the special
character of the Convention’s rules governing the validity of arbitration agreements.
As discussed above, Article II of the Convention establishes international rules of formal
and substantive validity, subject to escape mechanisms for local non-arbitrability and public
policy rules, which are binding on all Contracting States. In order effectively to implement
the Convention’s regime for recognizing international arbitration agreements, neither
Contracting States nor arbitral tribunals should be bound by local court decisions which either
ignore the Convention or rely on a local mandatory law to deny effect to an otherwise valid
arbitration agreement. On the contrary, giving effect to local court decisions of this character
is inconsistent with, and can be seen independently to violate, the Convention’s requirement
that Contracting States recognize international arbitration agreements.
Under this analysis, the international character of the Convention, and the international
obligations imposed on Contracting States under the Convention, would justify the non-
application of ordinary rules of preclusion in jurisdictional matters. Indeed, this appears to be
the approach taken even by those national courts that have accorded foreign judicial
determinations of arbitral jurisdiction preclusive effects (by requiring that the foreign judicial
decision not violate the Convention).292

[E] Role of Precedent in International Arbitration

Related to the principle of res judicata are the doctrines of stare decisis and “precedent” in
international arbitration. Virtually all legal systems accord important, if variable and not clear-
cut, effects to prior judicial decisions, referred to as “precedent.” The extent to which arbitral
awards may serve as precedent, in other arbitral proceedings and in judicial proceedings, and
the role of judicial precedent in arbitral proceedings, raise important, but unsettled, questions.
It is sometimes said that awards do not create as precedent: “[I]n both [Common and Civil
law] systems, the prior decision of an arbitral tribunal on a question of law has no
precedential value.”293 That is not correct, as a matter of practice, nor should it be true, as a
matter of law or aspiration.294
In practice, awards frequently serve as decisive authority. 295 Arbitral tribunals have noted
that they are influenced by prior awards between the parties. For example, in one ICC award,
the tribunal concluded that a prior award did not formally have res judicata effect, but that
parts of the previous award represented an “authoritative ruling” on “certain matters that
may be relevant” in the subsequent arbitration.296 Reliance on prior arbitral decisions, as a
form of decisive precedent, can also readily be observed in the context of maritime297 and
international construction298 arbitrations, where awards are not only followed, but often
published in specialized industry circles for precisely this purpose. Similarly, as discussed in
greater detail below, arbitral awards play a very significant role in investment arbitrations,
where parties and tribunals almost invariably refer to and rely upon the precedential
authority of previous arbitral decisions.299
Moreover, as detailed by discussions in earlier Chapters, awards have played significant
roles in the development of fundamental aspects of the international arbitral process,
including the separability presumption, the choice of the law governing the arbitration
agreement, the competence-competence doctrine, the standards applicable to provisional
relief in international arbitrations and the choice of the substantive law in international
arbitrations.300 In each of these areas, awards have contributed to the development – and
indeed played the leading role in the development – of the legal regime for international
arbitration. Equally, if less clearly, arbitral practices, relating to matters such as disclosure,
allocation of time at hearings, use of written witness statements and similar matters have
developed in the nature of customary practice, comparable to precedential authority.
Where awards have addressed substantive issues of commercial law, they have and should
have precedential weight, just as they have precedential weight on matters of jurisdiction and
procedure. Thus, awards have articulated principles with regard to issues such as obligations
of good faith, force majeure and comparable doctrines that are cited and given effect in other
arbitrations.301 Indeed, awards have on occasion expressly formulated rules not dissimilar to
notions of jurisprudence constante or stare decisis:
 The decisions of these tribunals [addressing jurisdiction over non-signatories]
progressively create case-law which should be taken into account, because it draws
conclusions from economic reality and conforms to the needs of international commerce,
to which rules specific to international arbitration, themselves successively formulated
should respond.302

Nor, is this inappropriate; on the contrary, it is sensible and desirable that awards serve as
precedent in subsequent arbitrations – applying the same rationale that animates the use of
precedent in national court proceedings. Where arbitrators have carefully considered
particular problems, and arrived at reasoned results, then, over time, these decisions should
serve as binding precedent in the same manner that national and international judicial
decisions do. As one commentator remarked, “[f]aced with a problem, one wants to know
what others in similar situations have done and one tends to copy them. So a number of
awards have been published and several are passed on from hand to hand.”303 Just as private
expectations and contractual relations are served, and the judicial process’s integrity
enhanced, by a body of judicial precedent, so the same conclusions apply to arbitral
precedent.
The fact that awards have, and should have, precedential weight does not mean that they
enjoy binding authority in the same fashion that a higher court judgment would bind a lower
court within a single legal system. One award explained this as follows:

[T]here is no doctrine of precedent in international law, if by precedent is meant a rule

of the binding effect of a single decision. There is no hierarchy of international tribunals,
and even if there were, there is no good reason for allowing the first tribunal in time to
resolve issues for all later tribunals.304

In practice, arbitral tribunals have adopted nuanced approaches towards the question of
precedent. Tribunals afford varying degrees of precedential authority to past awards, based
on the number of decisions adopting a particular analysis, the nature of the tribunal(s), the
quality of the tribunal’s reasoning and similar factors. As with most national courts, there is
no absolute rule of binding precedent, but instead a pragmatic analysis that gives effect to the
underlying values served by the doctrine of precedent, while permitting change, evolution and
correction in the law.
_________________________
1. Eco Swiss China Time Ltd v. Benetton Int’l NV , C-126/97, [1999] E.C.R. I-3055 (E.C.J.). See also Mayer &
Sheppard, Final ILA Report on Public Policy as A Bar to Enforcement of International Arbitral Awards,
Recommendation 1(a), 19 Arb. Int’ l 249, 250 (2003) (“ The finality of awards rendered in the context of
international commercial arbitration should be respected save in exceptional circumstances.”).
2. See Dasser, International Arbitration and Setting Aside Proceedings in Switzerland: A Statistical Analysis, 25
ASA Bull. 444 (2007) (between 5% and 7% of annulment applications in Swiss courts succeeded between 1989
and 2006); Duferco Int’l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383 (2d Cir. 2003) (decisions to
vacate award in four cases, out of 48 applications in recent Second Circuit decisions); Crépin, Le contrôle des
sentences arbitrales par la Cour d’appel de Paris depuis les reformes de 1980 et de 1981, 1991 Rev. arb. 521
(only two awards annulled by French courts in the 46 challenges on public policy grounds); Paulsson,
Arbitration-Friendliness: Promises of Principle and Realities of Practice, 23 Arb. Int’ l 477, 489 (2007)
(between 2002 and 2004, less than 5% of annulment proceedings in English courts were successful).
3. See, e.g., Methanex Motunui Ltd v. Spellman [2004] 1 NZLR 95 (Auckland High Court); ABC Co. v. XYZ Co. Ltd ,
[2003] 3 S.L.R. 546 (Singapore High Court); Canada ( Attorney General) v. S.D. Myers Inc., [2004] 3 F.C.R. 368
(Federal Ct. Canada); D. Frampton & Co. v. Thibeault , [1988] F.C.J. No. 305 (Federal Ct. Canada). See also G.
Born, International Commercial Arbitration 2562–63 (2009).
4. Corporacion Transnacional de Inversiones SA de CV v. STET Int’l SpA , 45 O.R.3d 183 (Ontario S.Ct. of Justice
1999) (emphasis added).
5. See Quintette Coal Ltd v. Nippon Steel Corp ., 47 B.C.L.R.2d 201, 229 (B.C. S.Ct. 1990) (“ [I]t is meet ... as a matter
of policy, to adopt a standard which seeks to preserve the autonomy of the forum selected by the parties and to
minimize judicial intervention when reviewing international commercial arbitral awards in British Columbia.”);
United Mexican States v. Metalclad Corp., 89 B.C.L.R. (3d) 359 (B.C. S.Ct. 2001). See also G. Born, International
Commercial Arbitration 2562–63 (2009).
6. Some arbitration legislation goes further than the Model Law in making the power to annul discretionary. See, e.g.,
British Columbia Commercial Arbitration Act, §30 (“ Where the court finds that the arbitrator has committed an
arbitral error, but that the error consists of a defect in form or a technical irregularity, the court may refuse to set
aside the award where refusal would not constitute a substantial wrong or miscarriage of justice.”); Israeli
Arbitration Law, Art. 26(a) (annulment may be denied if “ no miscarriage of justice has been caused”).
7. See infra p. 380.
8. U.S. FAA, 9 U.S.C. §9.
9. Diapulse Corp. of Am. v. Carba, Ltd, 626 F.2d 1108 (2d Cir. 1980).
10. See Porzig v. Dresdner, Kleinwort, Benson, N. Am. LLC , 497 F.3d 133 (2d Cir. 2007) (“ repeatedly recognized
the strong deference appropriately due arbitral awards and the arbitral process, and has limited its review of
arbitration awards in obeisance to that process“ ); Liberty Re ( Bermuda) Ltd v. Transamerica Occidental Life
Ins. Co., 2005 U.S. Dist. LEXIS 9774 (S.D.N.Y. 2005) (“ Arbitration awards are subject to a very limited review
in order to avoid undermining the twin goals of arbitration, namely settling disputes efficiently and avoiding
long and expensive litigation.”).
11. See, e.g., D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 110 (2d Cir. 2006); Trans Chem. Ltd v. China Nat’l Mach.
Imp. and Exp. Corp., 161 F.3d 314 (5th Cir. 1998); Diapulse Corp. of Am. v. Carba, Ltd , 626 F.2d 1108 (2d Cir.
1980); May v. First Nat’l Pawn Brokers, Ltd, 887 P .2d 185, 189 (Mont. 1994).
12. Swiss Law on P rivate International Law, Arts. 190, 194.
13. G. Born, International Commercial Arbitration 2565–66 (2009).
14. See, e.g., Belgian Judicial Code, Art. 1704; Netherlands Code of Civil Procedure, Art. 1065; Italian Code of Civil
P rocedure, Art. 829; Japanese Arbitration Law, Art. 44.
15. G. Born, International Commercial Arbitration 2566 (2009).
16. See G. Born, International Commercial Arbitration 2404–08 (2009).
17. Int’l Standard Elec. Corp. v. Bridas SA , 745 F.Supp. 172, 176 (S.D.N.Y. 1990) (emphasis in original). See also
Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara , 364 F.3d 274, 287 (5th Cir.
2004) (“ Only a court in a country with primary jurisdiction over an arbitral award may annul that award. ...
Under the Convention the country in which, or under the arbitration law of which, an award was made is said to
 have primary jurisdiction over the arbitration award.”).
18. Judgment of 24 November 1994, XXI Y.B. Comm. Arb. 635 (Rotterdam Rechtbank) (1996). See also G. Born,
International Commercial Arbitration 2403–07 (2009).
19. See supra pp. 111–14.
20. See supra p. 307.
21. See supra p. 105; Hiscox v. Outhwaite [1991] 2 W.L.R. 1321 (House of Lords) (award made where signed, not in
arbitral seat; overruled by English Arbitration Act, 1996); Judgment of 28 February 2005, Titan Corp. v.
Alcatel CIT, SA, XXX Y.B. Comm. Arb. 139 (Svea Court of Appeal) (2005) (award made where hearings conduct,
not in arbitral seat; overruled by subsequent legislative and judicial action).
22. G. Born, International Commercial Arbitration 1245–51, 2367–69, 2407–08 (2009).
23. G. Born, International Commercial Arbitration 1337–40, 2408–10 (2009).
24. Bridas, 745 F.Supp. at 178.
25. See, e.g., Karaha Bodas Co., 364 F.3d at 289–90 (Article V(1)(e) “ refers exclusively to procedural and not
substantive law, and more precisely, to the regimen or scheme of arbitral procedural law under which the
arbitration was conducted, and not the substantive law.”). See also G. Born, International Commercial
Arbitration 2408–10 (2009).
26. Karaha Bodas Co., 364 F.3d at 291. See supra pp. 21, 113; G. Born, International Commercial Arbitration
2410 (2009).
27. Nat’l Thermal Power Corp. v. The Singer Co., XVIII Y.B. Comm. Arb. 403, 407 (1992) (Indian S.Ct. 1992)
(1993). The Indian Supreme Court held that an award made in England (which was the contractual place of
arbitration) was nonetheless a domestic Indian award, not subject to the Convention in Indian courts, apparently
on the theory that it was rendered pursuant to an arbitration agreement governed by Indian law. The Indian court
reasoned: “ An award is ‘ foreign’ not merely because it is made in the territory of a foreign State, but because it is
made in such a territory on an arbitration agreement not governed by the law of India.” Nat’l Thermal Power
Corp. v. The Singer Co., XVIII Y.B. Comm. Arb. 403, 409 (Indian S.Ct. 1992) (1993). See also Nirma Ltd v. Lurgi
Energie und Entsorgung GmbH et al., XXVIII Y.B. Comm. Arb. 790 (Gujarat High Court 2002) (2003).
28. Hitachi Ltd v. Rupali Polyester , XXV Y.B. Comm. Arb. 486 (Pakistan S.Ct. 1998) (2000) (award made in
England subject to application to annul in Pakistan); Judgment of 27 August 2002, Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara v. Karaha Bodas Co., No. 86/P DT.G/2002/P N.JKT.P ST (Central
Jakarta District Court).
29. Bharat Aluminium Co. v. Kaiser Aluminium Technical Service, Inc., Civil Appeal No. 7019 of 2005 (Indian
S.Ct. 2012)
30. The exclusivity of Article 34’ s provisions regarding applications to annul awards made on national territory is
underscored by Article 5 of the Model Law, which forbids court intervention in international arbitrations, save
where permitted elsewhere in the Law. UNCITRAL Model Law, Art. 5.
31. Section 10 provides that annulment (or vacatur) actions may be heard only in “ the United States court in and for
the district wherein the award was made.” U.S. FAA, 9 U.S.C. §10 (emphasis added).
32. See Karaha Bodas Co., 364 F.3d at 308–09; Yusuf Ahmed Alghanim & Sons, 126 F.3d at 22.
33. Hall Street Assoc., LLC v. Mattel, Inc., 128 S.Ct. 1396 (U.S. S.Ct. 2008).
34. 126 F.3d at 22 (2d Cir. 1997) (emphasis added).
35. See, e.g., Karaha Bodas Co., 364 F.3d at 287–88 (“ courts of primary jurisdiction, usually the courts of the
country of the arbitral situs, have much broader discretion to set aside an award [and] may apply their own
domestic law”); W estacre Inv. Inc. v. Jugoimport-SPDR Holding Co. Ltd [1998] 4 All E.R. 570, 607 (Q.B.)
(“ [C]onvention recognises that the primary supervisory function in respect of arbitration rests with the court of
supervisory jurisdiction as distinct from the enforcement court.”).
36. See Quigley, Accession by the United States to the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, 70 Yale L.J. 1049, 1070 (1961); A. van den Berg, The New York
Arbitration Convention of 1958 19–27 (1981); H. Gharavi, The International Effectiveness of the Annulment
of An Arbitral Award 29 (2002) (“ There are no multilateral conventions on the extent of control of arbitral
awards by national courts. The subject is exclusively governed by national laws....”).
37. G. Born, International Commercial Arbitration 2555–59 (2009) (Convention does not permit de novo review
 of merits in annulment actions.).
38. U.S. FAA, 9 U.S.C. §10(a)(4) (allowing vacatur “ where the arbitrators exceeded their powers, or so imperfectly
executed them that a mutual, final, and definite award upon the subject matter submitted was not made”); Swiss
Law on Private International Law, Art. 190(2)(b) (allowing annulment “ if the Arbitral Tribunal wrongly
accepted or declined jurisdiction”); Belgian Judicial Code, Art. 1704(2)(c) (allowing arbitral award to be set
aside “ if there is no valid arbitration agreement”).
39. See supra pp. 43, 45–47, 57, 69, 70–71 & infra pp. 384–386.
40. See supra pp. 55–56 & infra pp. 384–85.
41. See supra p. 234. In some instances, a choice-of-law agreement will be implied from the nature of the parties’
relationship, making it unnecessary to rely on Article 34(2)(a)(i)’ s default rule. See supra p. 44.
42. G. Born, International Commercial Arbitration 2568–70 (2009).
43. See supra pp. 52–53 & infra p. 329; G. Born, International Commercial Arbitration 901–03, 2570–71, 2918–
19 (2009).
44. See supra p. 26 & infra pp. 385–86; G. Born, International Commercial Arbitration 929–47, 953–57, 2570–
71, 2918–19 (2009).
45. See supra p. 280; G. Born, International Commercial Arbitration 894–98, 2571–72 (2009).
46. Judgment of 6 June 2002, 2003 SchiedsVZ 39 (German Bundesgerichtshof).
47. A few other legal regimes appear to produce similar results. See supra p. 285; G. Born, International
Commercial Arbitration 894–98, 2571–72 (2009).
48. See, e.g., Netherlands Code of Civil Procedure, Art. 1065(1)(c) (“ the arbitral tribunal has not complied with its
mandate”); Belgian Judicial Code, Art. 1704(2)(d) (“ the arbitral tribunal has exceeded its jurisdiction or
powers”); Japanese Arbitration Law, Art. 44(1)(x) (“ the arbitral award contains decisions on matters beyond the
scope of the arbitration agreement or the claims in the arbitral proceedings”).
49. G. Born, International Commercial Arbitration 2605–09 (2009).
50. See, e.g., Banco de Seguros del Estado v. Mut. Marine Office, Inc ., 344 F.3d 255 (2d Cir. 2003) (“ We have
‘ consistently accorded the narrowest of readings’ to the FAA’ s authorization to vacate awards [for excess of
authority] under section 10(4).”); Elite Inc. v. Texaco Panama Inc ., 777 F.Supp. 289, 292 (S.D.N.Y. 1991)
(courts accord “ the ‘ narrowest of reading’ to the ‘ excess of powers’ provisions”); Judgment of 19 December
2001, 20 ASA Bull. 493 (Swiss Federal Tribunal) (2002) (tribunal has discretionary power to adjudicate case
under subsidiary prayer for relief seeking “ such other and further relief as the Arbitral Tribunal may determine is
just and appropriate under the law”).
51. See, e.g., Coast Trading Co. v. Pacific Molasses Co., 681 F.2d 1195, 1198 (9th Cir. 1982) (vacating award as
“ contrary to remedies provided in the contract and as beyond the authority of the arbitrators under the
submission”); Judgment of 19 April 1994, W estland Helicopters Ltd v. The Arab British Helicopter Company
( ABH), DFT 120 II 172, 175 (Swiss Federal Tribunal) (tribunal decided ultra petita when it did not limit itself to
rejecting claimant’ s request for relief, seeking declaration of non-existence of debt, but ordered claimant to pay
debt even though respondent did not request such relief).
52. G. Born, International Commercial Arbitration 2608–09 (2009).
53. Lesotho Highlands Dev. Auth. v. Impregilo SpA [2006] 1 A.C. 221, at ¶29 (House of Lords).
54. See, e.g., Stawski Distributing Co. v. Browary Zywiec SA , 126 Fed. Appx. 308, 2005 U.S. App. LEXIS 4143 (7th
Cir. 2005) (“ Had the arbitrators disdained Illinois law [selected by the parties’ choice-of-law clause], that might
call for judicial relief because they would to that extent have failed to implement the parties’ agreement.”); Stifel,
Nicolaus & Co. v. Francis , 872 S.W.2d 484 (Mo. App. 1994) (award vacated as excess of authority because it
was “ contrary to the agreed-upon-law”).
55. See, e.g., HCC Aviation Ins. Group, Inc. v. Employers Reins. Corp ., 2005 U.S. Dist. LEXIS 19992 (N.D. Tex.
2005) (vacating domestic award for exceeding scope of arbitration agreement); Judgment of 3 October 2000
Nejapa Power Company v. CEL, DFT 4P .60/2000, cons. 3a, 19 ASA Bull. 796 (Swiss Federal Tribunal).
56. See supra pp. 87–93, 95.
57. English Arbitration Act, 1996, §68(2)(d); Swiss Law on Private International Law, Art. 190(2)(c); Italian Code
of Civil Procedure, Art. 829(4) (“ the award ... fails to decide one or more items in the submission to arbitration or
contains contradictory provisions”).
58. E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International Commercial Arbitration ¶¶1629–
30 (1999).
59. See, e.g., U.S. FAA, 9 U.S.C. §10(c) (award may be vacated “ [w]here the arbitrators were guilty of misconduct in
refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and
material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced”);
Swiss Law on Private International Law, Art. 190(2)(d) (“ if the principle of equal treatment of the parties or the
right of the parties to be heard was violated”); Netherlands Code of Civil Procedure, Art. 1704(2)(g) (“ parties
have not been given an opportunity of substantiating their claims and presenting their case, or there has been
disregards of any other obligatory rule of the arbitral procedure, insofar as such disregard has had an influence on
the arbitral award”); Japanese Arbitration Law, Arts. 44(1)(iii) (“ not given notice as required by the provisions
of the laws of Japan”), (iv) (“ unable to present its case in the arbitral proceedings”).
60. See infra p. 319.
61. See supra pp. 148–49.
62. See, e.g., Int’l Transactions Ltd v. Embotelladora Agral Regiomontana , 347 F.3d 589, 594 (5th Cir. 2003);
Generica Ltd v. Pharm. Basics, Inc ., 125 F.3d 1123, 1129–30 (7th Cir. 1997) (“ an arbitral award should be
denied or vacated if the party challenging the award proves that he was not given a meaningful opportunity to be
heard as our due process jurisprudence defines it”); Judgments of 23 January, 28 March and 7 November 1996,
1997 Rev. arb. 239 (Paris Cour d’ appel) (arbitrators must respect principles for conduct of litigation); Judgment
of 2 June 2004, DFT 4P.64/2004 (Swiss Federal Tribunal (parties’ right to be heard corresponds to the
constitutional right under Art. 29(2) of the Swiss Federal Constitution).
63. See, e.g., Sheldon v. Vermonty , 269 F.3d 1202, 1207 (10th Cir. 2001) (“ ‘ [A] fundamentally fair [arbitration]
hearing requires only notice, opportunity to be heard and to present relevant and material evidence and
argument before the decision makers....’ ”) (emphasis in original); El Dorado School Dist. No. 15 v. Continental
Cas. Co., 247 F.3d 843, 848 (8th Cir. 2001) (“ To constitute misconduct requiring vacation of an award, an error
in the arbitrator’ s determination must be one that is not simply an error of law, but which so affects the rights of a
party that it may be said that he was deprived of a fair hearing.”); Judgment of 7 September 1993, DFT 119 II 386,
388 (Swiss Federal Tribunal).
64. See UNCITRAL Model Law, Art. 18 (“ The parties shall be treated with equality...”); supra pp. 152–53.
65. See UNCITRAL Model Law, Art. 18 (“ each party shall be given a full opportunity of presenting his case”);
supra pp. 152–53.
66. See supra pp. 152–53; G. Born, International Commercial Arbitration 1770–73, 2572–78 (2009).
67. Baravati v. Josephthal, Lyon & Ross, 28 F.3d 704, 709 (7th Cir. 1994).
68. United Mexican States v. Karpa, 2003 CanLII 34011, ¶¶77, 90 (Ontario S.Ct.). See also United Mexican States
v. Metalclad Corp., 89 B.C.L.R. (3d) 359 (B.C. S.Ct. 2001).
69. ABB Attorney General v. Hochtief Airport GmbH [2006] EWHC (Comm.) 388 (Q.B.). Decisions in other
jurisdictions are similar. See, e.g., Trustees of Rotoaira Forest Trust v Attorney-General, [1998] 3 NZLR 89
(Auckland High Court);Judgment of 25 June 1992, XXII Y.B. Comm. Arb. 619 (Austrian Oberster Gerichtshof)
(1997) (“ The parties may determine the arbitral procedure in the arbitration agreement or in a separate written
agreement. Lacking such agreement, the arbitrators decide on the procedure.”); Judgment of 30 December 1994,
13 ASA Bull. 217, 221 (Swiss Federal Tribunal) (1995) (“ the legislature did not desire that procedural public
policy should be extensively interpreted and that there should arise a code of arbitral procedure to which the
procedure, as freely selected by the parties, should be subjected”).
70. See, e.g., UNCITRAL Rules, Art. 32; 2012 ICC Rules, Art. 39; LCIA Rules, Art. 32(1).
71. See, e.g., Lucent Tech., Inc. v. Tatung Co., 379 F.3d 24, 31 (2d Cir. 2004) (waiver based on party’ s failure to
inquire from AAA regarding arbitrator’ s prior relationship with other party, and object during arbitration); Goff
v. Dakota, Minn. & E.R.R. Corp., 276 F.3d 992, 998 (8th Cir. 2002) (waiver of procedural objection due to failure
to raise objection during arbitration); Polytek Eng’g Co. v. Hebei Imp. & Exp. Corp., XXIII Y.B. Comm. Arb. 666,
669 (H.K. Court of Appeal, High Court) (1998) (waiver based on fact that party “ simply proceeded with the
arbitration as if nothing untoward had happened”); Judgment of 7 September 1993, DFT 119 II 386 (Swiss
Federal Tribunal) (party that failed to request opportunity to be heard could not seek annulment of award on
grounds that such opportunity was denied). See also supra p. 318 &infra pp. 392–93.
72. Avraham v. Shigur Express Ltd, 1991 U.S. Dist. LEXIS 12267 (S.D.N.Y. 1991).
73. See, e.g., English Arbitration Act, 1996, §68(2)(a) (“ failure by the tribunal to conduct the proceedings in
accordance with the procedure agreed by the parties”); Netherlands Code of Civil Procedure, Art. 1065(1)(c)
(“ tribunal has not complied with its mandate”); Japanese Arbitration Law, Art. 44(1)(vi) (“ the arbitral
proceedings were not in accordance with the provisions of the laws of Japan (or where the parties have otherwise
reached an agreement on matters concerning the provisions of the law that do not relate to the public policy, such
agreement)”).
74. G. Born, International Commercial Arbitration 2594–99 (2009).
75. See supra p. 317.
76. See supra p. 39.
77. G. Born, International Commercial Arbitration 1747–57, 2596–98 (2009).
78. See, e.g., Judgment of 16 March 2004, 22 ASA Bull. 770, 779 (Swiss Federal Tribunal) (“ Even in cases where a
procedural rule was intended by the parties and binding to the tribunal, it is not mandatory within the meaning
of Article 182(3) SLP IL.”).
79. See supra pp. 149–51, 156–58.
80. See, e.g., Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara , 190 F.Supp.2d 936,
945 (S.D. Tex. 2001) (“ it is appropriate to set aside an award based on a procedural violation only if such
violation worked substantial prejudice to the complaining party”);Fiat SpA v. Ministry of Fin. and Planning ,
1989 U.S. Dist. LEXIS 11995 (S.D.N.Y. 1989) (arbitrators’ failure to comply with AAA’ s rule requiring awards
within 30 days of hearing not basis for vacating award).
81. See, e.g., Judgment of 8 March 1988, Société Sofidif v. OIAETII., 1989 Rev. arb. 481 (French Cour de cassation
civ. le) (refusing to annul award in absence of an “ express, precise clause”).
82. See, e.g., Miller v. Prudential Bache Sec., Inc., 884 F.2d 128 (4th Cir. 1989);Jones v. St. Louis-San Francisco Ry.
Co., 728 F.2d 257, 265 (6th Cir. 1984) (dicta); Detroit Coil Co. v. Int’l Ass’n of Machinists & Aerospace
W orkers, 594 F.2d 575, 581 (6th Cir. 1979) (court vacated award of arbitrator who refused to apply a clear
contractual time limit).
83. G. Born, International Commercial Arbitration 2595–96 (2009).
84. See, e.g., Fiat SpA v. Ministry of Fin. and Planning , 1989 U.S. Dist. LEXIS 11995 (S.D.N.Y. 1989) (arbitrators’
failure to comply with AAA’ s rule requiring awards to be made within 30 days of hearing not basis for vacating
award); Laminoirs-Trefileries-Cableries de Lens, SA v. Southwire Co., 484 F.Supp. 1063 (N.D. Ga. 1980)
(arbitrators’ alleged failure to comply with ICC rule that award be issued within 6 months from signing Terms of
Reference not basis for vacating award); Local 355 etc. v. Fontainebleau Hotel Corp., 423 F.Supp. 83 (S.D. Fla.
1976) (failure to comply with 30 day contractual limit for issuing award not basis to vacate); Judgment of 16
March 2004, 22 ASA Bull. 770, 779 (Swiss Federal Tribunal) (2004).
85. See supra p. 255; Judgment of 14 November 1990, DFT 116 II 634 (Swiss Federal Tribunal) (decision ex aequo
et bono and not based on the law chosen by the parties does not violate public policy, at least as long as the
result does not differ fundamentally from the one that would have been reached under the chosen law); Alexander
v. Blue Cross of Calif., 106 Cal.Rptr.2d 431, 438 (Cal. App. 2001) (“ Even where an arbitration agreement
requires the arbitrator to apply a particular law or body of law, an arbitrator’ s failure to apply such a law is not in
excess of an arbitrator’ s powers”).
86. See, e.g., English Arbitration Act, 1996, §§2(1), 33, 68(2)(a) (“ failure by the tribunal to comply with section 33
(general duty of tribunal)”); Japanese Arbitration Law, Arts. 3(1), 25, 44(1)(vi) (“ the composition of the arbitral
tribunal or the arbitral proceedings were not in accordance with the provisions of the laws of Japan (or where the
parties have otherwise reached an agreement on matters concerning the provisions of the law that do not relate to
the public policy, such agreement)”); Netherlands Code of Civil P rocedure, Art. 1065(4).
87. G. Born, International Commercial Arbitration 2599–2602 (2009).
88. See supra p. 148.
89. Judgment of 12 November 1992, Recurso No. 2090/1998, quoted in Cairns, The Spanish Application of the
UNCITRAL Model Law on International Commercial Arbitration, 22 Arb. Int’ l 573, 590 n.58 (2006).
90. Most such references are by implication. See, e.g., Belgian Judicial Code, Art. 1704(2)(f) (“ arbitral tribunal
irregularly constituted”); Swiss Law on Private International Law, Art. 190(2)(a); 1966 European Uniform Law
 on Arbitration, Art. 25(2)(f) (“ if the award was made by an arbitral tribunal irregularly constituted”).
91. See G. Born, International Arbitration 247–52, 1461–64, 2613 (2009).
92. See supra pp. 140–41.
93. AAOT Foreign Economic Ass’n ( VO) Technostroyexport v. Int’l Dev. and Trade Sers. Inc. , 139 F.3d 980 (2d
Cir. 1999) (“ Where a party has knowledge of facts possibly indicating bias or partiality on the part of an
arbitrator he cannot remain silent and later object to the award of the arbitrators on that ground. His silence
constitutes a waiver of the objection.”). See G. Born, International Commercial Arbitration 2613–15 (2009).
94. Judgment of 14 March 1985, DFT 111 Ia 72 (Swiss Federal Tribunal); Judgment of 12 December 1996, 1998
Rev. arb. 699 (Paris Cour d’ appel) (“ a party that was not aware of the lack of independence and impartiality of an
arbitrator at the time of the appointment of the arbitral tribunal is entitled to seek annulment of the award on the
grounds of lack of impartiality or independence later on.”); Judgment of 23 March 1995, 1996 Rev. arb. 446
(Paris Cour d’ appel) (annulling award where concealment by arbitrator of his lack of independence had
prevented party from challenging independence during arbitral proceedings).
95. G. Born, International Commercial Arbitration 2613–16 (2009).
96. See, e.g., Judgment of 24 June 1999, XXIX Y.B. Comm. Arb. 687 (Oberlandesgericht Schleswig) (2004) (“ The
defendant made use in the arbitration of its right to challenge [the arbitrator] for bias. The [ICC] Court of
Arbitration deemed the defendant’ s request unfounded. This is the end of the matter, because this decision does
not appear to be clearly defective, e.g., for evident bias.”).
97. See supra pp. 141;AT& T Corp. v. Saudi Cable Co. [2000] 2 Lloyd’ s Rep. 127, 137 (English Court of Appeal).
98. See, e.g., Health Servs. Mgt Corp. v. Hughes, 975 F.2d 1253 (7th Cir. 1992) (objection to arbitrator’ s
impartiality in arbitral proceedings will preserve party’ s objection, even where party proceeds with arbitration
after its objection is overruled); San Carlo Opera Co. v. Conley, 72 F.Supp. 825 (S.D.N.Y. 1946), aff’d, 163 F.2d
310 (2d Cir. 1947) (party that made timely objection to arbitrators on grounds of bias not precluded from
reasserting objection in proceeding for confirmation of award).
99. English Arbitration Act, 1996, §68(2)(g) (“ the award or the way in which it was procured being contrary to
public policy”); Swiss Law on Private International Law, Art. 190(e) (“ the award is incompatible with public
policy”); Belgian Judicial Code, Art. 1704(2)(a) (“ contrary to ordre public”); Netherlands Code of Civil
Procedure, Art. 1065(1)(e) (“ the award, or the manner in which it was made, violates public policy or morals”);
Japanese Arbitration Law, Art. 44(1)(viii) (“ the content of the arbitral award is in conflict with the public policy
or good morals of Japan”).
100. United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 42 (U.S. S.Ct. 1987). The public policy doctrine in
the context of annulment actions is derived from applications of the doctrine in other private international law
contexts. G. Born, International Commercial Arbitration 2620–21 (2009).
101. G. Born, International Commercial Arbitration 2624–27, 2637–54 (2009).
102. Judgment of 18 November 2004, SA Thalès Air Défence v. GIE Euromissile , 132 J.D.I. (Clunet) 357 (Paris Cour
d’ appel) (2005). See also Judgment of 21 March 2000, 2001 Rev. arb. 805 (French Cour de cassation civ. 1e)
(violation of public policy must be “blatant, effective and concrete”).
103. French Code of Civil Procedure, Art. 1520(5). A few other jurisdictions have adopted similar statutory
approaches. Algerian Code of Civil Procedure, Art. 458 bis 23(h); Lebanese New Code of Civil Procedure, Art.
817(5); Portugal Code of Civil Procedure, Art. 1096(f); Romanian Law 105/1992 on the Settlement of Private
International Law Relations, Arts. 168(2), 181.
104. See, e.g., Judgment of 19 April 1994, DFT 120 II 155 (Swiss Federal Tribunal) (“ ... a uniform application of Art.
190(2)(e) SLP IL (violation of public policy) appears to require an extensive interpretation of the notion of
public policy, i.e. transnational or universal public policy, including the fundamental principles of law which
apply irrespective of the connection of the dispute to a specific country”); Judgment of 8 March 2006, DFT 132
III 389 (Swiss Federal Tribunal).
105. G. Born, International Commercial Arbitration 2620–22 (2009). The national public policies that a particular
state considers to have international application are typically said to be a narrower, more limited category of
matters than apply in domestic matters. See infra pp. 328; Sheppard, Interim ILA Report on Public Policy as A
Bar to Enforcement of International Arbitral Awards, in ILA, Committee on International Commercial
Arbitration, Proceeding of London Conference (2000), 19 Arb. Int’ l 217, 242–46 (2003). The rationale is that
 only matters which are essential to the forum state’ s legal system, and considered mandatory even in
international or transnational settings, will constitute international public policy.
106. See supra pp. 247 & 297.
107. See Belgian Judicial Code, Art. 1704(2)(b) (“ not capable of settlement by arbitration”); Japanese Arbitration
Law, Art. 44(1)(vii) (“ dispute that cannot constitute the subject of an arbitration agreement under laws of
Japan”).
108. See supra p. 326.
109. See supra p. 270 & infra pp. 404–05.
110. There are a few jurisdictions in which non-arbitrability rules appear not to be capable of waiver, including
provisions regarding consumer arbitration in the EU. See supra pp. 84–85.
111. G. Born, International Commercial Arbitration 2632–35 (2009).
112. See, e.g., English Arbitration Act, 1996, §68(2)(g) (“ the award being obtained by fraud ...”); Belgian Judicial
Code, Art. 1704(3)(a) (“ obtained by fraud”).
113. See, e.g., Re Corporacion Transnacional de Inversiones, SA de CV v. STET Int’l, 45 O.R.3d 183 (Ontario S.Ct. of
Justice 1999); W estacre Inv. Inc. v. Jugoimport-SPDR Co. Ltd [1999] 2 Lloyd’ s Rep. 65 (English Court of
Appeal) (perjured testimony is grounds for annulling award); Judgment of 30 September 1993, Euro’n Gas
Turbines SA v. W estman Int’l Ltd, XX Y.B. Comm. Arb. 198 (Paris Cour d’ appel) (1995) (use of fraudulent
documents is grounds for annulling award as contrary to international public policy).
114. Nat’l Oil Corp. v. Libyan Sun Oil Co., 733 F.Supp. 800, 814 (D. Del. 1990).
115. Biotronik Mess-und Therapiegeraete GmbH & Co. v. Medford Med. Instrument Co ., 415 F.Supp. 133, 137
(D.N.J. 1976).
116. See, e.g., Profilati Italia Srl v. Painewebber Inc. [2001] 1 Lloyd’ s Rep. 715 (Q.B.); Elektrim SA v. Vivendi
Universal SA [2007] EWHC 11 (Comm.) (Q.B.) (award may be annulled if “ obtained by the fraud of a party to the
arbitration or by the fraud of another to which a party to the arbitration was privy”).
117. W estacre Inv. Inc. v. Jugoimport-SPDR Co. Ltd [1999] 2 Lloyd’ s Rep. 65 (English Court of Appeal).
118. See, e.g., French Code of Civil Procedure, Arts. 1520; Swiss Law on Private International Law, Arts. 190, 194.
See also G. Born, International Commercial Arbitration 2636 (2009).
119. See, e.g., U.S. FAA, 9 U.S.C. §§9–10, 202, 207; English Arbitration Act, 1996, §§67–70, 99–103. See also G.
Born, International Commercial Arbitration 2637 (2009).
120. As discussed below, the U.S. Supreme Court arguably concluded recently that no substantive review of arbitral
awards, under the “ manifest disregard of law” doctrine, is available under the FAA. See Hall Street Assoc., LLC v.
Mattel, Inc., 128 S.Ct. 1396 (U.S. S.Ct. 2008); infra p. 341.
121. See G. Born, International Commercial Arbitration 2637–38, 2646–47 (2009).
122. See infra p. 383; G. Born, International Commercial Arbitration 2627–30, 2648–49 (2009).
123. See supra p. 307.
124. Nat’l W recking Co. v. Int’l Bhd of Teamsters, Local 731, 990 F.2d 957, 960 (7th Cir. 1993).
125. W esterbeke Corp. v. Daihatsu Motor Co ., 304 F.3d 200, 209 (2d Cir. 2002). See also G. Born, International
Commercial Arbitration 2638–45 (2009).
126. See, e.g., W estern Elec. Co. v. Comm. Equip. W orkers , 554 F.2d 135, 138 (4th Cir. 1977) (because there were
“ some facts to support [the] arbitration award,” award confirmed notwithstanding arbitrators’ application of
incorrect burden of proof); Deiulemar Compagnia di Navigazione, SpA v. Transocean Coal Co ., 2004 U.S. Dist.
LEXIS 23948 (S.D.N.Y. 2004) (in manifest disregard application, “ Respondents’ challenges fail to the extent
that they focus on the arbitrators’ factual findings rather than on their application of the law.”); Success Sys. Inc.
v. Maddy Petroleum Equip., Inc., 316 F.Supp.2d 93, 98 (D. Conn. 2004) (“ evaluating evidence remains the
exclusive province of arbitrators”).
127. Hall Street Assoc., LLC v. Mattel, Inc., 128 S.Ct. 1396 (U.S. S.Ct. 2008); infra p. 336.
128. See, e.g., Deiulemar Compagnia Di Navigazione, SpA v. Transocean Coal Co., Inc., 2004 WL 2721072
(S.D.N.Y. 2004); Strom v. First Am. Prof. Real Estate Servs., Inc ., 2009 WL 2244211 (W.D. Okla. 2009);
MACTEC, Inc. v. Gorelick, 427 F.3d 821, 827 (10th Cir. 2005); Kim–C1, LLC v. Valent Biosciences Corp., 756
F.Supp.2d 1258 (E.D. Cal. 2010). See also G. Born, International Commercial Arbitration 2660–68 (2009).
129. English Arbitration Act, 1996, §69(1). See, e.g., BLCT Ltd v. J. Sainsbury plc [2003] EWCA Civ. 884 (English
 Court of Appeal); Lesotho Highlands Dev. Auth. v. Impregilo SpA [2006] 1 A.C. 221 (House of Lords) (parties
exclude right of appeal under §69 by way of Article 26(6) of ICC Rules 1998).
130. English Arbitration Act, 1996, §69(3)(c); Reliance Indus. Ltd v. Enron Oil & Gas India Ltd [2002] 1 All E.R.
(Comm.) 59 (Q.B.). Finally, §69 also only permits an award to be annulled if the reviewing court concludes that it
is “ just and proper” to do so.
131. Lesotho Highlands Dev. Auth. v. Impregilo SpA [2006] 1 A.C. 221 (House of Lords).
132. ABB Attorney General v. Hochtief Airport GmbH [2006] EWHC (Comm.) 388 (Q.B.), quoting Zermalt
Holdings SA v. Nu-Life Upholstery Repairs Ltd [1985] 2 EGLR 14 (Q.B.).
133. Chinese Arbitration Law, Arts. 58(4), (5), 63, 217(4), (5).
134. See G. Born, International Commercial Arbitration 2646–47 (2009).
135. See G. Born, International Commercial Arbitration 2648–49 (2009).
136. Judgment of 8 April 2005, DFT 4P .253/2004 (Swiss Federal Tribunal).
137. Judgment of 10 November 2005, DFT 4P.98/2005 (Swiss Federal Tribunal). A comparable view may arise from
the conclusion of French courts recognizing a “ general principle of international public policy whereby
contracts are to be performed in good faith.” Judgment of 12 January 1993, République de Côte d’Ivoire v.
Norbert Beyrard, 1994 Rev. arb. 685 (P aris Cour d’ appel).
138. See, e.g., Finnish Arbitration Act, §40(3) (“ An award shall be null and void ... if the arbitral award is so obscure
or incomplete if it does not appear in it how the dispute has been decided.”); Argentinean National Code of Civil
and Commercial P rocedure, Art. 761(1) (“ An award containing contradictory decisions shall be null and void.”).
139. Judgment of 14 June 2000, XXVI Y.B. Comm. Arb. 270 (French Cour de cassation civ. le) (2001) (“ the reasons
for an arbitral award may not be reviewed by the court examining the validity of the award. The ground for appeal
based on contradictory reasons for the arbitral decision was thus inadmissible.”).
140. See, e.g., St. Mary Home, Inc. v. Service Employees Int’l Union , 116 F.3d 41 (2d Cir. 1997) (“ Internal
inconsistencies in the [arbitral award] are not grounds to vacate the award.”); Fairchild Corp. v. Alcoa, Inc .,
2007 WL 2775141 (S.D.N.Y. 2007) (“ Nor do internal conflicts embodied in the arbitrators’ decision warrant
denying confirmation of an award.”).
141. See, e.g., English Arbitration Act, 1996, §68(2)(h) (“ failure to comply with the requirements as to the form of the
awards”); Netherlands Code of Civil Procedure, Art. 1065(d)(1) (failure to sign award is grounds for annulment);
Belgian Judicial Code, Art. 1704(2)(h) (“ the formalities prescribed in paragraph 4 of Article 1701 [requiring
written, signed award] have not been fulfilled”).
142. See, e.g., Netherlands Code of Civil Procedure, Art. 1065(d)(1) (failure to provide reasons is grounds for
annulment); 1966 European Uniform Law on Arbitration, Art. 25(2)(i) (“ if the reasons for the award have not
been stated”).
143. See, e.g., English Arbitration Act, 1996, §68(2)(h); Belgian Judicial Code, Art. 1704(2)(h); Italian Code of Civil
P rocedure, Art. 823(2).
144. See, e.g., UNCITRAL Model Law, Art. 34(2); Japanese Arbitration Law, Art. 44; U.S. FAA, 9 U.S.C. §10.
145. See, e.g., Judgment of 10 March 1976, 46 Arb. 241 (1980) (Turkish S.Ct.) (denying recognition of Swiss award
on grounds that ICC award is not an award); Termorio SA v. Electranta SP , 487 F.3d 928 (D.C. Cir. 2007)
(Colombian judicial decisions annulling award on grounds that agreeing to arbitrate under ICC Rules violated
local public policy).
146. See, e.g., Rubins, The Enforcement and Annulment of International Arbitration Awards in Indonesia, 20 Am.
U. Int’ l L. Rev. 359, 373 (2005) (Indonesian courts hold legal (rather than “ technical”) disputes not capable of
resolution by arbitration); Recommendations of the High Commercial Court of Ukraine, No. 04-5/14 (28
December 2007) (corporate shareholder disputes held non-arbitrable under Ukrainian law).
147. The Spanish Tribunal Supremo vacated an international award because it had not been deposited with a notary,
as required by domestic arbitration legislation. Mantilla-Serrano, Note, 1994 Rev. arb. 749 (referring to Judgment
of 4 December 1993 of Tribunal Supremo). This result was reversed by Spain’ s 2003 Arbitration Act. Spanish
Arbitration Act, Art. 37.
148. See, e.g., Rubins, The Enforcement and Annulment of International Arbitration Awards in Indonesia, 20 Am.
U. Int’ l L. Rev. 359, 394 et seq . (2005) (Indonesian courts rely, wrongly, on expansive interpretations of New
York Convention’ s non-recognition grounds to add to bases for annulment of awards).
149. See, e.g., Judgment of 28 September 1992, Dongfeng Garments Factory of Kai Feng City and Tai Chu Int’l
Trade ( HK) Co. Ltd v. Henan Garments Import and Export ( Group) Co . (Zhengzhou Intermediate People’ s
Court), cited in Peerenboom, Seek Truth From Facts: An Empirical Study of Arbitral Awards in the PRC, 49
Am. J. Comp. L. 249, 289 (2001) (Chinese court refused to enforce a foreign award against a Chinese party solely
on the basis that it would not be in China’ s economic interests to do so).
150. See G. Born, International Commercial Arbitration 2555–59, 2656 (2009); supra p. 308.
151. French Code of Civil P rocedure, Art. 1520.
152. Swiss Law on Private International Law, Art. 190. See G. Born, International Commercial Arbitration 2657
(2009).
153. The current Belgian statutory approach is discussed below. See infra p. 335; G. Born, International
Commercial Arbitration 2657, 2660 (2009).
154. Malaysian Arbitration Act, 1952, §34 (repealed) (neither Arbitration Act nor any “ other written law” applies to
ICSID, UNCITRAL and Kuala Lumpur Regional Arbitration Centre awards).
155. See, e.g., 2012 ICC Rules, Article 34(6); LCIA Rules, Art. 26(9); ICDR Rules, Art. 27(1).
156. See supra p. 325. English Arbitration Act, 1996, §68, §4(1), Schedule 1; G. Born, International Commercial
Arbitration 2661–65 (2009)
157. Belgian Judicial Code, Art. 1717(4) (as amended in 1999) (“ The parties may, through an express declaration in
the arbitration agreement or through a later agreement, exclude any action for the annulment of an arbitrator’ s
award when neither of them is either a natural person with a Belgian citizenship or a residence in Belgium, or a
legal person having its main establishment or having a branch there.”).
158. Article 192(1) provides: “ If none of the parties have their domicile, their habitual residence, or a business
establishment in Switzerland, they may, by an express statement in the arbitration agreement or by a subsequent
written agreement, waive fully the action for annulment or they may limit it to one or several of the ground listed
in Art. 190(2).” Swiss Law on P rivate International Law, Art. 192(1).
159. See, e.g., Swedish Arbitration Act, §51 (“ Where none of the parties is domiciled or has its place of business in
Sweden, such parties may in commercial relationships through an express agreement exclude or limit the
application of the grounds for setting aside an award.”); Tunisian Arbitration Code, Art. 78(6) (“ The parties who
have neither domicile, principal residence, nor business establishment in Tunisia, may expressly agree to exclude
totally or partially all recourse against an arbitral award.”).
160. See, e.g., Noble China Inc. v. Lei [1998] O.T.C. LEXIS 2175 (Ontario Court of Justice) (at least where there was
no claim that a mandatory provision of the Model Law had been breached, right to seek annulment may be
excluded); Judgment of 19 December 1990, DFT 116 II 639, 640–41 (Swiss Federal Tribunal) (exclusion
agreement must clearly express intent to waive annulment).
161. See, e.g., Hoeft v. MVL Group, Inc ., 343 F.3d 57, 60, 66 (2d Cir. 2003) (agreement that award “ shall not be
subject to any type of review or appeal whatsoever” does not waive right to seek vacatur on manifest disregard
grounds: “ parties seeking to enforce arbitration awards through federal court confirmation judgments may not
divest the courts of their statutory and common law authority to review both the substance of the awards and the
arbitral process for compliance with §10(a) and the manifest disregard standard”); Spier v. Calzaturificio Tecnica
SpA, 77 F.Supp.2d 405 (S.D.N.Y. 1999) (agreement providing that award is “ final” and “ binding” does “ not
nullify statutory grounds for vacating awards”).
162. See, e.g., Judgment of 24 October 1994, 1995 Rev. arb. 263 (Paris Cour d’ appel); Judgment of 14 November
2004, 2005 Rev. arb. 751 (P aris Cour d’ appel) (waiver of annulment rights, allegedly affected by 1998 ICC Rules,
Article 28(6) “ cannot deprive the parties not only of bringing annulment proceedings against the award, which
is a matter of public policy, but also the corresponding right to invoke the general legal rights of the [French
New Code of Civil Procedure] to seek to stop the provisory enforcement as has been ordered in this case”). These
decisions have been legislatively overruled. French Code of Civil P rocedure, Art. ADD.
163. Noble China Inc. v. Lei [1998] O.T.C. LEXIS 2175, at *38–51 (Ontario Court of Justice) (parties may not validly
exclude annulment under Article 34).
164. See, e.g., Aerojet-Gen. Corp. v. Am. Arbitration Ass’n , 478 F.2d 248, 251 (9th Cir. 1973) (“ While it has been
held that parties to an arbitration can agree to eliminate all court review of the proceedings, the intention to do so
must clearly appear.”); Payne v. SS Tropic Breeze, 423 F.2d 236 (1st Cir. 1970); Goodall-Sanford, Inc. v. United
 Textile W orkers, 233 F.2d 104 (1st Cir. 1956).
165. Hall Street Assoc., LLC v. Mattel, Inc., 128 S.Ct. 1396 (U.S. S.Ct. 2008). As discussed below, Hall Street’ s
specific holding was that an agreement for enhanced judicial review (not waiver of judicial review) was contrary
to the FAA’ s exclusive statutory grounds for vacatur. See infra p. 337.
166. Judgment of 19 December 1990, DFT 116 II 639, 640–41 (Swiss Federal Tribunal) (“ Owing to the wide-
ranging effects of an exclusion agreement it is a requirement that the party should clearly express their intention
by referring to setting aside proceedings and waiving them.”); Judgment of 4 February 2005, DFT 131 III 173
(Swiss Federal Tribunal) (explicit reference to Articles 190 and 192 of the SLP IL required).
167. See, e.g., Am. Diagnostica, Inc. v. Gradipore Ltd , XXIVa Y.B. Comm. Arb. 574 (N.S.W. S.Ct. 1998) (1999) (“ an
agreement that an award shall be final and binding and an added undertaking to carry out the award without
delay (which is the most which can be found in the agreement in relation to the UNCITRAL Arbitration Rules) is
insufficient for an agreement which excludes the right of appeal ... in relation to the award. In accordance with a
long history, reference to an award as final and binding leaves it subject to challenges properly available to a
dissatisfied party.”); Raguz v. Sullivan [2000] NSWCA 240, at ¶87 (N.S.W. Court of Appeal) (“ Mere agreement
that an award shall be ‘ final and binding’ would not be an exclusion agreement.”).
168. See, e.g., M & C Corp. v. Erwin Behr GmbH , 87 F.3d 844, 947 (6th Cir. 1996) (interpreting waiver narrowly to
bar only retrial on merits, not manifest disregard review); Aerojet-Gen. Corp. v. Am. Arbitration Ass’n , 478 F.2d
248, 251 (9th Cir. 1973) (“ While it has been held that parties to an arbitration can agree to eliminate all court
review of the proceedings, the intention to do so must clearly appear.”).
169. See, e.g., Gateway Tech., Inc. v. MCI Telecomm. Corp., 64 F.3d 993 (5th Cir. 1995) (“ the FAA does not prohibit
parties who voluntarily agree to arbitration from providing contractually for more expansive judicial review of
the award”).
170. See, e.g., Kyocera Corp. v. Prudential Bache Trade Servs ., 299 F.3d 769 (9th Cir. 2002), vacating en banc,
LaPine Tech. Corp. v. Kyocera Corp., 130 F.3d 884 (9th Cir. 1997).
171. Hall Street Assoc., LLC v. Mattel, Inc., 128 S.Ct. 1396 (U.S. S.Ct. 2008).
172. G. Born, International Commercial Arbitration 2638, 2665–68 (2009).
173. See G. Born, International Commercial Arbitration 2673–74, 2687–88 (2009).
174. See supra p. 308.
175. See G. Born, International Commercial Arbitration 2338, 2676–77, 2722–25 (2009).
176. Judgment of 9 October 1984, Pabalk Ticaret Limited Sirketi v. Norsolor SA , XI Y.B. Comm. Arb. 484 (French
Cour de cassation civ. le) (1986).
177. See, e.g., Judgment of 10 June 1997, Omnium de Traitement et de Valorisation v. Hilmarton, XXII Y.B. Comm.
Arb. 696 (1997); Judgment of 23 March 1994, Omnium de Traitement et de Valorisation, 1994 Rev. arb. 327
(French Cour de cassation civ. 1e), Note Jarrosson.
178. Judgment of 14 January 1997, 1997 Rev. arb. 395 (Paris Cour d’ appel), Note Fouchard. See also Judgment of
29 September 2005, XXXI Y.B. Comm. Arb. 629 (P aris Cour d’ appel) (2006).
179. G. Born, International Commercial Arbitration 2679–80 (2009).
180. G. Born, International Commercial Arbitration 2680 (2009);Judgment of 28 April 2009, Yukos Capital
(Netherlands Court of Appeal) (recognizing award annulled in Russia).
181. 939 F.Supp. 907 (D.D.C. 1996).
182. 939 F.Supp. at 914. See also G. Born, International Commercial Arbitration 2676–77, 2682, 2722–25 (2009).
183. 939 F.Supp. at 913 (“ The [FAA] ‘ and the implementation of the Convention in the same year by amendment of
the [FAA],’ demonstrate that there is an ‘ emphatic federal policy in favor of arbitral dispute resolution,’
particularly ‘ in the field of international commerce.’ ... A decision by this Court to recognize the decision of the
Egyptian court would violate this clear U.S. public policy.”).
184. Baker Marine Ltd v. Chevron Ltd, 191 F.3d 194, 196–197 & n.3 (2d Cir. 1999).
185. The Baker court apparently relied upon the fact that the parties had not waived their rights to appeal from the
awards under Nigerian law and that there was no indication that the Nigerian courts had favored the award-
debtors during the annulment proceeding. The court also noted that the Nigerian judgments annulled the awards
on excess of authority and procedural grounds (both of which would be grounds for non-recognition under the
Convention). See also G. Born, International Commercial Arbitration 2684–85 (2009).
186. Spier v. Calzaturificio Tecnica, SpA , 71 F.Supp.2d 279 (S.D.N.Y. 1999), reargued, 77 F.Supp.2d 405 (S.D.N.Y.
1999). See also Termorio SA ESP v. Electrificadora del Atlantico SA ESP , 421 F.Supp.2d 87 (D.D.C. 2006)
(U.S. court will recognize annulled award only if annulment violated U.S. public policy; Colombian court’ s
decision that arbitration agreement that could not validly incorporate ICC Rules did not violate U.S. public
policy), aff’d on other grounds, sub nom, Termorio SA v. Electranta SP, 487 F.3d 928 (D.D.C. 2007).
187. 71 F.Supp.2d at 288. Most recently, a U.S. court held in Termorio SA v. Eltranta SP, that a foreign annulment
decision in the arbitral seat would ordinarily be given effect (unless “ tainted” or not “ authentic”). Termorio SA
v. Electranta SP , 487 F.3d 928 (D.D.C. 2007). The court’ s decision failed to appreciate the meaning of either
Article V(1)(e) or VII of the Convention, and in particular the basic principle that the Convention does not
require non-recognition of awards, but merely permits it. The Termorio decision has been widely criticized and
its future precedential weight is uncertain. G. Born, International Commercial Arbitration 2684–86, 2690–98
(2009).
188. Clair v. Beradi , VII Y.B. Comm. Arb. 319 (Paris Cour d’ appel) (1982) (declining to enforce award made in
Switzerland against French defendant after award was vacated as “ arbitrary” by Swiss court);Judgment of 13
August 1979, Gotaverken v. GNMTC, VI Y.B. Comm. Arb. 237 (Swedish S.Ct.) (1981).
189. There is little question but that, absent contrary agreement, it is the law of the seat that governs the tribunal’ s
power to correct an award. That is the approach taken by modern arbitration legislation (which provides
mechanisms for the correction of awards in locally-seated arbitrations). See infra p. 343; UNCITRAL Model Law,
Arts. 1(2), 33. It is also the conclusion reached by awards on the issue. See infra p. 343; UNCITRAL Model
Law, Arts. 1(2), 33. See Award in ICC Case No. 5835, in Grigera Naón, Choice-of-Law Problems in
International Commercial Arbitration, 289 Recueil des Cours 9, 166 (2001) (law of seat determines tribunal’ s
power to make corrections to award); Award in ICC Case No. 7307, in Grigera Naon, Choice-of-Law Problems in
International Commercial Arbitration, 289 Recueil des Cours 9, 167 (2001) (same).
190. Courts in Model Law (and other) jurisdictions have interpreted the scope of authority to correct awards
narrowly, refusing to permit corrections based on a reassessment of the evidence or arguments. See G. Born,
International Commercial Arbitration 2522–24 (2009).
191. See G. Born, International Commercial Arbitration 2526–27 (2009).
192. See G. Born, International Commercial Arbitration 2526–27 (2009).
193. See, e.g., Local 2322, Int’l Bhd of Elec. W orkers v. Verizon New England, Inc. , 464 F.3d 93, 97 (1st Cir. 2006)
(“ Even if one abolished the functus officio doctrine, such problems [like the subsequent authority of an
arbitrator to clarify an award] would remain for the courts to resolve (absent agreement by the parties).”); Smith v.
Transport W orkers Union of Am., AFL-CIO Air Transport Local 556, 374 F.3d 372, 374 (5th Cir. 2004)
(arbitration agreement provided that, “ The arbitrators sua sponte may amend or correct their award within three
business days after the award, but the parties shall not have a right to seek correction of the award.”). There is no
counterpart to §11 in either chapter 2 or 3 of the FAA, although §11 would likely be applicable in cases under
the New York Convention pursuant to §208.
194. See G. Born, International Commercial Arbitration 2530–33 (2009).
195. Williams & Buchanan, Corrections and Interpretations of Awards under Article 33 of the Model Law, 2001
Int’ l Arb. L. Rev. 119, 121. Articles 33(1) and 33(2), dealing with corrections and interpretations, do not
provide expressly for the parties’ agreement to provide otherwise than the statutory formula, in contrast to
Article 33(3), dealing with additional awards, which does.
196. 2012 ICC Rules, Article 35(2). The scope and application of Article 35 has been elaborated upon in a “ Note
Regarding Correction and Interpretation of Arbitral Awards,” issued on 1 October 1999 by the ICC Secretariat.
The Note clarifies that the procedure set forth in Article 29 of 1998 ICC Rules (and, by analogy, Article 35 of
2012 ICC Rules) is not exclusive of other remedies. ICC Secretariat, Note Regarding Correction and
Interpretation of Arbitral Awards, 10(2) ICC Ct. Bull. 4 (1999).
197. ICC, Extracts from ICC Addenda and Decisions Rendered under Article 29 of the ICC Rules of Arbitration,
13(1) ICC Ct. Bull. 72 (2002). Most corrections have involved mathematic or computational errors. In 2004, 25
requests for correction were submitted to the ICC, of which 18 were rejected. 16(1) ICC Ct. Bull. 13 (2005).
198. See, e.g., UNCITRAL Rules, Art. 38(1); LCIA Rules, Art. 27; ICDR Rules, Art. 30; Swiss International
Arbitration Rules, Art. 36; HKIAC Rules, Art. 36; SIAC Rules, Art. 29; WIP O Arbitration Rules, Art. 66.
199. See G. Born, International Commercial Arbitration 2533–35 (2009).
200. As with corrections, the law applicable to a tribunal’ s power to clarify or interpret an award is that of the seat
(or, in rare cases, a foreign procedural law selected by the parties).
201. H. Holtzmann & J. Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration:
Legislative History and Commentary 891 (1989).
202. See, e.g., Belgian Judicial Code, Art. 1702 bis; Swedish Arbitration Act, §32; Indian Arbitration and
Conciliation Act, Art. 33(1)(b); Japanese Arbitration Law, Art. 42.
203. For example, the English Arbitration Act, 1996, provides (in §57) for corrections to “ clarify or remove any
ambiguity,” but does not provide for an interpretation of the award. See G. Born, International Commercial
Arbitration 2539 (2009).
204. Some U.S. courts have held that, under §11 of the FAA, an ambiguous award can be referred back to the
arbitrators for clarification, while other courts have concluded that trial judges can resolve straightforward issues
themselves. See, e.g. , U.S. Energy Corp. v. Nukem, Inc ., 400 F.3d 822, 830 (10th Cir. 2005) (remanding for
clarification of “ vague description of ‘ purchase rights’ ”); Nat’l Post Office Mailhandlers v. U.S. Postal Service ,
751 F.2d 834, 844–45 (6th Cir. 1985); Diapulse Corp. of Am. v. Carba, Ltd , 626 F.2d 1108 (2d Cir. 1980)
(remanding for interpretation of order against sale of “ similar devices”); Alcatel Space SA v. Loral Space &
Comm., Ltd, 2002 U.S. Dist. LEXIS 11343 (S.D.N.Y. 2002) (if an award is “ ambiguous ... the court should
remand to the arbitrators for further findings”); Escobar v. Shearson Lehman Hutton, Inc ., 762 F.Supp. 461
(D.P .R. 1991) (award remanded for “ clarification” because it appeared arbitrators failed to consider one claim).
205. See, e.g., 2012 ICC Rules, Art. 35; IACAC Rules, Art. 42; SCC Rules, Art. 37; ICSID Arbitration Rules, Rules
50–51; DIS Rules, §37; VIAC Rules, Art. 29(1)(a) (subject to agreement by the parties).
206. See, e.g., Addendum in ICC Case No. 10189, 13(1) ICC Ct. Bull. 72, 81 (2002); Addendum in ICC Case No.
10172, 13(1) ICC Ct. Bull. 72, 79 (2002).
207. See LCIA Rules, Art. 27 (limiting the tribunal’ s power to make corrections to an award or to make an additional
award); CIETAC Rules, Arts. 47, 48 (same).
208. UNCITRAL Model Law, Art. 33(3).
209. See, e.g., Belgian Judicial Code, Art. 1708; Netherlands Code of Civil Procedure, Art. 1061; Indian Arbitration
and Conciliation Act, Art. 33(4); Japanese Arbitration Law, Art. 43.
210. French Code of Civil P rocedure, Art. 1481; Swedish Arbitration Act, §32.
211. See G. Born, International Commercial Arbitration 2541–42 (2009).
212. Trade & Transport, Inc. v. Natural Petroleum Charterers, Inc ., 931 F.2d 191, 195 (2d Cir. 1991) (“ [O]nce the
arbitrators have finally decided the submitted issues, they are, in common-law parlance, ‘ functus officio,’
meaning that their authority over those questions in ended.”); Mercury Oil Ref. Co. v. Oil W orkers Int’l Union ,
187 F.2d 980, 983 (10th Cir. 1951) (When “ arbitrators have executed their award and declared their decision
they are functus officio and have no power or authority to proceed further.”).
213. See, e.g., LCIA Rules, Art. 27(3); ICSID Arbitration Rules, Rule 49; ICDR Rules, Art. 30(1). The 1998 ICC Rules
omitted any provision permitting supplemental awards (after lengthy debate). In contrast, the 2012 ICC Rules
added a provision regulating the remission of an award, allowing the arbitrator to whom a court has remitted an
award to “ take any steps as may be necessary to enable the arbitral tribunal to comply with the terms of such
remission” and “ fix an advance to cover any additional fees and expenses of the arbitral tribunal and any
additional ICC administrative expenses.” 2012 ICC Rules, Art. 35(4).
214. See, e.g., Judgment of 11 March 1992, 1993 Rev. arb. 115 (Swiss Federal Tribunal); Judgment of 9 July 1997, 15
ASA Bull. 506 (Swiss Federal Tribunal) (1997).
215. English Arbitration Act, 1996, §§68(2)(g), 68(3)(a).
216. Antoine Biloune v. Ghana Inv. Centre, Ad Hoc Awards ( 27 October 1989 and 30 June 1990) , XIX Y.B. Comm.
Arb. 11, 22 (1994).
217. See Lincoln Riahi v. Islamic Republic of Iran , Decision No. DEC 133-485-1 ( 17 November 2004), 2004 WL
2812132, at ¶¶35–43; Antoine Biloune v. Ghana Inv. Centre , Award on Jurisdiction and Liability ( 27 October
1989), XIX Y.B. Comm. Arb. 11, 21 (1994) (“ [A] court or Tribunal, including this international arbitral Tribunal,
has an inherent power to take cognizance of credible evidence, timely placed before it, that its previous
determinations were the product of false testimony, forged documents or other egregious ‘ fraud on the
 Tribunal.’ ”).
218. See infra p. 413.
219. GAFTA Arbitration Rules, Arts. 10(1), 12(3).
220. See supra pp. 13–14, 148–49.
221. The empirical evidence indicates that compliance with awards is very high (e.g., in excess of 90%). See G. Born,
International Commercial Arbitration 2326, 2879 (2009).
222. B. Cheng, General Principles of Law as Applied by International Courts and Tribunals 336–72 (1953).
223. See G. Born, International Commercial Arbitration 2879–86 (2009).
224. The concept of a “ party” for preclusion purposes is generally defined to include both the litigant and various
other entities and persons that are in “ privity” with it. The scope of this doctrine varies from jurisdiction to
jurisdiction. See Brekoulakis, The Effect of An Arbitral Award and Third Parties in International Arbitration:
Res Judicata Revisited, 16 Am. Rev. Int’ l Arb. 177, 185 (2005) (“ the extension of the effect [of an award] to a
‘ circle’ of parties other than the real parties constitutes a general principle common to almost every legal
system”); G. Born, International Commercial Arbitration 2881–83, 2903–05 (2009).
225. Restatement ( Second) Judgments §18 (1982); P. Barnett, Res Judicata, Estoppel and Foreign Judgments 18–
19 (2001).
226. Restatement ( Second) Judgments §24 (1982); P. Barnett, Res Judicata, Estoppel and Foreign Judgments 117–
25 (2001).
227. See, e.g., Restatement ( Second) Judgments §27 (1982); Mills v. Cooper [1967] 2 Q.B. 459, 468–69 (Q.B.);
Arnold v. Nat’l W estminster Bank plc [1991] 2 A.C. 93, 111 (House of Lords); New Brunswick Ry. v. British and
French Trust Corp. [1939] A.C. 1, 20 (House of Lords).
228. Restatement ( Second) Judgments §29 (1982); P. Barnett, Res Judicata, Estoppel and Foreign Judgments 62–
65 (2001).
229. See, e.g., French Civil Code, Art. 1351; French Code of Civil Procedure, Art. 484; Belgian Judicial Code, Arts.
23–27, 1703; Netherlands Code of Civil Procedure, Arts. 236, 1059; German ZP O, §§322–327, 1055; Italian
Code of Civil P rocedure, Art. 324.
230. In the words of one Continental European authority: “ The principle of res judicata is a necessary consequence
of the parties’ right to apply for protection to the courts. ... Legal peace between the parties requires that every
litigation finds an end; consideration for the courts requires that they are not being burdened with what already
has been decided; preserving their integrity requires that conflicting decisions are avoided. This purpose is most
completely satisfied by virtue of the prohibition to re-litigate and re-consider and by binding the parties to the
decision.” L. Rosenberg, K. Schwab & P . Gottwald, Zivilprozessrecht §1055 (16th ed. 2004).
231. French Code of Civil P rocedure, Art. 484.
232. French Civil Code, Art. 1351.
233. See G. Born, International Commercial Arbitration 2884–86, 2905–08 (2009).
234. See G. Born, International Commercial Arbitration 2884–86 (2009).
235. B. Hanotiau, Complex Arbitrations ¶534 (2005). See G. Born, International Commercial Arbitration 2884–86
(2009).
236. See, e.g., Effect of Awards of Compensation Made by the United Nations Administrative Tribunal, [1954] I.C.J.
Rep. 47, 53 (I.C.J.) (res judicata is a “ well-established and generally recognized principle of law”);
Interpretation of Judgments 6 and 7 Concerning the Case of the Factory at Chorzow, Dissenting Opinion by
M. Anzilotti, P CIJ Series A, No. 13, at 27 (P.C.I.J. 1927) ( res judicata is one of the “ general principles of law
recognized by civilized nations”).
237. Trail Smelter Arbitration ( U.S. v. Canada) , Award of 16 April 1938 and 11 March 1941 , III R.I.A.A. 1905,
1950 (1941). See also The Pious Fund of the Californias ( United States of America v. Mexico) , Award in
Permanent Court of Arbitration ( 22 May 1902), 2 Am. J. Int’ l L. 893, 900 (1908) (“ this rule [of res judicata]
applies not only to the judgments of tribunals created by the State, but equally to arbitral sentences rendered
within the limits of the jurisdiction fixed by the compromis”);W aste Mgt, Inc. v. Mexico, Decision on
Jurisdiction, ICSID Case No. ARB( AF)/00/3 ( NAFTA) ( 26 June 2002), 41 Int’ l Legal Mat. 1315, ¶39 (2002)
(“ There is no doubt that res judicata is a principle of international law, and even a general principle of law
within the meaning of Article 38(1) (c) of the [ICJ] Statute.”).
238. Case Concerning the Arbitral Award Made by the King of Spain on 23 December 1906 ( Honduras v.
Nicaragua), [1960] I.C.J. Rep. 192 (I.C.J.).
239. It is doubtful that applying national preclusion principles comports with the objectives of the Convention, or
most agreements to arbitrate, and there are substantial arguments that this approach is mistaken. See G. Born,
International Commercial Arbitration 2888–94 (2009).
240. See G. Born, International Commercial Arbitration 2891 (2009).
241. Assoc. Elec. and Gas Ins . Services Ltd v. European Reins. Co. of Zurich, 21 ASA Bull. 857, 865 (Bermuda Court
of Appeal 2003) (2003) (emphasis added).
242. See G. Born, International Commercial Arbitration 2888–93 (2009).
243. See G. Born, International Commercial Arbitration 2880–87, 2893 (2009).
244. See McDonald v. City of W est Branch , 466 U.S. 284, 292–93 n.13 (U.S. S.Ct. 1984); Alexander v. Gardner-
Denver Co., 415 U.S. 36, 60 & n.21 (U.S. S.Ct. 1974).
245. McDonald, 466 U.S. at 288.
246. Restatement ( Second) Judgments §84(1) (1982). Sub-sections 2, 3 and 4 of §84 set forth various exceptions to
this general principle.
247. See, e.g., MACTEC Inc. v. Gorelick , 427 F.3d 821, 831 (10th Cir. 2005) (“ a valid and final award by arbitration
generally has the same effect under the rules of res judicata as a judgment of a court”);Greenblatt v. Drexel
Burnham Lambert, Inc ., 763 F.2d 1352, 1360 (11th Cir. 1985) (“ When an arbitration proceeding affords basic
elements of adjudicatory procedure, such as an opportunity to present evidence, the determination of issues in an
arbitration proceeding should generally be treated as conclusive in subsequent proceedings, just as
determinations of a court would be treated.”).
248. See, e.g., Restatement ( Second) Judgments §84(1) & (2) (1982); Lewis v. Circuit City Stores, Inc., 500 F.3d 1140
(10th Cir. 2007) (applying “ claim preclusion to litigation subsequent to final and valid arbitration awards”);
Jacobson v. Fireman’s Fund Ins. Co., 111 F.3d 261, 267 (2d Cir. 1997).
249. See, e.g., Sanders v. W ashington Metro. Area Transit Auth., 819 F.2d 1151, 1157 (D.D.C. 1987) (“ When the
parties have had a full and fair opportunity to present their evidence, the decisions of the arbitrator should be
viewed as conclusive as to subsequent proceedings, absent some abuse of discretion by the arbitrator.”); Norris
v. Grosvenor Mktg Ltd , 803 F.2d 1281, 1286 (2d Cir. 1986) (“ Norris was given his opportunity to argue his
case to the arbitrator. He should not now be given another bite of the cherry.”).
250. See Restatement ( Second) Judgments §84(1) & (3) (1982);W eizmann Inst. of Science v. Neschis, 2005 U.S. Dist.
LEXIS 32822 (S.D.N.Y. 2005) (“ Collateral estoppel applies to issues resolved in arbitration, assuming that
there has been a ‘ final determination on the merits, notwithstanding a lack of confirmation of the award.’ ”).
251. See, e.g., Sheinfeld v. Leeds, 201 Fed.Appx. 998, 999–1000 (5th Cir. 2006);Norris v. Grosvenor Mktg Ltd, 803
F.2d 1281, 1286–87 (2d Cir. 1986) (“ The fact that plaintiffs base their claims on new legal theories does not
shield them from the doctrine of collateral estoppel as liability is premised on the same issue in both
proceedings.”).
252. See G. Born, International Commercial Arbitration 2680–87, 2894–2903 (2009). This is subject to the caveat,
discussed above, that U.S. courts will in some circumstances recognize foreign awards which have been annulled
in the seat. See supra p. 340.
253. Restatement ( Second) Judgments §13, §84(1) & comment e (1982); W einberg v. Safeco Ins. Co. of Am., 114 Cal.
App.4th 1075 (Cal. App. 2004).
254. Restatement ( Second) Judgments §39 (1982); Powers v. United Servs. Auto. Ass’n , 6 P.3d 294, 298 (Al. 2000);
Bourque v. Cape Southport Assoc., LLC, 800 N.E.2d 1077, 1081 (Mass. App. Ct. 2004).
255. Fidelitas Shipping Co. Ltd v. V/O Exportchleb [1965] 1 Lloyd’ s Rep. 13 (English Court of Appeal).
256. See, e.g., Svenska Petroleum Exploration AB v. Lithuania [2005] EWHC 9 (Comm.) (Q.B.) (issue estoppel can
result from arbitral award); Aktiebolaget Legis v. Berg & Sons Ltd [1964] 1 Lloyd’ s Rep. 203 (Q.B.). See also
Imbar Maratima SA v. Republic of Gabon, XV Y.B. Comm. Arb. 436 (Cayman Islands Grand Court 1989) (1990)
(“ I have no option but to hold that doctrine of res judicata in its wider sense to be applicable to the here. The
result is that having failed to raise the issue of a compensation before the arbitral tribunal, the Republic is not
entitled to raise that issue now before this Court.”).
257. F.J. Bloemen Pty. Ltd v. Council of City of the Gold Coast, [1973] A.C. 115 (P rivy Council Australia).
258. See G. Born, International Commercial Arbitration 2903–05 (2009). See also Haubold, Res Judicata: A Tale
of Two Cities, 2(3) Global Arb. Rev. 19 (2007).
259. See G. Born, International Commercial Arbitration 2905–08 (2009).
260. See Belgian Judicial Code, Art. 1703 (“ when it has been notified”); Netherlands Code of Civil Procedure, Art.
1059 (“ the day on which it is made”); Swiss Law on Private International Law, Art. 190(1) (“ from its
notification.”); Japanese Arbitration Law, Art. 45(1).
261. See G. Born, International Commercial Arbitration 2905–08 (2009).
262. Judgment of 9 July 1992, Norbert Beyrard France v. République de Côte d’Ivoire , 1994 Rev. arb. 133 (Paris
Cour d’ appel).
263. CME Czech Republic BV v. Czech Republic , Partial Award ( 13 September 2001), 14 WTAM 288 (2001);
Lauder v. Czech Republic, Final Award ( 3 September 2001), 14 WTAM 109 (2001).
264. Judgment of 15 May 2003, Czech Republic v. CME Czech Republic BV , Case No. T 8735 01 (Svea Court of
Appeal), reprinted and discussed in S. Jarvin & A. Magnusson (eds.), International Arbitration Court Decisions
663, 678–79 (2006).
265. See G. Born, International Commercial Arbitration 2908, 2914–15 (2009). It is generally-held that it is the
dispositive portion of an award that has res judicata effect. See G. Born, International Commercial Arbitration
2908 (2009).
266. See G. Born, International Commercial Arbitration 2908–12 (2009).
267. Sheppard, Res Judicata and Estoppel, in B. Cremades & J. Lew (eds.), Parallel State and Arbitral Procedures in
International Arbitration 219, 231 (2005) (“ the tribunal - as law and practice stand today – must apply the res
judicata rules of the [second] place of arbitration”).
268. Sheppard, Res Judicata and Estoppel, in B. Cremades & J. Lew (eds.), Parallel State and Arbitral Procedures in
International Arbitration 219, 230 (2005) (“ The place where the prior decision was made might place some
constraint or limitation on the scope of res judicata. For example, under that law, only the dispositif might have
res judicata effect. This should then be respected at the place of arbitration.”).
269. See G. Born, International Commercial Arbitration 2908–12 (2009).
270. See G. Born, International Commercial Arbitration 2889–94, 2912, 2918–19 (2009).
271. See G. Born, International Commercial Arbitration 1624–26, 2176–92, 2914–32 (2009). See also Schlosser,
Arbitral Tribunals or State Courts: W ho Must Defer to W hom? , in Arbitral Tribunals or State Courts: W ho
Must Defer to W hom? 15, 24 (ASA Special Series No. 15 2001) (“ Since final court judgments are binding on
the parties, it is clear that arbitrators are bound by previous judicial determinations of the parties’ rights and
duties.”).
272. Judgment of 28 September 1979, 1980 Rev. arb. 506 (P aris Cour d’ appel).
273. Aircraft Braking Sys. Corp. v. Local 856 Int’l Union , 97 F.3d 155, 159 (6th Cir. 1996). See also G. Born,
International Commercial Arbitration 2914–15 (2009).
274. See infra p. 368; Judgment of 14 May 2001, Fomento de Construcciones y Contrates SA v. Colon Container
Terminal SA, DFT 127 III 279 (Swiss Federal Tribunal).
275. Final Award in ICC Case No. 3267, XII Y.B. Comm. Arb. 87, 89 (1987). See G. Born, International Commercial
Arbitration 2918 (2009).
276. E. Schwartz, The Practices and Experience of the ICC Court, in Conservatory and Provisional Measures in
International Arbitration 57 (1993) (quoting Partial Award in ICC Case No. 4126, in S. Jarvin & Y. Derains
(eds.), Collection of ICC Arbitral Awards 1974–1985 511 (1990).
277. See G. Born, International Commercial Arbitration 2919–30 (2009).
278. See supra p. 52.
279. See G. Born, International Commercial Arbitration 2921–23 (2009).
280. Republic of Kazakhstan v. Istil Group Inc. [2008] 1 Lloyd’ s Rep. 382, 395 (Q.B.).
281. See G. Born, International Commercial Arbitration 1045–47, 2920–22, 2927–28 (2009).
282. Judgment of 19 April 1994, United Arab Emirates v. W estland Helicopters Ltd , DFT 120 II 155, 164 (Swiss
Federal Tribunal) (“ It is only different ... when the national judge is seized first for an action to the merits and an
exception of arbitration is raised before him. If the court declines its jurisdiction, its decision does not bind the
arbitration tribunal seized at a later stage; on the contrary, if it assumes [jurisdiction], it binds the tribunal by
 reason of the res judicata status of its decision.”).
283. Judgment of 19 December 1997, Compañia Minera Condesa SA et Compañia de Minas Buenaventura SA v.
BRGMPérou SAS, DFT 124 III 83, 86–87 (Swiss Federal Tribunal).
284. Judgment of 14 May 2001, Fomento de Construcciones y Contrates SA v. Colon Container Terminal SA , DFT
127 III 279 (Swiss Federal Tribunal). The decision was subsequently legislatively overruled by an amendment to
Article 186 (1bis) of the Swiss Law on Private International Law, which granted Swiss-seated arbitral tribunals
discretion to decide whether to stay arbitral proceedings on jurisdictional issues in light of foreign litigations.
285. See supra pp. 52, 59; G. Born, International Commercial Arbitration 2923–24 (2009).
286. See supra p. 47.
287. See G. Born, International Commercial Arbitration 2924 (2009).
288. These were the circumstances in Termorio SA v. Electranta SP , 487 F.3d 928 (D.D.C. 2007), where a Colombian
court annulled an ICC award made in Colombia on jurisdictional grounds, and a U.S. court subsequently denied
recognition of the award. As discussed above, the Colombian decision violated Article II of the New York
Convention, while the U.S. decision perpetuated that violation by failing to recognize the award. See supra pp.
338–41. See G. Born, International Commercial Arbitration 2677–88, 2691–99, 2925 (2009).
289. See G. Born, International Commercial Arbitration 971–981, 1020, 1030–31, 2925 (2009).
290. See G. Born, International Commercial Arbitration 2923–28 (2009).
291. See, e.g., Award in ICC Case No. 10623, 21 ASA Bull. 59 (2003) (Ethiopian judicial proceedings had no effect
on the arbitrator’ s jurisdiction); Partial Award in ICC Case No. 4862, in, S. Jarvin, Y. Derains & J.-J. Arnaldez
(eds.), Collection of ICC Arbitral Awards 1986–1990 508–509 (1994) (Yemeni court action, challenging
validity of arbitration clause, had no effect on arbitration sited in France); Republic of Indonesia v. Himpurna
California Energy Ltd ( Bermuda), XXV Y.B. Comm. Arb. 469 (Hague Arrondissementsrechtbank) (2000). See G.
Born, International Commercial Arbitration 2925, 2945–46 (2009).
292. See G. Born, International Commercial Arbitration 2923–28 (2009).
293. Sheppard, Res Judicata and Estoppel, in B. Cremades & J. Lew (eds.), Parallel State and Arbitral Procedures in
International Arbitration 219, 222 (2005).
294. See G. Born, International Commercial Arbitration 2965–2970 (2009).
295. A recent overview of the field identified sports arbitrations, domain name arbitrations and (less decisively)
investment treaty arbitrations as fields where prior awards were both frequently cited and generally accorded
substantial precedential weight, while raising doubts as to the importance of arbitral precedent in international
commercial arbitration. Kaufmann-Kohler, Arbitral Precedent: Dream, Necessity or Excuse?, 23 Arb. Int’ l 357,
361–64, 372 (2007). In fact, a review of reported awards suggests fairly strongly that it is inaccurate to conclude
that arbitral authority is confined to sports, domain name and investment arbitrations.
296. Final Award in ICC Case No. 6363, XVII Y.B. Comm. Arb. 186, 201 (1992). In another case, the tribunal
concluded that, although a prior award did not have formal res judicata effect (because the prior dispute involved
different parties and different contracts), the prior award would be considered persuasive: “ the arbitration
tribunal is not bound by the X award; nor are the parties to these arbitration proceedings. There can be no issue
estoppel. Nonetheless, it provides a helpful analysis of the common factual background to this dispute.
Accordingly, we have borne its findings and conclusions in mind, whilst taking care to reach our own
conclusions on the materials submitted by these parties in these proceedings.” Award in ICC Case No. 7061
(unpublished), quoted in B. Hanotiau, Complex Arbitrations 253 (2005).
297. O’ Brien, Maritime Arbitration, 14 Forum 222, 227 (1978–1979).
298. Berger, The International Arbitrators’ Application of Precedents, 9 J. Int’ l Arb. 5, 20 (1992) (“ over and over
again, international arbitral tribunals have been confronted with the construction of Clause 67 FIDIC especially
with respect to the time-bar within the two-tier conflict resolution system ... International arbitrators are now
referring to these published awards rather than to court decisions to justify their holding or to reject the
allegations and legal view of the parties.”).
299. See infra p. 418.
300. See supra pp. 50–51, 52, 55–58, 203–33 & 233–59; G. Born, International Commercial Arbitration 2950–69
(2009).
301. Carbonneau, Rendering Arbitral Awards with Reasons: The Elaboration of A Common Law of International
 Transactions, 23 Colum. J. Trans. L. 579, 589 (1984–1985) (“ a group of core principles is beginning to take
shape”); Cremades, The Impact of International Arbitration on the Development of Business Law, 31 Am. J.
Comp. L. 526 (1983).
302. Interim Award in ICC Case No. 4131, IX Y.B. Comm. Arb. 131, 136 (1984). See also supra p. 58.
303. Lando, Conflict-of-Law Rules for Arbitrators, in Festschrift für Konrad Zweigert 157, 159 (1981).
304. SGS Société Gén. de Surveillance SA v. Republic of the Philippines, Decision on Jurisdiction, ICSID Case No.
ARB/02/6 ( 29 January 2004), 8 ICSID Rep. 515, 545 (2004).
Chapter 17
Recognition and Enforcement of International Arbitral
Awards

