Intro To International Arbi 86 Pages PDF

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1 Introduction to International Arbitration Internati Intern ationa onall arb arbitr itrati ations ons tak takee pla place ce wit within hin a com compl plex ex and vit vitall allyy imp import ortant ant int intern ernaational legal framework. As summarized in this introductory chapter, contemporary international conventions, national arbitration legislation, and institutional arbitration rules provide a specialized and highly supportive enforcement regime for most international commercial arbitrations and international investment arbitrations. A significantly less detailed legal framework exists for interstate arbitrations, although international law instruments provide a workable enforcement regime even in this context. The int intern ernati ationa onall leg legal al re regim gimes es for int intern ernati ationa onall com commer mercia ciall and inv invest estmen mentt arb arbiitrations have been established, and progressively refined, with the express goal of facili fac ilitat tating ing int intern ernati ationa onall tra trade de and inv invest estmen mentt by pr provi ovidin ding g a sta stable ble,, pr predi edicta ctabl ble, e, and effective legal framework in which these commercial activities may be conducted: [e]nforcement of international arbitral agreements promotes the smooth flow of international transactions by removing the threats and uncertainty of time-consuming and expensive litigation.1

This chapter summarizes the principal components of the contemporary international legal framework for international commercial, investment, and state-to-state arbitrations. First, the chapter provides an overview of the history of international arbitration. Second, the chapter addresses leading international arbitration conventions, including particularly the New York Convention (with regard to international commercial arbitration) and Convention (with regard international invest inv estmen mentt arb arbitr itrati ation) on).. Thi Thir rd,the theICSID chapte cha pter r bri briefl eflyy des descri cribes bes lea leadin ding g to nation nat ional al arb arbitr itraation statutes (including particularly the UNCITRAL Model Law). Fourth, the chaphocc arbitra ter sum summar mariz izes es the dif differ ferenc ences es bet betwee ween n ad ho arbitration tion and insti institutio tutional nal arbitratio arbit ration, n, parti particula cularly rly in the conte context xt of inter internatio national nal comme commerc rcial ial arbi arbitratio tration, n, including a summary of leading international arbitral institutions. Fifth, the chapter describes the principal elements that are typically found in contemporary international arbitration agreements. Finally, the chapter summarizes the principal choice of la law w is issu sues es th that at ar aris isee in th thee in inte tern rnat atio iona nall ar arbi bitr trat atio ion n pr proc oces esss (i (inc nclu ludi ding ng th thee la law w go govverning ern ing the par partie tiess un unde derl rlyi ying ng ag agrreem eemen entt (w (whe heth ther er a co cont ntra ract ct or tr trea eaty ty), ), th thee la law w go govverning the arbitration agreement, and the procedural law governing the arbitral proceedings). ’

1. David L. Threlkeld Threlkeld & Co. v. Metallgesellschaft Ltd, 923 F.2d F.2d 245, 248 (2d Cir. 1991).

1. Introduction to International Arbitration

OVERVIEW VIEW OF INTERNA INTERNATIONAL TIONAL A. HISTORICAL OVER ARBITRATION ARBITRA TION *

A brief consideration of the history of arbitration in international matters is useful as an introduction to contemporary international arbitration. In particular, this review identifies some of the principal themes and objectives of international arbitration and pla places ces con contem tempor porary ary dev develo elopme pments nts in con conte text. xt. An his histor torica icall revi eview ew als also o underscores the extent to which international state-to-state and commercial arbitration tio n dev develo eloped ped in par parall allel, el, wit with h str striki ikingl nglyy sim simila ilarr obj objecti ectives ves,, ins instit tituti utions ons,, and procedures.

1. Histor Historical ical Develo Development pment of Internatio International nal Arbitra Arbitration tion Betwee Between n States States The origins of international arbitration are sometimes traced, if uncertainly, to ancient mythology. Early instances of dispute resolution among the Greek gods, in matters at least arguably international by then-prevailing standards, involved dispute pu tess be betw twee een n Pos osei eido don n an and d He Heli lios os ov over er th thee ow owne ners rshi hip p of Co Cori rint nth h (w (whi hich ch wa wass rep epor ortt2 edly split between them by Briareus, a giant), Athena and Poseidon over possession 3

of Aegi Ae gina na (whi (w hich was sgoli awar aw arde d ch to th them em inarde comm co mmon on Zeus ), raan and d In Hera He rahus, and an osei os eido don n over ov er owne ow ners rshi hip pchofwa Argo Ar lis s ded (whi (w hich was wa s aw awar ded d en enti tirrby elyyZe el tous), Hera He by Inac achu s,daPmy myth thic ical al king of Argos).4 Egyptian mythology offers similar accounts of divine arbitrations, including a dispute between Seth and Osiris, resolved by Thoth (“he who decides without being partial”).5

a. Inte Interstat rstatee Arbi Arbitrati tration on in Anti Antiquit quity y Deities aside, international arbitration was a favored means for peacefully settling disputes between states and state-like entities in Antiquity: “arbitration is the oldest method metho d for the peace peaceful ful settlement of intern internation ational al disp disputes. utes.””6 Historical scholarship provides no clear conclusions regarding the first recorded instance of international arbitration between states (or state-like entities). In the state-to-state context, Lagash v. some cite what contemporary reporters would denominate as the case ofLagash Umma, apparently settled in 2550 B.C. by King Mesilim of Kish, 7 or the 2100 B.C. case ofUr Ur v. Lagash, in which the King of Uruk ordered one city to return territory seized sei zed by for force ce fr from om ano anothe therr.8 Ot Othe hers rs lo look ok to tw two o di disp sput utes es de deci cide ded d in th thee ei eigh ghth th ce cenntury B.C. by Eriphyle, a noblewoman, over Argos s plans to wage war on Thebes,9 ’

* This section is based substantially on Chapter 1 of G. Born, International Commercial Arbitration (2009). 2. J. Ralsto Ralston, n,International Arbitration from Athens to Locarno153 (1929). 3. C. Phillips Phillipson, on,The International Law and Custom of Ancient Greece and Rome, Vol. 2, 129 (1911). 4. J. Ralsto Ralston, n,International Arbitration from Athens to Locarno153 (1929). 5. Manti Mantica, ca,Arbitration in Ancient Egypt, 12 Arb. J. 155 (1957). 6. A. Stuyt, Stuyt,Survey of International Arbitrations 1794-1989vii (3d ed. 1990). 7. G. Wilner Wilner, Domke on Commercia Commerciall Arbitration§2:01 (3d ed. update 2006). 8. Lafo Lafont, nt,L arbitrage en Mésopotamie, 2000 Rev Rev.. arb. 557, 568-69. 9. D. Roebuck, Roebuck, Ancient Greek Arbitration 71 (2001). Eriphyle, the sister of the King of Argos, also appears appea rs to have been one of the first re recor corded ded instances instances of a corrup corruptt arbit arbitrator rator,, accep accepting ting bribes of a magic necklace and a magic robe to decide, inter alia, against her husband. ’

A. Historical Overview Overvi ew of International Arbitration

a 650 B.C. dispute between Andros and Chalcis over possession of a deserted city, 10 or a co cont ntrrov over ersy sy be betw twee een n At Athe hens ns an and d Me Mega gara ra in 60 600 0 B. B.C. C. ov over er th thee is isla land nd of Sa Sala lami mis. s.11 In one authority s words, “arbitration was used throughout the Hellenic world for five hundred years.”12 This included the frequent inclusion of arbitration clauses in state-to-state treaties, providing for specified forms of arbitration to resolve future disputes that might arise under the treaty,13 as well as submission agreements with regard to existing “interstate” disputes.14 ’

proce pr ocedur dures esto used use dntem inempo many man y anc ancien ient t arb arbitr ations betwee bet Greek eek city cit yted -states -st would wou ld, noThe not t be un unfa fami mili liar ar cont co pora rary ry li liti tiga gant nts. s.itrati The Th eons part pa rtie iessween werrne Gr we rep epr res esen ente dates by ag agen ents ts, who acted as counsel (in a dispute between Athens and Megara, Solon repr represented esented 15 the forme former); r); the par partie tiess pr prese esente nted d doc docume umenta ntary ry evi eviden dence ce and wit witnes nesss tes testim timony ony (or sworn witness statements); oral argument was presented through counsel, with time limits being imposed on counsel s arguments; and the arbitrators rendered written, signed and reasoned awards.16 One aspect of ancient state-to-state arbitration that would strike contemporary observers as unusual was the number of arbitrators: Although most tribunals apparently consisted of three members, there were instances where tribunals consisted of large numbers (variously, 600 Milesians, 334 Larissaeans, and 204 Cnidians), which arguably arguab ly reflect a quasi-legislativ quasi-legislative, e, rather than adjudicatory, adjudicatory, function.17 Other “arbitrat tr atio ions ns”” ap appe pear ar to ha have ve be been en mo morre in th thee na natu turre of no nonn-bi bind ndin ing g me medi diat atio ion, n, or po poli liti ti-18 cal consultation, than true arbitration. Arbitration was also used to settle disputes between state-lik state-likee entities during the Roman age. Although commentators observe that the use of arbitration declined from Hellenic practice,19 it was by no means abandoned. Territorial units of Rome, as well as vassal states and allies, appealed to the Roman Senate, to Roman proconsuls, or to other Roman institutions for “arbitral” decisions or the appointment of arbitrators to resolve territorial and other disputes. 20 In general, however, the historica tor icall re recor cord d ind indica icates tes tha thatt Rome pr prefe eferr rred ed pol politi itical cal or mil milita itary ry sol soluti utions ons,, wit within hin the Empire, to interstate arbitration or adjudication. ’