As noted above, in practice, most international arbitral awards are voluntarily complied with.
Nonetheless, in some cases, the award debtor may refuse to satisfy the award against it,
requiring the award creditor to seek to enforce the award. In international disputes, award
creditors may need to seek enforcement of awards outside the arbitral seat, against foreign
assets. In these instances, the New York Convention and many national arbitration statutes
provide a robust, “pro-enforcement” regime for recognizing and enforcing arbitral awards.

§17.01 JURISDICTIONAL REQUIREMENTS OF INTERNATIONAL AND

NATIONAL ARBITRATION REGIMES

In order for the pro-enforcement regime of the Convention, and national arbitration
legislation, to apply to an award, the “jurisdictional requirements” of these regimes must be
satisfied. The jurisdictional requirements applicable to recognition of arbitral awards are very
similar to those applicable to the recognition of international arbitration agreements
(discussed in Chapter 2 above).1 In particular, the Convention and most arbitration statutes
require showing: (1) that recognition is sought of an arbitral “award”; (2) arising from a
“commercial” relationship; (3) and a “defined legal” relationship; (4) that the award is a
“foreign” or “non-domestic” award; and (5) any reciprocity requirements are satisfied.

[A] “Award” Requirement

As discussed above, international arbitration conventions and national arbitration statutes

apply only to “arbitral awards,” and not to other decisions.2 The definition of an “arbitral
award” is addressed above, and includes three basic conditions: (a) the award must result
from an agreement to “arbitrate”; (b) the award must have certain minimal characteristics
inherent in the concept of an “award”; and (c) the award must resolve a substantive issue, not
a procedural matter. Unless these conditions are satisfied, an instrument will not be an award
and will not be subject to the pro-arbitration regime of the Convention and national
arbitration legislation.
[B] “Commercial” Relationship

Both the Convention and national arbitration legislation limit their respective legal regimes to
arbitral decisions arising from “commercial” relationships. This parallels analogous
jurisdictional requirements (discussed above) applicable to international arbitration
agreements. Paralleling the foregoing provisions, and as discussed above, many arbitration
statutes also apply only to “commercial” matters or to “international commercial
arbitration.”3 This limitation typically applies equally to arbitration agreements and arbitral
awards. (Some statutes omit any “commercial” requirement, and apply to awards regardless
whether they concern commercial or non-commercial matters, but this is comparatively
unusual.4 )

[C] “Defined Legal” Relationship

The Convention applies only to arbitration agreements – and, impliedly, awards – arising
from a “defined legal” relationship.5 Some arbitration legislation also contains a “defined
legal” relationship requirement. The Model Law repeats the Convention’s formulation
verbatim, limiting the statute’s scope to arbitration agreements, and therefore impliedly
awards, concerning disputes arising from a “defined legal” relationship.6 Other legislation
tends to omit such express limitations, although a similar requirement is usually implied.7
As discussed above, even where it is applicable, the “defined legal relationship”
requirement has in practice imposed few limitations on the scope of international conventions
or national legislation. Instead, the limitation serves to emphasize the breadth of the
permissible scope of arbitration agreements, which may encompass non-contractual, as well
as contractual, disputes.8

[D] “Foreign,” “Non-Domestic” and “International” Awards

Most arbitration conventions apply only to “foreign” or “non-domestic” awards; with regard
to purely domestic awards, arbitration conventions are inapplicable. Similarly, many
arbitration statutes apply only to “international” (or “foreign”) awards, or contain separate
recognition and enforcement provisions that apply only to “international” or “foreign”
awards.9 Purely domestic awards are typically dealt with by different legislative provisions.
As a consequence, the applicability of the favorable, pro-enforcement recognition and
enforcement regimes of international arbitration conventions and national arbitration
legislation will require establishing, according to varying formulae imposed by the relevant
convention or legislation, an award’s “international” (or “foreign” or “non-domestic”) status.
At the same time, the applicability of statutory annulment provisions will depend on
whether the award was made locally or abroad.

[1] New York Convention

The Convention applies only to “foreign” and “non-domestic” awards; its provisions
regarding the recognition of awards do not apply to “domestic” awards. These limitations are
contained in Article I(1), which provides that the Convention applies to awards that either:
(a) are “made” outside the country where enforcement is sought (i.e., a “foreign” award), or
(b) are “not considered as domestic awards” in the country where enforcement is sought (i.e.,
a “non-domestic” award).10 Thus, Article I(1) of the Convention provides:

This Convention shall apply to the recognition and enforcement of arbitral awards made
in the territory of a State other than the State where the recognition and enforcement of
such awards are sought, and arising out of differences between persons, whether
physical or legal. It shall also apply to arbitral awards not considered as domestic
awards in the State where their recognition and enforcement are sought.

The Convention does not apply to “domestic” (or even to “international”) awards, but only
to “foreign” awards and awards treated as “non-domestic” by particular Contracting States.

[i] “Foreign” Awards

Article I(1) provides that a “foreign” award is an award made in State A, which is sought to
be recognized in State B: in these circumstances, the award is “foreign” in State B.
Importantly, the character of an award as “foreign” varies depending on the state where this
question is presented: in the foregoing example, the award is “foreign” in State B, but is not
“foreign” in State A. Simply put, an award is “foreign” in a particular state when the award is
“made” in a different state (where it will not be “foreign”).
The most important interpretative question raised by this definition is determining where
an award is “made.” As discussed above, the answer to that question is prescribed (as a
uniform international rule) by the Convention: an award is “made” at the seat of the
arbitration, either as specified in the arbitration agreement or (absent agreement) by the
arbitral tribunal or institution.11 As also discussed above, virtually all courts to consider the
issue have adopted this view.12
When arbitral hearings are held for convenience outside the seat or when the arbitrators
(being resident in different places or for convenience) sign the award in different states, this
should have no effect on the arbitral seat or on the place where the award is deemed to be
made. Likewise, the delivery of an award to a party in its home jurisdiction, outside the seat
of arbitration, has no effect on where the award is “made.” Under the Convention, an award
is “made” in only one place and that place is the contractually-specified seat of arbitration.13
The legal consequences of classifying an award as “foreign” under the Convention are
straightforward. If an award is “foreign” in a particular Contracting State, it will ordinarily be
protected by the Convention in that state, and therefore subject to non-recognition in that
state only if one of the exceptions set forth in Article V of the Convention is applicable. In
contrast, an award that is not “foreign” in a particular state is not subject to the Convention
there and can generally be denied confirmation (and instead be subject to annulment within
that state on any grounds available under local law).14

[ii] “Non-Domestic” Awards

As noted above, the Convention’s provisions regarding the recognition of awards apply to
“non-domestic” awards (as well as to “foreign” awards). Thus, the second sentence of Article
I(1) provides that the Convention “shall also apply to arbitral awards not considered as
domestic awards in the State where their recognition and enforcement are sought.”
The overwhelming tendency of national legislatures is to adopt a territorial approach to
awards, treating any awards made on national territory as domestic (subject to local
annulment actions), and any awards made outside national territory as foreign/non-domestic
(not subject to local annulment actions, and instead protected by the Convention’s
recognition requirements). In effect, these states treat the category of “non-domestic” awards
as extending no further than, and thus duplicative of, the category of “foreign” awards.15
The United States is an exception to the foregoing approach, holding that awards will be
“non-domestic” even if they are made in the United States, provided they are “made within
the legal framework of another country, e.g., pronounced in accordance with foreign law or
involving parties domiciled or having their principal place of business outside the enforcing
jurisdiction.”16 This conclusion results from §202 of the FAA, which implements the
Convention in the United States; this legislation fairly clearly extends the Convention to
awards made in the United States, provided that the award concerns a matter with a
“reasonable relation” to one or more foreign states.17 As a consequence, U.S. courts hold that
any award made in the United States, with a meaningful international connection, is a non-
domestic award that is subject to the Convention.18
The legal consequences of classifying an award as a “non-domestic” award are less clear
than with regard to a “foreign” award. If an award is “non-domestic” in a particular state, it
can arguably be denied recognition in that state only if one of the substantive exceptions set
forth in Article V of the Convention is applicable (other than the exception in Article V(1)
(e)). This is the result that would follow from treating “non-domestic” awards in the same
manner, and subject to the same legal consequences, as “foreign” awards.
On the other hand, some U.S. courts have held that the Convention permits an award that
is made in the United States, but treated as “non-domestic” under the FAA, to be vacated by
a U.S. court on whatever grounds are available under domestic (U.S.) law for the annulment
of such awards: put differently, these decisions have held that the Convention does not
require a state to apply only Article V’s substantive grounds for non-recognition to the
annulment of awards which are made within the state, but which the state regards as “non-
domestic.”19 The better view is that these decisions are inconsistent with the categorization
of awards made in the United States as “non-domestic,” under §202 of the FAA: under this
analysis, non-domestic awards should be subject to vacatur in the United States only on
grounds available for non-recognition of awards under Article V of the Convention.

[2] National Arbitration Legislation

In general, most national arbitration legislation applies only to awards made in “international”
arbitrations, while such legislation generally prescribes different standards for the annulment
and recognition of “foreign” awards, on the one hand, and awards, made locally, on the other
hand. Under these standards, most arbitration statutes will only provide for annulment of
international arbitral awards made within the state and will provide for recognition of
international awards made both within and outside the state.
The UNCITRAL Model Law is representative. As discussed above, the Model Law
applies only to the subject of “international commercial arbitration.”20 In turn,
“international” arbitration is defined expansively in Article 1(3) by reference, alternatively, to
the parties’ places of businesses, the nature of the parties’ relationship, or the seat of the
arbitration.21 By virtue of Article 1(3), the Model Law’s provisions with regard to both
annulment and recognition of arbitral awards are applicable only to awards made in
“international” arbitrations; in contrast, the Model Law will not apply at all to “non-
international” or “domestic” awards.
The Model Law then establishes different legal frameworks for the annulment (Article 34)
and the recognition (Articles 35 and 36) of the international arbitral awards which are within
the Law’s general coverage. With regard to annulment, Articles 1(2) and 34 provide that an
international arbitral award can be annulled by a local court “only if the place of arbitration is
in the territory of the State”; Article 34 then prescribes an exclusive, exhaustive list of
grounds for the annulment of such awards. In contrast, with regard to recognition, Articles 35
and 36 apply to international arbitral awards “irrespective of the country in which [they were]
made” (that is, to both awards made abroad and awards made locally); Articles 35 and 36
then require that an award be recognized in accordance with specified statutory provisions.
Thus, “international” arbitral awards will be subject to annulment (under Article 34) or
recognition (under Articles 35 and 36) if they are made within the state, but only to
recognition (under Articles 35 and 36) if they are made outside the state.
Other national arbitration legislation parallels the Model Law. In almost all jurisdictions,
national law only permits a national court to annul an award that is made on local territory;
foreign awards, made outside national territory, are not subject to annulment, and are instead
only subject to recognition (or non-recognition).22
Despite the common approach adopted by the UNCITRAL Model Law and other legal
systems to the annulment and recognition of international arbitral awards, a few jurisdictions
have adopted contrary positions. As discussed above, a few decisions in India (recently
overruled), Pakistan and Indonesia have held that awards made abroad are nonetheless not
“foreign” in local courts (and are therefore not subject to the Convention’s recognition
regime).23 As discussed above, these decisions have typically reasoned that an award was
subject to local annulment, despite being made abroad, because the arbitration agreement or
underlying contract was subject to local law. These decisions are contrary to the Convention,
which contemplates (in Article V(1) (e)) that awards may be annulled only by a court in the
place where it is made (the arbitral seat).24

[E] Reciprocity Requirements under International Conventions

As discussed above, Article I(3) of the Convention permits Contracting States to make
reciprocity reservations (and a number of states have done so).25 Reciprocity under Article
I(3) is determined by reference to the place where the arbitral award is made, not by the
parties’ nationalities. 26 Because virtually all trading states have ratified the Convention, the
reciprocity requirement is almost always satisfied and of limited practical importance.

§17.02 PROOF OF FOREIGN ARBITRAL AWARDS

A threshold issue in any effort to obtain recognition of an international award is what proof
of the award is required. This subject is addressed by both the New York Convention and
many arbitration statutes, which seek to simplify the process of proving the existence of an
award.

[A] Proof of Award under New York Convention

The Convention sets forth, in Article IV, requirements of formal proof that must be satisfied
in order to obtain the advantage of the Convention’s provisions concerning recognition of
awards. These provisions are designed to provide internationally-uniform and transparent
standards of proof, and to prevent parochial resistance to the recognition of foreign awards in
the guise of formal requirements of proof.
Under Article IV, the party seeking enforcement of an award must provide: (a) an
authenticated original award or a certified copy; and (b) the original arbitration agreement or a
certified copy. Additionally, if the award or agreement are not in the official language of the
country where enforcement is sought, Article IV requires that a sworn translation be
provided. These documents must be filed, together with an application for recognition of the
award, with a “competent authority” in a Contracting State.
Under the Convention, national law is not permitted to impose more demanding
requirements of proof than those in Article IV. It is clear that the award-creditor bears the
burden of proving the existence of an award under Article IV’s standards, 27 in contrast to the
award-debtor’s obligation to prove the applicability of one of the exceptions to recognition
under Article V.
Article IV was drafted to advance the Convention’s pro-arbitration policies: “Article IV
must be interpreted in accordance with the spirit of the Convention .... The Contracting
States wished to reduce the obligations for the party seeking recognition and enforcement of a
foreign arbitral award as much as possible.”28 Consistent with this objective, courts have in
practice rejected efforts to complicate the proof requirements under Article IV, taking a
practical and flexible approach towards proof requirements.29 In one court’s words, “one
should not apply too strict a standard to the formal requirements for the submission of
documents ... when ... the conditions for recognition are undisputed and materially beyond
doubt.”30
Article IV should not be interpreted as requiring the award-creditor to demonstrate the
existence of a valid arbitration agreement, applicable to the parties’ claims. Rather, Article IV
is concerned merely with the presentation by the award-creditor of the instrument purporting
to be the agreement to arbitrate, with issues of validity and scope of the agreement being
subject to the exceptions permitting non-recognition under Article V. 31 Despite this, a few
courts have (wrongly) held that it is the award-creditor’s burden of proof under Article IV to
demonstrate that the form requirements in Article II for arbitration agreements are satisfied. 32
A few other decisions have (also wrongly) required that the award-creditor demonstrate that
the disputes dealt with in an award were within the scope of the arbitration agreement.33
In contrast, most courts and other authorities have (correctly) held that Article II’s form
requirements are relevant to the application of Article V(1)(a), as to which the award-debtor
bears the burden of proof, but not to the provision of an arbitration agreement under Article
IV.34 The same result applies with regard to issues of substantive validity and scope of the
arbitration agreement, which are subject to exceptions under Articles V(1)(a) and V(1)(c) of
the Convention.35 The correct interpretation is that, under Article IV, all that is required from
the award-creditor is provision of a document purporting to be the agreement to arbitrate.
If the materials identified in Article IV are properly filed, and if it is shown that an award
satisfies the jurisdictional requirements of the Convention, then a prima facie case has been
established for recognition of the award. The burden of proof then shifts from the award-
creditor to the party resisting enforcement to show that the award falls within one of Article
V’s exceptions (as discussed below).

[B] Proof of Award under National Arbitration Legislation

Many arbitration statutes contain provisions regarding proof of an award paralleling those of
the Convention. Article 35(2) of the M odel Law requires parties seeking to enforce an arbitral
award to provide the original award and arbitration agreement, or “duly certified” copies
thereof. Other arbitration statutes adopt similar approaches, aimed at avoiding unnecessary
formalism or delay in the enforcement process.36 Even where arbitration legislation does not
expressly prescribe proof requirements applicable to the recognition of foreign awards, it
should be and ordinarily is interpreted consistently with Article IV (which forbids imposition
of more demanding proof requirements than those in the Convention).

§17.03 PRESUMPTIVE OBLIGATION TO RECOGNIZE

INTERNATIONAL ARBITRAL AWARDS

Almost all states adopt an avowedly “pro-enforcement” approach to the recognition of

international arbitral awards. Assuming that the existence of an award, satisfying applicable
jurisdictional requirements, has been proven by the award-creditor, the New York
Convention provides for an award’s presumptive recognition, subject to only narrow,
enumerated exceptions. Likewise, most arbitration statutes, including the UNCITRAL M odel
Law, presumptively require the recognition of awards, again subject only to specifically-
identified exceptions.
Under both the Convention and national arbitration legislation, the burden of establishing
the applicability of one of these exceptions to the presumptive enforceability of an award is
squarely on the party resisting recognition. Moreover, even where one of these exceptions is
applicable, national courts are free to recognize awards (either based on local law or
otherwise). In practice, the overwhelming majority of international awards are complied with
voluntarily and, if not, again in the overwhelming majority of cases, recognized and enforced.
[A] Presumptive Obligation to Recognize Awards under New York
Convention
The New York Convention advanced the Geneva Convention’s treatment of international
arbitral awards in significant respects. As its formal title suggests, 37 the Convention was
designed in substantial part for the purpose of facilitating the recognition and enforcement of
foreign awards, and in particular, making such awards more readily enforceable than under the
Geneva Convention.38
As noted above, Article III of the Convention imposes a general obligation on Contracting
States to recognize awards made in other countries, subject to procedural conditions not
materially more onerous than those applicable to domestic awards. Article III must be read
together with Article V, which sets forth a limited, exclusive list of grounds for non-
recognition of an award. Article V provides that “recognition and enforcement of the award
may be refused ... only if [the party resisting recognition] furnishes to the competent
authority where the recognition and enforcement is sought” proof that one of several,
specifically-defined exceptions is applicable. This language makes it clear that, with regard to
substantive matters, the Convention does not impose a national treatment standard, as
compared to domestic awards, but requires that foreign awards be recognized and enforced,
subject only to specified, internationally-defined exceptions.
Several related aspects of the Convention give special force to the obligations imposed by
Articles III and V, underscoring the drafters’ goal of facilitating transnational enforcement of
arbitral awards. Thus, the obligation to enforce foreign awards (save where an Article V
exception applies) is mandatory, not discretionary. 39 Additionally, as discussed below, the
list of Article V exceptions is exclusive and exhaustive, not representative, and the burden of
proving the applicability of one of Article V’s exceptions is on the award-debtor, not the
award-creditor. Professor Pieter Sanders, one of the key drafters of the New York
Convention, explained these aspects of the Convention as follows:

The main [aims of the Convention] ... were, first of all, the elimination of the double
exequatur... . Under the 1927 Geneva [Convention], we always requested both. It is
logical to require an exequatur only in the country where enforcement of the award is
sought and not also in the country where the award was made, but no enforcement is
sought. Another element of the proposal was to restrict the ground for refusal of
recognition and enforcement as much as possible and to switch the burden of proof of
the existence of one or more of these grounds to the party against whom the
enforcement was sought. This again stands to reason.40

Given these aspects of the Convention, a wide range of authorities have concluded that the
Convention establishes a “pro-enforcement” approach towards foreign awards.41 As various
courts have remarked, the Convention’s treatment of awards reflects a “general pro-
enforcement bias,”42 is permeated by a “principle of favor arbitrandum”43 and demonstrates
a “pre-disposition to favour enforcement.”44

[B] Obligation to Recognize Awards under National Arbitration Legislation

Paralleling the Convention, most arbitration statutes treat international arbitral awards as
presumptively valid, requiring their recognition except where the award-debtor establishes
the applicability of one (or more) of a list of specified exceptions (again, paralleling those in
the Convention).45 Thus, Articles 35 and 36 of the UNCITRAL Model Law provide that
awards shall be recognized, save where specified exceptions apply. The exceptions track
those in Article V of the Convention almost verbatim, with only minor drafting changes.
Other arbitration statutes are similar.46
In contrast, some arbitration legislation merely incorporate Articles III and V by reference.
In the United States, §207 of the FAA restates the obligation imposed by Article III to
enforce Convention awards, and then incorporates Article V’s exceptions by reference: “The
court shall confirm the award unless it finds one of the grounds for refusal or deferral of
recognition or enforcement of the award specified in the said Convention.” Thus, where an
award made outside the United States is subject to the Convention, U.S. courts have
concluded that they must recognize the award, subject only to Article V’s exceptions; other
grounds for resisting awards, whether under §10 of the FAA or at common law, may not be
relied upon with regard to foreign awards subject to the Convention.47

§17.04 NEW YORK CONVENTION PROVIDES EXCLUSIVE GROUNDS

FOR NON-RECOGNITION OF FOREIGN ARBITRAL AWARD

In addition to imposing a mandatory presumptive obligation to recognize foreign awards, the

Convention also prescribes the exclusive grounds for denying recognition of a Convention
award. In particular, Article V of the Convention prescribes exhaustively the grounds for
non-recognition, while placing the burden of proving these grounds on the award debtor.

[A] Article V’s Exclusive Grounds for Non-Recognition

It is well-settled that the exceptions enumerated in Article V of the Convention are the
exclusive grounds for denying recognition of a foreign award. As noted above, Article V
provides that “[r]ecognition and enforcement of the award may be refused ... only if” one of
the specified exceptions applies. That language plainly treats the exceptions in Article V as
exclusive grounds for non-recognition. National courts uniformly adopt this result.48 In one
court’s words, “not only are the defenses under the New York Convention exhaustive, but ...
they must be narrowly construed so as to favour the enforcement of the award.”49

[B] Burden of Proof of Grounds for Non-Recognition

The allocation of the burden of proof for recognition of an award plays an important role in
the enforceability of awards. The text of the Convention clearly allocates the burden of
overcoming the presumptive enforceability of an award to the party resisting recognition.
Article V provides that an award may be denied recognition “at the request of the party
against whom it is invoked, only if that party furnishes to the competent authority where the
recognition and enforcement is sought, proof” that an Article V exception is satisfied.
Indeed, it is clear that one of the Convention’s central purposes was to shift the burden of
proof to parties resisting recognition of an award: “While the Geneva Convention placed the
burden of proof on the party seeking enforcement of a foreign arbitral award and did not
circumscribe the range of available defenses to those enumerated in the Convention, the 1958
Convention clearly shifted the burden of proof to the party defending against enforcement
and limited his defenses to seven set forth in Article V.” 50 Consistent with the Convention’s
text and pro-enforcement purposes, courts have repeatedly held that the party resisting
recognition bears the burden of showing that one of the Convention’s exceptions applies.51

[C] No Double Exequatur Requirement under New York Convention

One of the central objectives of the Convention was to eliminate the “double exequatur”
requirement (which had previously existed under the Geneva Protocol and Convention). That
requirement effectively necessitated the confirmation of an award in the arbitral seat (the first
“exequatur”) before it could be recognized abroad (the second “exequatur”). If either court
denied exequatur, the award could not be recognized abroad. This process made the
recognition and enforcement of international awards difficult, uncertain and slow.
The Convention eliminated the double exequatur requirement, with the objective of making
foreign awards more readily enforceable. As one court explained:

When the Convention was drafted, one of its main purposes was to facilitate the
enforcement of arbitration awards by enabling parties to enforce them in third countries
without first having to obtain either confirmation of such awards or leave to enforce
them from a court in the country of the arbitral situs.52
Indeed, it is sometimes said that elimination of the double exequatur process was the single
most important effect of the Convention.53

[D] No Obligation under New York Convention to Deny Recognition of

Awards

Nothing in the Convention requires a Contracting State ever to deny recognition to an award.
The Convention requires only that Contracting States recognize awards (and arbitration
agreements) in specified circumstances. Nothing in Article V, nor the basic structure and
purpose of the Convention, imposes the opposite obligation, not to recognize an award.
Article III of the Convention requires Contracting States to recognize awards made abroad,
subject to procedural requirements no more onerous than those for domestic awards,
provided that the proof requirements of Article IV are satisfied. Articles V(1) and V(2) then
provide exceptions to this obligation, beginning with the prefatory statement that
“[r]ecognition and enforcement of the award may be refused” in certain circumstances. The
most significant aspect of this provision is its structure, which is to establish an affirmative
obligation to recognize awards, subject to specified exceptions – but not to establish an
affirmative obligation to deny recognition. Critically, the Article V(1) exceptions are just that:
exceptions to an affirmative obligation, and not affirmative obligations in their own right.
Although the matter can be debated, the text of Article V supports this structural
conclusion. The English language text of Article V is unmistakably permissive, providing that
Contracting States “may” refuse recognition of an award; the Russian and Chinese texts are
identical in meaning, while the Spanish text indicates that recognition may be denied, without
indicating that it must be.54 The only exception is the French text, which has been relied on
by some authorities as supposedly establishing an obligation to deny recognition to awards
that have been annulled in the arbitral seat. In fact, the better view is that the French text is
ambiguous, assuming that awards falling within one of Article V’s exceptions would not be
enforced, but not affirmatively requiring this result.55

[E] No Judicial Review of Merits of Arbitrator’s Decision

It is an almost sacrosanct principle of international arbitration that courts will not review the
substance of arbitrators’ decisions contained in foreign awards in recognition proceedings.
Virtually nobody suggests that this principle does not exist or should be abandoned, and
when national courts do review the merits of awards they labor to categorize their action as
an application of public policy, excess of authority, or other Article V exception.
The Convention does not contain any exception permitting non-enforcement of an award
simply because the arbitrators got their decision wrong, or even badly wrong. This is
reasonably clear from the language of the Convention, which makes no reference to the
possibility of a review of the merits, and has uniformly been affirmed by national courts and
commentators.56 In the words of the Luxembourg Supreme Court: “The New York
Convention does not provide for any control on the manner in which the arbitrators decide on
the merits, with as the only reservation, the respect of international public policy. Even if
blatant, a mistake of fact or law, if made by the arbitral tribunal, is not a ground for refusal of
enforcement of the tribunal’s award.”57
Similarly, most arbitration statutes omit any provision for judicial review of the merits of
awards in recognition actions. Articles 35 and 36 of the Model Law make no provision for
denying recognition based upon an erroneous arbitral decision on the merits of the parties’
dispute. Other statutes and national court decisions are similar.58
In the United States, §§207 and 302 of the FAA limit non-recognition of an award to the
grounds specified in the New York and Inter-American Conventions, respectively. 59 Neither
provision contains any exception to the presumptive obligation of recognition for
“substantive errors” or “manifest disregard of the law.” Not surprisingly, U.S. courts have
repeatedly affirmed the exclusivity of the Convention’s grounds, and the absence of any basis
for reviewing the merits of an award in a recognition action: “The [Convention and FAA]
provide that a ... court must enforce an arbitration award unless it finds one of the grounds
for refusal or deferral of recognition or enforcement specified in the Convention. The court
may not refuse to enforce an arbitral award solely on the ground that the arbitrator may have
made a mistake of law or fact.”60
Despite the foregoing, in a few states, varying degrees of judicial scrutiny will be applied
to the merits of the arbitrators’ substantive decision in recognition actions, even with regard
to Convention awards.61 These decisions typically seek to portray such review as matters of
public policy or an excess of jurisdiction. In reality, however, they often involve illegitimate
relitigation of the substance of the parties’ dispute in violation of the Convention.

§17.05 GROUNDS FOR REFUSING TO RECOGNIZE INTERNATIONAL

ARBITRAL AWARDS
Although the Convention and many arbitration statutes establish a general presumption that
international arbitral awards are valid and must be recognized, these sources also allow for
non-recognition of awards in specified circumstances. In general, the Convention and
arbitration statutes provide for non-recognition on the same enumerated and very-limited
substantive grounds. In one court’s words, “the control by the [recognition] court essentially
concerns the question whether the award has been rendered in proceedings which respected
due process and, further, whether the law applied to the merits of the award is compatible
with [the recognition court’s] international public policy.”62
More specifically, as detailed below, these grounds of non-recognition are: (a) lack of a
valid arbitration agreement or excess of jurisdiction; (b) procedural irregularities; (c) bias of
the tribunal; (d) violation of public policy; (e) non-arbitrability; (f) lack of “binding” status of
the award; and (g) annulment of the award in the arbitral seat. In contrast, as also discussed
below, a few states permit a variety of other grounds for resisting recognition of both
Convention and non-Convention awards, including review for substantive errors.

Grounds for Non-Recognition of Arbitral Award under New York Convention

1. Arbitration Agreement Invalid; No Capacity – New York Convention, Art. V(1)(a)
2. Party Denied Opportunity to Present Case – New York Convention, Art. V(1)(b)
3. Award Deals with Matters Outside Scope of Submission to Arbitration – New York
Convention, Art. V(1)(c)
4. Composition of Arbitral Tribunal or Arbitral Procedures Not in Accordance with
Parties’ Agreement – New York Convention, Art. V(1)(d)
5. Award Not Binding or Annulled in Arbitral Seat – New York Convention, Art. V(1)
(e)
6. Disputes/Claims Were Non-Arbitrable – New York Convention Art. V(2)(a)
7. Award Violates Public Policy – New York Convention, Art. V(2)(b)

[A] No Valid Arbitration Agreement

As discussed above, international commercial arbitration is consensual: unless the parties

have validly agreed to arbitrate a dispute, the tribunal has no authority to resolve that
dispute. This principle is embodied in the Convention and the laws of all developed states.
A corollary of the consensual nature of arbitration is the unenforceability of awards that
are unsupported by a valid arbitration agreement. Thus, Article V(1)(a) of the Convention
permits non-recognition of an award if “the parties to the agreement referred to in Article II
were, under the law applicable to them, under some incapacity, or the said agreement is not
valid under the law to which the parties have subjected it or, failing any indication thereon,
under the law of the country where the award was made.” Article V(1)(a) is closely related to
Articles II(1) and II(3) of the Convention, providing for recognition of valid agreements to
arbitrate (and which are cross-referenced by Article V(1)(a)). Authorities dealing with
arbitration agreements under Article II are also generally relevant under Article V(1)(a).63
Likewise, national arbitration legislation uniformly contemplates that awards may be
denied recognition if they are not supported by a valid arbitration agreement. Article 36(1)(a)
(i) of the Model Law provides for non-recognition of an award if a party to the agreement
was “under some incapacity” or if the alleged arbitration agreement was “not valid under the
law to which the parties have subjected it or, failing any indication thereon, under the law of
the country where the award was made.” Other arbitration statutes contain similar
provisions.64
As a practical matter, most decisions applying Article V(1)(a) have rejected jurisdictional
challenges to the existence or validity of the arbitration agreement.65 Nonetheless, there are a
number of exceptions, in which courts have refused to recognize awards on the grounds that
no valid arbitration agreement existed.66

[1] General Principles

The substantive issues relating to the validity of an arbitration agreement and the capacity of
a party are dealt with in detail above, in the context of the enforceability of arbitration
agreements. The same substantive analysis that applies in that context is equally applicable
in resolving an application to recognize an award. In particular, virtually all authorities have
held that the separability presumption applies in the context of recognition actions, as do the
choice-of-law rules and the principles of contract formation, validity and legality which
apply in actions to enforce arbitration agreements. In addition, however, three further issues
arise in connection with consideration of the validity or scope of the parties’ arbitration
agreement which have particular relevance in a recognition action. These concern (a) the
burden of proof of an agreement to arbitrate, (b) the preclusive effect of a tribunal’s
jurisdictional award and (c) issues of waiver.

[2] Burden of Proof

As with other grounds for non-recognition, the award-debtor bears the burden of proof in a
recognition proceeding that no valid arbitration agreement existed.67 This reverses the burden
of proof required in interlocutory judicial (or arbitral) proceedings involving enforcement of
an agreement to arbitrate, where the party claiming the existence of a valid arbitration
agreement bears the burden of proof.68 This shifting in the burden of proof can have
significant practical consequences.

[3] Preclusive Effects of Jurisdictional Award

As discussed above, most arbitration legislation recognizes some version of the competence-
competence doctrine.69 As a consequence, by the time of a recognition action, there often will
have been consideration of jurisdictional objections by the tribunal and a jurisdictional award;
in some cases, there also will have been judicial review of such jurisdictional decisions in
annulment proceedings in the arbitral seat. A central issue in subsequent recognition
proceedings is the preclusive effects (if any) of the tribunal’s or annulment court’s prior
jurisdictional determinations.
Different national courts take different approaches to the preclusive effect of tribunals’
jurisdictional decisions (both positive and negative). Some courts give substantial weight to
arbitrators’ jurisdictional decisions, particularly where the parties have agreed to submit
jurisdictional objections to them.70 Other courts accord arbitrators’ jurisdictional decisions no
or virtually no weight, considering challenges to the existence, validity or scope of arbitration
agreements de novo.71 The extent to which the arbitrators’ jurisdictional decision affects a
recognition court will, therefore, depend on where recognition is sought and on whether the
parties have previously submitted their jurisdictional dispute to the tribunal.

[4] Waiver

If a party fails to raise a jurisdictional challenge during the arbitral process, it generally will
not be permitted to raise that challenge in opposition to an action to recognize or enforce the
award.72 There are occasional decisions suggesting that jurisdictional objections may not be
waived,73 but these are clearly wrong.
It is unclear whether contesting jurisdiction before a tribunal, without its competence to
decide jurisdictional issues, will be deemed an acceptance of the tribunal’s competence-
competence. A number of decisions have held that a party’s submission of jurisdictional
objections to a tribunal (under protest) does not constitute either a waiver of jurisdictional
objections or an implied acceptance of the tribunal’s authority to finally decide the
jurisdictional challenge;74 there is nonetheless contrary authority.75

[B] Excess of Authority

It is non-controversial that an award which exceeds the scope of authority granted by the
parties to the arbitrators can be denied recognition. Under Article V(1)(c) of the Convention,
recognition of an award may be denied if: “[t]he award deals with a difference not
contemplated by or not falling within the terms of the submission to arbitration, or it
contains decisions on matters beyond the scope of the submission to arbitration ....” The
Model Law replicates Article V(1) (c)’s provision, as do a number of other national
arbitration statutes.76
Article V(1)(c)’s excess of authority provisions are directed towards several distinct
categories of cases. Preliminarily, Article V(1)(c) does not apply where there is a dispute as
to the existence of a valid arbitration agreement (which is the subject of Article V(1)(a)), and
instead applies where a valid arbitration agreement is acknowledged, but it is alleged that a
tribunal improperly decided matters that were not submitted to it or failed to decide matters
that had been submitted to it.77
First, Article V(1)(c) applies in cases where a valid arbitration agreement existed, but the
matters decided by an award either exceeded those presented to the tribunal by the parties in
the arbitration (so-called extra petita or ultra petita) or failed to address the matters that were
submitted to the tribunal (so-called infra petita). Second, Article V(1)(c) is also applicable
where an award exceeded the scope of a concededly existent and valid arbitration agreement.
In both sets of cases, the underlying issue is whether the tribunal exceeded (or failed to
exercise) the authority that the parties granted to it.78
It is well-settled that, if the arbitrators rule on issues not presented to them by the parties’
submissions in the arbitration, or if they go beyond the scope of the parties’ arbitration
agreement, they will be found to have exceeded their authority under Article V(1)(c). 79
Although this basic excess-of-authority principle is non-controversial, courts have
interpreted it restrictively. 80 According to one court, “[Article V(1)(c)] should be construed
narrowly.”81 Some courts have also applied a presumption that the arbitrators acted within
the scope of their authority. 82 Likewise, courts have emphasized that most arbitration
agreements and institutional rules leave the tribunal substantial discretion in implementing
their terms (providing another reason that resisting recognition under Article V(1)(c) is
difficult).83
Challenges to awards under Article V(1)(c) are sometimes (but mistakenly) based on
objections to the arbitrators’ substantive contract interpretations or legal conclusions, or to
the arbitrators’ procedural rulings. 84 In neither instance is a true Article V(1)(c) defense
present. Rather, the defendant seeks to characterize a substantive objection to the tribunal’s
decision (which is not permitted by Article V) or a complaint about the fairness or regularity
of the arbitral procedures (which is dealt with by Articles V(1)(b) or V(1)(d)) as a
jurisdictional claim.
Second, Article V(1)(c) also applies in circumstances where, although one party presented
certain claims to the tribunal, which then decided them, those claims were not within the
scope of the arbitration agreement.85 As with other excess of authority arguments, courts
have generally afforded decisions of tribunals regarding the scope of the arbitration agreement
substantial deference.86 Additionally, as discussed above, where parties have concededly
agreed to arbitrate pursuant to institutional rules that grant tribunals competence-competence
to resolve disputes over the scope of the arbitration agreement, the tribunal’s jurisdictional
award should be final and generally not subject to judicial review, including in a recognition
proceeding.87
Article V(1)(c) provides expressly for partial recognition of an award where only part(s) of
the award exceeded the tribunal’s jurisdiction: “if the decisions on matter submitted to
arbitration can be separated from those not so submitted, that part of the award which
contains decisions on matters submitted to arbitration may be recognized and enforced.”
Consistent with this provision, courts have granted partial recognition to awards (or made
clear that they would be prepared to do so in appropriate cases).88

[C] Denial of the Opportunity to Present Party’s Case

Under Article V(1)(b) of the Convention, and equivalent provisions of national arbitration
statutes, awards may be denied recognition on grounds of procedural unfairness or denial of
an opportunity to present a party’s case. This exception to the presumptive enforceability
of an award is distinguishable from, but related to, a tribunal’s failure to comply with the
procedural requirements of the arbitration agreement or the procedural law of the arbitration
(under Article V(1)(d)), and application of procedural public policies (under Article V(2)(b)).
Article V(1) (b) is paralleled by Article 36(1)(a)(ii) of the M odel Law.

[1] General Principles

Under Article V(1)(b), an award may be denied recognition if “[t]he party against whom the
award is invoked was not given proper notice of the appointment of the arbitrator or of the
arbitration proceedings or was otherwise unable to present his case.” Broadly speaking, these
exceptions permit defenses to the recognition of awards for grave procedural unfairness in the
arbitral proceedings. This parallels what European lawyers would term a denial of procedural
fairness, equality of treatment, or natural justice and what U.S. lawyers would regard as a
denial of “due process.” As one court explained:

Although many of those States who are parties to the New York Convention are civil
law jurisdictions or are those which like China derive the whole or part of their
procedural rules from the civil law and therefore have essentially an inquisitorial system,
Article V of the Convention protects the requirements of natural justice reflected in the
audi alteram partem rule.89
Most authorities have held that Article V(1)(b) must be applied in light of the Convention’s
pro-enforcement objectives. In one court’s words, “the exception arising from an inability to
present one’s case ‘should be narrowly construed’ in light of the Convention’s goal of
encouraging the timely and efficient enforcement of awards.”90 Courts have emphasized that
the burden of proof is on the party alleging procedural unfairness under Article V.91

[2] Party Autonomy and Arbitral Tribunal’s Procedural Discretion

This pro-enforcement approach to the application of Article V(1)(b) is consistent with the
recognition of the parties’ procedural autonomy (discussed above), which makes courts
hesitant to interfere with the parties’ agreed arbitral procedures. One court put this in stark
terms, referred to above: “Short of authorizing trial by battle or ordeal or, more doubtfully,
by a panel of three monkeys, parties can stipulate to whatever procedures they want to
govern the arbitration of their disputes; parties are as free to specify idiosyncratic terms of
arbitration as they are to specify any other terms in their contract.”92 Although exaggerated,
this formulation reflects the broad deference afforded commercial parties in devising arbitral
or other dispute resolution procedures. Consistent with this, courts have very frequently
rejected efforts in recognition proceedings by parties to challenge the fairness of arbitral
procedures to which they had agreed (either in institutional rules or otherwise).93
The pro-enforcement approach under Article V(1)(b) is also consistent with the general
deference to tribunals’ procedural discretion in their conduct of the arbitral proceedings
(discussed above).94 As discussed earlier, most courts emphasize the importance of
respecting the procedural informality and flexibility of international arbitration. By agreeing
to arbitrate, a party “trades the procedures and opportunity for review of the courtroom for
the simplicity, informality, and expedition of arbitration.” 95 This recognition of the special
attributes of the arbitral process is even more pronounced under Article V(1)(b) than in
domestic arbitration or annulment contexts.96

[3] Choice of Law

The Convention does not specify what nation’s laws, or what international standards, apply
in determining whether Article V(1)(b)’s exception for procedural unfairness is met. Possible
choices for the source of the standards applicable under Article V(1)(b) include: (a) the
national law of the enforcement forum; (b) the national law of the arbitral seat; (c) a national
law standard developed especially for international arbitration; and (d) an internationally
uniform standard derived directly from Article V(1)(b). Different authorities have adopted
different solutions to choosing among these various laws.97
In applying Article V(1)(b), many courts have held that the law of the recognition forum
should be applied to determine whether a party was denied an opportunity to present its
case.98 According to one U.S. court: “Article V(1)(b) ‘essentially sanctions the application of
the forum state’s standards of due process,’ in this case, United States standards of due
process.”99 Thus, U.S. courts have generally held that Convention awards are subject to
scrutiny under the “due process” standards of the U.S. Constitution.100
Other courts have also looked, expressly or impliedly, to local standards of procedural
fairness in the enforcement forum in applying Article V(1)(b). For example, one German
decision reasoned that “[a]rbitral tribunals must essentially give [the parties] a fair hearing
according to the same principles as state courts.”101
Despite these authorities, the better view is that Article V(1)(b) should be read as
establishing a uniform international standard of procedural fairness. This would be consistent
with the objectives of the Convention – to establish uniform, international standards
facilitating the recognition of awards and prevent application of parochial rules that would
obstruct the arbitral process.
Although different legal systems have different approaches to dispute resolution, there is
in practice little disagreement among developed jurisdictions about the basic principles of
what is fair and unfair: an equal, adequate opportunity to present one’s case, by counsel of
one’s choice, to an impartial tribunal which applies regular, rational procedures. While most
legal systems provide different procedural avenues for dispute resolution, they almost
always will be in agreement on these principles. These principles are reflected in the core
procedural protections of the UNCITRAL Model Law, Article 18 of which provides that
“[t]he parties shall be treated with equality and each party shall be given a full opportunity
of presenting his case.” This principle is no more difficult to apply than domestic “due
process” formulations in most legal systems.

[4] Waiver and Preclusion

It is also well-settled that most objections under Article V(1)(b) are capable of waiver. If a
party fails to object to a particular procedure during the arbitration, it then cannot ordinarily
later challenge the award on the basis of that procedure. This principle is made explicit in
some institutional rules,102 and is applied by national courts even in the absence of express
agreements to this effect.103 In one court’s words, a party may not “wait in ambush and then
render wasteful years of effort at an expenditure of millions of dollars.”104
Some courts have also considered whether a party resisting recognition of an award
challenged the procedural conduct of an arbitration in an annulment action in the arbitral
seat.105 The suggestion in this approach is that failure to challenge an award in an annulment
action will presumptively amount to a waiver of procedural objections. Alternatively, some
courts have held that an award debtor is bound by decisions rendered in annulment
proceedings rejecting its procedural objections.106 These views are difficult to reconcile with
the Convention’s express provisions for non-recognition of awards in cases involving
procedural unfairness. Other courts have held that they are not bound in recognition
proceedings involving Article V(1)(b) by decisions in annulment proceedings.107

[D] Irregular Procedural Conduct of the Arbitration

The Convention (and most arbitration statutes) also permits awards to be challenged where
the arbitral procedures departed materially from either (a) the procedures provided for by the
arbitration agreement, or (b) absent such an agreement, the procedural law of the arbitral seat.
Article V(1)(d) of the Convention provides for non-recognition of an award “where the
composition of the arbitral authority or the arbitral procedure was not in accordance with the
agreement of the parties, or, failing such agreement, was not in accordance with the law of the
country where the arbitration took place.”108 Likewise, most arbitration statutes also provide
for non-recognition of awards where the tribunal departed from the parties’ agreement or the
procedural law of the seat.109 Article 36(1)(a)(iv) of the Model Law is representative,
paralleling Article V(1)(d) in both text and purpose.
Article V(1)(d) plays an essential role (discussed above) in establishing the legal framework
for international arbitral proceedings. It does so by granting priority, for purposes of
recognition under Article V(1), to the parties’ agreed arbitral procedures. As a Swiss court
described Article V(1)(d), “[i]t follows from this provision that the arbitral procedure is in
the first place governed by the agreement of the parties and, failing such agreement,
subsidiarily governed by the law of the country where the arbitration takes place.”110

[1] Parties’ Agreed Arbitral Procedures

The first ground for non-recognition under Article V(1)(d) – failure to comply with the
procedures in the arbitration agreement – is relatively straightforward. As discussed above,
this prong of Article V(1)(d) applies where the parties have agreed upon arbitral procedures,
and the appointing authority or tribunal fails to comply with that agreement.
For example, an arbitrator’s failure to render an award, or otherwise to conduct the
proceedings, within time limits imposed by the parties’ arbitration agreement or by
applicable procedural rules can provide grounds for non-recognition under Article V(1)(d).
Although national courts often conclude that violations of contractual time limits do not
affect the tribunal’s award,111 some decisions hold that such violations render the award non-
recognizable.112 Other examples of non-compliance to comply with the parties’ agreed
procedures include failure to adhere to specified procedural timetables or mechanisms, failure
to conduct the arbitration in the agreed arbitral seat, failure to make a reasoned award, or
consolidation of arbitrations or claims in violation of the parties’ agreement.113
An award will also be subject to non-recognition if the parties’ agreed procedures for
constituting the tribunal have not been followed. Examples include cases where the procedure
prescribed in the parties’ arbitration agreement for choosing a chairman was not followed,
where the tribunal was comprised of a number of arbitrators different from that agreed by the
parties, or where the arbitrators lacked the qualifications agreed upon by the parties.114 In
practice, this ground has rarely provided the basis for denying recognition.
Most courts have emphasized that a tribunal’s application of the parties’ agreed arbitral
procedures will not be subject to judicial second-guessing: Article V(1)(d) was not “intended
... to permit reviewing courts to police every procedural ruling made by the arbitrator and to
set aside the award if any violation of the ICC procedures [incorporated into the arbitration
agreement] is found.”115 Other courts have noted that most institutional rules leave broad
procedural discretion to the arbitrators, again, arguing against overly-strict judicial review of
the arbitrators’ compliance with agreed arbitral procedures under Article V(1)(d).116

[2] Agreed Arbitral Procedures and Mandatory Law in Arbitral Seat

The most difficult issues that arise under Article V(1)(d) involve cases where the parties’
agreed arbitral procedures violate the mandatory laws of the arbitral seat. A violation of the
parties’ agreed arbitral procedures is arguably grounds for non-recognition under Article V(1)
(d) only if those procedures did not themselves violate applicable mandatory requirements in
the seat for fair treatment of the parties. Put differently, there is arguably no valid
“agreement” on the arbitral procedures if the parties’ agreed procedures violate the
mandatory laws of the seat.
On the other hand, the weight of authority is that, for purposes of Article V(1)(d), the
parties’ agreed arbitral procedures must be given effect, regardless of the law of the seat. 117
As discussed above this authority is consistent with the better view of Article V(1)(d), which
was intended to give priority to the “agreement of the parties,” rather than “the law of the
country where the arbitration took place.” The better view is that this principle precludes
reliance on the law of the arbitral seat (including its mandatory law) to override the parties’
agreed arbitral procedures for purposes of non-recognition under Article V(1)(d).118

[3] Procedural Law of Arbitral Seat

The second ground for non-recognition of an award under Article V(1)(d) – failure to comply
with the procedural law of the arbitral seat, in the absence of contrary agreement by the
parties – is less straightforward. As discussed above, the law of the seat is only relevant, for
purposes of Article V(1)(d), insofar as the parties have not agreed upon a particular issue.
Under Article V(1) (d), the procedural law of the seat may only serve to supplement gaps in
the parties’ agreement, not to override or nullify that agreement. As discussed above, the
only exception to this is in limited circumstances where national law imposes a mandatory
procedural requirement which is consistent with the Convention.
In most jurisdictions, there are only very limited instances where national law imposes
procedural requirements that must be given effect, in the absence of agreement by the parties,
under Article V(1)(d). In particular, Article V(1)(d) does not contemplate that a tribunal must
comply with the local rules of civil procedure applicable in the courts of the arbitral seat.
Instead, as discussed above, most arbitration statutes provide legal regimes that afford
tribunals considerable discretion with regard to the procedural conduct of international
arbitrations.119 This discretion is generally subject only to broad guarantees of due process
and fairness, and a limited number of formal matters (e.g., oaths, delivery of awards).
Consistent with this, courts have almost always rejected arguments that an award should
be denied recognition under Article V(1)(d) for failure to comply with the law, including the
local civil procedure rules, of an arbitral seat.120 Rather, only in relatively rare instances,
where the arbitration law of the seat provides a mandatory legislative default rule, applicable
in the absence of procedural agreement by the parties, will Article V(1)(d) permit non-
recognition of an award.
As noted above, most arbitration regimes impose very few mandatory default rules for
international arbitrations. Rather, most statutes leave the tribunal broad authority, in the
absence of agreement by the parties, to adopt default procedures. As a consequence, it is rare
that the second prong of Article V(1)(d) will provide a basis for non-recognition of an award.
Moreover, paralleling analysis under the first limb of Article V(1)(d), courts have declined to
invoke Article V(1)(d) in cases involving minor violations of the law of the seat.121
Article V(1)(d) only provides for non-recognition of an award based upon a failure to
comply with the law of the arbitral seat, not the law of some other jurisdiction. In particular,
a court cannot deny recognition of a foreign award based upon non-compliance with its own
law (or the law of some third state).122 In so doing, Article V(1)(d) accomplishes the
essential purpose of limiting the national laws that may be invoked to challenge the
arbitrators’ procedural decisions.

[4] Waiver and Preclusion

Some courts have held that a recognition proceeding is not a proper forum for determinations
whether the arbitral procedures were consistent with the law of the seat.123 These decisions
have reasoned that the ability of the seat’s courts “to correctly assess the proper conduct of
arbitration proceedings with which it is familiar and which were determined by the rules of its
own legal system, must not be questioned.”124 This view is difficult to reconcile with the
terms of Article V(1)(d), which make non-compliance with the law of the seat a ground for
non-recognition. Nonetheless, as a practical matter, a party seeking to challenge an award on
the grounds that the arbitral procedures violated the law of the seat should raise such
objections in an annulment action, rather than seeking to do so in the first instance in
recognition proceedings. On the other hand, if a party seeks to annul an award on the grounds
that the arbitral procedure violated the law of the seat, and is unsuccessful, it will ordinarily
be precluded from relitigating the issue (including in recognition proceedings).
As with Article V(1)(b), a party may waive its objections under Article V(1)(d) if it fails
to raise them during the arbitration. A number of courts have relied on principles of waiver in
denying objections to the recognition of foreign awards.125

[E] Lack of Independence, Bias and Misconduct of the Arbitrators and Fraud

Virtually every jurisdiction insists on the observance of basic principles of neutrality and
independence by the arbitrators in the arbitral process. Nevertheless, neither the Convention
nor national arbitration statutes contain specific provisions concerning the impartiality of the
tribunal, or the related ground of misconduct by the arbitrators, as a basis for non-recognition
of an award.126 It is nonetheless clear that an arbitrator’s lack of independence and/or
impartiality is a basis for denying recognition of an award under the Convention.127

[1] General Principles

A number of different bases for challenging a tribunal’s independence and impartiality recur
in practice. These grounds are discussed above (in the contexts of challenges to arbitrators
and annulment of awards).128 The same basic analysis and conclusions apply to
consideration of these grounds in the context of recognition of an award as in considering
removal of an arbitrator. Additionally, however, some authorities have concluded that a
higher standard must be satisfied to warrant non-recognition (or annulment) of an award than
applies to removal of an arbitrator.129
Courts in recognition actions must take careful account of the parties’ expectations
regarding the impartiality of “their” arbitrators in particular settings. In some industries, or
legal systems, party-nominated arbitrators are expected (and required) to be predisposed, or
to be permitted to communicate with their nominating party; in other settings, co-arbitrators
are expected (and required) to be independent and impartial.130 In assessing an arbitrator’s
impartiality in a recognition action it is essential that courts take into account the express and
implied agreement of the parties, and not merely impose abstract rules (providing for either
more or less independence than the parties expected and desired).131 In one court’s words:

[T]hough both subjective and objective impartiality are an inherent quality for carrying
out a jurisdictional function ... embodying international public policy, impartiality, both
as a moral quality and a legal duty, is necessarily tempered in arbitration, where the
autonomy of the parties’ intention has paramount importance.132

This approach is not only sound policy, but is mandated by the Convention in recognition
proceedings. As discussed above, Article V(1)(d) accords primary importance to the parties’
agreement on the constitution of the tribunal, without reference to the law of the arbitral seat,
save as a subsidiary source applicable only where the parties reached no agreement on such
matters. As one commentator explains:

The drafters of the Convention thought it ... preferable to leave out as a ground for
refusal of enforcement of the award the irregularity of the composition of the arbitral
tribunal and the arbitral procedure under the law of the country in which the arbitration
took place in those cases where the parties had agreed on these matters.133

The result of Article V(1)(d) is that an arbitration can be conducted in State A by a tribunal
selected in accordance with the parties’ agreement, but contrary to State A’s laws, and
Contracting States to the Convention are in principle obliged to recognize the resulting award
under Article V. For example, an arbitration could be conducted under AAA Commercial
Rules (which, as discussed above, permit non-neutral co-arbitrators) in England under the
English Arbitration Act (which does not permit agreement on non-neutral co-arbitrators, as
discussed above) and a resulting award would be recognizable in other Contracting States
(even if annulled in England).134

[2] Effects of Prior Institutional Challenge of Arbitration

The parties’ agreement regarding the arbitrators’ impartiality is particularly important with
regard to the application of institutional rules and challenge procedures. As discussed above,
most institutional rules impose standards of impartiality on arbitrators and establish
procedures for institutional consideration of challenges to arbitrators.135 Most of these rules
specifically provide that the institution’s decisions on challenges are final.136
Institutional challenge mechanisms place significant limits on a party’s ability to rely on
objections to the tribunal’s impartiality to resist enforcement of an award in subsequent
recognition actions; a number of courts have held that an institution’s rejection of a challenge
precedes subsequent non-recognition on the same grounds.137 In general, only where evidence
that was unknown to a party is discovered, after an award is made, should that party be able
to challenge an arbitrator’s impartiality or independence in a recognition action.138
Nonetheless, in some jurisdictions, an award may be denied recognition on the grounds of
an arbitrator’s lack of impartiality, notwithstanding an institutional determination rejecting a
challenge to the arbitrator on the same grounds. The rationale for such results is that the
parties’ agreement on institutional impartiality rules cannot displace or contract out of
mandatory statutory standards of impartiality. This is particularly true as applied to
egregious instances of partiality (such as a direct personal interest or corruption).139

[3] Waiver

Claims that an arbitrator lacks independence or impartiality must be raised promptly or will
be waived for purposes of resisting recognition of an award. As discussed above, Articles 4
and 13 of the M odel Law provide that objections to an arbitrator must be raised promptly, as
do other arbitration statutes.140 Where a party fails to comply with these requirements, it
will be held to have waived its rights to resist recognition of an award based on an arbitrator’s
lack of independence or impartiality. Judicial decisions in other jurisdictions, including where
arbitration legislation is silent regarding waiver, are similar.141
As discussed elsewhere, there are some types of defects in the tribunal that are non-
waivable. Outright corruption or similar categories of partiality are generally not capable of
being waived, regardless what institutional rules or the parties’ agreement provide.142

[F] Award Annulled in Arbitral Seat

Article V(1)(e) provides that an award may be denied recognition if “the award has not yet
become binding on the parties, or has been set aside or suspended by a competent authority
of the country in which, or under the law of which, that award was made.” The Model Law
and other national legislation contain similar provisions.143 When a court in the arbitral seat
annuls an award, the question arises as to whether this requires (or permits) other national
courts to deny recognition of the award under Article V(1)(e). This issue has been resolved in
differing ways by national courts and other authorities, and is addressed above.144

[G] Award Not “Binding”

Article V(1)(e) also requires that, in order for an award to be recognized under the New York
Convention, it generally must have achieved some degree of “finality” or must be sufficiently
“binding.” As discussed above, one of the principal innovations of the Convention was its
abandonment of the “double exequatur” procedure.145 In addition, the Convention
specifically abandoned the “finality” requirement, which had been contained in Article I of the
Geneva Convention.
Instead, Article III of the Convention requires that awards be recognized, while Article
V(1) (e) permits, but does not require, non-recognition of an award if it has not become
“binding” (or has been set aside where it was made). Under these provisions, once an award
becomes “binding,” it is subject to recognition in any Contracting State – notwithstanding the
fact that it has not been confirmed in the seat. There remains considerable uncertainty,
however, surrounding the meaning of the Convention’s new requirement that an award be
“binding.” In the words of one commentator, “the meaning of this term [i.e., ‘binding’] has
always been a mystery.”146
It is undisputed that an award-creditor need not “confirm” an award in the arbitral seat
before seeking recognition abroad. This would essentially preserve the double exequatur
requirement of the Geneva Convention, which the New York Convention clearly dispensed
with; consequently, it is well-settled that an award may be “binding” even if it has not yet
been confirmed in the arbitral seat. Conversely, if an award has been confirmed in the seat,
then the award is clearly “binding” under the Convention.147 Courts have also generally held
that awards are “binding” notwithstanding the possibility of future judicial actions in the seat
to annul the award.148
Some authorities have concluded that the availability of appellate review of the merits of
the arbitrator’s decision (other than in an annulment action) in the courts of the arbitral seat
prevents an award from being binding.149 A number of courts have adopted this view,
distinguishing between appellate review of the merits of an award and an annulment
action.150 In one court’s words, “an appeal to set aside an award and an appeal on the merits
are different animals.”151
The better view is that an award is “binding” when the parties’ arbitration agreement
provides that it is binding, regardless of the possibility of future judicial annulment or
appeals. In one court’s words, Article V(1):

indicate[s] that the award must be binding “on the parties,” that is, in accordance with
the agreement of the parties. ... The agreement of the parties provides that the award of
the arbitral tribunal shall be final and binding, and thus immediately enforceable upon
being rendered. It does not provide for an appeal. According to the agreement of the
parties, the award has become binding upon being rendered.152

Other authorities are to the same effect.153 Indeed, there is a substantial argument that this
result is mandated by the Convention’s recognition of the parties’ autonomy, which permits
them to define when an award is binding.

[H] Award Contrary to Public Policy

One of the most frequently-invoked bases for refusing to recognize an award is the “public
policy” exception. A public policy exception is set forth in Article V(2)(b) of the
Convention, which provides that recognition of an award “may” be refused if it would “be
contrary to the public policy of that country” – i.e., the country “where recognition and
enforcement [of the award] is sought.” This provision establishes an escape device, which
allows Contracting States exceptionally to rely on local law, rather than Article V(1)’s
uniform international standards, to deny recognition of an award.

[1] General Principles

Paralleling the Convention, national arbitration legislation uniformly permits the non-
recognition of awards because they violate public policy, also variously termed “ ordre
public” or “good morals” in some national laws. Article 36(1) of the Model Law is
representative, providing that an award may be denied recognition if recognition and
enforcement of the award “would be contrary to the public policy of this State.” Other
legislation is similar, referring simply to “public policy” or to the “public policy of [the state
in question].”154 A number of definitions of public policy in national arbitration legislation
refer to “principles of international public policy.” 155 Some statutes also (or instead) refer to
“good morals.”156
In the United States, the first chapter of the FAA does not contain an express public
policy exception (with regard to either vacatur or recognition). Nevertheless, as discussed
above, it is well-settled that domestic awards that are contrary to public policy will not be
confirmed under the FAA by U.S. courts. The same result applies in international cases in
U.S. courts, including under the New York Convention and the second chapter of the
FAA.157

[2] Choice of Law

Although there is debate concerning the topic, there can be little doubt that the public policy
which may be invoked to resist recognition of an award under Article V(2) of the Convention
and Article 36(1)(b) of the Model Law is national public policy. This is explicit in the text of
Article V(2)(b), which refers to the public policy “of that country” (i.e., the judicial
enforcement forum), as well as in the basic structure of Article V(2) as an exceptional escape
device; it is equally explicit in Article 36(1)(b)(ii) of the Model Law. Consistent with this,
the overwhelming weight of authority applies the public policies of the judicial enforcement
forum in recognition proceedings.158 As one German court explained, “[t]he standard for
public policy is primarily to be deduced under the lex fori... An arbitral award violates public
policy when it violates a norm that regulates the basic principles of German state and
economic life in a manner that is mandatory and outside the parties’ scope of action.” 159 Or,
in the words of a Russian court, Article V(2)(b) refers to “the basis of the State’s political
and legal system and legal order of the Russian Federation.”160
It is well-settled that a narrower concept of public policy should apply to foreign awards
than to domestic awards. Whereas public policy is essentially national (i.e., it is considered in
a national context, namely in the national legal system of the forum), public policy in the field
of international arbitration should “invoke something more than contravention of [domestic]
law.”161 Rather, only those national public policies which mandatorily demand application to
international matters, taking into account the potential absence of any direct connection to
the judicial recognition forum, constitute public policy for purposes of Article V(2)(b).162

[3] Restrictive Approach to Public Policy

Despite the potentially expansive character of “public policy,” courts in most jurisdictions
have been very reluctant to invoke the exception to deny recognition to foreign awards.
Rather, they have underscored the narrow, exceptional character of the public policy defense
in recognition proceedings, emphasizing that the exception is not satisfied merely because
foreign law or a foreign tribunal reached a different result from that provided by domestic
law. One Swiss decision sums up this approach: “The appellant forgets that the enforcement
court does not decide on the arbitral award as an appellate instance; the merits of the award
cannot be reviewed under the cover of public policy.” 163 Other courts have also made clear
that “erroneous legal reasoning or misapplication of law is generally not a violation of public
policy within the meaning of the New York Convention.”164
The fact that a tribunal applies a law that is different from that of the recognition forum’s
laws, or wrongly applies the recognition forum’s laws, or reaches a result that is contrary to
that which the recognition forum’s courts would reach, is not a basis for a violation of public
policy.165 The same principle is even more clearly applicable with regard to factual findings
by a tribunal.166 There are occasional contrary decisions,167 but these are obscurely reasoned
and contrary to the overwhelming weight of authority.
Further, even if the recognition forum’s courts would refuse to apply the law applied by
the tribunal, that is not the basis for finding a violation of the recognition forum’s public
policy.168 That is rather, the public policy exception applies only in a narrow range of cases,
involving direct and grave violations of the recognition forum’s most fundamental and
mandatory public policies and laws.
National courts have also underscored the need for “extreme caution” in applying the
public policy exception with regard to the legal bases and determinations of a foreign award.
A Korean Supreme Court decision reflected this approach, holding that the public policy
defense could be applied only where fundamental, mandatory legal protections were
implicated:

The basic tenet of [Article V(2)(b)] is to protect the fundamental moral beliefs and social
order of the country where recognition and enforcement of the award is sought from
being harmed by such recognition and enforcement. As due regard should be paid to the
stability of international commercial order, as well as domestic concerns, this provision
should be interpreted narrowly. When foreign legal rules applied in an arbitral award are
in violation of mandatory provisions of Korean law, such a violation does not
necessarily constitute a reason for reason. Only when the concrete outcome of
recognizing such an award is contrary to the good morality and other social order of
Korea, will its recognition and enforcement be refused.169

Other national courts and commentators have adopted the same approach.170 The restraint
that is exercised by courts under Article V(2)(b) is consistent with restrictive applications of
public policy as a defense to enforcement of arbitration agreements under Article II.

[I] Disputes Not “Capable of Settlement” by Arbitration

Article V(2)(b)’s public policy exception is closely related to the “non-arbitrability”

exception in Article V(2)(a). Article V(2)(a) excuses Contracting States from the obligation to
recognize a Convention award if “the subject matter of the difference is not capable of
settlement by arbitration” under the law of the enforcing country. This provision is paralleled
by Article 36(1) (b)(ii) of the M odel Law.171
The “non-arbitrability” doctrine is discussed above, as a defense to the enforceability of
arbitration agreements.172 That discussion is generally relevant in actions to enforce awards.
Thus, most authorities have concluded that “question[s] of arbitrability” under Article II(1)
and Article V(2)(a) are the “same.” 173 That is, if arbitration of a claim cannot be compelled
under Article II(1), because it is non-arbitrable, then an award dealing with that claim is
unenforceable under Article V(2)(a), subject only to possible waiver arguments.
The possibility of waiver of non-arbitrability objections is important. If a party does not
challenge the arbitrability of particular disputes or claims, it may later be deemed to have
waived jurisdictional objections based on non-arbitrability arguments. Although there is little
precedent, a party’s arbitration (without reservation) of particular claims may well constitute
an agreement to arbitrate an existing dispute.174
At least some courts have reached this conclusion, relying on the view that parties may
generally agree to settle public law claims, after a dispute has arisen, and therefore should also
be able to enter into post-dispute agreements to arbitrate. On the other hand, some non-
arbitrability rules may not be waivable by private parties, even with respect to claims and
disputes which are already in existence (e.g., the parties’ waiver would not affect the non-
arbitrability of criminal matters or requests for administrative clearance of a merger).175
As discussed above, non-arbitrability under Articles II(1) and V(2)(a) has the character of
an exceptional escape mechanism (comparable to the public policy exception), where the
local forum is permitted to deviate from the Convention’s international standards and apply
local mandatory rules.176 Consistent with this, most courts have applied the non-arbitrability
rules of the judicial recognition forum,177 although generally not extending those rules to
factual circumstances with which they have no connection.178

§17.06 LIMITS ON FORUMS FOR SEEKING RECOGNITION OR

ENFORCEMENT OF INTERNATIONAL ARBITRAL AWARDS

A potentially significant aspect of the legal regime governing international arbitral awards
involves the limits on the forums in which such awards may be recognized and enforced. As
discussed below, neither the New York Convention nor most arbitration legislation impose
significant limits on the enforcement forums for arbitral awards, instead leaving award-
creditors largely free to select the place(s) where they wish to enforce an award.
 For the award-holder, the most important factor in enforcing an award will usually be the
location of identifiable, unencumbered assets of the adverse party: where such assets can be
found, an action to enforce the award will often be brought. In some cases, the award-debtor
may have substantial assets in several different places, and the award-holder will have the
opportunity of choosing where to seek enforcement. That opportunity requires selecting
whatever available forum it considers most advantageous.

[A] No Limits in New York Convention on Forums for Seeking Recognition

or Enforcement of Arbitral Awards

There is nothing in the text or structure of the Convention that limits the forums in which an
award may be recognized or enforced. In particular, there is no requirement that an award
creditor first (or ever) seek confirmation of award in the arbitral seat. Moreover, a
fundamental objective of the Convention was ensuring the broad enforceability of arbitral
awards. Consistent with this objective, the Convention should not be construed as limiting
the forums in which a party may seek to enforce an award in its favor, but should instead be
read to facilitate the maximum enforceability of awards in all available forums.

[B] National Law Limits on Forums for Seeking Recognition or Enforcement

of
International Arbitral Awards Consistent with the Convention, virtually no national
arbitration statutes limit the forums in which international awards may be recognized and
enforced. Despite this, a few courts have imposed jurisdictional, forum non conveniens, or
similar limits on actions to recognize foreign awards. The consistency of some of these limits
with the Convention is doubtful.
If neither of the parties to an arbitration, nor the substance of their dispute, has any
connection with a particular national forum, jurisdictional issues may arise in seeking to
recognize and enforce a foreign award in that forum. In many states, national courts are
unable to exercise jurisdiction unless a defendant (or, in enforcement actions, its assets) has
sufficient contacts with the state in question.179 Decisions adopting this view, and refusing
to recognize arbitral awards where the award debtor and its assets have no connection with
the forum, are likely consistent with the Convention.
A more expansive approach to objections to the recognition of foreign awards has been
taken under the forum non conveniens doctrine by a few U.S. courts. For example, in Melton
v. Oy Nautor AB, the court held that an action to enforce an award, made in Finland against a
Finnish defendant, could not proceed in U.S. courts because of the forum non conveniens
doctrine.180 Subsequent U.S. decisions have reached similar conclusions, apparently relying
on Article III of the Convention. As one such decision explained,

The signatory nations simply are free to apply differing procedural rules consistent with
the requirement that the rules in Convention cases not be more burdensome than those
in domestic cases. If that requirement is met, whatever rules of procedure for
enforcement are applied by the enforcing state must be considered acceptable, without
reference to any other provision of the Convention. The doctrine of forum non
conveniens, a procedural rule, may be applied in domestic arbitration cases brought
under the provisions of the [FAA], and it therefore may be applied under the provisions
of the Convention.181

It is difficult to reconcile these decisions with Articles III and V of the Convention, which
provide that “recognition and enforcement of [an] award may be refused ... only if” the
award-debtor establishes one of a limited number of bases for non-recognition. Article V’s
exceptions are exhaustive, and none of these exceptions includes, in any fashion, the forum
non conveniens doctrine. Prima facie, therefore, the refusal of a Contracting State to enforce
an award on forum non conveniens grounds is contrary to the Convention. Moreover, Article
III contemplates only the application of “rules of procedure” for recognition of an award,
which cannot be extended to the forum non conveniens doctrine (because it is not, properly
considered, a matter of “procedure”); rather, the forum non conveniens doctrine reflects
substantive policies and discretionary judgments,182 not questions of filing fees, time
requirements, or similar matters contemplated by Article III.183

§17.07 SUSPENSION OF RECOGNITION PROCEEDINGS PENDING

RESOLUTION OF APPLICATION TO ANNUL AWARD IN
ARBITRAL SEAT

If an application to annul an award is timely filed in the arbitral seat, issues arise as to the
effect of the application on proceedings in foreign courts to recognize the award. Both the
New York Convention and national law address this issue, providing foreign courts with
discretion to stay recognition proceedings pending resolution of the annulment application.
Article VI of the Convention expressly authorizes courts of Contracting States to suspend
or adjourn recognition proceedings pending resolution of actions to annul an award in the
seat; the provision also permits courts to condition the suspension of recognition proceedings
on the posting of security by the award-debtor. Thus, Article VI provides:

If an application for setting aside or suspension of the award has been made to a
 competent authority referred to in Article V(1)(e), the authority before which the award
is sought to be relied upon may, if it considers it proper, adjourn the decision on the
enforcement of the award and may also, on the application of the party claiming
enforcement of the award, order the other party to give suitable security.