10. Fraser Fraser,, A Sketch of the History of International Arbitration , 11 Cornell L.Q. 179 (1925-1926) (citing international chez les Hellènes16-17 (1912)). Raeder, L Arbitrage international 11. Smith,“Judicial Nationalism” in International Law: National Identity and Judicial Autonomy at the ICJ, 40 Tex. Int l L.J. 197, 203 n.30 (2004-2005). 12. Fraser Fraser,, A Sketch of the History of International Arbitration, 11 Cornell L.Q. 179, 188 (1925-1926). 13. J. Ralsto Ralston, n,International Arbitration from Athens to Locarno156-58 (1929); M. Tod, International Arbitration Amongst the Greek Greekss65-69 (1913). 14. S. Ager Ager,,Interstate Arbitrations in the Greek World, 337-90 B.C. 8-9 (199 (1996); 6); Weste estermann rmann,,Interstate Arbitration in Antiquity, II The Classical J. 197, 199-200 (1906-1907). 15. J. Ralsto Ralston, n,International Arbitration from Athens to Locarno161-62 (1929); D. Roebuck,Ancient Greek Arbitration 4646-47 47 (20 (2001) 01);; M. Boh Bohace acek, k,Arbitration and and State-Organized State-Organized Tribunals Tribunals in the Ancient Ancient Procedure Procedure of the the Greeks Gree ks and Romans197-204 (1952). 16. S. Ager Ager,,Interstate Arbitrations in the Greek World, 337-90 B.C. 15 (19 (1996) 96);; J. Ral Ralsto ston, n,Internationa Internationall Arbi162-64 (1929). tration from Athens to Locarno 17. J. Ralston, Ralston,International Arbitration from Athens to Locarno159 (1929). 18. E.g., S. Ager,Interstate Arbitrations in the Greek World World 337-90 B.C.281 (1996) (describing “interven[tion]” and “mediation” by Megara in a dispute between Achaia and Boiotia); id. at 264-66 (describing Rome s inc incre reasi asingl nglyy fr frequ equent ent ro role le as “me “media diator tor and arb arbitr itrato ator” r” in dis disput putes es bet betwee ween n Spa Sparta rta and the Ach Achaaian league). 19. Fraser Fraser,,A Sketch of the History of Internationa Internationall Arbitration, 11 Cor Cornel nelll L.Q L.Q.. 179 179,, 190(1925 190(1925-19 -1926)(“The 26)(“The republic lost what Greece had gained, and the empire lost the little the republic had won.”). 20. J. Ralston, Ralston,International Arbitration from Athens to Locarno171-72 (1929). ’

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1. Introduction to International Arbitration

Interstate state Arbit Arbitratio ration n in the Midd Middle le Ages Ages b. Inter After an apparent decline in usage under late Roman practice, international arbitratio tra tion n bet betwee ween n sta statete-lik likee ent entiti ities es in Eur Europe ope ex exper perien ienced ced a revi evival val dur during ing the Mid Middle dle Ages. Although historical recor records ds are incomplete, scholars conclude that international arbitration “existed on a widespread scale” during the Middle Ages, that “the constant disputes that arose in those warlike days were very frequently frequently terminated by some kind of arbitration,” and that “itand is surprising to learn of of the the ‘great of clausenumber compromisarbitral decisions, of their importance of the prevalence soire.’ .’””21 The states of the Swiss Confederation22 and the Hanseatic League,23 as well as German and Italian principalities,24 turned with particular frequency to arbitration to settle their differences, often pursuant to agreements to resolve all future disputes by arbitration.25 Determining the precise scope and extent of international arbitration between states or state-like entities during the Medieval era is difficult, in part because a distinction was not always drawn between judges, arbitrators, mediators, and amiable compositeurs.26 In Inde deed ed,, on onee of th thee mo most st fa famo mous us “a “arb rbit itra rati tion ons” s” of th thee ag agee — Pop opee Al Aleexander VI s division division of the discoveries discoveries of the New World World — appea appears rs not to have been 27 an arbitration at all, but rather a negotiation or mediation. On the other hand, numerouss treaties throughout this period drew quite clear distinctions between arbinumerou tration (in the sense of an adjudicative, binding process) and conciliation or mediation (in the sense of a non-binding procedure). 28 Again, the procedur procedures es used during arbitral proceedings in Medieval times bore important resemblances to those used today. Both parties presented arguments through counsel, evidence and testimony was received by the tribunal, the tribunal deliberated, and a written award was made.29 There is even evidence that written briefs were a standard element of interstate arbitral procedures. 30 Parties appear to have placed importance on the prompt resolution of their disputes, including by ’

21. Fraser Fraser,,A Sketch of the History of International Arbitration , 11 Cornell L.Q. 179, 190-91 (1925-1926). SeeJ. Ralston,International Arbitration from from Athens to to Locarno 177 177-78 -78 (19 (1929 29)) (ci (citin ting g a 123 1235 5 tr treat eatyy of all allian iance ce between Genoa and Venice providing for arbitration of future disputes; a 1343 “arbitral convention” between Denmark and Sweden promising to arbitrate any serious future disputes; and a 1516 treaty of “perpetual peace” between France and England). 22. J. Verz erzijl, ijl, Internatio International nal Law in Hist Historic orical al Persp erspectiv ectivee, Vol. 8, 189 189-90 -90 (19 (1974) 74) (ci (citin ting g his histor torica icall authorities). 23. J. Ralston Ralston,, International Arbitration from Athens to Locarno176-77 (1929). 24. J. Verzijl, Verzijl,International Law in Historical Perspective, Vol. Vol. 8, 189-90 (1974). 25. J. Ralston Ralston,, International Arbitration from Athens to Locarno 176-77 (1929); Fraser, A Sketch of the History of International Arbitration Arbitration, 11 Cornell L.Q. 179, 192 (1925-1926). 26. Fraser Fraser,, A Sketch of the History of International Arbitration , 11 Cornell L.Q. 179, 195 (1925-1926); J. Ralston,International InternationalArbitration Arbitration from Athens to Locarno 179(1929 179(1929)) (“B (“Byy a qui quite te uni univer versal sal pra practi ctice ce it wou would ld appear that before proceeding to adjudge, the arbitrator acted in the capacity of what subsequently became know as amiable compositeur — in other words he sought to find a basis for the composition of difficulties before considering them from the standpoint of law.”). 27. E. Bourne, Bourne, The Demarcation Line of Pope Alexander VI, in Essays in Historical Criticism Chap. VII (1901). 28. See the examples examples cited in J. Ralston,International Arbitration from Athens to Locarno 180 (1929). 29. J. Ralston Ralston,, International Arbitration from Athens to Locarno 185-86 (1929) (describing four-member legal teams of Kings of Castile and Navarre in 1176); Fraser Fraser,A Sketch of the History of International Arbitration, 11 Cornell L.Q. 179, 196 (1925-1926) . 30. Fraser Fraser,, A Sketch of the History of International Arbitration , 11 Cornell L.Q. 179, 197-98 (1925-1926) (case study of arbitration by Henry II of England between Castile and Navarre); Roebuck, L arbitrage en droit anglais avant 1558, 2002 Rev. arb. 535, 538. ’

A. Historical Overview Overvi ew of International Arbitration

imposing time limits in their agreements on the arbitrators mandates.31 And, if a losing party flouted the arbitrator s decision, the arbitrator or another authority was sometimes empowered to impose sanctions to enforce compliance. 32 During the sixteenth, seventeenth, and eighteenth centuries, the popularity of international arbitration as a means of resolving interstate disputes apparently declined significantly. Although by no means entirely abandoned, the rising tide of nation nat ionali alism sm app appar arent ently ly chi chille lled d his histor toric ic reli elianc ancee on arb arbitr itrati ation: on: “no “norr is arb arbitr itrati ation on the ’

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immediate jewel ofbetween Tudor souls.” was onlyUnited at the end of the century, with Jay s Treaty the newlyItfounded States andeighteenth Great Britain (dis34 cussed below), that international arbitration in the state-to-state context saw a new resurgence. ’

c. Inter Interstate state Arbi Arbitrati tration on in the the 18th 18th and 19th Cent Centurie uriess Great Brita Great Britain in s No Nort rth h Am Amer eric ican an co colo loni nies es ap appe pear ar to ha have ve em embr brac aced ed in inte ters rsta tate te ar arbi bi-tration from at least the moment of their independence. The 1777 Articles of Confederation provided a mechanism for resolving interstate disputes between differen differentt American states, through what can only be categorized as arbitral procedures.35 More significantly, “the modern era of arbitral or judicial settlement of internation ti onal al di disp sput utes es,, by co comm mmon on ac acco corrd am amon ong g al alll wr writ iter erss up upon on th thee su subj bjec ect, t, da date tess fr from om th thee signing on 19 November 1794 of Jay s Treaty between Great Britain and the United States.”36 Among other things, in a determined effort to restor restoree amicable relations between the United States and Great Britain, Jay s Treaty provided for the establishment of three different arbitral mechanisms, dealing with boundary disputes, claims by Br Brit itis ish h me merrch chan ants ts ag agai ains nstt U. U.S. S. na nati tion onal als, s, an and d cl clai aims ms by U. U.S. S. ci citi tize zens ns ag agai ains nstt Gr Grea eatt 37 Britain. This was a remarkable step, between recent combatants, which ushered in a new age of interstate arbitration. The United States continued its tradition of arbitrating international disputes throughout the nineteenth century. It included an arbitration clause (albeit an optional one) in the 1848 Treaty of Guadalupe Hidalgo, which provided for resolution of future disputes between the United States and Mexico “by the arbitration of comm co mmis issi sion oner erss ap appo poin inted ted on ea each ch si side de,, or by th that at of a fr frie iend ndly ly na nati tion on.” .”38 The Uni United ted States did the same in the 1871 Treaty of Washington with Great Britain (excerpted ’

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in the Documentary Supplement), providing the basis for resolving a series of disputes provoked by the Civil War; the Treaty provided for arbitration of the disputes before a five-person tribunal, with one arbitrator nominated by each of the United 31. J. Ralston, Ralston,International Arbitration from Athens to Locarno 186 (1929) (citing 1405 treaty requiring award to be rendered within six weeks and three days). 32. Id. at 187-188 (discussing penalty bonds, undertakings, and the possibility that violators of arbitral awards might be excommunicated by the Pope). 33. Fraser Fraser,, A Sketch of the History of International Arbitration, 11 Cornell L.Q. 179, 198 (1925-1926). 34. See infra pp. 5-6. 35. J. Ral Ralsto ston, n,Internationa (1929) 29).. The Art Articl icles es of Con Confed federa eratio tion n Internationall Arbitration from Athens to Locarno 190 (19 provided for states with interstate disagreements to jointly appoint five “commissioners or judges” to resolve their disputes; failing agreement, a complex list system was prescribed, in which each party was entitled to strike names of unsuitable candidates. Arts. of Confederation, Art. IX (1781). 36. Id. at 191. 37. Jay s Treaty (1794), Arts. V, VI, VII. 38. Tre reaty aty of Gua Guadal dalupe upe Hid Hidalg algo o (18 (1848) 48),, Art Art.. XXI.The Uni United ted Sta Statesand tesand Me Mexic xico o ent enter ered ed int into o a num num-ber of oth other er tr treat eatyy arra arrange ngemen ments ts dur during ing the nin ninete eteent enth h cen centur turyy, to re resol solve ve var variou iouss cat catego egorie riess of dis disput putes. es. J. Ralston, International Arbitration from Athens to Locarno203-07 (1929). ’