Article VI is paralleled by provisions of many arbitration statutes, including Article 36(2) of

the Model Law, which grant courts discretion to suspend recognition proceedings pending
the outcome of annulment applications in the arbitral seat.184
In general, courts have held that Article VI grants broad discretion to suspend a recognition
action.185 Many courts have suspended recognition proceedings pending disposition of an
annulment application, sometimes requiring security as a condition of doing so.186 On the
other hand, some decisions have refused to suspend recognition under Article VI, typically
emphasizing that the award was binding and was entitled to be treated as such.187
A number of factors have been relied on in decisions considering whether to suspend
recognition proceedings. Some authorities have concluded that the availability of an Article VI
suspension depends on the likelihood that a court in the arbitral seat will annul the award.188
Other decisions place substantial weight on the amount of time that is likely to be required
before annulment (or confirmation) proceedings in the arbitral seat are concluded.189
In general, courts should be circumspect in suspending recognition proceedings based on
the filing of an annulment application in the seat. As discussed above, there will be
circumstances in which annulment of an award will have no consequences for recognition of
the award in other courts.190 Further, the filing of an annulment application by no means
implies that the award will in fact be annulled (and, indeed, experience indicates that
annulment is, as a matter of probabilities, unlikely).
It is particularly important to be circumspect in suspending recognition proceedings given
the underlying purposes of the arbitral process – being to resolve disputes efficiently,
without the jurisdictional and other complexities attending the international litigation process.
Delaying recognition and enforcement of an award directly frustrates this objective. That is
particularly problematic when the reason for the delay is merely the possibility that a court
will invoke local public policies, non-arbitrability exceptions, or idiosyncratic procedural
rules to reverse the result of the parties’ contractually-agreed dispute resolution mechanism.
If a court is to suspend recognition proceedings, it should generally do so only upon the
condition that the award-debtor post security guaranteeing that the award may successfully
be enforced.191 As discussed above, the single most serious obstacle to enforcement of
international arbitral awards is identifying assets which can satisfy the awards: in the
international context, the possibility that funds will be dissipated or concealed is very
serious. It is unacceptable that a party, which complies with the contractual dispute
resolution process and then obtains an award of damages, should have its rights frustrated
through stalling tactics, diversion of assets, or insolvency of the award-debtor. If national
courts delay the process of recognizing an award, by suspending recognition proceedings,
they should take special care to ensure that the award-creditor is safeguarded against such
eventualities.
_________________________
1. See supra pp. 45–47.
2. In particular, Article I(1) provides that the Convention applies to “ the recognition and enforcement of arbitral
awards,” while Article III also deals only with “ arbitral awards.” Provisions of national arbitration legislation
implementing the Convention, such as Articles 31, 33 and 34–36 of the UNCITRAL Model Law, also apply only
to “ awards.” See also supra pp. 278–80; G. Born, International Commercial Arbitration 2347–61 (2009).
3. See supra pp. 45–46; UNCITRAL Model Law, Art. 1.
4. See, e.g., English Arbitration Act, 1996, §§5–8, 66–71; Swiss Law on Private International Law, Arts. 176, 177.
See also supra pp. 45–46; G. Born, International Commercial Arbitration 2361–63 (2009).
5. New York Convention, Art. II(1). See supra p. 46. Although the provisions of the Convention dealing with the
recognition and enforcement of awards (in Article III, IV, V and VI) do not specifically refer to this requirement,
these provisions are best interpreted as extending only to awards derived from arbitration agreements which are
subject to the Convention.
6. See supra p. 46; UNCITRAL Model Law, Art. 7(1).
7. G. Born, International Commercial Arbitration 255–57, 2362–63 (2009).
8. See supra pp. 89–92.
9. See G. Born, International Commercial Arbitration 2364–96 (2009).
10. See G. Born, International Commercial Arbitration 2365–83 (2009).
11. See supra pp. 308–09.
12. See supra pp. 308–09; G. Born, International Commercial Arbitration 2363–69 (2009).
13. See supra pp. 308–09; G. Born, International Commercial Arbitration 2369–72 (2009).
14. For example, if an award is “ foreign” in State A, it may only be denied recognition in State A courts if an Article
V exception applies; in contrast, if the award is not “ foreign” in State A, it may be annulled or denied
confirmation in State A courts on any grounds available under State A’ s law (even if an Article V exception does
not apply). G. Born, International Commercial Arbitration 2381–82 (2009).
15. See G. Born, International Commercial Arbitration 2380–81, 2385–88 (2009).
16. Bergesen v. Joseph Muller Corp., 710 F.2d 928, 932 (2d Cir. 1983).
17. See U.S. FAA, 9 U.S.C. §202 (“ An arbitration agreement or arbitral award arising out of a legal relationship,
whether contractual or not, which is considered as commercial, including a transaction, contract, or agreement
described in section 2 of this title, falls under the Convention. An agreement or award arising out of such a
relationship which is entirely between citizens of the United States shall be deemed not to fall under the
Convention unless that relationship involves property located abroad, envisages performance or enforcement
abroad, or has some other reasonable relation with one or more foreign states. For the purpose of this section a
corporation is a citizen of the United States if it is incorporated or has its principal place of business in the
United States.”).
18. G. Born, International Commercial Arbitration 2380 (2009).
19. See Yusuf Ahmed Alghanim & Sons, 126 F.3d at 19–20 (“ under Article V(1)(e), the courts of the United States
are authorized to apply United States procedural arbitral law, i.e., the FAA, to nondomestic awards rendered in
the United States”);P.M.I. Trading v. Farstad Oil , 2001 U.S. Dist. LEXIS 227 (S.D.N.Y. 2001) (non-domestic
award made in United States can be vacated under FAA).
20. UNCITRAL Model Law, Art. 1(1).
21. In principle, as discussed above, the Model Law’ s definition of “ international” extends broadly to any
arbitration involving almost any transnational commercial relationship, as well as to commercial arbitrations
seated outside the recognition/enforcement forum. See supra p. 47; G. Born, International Commercial
 Arbitration 284–88, 2384–85 (2009).
22. G. Born, International Commercial Arbitration 2384–87 (2009).
23. See supra pp. 309–10 & infra pp. 406–07.
24. See supra pp. 307–10 & infra p. 400; G. Born, International Commercial Arbitration 2373–76, 2387, 2410–
14 (2009).
25. Article I(3) of the Convention provides that Contracting States may declare that they “ will apply the
Convention, on the basis of reciprocity, to the recognition and enforcement of only those awards made in the
territory of another Contracting State.” See supra p. 47.
26. For example, assume that a company based in State A (which has not ratified the Convention) arbitrates against a
company based in State B (which has ratified the Convention) and the arbitration is conducted (and the award is
made) in State C (which also has ratified the Convention, with a reciprocity reservation). In this case, an award in
favor of the State A company would ordinarily be recognizable in accordance with the Convention in State B,
State C and other Contracting States. Similarly, an award in favor of the State B company would be recognizable
in State C and other Contracting States against the State A company. But if an award, in favor of either company,
were rendered in State A, it would not be recognizable under the Convention (except in states that had not made
reciprocity reservations). See G. Born, International Commercial Arbitration 2389–93 (2009).
27. See, e.g., Procter v. Schellenberg , XXVIII Y.B. Comm. Arb. 745 (Manitoba Court of Appeal 2002) (2003) (“ The
requirements of Article IV(1) of the Convention are mandatory requirements that an applicant must satisfy.”);
Judgment of 14 January 2003, XXX Y.B. Comm. Arb. 605 (Spanish Tribunal Supremo) (2005) (“ the claimant has
the burden of proving compliance [with Article IV]”).
28. Judgment of 15 April 1999, XXVI Y.B. Comm. Arb. 863 (Court of Appeal of the Canton of Geneva) (2001).
29. See, e.g., Bergesen v. Joseph Muller Corp., 710 F.2d 928, 934 (2d Cir. 1983) (refusing to require “ duly
authenticated copy of duly authenticated original”; accepting affidavit from tribunal chairman as to authenticity
of award); Yukos Oil Co. v. Dardana Ltd [2002] EWCA Civ. 543 (English Court of Appeal) (there is no
mechanism in English procedural law for a copy of an award or arbitration agreement to be “ duly certified,” and it
is enough that the applicant has deposed that it is authentic). See also G. Born, International Commercial
Arbitration 2701–04 (2009). J., concurring) (“ The better reading of Article IV – which comports with
fundamental principles of arbitration – requires that the party seeking enforcement both (1) supply a document
purporting to be the agreement to arbitrate the parties’ dispute and (2) prove to the court where enforcement is
sought that such document is in fact an ‘ agreement in writing’ within the meaning of Article II(2).”). (b) in a
manner that allows the enforcement court to deem that the parties intended to refer disputes arising out of a certain
business relationship to arbitration. When ascertaining whether this condition is met, the enforcement court is
not bound by the (legal evaluation of the) factual findings in the award.”).
30. Judgment of 20 April 1990, XVII Y.B. Comm. Arb. 584, 586 (Zurich Commercial Court) (1992).
31. That is made clear by the language of Article IV(1), which refers only to the award-creditor’ s obligation to
“ supply” specified documents “ at the time of application” (i.e., the arbitral award and the arbitration agreement),
without suggesting that any affirmative showing must be made by the award-creditor as to the underlying legal
validity of either; on the contrary, Article V(1)(a) makes it clear that questions as to the validity of the arbitration
agreement are for the award-debtor to raise and prove.
32. See, e.g., China Minmetals Materials Imp. & Exp. Co. v. Chi Mei Corp., 334 F.3d 274, 293 (3d Cir. 2003) (Alito,
33. See, e.g., Judgment of 14 January 2003, XXX Y.B. Comm. Arb. 605 (Spanish Tribunal Supremo) (2005) (denying
recognition for non-compliance with Article IV: “ the claimant must comply with the condition in Article IV(1)
34. See, e.g., Judgment of 14 February 2003, XXIX Y.B. Comm. Arb. 819 (Zurich Bezirksgericht) (2004) (no review
of tribunal’ s jurisdiction under Article IV); G. Born, International Commercial Arbitration 2704–06 (2009).
35. See, e.g., China Minmetals, 334 F.3d at 283 (no requirement for award-creditor to demonstrate substantive
validity of arbitration agreement under Article IV); Dardana Ltd v. Yukos Oil Co . [2002] EWCA Civ. 543, 327
(English Court of Appeal) (Article IV merely requires proof of what appears to be an arbitration clause in a
document, not substantive validity, which is dealt with by Article V(1)(a)); Aloe Vera of Am., Inc. v. Asianic
Food ( S) Pte Ltd, XXXII Y.B. Comm. Arb. 489 (Singapore High Court 2006) (2007) (no requirement for award-
creditor to demonstrate existence of valid arbitration agreement under Articles III and IV); infra pp. 384–89.
36. English Arbitration Act, 1996, §102; Swiss Law on Private International Law, Art. 193; French Code of Civil
 P rocedure, Art. 1516; Japanese Arbitration Law, Art. 45(2).
37. The “ United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards.”
38. G. Born, International Commercial Arbitration 2710–24 (2009).
39. It is clear that the Convention imposes a mandatory rule, requiring Contracting States to recognize and enforce
foreign awards (save where one of Article V’ s exceptions applies). Article III provides that “ Each Contracting
State shall recognize arbitral awards as binding” and enforce it in accordance with the Convention and its
national procedural rules. Article V provides that “ [r]ecognition and enforcement of the award may be refused ...
only if” one of specified exceptions applies. Both provisions are self-evidently mandatory, not permissive. See,
e.g., Admart AG v. Stephen & Mary Birch Found., Inc., 457 F.3d 302 (3d Cir. 2006) (“ Under the Convention, a
district court’ s role is limited – it must confirm the award unless one of the grounds for refusal specified in the
Convention applies to the underlying award.”); Rosseel NV v. Oriental Comm. & Shipping ( UK) Ltd , XVI Y.B.
Comm. Arb. 615 (Q.B. 1990) (1991) (“ If none of the grounds for refusal are present, the award ‘ shall’ be
enforced.”); Imbar Maratima SA v. Republic of Gabon , XV Y.B. Comm. Arb. 436 (Cayman Islands Grand Court
1989) (1990) (“ It is plain upon the wording of subsect. (1) that enforcement of a Convention award duly
evidenced is mandatory upon this court except in one or other of the circumstances detailed in [the implementing
legislation for Article V of the Convention].”). See G. Born, International Commercial Arbitration 2717 (2009).
40. See P . Sanders, Enforcing Arbitral Awards under the New York Convention: Experience and Prospects, UN No.
92-1-133609-0, at 3 (1998).
41. G. Born, International Commercial Arbitration 2711–16 (2009).
42. Ministry of Defense of the Islamic Republic of Iran v. Gould Inc ., 969 F.2d 764 (9th Cir. 1992) (“ ‘ general pro-
enforcement bias’ ”). See G. Born, International Commercial Arbitration 2714–17 (2009).
43. Judgment of 28 January 1999, XXIVa Y.B. Comm. Arb. 714 (Lux. Court of Appeal) (1999).
44. IPCO ( Nigeria) Ltd v. Nigerian Nat’l Petroleum Corp. [2005] EWHC 726 (Q.B.).
45. The Convention is generally applicable in national courts only as implemented by domestic legislation. A few
courts appear to have held that the Convention is self-executing (i.e., directly applicable in national courts
without implementing legislation), but this is a minority view. See, e.g., Judgment of 3 May 1977, IV Y.B. Comm.
Arb. 284 (Milan Corte di Appello) (1979) (“ The Convention contains a self-supporting system for the
enforcement of foreign awards, thereby replacing as lex specialis the ordinary municipal law on the enforcement of
foreign awards.”); Judgment of 14 January 1983, XI Y.B. Comm. Arb. 523 (Spanish Tribunal Supremo) (1986)
(“ treaties, and hence the New York Convention, form part of the Spanish internal legal system”). See G. Born,
International Commercial Arbitration 2726–29 (2009).
46. See, e.g., Belgian Judicial Code, Art. 1704; Netherlands Code of Civil Procedure, Arts. 1063–65; Japanese
Arbitration Law, Art. 44. See G. Born, International Commercial Arbitration 2732–34 (2009).
47. See, e.g., Encyclopaedia Universalis SA v. Encyclopaedia Britannica, Inc., 403 F.3d 85, 90 (2d Cir. 2005);
Karaha Bodas Co., 364 F.3d at 288; M& C Corp. v. Erwin Behr GmbH, 87 F.3d 844, 851 (6th Cir. 1996); Mgt &
Tech. Consultants SA v. Parsons-Jurden Int’l Corp., 820 F.2d 1531, 1533–34 (9th Cir. 1987). See also G. Born,
International Commercial Arbitration 2381–82, 2387, 2725–28 (2009).
48. See, e.g., Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara , 364 F.3d 274, 288
(5th Cir. 2004) (“ while courts of a primary jurisdiction country may apply their own domestic law in evaluating
a request to annul or set aside an arbitral award, courts in countries of secondary jurisdiction may refuse
enforcement only on the grounds specified in Article V”); Rosseel NV v. Oriental Comm. & Shipping ( UK) Ltd ,
XVI Y.B. Comm. Arb. 615 (Q.B. 1990) (1991) (“ the grounds of refusal set out in [Article V of the Convention] are
exhaustive. If none of the grounds for refusal are present, the award ‘ shall’ be enforced”); Judgment of 26 April
1973, IV Y.B. Comm. Arb. 305 (Hague Rechtbank) (1979) (“ the grounds enumerated in Art. V of the New York
Convention, on which the recognition and enforcement ‘ may be refused,’ are exhaustive”). See G. Born,
International Commercial Arbitration 2736–2872 (2009).
49. Sojuznefteexport v. JOC Oil Ltd, XV Y.B. Comm. Arb. 384 (Bermuda Court of Appeal 1989) (1990).
50. Parsons & W hittemore Overseas Co., Inc. v. Société Générale de l’industrie du Papier, 508 F.2d 969, 973 (2d
Cir. 1974).
51. See, e.g., Encyclopaedia Universalis SA v. Encyclopaedia Britannica, Inc., 403 F.3d 85, 90 (2d Cir. 2005) (“ The
burden is a heavy one”);Republic of Ecuador v. Occidental Exploration and Prod. Co. [2006] 2 All E.R. 225,
 254 (English Court of Appeal) (“ The convention provides both for recognition and enforcement and, under art.
V, for limited circumstances in which recognition and enforcement ‘ may be refused, at the request of the party
against whom it is invoked’ if that party provides appropriate proof of such circumstances.”); Judgment of 14
April 1983, Carbomin SA v. Ekton Corp., XII Y.B. Comm. Arb. 502, 503 (Court of Appeal of the Canton of
Geneva) (1987) (“ the New York Convention shifts the burden of proof by placing it on the defendant”). See also
G. Born, International Commercial Arbitration 2717–18 (2009).
52. Karaha Bodas Co., 335 F.3d at 366–67.
53. See Quigley, Accession by the United States to the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, 70 Yale L.J. 1049, 1054 (1961); A. van den Berg, The New York
Arbitration Convention of 1958 266–67 (1981).
54. Paulsson, May or Must under the New York Convention: An Exercise in Syntax and Linguistics, 14 Arb. Int’ l
227 (1998).
55. Ibid.
56. See G. Born, International Commercial Arbitration 2351, 2727–28, 2732–33, 2864–68 (2009).
57. Judgment of 24 November 1993, XXI Y.B. Comm. Arb. 617, 623 (Lux. Superior Court of Justice) (1996).
58. English Arbitration Act, 1996, §103; French Code of Civil Procedure, Arts. 1519, 1520, 1525; Swiss Law on
Private International Law, Arts. 190, 194; German ZP O, §1061; Japanese Arbitration Law, Art. 45. See G. Born,
International Commercial Arbitration 2864–68 (2009).
59. Section 207 provides, in relevant part: “ The court shall confirm the award unless it finds one of the grounds for
refusal or deferral of recognition or enforcement of the award specified in [the New York Convention].” U.S. FAA,
9 U.S.C. §207; U.S. FAA, 9 U.S.C. §302 (incorporating FAA, §207 by reference).
60. Karaha Bodas Co., 364 F.3d at 288 (emphasis added).
61. See G. Born, International Commercial Arbitration 2858–60 (2009).
62. Judgment of 28 January 1999, XXIVa Y.B. Comm. Arb. 714 (Lux. Court of Appeal) (1999).
63. See G. Born, International Commercial Arbitration 2776–84 (2009); supra p. 376.
64. See, e.g., English Arbitration Act, 1996, §103(2)(a)-(b); Belgian Judicial Code, Art. 1704(2)(a); Japanese
Arbitration Law, Art. 44(1)(ii)-(iii).
65. See, e.g. , Agroengineering v. Am. Custom Serv., Inc ., XXII Y.B. Comm. Arb. 990 (E.D.N.Y. 1996) (1997)
(rejecting claim that arbitration agreement was forged); Verolme Botlek BV v. Lee C. Moore Corp ., XXI Y.B.
Comm. Arb. 824 (N.D. Okla. 1995) (1996) (rejecting claim of duress);Shandong Textiles Import and Exp. Corp.
v. Da Hua Non-Ferrous Metals Co ., XXXI Y.B. Comm. Arb. 729 (H.K. Court of First Instance, High Court 2002)
(2006) (rejecting challenge to validity of arbitration agreement); Judgment of 31 May 2005, XXXII Y.B. Comm.
Arb. 608 (Spanish Tribunal Supremo) (2007) (rejecting argument that arbitration agreement was invalid adhesion
contract: “ the use of general conditions, which facilitates negotiations and reflect the habitual usages and
practices of a trade, is a commonly accepted practice in international trade”).
66. See, e.g., Moscow Dynamo v. Ovechkin , 2006 U.S. Dist. LEXIS 1320 (D.D.C. 2006) (denying recognition on
grounds that there was no “ exchange” of writings); Aamco Transmissions Inc. v. Kunz , (1991) 97 Sask. R. 5
(Sask. Court of Appeal) (denying recognition on grounds that adhesion contract signed by unsophisticated
party was not binding); Judgment of 14 January 1977, Agrimpex SA v. J.F. Braun & Sons, Inc. , IV Y.B. Comm.
Arb. 269 (Greek S.Ct.) (1979) (denying recognition on grounds that agent who executed putative arbitration
agreement was not authorized to do so in writing). See also G. Born, International Commercial Arbitration
2777–78 (2009).
67. See, e.g., Sojuznefteexport v. JOC Oil Ltd, XV Y.B. Comm. Arb. 384 (Bermuda Court of Appeal 1989) (1990) (“ In
holding that it was for [the award-creditor] to prove that arbitration agreement was valid and not for [the award-
debtor] to prove that the arbitration agreement was invalid the learned Judge was under a fundamental
misapprehension as to which party bears the burden of proof where a challenge is made to the validity of the
arbitration agreement under the 1976 Act.”); Judgment of 30 March 2000, XXXI Y.B. Comm. Arb. 652
(Oberlandesgericht Schleswig) (2006) (“ According to the letter of Article V(1)(a), the party relying thereon has
the burden to prove it.”); Judgment of 26 January 2005, XXX Y.B. Comm. Arb. 421 (Austrian Oberster
Gerichtshof) (2005) (“ the New York Convention allows the defendant to rely on the invalidity of the arbitration
agreement in the enforcement proceedings to prevent enforcement”). See G. Born, International Commercial
 Arbitration 2738–39, 2789–90 (2009).
68. See supra p. 376.
69. See supra p. 52.
70. See supra pp. 52–54; G. Born, International Commercial Arbitration 987–90, 2789–94 (2009). See also
Czarina, LLC v. W .F. Poe Syndicate , 358 F.3d 1286 (11th Cir. 2004) (“ under United States law and
international law, a court asked to confirm an award should review an arbitration panel’ s conclusion that the
parties agreed to arbitrate, unless the parties have agreed to submit this question to the arbitration panel”);
Guang Dong Light Headgear Factory Co. v. ACI Int’l, Inc ., 2005 U.S. Dist. LEXIS 8810 (D. Kan. 2005)
(“ Because the parties did not provide for the arbitrator to determine the question of arbitrability, under the rule
in First Options, the Court must determine the issue ....”).
71. See supra pp. 52–54; G. Born, International Commercial Arbitration 969–71, 2727–28, 2789–94 (2009).
72. See, e.g., China Minmetals, 334 F.3d at 286 (court should “ refuse to enforce an arbitration award under the
Convention where the parties did not reach a valid agreement to arbitrate, at least in the absence of a waiver of the
objection to arbitration”); Judgment of 14 January 1983, XI Y.B. Comm. Arb. 523 (Spanish Tribunal Supremo)
(1986) (“ the respondent was barred from objecting to the competence of the arbitrators during the enforcement
proceedings since, according to Art. V of the European Convention of 1961, he should have done so during the
arbitral proceedings”); Judgment of 26 April 1973, IV Y.B. Comm. Arb. 305, 306 (Hague Rechtbank) (1979) (“ it
appears that neither the respondent nor his lawyer objected to the form or contents of the arbitration agreement ...
at present, more than two years after the hearing at the German-Dutch Chamber of Commerce, Düsseldorf, the
respondent is estopped from invoking his right to question the validity of the arbitration agreement on the
abovementioned grounds.”). See G. Born, International Commercial Arbitration 2795–97 (2009).
73. See, e.g., Judgment of 26 June 2006, XXXII Y.B. Comm. Arb. 351 (Oberlandesgericht Frankfurt) (2007) (holding,
wrongly, that claim under Article V(1)(a) that arbitration agreement did not satisfy Article II’ s written form
requirement cannot be waived).
74. See, e.g., Four Seasons Hotels and Resorts, BV v. Consorcio Barr SA , 377 F.3d 1164 (11th Cir. 2004) (refusing
to find waiver of jurisdictional objections where party participated in arbitration under protest: “ If we adopted
the district court’ s position, a party facing arbitration would be in an untenable position. On the one hand, it
could refuse to participate in the arbitral proceeding altogether to preserve its ability to challenge any adverse
ruling in court; by doing so, however, the party would effectively forfeit any ability to present the merits of its
case to the arbitrators. On the other hand, if the party were to participate in the proceeding, it would lose any
ability to challenge the arbitrators’ ruling. Nothing in the Convention suggests that parties must make such a
choice, and we can find no case that supports this preclusive rule.”); Caribbean Trading and Fidelity Corp. v.
Nigerian Nat’l Petroleum Corp., 1990 U.S. Dist. LEXIS 17198, at *12–13 (S.D.N.Y. 1990) (participation in
arbitration after unsuccessfully challenging jurisdiction is not a waiver). See G. Born, International Commercial
Arbitration 2797 (2009).
75. See Oltchim, SA v. Velco Chem., Inc., 348 F.Supp.2d 97 (S.D.N.Y. 2004) (“ In light of the fact that Velco appeared
in the Romanian arbitration and filed counterclaims within that forum” its jurisdictional objections “ are all
deemed waived.” (despite award debtor’ s express reservation of jurisdictional objections)).
76. UNCITRAL Model Law, Art. 36(1)(a)(iii); English Arbitration Act, 1996, §103(2)(d); German ZP O, §1059(2)
(1)(c); Japanese Arbitration Law, Art. 45(2)(ix); Swiss Law on Private International Law, Art. 190(2)(c) (“ where
the award has gone beyond the claims submitted to the arbitral tribunal, or failed to decide one of the claims”).
77. See Fiat SpA v. Ministry of Finance and Planning of Repub. of Suriname , 1989 WL 122891, at *1 (S.D.N.Y.
1989) (Article V(1)(c) applies when it is alleged that the tribunal decided a matter that was not submitted to it or
is beyond the scope of the submission to arbitration); Fertilizer Corp. of India v. IDI Mgmt. Inc., 517 F.Supp.
948 (S.D. Ohio 1981) (Article V(1)(c) applies where an issue was not submitted to the arbitrators).
78. G. Born, International Commercial Arbitration 2798–2803 (2009).
79. See, e.g., Fertilizer Corp. of India v. IDI Mgmt. Inc., 517 F.Supp. 948, 958–60 (S.D. Ohio 1981); Judgment of 22
September 1995, XXIVa Y.B. Comm. Arb. 640 (Paris Cour d’ appel) (1999) (“ the principle that the time limit set
by the parties, as in the present case, for the arbitrators to accomplish their task may not be extended by the
arbitrators, reflects a need which pertains to public policy, both domestic and international, in that it is inherent
to the contractual character of arbitration”; denying recognition for failure to comply with parties’ time limits).
 See G. Born, International Commercial Arbitration 2799 (2009).
80. See Fiat SpA v. Ministry of Finance and Planning of Repub. of Suriname , 1989 WL 122891 (S.D.N.Y. 1989);
Parsons & W hittemore Overseas Co. v. Société Generale de l’Industrie du Papier, 508 F.2d 969 (2d Cir. 1974);
Judgment of 30 July 1998, XXV Y.B. Comm. Arb. 714 (Hanseatisches Oberlandesgericht Hamburg) (2000).
81. Parsons & W hittemore Overseas Co., 508 F.2d at 976. See also Lesotho Highlands Dev. Auth. v. Impregilo
SpA [2006] 1 A.C. 221, at ¶30 (House of Lords) (“ It is well established that Article V(1)(c) must be construed
narrowly and should never lead to a re-examination of the merits of the award.”);Judgment of 18 September 1997,
XXV Y.B. Comm. Arb. 710, 712 (Landgericht Hamburg) (2000) (rejecting argument that recognition should be
denied under Article V(1)(c) because tribunal supposedly relied upon lex mercatoria and applied incorrect rate
of interest); Judgment of 13 August 1979, Gotaverken v. GNMTC, VI Y.B. Comm. Arb. 237, 238 (Swedish S.Ct.)
(1981) (rejecting argument that recognition should be denied under Article V(1)(c) because tribunal supposedly
awarded price reduction although not requested to do so).
82. See, e.g., Mgt & Tech. Consultants SA v. Parsons-Jurden Int’l Corp., 820 F.2d 1531, 1534 (9th Cir. 1987)
(“ presumption that an arbitral body has acted within its powers”);Parsons & W hittemore, Overseas Co., 508
F.2d at 976 (“ powerful presumption that the arbitral body acted within its powers”); Sojuznefteexport v. JOC
Oil Ltd, XV Y.B. Comm. Arb. 384, 396 (Bermuda Court of Appeal 1989) (1990) (“ if there has been a Convention
award ... there is a presumption that the tribunal acted within its power and that the award is valid and regular
[and] that the burden of discharging the presumption resting on the defendant is a heavy one”). See G. Born,
International Commercial Arbitration 2799–2800 (2009).
83. See, e.g., Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran v. Cubic
Defense Systems, Inc., 29 F.Supp.2d 1168 (S.D. Cal. 1998) (rejecting argument that ICC tribunal failed to comply
with Terms of Reference’ s statement of issues on grounds that Terms of Reference left tribunal flexibility in
deciding issues); Aasma v. Am. SS Owners Mut. Protection and Indem ., 238 F.Supp.2d 918 (N.D. Ohio 2003)
(rejecting argument that award of costs of legal representation were excess of authority, because not expressly
provided for in agreement: “ the parties’ agreement established that the arbitration was to be conducted in
accordance with the [English Arbitration Act] specifically provide[s] for the awarding of costs and set forth
default provisions in the absence of an agreement between the parties as to costs”).
84. See, e.g., Deiulemar Compagnia di Navigazione, SpA v. Transocean Coal Co ., 2004 U.S. Dist. LEXIS 23948
(S.D.N.Y. 2004) (“ Where the parties have agreed to submit their disputes to an arbitral panel selected according
to specific, bargained-for guidelines, failure to adhere to those guidelines may affect the legitimacy of the entire
arbitration proceeding.”); Judgment of 4 March 2003, XXXII Y.B. Comm. Arb. 571 (Spanish Tribunal Supremo)
(2007) (rejecting defense to recognition under Article V(1)(c) on grounds that award-debtor did not claim excess
of authority but instead disagreement with substance of arbitrator’ s determination). See G. Born, International
Commercial Arbitration 2800–01 (2009).
85. See, e.g., Judgment of 14 February 2003, XXIX Y.B. Comm. Arb. 819 (Zurich Bezirksgericht) (2004) (Article
V(1)(c) applies to cases where “ the arbitral award for instance, deals with a difference not contemplated by the
arbitration agreement”); Judgment of 24 January 1997, Inter-Arab Inv. Guarantee Corp. v. Banque Arabe et
Internationale d’Investissements, XXII Y.B. Comm. Arb. 643, 656 (Brussels Cour d’ appel) (1997) (considering
challenge to scope of arbitration agreement under Article V(1)(c)); Aloe Vera of Am., Inc. v. Asianic Food ( S) Pte
Ltd, XXXII Y.B. Comm. Arb. 489 (Singapore High Court 2006) (2007) (refusing to consider argument that non-
signatory was not bound by arbitration agreement under Article V(1)(c), on grounds that provision concerns
“ scope of the arbitration agreement, rather than ... whether a particular person was party to that agreement”).
86. See, e.g., Mgt & Tech. Consultants SA v. Parsons-Jurden Int’l Corp., 820 F.2d 1531, 1534 (9th Cir. 1987)
(strong presumption that tribunal acted within scope of its authority); W hirlpool Corp. v. Philips Electronics,
NV, 848 F.Supp. 474 (S.D.N.Y. 1994) (tribunal’ s determination of “ the scope of its arbitral authority is entitled
to deference”); Sojuznefteexport v. JOC Oil Ltd , XV Y.B. Comm. Arb. 384 (Bermuda Court of Appeal 1989)
(1990) (“ powerful presumption that the [arbitral tribunal] acted within the scope of their authority”).
87. See supra pp. 92–93 & 382–83; G. Born, International Commercial Arbitration 932–37, 969–71, 981–85,
2791–95, 2802 (2009).
88. See, e.g. , Judgment of 26 January 2005, XXX Y.B. Comm. Arb. 421, 435 (Austrian Oberster Gerichtshof)
(2005);Judgment of 14 January 1981, VIII Y.B. Comm. Arb. 386, 388 (Trento Corte di Appello) (1983).
 89. Minmetals Germany GmbH v. Ferco Steel Ltd [1999] 1 All E.R. (Comm.) 315 (Q.B.).
90. Generica Ltd v. Pharm. Basics, Inc., 1996 U.S. Dist. LEXIS 13716 (N.D. Ill. 1996).
91. See, e.g., Telenor Mobile Comm. AS v. Storm LLC, 524 F.Supp.2d 332, 368 (S.D.N.Y. 2007) (“ to obtain relief
under Article V(1)(b), [party challenging recognition] bears the burden of proving that it was denied a full and
fair opportunity to be heard”); Judgment of 24 March 1982, Cominco France SA v. Soquiber SL, VIII Y.B.
Comm. Arb. 408 (Spanish Tribunal Supremo) (1983) (“ the burden of proof of this ground of refusal for lack of
notice is placed on the party against whom the award in question is rendered and who invokes it”). See G. Born,
International Commercial Arbitration 2738 (2009).
92. Baravati v. Josephthal, Lyon & Ross, 28 F.3d at 709. See supra p. 153.
93. See G. Born, International Commercial Arbitration 1747–57, 2736–39 (2009).
94. See, e.g., Parsons & W hittemore Overseas Co., 508 F.2d at 975–76 (“ Under Article V(1)(b) of the Convention,
enforcement of a foreign arbitral award may be denied if the defendant can prove that he was ‘ not given proper
notice ... or was otherwise unable to present his case.’ ”); Judgment of 16 December 1992, XXI Y.B. Comm. Arb.
535, 539 (Oberlandesgericht Cologne) (1996) (“ arbitrator’ s choice of English as the language of the
proceedings does not constitute a violation of due process”). See G. Born, International Commercial
Arbitration 2577–79, 2736–39 (2009).
95. Mitsubishi Motors, 473 U.S. at 628. See also supra pp. 305–06.
96. See G. Born, International Commercial Arbitration 2736–39 (2009).
97. See G. Born, International Commercial Arbitration 2740–46 (2009).
98. See, e.g., Generica Ltd v. Pharm. Basics, Inc ., 125 F.3d 1123, 1129 (7th Cir. 1997) (Article V(1)(b) “ basically
corresponds to the due process defense that a party was not given ‘ the opportunity to be heard at a meaningful
time and in a meaningful manner.’ ”); Irvani v. Irvani [2000] 1 Lloyd’ s Rep. 412 (English Court of Appeal);
Kanoria v. Guinness [2006] 2 All E.R. (Comm.) 413 (English Court of Appeal); Minmetals Germany GmbH v.
Ferco Steel Ltd [1999] 1 All E.R. (Comm.) 315 (Q.B.).
99. Karaha Bodas Co., 364 F.3d at 298.
100. See, e.g., Iran Aircraft Indus. v. Avco Corp., 980 F.2d 141, 145 (2d Cir. 1992) (“ the fundamental requirement of
due process is the opportunity to be heard ‘ at a meaningful time and in a meaningful manner’ ” (quoting Matthews
v. Eldridge, 424 U.S. 319, 333 (U.S. S.Ct. 1976)); Biotronik Mess-und Therapiegereate GmbH & Co. v. Medford
Med. Instrument Co., 415 F.Supp. 133, 140 (D.N.J. 1976) (due process requirement in New York Convention
consists essentially of notice and opportunity to be heard).
101. Judgment of 23 April 2004, XXX Y.B. Comm. Arb. 557 (Oberlandesgericht Cologne) (2005). See also Judgment
of 18 May 1982, X Y.B. Comm. Arb. 461 (Naples Corte di Appello) (1985) (Italian courts must ascertain,
“ discretionarily and according to prudent judgment,” whether respondent has been notified of the proceedings
against him in sufficient time to be able to present his case, even if the period of notice has complied with the
foreign law governing the arbitral proceedings); Judgment of 27 July 1978, IV Y.B. Comm. Arb. 266
(Hanseatisches Oberlandesgericht Hamburg) (1979) (“ The question whether the requirements of due process
have been satisfied must be considered under German law, which is the law of the enforcing State.”).
102. See, e.g., UNCITRAL Rules, Art. 32; 2012 ICC Rules, Art. 39; ICDR Rules, Art. 25; WIP O Arbitration Rules,
Art. 58. See supra pp. 319–20.
103. See, e.g., Minmetals Germany GmbH v. Ferco Steel Ltd [1999] 1 All E.R. (Comm.) 315 (Q.B.) (where the award
debtor has “ due to matters within his control, not provided himself with the means of taking advantage of an
opportunity given to him to present his case, he does not in my judgment bring himself within [Article V(1)
(b)]”); Qinhuangdao Tongda Enter. Dev. Co. v. Million Basic Co ., XIX Y.B. Comm. Arb. 675 (H.K. High Court,
S.Ct. 1993) (1994) (rejecting Article V(1)(b) defense to recognition: “ defendant knew that the tribunal had fixed
a deadline for the submission of evidence [which passed] without any application for an extension being made
[and] it was not until after the proceedings had been formally declared closed that any attempt was made to have
new evidence admitted”). See G. Born, International Commercial Arbitration 2759–60 (2009).
104. Cook Indus., Inc. v. C. Itoh & Co. ( Am.) Inc., 449 F.2d 106 (2d Cir. 1971).
105. See, e.g., Minmetals Germany GmbH v. Ferco Steel Ltd [1999] 1 All E.R. (Comm.) 315, 331 (Q.B.) (“ [I]n a case
where an enforcee alleges that a New York Convention award should not be enforced on the grounds that such
enforcement would lead to substantial injustice and therefore be contrary to English public policy, the following
 must normally be included amongst the relevant considerations (i) the nature of the procedural injustice; (ii)
whether the enforcee has invoked the supervisory jurisdiction of the seat of the arbitration; (iii) whether a remedy
was available under that jurisdiction; (iv) whether the courts of that jurisdiction have conclusively determined
the enforcee’ s complaint in favor of upholding the award; and (v) if the enforcee has failed to invoke that remedial
jurisdiction, for what reason, and in particular whether he was acting unreasonably in failing to do so.”); IPOC
Int’l Growth Fund Ltd v. LV Finance Group Ltd , Civil Appeal No. 30 of 2006 (B.V.I. Court of Appeal 18 June
2007) (“ [W]here, on an enforcement application, a forum court of supervisory jurisdiction ... makes a decision on
a particular issue under the law of the seat of the arbitration, a foreign court should not reinvestigate allegations
of substantial injustice, procedural defects and the conduct of the arbitration which the supervisory court already
considered, save in very exceptional cases. ... This approach is intended to accord weight to the policy of
sustaining the finality of international awards.”).
106. See, e.g., Int’l Inv. KCSC v. Sanghi Polyesters Ltd, XXX Y.B. Comm. Arb. 577 (Andhra P radesh High Court 2002)
(2005) (decision in annulment action in arbitral seat rejecting award debtor’ s claim that it was denied
opportunity to present case is res judicata in recognition action).
107. Judgment of 12 February 1993, Unichips Finanziara v. Gesnouin , 1993 Rev. arb. 276 (Paris Cour d’ appel)
(“ the French judge, when checking in concreto whether the parties’ right to be heard was respected, be it
according to French domestic law or the 1958 New York Convention, is not bound by the decision of the Swiss
courts which, in denying [the award debtor’ s] application to set aside the award considered that this award was
valid under Swiss arbitration law”).
108. As under other parts of Article V(1), it is the award-debtor that bears the burden of proof under Article V(1) (d).
See, e.g., Judgment of 8 October 1977, Bobbie Brooks, Inc. v. Lanificio W alter Banci , IV Y.B. Comm. Arb. 289
(Florence Corte di Appello) (1979) (“ The Court of Appeal rejected also other allegations by [the award debtor]
that the arbitration procedure had not been in conformity with various other rules of the American Arbitration
Association (relying on Art. V[(1)(d)]). Whilst according to Art. V of the Convention the burden of proof rests on
Walter Banci in the capacity of defendant, he had been unable to furnish proof of the violations.”).
109. See, e.g., English Arbitration Act, 1996, §103(2)(e); German ZP O, §1059(2)(d); French Code of Civil Procedure,
Art. 1520(3); Japanese Arbitration Law, Art. 46(2)(vi).
110. Judgment of 14 March 1984, XI Y.B. Comm. Arb. 536 (Swiss Federal Tribunal) (1986).
111. See, e.g., Int’l Ass’n of Machinists v. Mooney Aircraft, Inc., 410 F.2d 681, 683 (5th Cir. 1969); Laminoirs-
TrefileriesCableries de Lens, SA v. Southwire Co ., 484 F.Supp. 1063, 1066–67 (N.D. Ga. 1980) (failure to
comply with ICC 6-month limit for issuing award not basis to deny recognition); La Société Nationale Pour La
Recherche, etc. v. Shaheen Natural Resources Co., 585 F.Supp. 57 (S.D.N.Y. 1983), aff’d, 733 F.2d 260 (2d Cir.
1984).
112. See, e.g., Judgment of 17 January 1984, Bloch et Fils v. Delatrae Mockfjaerd , 1984 Rev. arb. 498 (Paris Cour
d’ appel); Judgment of 22 September 1995, Dubois et Vanderwalle v. Boots Frites BV, 1996 Rev. arb. 101 (P aris
Cour d’ appel); Judgment of 17 August 1995, 14 ASA Bull. 673 (Swiss Federal Tribunal) (1996).
113. See G. Born, International Commercial Arbitration 1747–54, 2072–88, 2449–56, 2757–59, 2763–65 (2009).
114. See G. Born, International Commercial Arbitration 1457–58, 2602–05, 2763–68, 2765–66 (2009).
115. Compagnie des Bauxites de Guinee v. Hammermills, Inc., 1992 WL 122712 (D.D.C. 1992).
116. See, e.g., Indus. Risk Insurers v. MAN Gutehoffnungshütte GmbH, 141 F.3d 1434 (11th Cir. 1998) (“ Arbitration
rules, such as those of the AAA, are intentionally written loosely, in order to allow arbitrators to resolve
disputes without the many procedural requirements of litigation.”; rejecting defense under Article V(1)(d) on
grounds that arbitral tribunal did not violate AAA rules in admitting evidence shortly before hearing). See also
supra pp. 150–51.
117. See Judgment of 14 March 1984, XI Y.B. Comm. Arb. 536 (Swiss Federal Tribunal) (1986) (“ The [preference]
that the New York Convention gives to the will of the parties enables the parties either to set up their own rules
of procedure or to choose already existing private rules of procedure or to choose the rules of procedure of a State.
It further results from the capacity to freely agree to other rules of procedure, that, by virtue of the agreement of the
parties, even the mandatory rules of procedure of a State also can be declared inapplicable and they can be
substituted with the parties’ own rules.”); Judgment of 14 January 1983, XI Y.B. Comm. Arb. 523 (Spanish
Tribunal Supremo) (1986) (“ parties are free to determine the arbitral procedure, including the place where the
 arbitration is to be held under Arts. II(2) and V(1)(d)”).
118. See G. Born, International Commercial Arbitration 2768–69 (2009).
119. See supra pp. 150–51.
120. See, e.g., Judgment of 30 September 1999, XXXI Y.B. Comm. Arb. 640, 646–47 (Hanseatisches
Oberlandesgericht Bremen) (2006) (failure to follow Turkish Code of Civil Procedure (where arbitration was
seated in Turkey) not grounds for non-recognition under Article V(1)(d)). See also G. Born, International
Commercial Arbitration 2769–73 (2009).
121. See, e.g., Judgment of 27 July 1978, IV Y.B. Comm. Arb. 266 (Hanseatisches Oberlandesgericht Hamburg) (1979)
(“ absence of reasons in the arbitral award did not constitute such a violation [of the law of the seat justifying
non-recognition under Article V(1)(d)], as under English law arbitral awards generally do not contain reasons”).
122. See M.A. Indus. Inc. v. Maritime Battery Ltd , XVIII Y.B. Comm. Arb. 354 (New Brunswick Q.B. 1991) (1993)
(rejecting argument that arbitrator in foreign seated arbitration was required to take oath required for arbitrations
seated in recognition forum because “ it would mean that an arbitrator would have to comply with the procedural
requirements of every jurisdiction to which the parties might potentially look for enforcement”); Judgment of 24
February 1994, Ministry of Public W orks v. Société Bec Frères, XXII Y.B. Comm. Arb. 682, 687–689 (Paris
Cour d’ appel) (1997) (rejecting challenge to award based on fact that arbitration agreement provided for two
arbitrators, which violated law of Tunisia, the seat); Judgment of 3 February 1990, Della Sanara
KustvaartBevrachting & Overslagbedrijf BV v. Fallimento Cap. Giovanni Coppola Srl, XVII Y.B. Comm. Arb.
542 (Genoa Corte di Appello) (1992) (refusing to apply law of judicial enforcement forum, which required
specification of number of arbitrators).
123. See, e.g., IPOC Int’l Growth Fund Ltd v. LV Finance Group Ltd , Civil Appeal No. 30 of 2006 (B.V.I. Court of
Appeal 18 June 2007) (“ [W]here, on an enforcement application, a forum court of supervisory jurisdiction ...
makes a decision on a particular issue under the law of the seat of the arbitration, a foreign court should not
reinvestigate allegations of substantial injustice, procedural defects and the conduct of the arbitration which the
supervisory court already considered, save in very exceptional cases. ... This approach is intended to accord
weight to the policy of sustaining the finality of international awards.”); Int’l Inv. KCSC v. Sanghi Polyesters
Ltd, XXX Y.B. Comm. Arb. 577 (Andhra Pradesh High Court 2002) (2005) (decision in annulment action in
arbitral seat rejecting award debtor’ s claim that it was denied opportunity to present case is res judicata in
recognition action). See also G. Born, International Commercial Arbitration 2774–75 (2009).
124. Judgment of 23 November 2004, XXXI Y.B. Comm. Arb. 786 (Jerusalem District Court) (2006).
125. See, e.g., Halcot Nav. Ltd v. Stolt-Nielsen Transp. Group , 491 F.Supp.2d 413, 419 (S.D.N.Y. 2007) (waiver of
challenge to arbitrators’ authority over the arbitrability of the dispute); Karaha Bodas Co., 364 F.3d at 304
(waiver of right to discovery). See also G. Born, International Commercial Arbitration 2776 (2009).
126. That is true, for example, under the Model Law, the French Code of Civil Procedure and the Swiss Law on Private
International Law. See A. van den Berg, The New York Arbitration Convention of 1958 377–80 (1981); Andros
Compania Maritima, SA v. Marc Rich & Co., 579 F.2d 691 (2d Cir. 1978) (questioning whether arbitrator bias
is basis for resisting recognition of award under the Convention); Judgment of 11 July 1991 , XXII Y.B. Comm.
Arb. 715 (Italian Corte di Cassazione) (1997) (only grounds for challenging impartiality of tribunal are non-
compliance with parties’ agreement or law of seat; not permitting challenge based on general objections to
partiality of tribunal).
127. Several different provisions of the Convention may be invoked to resist recognition of an award where the
arbitral tribunal was not independent and impartial. First, as described above, Article V(1)(d) of the Convention
permits non-recognition of an award where the “ composition of the arbitral authority” was not “ in accordance
with the law of the country where the arbitration took place,” which can incorporate standards relating to an
arbitrator’ s lack of independence or impartiality and misconduct. Second, as also discussed above, Article V(1)
(b) permits non-recognition where a party was “ unable to present his case,” which encompasses at least some
forms of arbitrator misconduct. Third, claims of lack of independence have been considered under Article V(2)
(b)’ s general public policy exception in a number of national courts.
128. See supra pp. 130–38. See also G. Born, International Commercial Arbitration 2802–12 (2009).
129. See supra pp. 323–25.
130. See supra pp. 131–32.
131. See G. Born, International Commercial Arbitration 2805–09 (2009).
132. Judgment of 7 October 2003, XXX Y.B. Comm. Arb. 617 (Spanish Tribunal Supremo) (2005).
133. A. van den Berg, The New York Arbitration Convention of 1958 323–25 (1981).
134. See G. Born, International Commercial Arbitration 1269–73, 1367–71, 2805–09 (2009).
135. See supra pp. 138–39.
136. See, e.g., LCIA Rules, Art. 3(9) (“ To the extent permitted by the law of the place of arbitration the parties shall be
taken to have waived any right of appeal.”); 2012 ICC Rules, Art. 34(6) (decisions “ shall be binding on the
parties”).
137. See, e.g., Judgment of 15 May 1985, Raffineries de pétrole d’Homs et de Banias v. Chambre de commerce
internationale, 1985 Rev. arb. 141 (Paris Cour d’ appel) (ICC Rules are exclusive basis for challenge to
arbitrator’ s independence); Judgment of 11 July 1992 , XXII Y.B. Comm. Arb. 715, 722 (Italian Corte di
Cassazione) (1997) (rejecting challenge to award based on alleged partiality of arbitrators; relying on party’ s
acceptance of rules of foreign (Romanian) arbitral institution); Judgment of 24 June 1999, XXIX Y.B. Comm. Arb.
687 (Oberlandesgericht Schleswig) (2004) (“ The defendant made use in the arbitration of its right to challenge
[the arbitrator] for bias. The [ICC] deemed the defendant’ s request unfounded. This is the end of the matter,
because this decision does not appear to be clearly defective, e.g., for evident bias.”).
138. See, e.g., Fertilizer Corp. of India v. IDI Mgmt. Inc., 530 F.Supp. 542 (D. Ohio 1982) (entertaining a challenge to
recognition on the basis of newly discovered evidence regarding impartiality of arbitrator).
139. See, e.g., Judgment of 18 August 1992, DFT 118 II 359 (Swiss Federal Tribunal) (“ It is correct that an appeal
directly against a decision of refusal of a private body such as the ICC Court of Arbitration is not possible,” but
may be considered in annulment action.); Judgment of 15 May 1986, XII Y.B. Comm. Arb. 489, 490 (German
Bundesgerichtshof).
140. See supra p. 141; Swiss Law on Private International Law, Art. 180(2); English Arbitration Act, 1996, §§31,
32; Belgian Judicial Code, Art. 1691; Japanese Arbitration Law, Arts. 18, 19.
141. See G. Born, International Commercial Arbitration 2811–12 (2009).
142. See supra p. 317.
143. UNCITRAL Model Law, Art. 36(1)(a)(v) (“ the award has not yet become binding on the parties or has been set
aside or suspended by a court of the country in which, under the law of which, that award was made...”); German
ZP O, 1061(1); New York Convention, Art. V(1)(e); Austrian ZP O, 614(1); English Arbitration Act, 1996,
103(2)(f). See G. Born, International Commercial Arbitration 2826 (2009).
144. See supra pp. 338–41.
145. See G. Born, International Commercial Arbitration 2335–37, 2719, 2813–22 (2009).
146. H. Gharavi, The International Effectiveness of the Annulment of An Arbitral Award 59 (2002).
147. See, e.g., Decision of 26 February 1982, BGE 108 1b 88 (Swiss Federal Tribunal) (interim award of security was
confirmed in arbitral seat, rendering it “ binding”).
148. See, e.g., Fertilizer Corp. of India v. IDI Mgt. Inc., 517 F.Supp. 948 (S.D. Ohio 1981); Judgment of 25 January
1996, Inter-Arab Inv. Guarantee Corp. v. Banque Arabe et Internationale d’Investissements , XXII Y.B. Comm.
Arb. 643, 646–49 (Brussels Tribunal de Première Instance) (1997). See G. Born, International Commercial
Arbitration 2813–22 (2009).
149. Craig, Uses and Abuses of Appeal From Awards, 4 Arb. Int’ l 174, 187 (1988). See also Sanders, A Twenty
Years’ Review of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 13 Int’ l
Law, 269, 275 (1979).
150. See, e.g., Société Nationale d’Opérations Pétrolières de la Côte d’Ivoire Holding v. Keen Lloyd Resources Ltd ,
XXIX Y.B. Comm. Arb. 776 (H.K. Court of First Instance, High Court 2001) (2004) (Award is binding if “ no
longer open to an appeal on the merits... if it is still open to an appeal on the merits it is not binding”; “ is the
award no longer open to an appeal on the merits? If so, it is binding.”); Judgment of 12 July 1984, SPP ( Middle
East) Ltd v. Arab Republic of Egypt, X Y.B. Comm. Arb. 487 (Amsterdam Rechtbank) (1985) (“ An arbitral award
is not binding if it is open to appeal on the merits before a judge or an appeal arbitral tribunal.”).
151. Société Nationale d’Opérations Pétrolières de la Côte d’Ivoire Holding v. Keen Lloyd Resources Ltd , XXIX
Y.B. Comm. Arb. 776 (H.K. Court of First Instance, High Court 2001) (2004).
152. Judgment of 24 January 1997, Inter-Arab Inv. Guarantee Corp. v. Banque Arabe et Internationale
 d’Investissements, XXII Y.B. Comm. Arb. 643, 658 (Brussels Cour d’ appel) (1997) (relying on parties’
arbitration agreement, providing “ the award of the tribunal shall be final and binding upon the parties and shall
be enforced immediately after it has been rendered ... The award shall not be subject to appeal or revision.”).
153. See, e.g., Judgment of 20 July 2004, XXXI Y.B. Comm. Arb. 846 (Spanish Tribunal Supremo) (2006) (“ the issue
whether the arbitral decision is binding must be examined under the rules governing the arbitration – here, the
Rules of the arbitral institution to which the dispute was submitted – rather than under the norms of the State
where the arbitration took place or the award was rendered ... the binding character of the award may not be made
to depend on an exequatur by the courts of the State of rendition”); Zhejiang Province Garment Imp. and Exp.
Co. v. Siemssen & Co. ( Hong Kong) Trading Ltd , XVIII Y.B. Comm. Arb. 389 (H.K. High Court, S.Ct. 1992)
(1993) (relying on fact that award “ was clearly intended by the tribunal to be binding on the parties” to hold
award “ binding”). See G. Born, International Commercial Arbitration 2816–22 (2009).
154. See, e.g., English Arbitration Act, 1996, §103(3); Swiss Law on Private International Law, Art. 194
(incorporating New York Convention); Belgian Judicial Code, Art. 1723(2) (“ if the award or its enforcement is
contrary to ordre public, or if the dispute is not capable of settlement by arbitration”); Netherlands Code of Civil
P rocedure, Art. 1063(1).
155. See, e.g., French Code of Civil Procedure, Art. 1520(5); Algerian Code of Civil Procedure, Art. 458 bis 23(h);
Lebanese New Code of Civil P rocedure, Art. 817(5).
156. See, e.g., Japanese Arbitration Law, Art. 45(2)(ix) (“ public policy or good morals of Japan”); Qatari Code of Civil
and Commercial P rocedure, Art. 380(4) (“ does not breach the rules of public order and good morals”).
157. This is in part because §207 expressly incorporates the grounds for non-recognition contained in the New York
Convention, including Article V(2)(b). U.S. FAA, 9 U.S.C. §207. See, e.g., Sarhank Group v. Oracle Corp ., 404
F.3d 657, 661–62 (2d Cir. 2005) (“ Article V(2) ... provides that a United States court is not required to enforce ...
the arbitral award [if it] would be contrary to American public policy.”); Karaha Bodas Co., 364 F.3d at 306
(“ Under Article V(2)(b) ... a court may refuse to recognize or enforce an arbitral award if it ‘ would be contrary to
the public policy of that country.’ ”).
158. See, e.g., Sarhank Group, 404 F.3d at 661–62 (“ American public policy”); Judgment of 18 January 1990, XVII
Y.B. Comm. Arb. 503 (German Bundesgerichtshof) (1992) (public policy violation under Article V(2)(b) requires
showing that “ award is manifestly irreconcilable with a fundamental principle of German law”);Judgment of 26
January 2005, XXX Y.B. Comm. Arb. 421 (Austrian Oberster Gerichtshof) (2005) (“ The relevant standard for the
autonomous public policy review of the foreign arbitral award by the court of the enforcement state, Austria, is
whether the arbitral award is irreconcilable with the fundamental principles of the Austrian legal system because
it is based on a foreign legal principle that is totally irreconcilable with the domestic legal system.”). See G.
Born, International Commercial Arbitration 2830–32 (2009). Compare id. at 2858–60.
159. Judgment of 20 November 2003, XXIX Y.B. Comm. Arb. 771 (Bavarian Oberstes Landesgericht) (2004).
160. Judgment of 31 October 1995, XXIII Y.B. Comm. Arb. 735 (Moscow District Court) (1998).
161. Renusagar Power Co. v. Gen. Elec. Co ., XX Y.B. Comm. Arb. 681, 700 (Indian S.Ct. 1993) (1995). See also
Judgment of 19 June 1990, XX Y.B. Comm. Arb. 762 (Execution Chamber Tessin) (1995) (“ The Swiss public
policy defense has a more limited scope in the context of proceedings for the recognition and enforcement of
foreign arbitral awards than in proceedings before a Swiss court deciding on the merits.”).
162. See G. Born, International Commercial Arbitration 522–27, 2174–76, 2183–92, 2833–37 (2009).
163. Judgment of 9 January 1995, Inter Maritime Mgt SA v. Russin & Vecchi, XXII Y.B. Comm. Arb. 789, 796 (Swiss
Federal Tribunal).
164. Karaha Bodas Co., 364 F.3d at 306. See G. Born, International Commercial Arbitration 2840–50 (2009).
165. See G. Born, International Commercial Arbitration 2624–27, 2643–46, 2840–50 (2009).
166. See G. Born, International Commercial Arbitration 2624–27, 2643–46, 2842 (2009).
167. See, e.g., Judgment of 29 November 2006, XXXII Y.B. Comm. Arb. 456, 469 (Manila Court of Appeals) (2007)
(Article V(2)(b) permits non-recognition where award “ is in manifest disregard of the law,” or would “ result in
supplanting our own laws and public policies with a judgment that is based on foreign law despite the clear
obligation of the arbitral tribunal to apply Philippine law.”; denying recognition because tribunal disregarded
P hilippine law).
168. Judgment of 9 January 1995, Inter Maritime Mgt SA v. Russin & Vecchi, XXII Y.B. Comm. Arb. 789 (Swiss
 Federal Tribunal) (1997); Chrome Resources SA v. Léopold Lazurus Ltd , SJ 1980, 65, 71 (Swiss Federal
Tribunal).
169. Judgment of 14 February 1995, Adviso NV v. Korea Overseas Constr. Corp. , XXI Y.B. Comm. Arb. 612, 615
(Korean S.Ct.) (1996).
170. See G. Born, International Commercial Arbitration 2840–50 (2009).
171. Article II(1) is similarly worded (with respect to arbitration agreements). New York Convention, Art. II(1) (“ the
subject matter of the difference is not capable of settlement by arbitration”). See supra pp. 326–27.
172. See supra pp. 82–86.
173. A. van den Berg, The New York Arbitration Convention of 1958 359 (1981). See also supra p. 82.
174. See, e.g., Mitsubishi Motors Corp., 473 U.S. at 625–27;Schattner v. Girard, Inc., 668 F.2d 1366, 1369 (D.D.C.
1981) (“ Although a party is not required to arbitrate facts underlying a securities law claim, once the facts
underlying those claims are in fact arbitrated the decision of the arbitrators is binding.”); Gardner v. Shearson,
Hammill & Co., 433 F.2d 367, 368 (5th Cir. 1970); Judgment of 21 July 2004, XXXII Y.B. Comm. Arb. 315
(Oberlandesgericht Düsseldorf) (2007) (reasoning that non-arbitrability of competition law claims could not be
raised in recognition proceeding because award-debtor contested substance of issues before arbitral tribunal
without reservation).
175. Alexander v. Gardner-Denver Co., 415 U.S. 36, 56–59 (U.S. S.Ct. 1974); supra p. 399.
176. See supra pp. 82–86.
177. See, e.g., Judgment of 7 June 1995, XXII Y.B. Comm. Arb. 727 (Italian Corte di Cassazione) (1997) (“ non-
arbitrability of the dispute according to Italian law, as it is the lex fori which determines the arbitrability of the
subject matter”); Judgment of 22 October 1976, SA Tradax Export v. Spa Carapelli, III Y.B. Comm. Arb. 279
(Florence Corte di Appello) (1978) (“ Referring to Art. V(2)(a) and (b), the Court found that the fact that Tradax
might have been engaged in illegal behaviour was arbitrable. Such questions may be framed as a penal law action.
But they may be submitted to the arbitrator as an action for civil liability ex delicto which may result in the
condemnation of the payment of monetary damages.”); Judgment of 5 October 1994, Société Van Hopplynus v.
Société Coherent Inc., XXII Y.B. Comm. Arb. 637 (Brussels Tribunal de Commerce) (1997) (“ Article V(2)(a) ...
expressly refers to the lex fori for the evaluation of the dispute in the phase of the recognition ....”).
178. See Judgment of 24 November 1994, XXI Y.B. Comm. Arb. 635 (Rotterdam Rechtbank) (1996) (rejecting
argument that award resolving inheritance dispute under Jewish law should be denied recognition under Article
V(2)(a)’ s non-arbitrability exception; “ the present case concerns proceedings held in Israel before arbitrators
according to the Israeli arbitration law and ... it is possible in Israel to arbitrate Jewish religious issues”).
179. See G. Born, International Commercial Arbitration 2398–99 (2009).
180. Melton v. Oy Nautor AB, 1998 U.S. App. LEXIS 22100 (9th Cir. 1998).
181. Monegasque de Reassurances SAM v. Nak Naftogaz of Ukraine , 311 F.3d 488, 496 (2d Cir. 2002). See also
Glencore Grain Rotterdam BV v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1127–28 (9th Cir. 2002)
(refusing on forum non conveniens grounds to confirm award made in London between Dutch and Indian
parties); Base Metal Trading Ltd v. OJSC Novokuznetsky Aluminum Factory , 283 F.3d 208, 215–16 (4th Cir.
2002) (refusing on U.S. jurisdictional grounds to confirm foreign award between Guernsey and Russian parties).
182. G. Born & P . Rutledge, International Civil Litigation in United States Courts 365–459 (5th ed. 2011).
183. Extending Article III’ s provisions requiring recognition of awards in accordance with domestic “ rules of
procedure” to permit non-recognition of awards based on a court’ s assessment of substantive comity interests,
U.S. and foreign regulatory policies, and similar matters distort the Convention’ s objectives and would grant
national courts excessive discretion to avoid or reformulate a Contracting State’ s obligations in particular cases
in the guise of forum non conveniens analysis; that is inconsistent with the Convention’ s objectives and very
far from what Article III was meant to accomplish. Even if a court were to apply forum non conveniens
considerations, the obligations imposed by the Convention and the pro-arbitration federal policy would be
entitled to materially greater weight than afforded by prior U.S. decisions.
184. UNCITRAL Model Law, Art. 36(2) (“ [T]he court where recognition or enforcement is sought may, if it considers
it proper, adjourn its decision and may also, on the application of the party claiming recognition or enforcement
of the award, order the other party to provide appropriate security.”).
185. See, e.g., Hewlett-Packard Co. v. Berg, 61 F.3d 101, 106 (1st Cir. 1995); Powerex Corp. v. Alcan Inc ., 2004
 BCSC 876, at §26 (B.C. S.Ct.) (“ In assessing the balance of convenience, the court will consider a number of
factors, including the estimated time to complete the case in the originating jurisdiction; whether the party
opposing enforcement is merely delaying the inevitable; whether a court in the originating jurisdiction has
already refused to set aside the award; the availability of security and the possibility of asset removal prior to
enforcement; and the willingness of the party resisting enforcement to undertake diligent prosecution of the
action in the originating jurisdiction.”). See G. Born, International Commercial Arbitration 2874 (2009).
186. See, e.g. , Alto Mar Girassol v. Lumbermens Mut. Cas. Co ., 2005 U.S. Dist. LEXIS 7479 (N.D. Ill. 2005)
(suspending recognition proceeding; requiring security to be posted); Nedagro BV v. ZAO Konversbank , 2003
U.S. Dist. LEXIS 787 (S.D.N.Y. 2003) (suspending recognition proceedings, based principally on reversal of
order confirming award); Dalimpex Ltd v. Janicki , [2003] OJ 2094, at *40 (Ontario Court of Appeal) (reversing
lower court decision enforcing award and requiring suspension pending annulment proceeding in arbitral seat).
See G. Born, International Commercial Arbitration 2874–75 (2009).
187. See, e.g., Skandia Am. Reins. Corp. v. Seguros La Republica, XXII Y.B. Comm. Arb. 1040 (S.D.N.Y. 1996) (1997)
(refusing to suspend U.S. recognition proceeding in light of pending Mexican litigation challenging validity of
arbitration agreement); Judgment of 14 October 2003, XXX Y.B. Comm. Arb. 627 (Spanish Tribunal Supremo)
(2005) (refusing to suspend recognition proceedings because of related litigation pending in Spanish courts);
Judgment of 12 March 1998, XXIX Y.B. Comm. Arb. 663 (Hanseatisches Oberlandesgericht Hamburg) (2004)
(refusing to suspend recognition proceedings based on pending criminal proceeding on related matters: “ in the
interest of expeditious proceedings, the dispute should not be stayed during the – uncertain – duration of the
preliminary inquiry and consequent criminal action in Switzerland, if any”).
188. See, e.g., Caribbean Trading and Fidelity Corp. v. Nigerian Nat’l Petroleum Corp ., 1990 U.S. Dist. LEXIS
17198, at *18 (S.D.N.Y. 1990).
189. See, e.g., Europcar Italia, SpA v. Maiellano Tours, Inc., 156 F.3d 310, 317–18 (2d Cir. 1998); Powerex Corp. v.
Alcan Inc., 2003 BCSC 1096 (B.C. S.Ct.).
190. See supra pp. 338–41.
191. See authorities cited supra p. 408 note 186; Powerex Corp. v. Alcan Inc., 2004 BCSC 876 (B.C. S.Ct.) (ordering
security to be posted for $100 million award, while suspending recognition proceeding pending outcome of
annulment action in arbitral seat); IPCO ( Nigeria) Ltd v. Nigerian Nat’l Petroleum Corp. [2005] EWHC 726
(Q.B.).
Chapter 18
Investor-State and State-to-State Arbitration

Most international arbitrations involve commercial disputes between private parties. The
preceding Chapters have focused principally on the legal framework for, and practice of,
international commercial arbitrations of this character. In addition, however, international
arbitration is also frequently used for the resolution of other types of disputes – including
investor-state (or investment) arbitrations and state-to-state (or interstate) arbitrations. This
Chapter introduces both categories of international arbitration.

§18.01 INVESTOR-STATE ARBITRATION

Foreign direct investment is a major component of the world economy, with cross-border
investment flows now exceeding $1.5 trillion annually. 1 Foreign investment takes a wide
variety of forms, ranging from major infrastructure and industrial projects (e.g., power
stations, mines, or energy projects) to financial investments (e.g., equity and debt) to
purchases of agricultural or other property; in many instances, these investments play a
central role in the development of national economies.

[A] Introduction

Whatever their form, cross-border direct investments face particular risks from host
government interference with, or outright taking of, foreign investors’ property or other
rights. These types of government action are often motivated by significant domestic political
objectives, including either regulatory policies or local economic interests. Historically,
foreign investors enjoyed limited protections against these sorts of government actions.
In some cases, investors could seek the diplomatic protection of their home state, which
would in turn “espouse” the claims of its national against the foreign state. This form of
protection was discretionary; it was often highly uncertain and complicated by other
considerations, such as the diplomatic, trade, security and other relationships between the
involved states. States declined to pursue the claims of nationals and, when they did so, often
dropped or settled them based on diplomatic considerations unrelated to the merits of the
investor’s claim.
Alternatively, a foreign investor might pursue relief in the courts of the host state. In most
cases, however, the host state’s courts were an unsatisfactory forum for resolution of
disputes arising from the governmental action of the host state itself. Particularly in states
where judicial independence is not assured, local courts are often unable to provide neutral
forums for foreign investors. Equally, local law in host states often provides an
unsatisfactory legal regime for foreign investments, in part because it is subject to unilateral
change adverse to foreign investors. Sovereign immunity and related doctrines provided
further, often insuperable obstacles to efforts by foreign investors to obtain meaningful relief.

[1] Contemporary Foreign Investment Treaties

In order to address the special concerns arising from cross-border direct investments, and to
provide a stable, neutral and enforceable legal regime for foreign investment, states have
established a number of specialized multilateral and bilateral treaties.2 The principal treaties
in this regime are: (a) the ICSID Convention; (b) multilateral regional treaties like the North
American Free Trade Agreement (“NAFTA”), the ASEAN Comprehensive Investment
Agreement and treaties in Latin America and Africa, (c) multilateral sectoral treaties like the
Energy Charter Treaty; and (d) a network of bilateral investment treaties (“BITs”).3 These
treaties generally provide both substantive legal standards protecting foreign investments and
specialized dispute resolution mechanisms – in particular, international arbitration.
In some instances, these dispute resolution mechanisms closely resemble those in
international commercial arbitration settings; as discussed below, many BIT arbitrations are
conducted under general institutional arbitration rules, such as the UNCITRAL Rules, with
the New York Convention and national arbitration legislation applicable to both the parties’
arbitration agreement and the arbitral awards. In other instances, however, investment
disputes are subject to specialized and sui generis dispute resolution mechanisms; for
example, ICSID arbitrations are subject to a legal regime that has very significant differences
from that applicable to international commercial arbitrations under the New York
Convention. In each case, however, investment arbitrations ordinarily deal with a distinctive
category of disputes, involving the application of substantive international law protections to
governmental actions and regulatory measures and implicating complex international and
domestic policies.

[i] ICSID Convention

A central pillar of the international investment treaty regime is the ICSID Convention.4 As
discussed above, the Convention establishes the International Centre for Settlement of
Investment Disputes (“ICSID”) which administers arbitrations and conciliations, both
pursuant to the Convention and otherwise. Unlike most other international investment
treaties, the ICSID Convention does not provide substantive protections for foreign
investments and instead provides only a specialized dispute resolution mechanism.
The Convention was negotiated and opened for signature in 1965 and now has 147
Contracting States, including states in every geographic region of the world.5 The Convention
provides an institutional arbitration regime for “investment disputes” (as defined below)
between foreign investors and Contracting States that the parties agree to submit to
arbitration under the ICSID Convention. Importantly, the ICSID Convention does not
provide an independent basis for arbitrating particular disputes under the Convention.
Instead, an ICSID arbitration cannot be pursued without a separate consent to ICSID
arbitration by the foreign investor and host state, which usually takes the form of either an
arbitration clause contained within an investment contract or a consent provided in a foreign
investment law, a BIT, or another treaty.
If parties agree to submit a dispute to ICSID arbitration, the ICSID Convention (and
related ICSID Arbitration Rules) provide a comprehensive, stand-alone regime, almost
entirely detached from national law and national courts, for the conduct of ICSID arbitral
proceedings. Under this regime, arbitral tribunals are granted exclusive competence-
competence to resolve jurisdictional challenges (subject to limited subsequent review by
ICSID-appointed annulment committees (and not by national courts)).6 Likewise, ICSID
arbitral awards are subject to immediate recognition and enforcement in the courts of
Contracting States without set aside proceedings or any other form of other review in
national courts, either in the arbitral seat or elsewhere (but subject to local rules of state
immunity of state assets). Similarly, ICSID (and not a national court) serves as the
appointing authority in ICSID arbitrations, when necessary, selecting and replacing
arbitrators from a list of individuals selected by individual Contracting States.7

[ii] North American Free Trade Agreement

A number of other multilateral treaties also play important roles in the international
investment regime, establishing legal regimes that resemble, but also differ from, the ICSID
Convention. The North American Free Trade Agreement (“NAFTA”) is a multilateral treaty
between Canada, Mexico and the United States which addresses a wide range of trade,
investment and other issues. Chapter 11 of NAFTA sets forth standards for treatment by
each NAFTA state of investors from other NAFTA states, as well as a mechanism for
arbitrating investment disputes under those standards. The substantive rights provided by
NAFTA include protections against discriminatory treatment of a NAFTA investor by the
host state, unfair or inequitable treatment and expropriation without adequate
compensation.8
 No separate consent to arbitration is required to permit an investor from one NAFTA
state to arbitrate claims under NAFTA’s substantive provisions against another NAFTA
state. Rather, the necessary consent by the NAFTA state parties is provided in Chapter 11
of NAFTA itself, which provides investors from NAFTA states with immediate access to an
arbitral forum.9
While NAFTA includes ICSID arbitration as an option for resolving disputes, neither
Canada nor Mexico is currently a party to the ICSID Convention, and NAFTA arbitrations
therefore cannot be conducted under the Convention.10 As a result, NAFTA awards are not
subject to the ICSID Convention (including its internal institutional annulment procedure),
and are instead subject to being set aside in national courts of the arbitral seat in the same
general manner as international commercial arbitration awards.11 (As discussed below,
ICSID’s “Additional Facility” Rules are commonly used in NAFTA arbitrations, permitting
use of ICSID as an appointing authority and administering institution, notwithstanding the
ICSID Convention’s inapplicability.12 )

[iii] ASEAN Comprehensive Investment Agreement

The Association of Southeast Asian Nations (“ASEAN”) has also established a regional
investment protection regime. In February 2009, the ASEAN member states signed the
ASEAN Comprehensive Investment Agreement, which amended and expanded on many of
the provisions in the older ASEAN Agreement for the Promotion and Protection of
Investments of 1987.13 Like NAFTA and many BITs, the ASEAN Agreement contains both
substantive protections and dispute resolution mechanisms for investors (which contains the
ASEAN member states advance consent to arbitration, thereby providing nationals of
ASEAN states with immediate access to arbitration to resolve investment disputes under the
Agreement). The Agreement applies to the manufacturing, agriculture, fishery, forestry,
mining and quarrying sectors, as well as any other sectors to which the ASEAN member
states agree.14

[iv] Energy Charter Treaty

The Energy Charter Treaty provides a specialized legal regime for investments made by an
investor from a Contracting Party in the energy sector on the territory of another Contracting
Party. Some 50 states (as well as the European Community and the European Atomic Energy
Community) are party to the Energy Charter Treaty, including most European states and a
number of Central Asian states.15 Like NAFTA, the ASEAN Agreement and many BITs, the
Energy Charter provides both substantive protections (against expropriation, unfair and
inequitable treatment and similar governmental conduct) and a choice of dispute resolution
mechanisms (which require no additional, separate consent to enable investors to submit
disputes to arbitration).16

[v] Bilateral Investment Treaties

BITs play a central role in the international investment regime. Unlike the ICSID Convention
(and other multilateral investment treaties), BITs are bilateral treaties, tailored to the
circumstances of individual bilateral relationships and only binding two Contracting States.
Nonetheless, as discussed below, most BITs follow a common structure and include common
provisions (often contained in “model” BITs published by some states).17
Capital-exporting states (including Germany, the United Kingdom, most other Western
European states, the United States and Japan) were the earliest proponents of BITs, which
were originally entered into principally between developed and developing countries. More
recently, states in all stages of development have concluded BITs with one another. More
than 2,800 BITs are currently in force, with a substantial proportion of all BITs being
between developing states (so-called “South-South” BITs).18
Most BITs provide significant substantive protections for investments made by investors
from one of the two contracting states in the territory of the other contracting state. These
protections typically include guarantees against expropriation without compensation, unfair
or inequitable treatment and discriminatory treatment.19
BITs also very frequently (but not always) contain dispute resolution provisions which
permit investors from one contracting state to submit “investment disputes” with the other
contracting state to arbitration, subject occasionally to specified exclusions (e.g., for tax
disputes). Importantly, like NAFTA and the Energy Charter Treaty, these provisions
provide each state’s binding consent to arbitration of investment disputes; this permits
investors to demand arbitration of covered disputes against the host state without a
traditional contractual arbitration agreement with the host state or other separate consent to
arbitration by the host state (so-called “arbitration without privity”).20 A few BITs do not
include the Contracting States’ consents to arbitration, requiring foreign investors to conclude
a separate arbitration agreement with the host state in order to arbitrate an investment
dispute under the treaty, but this is unusual.
BITs contain a variety of different arbitration mechanisms. Some BITs provide for ICSID
arbitration of investment disputes under the BIT; other BITs provide for UNCITRAL or
some form of institutional arbitration (for example, ICC or SCC) or ad hoc arbitration; and
some BITs permit investors to select among any of the foregoing options.21 The appointing
authority in a particular BIT arbitration will vary, depending on the terms of the individual
BIT and the option(s) selected by the investor. Unless a BIT arbitration proceeds under the
ICSID Arbitration Rules and ICSID Convention, BIT arbitral awards will be subject to the
New York Convention and general national arbitration legislation.

[vi] Investment Protection Legislation

A number of states have enacted investment protection legislation, which often provides
substantive rights to foreign investors that parallel those in BITs and multilateral investment
treaties (e.g., protection against uncompensated expropriation, unfair and inequitable
treatment and discriminatory government conduct). In addition, some investment legislation
provides either specialized dispute resolution mechanisms or consent to ICSID (or other)
arbitration for defined categories of disputes with foreign investors.22 In these cases, foreign
investors can generally require arbitration of investment disputes with the host state (again,
without additional, specific consent from the host state).

[2] Distinguishing Characteristics of Investor-State Arbitration

Investor-state arbitration has important similarities with international commercial arbitration.

As summarized above, investment arbitration is consensual (albeit involving mechanisms for
manifesting consent different from traditional contractual forms of commercial arbitration
agreements). Investment arbitration also involves decisions by arbitrators, selected for
particular disputes by (or for) the parties, which resolve the parties’ dispute in a final and
binding manner applying adjudicatory procedures. Finally, investment arbitration is typically
conducted either pursuant to specialized institutional rules (e.g., ICSID Arbitration Rules)
that have been modeled on commercial arbitration rules or pursuant to generally-applicable
institutional rules designed principally for international commercial arbitrations (e.g.,
UNCITRAL).
Despite these similarities, investment arbitration also has characteristics that distinguish it
from international commercial arbitration. That is particularly true of arbitrations conducted
under the ICSID Convention, but is also generally true of arbitrations under BITs, NAFTA
and other treaty regimes.
First, parties in investor-state arbitrations are almost always sovereign states, on the one
hand, and foreign investors from another state, on the other hand. In contrast, international
commercial arbitration typically involves disputes between private parties (although, in a
minority of cases, commercial disputes will involve either a state or a state-related entity as a
contracting party). Historically, most investment arbitrations also involved claims by
companies based in developed, capital-exporting states against less-developed, capital-
importing states; more recently, however, investment arbitrations have involved both claims
by companies from developing states and claims against developed states in North America,
Europe and elsewhere.
Second, many claims and defenses in investment arbitrations arise under the substantive
protections of either a BIT or a multilateral treaty, such as NAFTA or the Energy Charter
Treaty or (less commonly) under customary international law. 23 In contrast, international
commercial arbitrations typically involve contractual claims (although, again in a minority of
cases, claims under treaties or customary international law are sometimes also asserted in
international commercial arbitrations). As a consequence, investment arbitrations frequently
turn on issues of treaty interpretation (e.g., ICSID and/or BITs) and international law, with
parties citing to a fairly substantial body of publicly-available investment arbitration awards
(which, as discussed below, arguably have weight as “precedent”). In contrast, commercial
arbitrations frequently turn on issues of contract interpretation and national law, with
relatively few commercial arbitration awards being published and parties generally relying on
national legislation and judicial decisions.
Similarly, investor-state disputes frequently implicate state interests and legislative
policies more directly than many commercial disputes. For example, claims that governmental
regulatory measures are wrongful creeping expropriations or wrongful discrimination involve
sensitive issues of national policy and international law in ways that are seldom paralleled in
commercial arbitrations.
Third, investment arbitration is often subject to a specialized legal regime that is more
“detached” or “autonomous” from national law and courts than international commercial
arbitration. That is particularly true under the ICSID Convention, which contains a number
of provisions that establish an autonomous legal regime for ICSID arbitrations, including (a) a
specialized institutional arbitration authority (ICSID) with international financing and
immunities (Articles 1–24); (b) a prohibition against an investor’s pursuit of other remedies,
including in national courts, for matters submitted to ICSID arbitration (Article 26); (c) no
role for national courts in the arbitral seat or elsewhere in constituting ICSID arbitral
tribunals, which is instead the exclusive responsibility of the parties and ICSID (Articles 37–
40); (d) exclusive competence of ICSID arbitral tribunals over jurisdictional disputes (Article
41) and provisional measures (Articles 26 and 47); (e) no setting aside or other review of
ICSID awards in national courts, either in the arbitral seat or elsewhere, with ICSID
annulment committees instead having exclusive responsibility for review of ICSID awards
and only the (limited) grounds provided by the Convention; and (f) mandatory recognition of
ICSID awards in national courts, with no provision for judicial review, and mandatory
enforcement of the pecuniary obligations of such awards in national courts (Articles 53–55).
In contrast to arbitration under the ICSID Convention, other types of investor-state
arbitration involve greater roles for national courts. Specifically, in BIT arbitrations
conducted under UNCITRAL or institutional arbitration rules (e.g., SCC or ICSID Additional
Facility Rules), arbitral awards may be set aside in national courts or denied recognition under
the New York Convention and national arbitration legislation.24
Fourth, investor-state arbitration is sometimes “one-way,” in the sense that the investor is
permitted to assert claims against the host state, but the state is often not able to assert
claims or counter-claims against the investor. 25 This structure is different from that available
in international commercial arbitration, where both parties are free to assert claims (or
counterclaims) against one another. This basic structure arises from the terms of most BITs,
which impose obligations on states, but not (for the most part) on investors.26 In limited
circumstances, however, states may be permitted to assert counter-claims against an investor
(e.g., in disputes arising under investment contracts or, less clearly, under a contract covered
by an umbrella clause).
Finally, investor-state arbitration often involves reduced confidentiality (or, conversely,
greater “transparency”). Thus, the revised ICSID Arbitration Rules mandate the publication
of excerpts of the tribunal’s reasoning27 and, in practice, ICSID awards (and submissions) are
very frequently made public.28 As discussed above, NAFTA arbitrations are even more
“public,” with the NAFTA parties making virtually all filings and awards in NAFTA
proceedings public. As a result, a substantial body of case law on investment arbitration has
developed, which has helped inform the development of investment law and international law
more generally and which is frequently relied upon in both the parties’ submissions and
arbitrators’ awards in investment arbitrations.

[3] Popularity of Investor-State Arbitration

Investor-state arbitration has enjoyed significant growth over the past several decades, largely
as a result of arbitrations commenced pursuant to BITs.29 As already noted, nearly 150
states are parties to the ICSID Convention, while more than 2,800 BITs are currently in
force. Additional BITs are being concluded each year, 30 while additional states are continuing
to ratify ICSID and other multilateral investment treaties.31
The past fifteen years have also seen a substantial increase in the usage of ICSID and other
forms of investor-state arbitration, particularly arbitrations arising from BITs. As of June 30,
2012, ICSID had registered 390 arbitrations since its establishment (in 1965), with twenty-
one new arbitrations registered in the first half of 2012 alone.32 During the first decade of
ICSID’s operations, only five ICSID arbitrations were filed; in contrast, over the past decade
(between 2002 and 2012), 303 arbitrations were filed with ICSID.33 Similarly, while only
four ICSID awards were rendered between 1971 and 1980, 96 awards were made between
2001 and 2010; a total of 141 ICSID awards were made by the end of 2011.34 The increases
in the number of BIT arbitrations and BIT awards have accentuated this trend.35
Moreover, there has been a substantial increase in the size of disputes submitted to ICSID
and other types of investment arbitration, with many recent investment arbitrations involving
claims in excess of $1 billion. Some disputes have involved claims of tens of billions of
dollars. By any measure, investment arbitration has experienced very substantial growth over
the past 25 years.

[4] Criticism of Investor-State Arbitration

Along with its popularity, investment arbitration has generated substantial criticism,
particularly from opponents of a liberal international system for trade and investment. Over
the past decade, three states have given notice of their withdrawal from ICSID – Bolivia
(2007), Ecuador (2009) and Venezuela (2012) – claiming that investment arbitration erodes
national sovereignty and favors foreign investors.36 Governments in a few other states have
also criticized the current investment arbitration framework, as have some commentators.37
Even some traditional proponents of investment arbitration, like the United States and
Canada, have revised their model BITs to limit the scope of investor protections.38
Despite these developments, investment arbitration has continued to flourish. The ICSID
Convention has continued to attract new state signatories, BITs continue to be concluded in
significant numbers, the ASEAN Investment Agreement has recently been expanded, and
China and other states have started to adopt more expansive investment protection
agreements.39 At the same time, the number of investment arbitrations continues to increase.
By all appearances, investment arbitration seems likely to continue to grow in usage and
popularity, notwithstanding criticisms of some aspects of the legal regime.

[B] Jurisdictional Issues in Investment Arbitration

Investor-state arbitrations involve relatively unique jurisdictional issues, which differ

somewhat among different investment regimes. In general, these issues concern
interpretations of the jurisdictional requirements imposed by BITs and multilateral
investment treaties (e.g., ICSID and the Energy Charter), and not the traditional issues of
contract formation and validity which predominate in international commercial arbitrations.
In almost all instances, the law applicable to these jurisdictional issues is international law (in
the form of either customary international law, the Vienna Convention on the Law of Treaties
or the relevant BIT or other investment treaty).
[1] ICSID Jurisdictional Requirements

Several jurisdictional requirements must be satisfied to pursue an ICSID arbitration.40 These

requirements are reflected in Article 25 of the ICSID Convention, which provides:

The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an
investment, between a Contracting State (or any constituent subdivision or agency of a
Contracting State designated to the Centre by that State) and a national of another
Contracting State, which the parties to the dispute consent in writing to submit to the
Centre.

As also discussed below, there are similarities between the jurisdictional requirements under
the ICSID Convention and those applicable under individual BITs (e.g., the “investment” and
“nationality” requirements). Nonetheless, the meaning of these requirements may differ
between the ICSID Convention and individual BITs (for example, the “investment”
requirements may be less expansive under the Convention than under a particular BIT).

[i] Legal Dispute Arising out of an Investment

The ICSID Convention limits ICSID jurisdiction to “legal dispute[s] arising directly out of an
investment.” The Convention does not define either “investment” or “legal dispute.”
ICSID tribunals have reached a variety of interpretations of what constitutes an
“investment” under the Convention, developing different criteria to define the term. A
number of ICSID awards have suggested that an investment involves the contribution of
money or other assets for a duration of time in a manner that incurs some element of risk and
assists the host state’s development; all of these elements, and particularly the final one, have
been the source of debate.41 Under this standard, the construction of a mine, factory or
pipeline would constitute classic investments, while an isolated sale of goods contract or
merely preparatory work towards an investment would arguably not qualify as
“investments” under the Convention.42
ICSID tribunals have devoted limited attention to what constitutes a “legal dispute.” Any
dispute involving the assertion of legal rights or defenses, or claims for relief for breaches of
legal rights, should satisfy Article 25 of the ICSID Convention. In practice, virtually all
claims by foreign investors under investment contracts or BITs constitute legal disputes and
can fall within the scope of Article 25.43

[ii] Nationality Requirement

In order to satisfy ICSID’s jurisdictional requirements, a dispute must also arise between “a
Contracting State ... and a national of another Contracting State.” In other words, an
investor’s home state must be different from that of the host state, and both states must be
Contracting States to the ICSID Convention. ICSID’s “nationality” requirement raises a
number of issues.
First, determining whether a state is a party to the ICSID Convention is straightforward
and can be ascertained by consulting ICSID’s website.44 Only if a state is a Contracting State
to the ICSID Convention can it be a party to an arbitration under the Convention45 and can
its nationals pursue ICSID arbitrations.
Second, the question whether a party is a national of a Contracting State is ordinarily
determined by an individual’s citizenship and a company’s place of incorporation or
principal place of business.46 Thus, a Japanese individual investing in Germany, or a
German-incorporated company investing in Japan, would satisfy Article 25 of the
Convention (because both Japan and Germany have ratified the Convention).
The nationality of a local subsidiary of a foreign company based and incorporated in the
host state raises special issues (e.g., the status of a Bolivian subsidiary whose shares are
owned 100% by a U.S. parent company). Article 25(2)(b) of the ICSID Convention provides
that ICSID jurisdiction extends to “any juridical person which ha[s] the nationality of the
Contracting State party to the dispute ... and which, because of foreign control, the parties
have agreed should be treated as a national of another Contracting State for the purposes of
this Convention.” Under Article 25(2) (b), the parties must have agreed that a locally-
incorporated subsidiary will be treated as a foreign national, either by a provision in an
arbitration clause in an investment contract (for example, using ICSID’s model clause),47 or in
a BIT, other investment treaty or investment legislation.48
Third, “dual nationals,” with citizenship in two or more states, raise special issues. Article
25(2)(a)(2) of the ICSID Convention excludes dual nationals, one of whose nationalities is
that of the host state, from the definition of nationals, providing that a national “does not
include any person who on either date also had the nationality of the Contracting State party
to the dispute.” For example, in Champion Trading v. Egypt, claims against Egypt by U.S.
nationals, who were also found to have Egyptian nationality, were dismissed on jurisdictional
grounds because of the rule.49 In a few cases, states have argued that an investor did not have
sufficient connections with the state of which he or she was claiming nationality, relying on
effective nationality principles under international law; most tribunals have rejected such
arguments, holding that the sole inquiry under Article 25 is whether a party is granted
nationality under the law of the Contracting State in question.50
Fourth, cases involving foreign-incorporated companies owned by investors who are
nationals of the host state have produced divergent results. In Tokios Tokel s v. Ukraine,
Ukraine argued that there was no jurisdiction under the Lithuania-Ukraine BIT over a claim
brought against Ukraine by a Lithuanian company owned by Ukrainian nationals.51 A
majority of the tribunal rejected the defense, concluding that it had jurisdiction over the case
because the Ukrainian nationals did not create the company for the purpose of gaining access
to ICSID jurisdiction.52 In contrast, while accepting the Tokios Tokel s analysis, the tribunal
in Phoenix Action, Ltd v. Czech Republic, concluded that it lacked jurisdiction in an arbitration
involving a claim brought by an Israeli company owned by Czech investors against the Czech
Republic under the Czech Republic-Israel BIT; the Phoenix Action tribunal held that the
claimant was a corporate entity created for the sole purpose of gaining access to ICSID
jurisdiction after damages had occurred.53
Finally, additional issues arise when a foreign investor contracts with the subdivision or
agency of the host state, such as a municipality or state-owned company. Under the ICSID
Convention, states must notify ICSID that such entities are subject to ICSID jurisdiction and
approve the consent of such entities to arbitration (or inform ICSID that such approval is not
required).54 For example, the tribunal in Cable Television v. St. Kitts and Nevis concluded
that it lacked jurisdiction over the dispute at issue because the investment contract containing
the ICSID arbitration clause was signed by the claimant and a subdivision of St. Kitts and
Nevis (rather than the state itself); St. Kitts and Nevis had not designated the subdivision as
an entity that could be a party to an ICSID arbitration or approved the subdivision’s consent
to ICSID arbitration and, as such, the subdivision was held not to have the capacity to bind
the state to an agreement to arbitrate under the ICSID Convention.55

[iii] Written Consent to ICSID Arbitration

Finally, the parties to an ICSID arbitration must “consent” in writing to arbitration under
ICSID’s auspices. Consent to arbitrate generally, or to arbitrate pursuant to another
institution’s rules, does not constitute consent to ICSID arbitration; rather, both parties must
“submit to the Centre [i.e., ICSID].”
In order to establish valid consent to ICSID arbitration for purposes of the ICSID
Convention, an investor must demonstrate the existence of written consents to arbitrate
binding both the host state (or certain subdivisions or agencies) and the investor; these
consents may be, but often are not, contemporaneous.
The simplest form of consent is in a traditional arbitration clause in an investment contract;
model ICSID arbitration clauses are available on ICSID’s website and in commentary. 56
Arbitration clauses in investment contracts are subject to the same types of contract
formation and validity defenses as applicable to international commercial arbitration
agreements.57
More commonly, a state’s consent to ICSID arbitration will be provided by a BIT or other
treaty.58 As discussed above, a sizeable number of BITs providing general consent by the
Contracting States to ICSID arbitration for defined categories of disputes are currently in
force. When a state provides its consent to ICSID arbitration in a BIT, it makes a general
offer to arbitrate with nationals from the other Contracting State to the BIT; when a foreign
investor commences an ICSID arbitration, it accepts that offer, giving rise to a binding
agreement to arbitrate between it and the host state.59 Alternatively, an investor can provide
its consent to arbitration separately in a formal notice or other written instrument.
An offer to arbitrate investment disputes with foreign investors can also be made in
national legislation providing for arbitration of foreign investment disputes under the ICSID
Convention.60 Again, an investor can subsequently accept an offer to arbitrate by filing a
request for arbitration with ICSID or otherwise giving notice of its acceptance of the offer.
Finally, both BITs and national arbitration legislation may impose additional requirements
(e.g., waiting periods or exhaustion of local remedy requirements), beyond what the ICSID
Convention itself requires. These requirements are discussed below.61

[iv] ICSID Additional Facility Rules

The circumstances in which an arbitration may be administered by ICSID are expanded by

the ICSID Additional Facility Rules, adopted in 1978. 62 The Additional Facility Rules
permit ICSID to administer arbitrations that do not satisfy the jurisdictional requirements of
the ICSID Convention (for example, where the host state is not a Contracting State to the
Convention or the investor is not a national of a Contracting State). The Additional Facility
Rules are only available, however, if the ICSID Secretary General has consented to their use
in a particular case (pursuant to Article 4(1) of the Additional Facility Rules). Parties may
apply to ICSID for advance approval from the Secretary General (and frequently do so).
Notably, proceedings pursuant to the Additional Facility Rules are not governed by the
ICSID Convention. Although ICSID acts as the institutional appointing authority and
provides administrative services in Additional Facility cases, the Convention’s provisions
regarding exclusion of other remedies, prohibition of applications for provisional relief in
national courts (absent contrary agreement) and internal annulment committees do not apply
in such cases. Similarly, the ICSID Convention’s provisions on recognition and enforcement
of awards do not apply to Additional Facility awards; instead, an Additional Facility award
is subject to being set aside in the courts of the arbitral seat, under generally-applicable
national arbitration legislation, and to non-recognition under the New York Convention – in
the same manner as awards in international commercial arbitrations.63 As discussed above,
because neither Canada nor Mexico is a party to the ICSID Convention, the ICSID
Additional Facility Rules have been used extensively in NAFTA arbitrations.64

[2] BIT Jurisdictional Requirements

Specialized jurisdictional requirements apply to BIT arbitrations; these requirements vary

depending on the terms of individual BITs. In general, most BITs contain jurisdictional
requirements that are broadly similar to those applicable under ICSID, but there can be
important differences. In order for an investor to pursue a BIT arbitration, the BIT’s
jurisdictional requirements must be satisfied; where the BIT provides for or permits an
ICSID Convention arbitration, the Convention’s jurisdictional requirements must also
generally be satisfied.

[i] No Separate Consent by Host State

As discussed above, many BITs require no additional consent (by the host state) to
arbitration in order to permit an investor to commence arbitral proceedings against it. Rather,
the BIT provides a general, standing offer to arbitrate by the host state, which nationals of
the other Contracting State may accept by formal notice to that effect or by commencement
of an arbitration.65
A few BITs are different and require consent on a case-by-case basis. In some such cases,
consent can be provided in advance, through government registration or approval of an
investment; in other cases, consent will only be provided after disputes arise (when states are
unlikely to consent to arbitrate).66

[ii] Nationality Requirement

BITs typically limit both the host state’s substantive guarantees and dispute resolution
commitments to “nationals” of the other Contracting Party. In general, the same analysis of
issues of nationality that applies under the ICSID Convention also applies under most BITs.
In contrast to Article 25(2)(a)(2) of the ICSID Convention, however, some BITs provide that
dual nationals shall be deemed to have the nationality of the state of “dominant” or
“effective” nationality. 67 More generally, the language of individual BITs is decisive with
regard to the definition of a “national” (with some BITs having detailed definitions of
“nationals”).68

[iii] Investment
Virtually all BITs contain requirements for an “investment,” with some treaties again
containing detailed definitions of covered investments.69 The definition of “investment”
under the ICSID Convention is broadly relevant under many BITs, although some tribunals
have concluded that particular BITs contemplate a more expansive concept of investment
than the ICSID Convention.70

[iv] Compliance with Host State Law

As discussed below, BITs frequently require that investments have been made “in accordance
with” the host state’s law. There is divergent authority as to whether failure to do so gives
rise to jurisdictional issues under a BIT or whether such requirements are instead relevant
only to the substance of the parties’ claims and defenses.71

[v] Exclusions

Finally, BITs frequently contain exclusions covering specified categories of disputes (e.g.,
taxation, government procurement and subsidies, and, increasingly, “essential security” and
financial regulatory measures).72 Where they exist, the terms of such exclusions vary from
BIT to BIT.

[3] Notice and Other Requirements

The ability of an investor to pursue claims against a host state in an investment arbitration is
sometimes subject to additional requirements, which may be imposed in an investment
contract, BIT or investment law.

[i] Notice and “Cooling Off” Periods

BITs frequently contain “cooling off” periods (for example, requiring an investor to wait for
six months following notice of a dispute) or requirements to pursue mediation or other
alternative dispute resolution mechanisms prior to commencing an arbitration; alternatively,
some BITs contain an exhaustion provision, requiring investors first to pursue remedies in
local courts before commencing an arbitration.73 Where an investor fails to comply with these
pre-arbitration requirements, it may be precluded from pursuing an investment arbitration.74

[ii] “Fork in the Road” Provisions

Some BITs require investors to choose a single avenue of relief at the outset of a dispute.
These “fork in the road” clauses can preclude an investor from switching forums after having
filed a request for arbitration or having commenced a proceeding in local courts. Violation of
these provisions may result in a jurisdictional bar to an investor’s pursuit of identical
remedies in the same dispute in an investment arbitration.

[iii] Exhaustion Requirements

A few BITs contain provisions requiring an investor to pursue relief initially in the host
state’s courts prior to commencing an investment arbitration. 75 For example, the Argentina-
U.K. BIT requires investors to pursue claims for 18 months in the host state’s courts before
submitting a dispute to arbitration.76 These provisions require the opposite of “fork in the
road” clauses, which forbid an investor from pursuing claims in an investment arbitration if it
has first submitted those claims to the host state’s courts.

[C] “Umbrella Clauses”

BITs may also contain so-called “umbrella clauses,” that permit investors to arbitrate a wide
range of disputes with the host state, including disputes involving contractual claims by an
investor against the host state, or a state-related entity, with which the investor has a
contract. Umbrella clauses are drafted in different ways, but typically contain language to the
effect that a host state must honor all obligations it has undertaken toward investors who are
nationals of the other contracting state, in addition to the substantive obligations imposed by
the BIT itself. For example, the Argentina-U.S. BIT provides that “[e]ach Party shall observe
any obligation it may have entered into with regard to investments.”77 In such cases, a state’s
breach of a contract with a foreign investor may also qualify as a breach of the investment
treaty itself, providing a basis for seeking arbitration under the BIT.
A recurrent issue is whether an umbrella clause permits an investor to assert contractual
claims against a state in a BIT arbitration where the investor’s underlying contract provides a
contractual dispute resolution mechanism (e.g., a commercial arbitration clause or a forum
selection clause). Some BITs expressly address this question, for example, by providing that
investors may proceed with a BIT arbitration of contractual claims notwithstanding a
contrary contractual choice-of-forum provision.78 In many cases, however, BITs are silent on
the effect of a choice-of-forum provision and, in these circumstances, states often argue that
breach of contract disputes must be resolved in the contractual forum, rather than in a BIT
arbitration.79
For example, in one frequently-cited BIT arbitration, a Swiss investor asserted breach of
contract claims against Pakistan, relying on the umbrella clause in the Pakistan-Switzerland
BIT.80 The tribunal concluded that it did not have jurisdiction over the claims because the
umbrella clause “would have to be considerably more specifically worded before it can
reasonably be read in the extraordinarily expansive manner submitted by” the investor. 81 In a
similar arbitration, the same investor asserted breach of contract claims against the
Philippines, relying on an umbrella clause in the Philippines-Switzerland BIT providing:
“[e]ach Contracting Party shall observe any obligation it has assumed with regard to specific
investments in its territory by investors of the other Contracting Party.” 82 Rejecting the
analysis in the previously-cited award, the tribunal reasoned that the umbrella clause “makes
it a breach of the [BIT] for the host State to fail to observe binding commitments, which it
has assumed with regard to specific investments.”83
Subsequent awards have interpreted umbrella clauses in divergent ways. Some awards have
permitted contractual claims to be asserted in a BIT arbitration, even when the parties’
contract contains alternative dispute resolution mechanisms; these decisions have reasoned
that the BIT confers additional, treaty-based rights that are distinct from underlying
contractual rights.84 Other awards have given expansive effect to contractual choice-of-forum
clauses holding that they prevail over the general terms of the BIT. Decisions frequently
emphasize the particular text of the umbrella clause at issue and the character of the
governmental action allegedly breaching the state’s obligations.85

[D] Substantive Issues in Investor-State Disputes

Investment treaties and customary international law provide foreign investors a number of
substantive rights that may potentially be pursued in investor-state arbitrations. The same
sources also provide host states with a variety of defenses to investors’ claims.

[1] Substantive Claims in Investor-State Arbitrations

Foreign investors can potentially pursue a number of different claims against host states in
investment disputes. These include claims based on denial of minimum standards of fair
treatment, expropriation or denial of national or most favored nation treatment. These claims
are virtually always based principally on international law, in the form of either the
provisions of the applicable investment treaty or customary international law.