1. Introduction to International Arbitration

States and Great Britain, and three arbitrators nominated by neutral states.39 One product of the Treaty of Washington was the so-called “Alabama arbitration,” in which Great Britain was order ordered ed to pay the equivalent of $15.5 million in gold for having permitted the outfitting of a Confederate privateer that caused substantial damage to Union shipping.40 The United States and Great Britain also repeatedly res esor orte ted d to ar arbi bitr trat atio ion n to se settl ttlee va vari riou ouss bo boun unda dary ry an and d ot othe herr di disp sput utes es du duri ring ng th thee ni nine ne-41 teenth and early twentieth centuries. Agreements in thebetween Americas1800 wereand not 1910, confined to matters involving the United States. to Onarbitrate the contrary, some 185 separate treaties among Latin American states included arbitration clauses, dealing with everything from pecuniary claims, to boundaries, to general relations. 42 For example, an 1822 agreement between Colombia and Peru, which was intended to “draw more closely the bonds which should in future unite the two states,” provides that “a general assembly of the American states shall be convened . . . as an umpire and conciliator in their disputes and differences.”43 Moreover Moreover,, many Latin American states engaged in interstate arbitrations arising from contentious boundary disputes inherited from colonial periods, which the disputing parties submitted to a foreign sovereign or commission for resolution.44 Arbitration of such matters was not always successful, especi esp eciall allyy whe when n the dis disput puted ed terr territo itory ry was ric rich h in nat natura urall reso esour urces ces or min minera erals, ls,45 and boundary disputes at times required additional arbitrations to interpret an initial award.46

d. Arbit Arbitral ral Proce Procedur dures es in Inter Interstate state Arbi Arbitrati trations ons As outlined above, arbitral procedur procedures es have varied substantially substantially,, both over time and in different geographic and political settings. At least in part, that reflects the inherent flexibility of the arbitral process, which leaves the parties (and arbitrators) free fr ee to de devi vise se pr proc oced edur ures es ta tail ilor ored ed to a pa part rtic icul ular ar di disp sput utee an and d le lega gall or cu cult ltur ural al se sett ttin ing. g. Despite this inherent flexibility, the procedures used in state-to-state arbitrations have also displayed, with remarkable consistency, consistency, certain enduring common characteristics. These have included an essentially adversarial procedure, with states being free fr ee — and requir required ed — to present present their respecti respective ve cases, often through through counsel counsel and/ or agents; an adjudicative procedure, with decisions being based on the evidentiary and an d le lega gall su subm bmis issi sion onss of th thee pa part rtie ies; s; an and d co cont ntin inui uing ng ef effo fort rtss to de devi vise se pr proc oced edur ures es th that at 39. Treaty of Washington Washington (1871), Art. 1. 40. See infra p. 92; F. Hackett, Reminiscences of the Geneva Tribunal of Arbitration(1911); Bingham, The Alabama Claims Arbitration, 54 Int l & Comp. L.Q. 1 (2005). 41. J. Ralston Ralston,, International Arbitration from Athens to Locarno194-95 (1929). 42. W. Manning,Arbitration Treaties Treaties Among the American Nations(1978). 43. Id.1 n.1. 44. Woolsey Woolsey,, Boundary Disputes in Latin-America , 25 Am. J. Int l L. 324, 325 nn.1-2 (1931) (Argentine and Paraguayan territory dispute settled by 1878 arbitral award issued by U.S. President Hayes; Costa Rican and Nicaraguan territory dispute settled by 1888 arbitral award issued by U.S. President Cleveland; Argentine and Chilean territory dispute settled by 1902 arbitral award issued by King Edward VII of United Kingdom). 45. See id. at 330 (describing inconclusive nature of arbitration over Ecuador-Peru territory rich in tropica tr opicall res resour ources) ces);; Dono Donovan, van, Challenges to the Territorial Integrity of Guyana: A Legal Analysis , 32 Ga. J. Int l ’

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& Comp. 661,deposits). 675-78 (2004) (describing demise of arbitral ruling over Venezuela-Britis Venezuela-British h Guyana territory withL.gold 46. See Convention Between Coasta Rica and Panama for the Settlement of the Boundary Controversy , 6 Am. J. Int l L. 1, 1-4 (Supp. 1912); K. Carlston, The Proce Process ss of International Arbitration Arbitration 66-70 (1946). ’

A. Historical Overview Overvi ew of International Arbitration

would provide a fair fair,, efficient, and expeditiou expeditiouss arbitral process.47 As already noted, historic approaches towards the interstate arbitral process often produced procedurres th du that at we werre no nott di diss ssim imil ilar ar to th thos osee us used ed in co cont ntem empo pora rary ry st stat atee-to to-s -sta tate te arbitrations. Arbitral procedur procedures es that evolved in state-to-state arbitrations during the nineteenth tee nth cen centur turyy bor boree eve even n clo closer ser rese esembl mblanc ances es to con contem tempor porary ary pr proce oceedi edings ngs tha than n was histor his torica ically lly the cas case, e, wit with h int intern ernati ationa onall tri tribun bunals als mor moree sys system temati atical cally ly ex exer ercis cising ing the their ir 48

power to establish rulesbygoverning and proceedings. werea generally represented an agent,pleadings who represented the interestsGovernments of the state, and counse cou nsel, l, who pr provi ovided ded adv advice ice,, man manage aged d the cas case, e, and app appear eared ed bef befor oree the tri tribun bunal. al.49 Cases were initiated by a written memorial, which asserted the basic legal claims and alleged sufficient facts to establish jurisdiction; the opposing party s response then could come in the form of an answer, a plea, a motion to dismiss, or an exception.50 Although rules for evidence varied, tribunals generally preferr preferred ed documentary evid ev iden ence ce to li live ve wi witn tnes esse sess an and, d, ra rath ther er th than an exc xclu ludi ding ng ce cert rtai ain n ty type pess of ev evid iden ence ce,, wo woul uld d 51 acce ac cept pt al alll ev evid iden ence ce an and d we weig igh h it at th thei eirr di disc scrret etio ion. n. With the increased frequency of state-to-state arbitration over the course of the nineteenth century, practices of civil and common law countries converged, eventually giving way to the partial codification of these procedures in international instruments.52 Again, the procedur procedures es outline li ned d in th thes esee ni nine nete teen enth th ce cent ntur uryy in inst stru rume ment ntss be bear ar st stri riki king ng si simi mila lari riti ties es to contemporary procedural regimes. One of the enduring features of international arbitration procedure in the stateto-state context, regardless of time or cultural setting, has been the nomination of members of the tribunal by the individual parties. From almost the beginning of recor rec orded ded modern history history — thr through ough every age until the present present — party party-nomi -nominated nated arbitrators were an enduring, essential feature of the international arbitral process. Thus: ’

a. In a 1254 treaty treaty of peace peace among among various various German German states, states, future future disputes disputes were to be settled by mixed tribunals “composed of judges of equal number of the two parties and presided over by a “gemeiner mann” (or umpire).53 Northern Italian states and Swiss cantons adopted the same approach during the twelfth, thirteenth, and fourteenth centuries, with the occasional variation that each party was required to select a national of the counterparty as co-arbitrator.54 b. In one one of the earliest earliest Medieval plans for institutional international arbitration of state-to-state disputes, in 1306, Pierre Dubois proposed a meanss of sett mean settling ling disp disputes utes amon among g Eur European opean prin principali cipalities ties invo involvin lving g 47. See infra pp.7-9, 64-74. 48. SeeK. Carlston,The Proce Process ss of Internationa Internationall Arbitration3-33 (1946); Institut de Droit International, International, Projett de règlement pour la procédure arbitrale Proje arbitrale internationale(Session de La Haye, 1875); C. Bishop, International Arbitral Procedure (1930). 49. J. Ralston, Ralston,International Arbitration from Athens to Locarno75-76 (1929). 50. Id. at 77-78. See also K. Carlston,The Proces Processs of Internationa Internationall Arbitration7 (1946). 51. J. Ralsto Ralston, n,International Arbitration from Athens to Locarno79-80 (1929).See alsoPietrowski,Evidence in International Arbitration Arbitration, 22 Arb. Int l 373, 374-375 (2006); K. Carlston, The Proce Process ss of International Arbitration26-27 (1946). ’

See K.deCarlston, of International Arbitration 260-64 52. Projet (1946); de Droit International, règlementThe pourProcess la procédur procédure e arbitrale internationale (Session de La Institut Haye, 1875). 53. J. Ralston, Ralston,International Arbitration from Athens to Locarno180 (1929). 54. J. Verzijl, Verzijl,International Law in Historical Perspective, Vol. Vol. 8, 192-93 (1974).