Fair and Equitable Treatment. The requirement of a state to afford foreign investors fair and
equitable treatment is found in most investment treaties and has developed into the core
standards of protection in investment arbitration. A representative formulation is found in
the Germany Model BIT, which provides that “[e]ach Contracting State shall in its territory
in every case accord investments by investors of the other Contracting State fair and
equitable treatment ....”86
A recurrent issue is whether the requirement of fair and equitable treatment requires a state
to afford investors a higher standard of treatment than that which is required under the so-
called “minimum standard of treatment of aliens” under customary international law.
Although a number of awards have answered in the affirmative,87 the 2004 and 2012 U.S.
Model BIT and a few other recent BITs are to the contrary, providing that nothing more than
the traditional minimum standard of international law is required by the guarantee of fair and
equitable treatment.88
Fair and equitable treatment generally involves consideration of the consistency,
transparency, fairness and proportionality of governmental measures, as well as prohibitions
against arbitrary or discriminatory state action.89 In many cases, tribunals give decisive
weight to an investor’s “legitimate expectations.” 90 A few tribunals, however, have applied a
more stringent standard. In Glamis Gold v. United States , for example, the tribunal concluded
that a violation of the fair and equitable treatment standard requires that an act be “egregious
and shocking – a gross denial of justice, manifest arbitrariness, blatant unfairness, a complete
lack of due process, evident discrimination, or a manifest lack of reasons.”91

No Expropriation without Compensation. Many BITs contain protections against the

expropriation of an investment. Although BITs generally permit the expropriation of
property in some circumstances, the expropriation must be for a public purpose and non-
discriminatory, and the state must pay adequate compensation to the investor even where an
expropriation is otherwise lawful. For example, the Energy Charter Treaty provides that
“Investments of Investors of a Contracting Party in the Area of any other Contracting Party
shall not be nationalized, expropriated or subjected to a measure or measures having effect
equivalent to nationalization or expropriation ... except where such Expropriation is: (a) for a
purpose which is in the public interest; (b) not discriminatory; (c) carried out under due
process of law; and (d) accompanied by the payment of prompt, adequate and effective
compensation.”92
Expropriations may be direct or indirect. A direct expropriation involves the state taking
physical possession of or legal title to the expropriated property (e.g., seizure of a factory or
registration of new ownership of an asset). In contrast, an indirect expropriation arises from
measures that significantly diminish the value or use of the investor’s property rights in the
investment; indirect expropriations can arise from revocation of an investor’s license, or
unduly onerous regulations (including environmental, cultural protection or health and safety
regulations).
 Additionally, some expropriations can be “creeping,” resulting from a step-by-step series
of measures, rather than a single act. Most authorities hold that creeping expropriations are
no less violations of protections against expropriation than other expropriations. In practice,
difficulties frequently arise in distinguishing between compensable indirect or creeping
expropriations and non-compensable regulatory measures.

Full Protection and Security. Many investment treaties contain a guarantee of full protection
and security for investors and their investments.93 The Colombia Model BIT provides a
representative formulation of this guarantee: “[e]ach Party shall accord ... full protection and
security in its territory to investments of investors of the other Contracting Party.” 94 The
concept of full protection and security generally requires a host state to take reasonable
measures (“due diligence”) to prevent the physical destruction of an investor’s property.
Thus, in Saluka Investments v. Czech Republic, the tribunal observed that “the ‘full security
and protection’ clause is not meant to cover just any kind of impairment of an investor’s
investment, but to protect more specifically the physical integrity of an investment against
interference by use of force.”95
A number of tribunals have taken a broader view of the full protection and security
standard and concluded that it also requires ensuring a secure environment that affords
stability to the investor (arguably similar to what is required under the fair and equitable
treatment standard).96 Thus, in concluding that Argentine provincial officials violated a full
protection and security guarantee in relation to a water concession by politicizing the
applicable tariff regime, calling on customers to refuse to pay their water bills following an
algae outbreak and failing to complete works critical to algae removal, one tribunal observed
that “full protection and security may be breached even if no physical violence or damage
occurs .... It is not only a matter of physical security; the stability afforded by a secure
investment environment is as important from an investor’s point of view.”97

National Treatment. Investment treaties also usually contain guarantees of national treatment,
which require host states to treat foreign investments no less favorably than the investments
of their own nationals in like circumstances.98 NAFTA is illustrative, providing that “[e]ach
Party shall accord to investments of investors of another Party treatment no less favorable
than that it accords, in like circumstances, to investments of its own investors with respect to
the establishment, acquisition, expansion, management, conduct, operation, and sale or other
disposition of investments.”99 For example, applying this standard, the tribunal in Feldman
v. Mexico, concluded that Mexico violated the national treatment standard when it failed to
provide a U.S. investor with a rebate on an excise tax on exported cigarettes produced in
M exico that was available to M exican cigarette producers.100
 A key question that often arises in national treatment claims is what constitutes “like
circumstances” (or a “like situation”). In particular, tribunals must determine to whom or
what the claimant should be compared: for example, should the treatment of a foreign
investor be compared to the treatment of domestic investors who are in precisely the same
line of business or to domestic investors who are not in the same line of business but operate
in the same general economic sector?101 While tribunals have adopted different approaches,
they have, for the most part, been cautious “not to construe the basis of comparison for the
applicability of the national treatment standard too narrowly.”102

Most Favored Nation Treatment. Some investment treaties contain “most favored nation” (or
M FN) protections, which generally require host states to treat foreign investments no less
favorably than the investments of investors from other foreign states. Although the language
of such provisions can differ, the ASEAN Comprehensive Investment Agreement provides,
for example, that: “[e]ach Member State shall accord to investments of investors of another
Member State treatment no less favourable than that it accords, in like circumstances, to
investments in its territory of investors of any other Member State or a non-Member State
with respect to the admission, establishment, acquisition, expansion, management, conduct,
operation and sale or other disposition of investments.”103
There is divergent authority on the question of whether a general M FN clause extends to
dispute resolution provisions. In Maffezini v. Spain, a BIT tribunal concluded that an
Argentine investor did not first need to submit a dispute with Spain to the Spanish courts (as
required by the Argentina-Spain BIT) because there was no such requirement in the Chile-
Spain BIT; the tribunal held that the M FN provision in the Argentina-Spain BIT allowed the
investor to rely on the more favorable dispute resolution provision of the Chile-Spain
BIT.104 Other tribunals have rejected this reasoning, holding that an M FN provision
ordinarily only incorporates “substantive” protections (such as guarantees of fair and
equitable treatment) and does not include dispute resolution provisions.105 Similarly, the
recent ASEAN Comprehensive Investment Agreement expressly provides that its M FN
provision “shall not apply to investor-State dispute settlement procedures that are available
in other agreements to which M ember States are party.”106
It remains disputed whether a distinction between “substantive” and dispute resolution
rights can be derived from the text of most M FN provisions. In practice, tribunals often give
significant weight to the language of particular M FN provisions.

Free Transfer of Funds Related to Investments. Many investment treaties contain provisions
that guarantee the ability of a foreign investor to transfer capital in and out of the host
country in relation to the investor’s investments without undue governmental interference.
Under such provisions, foreign investors may seek compensation if the host state
implements currency control regulations or other measures that have the effect of freezing the
investor’s capital in the host state or obstructing transfers of funds out of the host state. 107
Provisions relating to the free transfer of investment-related funds are often spelled out in
considerable detail in BITs (and, as a result, relatively fewer disputes have arisen with
respect to these provisions).108 In some cases, BITs contain exceptions to or limitations on
the scope of free transfer and convertibility protections (e.g., for prudential financial
regulatory measures).

Residual Protections of Customary International Law. Beyond the explicit protections set
forth in BITs, investors may also base claims against host states on customary international
law relating to the protection of alien property. While the contours of the standard have been
the subject of considerable debate, international law has historically recognized that an
international minimum standard exists that ensures a minimum level of protection for foreign
nationals and their property (regardless of the protections that a state may afford its own
nationals).109 As noted above, the United States and the other NAFTA parties have declared
that NAFTA’s guarantee of fair and equitable treatment is co-exclusive with this historic
minimum standard.110
The related principle of denial of justice or “the duty to provide decent justice to
foreigners” also has its roots in customary international law. 111 Under this principle, “[a]
denial of justice could be pleaded if the relevant courts refuse to entertain a suit, if they
subject it to undue delay, or if they administer justice in a seriously inadequate way....”112

Umbrella Clauses. As discussed above, many investment treaties contain “umbrella clauses”
permitting arbitration of claims for breach by the host state of any obligation owed to the
investor. For example, the Energy Charter Treaty provides that “[e]ach Contracting Party
shall observe any obligations it has entered into with an Investor or an Investment of an
Investor of any other Contracting Party.” 113 The precise terms of umbrella clauses vary,
which has in turn produced divergent applications of such provisions in arbitral awards. In
principle, however, an umbrella clause permits investors to assert claims against the host
state for breach of any obligation owed by that state, including obligations under contracts,
treaties, customary international law, national legislation and regulatory provisions, and
otherwise.

[2] Defenses in Investor-State Arbitration

Host states have a variety of defenses available to claims by investors in investment

arbitrations. As with investors’ claims, these defenses are virtually always governed
principally by international law (not national law), in the form of either the provisions of the
applicable investment treaty or customary international law.
Preliminarily, virtually every investor-state arbitration involves a jurisdictional or related
objection by the host state (relying on one of the jurisdictional defenses summarized
above).114 This contrasts to international commercial arbitration, where jurisdictional
defenses are far less common. When jurisdictional defenses fail, states assert a variety of
defenses to an investor’s substantive investment claims. These defenses are often highly fact
specific, and their success depends on the particular circumstances of the case.

Permitted Regulation. Host states frequently deny either that their regulatory actions
constitute an (indirect) expropriation or amount to a denial of fair and equitable treatment or a
breach of the international minimum standard of treatment of aliens. States typically argue
that particular circumstances warranted regulatory responses, that the foreign investor was
treated fairly and appropriately and that nothing more than ordinary government regulation
occurred. States frequently cite concepts of national sovereignty and regulatory prerogatives
in asserting such defenses. For example, in Methanex Corp. v. United States , a NAFTA
tribunal accepted the respondent’s argument that a ban on a gasoline additive produced by
the claimant was a lawful exercise of governmental authority and not an expropriation.115

Exceptions. BITs frequently include exceptions for particular types of measures or industry
sectors. For example, tax measures or measures in a particular industry (e.g., inland shipping)
may be excluded from the BIT’s protections or a breach of the international minimum
standard of treatment of aliens.

Investor’s Unlawful Conduct . A foreign investor’s wrongful or unlawful conduct may be

grounds for denying its claims. For example, in World Duty Free Co. Ltd v. Republic of
Kenya,116 an ICSID tribunal dismissed an investor’s claims because the investment contract
at issue (to operate an airport shop concession) was obtained through corruption. (In
particular, it was common ground that the investor obtained the contract by paying a $2
million bribe to the former president of Kenya.) The tribunal dismissed the claims on the
basis that (1) under international public policy, a claimant cannot maintain claims arising
under a contract obtained through bribery and (2) Kenya was entitled to (and did) void such a
contract under the applicable national laws.117

Necessity. Host states sometimes raise a defense of “necessity” under customary

international law or “essential security” under the text of some BITs. These defenses
typically claim that a governmental act was either unavoidable or justified because of pressing
and essential state interests.
Under Article 25 of the International Law Commission’s Articles on State Responsibility,
necessity may “be invoked by a State as a ground for precluding the wrongfulness of an act
not in conformity with an international obligation of that State” if the act “is the only way
for the State to safeguard an essential interest against a grave and imminent peril.”118
Argentina invoked this defense in a number of arbitrations arising from emergency measures it
adopted in 2001, arguing that the severe state of its economy necessitated its actions. These
arbitrations have resulted in divergent views on the “necessity” or “essential security”
defense: several tribunals have rejected the defense, while others have accepted it.119

Exhaustion of Local Remedies. As discussed above, a few BITs require an investor to exhaust
its local remedies in the host state courts before commencing an investment arbitration.120 In
addition, states sometimes argue that no violation of a foreign investor’s substantive rights
has occurred because the investor failed to exhaust its local remedies – for example, by
seeking appellate review of a wrongful first instance judicial decision. Requirements for
exhaustion are most frequently asserted in cases involving claims of a denial of justice.121
Thus, in Loewen v. United States , a NAFTA tribunal denied the claimant’s claim that a trial
court decision violated international standards of due process because the claimant had not
appealed the decision to the U.S. Supreme Court.122

International Obligation. States sometimes argue that their actions were required by another
international commitment (e.g., an environmental or human rights treaty) or, less plausibly,
by domestic law. For example, in Vivendi v. Argentina, the claimants argued that they were
not reimbursed for an increase in costs linked to investments made for the expansion and
improvement of the water system; Argentina argued that it adopted measures affecting the
claimants’ investments “in order to safeguard the human right to water of the inhabitants of
the country.”123 The tribunal concluded, however, that Argentina could have respected both
its human rights obligations and its obligations under the BIT because the obligations were
not “inconsistent, contradictory, or mutually exclusive.”124
Alternatively, some BITs contain provisions that specific measures are not precluded by
or actionable under the BIT’s terms. As noted above, these measures often relate to taxation,
government procurement and subsidies, and, increasingly, national security.

Time Bar. States may argue that an investor’s claims are time barred. Article 1116(2) of
NAFTA, for example, provides that “[a]n investor may not make a claim if more than three
years have elapsed from the date on which the investor first acquired, or should have first
acquired, knowledge of the alleged breach and knowledge that the investor has incurred loss or
damage.”125 In Grand River Enterprises Six Nations, Ltd v. United States , a NAFTA arbitral
tribunal dismissed claims brought by Canadian cigarette manufacturers because the claimants
should have known of measures taken by the United States that allegedly violated their rights
under NAFTA more than three years before filing the claims.126

[E] Arbitral Procedures in Investor-State Arbitration

Procedures in investor-state arbitration are modeled closely on those in international

commercial arbitration. There are some differences, but these are comparatively limited. As in
commercial arbitration, the guiding principle in investment arbitrations is that of the parties’
procedural autonomy. In general, if the parties agree to particular procedures, that agreement
will be accepted (and binding).
In practice, virtually all investment arbitrations are conducted pursuant to institutional
arbitration rules, usually ICSID, UNCITRAL, SCC, ICSID Additional Facility, or ICC
Rules. As discussed above, each of these sets of rules establishes a basic procedural
framework for the arbitration, leaving the parties broad autonomy to agree upon particular
timetables or procedural approaches and, absent agreement, granting the tribunal broad
discretion to conduct the arbitration. National rules of civil procedure generally play no part
in investment arbitration proceedings; as with international commercial arbitration, there is
also no generally-applicable international code of arbitral procedure. Rather, absent contrary
agreement by the parties, arbitral tribunals adopt international procedures tailored to the
circumstances of particular cases.
The constitution of the arbitral tribunal in investment arbitrations is also closely modeled
on that in international commercial arbitrations. In the vast majority of cases, investment
arbitrations are heard by three-person tribunals, with each party nominating one co-arbitrator
and the parties (or co-arbitrators) selecting the presiding arbitrator; where the parties (or co-
arbitrators) are unable to reach agreement, the appointing authority (e.g., ICSID or PCA) will
appoint the presiding arbitrator. As in commercial arbitration, arbitrators in investment
arbitrations are generally subject to obligations of independence and impartiality.
In practice, there is some overlap between the arbitrators who are frequently appointed in
international commercial arbitrations and investor-state arbitrations, although the latter also
involve arbitrators with more specialized public international law or investment law
backgrounds. Additionally, ICSID appointments of presiding arbitrators are (as provided by
Article 40 of the ICSID Convention) made from the ICSID Panel of Arbitrators, consisting of
individuals designated by Contracting States or designated by the Chairman of the ICSID
Administrative Council.
Written submissions, disclosure and oral hearings in investor-state arbitration all generally
follow the same basic model as in international commercial arbitration. Evidentiary and
procedural issues are sometimes influenced by the sovereign character of the respondent
state, including on disclosure matters (where state secret or similar privileges are sometimes
asserted). As discussed, above, investor-state arbitrations also involve materially less
confidentiality (and, conversely, greater transparency) than commercial arbitrations, as well
as opportunities for the participation of amicus curiae. Additionally, the parties’
submissions in investment arbitrations often involve more extensive reliance on prior
investment arbitration awards than is the case in commercial arbitrations. In most other
respects, however, procedural issues are little different from those in commercial contexts.

[F] Applicable Law in Investment Arbitration

Most investor-state arbitrations arise under a BIT or a multilateral investment agreement, and
as a consequence, the principal applicable law in almost all investment arbitrations will be the
provisions of the underlying treaty and general principles of international law. Moreover,
Article 42(1) of the ICSID Convention provides that “[t]he Tribunal shall decide a dispute in
accordance with such rules of law as may be agreed by the parties. In the absence of such
agreement, the Tribunal shall apply the law of the Contracting State party to the dispute ...
and such rules of international law as may be applicable,” while some BITs contain similar
applicable law provisions. The law of the host state will also often be applicable, if only to a
limited extent; for example, national law may apply to a contract claim brought under an
umbrella clause or in determining if an investment was made in accordance with the local law
of the host state.

[G] Finality of Awards

The finality of awards in investment arbitrations varies depending on the treaty under which
the arbitration is pursued. In particular, there are significant differences in the status of ICSID
and non-ICSID awards.

[1] ICSID Awards

ICSID awards are subject to the unique annulment mechanism provided under the ICSID
Convention. Pursuant to Article 52 of the Convention, a party may challenge an award before
a n ad hoc ICSID annulment committee, appointed by ICSID, on several grounds: (a)
improper constitution of the tribunal, (b) manifest excess of authority, (c) corruption
involving a member of the tribunal, (d) a “serious departure from a fundamental rule of
procedure,” or (e) a failure by the tribunal to state in the award the reasons on which it is
based.127 Unlike commercial arbitration awards, ICSID awards are not subject to annulment
proceedings in national courts, either in the arbitral seat or elsewhere.
Similarly, nothing in the ICSID Convention permits courts in a Contracting State to review
the tribunal’s jurisdiction, procedural decisions or other actions, or to consider objections
based on local public policy, in a proceeding to recognize an ICSID award. Rather,
Contracting States are required by Articles 53 and 54 of the Convention to treat awards as
binding and to recognize them without any judicial review (as discussed below).

[2] Non-ICSID Awards

Awards made in non-ICSID Convention investment arbitrations are subject to different

review mechanisms. BITs (and multilateral treaties like NAFTA) do not provide for internal
review by any arbitral institution (except where a treaty includes a dispute resolution
mechanism that provides for ICSID arbitration). In non-ICSID Convention investment
arbitrations, awards are subject to setting aside in the arbitral seat in the same manner as
international commercial arbitration awards and to recognition (or non-recognition) and
enforcement under the New York Convention. 128 As a consequence, all of the bases for
setting aside that are available under local arbitration legislation in the arbitral seat for setting
aside a commercial award are generally available for setting aside of a BIT award (including
lack or excess of jurisdiction, procedural unfairness, public policy and non-arbitrability); the
same is true of grounds for non-recognition under Article V of the New York Convention in
recognition actions.

[H] Enforcement of Awards

Article 54 of the ICSID Convention requires Contracting State to recognize a monetary award
“as if it were a final judgment of a court in that State.” Nonetheless, Article 54(3) of the
Convention provides that execution of an award against assets of a state is “governed by the
laws concerning the execution of judgments in force in the State in whose territories such
execution is sought”; likewise, Article 55 of the Convention provides that enforcement is
subject to “the law in force in any Contracting State relating to immunity of that State or of
any foreign State from execution.”129 In many states, foreign sovereign immunity or state
immunity legislation limits the ability of parties to coercively enforce awards and judgments
against non-commercial state assets.130 Execution of non-ICSID awards against foreign state
assets is subject to similar limitations.
§18.02 STATE-TO-STATE ARBITRATION

State-to-state arbitration (also termed “interstate arbitration”) involves disputes entirely

between states or state entities, typically concerning treaty obligations or issues of public
international law. In particular, state-to-state arbitration frequently involves disputes over
territorial and maritime boundaries, the meaning of treaty provisions and post-war matters.
State-to-state arbitrations bear some resemblances to international commercial and investment
arbitrations, but are subject to a fundamentally different legal regime and somewhat different
arbitral procedures. Although less common than commercial or investment arbitrations, state-
to-state arbitrations play an important role in contemporary international affairs.

[A] Historical Background

States have resolved interstate disputes through arbitration since Antiquity, particularly
among Greek city-states; arbitration between states and state-like entities was also used
during M edieval times and subsequently.131
The 1794 Jay Treaty between Great Britain and the United States ushered in the modern
era of state-to-state arbitration. Among other things, the Jay Treaty established three arbitral
mechanisms to resolve disputes following the Revolutionary War concerning the U.S.-
Canadian boundary, claims involving debts owed by U.S. citizens to British merchants and
claims by U.S. nationals against Great Britain.132 Almost a century later, Great Britain and
the United States also resorted to arbitration in the Treaty of Washington to resolve disputes
following the U.S. Civil War. 133 These disputes included the classic Alabama arbitration
addressing claims by the United States for damage caused by a warship constructed in Great
Britain and sold to the Confederacy, allegedly in violation of Great Britain’s obligations of
neutrality.134
Numerous other states, particularly in Latin America, were also frequent users of
international arbitration during the 19th century. 135 Territorial boundary disputes and post-
conflict settlements were particularly common subjects of state-to-state arbitration.
As discussed above, the 1899 and 1907 Hague Conventions for the Pacific Settlement of
International Disputes established the PCA to administer state-to-state arbitrations. The
PCA administered relatively few cases in its early decades (20 cases in its first 30 years, and
then very few until the 1990s).136 Since 1990, however, the PCA has enjoyed a substantial
revival, particularly in the administration of investor-state disputes under BITs.
Additionally, a number of significant state-to-state disputes have recently been arbitrated
under the auspices of the PCA, including arbitrations between Eritrea and Yemen over their
maritime boundary; Sudan and the Sudan People’s Liberation Movement/Army over the
Abyei Area; Eritrea and Ethiopia over their boundary and post-war claims; as well as Guyana
and Suriname and Croatia and Slovenia over their maritime and/or land boundaries.
States also establish ad hoc tribunals to resolve their differences through arbitration. In
some instances, the establishment of an arbitral tribunal by states can result in a semi-
permanent body. Iran and the United States established the Iran-U.S. Claims Tribunal in
1981 after the United States agreed to unfreeze Iranian assets following the hostage crisis at
the U.S. Embassy in Tehran.137 Applying a version of the UNCITRAL Rules, the Tribunal
has resolved nearly 4,000 claims since its inception. The tribunal is a “mixed” tribunal in the
sense that it adjudicates both private claims brought by individuals and state-to-state claims.
Finally, states occasionally use existing arbitral (or other) institutions to resolve state-to-
state disputes. For example, the United States and Canada agreed to use the LCIA to
administer arbitrations under their Softwood Lumber Agreement.

[B] Reasons for State-to-State Arbitration

States agree to arbitrate disputes for a variety of reasons. In some instances, an arbitral
tribunal serves as a neutral third party to resolve disputes that are politically sensitive and
therefore cannot readily be resolved through negotiations or other means. Carving out certain
issues and placing them in the hands of arbitrators may enable states to move forward on less
sensitive issues and improve their overall relations. In some instances, the only alternatives to
arbitrating disputed issues may be diplomatic impasse, political or trade pressure, or worse,
making arbitration the least unattractive alternative.
State-to-state disputes involving highly technical issues may be submitted to arbitration.
Many water-related disputes fall into this category. For example, the Indus Waters Treaty
between India and Pakistan requires that arbitral tribunals include “[h]ighly qualified
engineers.”138 Other tribunals are empowered to retain experts to assist them to handle
technical disputes. For example, the treaty establishing the Trail Smelter arbitration involving
damage that occurred in the United States from fumes discharged from a smelter in Canada
provided that the United States and Canada “may each designate a scientist to assist the
Tribunal.”139
States may also agree to arbitration of interstate disputes because of the flexibility and
speed of arbitration, particularly when compared to dispute resolution through the
International Court of Justice (“ICJ”). State parties to an arbitration also have considerable
latitude in formulating the arbitral procedures and issues to be arbitrated. In contrast, cases
brought before the ICJ will be subject to the ICJ’s generally-applicable procedures and will
often take more time and expense to resolve. Moreover, state-to-state arbitration permits
parties to establish their own mechanisms to select the arbitrators, rather than requiring use
of the ICJ’s standing tribunal of judges.

[C] Jurisdiction in State-to-State Arbitrations

States are not generally obligated to resolve their disputes through arbitration or any other
binding dispute resolution mechanism; like international commercial and investment
arbitration, state-to-state arbitration requires the consent of the parties. This consent is
typically given in a treaty providing for constitution of an arbitral tribunal, which also sets
forth the jurisdiction of the tribunal. As in commercial settings, agreements to arbitrate can
involve either existing disputes or future disputes that may arise under a particular treaty.
For example, a tribunal might be established to delimit an international boundary between
two states, after disputes have arisen regarding that boundary. 140 Similarly, a tribunal might
be established to hear post-war claims, as in case of the Eritrea-Ethiopia Claims Commission,
which was formed to hear claims that resulted from “violations of international humanitarian
law ... or other violations of international law” that occurred during the 1998–2000 conflict
between those two states.141
Alternatively, treaties sometimes include arbitration clauses (much as commercial contracts
do) providing for the arbitration of future disputes that arise under the treaty’s provisions.
For example, the Ecuador-U.S. BIT provides that “[a]ny dispute between the Parties
concerning the interpretation or application of the Treaty which is not resolved through
consultations or other diplomatic channels, shall be submitted, upon the request of either
Party, to an arbitral tribunal for binding decision in accordance with the applicable rules of
international law.”142
In some cases, states consent to the use of standing arbitral (or similar) bodies to resolve
particular categories of disputes. For example, dispute resolution mechanisms under the
United Nations Convention on the Law of the Sea, Chapter 20 of NAFTA and the Dispute
Settlement Understanding of the World Trade Organization provide examples of specialized
forms of state-to-state arbitration established to resolve particular categories of disputes.
A state-to-state tribunal, as in international commercial arbitrations, has competence-
competence to determine its own jurisdiction.143 If, however, an arbitral tribunal exceeds the
jurisdiction granted to it, the resulting award may constitute a nullity.144
Importantly, however, there is generally no basis under either international or national law
to annul or set aside an award in a state-to-state arbitration on jurisdictional grounds, either in
the arbitral seat or elsewhere. In contrast to international commercial and (some) investment
arbitrations, state-to-state arbitrations generally do not satisfy the requirements of national
arbitration legislation for “commercial” disputes. Even in states that have no “commercial”
requirement in local arbitration legislation, it is very doubtful that annulment may properly
be sought of an award in an interstate arbitration, concluded under public international law, in
national courts or that the involved states would be subject to the jurisdiction of local courts
(given issues of state immunity). Similarly, it is also doubtful that national courts would grant
applications to enforce state-to-state arbitration agreements (as could occur with commercial
arbitration agreements under Article II of the New York Convention or Article 8 of the
UNCITRAL M odel Law, as discussed above).

[D] Procedures in State-to-State Arbitration

Arbitral procedures in state-to-state arbitrations are broadly similar to those in international

commercial arbitration, but with some important differences. As in other contexts, principles
of party autonomy and (absent contrary agreement) the arbitrators’ procedural discretion are
the foundation of the arbitral process. In practice, states often agree to arbitrate pursuant to
institutional rules adopted specifically for interstate arbitrations, including the PCA’s (1)
Optional Rules for Arbitrating Disputes between Two States or (2) Optional Rules for
Arbitrating Disputes between Two Parties of Which Only One Is a State. The International
Law Commission also adopted the Model Rules on Arbitral Procedure, which generally
reflect customary international law and practice.145
In general, procedures in state-to-state arbitrations broadly follow those in international
commercial arbitrations (and differ from more rudimentary procedures in many international
courts). Parties make written submissions (often termed “Memorials”), attaching
documentary evidence and witness statements, and oral hearings are conducted, in which
counsel make legal submissions and witnesses may be examined. In general, however, witness
evidence is significantly less extensive in state-to-state arbitrations than in commercial
settings. Similarly, compulsory disclosure or discovery of documents is often much more
limited, or non-existent, both because of customary practice and notions of state sovereignty
and governmental secrecy.
The constitution of state-to-state arbitral tribunals is also broadly similar to that in
international commercial and investment arbitration. In general, parties have the right
unilaterally to appoint an equal number of the members of the arbitral tribunal (e.g., one by
each party in cases with a three-person tribunal or two by each party in cases with a five-
person tribunal) and to agree jointly upon the identity of the presiding arbitrator; failing
agreement, the parties’ designated appointing authority will choose the presiding arbitrator.
As in other types of arbitration, all arbitrators are generally required to be independent and
impartial; the meaning of this standard in state-to-state, as distinguished from commercial and
investment, arbitration is debated.
State-to-state arbitral tribunals often have larger tribunals than the three-member panels
generally found in international commercial and investment arbitrations. For example, the
arbitral bodies established under the Jay Treaty, the Abyei tribunal, the Eritrea-Ethiopia
Boundary Commission and the Eritrea-Ethiopia Claims Commission each had five members.
The Indus Waters Treaty provides for seven-member tribunals, and the Iran-U.S. Claims
Tribunal consists of nine members (organized into several chambers).

[E] Applicable Law in State-to-State Arbitration

The applicable law in a state-to-state arbitration is virtually always international law, unless
the parties have exceptionally agreed that other legal rules should apply. For example, in the
Trail Smelter case, the arbitration agreement provided that the tribunal was to apply U.S. law
as well as international law. 146 Ordinarily, however, it is international law, as derived from
both treaties and customary international law, that will apply in state-to-state arbitrations.
As in international commercial arbitrations, parties to a state-to-state arbitration may agree
to arbitration ex aequo et bono (i.e., on the basis of fairness rather than legal rules). However,
this is seldom done; indeed, the agreement establishing the Eritrea-Ethiopia Boundary
Commission specifically provided that that tribunal could not render a decision ex aequo et
bono.147
In many instances, state-to-state arbitration involves two states asserting competing claims
(e.g., as to where an international boundary lies) instead of one state presenting a claim that is
then defended by another state. Where a state-to-state arbitration does involve a state
defending against another state’s claim of wrongdoing, both the claims and defenses are
almost always based on principles of public international law and state responsibility.148

[F] Finality of Awards and Enforcement

Awards issued by state-to-state arbitral tribunals are generally final and binding and not
properly subject to any form of subsequent review (unless the states that created the tribunal
provide for a review mechanism in the arbitration agreement). An award may, however, be
considered a nullity under certain circumstances, including where the tribunal has exceeded its
powers, corruption is involved, or there is a serious departure from a fundamental rule of
procedure.149 Claims that an award is a nullity will generally be asserted by a state after it
refuses to comply with the award (and, as discussed above, not in annulment or non-
recognition proceedings in national courts, which will not ordinarily be properly available in
state-to-state contexts).
While a state might attempt to enforce an award issued by a state-to-state arbitral tribunal
through attachment or litigation in the domestic courts of a jurisdiction where the other state
has assets, states have not done so. In part, this is due to the nature of state-to-state arbitral
awards, which often do not involve awards of monetary relief: while a pecuniary award
issued in favor of a state might be capable of enforcement in a domestic court, an award
delimiting a disputed boundary or mandating changes on national regulatory or other rules is
not. Moreover, even with regard to monetary awards, enforcement efforts would raise
significant issues of state or sovereign immunity.
In practice, the principal mechanism for enforcement of state-to-state arbitral awards has
been diplomatic persuasion and counter-measures. For the most part, this has resulted in
reasonably good compliance with interstate awards, although instances of egregious non-
compliance can readily be cited.150
_________________________
1. UNCTAD, Global Investments Trend Monitor No. 8 (24 January 2012), Global Flows of Foreign Direct
Investment Exceeding Pre-Crisis Levels in 2011, Despite Turmoil in the Global Economy 1
(UNCTAD/WEB/DIAE/IA/2012/1), available at unctad.org/en/docs/webdiaeia2012d1_en.pdf.
2. Foreign investors can also sometimes obtain “ political risk” insurance, to provide a measure of compensation in
the event of defined events of expropriation or similar governmental action.
3. Investment protections are also provided by investment chapters of some states’ free trade agreements (e.g., those of
the United States and Canada) and by other multilateral agreements (e.g., the Trans-Pacific Partnership agreement,
which is currently under negotiation).
4. See supra pp. 41–42.
5. ICSID, List of Contracting States and Other Signatories of the Convention ( as of July 25, 2012), available at
http://icsid.worldbank.org/ICSID/FrontServlet?
requestType=ICSIDDocRH&actionVal=ContractingStates&ReqFrom=Main.
6. ICSID Convention, Arts. 41, 52, 53; C. Schreuer et al., The ICSID Convention: A Commentary 516–24 (2d ed.
2009).
7. ICSID Convention, Arts. 13(1), 38, 40(1); C. Schreuer et al., The ICSID Convention: A Commentary 45–47, 490–
97, 508–10, 1102–05 (2d ed. 2009). ICSID has adopted an informal procedure under which it first provides the
disputing parties with a list of three candidates that are not necessarily from the list selected by the Contracting
States; if there is agreement between the parties from the names on this list, ICSID appoints from this list rather
than using the list selected by the Contracting States. As discussed below, and as in commercial arbitration, party
autonomy is the prevailing rule in ICSID and other investment arbitrations: if the parties agree upon an arbitrator,
or a mechanism for selecting an arbitrator, that choice will virtually always be respected.
8. NAFTA, Chapter 11, Arts. 1102 (national treatment), 1103 (most-favored-nation treatment), 1105 (fair and
equitable treatment), 1110 (expropriation). The Dominican Republic-Central American Free Trade Agreement
(commonly referred to as “ CAFTA-DR”) provides substantive rights and dispute resolution mechanisms similar,
but not identical, to those under NAFTA among the CAFTA-DR Contracting Parties (Costa Rica, Dominican
Republic, El Salvador, Guatemala, Nicaragua, Honduras and the United States).
9. See NAFTA, Chapter 11, Art. 1122 (“ Each Party consents to the submission of a claim to arbitration in accordance
with procedures set out in this Agreement.”).
10. ICSID, List of Contracting States and Other Signatories of the Convention ( as of July 25, 2012), available at
http://icsid.worldbank.org/ICSID/FrontServlet?
requestType=ICSIDDocRH&actionVal=ContractingStates&ReqFrom=Main. ICSID arbitration could be
exercised as an option under NAFTA in certain cases if Canada or Mexico were to ratify the ICSID Convention.
NAFTA, Chapter 11, Art. 1120(1)(a). Canada is currently taking steps to do so.
11. C. Schreuer et al., The ICSID Convention: A Commentary 85 (2d ed. 2009).
12. See infra pp. 424–25.
13. Maxwell & Wegner, The New ASEAN Comprehensive Investment Agreement, 5 Asian Int’ l Arb. J. 167 (2009).
The ASEAN Comprehensive Investment Agreement entered into force in 2012. See ASEAN, Press Release,
ASEAN Comprehensive Investment Agreement ( ACIA) Enters Into Force Creating a Stable and Predictable
 Business Investment Environment (4 April 2012), available at www.aseansec.org/26842.htm.
14. ASEAN Comprehensive Investment Agreement, Art. 3.3.
15. Energy Charter, Members & Observers, available at www.encharter.org/index.php? id=61. Other key states in
the energy sector, including the United States, China, Saudi Arabia and Venezuela, are observers, but not parties,
to the Energy Charter Treaty. Ibid. Russia’ s status under the Energy Charter is disputed; although Russia
accepted the Charter’ s provisional application in 1994, it never ratified the treaty and terminated its provisional
acceptance in 2009.
16. Energy Charter Treaty, Arts. 10, 13 & 26; C. Baltag, The Energy Charter Treaty: The Notion of Investor 14–15
(2012).
17. See, e.g., Canada Model BIT (2004); Colombia Model BIT (2007); France Model BIT (2006); Germany Model BIT
(2008); India Model BIT (2003); U.S. Model BIT (2012). These model treaties are available at
http://italaw.com/investment-treaties.
18. For example, 20 out of 58 BITs in 2010 were concluded between developing countries. UNCTAD, Bilateral
Investment Treaties 1995–2006: Trends In Investment Rulemaking (2007); UNCTAD, W orld Investment
Report 2011 , available at www.unctad-docs.org/files/UNCTAD-WIR2011-Full-en.pdf. A few states, notably
Brazil, have refused to conclude BITs, but most states, including the United States, China, all EU states, most
Latin American, Asian states and many African states have concluded substantial numbers of BITs.
19. See R. Dolzer & C. Schreuer, Principles of International Investment Law 89–191 (2008); A. Newcombe & L.
P arad el l , Law and Practice of Investment Treaties: Standards of Treatment (2009); S. Schill, The
Multilateralization of International Investment Law (2009).
20. See P aulsson, Arbitration W ithout Privity, 10 ICSID L. Rev. 232 (1995). In fact, “ arbitration without privity”
is a misnomer: BITs contain standing offers by states to arbitrate defined categories of investment disputes with
foreign investors, which, when accepted by a foreign investor, give rise to a bilateral arbitration agreement
between the host state and foreign investor.
21. A. Newcombe & L. P aradell, Law and Practice of Investment Treaties: Standards of Treatment 73–74 (2009).
22. For example, El Salvador’ s investment law provides that “ [i]n the case of disputes arising among foreign
investors and the State, regarding their investments in El Salvador, the investors may submit the controversy to
... [t]he International Centre for Settlement of Investment Disputes (ICSID), in order to settle the dispute by ...
arbitration ....” Pac Rim Cayman LLC v. Republic of El Salvador, Decision on the Respondent’s Jurisdictional
Objections, ICSID Case No. ARB/09/12 ( 1 June 2012), Ann. to Part 1, ¶1.2, available at
http://icsid.worldbank.org.
23. Less frequently, investment arbitrations may involve contract claims, under either the terms of an investment
agreement or pursuant to an “ umbrella clause” (discussed below, infra pp. 427–29).
24. It is unclear whether BIT arbitrations are “ commercial” for purposes of the New York Convention and national
arbitration legislation. See supra pp. 45–46. The better view is in the affirmative.
25. See, e.g., Spyridon Roussalis v. Romania, Award, ICSID Case No. ARB/06/1 ( 7 December 2011) , ¶¶859–877,
available at http://icsid.worldbank.org (concluding that the tribunal had no jurisdiction to determine the host
state’ s counterclaim because the applicable BIT limited jurisdiction to claims brought by investors concerning
obligations of the host state).
26. A. Newcombe & L. P aradell, Law and Practice of Investment Treaties: Standards of Treatment 64 (2009).
27. ICSID Arbitration Rules, Rule 48(4).
28. The ICSID Convention and Rules permit the publication of awards with the consent of both parties. ICSID’ s
website contains detailed information and access to submissions, awards, and orders, see icsid.worldbank.org, as
do other websites, see, e.g., Investment Treaty Arbitration, available at ita.law.uvic.ca; Investment Claims,
available at www.investmentclaims.org.
29. A substantial majority of claims (63%) arise under BITs, followed by investment contracts (20%), and national
legislation (6%). ICSID, The ICSID Caseload – Statistics ( Issue 2012-2), at 10, available at
http://icsid.worldbank.org/ICSID/FrontServlet? requestType/=ICSIDDocRH&actionVal=CaseLoadStatistics.
30. UNCTAD, Investment Policy Monitor No. 6 (11 October 2011), available at
www.unctad.org/en/docs/webdiaeia2011d12_en.pdf (reporting that five new BITs were signed between April
and September 2011 (in other words, at a pace of about one a month)).
31. Since 2007, Cape Verde, Haiti, Kosovo, Moldova, Qatar, Serbia and South Sudan have ratified the ICSID
Convention, and Montenegro signed it in July 2012.
32. ICSID, The ICSID Caseload – Statistics ( Issue 2012-2), at 7, available at
http://icsid.worldbank.org/en/docs/webdiaeia2011d12_en.pdf.
33. ICSID, List of ICSID Cases, available at http://icsid.worldbank.org/ICSID/FrontServlet?
requestType=CasesRH&actionVal=ListCases.
34. ICSID, Annual Report 2011 , available at http://icsid.worldbank.org/ICSID/FrontServlet?
requestType=ICSIDP ublicationsRH&actionVal=ViewAnnualReports#.
35. UNCTAD, Latest Developments in Investor-State Dispute Settlement, at 3 (April 2012), available at
www.unctad.org/en/docs/webdiaeia20113_en.pdf (charting the substantial rise in known investor-state treaty-
based arbitrations from a handful of cases in the late-1980s and early-1990s to some 450 arbitrations in 2011).
36. See ICSID, List of Contracting States and Other Signatories of the Convention ( as of July 25, 2012), available
a t http://icsid.worldbank.org/ICSID/FrontServlet?
requestType=ICSIDDocRH&actionVal=ContractingStates&ReqFrom=Main.
37. See An Open Letter from Lawyers to the Negotiators of the Trans-Pacific Partnership Urging the Rejection of
the Investor-State Dispute Settlement (8 May 2012), available at http://tpplegal.wordpress.com/open-letter; M.
Waibel, A. Kaushal, K. Chung, & C. Balchin (eds.), The Backlash Against Investment Arbitration (2010); van
Aaken, Perils of Success? The Case of International Investment Protection, 9 Eur. Bus. Org. L. Rev. 1 (2008);
Van Harten et al., Public Statement on the International Investment Regime 1 (August 2010), available at
www.bilaterals.org/IMG/pdf_P ublic_Statement.pdf.
38. See U.S. Model BIT (2012); Canada Model BIT (2004).
39. ICSID also revised its rules (in 2006) to increase transparency and address criticisms. Kantor, ICSID Amends Its
Arbitration Rules, Transn. Dispute Mgt. 5 (2006).
40. Further requirements may be imposed by the terms of the parties’ consent to arbitration whether in an investment
contract or an applicable BIT or investment law.
41. See Salini v. Morocco, Decision on Jurisdiction, ICSID Case No. ARB/00/4 ( 23 July 2001), §§43–58, available
a t http://icsid.worldbank.org; Krishan, A Notion of ICSID Investment, in T. Weiler (ed.), Investment Treaty
Arbitration: A Debate and Discussion 66–84 (2008); C. Schreuer et al., The ICSID Convention: A Commentary
128–34 (2d ed. 2009).
42. See, e.g., Global Trading Resource Corp. and Globex Int’l, Inc. v. Ukraine , ICSID Case No. ARB/09/11 ( 1
December 2010), ¶¶54–57, available at http://icsid.worldbank.org (concluding that sale and purchase contracts
were commercial transactions that did not constitute “ investments” under Article 25 of the ICSID Convention);
Mihaly Int’l Corp. v. Democratic Socialist Republic of Sri Lanka , ICSID Case No. ARB/00/2 ( 15 March 2002),
available at http://icsid.worldbank.org (concluding that expenses incurred by the claimant before finalization of a
power project contract with the Sri Lankan Government did not constitute an “ investment” under the Sri Lanka-
U.S. BIT).
43. C. Schreuer et al., The ICSID Convention: A Commentary 93–95 (2d ed. 2009). No published ICSID award has
denied jurisdiction on the grounds that no “ legal dispute” exists.
44. See ICSID, List of Contracting States and Other Signatories of the Convention ( as of July 25, 2012), available
a t http://icsid.worldbank.org/ICSID/FrontServlet?
requestType=ICSIDDocRH&actionVal=ContractingStates&ReqFrom=Main.
45. As discussed below, ICSID’ s Additional Facility Rules permit ICSID to administer arbitrations involving states
that are not party to the ICSID Convention. These arbitration are not, however, subject to the Convention.
46. C. Schreuer et al., The ICSID Convention: A Commentary 283–98 (2d ed. 2009).
47. “ It is hereby agreed that, although the Investor is a national of the Host State, it is controlled by nationals of
name(s) of other Contracting State(s) and shall be treated as a national of [that]/[those] State[s] for the purposes of
the Convention. See ICSID, Model Clauses, Clause 7, available at
http://icsid.worldbank.org/ICSID/FrontServlet? actionVal=ModelClauses&requestType=ICSIDDocRH; see also
C. Schreuer et al., The ICSID Convention: A Commentary 299–300 (2d ed. 2009). Disputes can arise where
multiple levels of corporate ownership separate a party from the company or person claiming ultimate control
(e.g., where Company 1 owns Company 2, which owns Company 3, which owns Company 4).
48. C. Schreuer et al., The ICSID Convention: A Commentary 310–12 (2d ed. 2009).
49. Champion Trading Company Ameritrade International Inc., James T. W ahba, John B. W ahba, Timothy T.
W ahba v. Arab Republic of Egypt , Decision on Jurisdiction, ICSID Case No. ARB/02/9 ( 21 October 2003),
available at http://icsid.worldbank.org.
50. Micula v. Romania , Decision on Jurisdiction and Admissibility, ICSID Case No. ARB/05/20 ( 24 September
2008), available at http://icsid.worldbank.org; Hussein Nuaman Soufraki v. United Arab Emirates, ICSID Case
No. ARB/02/7 ( 7 July 2004), available at http://italaw.com.
51. Tokios Tokel s v. Ukraine , Decision on Jurisdiction, ICSID Case No. ARB/02/18 ( 26 July 2007), available at
http://icsid.worldbank.org.
52. Tokios Tokel s v. Ukraine , Decision on Jurisdiction, ICSID Case No. ARB/02/18 ( 26 July 2007), available at
http://icsid.worldbank.org.
53. Phoenix Action, Ltd v. Czech Republic , ICSID Case No. ARB/06/5 ( 15 April 2009), available at
http://icsid.worldbank.org.
54. ICSID Convention, Arts. 25(1), 25(3); see also C. Schreuer et al., The ICSID Convention: A Commentary 152–
54, 338–41 (2d ed. 2009).
55. Cable Television of Nevis, Ltd and Cable Television of Nevis Holdings, Ltd v. Federation of St. Kitts and Nevis,
ICSID Case No. ARB/95/2 ( 13 January 1997), ¶2.33, available at http://icsid.worldbank.org.
56. ICSID, Model Clauses, Clauses 1–2, available at http://icsid.worldbank.org/ICSID/FrontServlet?
actionVal=ModelClauses&requestType=ICSIDDocRH; see also Paul D. Friedland, Arbitration Clauses for
International Contracts 157–70 (2d ed. 2007); L. Reed, J. Paulsson, & N. Blackaby, Guide to ICSID
Arbitration 22–23, 35–37 (2d ed. 2010).
57. C. Schreuer et al., The ICSID Convention: A Commentary 259–60 (2d ed. 2009) (“ If an investment agreement
between the host State and the investor containing a clause providing for ICSID’ s jurisdiction is alleged to be
invalid or has been terminated, it may be argued that the consent clause is also invalidated or ceases to operate.”).
See supra pp. 77–82 for a discussion of contract defenses in commercial arbitration.
58. See, e.g., Sri Lanka-U.K. BIT, Art. 8(1) (“ Each Contracting Party hereby consents to submit to the International
Centre for the Settlement of Investment Disputes ... for settlement by conciliation or arbitration under the
Convention ... any legal disputes arising between that Contracting Party and a national or company of the other
Contracting Party concerning an investment of the latter in the territory of the former.”); see also C. Schreuer et
al., The ICSID Convention: A Commentary 205–06 (2d ed. 2009).
59. C. Schreuer et al., The ICSID Convention: A Commentary 206–08, 211–14 (2d ed. 2009).
60. See C. Dugan et al., Investor-State Arbitration 230–36 (2008).
61. See infra pp. 426–27.
62. ICSID, Additional Facility Rules, available at
http://icsid.worldbank.org/ICSID/ICSID/AdditionalFacilityRules.jsp.
63. C. Schreuer et al., The ICSID Convention: A Commentary 85 (2d ed. 2009).
64. C. Schreuer et al., The ICSID Convention: A Commentary 107 (2d ed. 2009).
65. See supra p. 416.
66. C. Schreuer et al., The ICSID Convention: A Commentary 192, 194–95 (2d ed. 2009).
67. See, e.g., Uruguay-U.S. BIT, Art. 1.
68. R. Dolzer & C. Schreuer, Principles of International Investment Law 46–59 (2008).
69. C. Schreuer et al. , The ICSID Convention: A Commentary 122–25 (2d ed. 2009). For example, financial
investments, such as acquisitions of corporate shares or debt, will also generally constitute investments. See, e.g.,
U.S. Model BIT, Art. 1 (2012) (defining an “ investment” to include “ shares, stock, and other forms of equity
participation in an enterprise” as well as “ bonds, debentures, other debt instruments, and loans”).
70. See C. Dugan et al., Investor-State Arbitration 259 (2008). Conversely, some BIT tribunals have concluded that
the concept of an investment under the ICSID Convention is also applicable under particular BITs.
71. See Kriebaum, Investment Arbitration – Illegal Investments in C. Klausegger et al., Austrian Arbitration
Yearbook 2010 307–335 (2010).
72. A. Newcombe & L. Paradell, Law and Practice of Investment Treaties: Standards of Treatment 481–509
(2009).
73. Article 26 of the ICSID Convention specifically recognizes that “ [a] Contracting State may require the
exhaustion of local administrative or judicial remedies as a condition of its consent to arbitration under this
Convention.”
74. A few tribunals have held that failure to comply with a cooling-off period is a jurisdictional defect. See, e.g.,
Enron Corp. and Ponderosa Assets, LP v. Argentine Republic Decision on Jurisdiction, ICSID Case No.
ARB/01/3 ( 2 August 2004), ¶88, available at http://icsid.worldbank.org (noting that a six-month negotiation
period “ is in the view of the Tribunal very much a jurisdictional one” and that “ [a] failure to comply with that
requirement would result in a determination of lack of jurisdiction”). Most tribunals have held, however, that
notice, cooling off and alternative dispute resolution requirements are not jurisdictional and that non-compliance
with these requirements does not require dismissal of an arbitration. See, e.g., Biwater Gauff ( Tanzania) Ltd. v.
United Republic of Tanzania, ICSID Case No. ARB/05/22, ( 24 July 2008), ¶343, available at
http://icsid.worldbank.org (“ In the Arbitral Tribunal’ s view ... this six-month period is procedural and directory
in nature, rather than jurisdictional and mandatory.”).
75. See Argentina-U.K. BIT, Art. 8.
76. In contrast, the ICSID Convention provides that foreign investors are not required to exhaust their local remedies
before pursuing relief in an ICSID arbitration. ICSID Convention Art. 26 (“ Consent of the parties to arbitration
under this Convention shall, unless otherwise stated, be deemed consent to such arbitration to the exclusion of
any other remedy.”).
77. Argentina-U.S. BIT, Art. II(2)(c).
78. See, e.g., Albania-U.S. BIT, Art. IX.
79. See, e.g., SGS Société Générale de Surviellance SA v Islamic Republic of Pakistan, Decision of the Tribunal on
Objections to Jurisdiction, ICSID Case No. ARB/01/13 ( 6 August 2003), ¶;2, available at
http://icsid.worldbank.org (“ Pakistan asks the Tribunal to dismiss the present claims on the ground that a more
specialized tribunal has already been established by agreement of the parties and that tribunal’ s jurisdiction can
encompass all of the claims presently before this Tribunal.”).
80. The umbrella clause provided “ [e]ither Contracting Party shall constantly guarantee the observance of the
commitments it has entered into with respect to the investments of the investors of the other Contracting Party.”
SGS Societe Generale de Surviellance SA v Islamic Republic of Pakistan, Decision of the Tribunal on
Objections to Jurisdiction, ICSID Case No. ARB/01/13( 6 August 2003),¶;2, available at
http://icsid.worldbank.org.
81. Id. at ¶;171.
82. SGS Société Générale de Surveillance SA v. Philippines , Decision of the Tribunal on Objections to
Jurisdiction, ICSID Case No. ARB/02/6 ( 29 January 2004), ¶;115, available at http://icsid.worldbank.org.
83. Id. at ¶;¶;125, 128. The tribunal also concluded that the analysis by the tribunal in the SGS v. Pakistan
arbitration was “ unconvincing” and “ failed to give any clear meaning to the ‘ umbrella clause’ .”
84. C. Schreuer et al., The ICSID Convention: A Commentary 158–62 (2d ed. 2009).
85. Tribunals have been more likely to hold that “ sovereign” actions by states, as contrasted with “ commercial”
actions, may be pursued under an umbrella clause in a BIT arbitration.
86. Germany Model BIT, Art. 2(2) (2008).
87. See, e.g., Compañía de Aguas del Aconquija SA and Vivendi Universal SA v. Argentine Republic , ICSID Case
No. ARB/97/3 ( 20 August 2007), available at http://icsid.worldbank.org (“ The Tribunal sees no basis for
equating principles of international law [on fair and equitable treatment] with the minimum standard of
treatment.”); see also R. Dolzer & C. Schreuer, Principles of International Investment Law 126 (2008).
88. U.S. Model BIT, Art. 5(2) (2012) (“ For greater certainty, paragraph 1 [requiring fair and equitable treatment and
full protection and security] prescribes the customary international law minimum standard of treatment of aliens
as the minimum standard of treatment to be afforded to covered investments. The concepts of ‘ fair and equitable
treatment’ and ‘ full protection and security’ do not require treatment in addition to or beyond that which is
required by that standard, and do not create additional substantive rights.”). Similarly, the NAFTA states issued
a “ clarification” purporting to interpret the Treaty’ s “ fair and equitable treatment” provision as extending no
further than general principles of customary international law. NAFTA Free Trade Commission, Notes of
Interpretation of Certain Chapter 11 Provisions (31 July 2001).
 89. Schill, Fair and Equitable Treatment in Investment Treaties as an Embodiment of the Rule of Law (IILJ
Working P aper 2006).
90. See Tecnicas Medioambientales Tecmed S.A. v. United Mexican States, Award, ICSID Case No. ARB( AF)/00/2
( 29 May 2003), ¶;154, available at http://icsid.worldbank.org; Siemens v. Argentina, ICSID Case No. ARB/02/8
( 6 February 2007), ¶;298, available at http://icsid.worldbank.org; Parkerings-Compagniet AS v. Lithuania,
ICSID Case No. ARB/05/8 ( 11 September 2007), ¶;330, available at http://italaw.com.
91. Glamis Gold Ltd. v. United States of America , NAFTA/UNCITRAL, ¶;616 (8 June 2009), available at
www.state.gov.
92. Energy Charter Treaty, Art. 13(1).
93. See R. Dolzer & C. Schreuer, Principles of International Investment Law 149–51 (2008).
94. Colombia Model BIT, Art. III(3) (2007).
95. Saluka Investments BV v. Czech Republic , UNCITRAL Partial Award, ¶;484 (17 March 2006), available at
www.pca-cpa.org.
96. See R. Dolzer & C. Schreuer, Principles of International Investment Law 151–53 (2008).
97. Azurix Corp. v. Argentine Republic , ICSID Case No. ARB/01/12 ( 14 July 2006), ¶;¶;406–08, available at
http://italaw.com.
98. See R. Dolzer & C. Schreuer, Principles of International Investment Law 178–86 (2008).
99. NAFTA, Chapter 11, Art. 1102(2).
100. Marvin Roy Feldman Karpa v. United Mexican States , ICSID Case No. ARB( AF)/99/1( 16 December 2002),
available at http://icsid.worldbank.org.
101. See R. Dolzer & C. Schreuer, Principles of International Investment Law 180–81 (2008).
102. Id. at 180.
103. ASEAN Comprehensive Investment Agreement, Art. 6(2) (2009). The ASEAN Agreement also contains a nearly
identical provision that applies to “ investors.” See id. at Art. 6(1).
104. Emilio Agustín Maffezini v. Kingdom of Spain , Decision of the Tribunal on Objections to Jurisdiction, ICSID
Case No. ARB/97/7 ( 25 January 2000), available at http://icsid.worldbank.org.
105. A leading award is Daimler v. Argentina , in which a majority of the tribunal concluded that the claimant first
had to submit the claim to the Argentine courts before proceeding with arbitration under the applicable
Argentina-Germany BIT even though the Argentina-Chile BIT had no such requirement. Daimler Financial
Services AG v. Argentine Republic, ICSID Case No. ARB/05/1 ( 22 August 2012) , available at www.italaw.com.
Similar cases have arisen in the context of claimants seeking to expand the scope of a tribunal’ s jurisdiction (e.g.,
by seeking to apply consent to ICSID jurisdiction in one BIT to a dispute under another BIT). R. Dolzer & C.
Schreuer, Principles of International Investment Law 255–57 (2008); A. Newcombe & L. Paradell, Law and
Practice of Investment Treaties: Standards of Treatment 192–95 (2009).
106. ASEAN Comprehensive Investment Agreement, Art. 6 n.4(a). For further discussion of the ASEAN
Comprehensive Investment Agreement, see supra p. 414.
107. R. Dolzer & C. Schreuer, Principles of International Investment Law 253–57 (2008); A. Newcombe & L.
P aradell, Law and Practice of Investment Treaties: Standards of Treatment 399–417 (2009).
108. See R. Dolzer & C. Schreuer, Principles of International Investment Law 192 (2008).
109. See R. Dolzer & C. Schreuer, Principles of International Investment Law 11–17 (2008); M. Shaw, International
Law 734–37 (5th ed. 2003).
110. NAFTA Free Trade Commission, Notes of Interpretation of Certain Chapter 11 Provisions (31 July 2001).
111. J. P aulsson, Denial of Justice in International Law 1 (2005).
112. Robert Azinian, Kenneth Davitian, & Ellen Baca v. United Mexican States , ICSID Case No. ARB( AF)/97/2 ( 1
November 1999), ¶;102, available at http://icsid.worldbank.org.
113. Energy Charter Treaty, Art. 10(1).
114. C. Schreuer et al., The ICSID Convention: A Commentary 524–25 (2d ed. 2009).
115. Methanex Corp. v. United States , Final Award of the Tribunal on Jurisdiction and Merits, Part IV, Ch. D ( 3
August 2005), available at www.state.gov.
116. W orld Duty Free Co. Ltd. v. Republic of Kenya , ICSID Case No. ARB/00/7 ( 4 October 2006), available at
http://italaw.com.
117. The tribunal made clear that it was dismissing the claims on substantive grounds and that it had jurisdiction to
hear the claims. It noted in this regard that “ no evidence was adduced or argument submitted by either of the
Parties to the effect that the bribe specifically procured ... the Parties’ agreement to arbitration under the ICSID
Convention” and, therefore, the tribunal assumed “ that the Parties’ arbitration agreement remains subsisting
valid and effective for the purpose of this proceeding and Award.” W orld Duty Free Co. Ltd. v. Republic of
Kenya, ICSID Case No. ARB/00/7 ( 4 October 2006), available at http://italaw.com. In some circumstances, an
investor’ s unlawful conduct may also be a jurisdictional defense if, for example, an investment is not made in
accordance with national laws. See Fraport AG Frankfurt Airport Services W orldwide v. Republic of
Philippines, ICSID Award No. ARB/03/25 ( 16 August 2007), available at http://italaw.com (annulled on other
grounds by Fraport AG Frankfurt Airport Services W orldwide v. Republic of Philippines, Decision on the
Application for Annulment of Fraport AG Frankfurt Airport Services W orldwide, ICSID Case No. ARB/03/25
( 23 December 2010), available at http://italaw.com) ; Inceysa Vallisoletana, S.L. v. Republic of El Salvador ,
ICSID Case No. ARB/03/26 ( 2 August 2006), available at http://italaw.com.
118. See International Law Commission, Articles on State Responsibility, Report of the International Law
Commission on the W ork of its Fifty-third Session, Art. 25, 56th Sess., U.N. Doc. A/56/10 (2001).
119. Compare CMS Gas Transmission Co. v. Argentine Republic , ICSID Case No. ARB/01/8 ( 12 May 2005),
available at http://icsid.worldbank.org (partially annulled on other grounds by CMS Gas Transmission Co. v.
Argentine Republic, Decision of the Ad Hoc Committee on the Application for Annulment of the Argentine
Republic, ICSID Case No. ARB/01/8 ( 25 September 2007), available at http://icsid.worldbank.org) with LG& E
Energy Corp., LG& E Capital Corp. and LG& E Int’l Inc. v. Argentine Republic, Decision on Liability, ICSID
Case No. ARB/02/1 ( 3 October 2006), available at http://icsid.worldbank.org. Among other things, authorities
differ on the question whether “ essential security” provisions in BITs are more (or less) expansive than the
customary international law defense of necessity.
120. See supra p. 427.
121. J. P aulsson, Denial of Justice in International Law 100–30 (2005).
122. The Loewen Group, Inc. and Raymond L. Loewen v. United States, Award , ICSID Case No. ARB( AF)/98/3 ( 26
June 2003), ¶;217, available at www.state.gov.
123. Suez, Sociedad General de Aguas de Barcelona S.A., and Vivendi Universal S.A. v. Argentine Republic,
Decision on Liability, ICSID Case No. ARB/03/19 ( 30 July 2010), ¶;252, available at http://italaw.com.
124. Id. at ¶;262.
125. NAFTA, Chapter 11, Art. 1116(2). Another provision similarly provides that “ [a]n investor may not make a
claim on behalf of an enterprise . . . if more than three years have elapsed . . . .” NAFTA, Chapter 11, Art. 1117(2)
(emphasis added).
126. Grand River Enterprises Six Nations, Ltd v. United States , Decision on Objections to Jurisdiction,
NAFTA/UNCITRAL Arbitration, ¶;71 ( 20 July 2006), available at www.state.gov.
127. C. Schreuer, The ICSID Convention: A Commentary 931–1023 (2d ed. 2009). The final ground available under
Article 52 has been interpreted to mean that an award must be coherently reasoned and understood by the parties;
substantive challenges to the validity of these reasons are not meant to be raised, as they might for an appeal in
national courts. See G. Aruilar Alvarez & W.M. Reisman (eds.), The Reasons Requirement in International
Investment Arbitration: Critical Case Studies (2008). Although some recent annulment decisions have given
rise to uncertainty about the scope of review under Article 52, the weight of authority supports a limited power
of review in annulment proceedings. Cheng & Trisotto, Reasons and Reasoning in Investment Treaty
Arbitration, 32 Suffolk Transnat’ l Rev. 409 (2008); ICSID, Background Paper on Annulment for the
Administrative Council of ICSID (10 August 2012), available at
https://icsid.worldbank.org/ICSID/FrontServlet? requestType=IC
SIDNewsLettersRH&actionVal=ShowDocument&DocId=DCEVENTS11.
128. C. Schreuer et al., The ICSID Convention: A Commentary 900–01 (2d ed. 2009).
129. ICSID Convention, Art. 55. See Kanter, Nolan & Baldwin, Limits of Enforcement of ICSID Awards, 23 J. Int’ l
Arb. 1 (2006).
130. C. Schreuer et al., The ICSID Convention: A Commentary 1155–77 (2d ed. 2009).
131. See G. Born, International Commercial Arbitration 8–10 (2009).
132. The Jay Treaty (1794), Arts. V, VI, VII, reprinted in, H. Miller, II Treaties and Other International Acts of the
United States of America 1776–1863 245 (1931), available on www.heinonline.org.
133. Treaty of Washington (1871), Art. I, reprinted in, C. Bevans, XII Treaties and Other International Acts of the
United States of America 1776–1949 170 (1968), available on www.heinonline.org.
134. See T. Balch, The Alabama Arbitration (1900). The arbitration resulted in a substantial monetary award against
Great Britain, which it paid in full. Ibid.
135. G. Born, International Commercial Arbitration 14 (2009).
136. I. Brownlie, Principles of Public International Law 703 (7th ed. 2008); M. Shaw, International Law 953 (5th
ed. 2003).
137. See Algiers Accords, 1 Iran-US C.T.R. 3 et seq. (1981–1982).
138. Indus Waters Treaty, Annexure G, para. 4(b)(ii).
139. Trail Smelter Arbitration ( U.S. v. Can.), 3 R.I.A.A. 1911, 1911 (1938).
140. For example, Eritrea and Ethiopia established “ a neutral Boundary Commission composed of five members ... with
a mandate to delimit and demarcate the colonial treaty border based on pertinent colonial treaties ... and
applicable international law.” Agreement Between the Government of the Federal Democratic Republic of
Ethiopia and the Government of the State of Eritrea, Art. 4(2) (12 December 2000).
141. Id. at Art. 5(1).
142. Ecuador-U.S. BIT, Art. VII(1). Ecuador and the United States are currently arbitrating a dispute under this
provision concerning another provision in the BIT requiring the parties to provide investors with effective
means of asserting their claims and enforcing their rights. See Permanent Court of Arbitration, Cases, The
Republic of Ecuador v. The United States of America , available at www.pca.cpa.org/showpage.asp?
pag_id=1029.
143. G. Born, International Commercial Arbitration 856 n.16 (2009).
144. M. Shaw, International Law 956–57 (5th ed. 2003).
145. I. Brownlie, Principles of Public International Law 703–04 (7th ed. 2008).
146. See Trail Smelter Arbitration ( U.S. v. Can.), 3 R.I.A.A. 1911, 1950 (1938).
147. Agreement Between the Government of the Federal Democratic Republic of Ethiopia and the Government of the
State of Eritrea, Art. 4(2) (12 December 2000). In contrast, the recent Croatia-Slovenia arbitration agreement
provides for the possibility of arbitration ex aequo et bono. Arbitration Agreement Between the Government of
the Republic of Slovenia and the Government of the Republic of Croatia, Art. 4(b) (4 November 2009).
148. See International Law Commission, Articles on State Responsibility, Report of the International Law
Commission on the W ork of its Fifty-third Session, 56th Sess., U.N. Doc. A/56/10 (2001).
149. M. Shaw, International Law 957 (5th ed. 2003).
150. France’ s premature release from confinement of the convicted perpetrators of the “ Rainbow Warrior” bombing is a
recent example of such non-compliance.
Annex I
United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (“New York
Convention”)

Article I
(1) This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State
other than the State where the recognition and enforcement of such awards are sought, and arising out of differences
between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards
in the State where their recognition and enforcement are sought.
(2) The term “ arbitral awards” shall include not only awards made by arbitrators appointed for each case but also
those made by permanent arbitral bodies to which the parties have submitted.
(3) When signing, ratifying or acceding to this Convention, or notifying extension under article X hereof, any State
may on the basis of reciprocity declare that it will apply the Convention to the recognition and enforcement of awards
made only in the territory of another Contracting State. It may also declare that it will apply the Convention only to
differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the
national law of the State making such declaration.

Article II
(1) Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to
arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal
relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.
(2) The term “ agreement in writing” shall include an arbitral clause in a contract or an arbitration agreement, signed
by the parties or contained in an exchange of letters or telegrams.
(3) The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an
agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration,
unless it finds that the said agreement is null and void, inoperative or incapable of being performed.

Article III
Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of
procedure of the territory where the award is relied upon, under the conditions laid down in the following articles.
There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or
enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of
domestic arbitral awards.

Article IV
(1) To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition
and enforcement shall, at the time of application, supply:
(a) The duly authenticated original award or a duly certified copy thereof;The duly authenticated original award
or a duly certified copy thereof;The duly authenticated original award or a duly certified copy thereof;The
duly authenticated original award or a duly certified copy thereof;
(b) The original agreement referred to in article II or a duly certified copy thereof.
(2) If the said award or agreement is not made in an official language of the country in which the award is relied upon,
the party applying for recognition and enforcement of the award shall produce a translation of these documents into
such language. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent.

Article V
(1) Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked,
only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:
(a) The parties to the agreement referred to in article II were, under the law applicable to them, under some
incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing
any indication thereon, under the law of the country where the award was made; or
(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator
or of the arbitration proceedings or was otherwise unable to present his case; or
(c) The award deals with a difference not contemplated by or not falling within the terms of the submission to
arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided
that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that
part of the award which contains decisions on matters submitted to arbitration may be recognized and
enforced; or
(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement
of the parties, or, failing such agreement, was not in accordance with the law of the country where the
arbitration took place; or
(e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent
authority of the country in which, or under the law of which, that award was made.
(2) Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country
where recognition and enforcement is sought finds that:
(a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or
(b) The recognition or enforcement of the award would be contrary to the public policy of that country.

Article VI
If an application for the setting aside or suspension of the award has been made to a competent authority referred to in
article V(1)(e), the authority before which the award is sought to be relied upon may, if it considers it proper, adjourn
the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the
award, order the other party to give suitable security.

Article VII
(1) The provisions of the present Convention shall not affect the validity of multilateral or bilateral agreements
concerning the recognition and enforcement of arbitral awards entered into by the Contracting States nor deprive any
interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed
by the law or the treaties of the country where such award is sought to be relied upon.
(2) The Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign
Arbitral Awards of 1927 shall cease to have effect between Contracting States on their becoming bound and to the
extent that they become bound, by this Convention.

Article VIII
(1) This Convention shall be open until 31 December 1958 for signature on behalf of any Member of the United
Nations and also on behalf of any other State which is or hereafter becomes a member of any specialized agency of the
United Nations, or which is or hereafter becomes a party to the Statute of the International Court of Justice, or any
other State to which an invitation has been addressed by the General Assembly of the United Nations.
(2) This Convention shall be ratified and the instrument of ratification shall be deposited with the Secretary-General
of the United Nations.

Article IX
(1) This Convention shall be open for accession to all States referred to in article VIII.
(2) Accession shall be effected by the deposit of an instrument of accession with the Secretary-General of the United
Nations.

Article X
(1) Any State may, at the time of signature, ratification or accession, declare that this Convention shall extend to all or
any of the territories for the international relations of which it is responsible. Such a declaration shall take effect when
the Convention enters into force for the State concerned.
(2) At any time thereafter any such extension shall be made by notification addressed to the Secretary-General of the
United Nations and shall take effect as from the ninetieth day after the day of receipt by the Secretary-General of the
United Nations of this notification, or as from the date of entry into force of the Convention for the State concerned,
whichever is the later.
(3) With respect to those territories to which this Convention is not extended at the time of signature, ratification or
accession, each State concerned shall consider the possibility of taking the necessary steps in order to extend the
application of this Convention to such territories, subject, where necessary for constitutional reasons, to the consent
of the Governments of such territories.

Article XI
In the case of a federal or non-unitary State, the following provisions shall apply:
(a) With respect to those articles of this Convention that come within the legislative jurisdiction of the federal
authority, the obligations of the federal Government shall to this extent be the same as those of Contracting
States which are not federal States;
(b) With respect to those articles of this Convention that come within the legislative jurisdiction of constituent
states or provinces which are not, under the constitutional system of the federation, bound to take legislative
action, the federal Government shall bring such articles with a favourable recommendation to the notice of the
appropriate authorities of constituent states or provinces at the earliest possible moment;
(c) A federal State Party to this Convention shall, at the request of any other Contracting State transmitted
through the Secretary-General of the United Nations, supply a statement of the law and practice of the
federation and its constituent units in regard to any particular provision of this Convention, showing the
extent to which effect has been given to that provision by legislative or other action.

Article XII
(1) This Convention shall come into force on the ninetieth day following the date of deposit of the third instrument of
ratification or accession.
(2) For each State ratifying or acceding to this Convention after the deposit of the third instrument of ratification or
accession, this Convention shall enter into force on the ninetieth day after deposit by such State of its instrument of
ratification or accession.

Article XIII
(1) Any Contracting State may denounce this Convention by a written notification to the Secretary-General of the
United Nations. Denunciation shall take effect one year after the date of receipt of the notification by the Secretary-
General.
(2) Any State which has made a declaration or notification under article X may, at any time thereafter, by notification to
the Secretary-General of the United Nations, declare that this Convention shall cease to extend to the territory
concerned one year after the date of the receipt of the notification by the Secretary-General.
(3) This Convention shall continue to be applicable to arbitral awards in respect of which recognition or enforcement
proceedings have been instituted before the denunciation takes effect.

Article XIV
A Contracting State shall not be entitled to avail itself of the present Convention against other Contracting States
except to the extent that it is itself bound to apply the Convention.

Article XV
The Secretary-General of the United Nations shall notify the States contemplated in article VIII of the following:
(a) Signatures and ratifications in accordance with article VIII;
(b) Accessions in accordance with article IX;
(c) Declarations and notifications under articles I, X, and XI;
(d) The date upon which this Convention enters into force in accordance with article XII;
(e) Denunciations and notifications in accordance with article XIII.

Article XVI
(1) This Convention, of which the Chinese, English, French, Russian and Spanish texts shall be equally authentic,
shall be deposited in the archives of the United Nations.
(2) The Secretary-General of the United Nations shall transmit a certified copy of this Convention to the States
contemplated in article VIII.
Annex II
UNCITRAL Model Law on International Commercial
Arbitration – 2006 Revisions

Amendments by the United Nations Commission on International Trade Law on 7 July 2006

Article 1 Scope of application1

1. This Law applies to international commercial 2 arbitration, subject to any agreement in force between this State and
any other State or States.
2. The provisions of this Law, except articles 8, 9, 17H, 17I, 17J, 35 and 36, apply only if the place of arbitration is in
the territory of this State.
( Article 1( 2) has been amended by the Commission at its thirty-ninth session, in 2006)
...

Article 2 A. International origin and general principles

( As adopted by the Commission at its thirty-ninth session, in 2006)
1. In the interpretation of this Law, regard is to be had to its international origin and to the need to promote
uniformity in its application and the observance of good faith.
2. Questions concerning matters governed by this Law which are not expressly settled in it are to be settled in
conformity with the general principles on which this Law is based.
...

CHAPTER II. ARBITRATION AGREEMENT

Option I

Article 7. Def inition and f orm of arbitration agreement

( As adopted by the Commission at its thirty-ninth session, in 2006)
1. “ Arbitration agreement” is an agreement by the parties to submit to arbitration all or certain disputes which have
arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An
arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
2. The arbitration agreement shall be in writing.
3. An arbitration agreement is in writing if its content is records in any form, whether or not the arbitration agreement
or contract has been concluded orally, by conduct, or by other means.
4. The requirement that an arbitration agreement be in writing is met by an electronic communication if the
information contained therein is accessible so as to be useable for subsequent reference; “ electronic communication”
means any communication that the parties make by means of data messages; “ data message” means information
generated, sent, received or stored by electronic magnetic, optical or similar means, including, but not limited to,
electronic data interchange (EDI), electronic mail, telegram, telex or telecopy.
5. Furthermore, an arbitration agreement is in writing if it is contained in an exchange of statements of claim and
defence in which the existence of an agreement is alleged by one party and not denied by the other.
6. The reference in a contract to any document containing an arbitration clause constitutes an arbitration agreement in
writing, provided that the reference is such as to make that clause part of the contract.

Option II

Article 7. Def inition of arbitration agreement

( As adopted by the Commission at its thirty-ninth session, in 2006)
“ Arbitration agreement” is an agreement by the parties to submit to arbitration all or certain disputes which have
arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
...

CHAPTER IV A. INTERIM MEAS URES AND PRELIMINARY ORDERS

(As adopted by the Commission at its thirty-ninth session, in 2006)
Section 1. Interim measures

Article 17. Power of arbitral tribunal to order interim measures

1. Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, grant interim measures.
2. An interim measure is any temporary measure, whether in the form of an award or in another form, but which, at any
time prior to the issuance of the award by which the dispute is finally decided, the arbitral tribunal orders a party to:
(a) Maintain or restore the status quo pending determination of the dispute;
(b) Take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm
or prejudice to the arbitral process itself;
(c) P rovide a means of preserving assets out of which a subsequent award may be satisfied; or
(d) P reserve evidence that may be relevant and material to the resolution of the dispute.

Article 17 A. Conditions f or granting interim measures

1. The party requesting an interim measure under article 17(2)(a), (b) and (c) shall satisfy the arbitral tribunal that:
(a) Harm not adequately reparable by an award of damages is likely to result if the measure is not ordered, and
such harm substantially outweighs the harm that is likely to result to the party against whom the measure is
directed if the measure is granted; and
(b) There is a reasonable possibility that the requesting party will succeed on the merits of the claim. The
determination on this possibility shall not affect the discretion of the arbitral tribunal in making any
subsequent determination.
2. With regard to a request for an interim measure under article 17(2)(d), the requirements in paragraphs (1)(a) and (b)
of this article shall apply only to the extent the arbitral tribunal considers appropriate.

Section 2 Preliminary Orders

Article 17 B . Applications f or preliminary orders and conditions f or granting preliminary orders

1. Unless otherwise agreed by the parties, a party may, without notice to any other party, make a request for an
interim measure together with an application for a preliminary order directing a party not to frustrate the purpose of the
interim measure requested.
2. The arbitral tribunal may grant a preliminary order provided it considers that prior disclosure of the request for the
interim measure to the party against whom it is directed risks frustrating the purpose of the measure.
3. The conditions defined under article 17A apply to any preliminary order, provided that the harm to be assessed
under article 17A(1)(a), is the harm likely to result from the order being granted or not.

Article 17 C. Specif ic regime f or preliminary orders

1. Immediately after the arbitral tribunal has made a determination in respect of an application for a preliminary order,
the arbitral tribunal shall give notice to all parties of the request for the interim measure, the application for the
preliminary order, the preliminary order, if any, and all other communications, including by indicating the content of
any oral communication, between any party and the arbitral tribunal in relation thereto.
2. At the same time, the arbitral tribunal shall give an opportunity to any party against whom a preliminary order is
directed to present its case at the earliest practicable time.
3. The arbitral tribunal shall decide promptly on any objection to the preliminary order.
4. A preliminary order shall expire after twenty days from the date on which it was issued by the arbitral tribunal.
However, the arbitral tribunal may issue an interim measure adopting or modifying the preliminary order, after the
party against whom the preliminary order is directed has been given notice and an opportunity to present its case.
5. A preliminary order shall be binding on the parties but shall not be subject to enforcement by a court. Such a
preliminary order does not constitute an award.

Section 3 Provisions applicable to interim measures and preliminary orders

Article 17 D. Modif ication, suspension, termination

The arbitral tribunal may modify, suspend or terminate an interim measure or a preliminary order it has granted, upon
application of any party or, in exceptional circumstances and upon prior notice to the parties, on the arbitral
tribunal’ s own initiative.

Article 17 E. Provision of security

1. The arbitral tribunal may require the party requesting an interim measure to provide appropriate security in
connection with the measure.
2. The arbitral tribunal shall require the party applying for a preliminary order to provide security in connection with
the order unless the arbitral tribunal considers it inappropriate or unnecessary to do so.

Article 17 F. Disclosure
1. The arbitral tribunal may require any party promptly to disclose any material change in the circumstances on the
basis of which the measure was requested or granted.
2. The party applying for a preliminary order shall disclose to the arbitral tribunal all circumstances that are likely to
be relevant to the arbitral tribunal’ s determination whether to grant or maintain the order, and such obligation shall
continue until the party against whom the order has been requested has had an opportunity to present its case.
Thereafter, paragraph (1) of this article shall apply.

Article 17 G . Costs and damages

The party requesting an interim measure or applying for a preliminary order shall be liable for any costs and damages
caused by the measure or the order to any party if the arbitral tribunal later determines that, in the circumstances, the
measure or the order should not have been granted. The arbitral tribunal may award such costs and damages at any
point during the proceedings.

Section 4 Recognition and enf orcement of interim measures

Article 17 H. Recognition and enf orcement

1. An interim measure issued by an arbitral tribunal shall be recognized as binding and, unless otherwise provided
by the arbitral tribunal, enforced upon application to the competent court, irrespective of the country in which it was
issued, subject to the provisions of article 17I.
2. The party who is seeking or has obtained recognition or enforcement of an interim measure shall promptly inform
the court of any termination, suspension or modification of that interim measure.
3. The court of the State where recognition or enforcement is sought may, if it considers it proper, order the requesting
party to provide appropriate security if the arbitral tribunal has not already made a determination with respect to
security or where such a decision is necessary to protect the rights of third parties.

Article 17 I. G rounds f or ref using recognition or enf orcement3

1. Recognition or enforcement of an interim measure may be refused only:
(a) At the request of the party against whom it is invoked if the court is satisfied that:
(i) Such refusal is warranted on the grounds set forth in article 36(1)(a)(i), (ii), (iii) or (iv); or
(ii) The arbitral tribunal’ s decision with respect to the provision of security in connection with the interim
measure issued by the arbitral tribunal has not been complied with; or
(iii) The interim measure has been terminated or suspended by the arbitral tribunal or, where so empowered,
by the court of the State in which the arbitration takes place or under the law of which that interim
measure was granted; or
(b) If the court finds that:
(i) The interim measure is incompatible with the powers conferred upon the court unless the court decides
to reformulate the interim measure to the extent necessary to adapt it to its own powers and procedures
for the purposes of enforcing that interim measure and without modifying its substance; or
(ii) Any of the grounds set forth in article 36(1)(b)(i) or (ii), apply to the recognition and enforcement of the
interim measure.
2. Any determination made by the court on any ground in paragraph (1) of this article shall be effective only for the
purposes of the application to recognize and enforce the interim measure. The court where recognition or enforcement
is sought shall not, in making that determination, undertake a review of the substance of the interim measure.

Section 5 Court-ordered interim measures

Article 17 J. Court-ordered interim measures

A court shall have the same power of issuing an interim measure in relation to arbitration proceedings, irrespective of
whether their place is in the territory of this State, as it has in relation to proceedings in courts. The court shall
exercise such power in accordance with its own procedures in consideration of the specific features of international
arbitration.
...

CHAPTER VIII. RECOGNITION AND ENFORCEMENT OF AWARDS

Article 35 Recognition and enf orcement
...
2. The party relying on an award or applying for its enforcement shall supply the original award or a copy thereof. If
the award is not made in an official language of this State, the court may request the party to supply a translation
thereof into such language.4
( Article 35( 2) has been amended by the Commission at its thirty-ninth session, in 2006)
_________________________
1. Article headings are for reference purposes only and are not to be used for purposes of interpretation.
2. The term “ commercial” should be given a wide interpretation so as to cover matters arising from all relationships of
a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited
to, the following transactions: any trade transaction for the supply or exchange or goods or services; distribution
agreement; commercial representation or agency; factoring; leasing; construction of works; consulting;
engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint
venture and other forms or industrial or business cooperation; carriage of goods or passengers by air, see, rail or
road.
3. The conditions set forth in article 17 I are intended to limit the number of circumstances in which the court may
 refuse to enforce an interim measure. It would not be contrary to the level of harmonization sought to be achieved
by these model provisions if a State were to adopt fewer circumstances in which enforcement may be refused.
4. The conditions set forth in this paragraph are intended to set maximum standards. It would, thus, not be contrary to
the harmonization to be achieved by the model law if a State retained even less onerous conditions.
Annex III
UNCITRAL Model Law on International Commercial
Arbitration

Adopted 21 June 1985 by United Nations Commission on International Trade Law

CHAPTER I. GENERAL PROVIS IONS

Article 1 Scope of application1

1. This Law applies to international commercial arbitration, subject to any agreement in force between this State and
any other State or States.
2. The provisions of this Law, except articles 8, 9, 35 and 36, apply only if the place of arbitration is in the territory of
this State.
3. An arbitration is international if:
a. the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of
business in different States; or
b. one of the following places is situated outside the State in which the parties have their places of business:
(i) the place of arbitration if determined in, or pursuant to, the arbitration agreement;
(ii) any place where a substantial part of the obligations of the commercial relationship is to be performed or
the place with which the subject-matter of the dispute is most closely connected; or
c. the parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one
country.
4. For the purposes of paragraph (3) of this article:
a. if a party has more than one place of business, the place of business is that which has the closest relationship to
the arbitration agreement;
b. if a party does not have a place of business, reference is to be made to his habitual residence.
5. This Law shall not affect any other law of this State by virtue of which certain disputes may not be submitted to
arbitration or may be submitted to arbitration only according to provisions other than those of this Law.

Article 2 Def initions and rules of interpretation

For the purposes of this Law:
a. “ arbitration” means any arbitration whether or not administered by a permanent arbitral institution;
b. “ arbitral tribunal” means a sole arbitrator or a panel of arbitrators;
c. “ court” means a body or organ of the judicial system of a State;
d. where a provision of this Law, except article 28, leaves the parties free to determine a certain issue, such freedom
includes the right of the parties to authorize a third party, including an institution, to make that
determination;
e. where a provision of this Law refers to the fact that the parties have agreed or that they may agree or in any other
way refers to an agreement of the parties, such agreement includes any arbitration rules referred to in that
agreement;
f. where a provision of this Law, other than in articles 25(a) and 32(2)(a), refers to a claim, it also applies to a
counter-claim, and where it refers to a defence, it also applies to a defence to such counter-claim.
Article 3 Receipt of written communications
1. Unless otherwise agreed by the parties:
a. any written communication is deemed to have been received if it is delivered to the addressee personally or if it
is delivered at his place of business, habitual residence or mailing address; if none of these can be found after
making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the
addressee’ s last-known place of business, habitual residence or mailing address by registered letter or any
other means which provides a record of the attempt to deliver it;
b. the communication is deemed to have been received on the day it is so delivered.
2. The provisions of this article do not apply to communications in court proceedings.

Article 4 Waiver of right to object

A party who knows that any provision of this Law from which the parties may derogate or any requirement under the
arbitration agreement has not been complied with and yet proceeds with the arbitration without stating his objection
to such non-compliance without undue delay or, if a time limit is provided therefore, within such period of time, shall
be deemed to have waived his right to object.

Article 5 Extent of court intervention

In matters governed by this Law, no court shall intervene except where so provided in this Law.

Article 6 Court or other authority f or certain f unctions of arbitration assistance and supervision
The functions referred to in article 11(3), 11(4), 13(3), 14, 16(3) and 34(2) shall be performed by ... [Each State
enacting this Model Law specifies the court, courts or, where referred to therein, other authority competent to perform
these functions.]

CHAPTER II. ARBITRATION AGREEMENT

Article 7 Def inition and f orm of arbitration agreement
1. “ Arbitration agreement” is an agreement by the parties to submit to arbitration all or certain disputes which have
arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An
arbitration agreement may be in the form or an arbitration clause in a contract or in the form of a separate agreement.
2. The arbitration agreement shall be in writing. An agreement is in writing if it is contained in a document signed by
the parties or in an exchange of letters, telex, telegrams or other means of telecommunications which provide a record of
the agreement, or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by
one party and not denied by another. The reference in a contract to a document containing an arbitration clause
constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that
clause part of the contract.

Article 8 Arbitration agreement and substantive claim bef ore court

1. A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a
party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to
arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.
2. Where an action referred to in paragraph (1) of this article has been brought, arbitral proceedings may nevertheless
be commenced or continued, and an award may be made, while the issue is pending before the court.

Article 9 Arbitration agreement and interim measures by court

It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a
court an interim measure of protection and for a court to grant such measure.
CHAPTER III. COMPOS ITION OF ARBITRAL TRIBUNAL
Article 10 Number of arbitrators
1. The parties are free to determine the number of arbitrators.
2. Failing such determination, the number of arbitrators shall be three.

Article 11 Appointment of arbitrators

1. No person shall be precluded by reason of his nationality from acting as an arbitrator, unless otherwise agreed by
the parties.
2. The parties are free to agree on a procedure of appointing the arbitrator or arbitrators, subject to the provisions of
paragraphs (4) and (5) of this article.
3. Failing such agreement,
a. in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two arbitrators thus
appointed shall appoint the third arbitrator; if a party fails to appoint the arbitrator within thirty days of
receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator
within thirty days of their appointment, the appointment shall be made, upon request of a party, by the court
or other authority specified in article 6;
b. In an arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator, he shall be appointed,
upon request of a party, by the court or other authority specified in article 6.
4. Where, under an appointment procedure agreed upon by the parties,
a. a party fails to act as required under such procedure, or
b. the parties, or two arbitrators, are unable to reach an agreement expected of them under such procedure, or
c. a third party, including an institution, fails to perform any function entrusted to it under such procedure,
any party may request the court or other authority specified in article 6 to take the necessary measure, unless the
agreement on the appointment procedure provides other means for securing the appointment.
5. A decision on a matter, entrusted by paragraph (3) or (4) of this article to the court or other authority specified in
article 6 shall be subject to no appeal. The court or other authority, in appointing an arbitrator, shall have due regard
to any qualifications required of the arbitrator by the agreement of the parties and to such considerations as are likely
to secure the appointment of an independent and impartial arbitrator and, in the case of a sole or third arbitrator, shall
take into account as well the advisability of appointing an arbitrator of a nationality other than those of the parties.

Article 12 G rounds f or challenge

1. When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any
circumstances likely to give rise to justifiable doubts as to his impartiality or independence. An arbitrator, from the
time of his appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances
to the parties unless they have already been informed of them by him.
2. An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his
impartiality or independence, or if he does not possess qualifications agreed to by the parties. A party may challenge
an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes
aware after the appointment has been made.

Article 13 Challenge procedure

1. The parties are free to agree on a procedure for challenging an arbitrator, subject to the provisions of paragraph (3)
of this article.
2. Failing such agreement, a party who intends to challenge an arbitrator shall, within fifteen days after becoming
aware of the constitution of the arbitral tribunal or after becoming aware of any circumstance referred to in article 12(2),
send a written statement of the reasons for the challenge to the arbitral tribunal. Unless the challenged arbitrator
withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.
3. If a challenge under any procedure agreed upon by the parties or under the procedure of paragraph (2) of this article
is not successful, the challenging party may request, within thirty days after having received notice of the decision
rejecting the challenge, the court or other authority specified in article 6 to decide on the challenge, which decision
shall be subject to no appeal; while such a request is pending, the arbitral tribunal, including the challenged
arbitrator, may continue the arbitral proceedings and make an award.

Article 14 Failure or impossibility to act

1. If an arbitrator becomes de jure or de facto unable to perform his functions or for other reasons fails to act without
undue delay, his mandate terminates if he withdraws from his office or if the parties agree on the termination.
Otherwise, if a controversy remains concerning any of these grounds, any party may request the court or other
authority specified in article 6 to decide on the termination of the mandate, which decision shall be subject to no
appeal.
2. If, under this article or article 13(2), an arbitrator withdraws from his office or a party agrees to the termination of
the mandate of an arbitrator, this does not imply acceptance of the validity of any ground referred to in this article or
article 12(2).

Article 15 Appointment of substitute arbitrator

Where the mandate of an arbitrator terminates under article 13 or 14 or because of his withdrawal from office for any
other reason or because of the revocation of his mandate by agreement of the parties or in any other case of termination
of his mandate, a substitute arbitrator shall be appointed according to the rules that were applicable to the
appointment of the arbitrator being replaced.

CHAPTER IV. JURIS DICTION OF ARBITRAL TRIBUNAL

Article 16 Competence of arbitral tribunal to rule on its jurisdiction
1. The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or
validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be
treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the
contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
2. A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the
statement of defence. A party is not precluded from raising such a plea by the fact that he has appointed, or participated
in the appointment of, an arbitrator. A plea that the arbitral tribunal is exceeding the scope of its authority shall be
raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.
The arbitral tribunal may, in either case, admit a later plea if it considers the delay justified.
3. The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as a preliminary question or
in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may
request, within thirty days after having received notice of that ruling, the court specified in article 6 to decide the
matter, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal may
continue the arbitral proceedings and make an award.

Article 17 Power of arbitral tribunal to order interim measures

Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to take such
interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the
dispute. The arbitral tribunal may require any party to provide appropriate security in connection with such measure.

CHAPTER V. CONDUCT OF ARB ITRAL PROCEEDING S

Article 18 Equal treatment of parties

The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.
Article 19 Determination of rules of procedure
1. Subject to the provisions of this Law, the parties are free to agree on the procedure to be followed by the arbitral
tribunal in conducting the proceedings.
2. Failing such agreement, the arbitral tribunal may, subject to the provisions of this Law, conduct the arbitration in
such a manner as it considers appropriate. The power conferred upon the arbitral tribunal includes the power to
determine the admissibility, relevance, materiality and weight of any evidence.

Article 20 Place of arbitration

1. The parties are free to agree on the place of arbitration. Failing such agreement, the place of arbitration shall be
determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the
parties.
2. Notwithstanding the provisions of paragraph (1) of this article, the arbitral tribunal may, unless otherwise agreed
by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses,
experts or the parties, or for inspection of goods, other property or documents.

Article 21 Commencement of arbitral proceedings

Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the
date on which a request for that dispute to be referred to arbitration is received by the respondent.

Article 22 Language
1. The parties are free to agree on the language or languages to be used in the arbitral proceedings. Failing such
agreement, the arbitral tribunal shall determine the language or languages to be used in the proceedings. This
agreement or determination, unless otherwise specified therein, shall apply to any written statement by a party, any
hearing and any award, decision or other communication by the arbitral tribunal.
2. The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the
language or languages agreed upon by the parties or determined by the arbitral tribunal.

Article 23 Statements of claim and def ence

1. Within the period of time agreed by the parties or determined by the arbitral tribunal, the claimant shall state the
facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his
defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of such
statements. The parties may submit with their statements all documents they consider to be relevant or may add a
reference to the documents or other evidence they will submit.
2. Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the
course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow such amendment
having regard to the delay in making it.

Article 24 Hearings and written proceedings

1. Subject to any contrary agreement by the parties, the arbitral tribunal shall decide whether to hold oral hearings
for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of
documents and other materials. However, unless the parties have agreed that no hearings shall be held, the arbitral
tribunal shall hold such hearings at an appropriate stage of the proceedings, if so requested by a party.
2. The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the
purposes of inspection of goods, other property or documents.
3. All statements, documents or other information supplied to the arbitral tribunal by one party shall be
communicated to the other party. Also any expert report or evidentiary document on which the arbitral tribunal may
rely in making its decision shall be communicated to the parties.

Article 25 Def ault of a party

Unless otherwise agreed by the parties, if, without showing sufficient cause,
a. the claimant fails to communicate his statement of claim in accordance with article 23(1), the arbitral tribunal
shall terminate the proceedings;
b. the respondent fails to communicate his statement of defence in accordance with article 23(1), the arbitral
tribunal shall continue the proceedings without treating such failure in itself as an admission of the
claimant’ s allegations;
c. any party fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the
proceedings and make the award on the evidence before it.

Article 26 Expert appointed by arbitral tribunal

1. Unless otherwise agreed by the parties, the arbitral tribunal
a. may appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal;
b. may require a party to give the expert any relevant information or to produce, or to provide access to, any
relevant documents, goods or other property for his inspection.
2. Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the
expert shall, after delivery of his written or oral report, participate in a hearing where the parties have the opportunity
to put questions to him and to present expert witnesses in order to testify on the points at issue.

Article 27 Court assistance in taking evidence

The arbitral tribunal or a party with the approval of the arbitral tribunal may request from a competent court of this
State assistance in taking evidence. The court may execute the request within its competence and according to its rules
on taking evidence.

CHAPTER VI. MAKING OF AWARD AND TERMINATION OF PROCEEDINGS

Article 28 Rules applicable to substance of dispute
1. The arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties as
applicable to the substance of the dispute. Any designation of the law or legal system of a given State shall be
construed, unless otherwise expressed, as directly referring to the substantive law of that State and not to its conflict
of laws rules.
2. Failing any designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws
rules which it considers applicable.
3. The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly
authorized it to do so.
4. In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into
account the usages of the trade applicable to the transaction.

Article 29 Decision making by panel of arbitrators

In arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made, unless
otherwise agreed by the parties, by a majority of all its members. However, questions of procedure may be decided by a
presiding arbitrator, if so authorized by the parties or all members of the arbitral tribunal.

Article 30 Settlement
1. If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings
and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an
arbitral award on agreed terms.
2. An award on agreed terms shall be made in accordance with the provisions of article 31 and shall state that it is an
award. Such an award has the same status and effect as any other award on the merits of the case.
Article 31 Form and contents of award
1. The award shall be made in writing and shall be signed by the arbitrator or arbitrators. In arbitral proceedings with
more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal shall suffice, provided
that the reason for any omitted signature is stated.
2. The award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be
given or the award is an award on agreed terms under article 30.
3. The award shall state its date and the place of arbitration as determined in accordance with article 20(1). The award
shall be deemed to have been made at that place.
4. After the award is made, a copy signed by the arbitrators in accordance with paragraph (1) of this article shall be
delivered to each party.

Article 32 Termination of proceedings

1. The arbitral proceedings are terminated by the final award or by an order of the arbitral tribunal in accordance with
paragraph (2) of this article.
2. The arbitral tribunal shall issue an order for the termination of the arbitral proceedings when:
a. the claimant withdraws his claim, unless the respondent objects thereto and the arbitral tribunal recognizes a
legitimate interest on his part in obtaining a final settlement of the dispute;
b. the parties agree on the termination of the proceedings;
c. the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary
or impossible.
3. The mandate of the arbitral tribunal terminates with the termination of the arbitral proceedings, subject to the
provisions of articles 33 and 34(4).

Article 33 Correction and interpretation of award; additional award

1. Within thirty days of receipt of the award, unless another period of time has been agreed upon by the parties:
a. a party, with notice to the other party, may request the arbitral tribunal to correct in the award any errors in
computation, any clerical or typographical errors or any errors of similar nature;
b. if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an
interpretation of a specific point or part of the award.
If the arbitral tribunal considers the request to be justified, it shall make the correction or give the interpretation
within thirty days of receipt of the request. The interpretation shall form part of the award.
2. The arbitral tribunal may correct any error of the type referred to in paragraph (1)(a) of this article on its own
initiative within thirty days of the date of the award.
3. Unless otherwise agreed by the parties, a party, with notice to the other party, may request, within thirty days of
receipt of the award, the arbitral tribunal to make an additional award as to claims presented in the arbitral
proceedings but omitted from the award. If the arbitral tribunal considers the request to be justified, it shall make the
additional award within sixty days.
4. The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction,
interpretation or an additional award under paragraph (1) or (3) of this article.
5. The provisions of article 31 shall apply to a correction or interpretation of the award or to an additional award.

CHAPTER VII. RECOURS E AGAINS T AWARD

Article 34 Application f or setting aside as exclusive recourse against arbitral award
1. Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance
with paragraphs (2) and (3) of this article.
2. An arbitral award may be set aside by the court specified in article 6 only if:
a. the party making the application furnishes proof that:
(i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said
agreement is not valid under the law to which the parties have subjected it or, failing any indication
thereon, under the law of this State; or
(ii) the party making the application was not given proper notice of the appointment of an arbitrator or of the
arbitral proceedings or was otherwise unable to present his case; or
(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to
arbitration, or contains decisions on matters beyond the scope of the submission to arbitration,
provided that, if the decisions on matters submitted to arbitration can be separated from those not so
submitted, only that part of the award which contains decisions on matters not submitted to arbitration
may be set aside; or
(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the
agreement of the parties, unless such agreement was in conflict with a provision of this Law from which
the parties cannot derogate, or, failing such agreement, was not in accordance with this Law; or
b. the court finds that:
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or
(ii) the award is in conflict with the public policy of this State.
3. An application for setting aside may not be made after three months have elapsed from the date on which the party
making that application had received the award or, if a request had been made under article 33, from the date on which
that request had been disposed of by the arbitral tribunal.
4. The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the
setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to
resume the arbitral proceedings or to take such other action as in the arbitral tribunal’ s opinion will eliminate the
grounds for setting aside.

CHAPTER VIII. RECOGNITION AND ENFORCEMENT OF AWARDS

Article 35 Recognition and enf orcement
1. An arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon
application in writing to the competent court, shall be enforced subject to the provisions of this article and of article
36.
2. The party relying on an award or applying for its enforcement shall supply the duly authenticated original award
or a duly certified copy thereof, and the original arbitration agreement referred to in article 7 or a duly certified copy
thereof. If the award or agreement is not made in an official language of this State, the party shall supply a duly certified
translation thereof into such language.