1. Introduction to International Arbitration

each ch pa part rtyy no nomi mina nati ting ng th thrree ar arbi bitr trat ator ors, s, to be jo join ined ed by th thrree ad addi diti tion onal al ea 55 ecclesiastics. c. Th Thee 13 1343 43 Ar Arbi bitr tral al Co Conv nven enti tion on be betw twee een n Ki King ng Wal alde dema marr of De Denm nmar ark k an and d King Magnus of Sweden provided for each state to select three bishops and an d th thrree kn knig ight htss an and, d, if th thee res esul ulti ting ng tr trib ibun unal al wa wass un unab able le to res esol olve ve ma matt56 ters, to select two (one each) of its number to make a final decision. d. Th Thee 15 1516 16 Trea eaty ty of Per erpe petu tual al Pea eace ce be betw twee een n th thee Sw Swis isss Ca Cant nton onss an and d Fra ranncis I provided for arbitration before “four men of substance, two named by each party,” and “if their opinions are divided, the plaintiff may choose from the neighboring counties a prud’homme beyond suspicion and who will meet with the arbitrators to decide the difficulty.”57 e. The 1655 Treaty Treaty of Westminster Westminster between between France France and England provided provided for resolution of future disputes by six arbitrators, three named by each side, with unresolved matters being referred to the Republic of Hamburg, which was charged with selecting a further tribunal. 58 f. The 1777 Articles Articles of Confederation, of the American colonies, provid provided ed for the arbitral resolution of disputes between states, with the concerned states being involved in selection of the tribunal, either by agreement or through an innovative list system.59 ’

g. Jay s Treaty of 1794, between the United States and Great Britain, provided for three arbitral mechanisms, with the tribunals consisting of either three arbitrators (one appointed by the United States and one by Great Gr eat Bri Britai tain, n, wit with h the two par party ty-no -nomin minate ated d arb arbitr itrato ators rs sel select ecting ing a thi thirrd, either by agreement or a prescribed list system) or five arbitrators (two appointed by the King of England, two by the President of the United States, and the fifth by agreement or through the use of a prescribed list system).60 h. Th Thee Trea eaty ty of Ap Apri rill 11 11,, 18 1839 39,, be betw twee een n th thee Un Unit ited ed St Stat ates es an and d Me Mexi xico co pr proovided for a tribunal of five, with two arbitrators appointed by each state and (absent agreement) the fifth arbitrator being selected by the King of Prussia.61A larg largee number of other treaties between the United States and

55. Fraser Fraser,,A Sketch of the History of International Arbitration , 11 Cornell L.Q. 179, 179 n.3 (1925-1926) (citing authorities). 56. J. Ralston Ralston,, International Arbitration from Athens to Locarno178 (1929). 57. Id. at 178 (quoting A. Mergnhac, Traité théorique et pratique de l arbitrage international international40 (1895)). 58. Id. at 185. 59. Articles of Confederation (1781), Art. IX (“[The two disputing States] shall then be directed to appoint by joint consent, commissioners or judges to constitute a court for hearing and determining the matt ma tter er in qu ques esti tion on:: bu butt if th they ey ca cann nnot ot ag agrree ee,, Co Cong ngrres esss sh shal alll na name me th thrree pe pers rson onss ou outt of ea each ch of th thee Un Unit ited ed States, and from the list of such persons each party shall alternately strike strike out one, the petitioners beginning ni ng,, un unti till th thee nu numb mber er sh shal alll be red educ uced ed to th thir irte teen en;; an and d fr from om th that at nu numbe mberr no nott le less ss th than an se seve ven, n, no norr mo more re than nine names as Congress shall direct, shall in the presence of Congress be drawn out by lot, and the pers pe rson onss wh whos osee na name mess sh shal alll be so dr draw awn n or an anyy fi five ve of th them em,, sh shal alll be co comm mmis issi sion oner erss or ju judg dges es,, to he hear ar an and d finally determine the controversy, so always as a major part of the judges who shall hear the cause shall agree in the determination determination”). ”). ’

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60.. Jay1776-1863 60 s Tre reaty aty (17 (1794) 94),, 2, Arts. Art s. V, available VI, VII, H. Miller ler,, Treaties and Other International Acts of the United States of America , Vol. 245, onMil www.heinonline.org. 61.. Tre 61 Treaty aty of 11 Apr April, il, 183 1839, 9, Art Arts. s. I, VII VII,, H. Mil Miller ler,, Treat eaties ies and Oth Other er Int Intern ernati ationa onall Ac Acts ts of the Uni United ted Sta States tes of America 1776-1863, Vol. 4, 189, available on www.heinonline.org.

A. Historical Overview Overvi ew of International Arbitration

various Latin American states provid provided ed for party-nominated arbitrators on either three- or five-person tribunals.62 i. Th Thee so so-c -cal alle led d Por orte tend ndic ick k cl clai aims ms,, be betw twee een n Gr Grea eatt Br Brit itai ain n an and d Fra ranc ncee (c (con on-cerning an allegedly unlawful French blockade of the Moroccan coast), were referred to the King of Prussia, who in turn referr referred ed implementation of his award to a tribunal consisting of one arbitrator nominated by each state and a third whom he selected.63 j. The 1871 Treaty of Washington provi provided ded (with regar regard d to U.S. claims against Great Britain) for two party-nominated arbitrators on a tribunal of five, with the remaining three arbitrators being nominated by neutral states.64 To res esol olve ve cl clai aims ms by pr priv ivat atee ci citi tizen zenss ag agai ains nstt ei eith ther er of th thee tw two o si siggnatory nations, the treaty provided for three-person tribunals, with each state nominating one arbitrator and an umpire being selected by agreement or by a neutral choice. 65 A scholar of state-to-state arbitrations during the nineteenth century concluded his discussion of the procedural aspects of the subject by referring to: the ver veryy co comm mmon on ide ideaa tha thatt the sov sover ereig eign n pow power er of the con contes testan tants ts sho should uld fin find d re repr prese esenntation on the court, an idea which finds illustration even in the Permanent Court of Intern Int ernati ationa onall Jus Justic tice. e. The the theory ory is tha thatt the repr eprese esenta ntativ tives es of the par partie tiess can spe speak ak wit with h authority within the bosom of the court with regard to the law and contentions of their governments, an idea which would not be tolerated because of manifest evils within the bosom of a national court. 66

As discussed below below,, this approach was also an enduring approach in international commercial arbitrations between private parties and in international investment arbitrations between private parties and states. 67

Historical Histor ical Devel Developmen opmentt of of Commer Commercial cial Arbitr Arbitration ation

Just as arbitration between states has an ancient, rich history, history, so arbitration of comme mer rci cial al di disp sput utes es ca can nthat be tr trac aced ed to th thee be begi ginn nnin ing g of reco ecorrof ded de d huma hu man nsettlement, soci so ciet etyy. It iswith occa oc ca-asionally suggested “as a technocratic mechanism dispute particular set of rules and doctrines, international commercial arbitration is a productt of th uc this is ce cent ntur uryy [i [i.e .e., ., th thee 20 20th th ce cent ntur ury] y].” .”68 Ins Insofa ofarr as thi thiss imp implie liess tha thatt int intern ernati ationa onall commercial arbitration is a recent phenomenon, it is contradicted by a detailed histori to rica call rec ecor ord, d, wh whic ich h le leav aves es no se seri riou ouss do doub ubtt as to th thee lo long ng tr trad adit itio ion n — st strret etch chin ing g fo forr 62. J. Ralston Ralston,, International Arbitration from Athens to Locarno 205-26 (1929) (including Mexican pecuniary and boundary disputes, Chilean, Colombian, Ecuadorean, German, Peruvian, Spanish, and other pecuniary disputes, Norwegian shipping claims, and a host of other matters). 63. Id. at 227-28. 64. Treaty of Washington Washington (1871), Art. I, excerpted in Documentary Supplement, pp. 69-76. 65. Treaty of Washington Washington (1871), Art. XII, excerpted in Documentary Supplement, pp. 69-76. 66. J. Ralston, Ralston,International Arbitration from Athens to Locarno226 (1929). 67. See infra pp. 12, 632-38. Arbit Arbitrat ration ionl L.J. and419, the 430 Third Thi rd Worl orld: d: Plea Ple a for Rea Reasse ssessi ssing ngClimate Biass Un Bia Under the Spe Specte cter r of 68. Shalakany Shalakany, Neo-Liberalism , 41, Harv. Int (2000). SeeA also Sornarajah, The of der International Arbiparticularly in the field of tration, 8 J. Int l Arb. 47, 50-51 (1991) (“International commercial arbitration, particularly foreign investment contracts, developed principally in the latter part of the twentieth century. . . .”). ’

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1. Introduction to International Arbitration

many centuries arbitration and related related forms of dispute resolut resolution ion as a means centuries — of arbitration for resolving international business disputes.

a. Comm Commerci ercial al Arbit Arbitratio ration n in Antiq Antiquity uity As in the state-to-state context, some of the earliest reports of commercial arbitration are from the Middle East. Archaeological research reports that clay tablets from contem con tempor porary ary Ira Iraq q re recit citee a dis disput putee bet betwee ween n one Tulp ulpunn unnaya aya and her nei neighb ghbor or,, Kil Killi, li, over water rights in a village near Kirkuk, which was resolved by arbitration (with Tulpunnaya being awarded ten silver shekels and an ox).69 Arbitration was also apparently well known in ancient Egypt, with convincing examples of agreements to arbitrate future disputes (used alongside what amount to forum selection clauses) included in funerary trust arrangements in 2500 B.C. and 2300 B.C. 70 Arbitration was no less common in ancient Greece for the resolution of commercial and other “private” disputes than for state-to-state disputes. 71 Homer describes an eighth century B.C. resolution of a blood debt through a public arbitral process, where the disputants appealed to a man “versed in the law law,” ,” of their mutual choice, who presided over a tribunal of elders which publicly heard the parties claims and rendered reasoned oral opinions.72 The example suggests the use of arbitration to resolve disputes between private parties in Antiquity, but also indicates the lack of clear boundaries in some periods between governmental dispute resolution mechanisms and “private,” consensual arbitration. Thee rea Th easo sons ns fo forr res esor orti ting ng to ar arbi bitr trat atio ion n in An Anti tiqu quit ityy ap appe pear ar to be rem emar arka kabl blyy mo moddern. Historical Historical researc research h indic indicates ates that ancie ancient nt Greek courts — lik likee today s courts in many countries countries — suff suffere ered d from congestion congestion and back-logs, back-logs, which led to the use of arbitrators, retained from other city states (rather like foreign engineers or mercenaries), to resolve pending cases.73 Similarly, a summary of the basic legal rules governi er ning ng co comm mmer erci cial al ar arbi bitr trat atio ion n in an anci cien entt Gr Gree eece ce is no nott fa farr di dist stan antt fr from om contemporary legislation in the area: ’

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If any parties are in dispute concerning private contracts, and wish to choose any arbitrator, it shall be lawful for them to choose whomsoever they wish. But when they have chos ch osen en by mu mutu tual al ag agrree eeme ment nt,, th they ey sh shal alll ab abid idee by hi hiss de deci cisi sion onss an and d sh shal alll no nott tr tran ansf sfer er th thee same charges from him to another court, but the judgments of the arbitrator shall be final.74 69.. M. Bu 69 Burr rrow owss & E. Sp Spei eise serr ed eds. s.,, One Hund Hundre redd New Sele Selected cted Nuzi Texts, 16The An Annu nual al of Th Thee Am Amer eric ican an Schools of Oriental Research, 79, 95 (1936) (document 41) (cited in G. Wilner Wilner,,Domke on Commerci Commercial al Arbitration§2.01 (3d ed. Update 2006)). 70. Manti Mantica, ca,Arbitration in Ancient Egypt, 12 Ar Arb. b. J. 15 155, 5, 15 1588-60 60 (1 (195 957) 7) (“ (“R Rec ecor ords ds of ve very ry ad adva vanc nced ed pr proocedures of arbitration survive from those [Greco-Roman] [Greco-Roman] periods”). 71. D. Ro Roebuck ebuck,,Ancient Greek Arbitration 4545-46, 46, 348 348-49 -49,, 358 (20 (2001) 01) (“E (“Ever verywh ywher eree in the Anc Ancien ientt Gr Greek eek world, including Ptolemaic Egypt, and at all times within our period, disputing parties considered arbitratio tra tion n to be a nat natura ural, l, per perhap hapss the mos mostt nat natura ural, l, met method hod of re resol solvin ving g the dif differ ferenc ences es the theyy cou could ld not set settle tle themselves, even though they sometimes resorted to litigation (or in earlier times self-help) when they could not get their own way.”). 72. Hammo Hammond, nd, Arbitration in Ancient Greece , 1 Arb. Int l 188 (1985) (citing Homer, The Iliad XVIII. 497-508). 73. D. Ro Roebuck ebuck,,Ancient Greek GreekArbitration Arbitration 348348-349 349 (200 (2001) 1) (“ (“Arbit Arbitrati ration on was the natur natural al and reg regular ular pro pro-cess of choice for those who could not afford litigation, were afraid of its outcome, preferred privacy, or were manipulating the alternatives”); Hammond, Arbitration in Ancient Greece, 1 Arb. Int l 188, 189 ’

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of Athenian (1985); Bonner, The Institution , 11Against Classical Philology 191, 192 (1916). Timocrates, 74. Demosthenes, Against Meidias , in Arbitrators Demosthenes Meidias, Androtion, Aristocrates, Aristogeiton Aristogeito n 69 69,, 94 94.. See alsoV Velissaro elissaropoulos-Karak poulos-Karakostas, ostas,L arbitrage dans la Grèce Grèce antique—Epoques antique—Epoques archaïque archaïque et clasique, 2000 Rev. arb. 9. ’

A. Historical Overview Overvi ew of International Arbitration

Arbitral procedur procedures es in ancient Greece appear to have been largel largelyy subject to the parties control, including with regard to the subject matter of the arbitration, the arbi ar bitr trat ator ors, s, th thee ch choi oice ce of la law w, an and d ot othe herr ma matt tter ers. s.75Although sole arbitrators were not uncommon, parties frequently agreed to arbitrate before three or five arbitrators, with each party selecting one (or two) arbitrator(s) and the party-nomi party-nominated nated arbitra76 tors choosing a presiding arbitrator (a koinos). Arbitration of commerci commercial al matters in ancient Roman times was more common than ’

Roman state-to-state in part because was no77judicial system of litigation comparable toarbitrations, those in contemporary legalthere structures. A leading scholar on Roman law summarizes the subject as follows: [F]rom the beginning of the empire, Roman law allowed citizens to opt out of the legal processs by what they called compromissum. This was an agreem proces agreement ent to refer a matter to an arbiter, as he wa wass ca call lled ed,, an and d at th thee sa same me ti time me th thee pa part rtie iess bo boun und d th them emse selv lves es to pa payy a pe pennaltyy if the arb alt arbitr itrato atorr s aw awar ard d wa wass di diso sobe beye yed. d. Pay ayme ment nt of th thee pe pena nalt ltyy co coul uld d be en enfo forrce ced d by 78 legal action. ’

As in Greece, awards in Roman practice were reasoned, binding, and apparently subject to little subsequent judicial review: review: “The award of the arbiter which he makes with reference to the matter in dispute should be complied with, whether it is just or unjust; because the party who accepted the arbitration had only himself to blame.” 79 Par arti ties es co coul uld d se seek ek en enfo forrce ceme ment nt of ar arbi bitr tral al aw awar ards ds in th thee co cour urts ts (o (orr ot othe herr go gove vern rnme ment nt forums), although the enforcement mechanisms that were available varied over time.80 It appears that arbitral procedures in Roman times were not dissimilar to those in morre mo mo mode dern rn er eras as.. In a pa para rall llel el to mo mode dern rn ar arbi bitr tral al pr prac acti tice, ce, th thee ar arbi bitr trat ator or s jur jurisd isdiciction ti on wa wass st stri rict ctly ly li limi mite ted d to “t “the he te term rmss of th thee ag agrree eeme ment nt fo forr ar arbi bitr trat atio ion n (compromissum), and, therefore, he cannot decide anything he pleases, nor with reference to any matter that he pleases, but only what was set forth in the agreement for arbitration, and in compliance with the terms of the same.” 81 Arbitrators in the Classical age reportedly remained entirely free in their decisions: “they were not bound by any rules of ’

75. D. Roebuck,Ancient Gree Greekk Arbitration347-48 (2001) (“If the parties chose to submit their disputes to private arbitration, then throughout the arbitration process they had almost unlimited freedom of choice. By their agreement they controlled the subject-matter in dispute, the selection of arbitrators, the limits of their jurisdiction, the rules of procedur proceduree and even whether they should decide the issue according to the law or should determine according to their sense of fairness”). 76. Id. at 349 (where tribunal consisted of more than one arbitrator, “each party would then appoint one, sometimes two, who would be identified with that party s interests either as a friend or member of the famil familyy. The parti parties es arb arbitr itrato ators rs wou would ld the then n app appoin ointt akoinos, som someon eonee com commonto monto bot both h sid sides, es, whotook his place as an equal with the others”). 77. SeeD. Roebuck & B. de Fumichon,Roman Arbitration94 (2004) (“The Romans probably began to makee useof arb mak arbitr itrati ation on excompr excompromi omisso sso,, a pri privat vatee arb arbitr itrati ation on cr creat eated ed andcontr andcontroll olled ed by the wri writte tten n agr agreeeement me nt of th thee pa part rtie iess bu butt su supp ppor orte ted d by th thee pr prae aeto torr, at so some me ti time me in th thee se seco cond nd ce cent ntur uryy BC BC,, at a ti time me of gr grea eatt imperial and colonial expansion”). expansion”). 78. Stein,Arbitration under Roman Law, 41 Arb. 203, 203-04 (1974). 79. Digest, 4, 8, 27, 2 (Ulpian), in S. Scott ed., The Civil Law, Vol. 3 (1932). 80. M. Kaser Kaser & K. Hackl, Hackl,Das römische Zivilprozessrecht640 (2d ed. 1996); B. Matthias,Die Entwicklung des römischen Schiedsgerichts, in Festschrift zum fünfzigjährigen Doktorjubiläum von Bernhard Windscheid 102 (1888). ’

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The Civil LawLaw Labeo s96) Reasoning on 81. Digest 8, 32, 15L. (Paulus); S. 4); Scott ed., , Vol.of3Obligations (1932); Stein, Arbitration , 91, 4, S. Afr Afric ican an L.J. J. 13 135 5 (1 (197 974) ; R. Zi Zimm mmer erma man, n, The 513-14 513 -14 (1996) (19 (“the (“t he arb arbiitrator can act only on the basis of a contractual relationship relationship (sui generis) existing between himself and the parties to the dispute”).

1. Introduction to International Arbitration

law.” .”82 Parties enjoyed substantial autonomy with regard to the arbitral substantive law procedures.83 Among other things, and paralleling state-to-state practice, historical recor records ds reveal the widespread use of party-nominated arbitrators: “a common practice . . . [was] to refer the matter to two arbitrators and the praetor is bound to compel them, if they disagree, to choose a third person themselves and his authority can be obeyed.”84 If an arbitrator agreed to hear a dispute (receptum arbitrum), but subsequ quen tlyy ref efus 85 used ed to do so so,, lo loca call ju judi dici cial al of offi fici cial alss co coul uld d ap appa parren entl tlyy co comp mpel el hi him m to fu fulf lfil illl hisentl duties. Although records of ordinary commercial disputes from this era have seldom survived, historians nonetheless conclude that arbitration was widely used in ancient Rome.86 There were few limits on the subjects of arbitration, and in practice a wide range of commercial and family matters were arbitrated. 87 In the post-Classical period, arbitration became increasingly popular because of deficiencies in state court systems, which were characterized as unreliable, cumbersome, and costly, and which faced particular difficulties in interstate matters. 88 During in g th this is er era, a, th thee en enfo forrcea ceabi bili lity ty of ar arbi bitr trat atio ion n ag agrreem eemen ents ts wa wass pr prog ogrres essi sive vely ly 89 recognized, even without a penalty mechanism. This result was generally based on pacta sunt servanda, which was developed and applied by canonical the principle ofpacta jurists in the context of agreements to arbitrate. 90 The Church began to play a leading role in the later Roman Empire, with arbitral jurisdiction frequently being exer exercised cised by Christian bishops (episcopalis audentia). Once On ce pa part rtie iess ha had d ag agrree eed d to “E “Epi pisc scop opal al”” ar arbi bitr trat atio ion, n, a su subs bseq eque uent nt aw awar ard d wa wass en enfo forrce ce-91 able without judicial review. Simultaneously, arbitral tribunals established within Jewish congregations were granted similar powers, enabling them to decide not only religious, but also commercial, disputes.92 Arbitration continued to play — so far as the historical recor record d can be understood under stood — an important important role in commercial commercial matters matters in the Byzantine Byzantine period, period, in Egypt, and elsewhere. Although the records and details of such arbitrations are uncertain, those materials that survive involve merchants, family feuds, inheritance

82. R. Zimmermann,The Law of Obligations529 (1996). See alsoH. Coing,Zur Entwicklung des Schiedsvertrages im Jus Commune 36, in G. Baumgärtel, H.-J. Becker, E. Klingmüller & A. Wacke, Festschrift für Heinz Hübner(1984). 83.. D. Roe 83 oebu buck ck & B. de Fum umic icho hon, n,Roman Arbitration Arbitration 160 (20 (2004) 04) (“Th (“Thee par partie tiess con contr troll olled ed the sco scope pe of the arbiter s powers to dictate the form of the proceedings”). 84. Stein Stein,, Arbitration under Roman Law, 41 Arb. 203, 205 (1974). 85. B. Matthias, Matthias,Die Entwicklung des römischen Schiedsgerichts in Festschrift zum fünfzigjährigen Doctorjubiläum von Bernhar Bernhardd Windscheid102 (1888); M. Kaser & K. Hackl,Das römische Zivilprozessrecht 639 (2d ed. 1996). 86. F. Sanborn,Origins of the Early English Maritime and Commercial Law 8-9 (1930); Stein, Arbitration under Roman Law, 41 Arb. 203, 203-04 (1974); D. Roebuck & B. de Fumichon,Roman Arbitration (2004). 87. D. Roebuck Roebuck & B. de Fumich umichon, on, Roman Arbitration 105 (2004) (“With these few exceptions [for inheritance and status of slaves/citizens] . . . arbitration ex compromisso was used comprehensively to deal with all types of disputes, relating to land and goods and slaves, and breaches of contract of all kinds”). 88. K.-H. Ziegler Ziegler, Das private Schiedsgericht im antiken römischen Recht 199-201 (1971). 89. Id. at 182; R. Zimmermann, The Law of Obligations 527 (1996). ’

undetdogmatische Schiedsvertrages es, in R. Zimmermann,Rechts90. K.-H. Zi egler,,Geschichtliche geschichte und Ziegler Privatrecht Privatrechtsdogmatik sdogmatik671 seq. (1999).Aspekte des Schiedsvertrag 91. M. Kaser & K. Hackl Hackl,, Das römische Zivilprozessrecht Zivilprozessrecht643 (2d ed. 1996). 92. K.-H. Ziegler Ziegler, Das private Schiedsgericht im antiken römischen Recht 175 (1971).