Article 36 G rounds f or ref using recognition or enf orcement

1. Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused
only:
a. at the request of the party against whom it is invoked, if that party furnishes to the competent court where
recognition or enforcement is sought proof that:
(i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said
agreement is not valid under the law to which the parties have subjected it or, failing any indication
thereon, under the law of the country where the award was made; or
(ii) the party against whom the award is invoked was not given proper notice of the appointment of an
arbitrator or of the arbitral proceedings or was otherwise unable to present his case;
(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to
 arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration,
provided that, if the decisions on matters submitted to arbitration can be separated from those not so
submitted, that part of the award which contains decisions on matters submitted to arbitration may be
recognized and enforced; or
(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the
agreement of the parties or, failing such agreement, was not in accordance with the law of the country
where the arbitration took place; or
(v) the award has not yet become binding on the parties or has been set aside or suspended by a court of the
country in which, or under the law of which, that award was made; or
b. if the court finds that:
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or
(ii) the recognition or enforcement of the award would be contrary to the public policy of this State.
2. If an application for setting aside or suspension of an award has been made to a court referred to in paragraph (1)(a)
(v) of this article, the court where recognition or enforcement is sought may, if it considers it proper, adjourn its
decision and may also, on the application of the party claiming recognition or enforcement of the award, order the
other party to provide appropriate security.
_________________________
1. Article headings are for reference purposes only and are not to be used for purposes of interpretation.
Index

AAA, 16, 32, 293, 320, 394, 398

AAA Commercial Rules, 284-85, 292, 321, 394, 398
AAA International Rules (ICDR Rules), 237, 246, 282-83, 290, 292, 294, 335, 344, 347, 392
Ad hoc arbitration, 27-28, 125, 127 129, 140, 144, 151, 156, 158, 255, 349, 416, 440
Adhesion contracts, 384
Adjudicatory procedures, 6, 130, 265, 355, 417
Agency
apparent authority, 96
choice of law, 100
principal bound, 96
Allocation of jurisdictional competence, see “ Competence-Competence”
Alter ego
choice of law, 100
form requirement, 96
standards for establishing, 96
Amiable compositeur, 255-56, Documentary Supplement at 456
Annulment of Award exclusion agreement, 334-37
forum for annulment, 307-09
grounds for annulment, 313-34
arbitration agreement, non-existent or invalid, 313-15
arbitrator bias, 130, 133, 141, 323-24
burden of proof, 305, 306, 330
denial of opportunity to be heard, 317-20
excess of authority, 315-16
failure to comply with parties’ agreed arbitral procedure, 320-21
final award, 286-88
formal defects, 285, 332-33
fraud, 323, 327-28, 348-49
internally-inconsistent award, 332
international limits on grounds for annulment, 311
judicial review of merits, 314-16, 322, 324, 328-29, 331, 334-37, 361-62
“ manifest disregard,” 329-32, 336-37
non-arbitrability, 304-05, 313, 318, 326-27, 333, 341, 365
“ opportunity to present his case,” 312-13, 317-18, 323
violation of laws of arbitral seat, 322-23
international limits on grounds for annulment, 311
national laws, annulment provisions, 328-334, 371, 373-74
rationale for annulment, 310-11 326, 332, 336
timing of annulment action, 321-23
UNCITRAL Model Law, 304, 311, 313, 318, 333-34, 342, 344-45, 347-48, 354, 374
waiver of grounds for annulment, 327, 334-37, 392
Antisuit injunctions, 64-67
Applicable law, see “ Choice of Law”
Appointing authority – 279, 320
appointment of arbitrators, 121-138, 284, 317, 324, 436, 442, Documentary Supplement at 453-54
 challenges to arbitrators, 138-41, 323
institutional rules, 138-39
judicial review of institutional appointments or challenge decisions, 138-41, 320
replacement of arbitrator, 142
UNCITRAL Rules, 123
Arbitrability (or Non-Arbitrability or Objective Arbitrability)
annulment of award, 82, 326-27, 333, 365
antitrust claims, 83, 258, 327
arbitrability and public policy, 82, 326
“ capable of settlement by arbitration,” 58, 77, 82-85, 249
choice-of-law governing, 85
New York Convention, 58, 82, 405-06, Documentary Supplement at 446
non-recognition of award, 383, 404-05, 409
“ subject matter not capable of settlement by arbitration,” 58, 77, 82, 85, 312, 333, 404-05, Documentary
Supplement at 446, 458
UNCITRAL Model Law, Documentary Supplement at 448-58
Arbitral Award, see “ Award”
Arbitral Institutions, 29-34, 250, 279, 308
Arbitral P rocedures
allocation of procedural authority between arbitrators and parties, 156, 319
allocation of time, 161-62, 336
arbitral seat, effect on procedures, 160, 235, 238, 243, 257, 264, 393
arbitrators’ background as affecting, 157, 161
arbitrators’ control over, 124, 137, 157, 168, 177, 183, 319, 330
arbitrator’ s exercise of procedural authority, 156-58
arbitrators’ obligation to follow arbitration agreement’ s procedures, 148-49, 319, 393-94
arbitrators’ obligation to make enforceable award
arbitrators’ procedural discretion, 149-50
civil law, 157-58, 166-70
civil procedure rules inapplicable, 111, 156, 395
common law, 157-58, 164-65, 167-70
communications with parties, 160-61, 267-68, 293
cross-examination, 157, 169-70
default, 125, 127, 129, 148, 171-72, 396
differences from litigation, 156, 159, 164, 174, 178, 186, 188, 264, 269, 298
direct examination, 169
disclosure, see “ Disclosure and Discovery” equal treatment of parties, 122, 126-27, 148, 151-53, 167, 179, 187,
317, 318
evidence-taking, 139, 319
evidentiary hearing, 166-67
general procedural code, non-existent, 156
hearings, 156-57, 160, 162, 166, 169
initial procedural conference, 161
judicial non-interference, 154-55, 394
language of arbitration, 38, 161, 285
legal representatives in, 160, 163, 168, 261-69
litigation procedures, distinguished, 153, 264, 269, 298
location of hearings, 166, 309
mandatory law, 111, 148, 152-53, 156, 172, 318-19, 322, 325-26, 336, 339
mandatory rules of arbitral seat, 111, 151, 156, 311-12, 394-96
mandatory time limits, 127, 139, 141, 161
 New York Convention, Article II, 148, 150, 154, 364, 365, Documentary Supplement at 445
procedural law, distinguished from, 147-48, 359
procedural meeting, 163
procedural orders, 152, 164, 183-84, 279
procedural timetable, 161-62
representation, right to, 261
terms of reference, 159, 162-63, 321
time limits, 127, 139, 141, 161-62, 166-67, 169, 173, 292, 293
UNCITRAL Notes, 122
UNCITRAL Model Law, 148-51, 262, 277, 293, 298, 302, Documentary Supplement at 455, 458
witness conferencing, 158, 170
witness examination, 168-69
witness interviews, 166, 265-66
witness, party representative as, 168
witness statements, 165-66, 366
Arbitral Seat
award 304, 308-11, 313, 318, 322, 329, 338-43, 361, 262
agreements selecting arbitral seat, 114-15
arbitral institution’ s power to select, 115
arbitral tribunal’ s power to select, 115
annulment of award, 109-10, 304, 308-11, 318, 322, 329, 338-43, 361-62, 382, 385, 392, 396, 400, 407-09
award “ made” in arbitral seat, 105, 275, 282, 293, 294, 298, 371
choice-of-law rules, applicable in arbitration, 118-19, 238-39
consequences of selecting, 56, 117-19, 237-39
defective agreements on seat, 115
defined, 105-06
drafting clause selecting arbitral seat, 37
factors relevant to selecting, 117-19
foreign procedural law, 113-14, 318, 345
hearings conducted outside arbitral seat, 372
importance of, 105
inconvenient arbitral seat, 119 “ internal” issues affecting arbitration, 108
interstate arbitration and seat, 441
investment arbitration and seat, 413-14, 417-18, 438
local rules of civil procedure not applicable, 111
mandatory character of arbitration legislation of arbitral seat, 318-19, 322, 325-26, 336, 339
mandatory procedural requirements of arbitral seat, 318-19, 322, 325-26, 336, 339
national courts’ selection of seat, 116-17
parties’ autonomy to select, 114-15
presumptive choice of seat in institutional rules, 115
procedural law, relation to, 107-08, 393, 395-96
territorial limits of arbitration legislation, 107-08
Arbitral Tribunal, see “ Arbitrators” number of arbitrators, 124-25, Documentary Supplement at 453
party autonomy to select, 37-38, 121-24
procedures for selecting, 125-29
removal of, 141-42
restrictions on arbitrators’ identities, 136-37
truncated tribunal, 142-44
Arbitration ad hoc arbitration, 28, 255, 349, 416
advantages v. disadvantages, 28-29
agreements, see “ Arbitration Agreements” appellate review, absence of, 13
 choice of law, 39-41, 233-59, 391-92
commercial relationship, 45, 370, 442, Documentary Supplement at 448, 452
consensual character, 4-5
conciliation, distinguished, 7
contemporary popularity of arbitration, 16-18
costs of, relative, 14-45
defined, 3-6
expert determination, distinguished, 7, 278
expertise of arbitrators, 12-13
institutional arbitration, 27-28, 343
investment (or investor-state), 41-42, 274, 296, 411-39
judicial hostility, historic, 25-27
multiparty issues, 221-31
party autonomy, 13-14, 253, 294, 298, 318, 338, 344, 390, 442
place of, see “ Arbitral Seat” state-to-state, 42, 274, 461
supportive national legislation, 23-24, 334
Arbitration agreements adhesion contracts, 384
agency, 96
agreement for heightened judicial review of award, 337-38
allocation of authority to decide disputes concerning, see “ Competence-Competence”
alter ego, 96-97
“ arising out of” or “ arising under,” 89-90, 373
Assignment, 98
asymmetrical agreement to arbitrate, 78
bankruptcy disputes, 83-84, 295
blank clauses, 71
capacity, 80, 383-84, Documentary Supplement at 446, 458
choice-of-law applicable to, 233-34
absence of choice-of-law agreement, 235-43
agency, 100
alter ego, 100
arbitrability, 85, 304-05, 313, 318, 326
arbitral seat, substantive law of, 39-40, 238
capacity, 100
choice-of-law agreements, 38, 239, 249
choice-of-law clause in underlying contract, 235, 273
choice-of-law rules, 244, 256
closest connection, 236-37, 240-41
cumulative approach, 239-40
discriminatory national law, 314
formal validity, 73-77, 99-100
formation, 69-71, 245, 251
fraud, 79, 288
institutional rules, 92-93, 234
international standards, 240-41
interpretation, 87-93, 256-60
interstate arbitration agreements, 42, 443
investment arbitration agreements, 41-42, 428
law of judicial enforcement forum, 55
mandatory application of law of arbitral seat, 108-111, 111-114, 238
most significant relationship, 240
 New York Convention and non-arbitrability, 85
non-signatory issues, 100
parties’ autonomy to choose, 251, 318
substantive validity, 48-51, 366
underlying contract, law governing, 233, 235, 249
validation principle, 56, 314
commercial relationship, 45-46, 251, 370
competence-competence, see “ Competence-Competence” consequences of invalid term, 251
conduct as basis for formation, 249-50
consumer contract, 84-85
corporate officers and directors, 99, 134, 168
defined, Documentary Supplement at 449, 453
“ defined legal relationship,” 46, 370
“ differences” or “ disputes,” 46, 124-25, 132, 136, 138, 153, 156, 158, 161, 165, 179, 184, 197-99
differences “ whether contractual or not,” 46 Documentary Supplement at 448, 453
duress, 78-19, 251
dysfunctional arbitration clauses, 71-73
effects of
antisuit injunctions, 64-66, 67
enforcement of positive obligations, 61
obligation to arbitrate in good faith, 59-60
negative obligations, 62-67
positive obligations, 59-61
elements of agreement to arbitrate, 35-36, Documentary Supplement at 448, 453
arbitrators, 37-38
choice-of-law clause, 38-39
choice of law governing language, 38
seat, 37, 105-11
scope, 36, 87-92, Documentary
Supplement at 453
enforceability of, 48-50, 405
estoppel, 98-99, 350
exchange of letters, 74-77
foreign, 8-9, 136, 147, 189, 192-93
form contract, 84-85
form requirements
consent, distinguished from form requirement, 69-70
“ exchange” of letters (see below, Arbitration Agreement – formation – exchange of forms)
Formation see “ formation” Generally, 69-85
national law, 74
New York Convention writing requirement, Documentary Supplement at 445
signature requirement, Documentary Supplement at 445
UNCITRAL Model Law, 74-75, Documentary Supplement at 445, 453
UNCITRAL Model Law, 2006 Revisions, 76, Documentary Supplement at 445, 448, 453
formation
“ blank” clauses, 71
choice of law, 55-56, 245, 251
duress, 78-79
essential terms of, 70-71
exchange of forms, 74-77
incorporation, 76-77
indefinite agreement, 72
internally-contradictory agreement, 73
non-existent institution, 73
optional arbitration agreement, 73
separability presumption, effect of, 50-51
standards of proof, 70
fraud, 79, 145, 157, 175
fraudulent inducement, 79
future disputes, 34, 46
group of companies, 97
“ in connection with,” 89-90, 133, 145, 191-93, 198, 200
inconvenient arbitral seat, 81-82, 119
incorporation of, 76-77, 137
indefinite arbitration agreement, 72
illegality, 79-80
“ inoperative,” 77, Documentary Supplement at 445, 453
Institutional, 92-93
internally-contradictory arbitration agreement, 73
“ internationally neutral” defenses, 56-57
interpretation of allocation of competence, 51-55, 93
“ arising out of” or “ arising under,” 89-90
“ broad” v. “ narrow” clauses, 90
contract construction, rules of, 88
generally-applicable rules of contract construction, 88
“ in connection with,” 89-90
interstate arbitration agreements, 441
investment arbitration agreements, 417, 420
multiple agreements, 91-92
multiparty issues, 221-31
New York Convention, 388
non-contractual claims, 90-91
pro-arbitration presumption, 88
restrictive presumption, 88-89
“ relating to, ” 89-90
rules of construction, 88
scope of arbitration agreement, 87-92
statutory claims, 91
tort claims, 90-91
interstate arbitration agreement, 42, 442
investment arbitration, agreement, 41-42, 415-16
Kompetenz-Kompetenz, see “ Competence-Competence”
lack of capacity, 77, 80, 383-84, 423, Documentary Supplement at 446, 458
mutuality, 78
New York Convention, choice-of-law, 234, 245
New York Convention, form requirements, 74, 376
New York Convention, jurisdictional requirements, arbitration agreements, 45
commercial relationship, 45-46, 370
defined legal relationship, 46, 370
existing or future disputes, 46
foreign agreement, 46
international, 46
 reciprocity, 47
New York Convention, enforcement, Documentary Supplement at 446
New York Convention, substantive validity, 77, 376, 384
non-arbitrability, see “ Arbitrability” non-existence, 50-51
non-signatories, see “ Non-Signatories” “ null and void,” 77, Documentary Supplement at 453
Optional, 73, 158
oral arbitration agreement, 74, Documentary Supplement at 448
pathological clauses, 71-73
parties bound, 388
presumptive validity of, 48-49
presumption of arbitrability “ procedural agreement,” 142. 152-53, 395
ratification reciprocity, 47-48
recission of underlying contract “ relating to,” 89-90, 149, 156, 158, 160, 180, 196
Repudiation, 80-81
scope of, 87-92, 145, 155, 161, 164, 177-78, 180, 183, 186-87, 190, 196, 199, 370, 385-89
separability presumption, see also
“ Separability P resumption”, 366
signature requirement, 282, Documentary Supplement at 445, 453
substantive validity of asymmetrical, 78
capacity, lack of, 80
competence-competence and, Documentary Supplement at 455
duress, 78
formal requirements, 376
fraud, 79
frustration, 79
illegality, 79
impossibility, 79
imprecise arbitration agreement, 77
incapable of being performed, 77
internally-contradictory clause, 73
“ null and void, ” 77
termination, 80-81
unconscionability, 78
waiver, 81
termination of arbitration agreement, 80-81
termination of underlying contract, 50-51
transfers of arbitration agreement, 97-98
unconscionability, 78
validity, 73-82, 376, 383-87, Documentary Supplement at 446, 455, 458
waiver of objections to, Documentary Supplement at 453
writing requirement, 74-77, Documentary Supplement at 445, 448, 453
Arbitrators
ABA/AAA Code of Ethics, 126, 131-32, 135
appointing authority, 128, 320, 413, 436
appointment of, 124-29, 284, 317, 324, 389, 436-37, Documentary Supplement at 446, 453-54, 455, 458
arbitration agreement naming, 128
bias, see “ Impartiality”, 291, 313, 223-25, 329
capacity, requirement for, 136-37
chairman, 123, 127-29, 289-90
challenges to, 138-41, 323, 397, 399, Documentary Supplement at 454
co-arbitrator, impartiality of, 131-32, 397-98
 co-arbitrator, selection of, 125-27, 436
consequences of party’ s failure to appoint, 123-24
control over arbitral procedures, 149-51
declaration, 134
disclosure obligations of, 133-34
duty of party to investigate for arbitrator bias, 126
even number, 124
ex parte communications with, 135
experience requirements, 138
failure of party to nominate, 126-27
FAA, 122, 125, 127, 140
functus officio, 301-02
IBA Guidelines on Conflict of Interest, 126, 132-35
impartiality, see “ Impartiality” independence, see “ Impartiality” institutional rules, 123, 130-32, 138-39
interview of, 126, 128
judicial appointment of arbitrators, 129
judicial removal of arbitrators, 140-41
judicial review of appointments, 139-41, 397
limits on parties’ involvement in choice of presiding arbitrator, 127-28
mandatory national law, 122, 132, 136, 399
national courts, role in appointing circumstances when appropriate, 129
jurisdictional competence, 154-55
nationality of, 136-37, Documentary Supplement at 453-54
number, 124, 394, Documentary Supplement at 453
one-sided procedures for selecting parties’ autonomy to select, 121-22
parties’ autonomy to select, limitations on, 129, 390, 436
party-appointed arbitrator, 125-28, 436
presiding arbitrator, 123, 127-29, 131, 133-34, 137, 142, 289-90, 436-37, 442, Documentary Supplement at 456
procedural discretion, 149-51, 292, 319, 388-90, 394, 396, 442
qualifications of, 137-39, 394, Documentary Supplement at 454
removal of appointing authority, 141-42
contractual qualifications, 137-38
institutional rules, 138-40
investment arbitrations, 135
national court, 140-41
no judicial removal under FAA, 140
relationship between institutional and judicial challenge procedures, 141-42
waiver of objections, 141
selection of co-arbitrator, 125-26
sole arbitrator, 127-28, Documentary Supplement at 454
vacancies, 141-42
violation of parties’ agreement, consequences of, 123-24
waiver of objections to, 141, 386, 399
Assignment of arbitration agreement, 98
Asymmetrical arbitration agreement, 78
Attachment, see “ P rovisional Measures”
Attorney’ s ethical obligations, 265-70
Attorneys’ fees, 175-76, 298-300
Autonomy of arbitration agreement, see “ Separability P resumption”
Award, advisory instrument, distinguished, 271
agreement for heightened judicial review, 337
 annulment, see “ Annulment of Award”
award does not merge in judgment confirming award, 357
binding, 271, 357, 400-01, Documentary Supplement at 445
“ commercial relationship,” 370, 442
consent awards, 285, 287-89
correction of 293, 302-03, Documentary Supplement at 457
dated, 282
default awards, 285, 288
defined, 271, 278
“ defined legal relationship,” 370
deposit of awards, 294
dissenting opinion, 290-91
distinguished from foreign judgment, 360
distinguished from procedural order, 279
double exequatur, 286, 294, 378, 381
drafted by third parties, 278
enforcement of, see “ Enforceability of Arbitral Awards” exclusion agreement, 336-37
final awards, 342, 346-47, Documentary Supplement at 457
“ foreign” awards, 278, Documentary Supplement at 445
Article I(1), New York Convention consequences of award being foreign, 278, 370-74
formal requirements, 281-85, UNCITRAL Model Law, Documentary Supplement at 457
formal requirements, UNCITRAL Model Law, 285, Documentary Supplement at 457
formal requirements, consequences of non-compliance, 285
fraud as grounds for challenging, 327
ICSID awards, 413, 416-19, 421, 424-25, 437-38
interim awards, 286-87, Documentary Supplement at 449
interim orders, 287
international awards, 303-04, 306, 370-73
interpretation of, 345, Documentary Supplement at 457
interstate awards, 441-44
“ made,” place where made, 282
made “ under” what law, 309
majority award, 278
modification of, 288
“ non-domestic,” 312, 370-73
place of, 282, Documentary Supplement at 457
precedent, 365-67
preclusive effect of, 272, 278, 385-86
procedural orders, distinguished, 279-80
proof of, 176, 375-77
reciprocity, 374-75
recognition, see “ Recognition of Award” reasoned award, 277, 279, 281-84
res judicata effect, 271, 273, 277, 301-06
setting aside, see “ Annulment of Award” signature, 282, Documentary Supplement at 457
time for making award, 321
voluntary compliance with, 271
where “ made”, 282
writing requirement, 282, Documentary
Supplement at 457
Bankruptcy claims, 83
Baseball arbitration, 8
Bias, of arbitrators, see “ Impartiality” Bilateral investment treaties, 42, 358, 412-38
“ Binding” award Article VI stays, Documentary Supplement at 446
meaning of “ binding”, 277, 400-01
requirement of security, 408
Blank arbitration clause, 71
Bribery, arbitrability, 323
“ Broad” v. “ narrow” arbitration clauses, 90

“ Capable of settlement by arbitration, ” 82, Documentary Supplement at 445-46, 458

Capacity
Article II, New York Convention, 77, Documentary Supplement at 445
Article V(1)(a), New York Convention, 57, 384, Documentary Supplement at 446
validation principle, 56
Challenges of arbitrators, 138-41, 323, 397-99, Documentary Supplement at 454
Choice-of-law, arbitration agreement, see “ Arbitration Agreement, choice of law” Choice of law, procedural law, see
“ P rocedural Law”
Choice-of-law, substantive law amiable compositeur, 255-56, Documentary Supplement at 456
“ appropriate” choice of law rules, 236-39
arbitral seat, choice of law rules, 244
arbitral seat, substantive law, 238-39
choice-of-law agreements
applicable to underlying contract, not arbitration agreement, 235-36
arbitral seat’ s conflicts rules, 238-39
conflicts law applicable to, 235
conspicuous choice of law, required, 252
exclusivity, 234, 253
express choice of law, required, 238, 252
implied, 249, 253
interpretation, 233
mandatory law of “ foreign” legal system, 248
mandatory law of parties’ chosen legal system, 247-48
party autonomy, 244-47, 253
party autonomy, limits, 253
presumptive validity of choice of law clause, 244-46
public policy limitations, 247-49
reasonable relationship requirement, 251
reasons for choice of law clause, 233
renvoi, 257
rules of law, 236, 241
scope of, 258
substance, not procedure, 258
UNCITRAL Model Law, 234, 235, 239-39, 243-44, 246, 254, 256-57
validation principle, 314
validity of, distinguished from validity of arbitration agreement, 251
whole law, 257
choice-of-law rules (in absence of choice of law agreement), 235
choice-of-law rules of arbitral seat, 238
“ closest connection,” choice of law rules with, 240
“ closest connection,” substantive law with, 240
cumulative approach, 239-40
“ direct” application of substantive law, 242
 European Convention, 244-46, 256, 283
ex aequo et bono, 255-56, 443
Documentary Supplement at 456
floating choice of law, 253
general principles of law, 240, 437
implied choice of law, 249
incomplete law, 257
institutional rules, 234
international choice-of-law rules, 240
internationalized contracts, 240
international law, 253-54
interpretation of, 256
interstate arbitration, 443
investment arbitration, 428, 437
judicial deference to arbitrators’ choice of law, 295
lex mercatoria. 253-54
mandatory application of conflicts rules of arbitral seat, 235
mandatory laws, 247-48
New York Convention, 245-46, 391
need for application of choice-of-law rules, 235
party autonomy and limits thereto, 244-47, 253
procedural issues public policy and, 247-49
reasonable relation requirement and, 251
renvoi, 257
Rome Convention, 240-42, 247-49, 253
split choice-of-law clause, 252
sua sponte consideration of mandatory law, 247
substance v. procedure, 258
substantive law of arbitral seat, 238
standard for implied choice of law SLP IL, 320
uncertainty of choice of law analysis, 233
UNCITRAL Model Law, 234-35, 238-39, 243-44, 246, 254, 256-57, Documentary Supplement at 456
validity of, 251
whole law, 257
Claim preclusion, 350
Co-arbitrator consequences of party’ s failure to nominate, 126-127
considerations affecting choice, 131-32
institutional confirmation, 126-27
selection of, 125-26, 436
Collateral estoppel, 350
“ Commercial relationship” arbitration agreements, 45, 251
arbitral awards, 239-370
New York Convention, 45-46, Documentary Supplement at 445
reservations, under New York Convention, 22, 45-46
Compelling arbitration, 61
Competence-Competence, 361, 362, 366
agreement to arbitrate jurisdictional disputes, 54
allocation of jurisdictional competence, 51-54
“ broad” versus “ narrow” arbitration clause, 90
challenges to arbitrators’ jurisdiction, 43-44
“ clear and unmistakable evidence,” 54
 French New Code of Civil P rocedure, 52
institutional arbitration rules, 389
interpretation of arbitration agreements, 90
interstate arbitration and, 441
investment arbitration and, 413
“ manifestly null,” 52
prima facie jurisdiction, 52
UNCITRAL Model Law and 54, Documentary Supplement at 455
validity of arbitration agreement and, 51
waiver of jurisdictional objections, 69-70, 385-386
Conciliation, 345
Confidentiality choice of law, 196
implied obligation, 197
institutional rules, 199-200
investment arbitration, 200-02
New York Convention and, 196
party autonomy, 196-97
privacy, distinguished, 195
reason for arbitration, 15
third party rights, 197
UNCITRAL Model Law and, 197
Conflict of interest, counsel in arbitration, 266, 257, 269
Consent to arbitration agreement, 69-70, 413-14, 416, 423-24
Consolidation
ICC Rules, 227-228
LCIA Rules, 228
national laws authorizing consolidation, 226
Swiss International Arbitration Rules, 228
Contingent fees, 265, 267
Contractual qualifications of arbitrators, 137-38
Correction of award inherent authority of arbitrators to correct award, 342
institutional rules authorizing arbitrators to correct award, 343
national law authorizing arbitrator to correct award, 342
Corruption, 399, 434, 437, 443
Costs of arbitration, 175-76, 267, 298-99
Counsel, 262-64
Courts annulment of award, 303-04, 324-28, 350-52, 365, 373-74, 438
anti-suit injunctions, 64-66, 67
arbitral seat, 106, 395-96, 400-01, 408-09, 424-25
arbitrator, appointment of, 110, 129, Documentary Supplement at 454
arbitrator, removal of, 110, 140-41
correction of award, 342
disqualification of counsel, 267
evidence-taking in aid of arbitration, 192-93
interim relief in aid of arbitration, 213-18, Documentary Supplement at 450
judicial non-interference in arbitration, 154-55, 387-89, Documentary Supplement at 453
provisional measures, 213-18
recognition of award, 375-409, Documentary Supplement at 450, 458
Cross-examination, 157, 168-70
Curial law, see “ P rocedural Law”
Deadlines, for awards, 292
Default awards, 288
“ Defined legal relationship,” 46, 369-70, Documentary Supplement at 445, 448-49, 453
Depositions, 157, 190
“ Differences,” 46
Differences “ whether contractual or not,” Documentary Supplement at 445
Discovery and Disclosure adverse inferences, 133-34
agreement of parties, effect on, 178-80
arbitrators’ control over, 179-80
arbitrators’ power to order discovery generally implied authority, 179-80
under arbitration agreement, 176
under FAA, 179, 182
under institutional rules, 180-82
under UNCITRAL Model Law, 178
court-ordered
arbitrator’ s authority to seek judicial assistance, 189-91
FAA §7, 190
parties, generally not authorized to seek judicial assistance in disclosure, 189, 191
UNCITRAL Model Law, 189-90
depositions, 157, 190
disclosure from third parties, 178, 182, 190-91
document discovery, 164, 186, 190
“ exceptional circumstances,” 168-69, 191-93
FAA §7
court-ordered discovery in aid of foreign arbitration, 192
parties generally not entitled to seek court-ordered discovery, 191
parties entitled to seek court-ordered discovery in exceptional circumstances, 191-193
IBA Rules on Taking of Evidence and Documentary Supplement at 182-86, 188, 200
ICSID arbitration, 187, 197, 437
importance of arbitrators’ background, 178, 183
institutional rules, impact of, 180
interlocutory judicial review, 154
litigation, distinguished from, 174, 186, 188
national law limits, 152-54, 193
party autonomy, 178-79
parties, discovery limited to, 182
practical implementation, 182
prehearing discovery under FAA, 190-91
third party discovery, 164, 182, 190-91
no automatic right to disclosure, 184-85
practice, 178, 180-81, 183-84, 186, 193
procedural law, impact of, 178, 180, 182, 197
privileges, 187
sanctions, 188-89
section 1782, 192
site inspections, 179, 180-81
Standard Rules of Evidence, 183-84
Subpoenas, 191
witnesses, compelling attendance, 190
“ Dispute,” 46, 122, 124-26, 128, 132, 134-36, 138, 144, 148, 151, 153-54, 156-58, 161, 165, 169, 178-80, 183-84,
186, 197, 201
Dissenting opinions, 290-91
Double exequatur, 276, 378, 381, 400
Due process annulment of award, 320, 322
arbitral procedures, 152
equal treatment of parties, 107, 152-53
exclusion of evidence, 319
mandatory law, 152-53, 322
opportunity to present case, 317
recognition of award, 152, 383, 389-92
Duress, 78
Employment claims, 326-27
Enforceability of arbitral awards, action to annul award, 372, 392, 396, 401, 407-09
action to confirm award, 379, 381, 402, 406
action to correct award, Documentary Supplement at 457
agreement that award is final, 389, 401, 437, 443
annulled award, effect of, 338
arbitrator bias, see “ Impartiality” “ binding” award, 383, 400-01, Documentary Supplement at 445, 458
burden of proof, 375-79, 385, 390
exceptions to enforceability of award, see “ Annulment” and “ Recognition”, 338
“ final” award, 285
forum for seeking recognition of award, 406-07, 413
forum non conveniens, 406-07
interlocutory judicial review, 385
international award, 371, 381, 406
jurisdictional requirements of New York Convention
commercial relationship, 370, Documentary Supplement at 445
“ defined legal relationship,” 370, Documentary Supplement at 445
“ foreign” award, 370-74
“ non-domestic” award, 372-73
reciprocity, 374-75, Documentary
Supplement at 445
limited scope of judicial review, 382-83, 389, 394
“ non domestic” award, 370-73
presumption of validity, 383
proof of award, 375-77
reasoned awards, 394
English Arbitration Act, 1996, 125, 127, 145, 153, 155, 179, 193, 196, English common law, treatment of arbitration,
130, 145, 149, 153, 179, 193, 196-98
Equal treatment of parties, 117, 122, 126, 148, 151-53, 179
Estoppel, 350-52
Ethics of arbitrators, see “ Impartiality”
Ethics of counsel in arbitration candor, 268
confidential information, use of, 265
contingent fees, 267
legal fees, 267
malpractice, 265
settlement communications, 268
standards, 265
witness interviews and preparation, 268
European Convention on International Commercial Arbitration, 244-46, 256, 283
Evidence
 admissibility, 167, 173-74, 178
arbitrators’ discretion, 150, 174, 179-80, 182, 184, Documentary Supplement at 455-56
civil law procedures, 178-80, 183
common law procedures, 179, 183-84
cross-examination, 168-70
depositions, 152, 190
direct examination, 168-69
discovery, 178, 180-81, 183-86, 190-92, 442
documents, 184-85, 442, Documentary Supplement at 456
fact witnesses, 168-70
hearing, 166-67, Documentary Supplement at 456
IBA Rules on Taking of Evidence, 185-86
internationalized procedures, 189-91
judicial review of arbitrators’ evidentiary decisions, 154-55
mandatory rules, 152-54
party autonomy, 178-80, Documentary Supplement at 455-56
privileges, 187
Standard Rules of Evidence, 183-84
Transcripts, 168
waiver of procedural objections, 184-85, 320
witness statements, 165-66, 442, Documentary Supplement at 455, 456
Ex aequo et bono, 255-56, 321, 443, Documentary Supplement at 456
Ex parte communications, 135-60
Excess of authority, 295, 329, 340, 347, 382, 387-89, 437
Expert determination, 145

Federal Arbitration Act

appointment of arbitrators, 125
arbitrator, appointment under, 125
choice of law under, 235
competence-competence, see
“ Competence-Competence” discovery and, 190-91, 195
interlocutory judicial review, 155
judicial non-interference, 155
mandatory procedural requirements, 153
procedural law, party autonomy to choose, 149
procedures, party autonomy to choose, 150
“ Final” awards distinguished from interim awards, 287
distinguished from orders, 286
national arbitration legislation, 286
“ Foreign” award consequences of treating an award as foreign, 370-72
definition, 46-47, 371
FAA, 379
where an award is “ made,” 371-72
Formation of arbitration agreement, see “ Arbitration Agreement”
Forum non conveniens defense to validity of arbitration agreement in recognition action, 406-07
Forum for annulling award, 307-09
Fraud, 145, 157, 175, 268, 288, 313, 323, 327-28, 348, 397
French New Code of Civil P rocedure, 256, 336
Frustration, 143, 242, Documentary Supplement at 449
Functus officio, 193, 301-02
Future disputes, 134-200, 441
Geneva Convention, 377-80, 400, Documentary Supplement at 446
Geneva P rotocol, 381, Documentary Supplement at 446
Grounds to annul award, see “ Annulment” Grounds to deny recognition of award, see “ Recognition of Award”
Grounds to remove arbitrator, see “ Arbitrators” and “ Impartiality”

Hearings allocation of time between parties, 156, 167

arbitrators’ control, 160, Documentary Supplement at 456
Bockstiegel method, 167
conducted outside arbitral seat, 106, 372
equality of treatment, 153
judicial non-interference, 154-55
judicial supervision of arbitral proceedings, 155
mandatory requirements of arbitral seat, 108
witness examination, 168-69

ICSID Convention
annulment of ICSID award, 349, 413, 418, 434-35, 437-38
arbitrator’ s impartiality, 436
arbitrator’ s procedural discretion, 436
confidentiality, 418, 437
disclosure, 437
“ disputes,” 437
excess of authority, 437
judicial non-interference, 413, 417-18, 438
party autonomy, procedures, 436-37
procedures, 436-38
reasoned award, 437-38
scope of, 421
Impartiality and independence, of arbitrators ABA/AAA Code of Ethics, 131-32
advance waiver of impartiality objections, 141
business/personal relations, 135
challenges under institutional rules, 138-39, 398-99
commonly-invoked bases for impartiality challenges, 134-35
co-arbitrator, role of, 125-126
consequences of removal of arbitrator, 141-42
declarations of independence, 126
disclosure obligations, 133
employment by party, 134
ex parte communications, 135
family relations, 135
financial interest, 134
historical approach in United States to co- arbitrator’ s impartiality, 131
IBA Ethics, 132-33
IBA Guidelines on Conflicts of Interest, 132-33
ICSID Convention, 436-37
Impartiality, 129-135
Independence, 129-135
institutional rules, impartiality under, 130-31
interlocutory judicial challenges, 140-41
interstate arbitration, 442
 interview of prospective arbitrator, 126
“ judge in own case,” 134
judicial impartiality standards jurisdictional limits on national court removal of arbitrators, 140-41
“ justifiable doubts,” 130, 133-35, 139
law firm conflicts, 135
national law, requirements of impartiality, 130
New York Convention and, 122
non-recognition of award, 130, 397-99
parties’ agreement, effect on standard of impartiality, 123-24
party autonomy, 122
party-appointed arbitrators, 125-28
prior involvement in dispute, 134
prior representation of party, 135
personal relationship, 135
procedures for removal, 141-42
public expressions of views, 135
recurrent appointments of arbitrator, 135
replacement of arbitrator, 141-42
UNCITRAL Model Law, 130-31, Documentary Supplement at 453
vacancy, 142-43
waiver of objections, 399
Impossibility
UNCITRAL Model Law, Documentary Supplement at 454, 457
Independence, of arbitrators see “ Impartiality and independence of arbitrators” “ Inoperative,” Documentary
Supplement at 445, 453
Institutional arbitration rules
appointment of arbitrators under, 123, Documentary Supplement at 453-54
challenge to arbitrators under, 138-139, Documentary Supplement at 454
competence-competence, Documentary Supplement at 455
Interim awards, 287
Interim measures, see “ P rovisional measures, ordered by arbitrators,” “ P rovisional measures, ordered by national
courts,” P rovisional measures, enforcement of arbitrators’ measures by national courts”
Interlocutory review of arbitral decisions appointments of arbitrators, 140-41
discovery rulings, 189-90
procedural rulings, 154-55
selection of arbitral seat, 109
International Bar Association Ethics, 126, 132, 135, 160
International Bar Association Rules on P resentation of Evidence, 151, 153, 166, 169, 174, 182-186, 188, 200
International Chamber of Commerce, see “ ICC” and “ ICC Rules”
International Centre for Dispute Resolution, see “ ICDR”
International choice-of-law rules, 240
Interpretation of arbitration agreements, see “ Arbitration Agreements – interpretation” Investment arbitration
annulment of ICSID award, 413, 418, 434-35, 437-38
arbitral seat, 413-13, 417-18, 425, 438
arbitration agreement, 412
arbitration without privity, 416
New York Convention, application to, 424-25, 438
pre-arbitration procedural requirements, 426-27
provisional measures, 418
relationship to contractual arbitration, 416
unilateral character, 418
Joinder, 221
Judicial non-interference, 154-55
Jurisdiction, of arbitrators competence-competence, 52, 441, Documentary Supplement at 455
consensual basis of arbitration, 416-17
excess of authority, 387-89
Jurisdictional requirements of New York
Convention arbitration agreement, defined arbitration agreements, 45-47, Documentary Supplement at 445
arbitral awards, Documentary Supplement at 446
commercial relationship, 45-46, 370
defined legal relationship, 46, 370
existing or future disputes, 46
foreign agreement, 46-47, 371-72
non-domestic award, 372-73
reciprocity, 47

Kompetenz-Kompetenz, see“ Competence-Competence”

LCIA, see “ London Court of International Arbitration”

Language of arbitration, 161
Law governing arbitral proceedings, see “ P rocedural Law”
Law governing arbitration agreement, see “ Arbitration Agreement, choice-of-law applicable to”
Legal representation disqualification of counsel, 267, 269
institutional rules and, 262, 265
non-lawyer representatives in arbitration, 262
party autonomy to choose counsel, 261
professional responsibility codes, 261-62, 265, 268
right to select counsel, 391
unauthorized practice of law, 263
Lex arbitri, see “ P rocedural Law”
Lex mercatoria, 241, 253
London Court of International Arbitration, 440

“ Made” (where an award is made), Documentary Supplement at 445-46

Mediation, 426
Misconduct, by arbitrator, see “ Impartiality and independence”
Model Law, see “ UNCITRAL Model Law” Modification of award, 288, 302
Multiparty issues advantages and disadvantages of consolidation, joinder and consolidation, 221-22
appointment of arbitrators, 229-30
institutional rules, 227-29
national law, 222-27
Mutuality, 78

National arbitration legislation, overview, 373-74

New York Convention applicable law, arbitration agreement arbitral procedures,
Article II, 136, 148, 150, 154, Documentary Supplement at 445
Article V(1)(b), 150, 152, 288, 317, 389-93, Documentary Supplement at 446
Article V(1)(d), 122, 136, 148, 150, 310, 319-20, 322, 393-97, Documentary Supplement at 446
Article V(2)(b), 152, 284, 297, 325, Documentary Supplement at 446
constitution of arbitral tribunal, 122, 398
judicial non-interference, 154, 390
mandatory law of arbitral seat, 152, 394-95
party autonomy, 122, 148, 390, 436, Documentary Supplement at 446
 arbitration agreement,
Article V(1)(a), 376, 384, Documentary Supplement at 446
Capacity, Documentary Supplement at 446
exchange requirement, Documentary Supplement at 445
validity, 384, Documentary Supplement at 446
writing requirement, Documentary Supplement at 445
awards, annulment, forums for, 374
“ binding” award, 400

place where award is made, 371, Documentary Supplement at 445

recognition, see “ Recognition” reciprocity, Documentary Supplement at 445
“ capable of settlement by arbitration,” 404-05, Documentary Supplement at 445
capacity, Documentary Supplement at 446
choice-of-law under Article II, Documentary Supplement at 445
choice-of-law under Article V(1)(a), 310,, Documentary Supplement at 446
“ commercial” relationships, 370, Documentary Supplement at 445
“ defined legal relationship,” 370, Documentary Supplement at 445
differences “ whether contractual or not,” Documentary Supplement at 445
“ foreign” awards, 371-72
interstate arbitration, application of New York Convention to, 442
investment arbitration, application of New York Convention to, 412, 416, 418, 425, 438
judicial non-interference, 154-55
jurisdictional requirements, for awards, 376-77
non-arbitrability, 404-05
“ non-domestic” awards, 372-73
“ opportunity to present his case,” 389
procedural law and, 393
public policy exception, 152, 401-04
pro-enforcement bias, as to awards, 378-79, 390
proof of award, 375-77
reciprocity reservations, 374-75, Documentary Supplement at 445
recognition, see “ Recognition of Award”
Non-arbitrability, see “ Arbitrability”
“ Non-domestic” award, see “ Recognition of Award”
Non-recognition of award, see “ Recognition of Award”
“ Null and void,” Documentary Supplement at 445, 453, 455
Number of arbitrators in absence of parties’ agreement, 125
party autonomy, 124, Documentary Supplement at 453

“ Opportunity to present his case” biased arbitral tribunal, 139-41

disclosure or discovery, 164, 184-85
evidentiary rulings, 154
ex parte contacts, 171-72
interlocutory review, 140
judicial deference to arbitrators’ procedural rulings, 154
New York Convention Article V(1)(b), 152
Notice, 138-39, 389, 391, Documentary Supplement at 446
opportunity to comment on evidence or argument, 167
opportunity to reply, 160
party’ s inability to attend hearing, 166-67
right to be heard in oral proceeding, 148, 151, 164, 166
 scheduling of hearings, 166-67
special procedural character of arbitration, 166-67
time limits, 166-67
unequal treatment, 153
U.S. courts’ use of due process standards, 153
waiver of objections to, 139, 141
Ordre publique, see “ P ublic P olicy”

P anama Convention, see “ Inter-American Convention”

P arty autonomy annulment, waiver of, 319
applicable law, arbitration agreement, 40, 55
applicable law, procedural law, 40-41
applicable law, substantive law, 233-34
arbitral seat, 117-19
arbitral procedures, 148-49
arbitrators, 122-24
confidentiality, 196-97
procedural law, 148-49
procedures, 148-49, 390, 436, 442
provisional measures, 217-18
substantive law, 233-34
P arty-nominated arbitrators, 125-28, 397-98, 436
P ermanent Court of Arbitration, 351, 436, 439-40, 442
P lace of arbitration, see “ Arbitral Seat” P recedent and arbitration, 365-66, 417
P reclusive effect of arbitral award collateral estoppel, 350
divergent approaches to preclusion under national legal systems, 350-51
Inter-American Convention, 352
national arbitration legislation, 350-51, 355-56
New York Convention, 351, 354
practical importance, 352
res judicata, 350
UNCITRAL Model Law, 354
P reparation of witnesses, 166, 170, 265-66
P rocedural law of arbitration a-national arbitration, 148-49
arbitral procedures, distinguished from, 112, 147
arbitral seat, 112-13, 147-48
civil procedure rules of arbitral seat, distinguished from, 151
conducting hearing outside arbitral seat, effect on, 106
conflicts of jurisdiction, 161
conflicts rules for selecting, 149-51
effect on arbitral procedures, 156-58
effect on forum for annulling award, 322
external relationship between arbitration and national court, 155
foreign procedural law, 147
importance of procedural law, 156-58
issues subject to procedural law, 159
law governing arbitration agreement, distinguished from, 147
legal representation, 262
mandatory application of law of arbitral seat, 152-54
mandatory rules of arbitral seat, 152-54, 322
New York Convention and, 148, 150, 152
 party autonomy and limits thereto, 151-53, 325
presumption against choice of foreign procedural law, 112-13
provisional measures, 205
reasons for choosing foreign procedural law, 112-13
requirements of arbitral seat, 153-54, 322
selection of foreign procedural law, 112-13, 147
P rocedural order, 152, 164, 183
P rocedural public policy, 152, 284, 319, 389
P rocedural regularity, 152
P rocedures, in arbitration, see “ Arbitral
P rocedures”
P rovisional measures, ordered by arbitrators aggravation of dispute, order forbidding, 210
arbitrators’ discretion, 9
arbitrators’ exercise of power to order, 207-10
arbitrators’ power to order, 203-07
arbitrators’ power under institutional rules to order, 205-06
categories of, 210
choice of law, 40, 203
concurrent jurisdiction, 213
enforcement, arbitrators’ lack of authority, 206
ex parte provisional measures, 210
FAA, 204-05
ICC’ s P re-Arbitral Referee P rocedure, 210
ICDR Rules, 210-11
implied authority of arbitrators to grant provisional measures, 204
interstate arbitration, 417-18
judicial enforcement, 206, 211-13
limits under national law, 203-05
Netherlands Arbitration Institute, 211
non-parties, no authority for arbitrators to order provisional measures against, 210
preservation of property, order requiring, 206
relationship between requests for tribunal-ordered relief and court-ordered relief, 211-13
security, 210
standards for provisional relief balancing of interests, 210
different standards for different relief, 210
irreparable harm, 208
no prejudgment of merits, 208-09
prima facie basis for claim, 209
serious harm, 208
urgency, 208
status quo, order preserving, 210
third parties, 206
UNCITRAL Model Law, Documentary Supplement at 449-51, 455
waiver and, 217
P rovisional measures ordered by national courts
agreement prohibiting court-ordered provisional measures, 213
choice of law, 217-18
concurrent authority, 213
court-ordered provisional measures for “ foreign” arbitration, 219
court’ s discretion not to order in “ foreign” arbitration, 214, 220
FAA and, 204-05, 211, 215
 forum selection, 218-20
ICSID, 203, 208, 210, 424-25
institutional rules, 205-06
national law, 203-05, 215-16
New York Convention, 213-15
standards, 207, 209-10
UNCITRAL Model Law, Documentary Supplement at 451, 453
P rovisional measures, enforcement of courts, 206
“ binding” award, 211
enforceability, under FAA, 211
enforceability, under UNCITRAL Model Law, 211
enforceability under New York Convention, 213-15
“ finality, ” 211-12

Qualifications of arbitrators legal capacity, 136-37

national court judges, 137
natural persons, 136-37
national law requirements, 130

Reasonable relationship requirement, in choice-of-law, 251

Reasoned award adequacy of reasons, 283
annulment of award, 347
mandatory requirement, 283
requirement for, 283
Reciprocity
New York Convention, 374-75, Documentary Supplement at 445
reservations, 374-75
Recognition of award applicability of New York Convention in national courts, 380, 382, 393-94, 400
Article V(1)(a), 376, 384, 387, Documentary Supplement at 445
Article V(1)(b), 388-93, 397, Documentary Supplement at 445
Article V(1)(c), 376, 387-89, Documentary Supplement at 445
Article V(1)(d), 388, 389, 393-98, Documentary Supplement at 445
Article V(1)(e), 373, 400, 408, Documentary Supplement at 445
Article V(2)(a), 404-05, Documentary Supplement at 445
Article V(2)(b), 389, 401-04, Documentary Supplement at 445
burden of proof of grounds for non-recognition, 385
double exequatur, not required, 276, 400
exclusivity of grounds for non-recognition under New York Convention, 378, 379-83
forum non conveniens defense to recognition, 406-07
forums for recognition, 391, 396, 403-07
grounds for non-recognition annulment, consequences of not seeking application of due process standards by U.S.
courts under Article V(1)(b), 389-92
arbitrators’ procedural discretion, 390
choice of law under Article V(1) (b), 391-92
equality of treatment, 389-90
parties’ procedural autonomy, 390
relationship between Articles V(1)(b) and V(1)(d), 389
serious procedural violation of fundamental legal protection required, 404
waiver of procedural objections, 392-93
arbitration agreement invalid choice of law, 385
judicial deference to arbitrators’ jurisdictional ruling, 385-86
 separability presumption, 385
waiver of jurisdictional objections, 386-87
arbitrator bias annulment action, effect on recognition, 338
Article V(1)(b), Documentary Supplement at 446
Article V(1)(d), 398, Documentary Supplement at 446
Article V(2)(b), Documentary Supplement at 446, 454
challenge procedure under institutional rules, effect on recognition, 398-99
no specific provision for arbitrator bias in New York Convention, 397
no specific provision for arbitrator bias in recognition section of most national arbitration laws, 397
award annulled in arbitral seat, see “ Annulled award – consequences of”
“ binding” award, 400-01, 408, Documentary Supplement at 445, 458
“ capable of settlement by arbitration,”
Article II(1), Documentary Supplement at 445
Article V(2)(a), 404, Documentary Supplement at 446
judicial review of substance of mandatory law decisions, 405
UNCITRAL Model Law, Documentary Supplement at 448
waiver of, 405
excess of authority ICSID Convention, 437
judicial deference to arbitrators’ jurisdictional ruling, 382, 387-89
scope of Article V(1)(c), 387-89
fraud, 397-99
irregular procedural conduct of arbitration
conflicts between parties’ agreed procedures and law of arbitral seat, 394-96
constitution of tribunal, 394
non-compliance with agreed procedural rules, 393-97
non-compliance with law of arbitral seat, 393
waiver of procedural objections, 396-97
no judicial review of merits, 382-83
“ opportunity to present his case,” 389-93
public policy
Article V(2)(b), 401-05
mandatory obligation to recognize award, 378-79
no obligation to deny recognition under New York Convention, 381-82
presumptive obligation to recognize award under ICSID Convention, 379-80
under Inter-American Convention, 382-83
under New York Convention, 377-79
under national arbitration legislation, 379
proof of award, 375-77
standards for non-recognition distinguished from standards for annulment, 373
UNCITRAL Model Law, 373-74, 408
Removal of arbitrator, 141-42
Renvoi, 257
Replacement of arbitrator, 141-42, Documentary Supplement at 454
Representation in arbitration, see “ Legal representation in arbitration”
Res judicata, 350-55
Right to be heard, see “ Opportunity to present his case”
Right to select counsel, 261
Rome Convention, 240-41, 245, 247-48
Rules of law, 254, 360, 437, Documentary Supplement at 456 “ Second look” doctrine see “ Arbitrability”

Seat of arbitration, see “ Arbitral Seat”

Section 1782
“ interested parties,” 192
tribunal, defined, 192
Security, 236, 408-09, Documentary Supplement at 446, 450, 455, 458
Separability doctrine, see “ Separability presumption”
Separability presumption arbitration clause may survive termination of underlying contract, 80-81
basis for, 50
choice of law, 366
consequences of, 50
illegality of agreement, 79-80
institutional rules, 50
invalidity of arbitration clause does not necessarily invalidate underlying contract, 51
invalidity of underlying contract does not necessarily invalidate arbitration clause, 51
Kompetenz-Kompetenz, see “ Competence-Competence” national laws and, 50
UNCITRAL Model Law, 50
unconscionability, 78
Seat of arbitration, see “ Arbitral Seat” Setting aside of award, see “ Annulment” Severability, see “ Separability
presumption” Sole arbitrator, 124, 294, Documentary Supplement at 454
Stare decisis, 365, 367
State-to-state arbitration, see “ Interstate arbitration”
Stay of litigation, 63
Submission agreement, 34
Substantive law, choice of, 233-59

Terms of reference, 163

Territorial scope of national arbitration legislation, 107-108
Time limits, for commencing arbitration, 393-94
Tort claims, arbitrability of, 90-91, 258
Transfer of arbitration agreement, 97-98

UNCITRAL Model Law applicability, 373

allocation of jurisdictional competence, 50
annulment of award, 311, 313, 318, 323, 328, 334
arbitrability, 82
arbitral award
annulment, 311, 313, 318, 323, 328, 334
consent, 70
correction, Documentary Supplement at 457
final, Documentary Supplement at 457
foreign awards, Documentary Supplement at 457
interim, Documentary Supplement at 450-51
interpretation, Documentary Supplement at 457
recognition, 377, 379, 382, 384, 387, 393, 400, 402, 404, Documentary Supplement at 450-51, 458
arbitral procedures equality of treatment, 392, Documentary Supplement at 455
opportunity to present case, 387, 392
arbitration agreement arbitrability, 82
capacity, 80, 384, Documentary Supplement at 458
competence-competence, 52
formal validity, 74-75, 384, Documentary Supplement at 448-49
frustration, 79
impossibility, 79
 incorporation of arbitration agreement, 77
presumptive validity, 48, 49
separability presumption, 50
substantive validity unconscionability, 78
waiver, 81
writing requirement, 74-75, 76, Documentary Supplement at 450-51, 453
arbitrators, challenge procedures, Documentary Supplement at 454
impartiality and independence, Documentary Supplement at 454
“ justifiable doubts,” Documentary Supplement at 454
Nationality, Documentary Supplement at 453, 454
Number, Documentary Supplement at 453
choice of law, substance, 233, 237, 346, 252, 253
commercial, defined, Documentary Supplement at 448
competence-competence, Documentary Supplement at 455
court intervention, Documentary Supplement at 453
“ defined legal relationship,” 370, Documentary Supplement at 448-49, 453
final award, 347
functus officio, 302, 347
international, defined, Documentary Supplement at 452
Revisions to Model Law, Documentary Supplement at 448-51
substantive law, Documentary Supplement at 456
waiver of objections to arbitrator, 399, Documentary Supplement at 453
waiver of procedural objections, Documentary Supplement at 453
UNCITRAL Model Law, 2006
Revisions, 76, Documentary Supplement at 448-51
Unconscionability choice of law, 251

Waiver arbitration agreement

FAA, 81
New York Convention, 81
UNCITRAL Model Law, 81, 399
challenge to arbitrator, 399
jurisdictional objections, 386, 396-97
non-arbitrability, 405
procedural objections, 392, 396-97
provisional measures, 216-17
right to arbitrate, 81
Washington Convention, see “ ICSID” Witness examination, 168-69
Witness interviews, 166
Witness statements, 139-40, 442
“ Writing” Requirement, 139-40, 281, Documentary Supplement at 445, 448, 453, 457