A. Historical Overview Overvi ew of International Arbitration

disputes, and other private law matters being submitted to binding arbitration, with the results being enforced through penalty mechanisms (as in Roman times). 93

b. Comme Commercia rciall Arbitrat Arbitration ion in in the Eur European opean Middle Middle Ages A wide variety of regional and local forms of arbitration were used to resolve private law disputes the Middle in Europe. A recurr recurrent ent theme this development was throughout the use of arbitration byAges merchants in connection with eitherofmerchant cha nt gui guilds lds,, tra trade de fai fairs, rs, or oth other er for forms ms of com commer mercia ciall or pr profe ofessi ssiona onall or organ ganiz izati ations ons.. 94 As in the state-to-state context, arbitration was particularly common during Medieval times in the Swiss Confederation, Northern Italy, Germany and neighboring regi egions ons (th (thee Ha Hanse nseati aticc Lea League gue in par partic ticula ular), r), Fran rance, ce, and Eng Englan land. d. Ind Indeed eed,, it is “ve “very ry common,” if inaccurate, “to say that commercial arbitration had its beginning with the practices of the market and fair courts and in the merchant gilds.” 95 In Medieval Medieval England, England, the charte charters rs of numer numerous ous guilds guilds — such as the Comp Company any of 96 Clot Cl othw hwor ork ker erss or th thee Gi Gild ld of St St.. Jo John hn of Be Beve verl rley ey of th thee Ha Hans ns Ho Hous usee — pr prov ovid ided ed fo forr mand ma ndat ator oryy ar arbi bitr trat atio ion n of di disp sput utes es am amon ong g me memb mber ers: s: Th Thee gu guil ilds ds “e “ent nter erta tain in ac acti tion onss of debt and covenant and trespass, and hardly dare we call such assemblies mere courts of arbitration, for they can enforce their own decrees.” 97 Where merchants did business with one another at trade fairs, outside the context of a guild, arbitration also played a role. Indeed, because fairs involved numerous itinerant or foreign merchants, this appears to have been a direct forbearer of more modern forms of international commercial arbitration.98 Arbitration of “international” disputes of this sort was preferr preferred ed for reasons of expedition and commercial expertise, as well as, increasingly, the inadequacy of the local courts or other decision makers to deal with the special jurisdictional and enforcement obstacles presented by foreign or “international” litigation. In Blackstone s words, which again might be uttered almost equally well today: ’

The reason of their original institution seems to have been, to do justice expeditiously among the variety of persons that resort from distant places to a fair or market; since it is probable that no inferior court might be able to serve its process, or execute its judgments, on both or either of the parties. . . .99

The guilds and fairs developed their respective arbitral mechanisms with substantial independence from local court systems. That is reflected in the explanation provided by Gerard Malynes, a seventeenth-century English authority on the law merchant: 93. Manti Mantica, ca,Arbitration in Ancient Egypt, 12 Arb. J. 155, 161-62 (1957); Modrzejewski, Private Arbitration in the Law of Greco-Roman Egypt , 6 J. Juristic Papyrology 239 (1952). 94. See supra pp. 4-5. 95. Wolaver Wolaver,, The Hist Historica oricall Back Backgr ground ound of Comm Commerc ercial ial Arbi Arbitrat tration ion, 83 U. Pa. L. Rev ev.. 13 132, 2, 13 133 3 (1 (193 9344-19 1935 35). ). 96. J. Cohen, Cohen,Commercial Arbitration and the Law 4 (1918). 97. F. Poll ollock ock & F. Mai Maitla tland, nd, The History of English Law 66 668 8 (2 (2d d ed ed.. 18 1898 98). ). For a le less ss exp xpan ansi sive ve vi view ew,,see A. Carter, Carter,A History of English Legal Institutions258-259 (1902) (“Members of the same gild were bound to bring their disputes before the gilds before litigating the matter elsewhere.”). 98. Arbitration was also relied on to resolve disputes disputes in a wide range of substantive areas areas outside of commerce proper, proper, including real estate, medical negligence, employment, determinations of feudal sta’

tus,, and tus even n com compla plaint intss of ass assaul aultt or ars arson. on. See Roebuck,L arbitrage en droit anglais avant 1558, 200 2002 2 Re Revv. arb. 535,eve 567-76. 99. S. Tucker Tucker,, Blackstone s Commentaries on the Laws of England, Vol. 3, *33 (1803) (quoted in Wolaver, The Historical Backgr Background ound of Commercial Arbitration, 83 U. Pa. L. Rev. 132, 136 (1934-1935)). ’

1. Introduction to International Arbitration

The second meane or rather ordinarie course to end the questions and controversies arising between Merchants, Merchants, is by way of Arbitr Arbitrement, ement, when both parties do make choice of ho hone nest st me men n to en end d th thei eirr ca caus uses es,, wh whic ich h is vo volu lunt ntar arie ie an and d in th thei eirr ow own n po powe werr, an and d th ther ereeforee cal for called led Arb Arbitr itrium ium,, or fr free ee wil will, l, whe whence nce the nam namee Arb Arbitr itrato atorr is der derive ived: d: and the these se men (by some called Good men) give their judgments by Awards, according to Equitie and Conscience, observing the Custome of Merchants, and ought to be void of all partialitie or af affe fect ctio ion n mo morre no norr le less ssee to th thee on one, e, th than an to th thee ot othe herr, ha havi ving ng on onel elyy ca carre th that at ri righ ghtt ma mayy take place according according the truth, and that the difference may bee ended with brevitie and 100 expedition. . . .

It also appears that English courts were quite prepared during this early period to give effect to arbitration agreements, by enforcing penalty clauses associated with them th em,, by ba barri rring ng li liti tiga gati tion on on cl clai aims ms wi with thin in th thee sc scop opee of ar arbi bitr trat atio ion n ag agrree eeme ment nts, s, an and d 101 by a robust enforcement of arbitral awards. Arbitration appears to have been equally important to commercial affairs in Germany, Switzerland, Northern Italy, and France. The Edict of 1560, promulgated by Francis II, made arbitration mandatory for the resolution of commercial disputes among merchants; at the same time, it declared arbitration agreements valid, even without a penalty clause, thereby moving beyond Roman law requir requirements ements for a com102 promissum. Although successive French Parlements apparentl apparentlyy fought to restrict the bin bindin ding g cha charac racter ter of com commer mercia ciall arb arbitr itrati ation, on, the pra practi ctice ce re remai mained ned wel welll103

established untilarbitration the French Revolution. Commercial was also prevalent in the Swiss cantons and German prin104 cipalities. In these areas of Europe, arbitration developed from two principal sources, which began to fuse in the fourteenth and fifteenth centuries. On the one hand, local traditions of arbitration were integrated into the feudal system; on the other, the Catholic Church offered arbitral mechanisms and practices which were developed under canonical law.105 Whatever its sources, it is clear that commercial arbitration was very widely used in these regions of Europe during the Middle Ages. Consistent with this, early codifications tio ns of pr proce ocedur dural al law dat dating ing fr from om the fou fourte rteent enth, h, fif fiftee teenth nth,, and six sixtee teenth nth cen centur turies ies 106 provided for arbitration as a supplement to local court proceedings. Resear Research ch in southern Germany, Switzerland, and Austria also reveals thousands of “arbitration deeds” (“Schiedsurkunde”) evidencing a rich and varied arbitral practice in these

100. G. Malynes, Malynes,Lex Mercatoria, or The Ancient Law Merchant; Divided into Three Parts: According to the Essentiall Parts Parts of Trafficke: Trafficke: Necessarie for All Statesmen, Judges, Magistrates, Temporal Temporal and Civil Lawyers, Mintmen, Merchants, Merchants, Mariners, Mariners, and all others others negotiating in all places of of the World World Ch. XV (16 (1622) 22)..Id. at Ch Chap apte terr XV (1685 (16 85 ed. ed.)) (“[ (“[W]h W]hen en Mer Mercha chants nts by the their ir Let Letter terss or Com Commis missio sions ns use the these se or the lik likee wor words, ds, Let All thi things ngs be don donee as sha shall ll be tho though ughtt mos mostt ex exped pedien ientt or con conven venien ient, t, tha thatt the sai said d Com Commis missio sions ns or Dir Direct ection ionss ar aree to be left to the interpretation of Arbitrators when any question ariseth, which is also in many more questions concerning Merchants Merchants.”). .”). 101. Simps Simpson, on,The Penal Bond with Conditional Defeasance, 82 L.Q. Rev. 392 (1966). 102. R. David, David,Arbitration in International Trade Trade88-89 (1985). 103. 10 3. D. Bel Bell, l,Lawyers and Citizens: The Making of a Political Elite in Old Regime Fr (1994) 94);; R. Dav David, id, France ance 31 (19 Arbitration in International Trade Trade88-89 (1985); Kessler, Enforcing Virtue: Virtue: Social Norms and Self-In Self-Interest terest in an Eighteenth-Century Eighteenth-Cen tury Merchant Court, 22 Law & Hist. Rev. 71, 82-86 (2004). 104. Bader Bader,,Arbiter arbitrator seu amicabilis compositor, 77 Zei Zeitsc tschri hrift ft für Re Recht chtsge sgesch schich ichte te Kan Kan.. Abt Abt.. 239 239,, 240 et seq. (19 (1960) 60);; H. Kra Krause use,,Die geschichtliche Entwicklung Entwicklung des Schiedsgerichtswese Schiedsgerichtswesens ns in Deutschland 36 et seq., 52 105. (1930). H. Krause, Krause,Die geschichtliche Entwicklung des Schiedsgerichtswesens in Deutschland 2 et seq., 40 et seq. (1930). 106. Id. 58 et seq.

A. Historical Overview Overvi ew of International Arbitration

regions during the Middle Ages.107 A repr representative esentative example was Bavaria, where there is substantial evidence of commercial arbitration in the thirteenth and fourteenth centuries.108 Another anecdotal exampl examplee is drawn from the archives of the principality of Fürstenberg, which contain more than 500 arbitral deeds for the peri pe riod od be betw twee een n 12 1275 75 an and d 16 1600 00 (c (com ompa parred to rec ecor ords ds fo forr so some me 25 co cour urtt 109 proceedings). Despite its deep historical roots, commercial arbitration also encountered recurrent challenges, often in thebeen formoverstated, of politicaland andthey judicial jealousy jealousy. . These challenges have sometimes havemistrust almost or always been overcome co me by th thee pe perrce ceiv ived ed be bene nefi fits ts of th thee ar arbi bitr tral al pr proc oces esss in co comm mmer erci cial al se sett ttin ings gs an and d th thee (eventual) (even tual) acceptance acceptance of these benefits by govern governmental mental bodies. Moreover Moreover,, the enfor enf orcea ceabil bility ity of arb arbitr itrati ation on agr agreem eement entss app appear earss fr frequ equent ently ly to hav havee bee been n ach achiev ieved, ed, in histor his torica icall com commer mercia ciall set settin tings, gs, lar largel gelyy thr throug ough h non non-l -lega egall san sancti ctions ons,, suc such h as com commer mer-110 cial, religious, and other sanctions effectuated via guilds or similar bodies. Nonetheless, the historical record is not complete without addressing some of the more significant challenges that have sporadically emerged to the legal enforcement of arbitration agreements and awards.

c. Comme Commercia rciall Arbitrati Arbitration on at Englis English h Common Common Law and Englis English h Legislative Reform In the common law world, Lord co*ke s 1609 decision in Vynior’s Case enjoys the greatest notoriety for its treatment of agreements to arbitrate. The case involved a suit su it by Vyn ynio iorr ag agai ains nstt Wi Wild lde, e, se seek ekin ing g pa paym ymen entt on a bo bond nd,, wh whic ich h ha had d se secu curred th thee pa parr111 ties promise to submit a dispute over a parish tax to arbitration. co*ke granted judgment for Vynior on the bond, but added the following reasoning: ’

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[A]lthoug [A]lth ough h . . . the def defend endant ant was bou bound nd in a bon bond d to . . . obser observe ve [th [the] e] arb arbitr itrame ament, nt, yet he mi migh ghtt co coun unte term rman and d it it;; fo forr a ma man n ca cann nnot ot by hi hiss ac actt ma mak ke su such ch au auth thor orit ityy . . . no nott co coun un-termandable, which is by the law and of its own nature countermandable; as if I make a lett le tter er of at atto torn rney ey . . . so if I ma mak ke my te test stam amen entt an and d la last st wi will ll irr irrev evoc ocab able le[. [.]] An And d th ther eref efor oree . . . in both cases [i.e., both where an arbitration agreement is supported by a bond and where the agreem agreement ent incorporates no bond] the authority of the arbitrator may be revoked; but then in the one case he shall forfeit his bond and in the other he shall lose nothing.112

As long as penalty bonds remained enforceable, co*ke s dictum was of limited practical import: Parties could, and routinely did, include penalty provisions in their agreements to arbitrate.113 ’

107. SeeBader, Arbiter arbitrator seu amicabilis compositor, 77 Zeitschrift für Rechtsgeschichte Kan. Abt. 239, 240et seq. (1960). 108. M. Kobler Kobler, Das Schiedsgerichtswesen nach bayerischen Quellen des Mittelalters107-108 (1966). 109. SeeBader, Arbiter arbitrator seu amicabilis compositor, 77 Zeitschrift für Rechtsgeschichte Kan. Abt. 239, 240et seq. (1960). 110. See infra pp. 20-24; Benson, An Exploration of the Impact of Modern Arbitration Statutes on the Development of Arbitration in the United States, 11 J.L. Econ. & Org. 479, 480 n.2, passim (1995). 111. Vynior v. v. Wilde (1609) 77 Eng. Rep. 595 (K.B.). 112. 598-600. 113. Id. R. at David David, , Arbitration In International Trade 109 (1985) (noting willingness of English courts to enforce enfor ce penal penalty ty pro provisio visions); ns); W. Hold Holdswort sworth, h, 12A History of English Law 519 519-20 -20 (2d prt prtg. g. 196 1966); 6); Ro Roebu ebuck, ck, The Myth of Judicial Jealousy, 10 Arb. Int l 395 (1994). ’

1. Introduction to International Arbitration

The common law s treatment of such provisions was changed, however, in 1687, when Parliament Parliament enacted the Statute of Fines and Penalties, Penalties, which disallowed recovery of penalties generally, limiting bond-holders to the recovery of actual damages.114 Apparentl Apparentlyy to correct the effect of this statute on commercial arbitration, Parliament soon thereafter enacted one of the world s first arbitration statutes, adopting what is sometimes called the 1698 Arbitration Act.115 Reflecting an objective of promoting commerce that would recur in later eras, the Act s objects were ’

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promoting trade, and rendering the awards of arbitrators more effectual in all cases, for the final determination of controversies referred to them by merchants and traders, or others, concerning matters of account or trade, or other matters.116

These objects were realized by providing that parties could make their arbitration agreement “a rule of any of His Majesty s Courts of Record,” which would permit enfo en forrce ceme ment nt by wa wayy of a ju judi dici cial al or orde derr th that at “t “the he pa part rtie iess sh shal alll su subm bmit it to to,, an and d fi fina nall llyy be 117 conclu con cluded ded by the arb arbitr itrati ation on and ump umpira irage. ge.”” Thi Thiss leg legisl islati ation on sou sought ght to re remed medyy, at least in part, the damage effected by the combination of co*ke s dicta inVynior’s Case and the Statute against Fines, allowing Blackstone to conclude: ’

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[I]t is no [I]t now w be beco come me th thee pr prac acti tice ce to en ente terr in into to mu mutu tual al bo bond nds, s, wi with th co cond ndit itio ion n to st stan and d to th thee awarrd or arb awa arbitr itrati ation on of the arb arbitr itrato ators rs or ump umpir iree the there rein in nam named. ed. And ex exper perien ience ce hav having ing shown the gr shown great eat use of the these se pea peacea ceable ble and dom domest estic ic tr tribu ibunal nals, s, esp especi eciall allyy in set settli tling ng mat mat-terss of acc ter accou ount, nt, and oth other er mer mercan cantil tilee tra transa nsact ction ions, s, whi which ch ar aree dif diffic ficult ult and alm almost ost imp imposossible to be adjusted on a trial at law; the legislature has now established the use of them.118

It nonetheless remained the case that, at English common law, an arbitration agreemen agr eementt was — on the authority authority of the dicta dicta inVynior’s Case, which later hardened into solid precedent precedent — “re “revocab vocable” le” at will will.. Although damages were in theory recovrecoverable when an arbitration agreement was revoked, damages could not readily be prov pr oven en or rec ecov over ered ed fo forr br brea each ch of an ar arbi bitr trat atio ion n ag agrree eeme ment nt — ren ende deri ring ng su such ch ag agrree ee-ment me ntss ne near arly ly un unen enfo forrce ceab able le in ca case sess wh wher eree th thee 16 1698 98 Ar Arbi bitr trat atio ion n Ac Actt di did d no nott ap appl plyy.119 Outside the statutory “safe haven” of the 1698 Arbitration Act, common law enfor enf orcem cement ent of arb arbitr itrati ation on agr agreem eement entss was mad madee eve even n mor moree pr probl oblema ematic tic by the dec deciiv. Hollister. Th sion si on inKill v. Ther ere, e, th thee co cour urtt pe perm rmit itte ted d an ac acti tion on on an in insu sura ranc ncee po poli licy cy to proceed, notwithstanding an arbitration clause, on the grounds that “the agreement of the parties cannot oust this court.”120 In subsequent subsequent centuries, centuries, that doctri doctrine ne — which appeared to raise a broad-based public policy objection to arbitration (and forum foru m selec selection) tion) agreemen agreements ts — pr provide ovided d ample support for both English and U.S. proponents of judicial hostility to arbitration.121 Nonetheles None theless, s, subs subsequen equentt legis legislativ lativee ref reforms orms in Engla England nd gradu gradually ally intr introduce oduced d greater support for commercial arbitration agreements and arbitral tribunals powers. The 1833 Civil Procedure Act restated the rule that an arbitration agreement ’

114. An Act for the better preventing frivolous and vexatious vexatious Suits, 1697, 8 & 9 Will. III, Ch. 11. 115. Samu Samuel, el,Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2, 4 (1999). 116. English Civil Procedure Procedure Act, 1698, 9 & 10 Will. III, Ch. 15 (emphasis added). 117. Id. ’

the Laws of England 118. TDoleman ucker,, Blackstone , Vol. Vol. 4, 16-17 (1803). 119. S. SeeTucker & Sonssv.Commentaries Ossett Corp.on [1912] 3 K.B. 257, 267-68 (Fletcher Moulton, L.J.). 120. Kill v. v. Hollister, Hollister, 19 Geo. II 1746, 1 Wils. K.B. 129. 121. See infra pp. 19-25.

A. Historical Overview Overvi ew of International Arbitration

which was made a rule of court could not be revok revoked, ed, while providi providing ng arbitrators with a mechanism to summon witnesses and the power to administer oaths.122 At the same time, in the middle of the nineteenth century, century, English courts revisited the analysis inKill v. Hollister, arriving at a very different view. The leading authority isScott v. Avery, where Lord Campbell said: Is there anything contrary to public policy in saying that the Company shall not be ha hara rass ssed edreferred by ac acti tion ons, s, th the e co cost stss of wh whic ich h mi migh ght t be ru ruin inou ous, s, bu butt th that at an any y di disp sput utee th that atdeteraris ar ises es shall be to a domestic tribunal, which may speedily and economically mine mi ne th thee di disp sput ute? e? . . . I ca can n se seee no nott th thee sl slig ight htes estt il illl co cons nseq eque uenc nces es th that at ca can n fl flow ow fr from om su such ch an ag agrree eeme ment nt,, an and d I se seee gr grea eatt ad adva vant ntag agee th that at ma mayy ar aris isee fr from om it it.. . . . Pu Publ blic ic po poli licy cy,, th ther eree123 fore, seems to me to require that effect should be given to the contract.

He also disposed of the “ous “ousting ting the court of juris jurisdicti diction” on” adage — pr proffer offered ed in Kill v. Hollister — by remarking remarking dismissively dismissively that “it pro probably bably originated originated in the contests of the different courts in ancient times for extent of jurisdiction, all of them being opposed to anything that would altogether deprive every one of them of jurisdiction.”124 In a subsequent case, decided the same year, Lord Campbell declared: Somehow the Courts of law had, in former times, acquired a horror of arbitration; and it was even doubted if a clause for a general reference of prospective disputes was legal. 125 Iselves nevertocould for what reason parties not be permitted to bind themsettleimagine their disputes in any manner on should which they agreed.

While Lord Campbell s de deri riso sory ry de desc scri ript ptio ion n of th thee En Engl glis ish h co cour urts ts histo historical rical attit attitude ude 126 towar tow ards ds com commer mercia ciall arb arbitr itrati ation on app appear earss to hav havee bee been n ove overst rstate ated, d, th thee mo morre en endu durring point is his own resounding endorsem*nt of the arbitral process in commercial matt ma tter erss — a po poin intt of vi view ew th that at wa wass fo form rmul ulat ated ed wi with th in incr crea easi sing ng vi vigo gorr by En Engl glis ish h co cour urts ts and legislatures in succeeding decades. This Th is wa wass co conf nfir irme med d in th thee 18 1854 54 Co Comm mmon on La Law w Proc oced edur uree Ac Act, t, on onee of th thee fi firs rstt mo modd127 ern efforts at a comprehensive arbitration statute. Among other things, the Act provided (albeit circuitously) for the irrevocability of any arbitration agreement, by permitting it to be made a rule of court, regardless whether the parties had so agreed.128 At the t he same time, however, however, the statute introduced new limits on the arbitral process by providing for fairly extensive judicial review of the substance of ’

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122. English Civil Procedure Procedure Act, 1833, 3 & 4 Will. IV, IV, Ch. 42, §§39-41. 123. Scott v. v. Avery (1856) 5 H.L. Cas. 809, 853 (House of Lords). 124. Id. at 853. 125. 12 5. Ru Russ ssel elll v. Pel elle legr grin inii (1 (185 856) 6) 6 E. & B. 10 1020 20,, 10 1025 25 (K (K.B .B.) .).. Lo Lorrd Ca Camp mpbe bell ll al also so pr prov ovid ided ed a fa famo mous usly ly cynical explanation for the alleged historic hostility of English common law judges to arbitration: “This doctrine had its origin in the interests of the judges. There was no disguising the fact that, as formerly, the emo emolum lument entss of the Jud Judges ges dep depend ended ed mai mainly nly,, or alm almost ost ent entir irely ely,, on fee fees, s, and as the theyy had no fix fixed ed sal salaaries there was great competition to get as much as possible of litigation into Westminster Hall and there was a great scramble in Wes Westminster tminster Hall for the division of the spoil. . . . And they had great jealousy of arbitration whereby Westminster Hall was robbed of those cases.” Scott v. Avery (1856) 5 H.L. Cas. 308, 313 (House of Lords). 126. Horo Horowitz witz & Oldha Oldham, m,John John Locke, Lord Mansfield and Arbitration During the Eighteenth Century,36(I) The Historical Journal 137 (1993) (denying that common law hostility to arbitration was particularly marked mark ed or significant); Roebuck,The Myth of Judicial Jealousy, 10 Arb. Int l 395, 403-04 (1994). 127. English Common Law Procedure Procedure Act, 1854, 17 & 18 Vict., Ch. 125. ’

128. . at §17 (“Ever (“E veryy agr agreem eement entbe formade submis sub missio sion n of to any arbitr arb itrati ation on by con consen sent, t, whe whethe therrof bylaw deed dee d or instru ins trument in Id writing not under seal may a rule one of the superior courts or equity atWestminster We stminster,, on the application of any party thereto, unless such agreement or submission contain words purporting that the parties intend that it should not be made a rule of court.”).

1. Introduction to International Arbitration

arbitrators awards, through a “case stated” procedure that permitted any party to obtain judicial resolution of points of law arising in the arbitral proceedings.129 At the end of the nineteenth century century,, England enacted the 1889 Arbitration Act, which was in turn widely adopted throughout the Commonwealth.130 The Act confirmed fir med the irr irrevo evocab cabili ility ty of agr agreem eement entss to arb arbitr itrate ate fut futur uree dis disput putes, es,131while granting English courts discretion whether or not to stay litigations brought in breach of such agreemen agr eements ts (eff (effectiv ectively ely perm permittin itting g speci specific fic perfo performanc rmancee of arbit arbitratio ration n agr agreemen eements ts to ’

132

be ordere ord ered). d).including At the same time, the Act preservedfor previous previou s features of English arbitration law, the “case stated” procedure judicial review and the powers of the English courts to appoint arbitrators and assist in taking evidence.133

d. Comm Commerci ercial al Arbit Arbitratio ration n in France A broadly similar set of historical developments occurred in France as in England. Ther Th ere, e, as di disc scus usse sed d ab abov ove, e, th thee Ed Edic ictt of 15 1560 60 an and d me merrch chan antt pr prac acti tice ce le led d to wi wide desp sprrea ead d use of arb arbitr itrati ation on for reso esolvi lving ng com commer mercia ciall dis disput putes. es. The Frenc ench h Revo evolut lution ion cha change nged d this, like much else. Consistent with more general notions of social contract and democratic choice, the arbitration agreement was initially afforded enhanced dignity. Arbitration was described as producing “pure, simple and pacific justice,” 134 which legislatively to be “the 135 most reasonable means for the tion ofwas disputes arising declared between citizens.” In due course, arbitration was terminaelevated to constitutional status in the Constitution of 1793 (Year I) and the Constitution of 1795 (Year III).136 As with many other things, the French Revolution soon turned on these progeny progeny,, with arbitration eventually being considered (ironical (ironically) ly) a threat to the rule of law and 137 the authority of the revolutionary state. With this hostility in the air air,, the 1806 Napoleonic Code of Civil Procedure imposed numerous procedural and technical restrictions on arbitration agreements and procedures. In particular, Article 2059 of the Civil Code and Article 1006 of the Code of Civil Procedure generally provided thatt agr tha agreem eement entss to arb arbitr itrate ate fut futur uree dis disput putes es wer weree une unenfo nforrcea ceable ble..138 The Comm Commerc ercial ial

129. English Common Law Procedure Procedure Act, 1854, 17 & 18 Vict., §4. The Act also required required arbitrators to issue their awards within three months of their appointment, unless the parties or a superior court judge agreed to extend the time limit. Id. at §15. 130. SeeSamuel,Arbitration Statutes in England and the USA , 8 Arb. & Disp. Res. L.J. 2, 6 (1999) (“The 1889 188 9 Arb Arbitr itrati ation on Act can be re regar garded ded as the fir first st mod modern ern arb arbitr itrati ation on sta statut tutee in the com common mon law wor world. ld.”). ”). 131. 13 1. Eng Englis lish h Arb Arbitr itrati ation on Act Act,, 188 1889, 9, 52 & 53 Vi Vict. ct.,, Ch. 49 (ar (arbit bitrat ration ion agr agreem eement ent is irr irrevo evocab cable, le, unl unless ess otherwise indicated). 132. Id. at §4. 133. Id. at §§5, 8, 10, 19. 134. M. de Boisséson, Boisséson,Le droit français de l arbitrage interne et international¶8 (2d ed. 1990) (quoting Thouret, Member of Constituent Assembly). 135. Law of 16-24 August 1790, Art. 1 (“As arbitration is the most reasonable means of terminating disputes between citizens, the legislators shall not make any provision that would diminish either the favor or the efficiency of an arbitration agreement.”). 136. French Constitution of Year Year I, 1793, Art. 86 (“The right of the citizens to have their disputes settle set tled d by arb arbitr itrato ators rs of the their ir cho choice ice sha shall ll not be vio violat lated ed in any way wha whatso tsoeve everr.”) .”);; Fre rench nch Con Consti stitut tution ion of Year Y ear III, 1795, Art. 210 (“The right to chose arbitrators in any dispute shall not be violated in any way ’

whatsoever whatsoever.”). 137. R. .”). David,Arbitration in International Trade David, Trade90 (1985). 138. M. de Boissésson, Le droit français de l arbitrage interne et international¶¶8-11 (2d ed. 1990); R. David,Arbitration in International Trade Trade90 (1985); Code of Civil Procedure, 1806, Art. 1006. ’

A. Historical Overview Overvi ew of International Arbitration

Code permitted agreements to arbitrate future disputes only in limited circ*mstances, consisting of maritime insurance contracts and certain corporate and partnership contexts.139 More generally, as one commentator observes: [A]ll the provisions of the [Napoleonic Code] do appear to reflect, so to speak, a hatred of arbitration agreements and provide evidence of a secret desire to eliminate their existence. 140

This hostility towards the arbitral process was reflected in contemporaneous French lega le gall co comm mmen enta tary ry,, wh whic ich h he held ld th that at “a “arb rbit itra rati tion on is a rou ough gh dr draf aftt of th thee in inst stit itut utio ions ns an and d 141 142 the judicial guarantees” and “[a] satire of judicial administration.” French courts did little during the nineteenth century to ameliorate this hostility. An 1843 decision of the Cour de Cassation (excer (excerpted pted below) held broadly that agreements men ts to arb arbitr itrate ate fut futur uree dis disput putes es wer weree not bin bindin ding g unl unless ess the theyy ide identi ntifie fied d the par partic ticuu143 lar dispute and specified the individuals who were to serve as arbitrators. The stat st ated ed ra rati tion onal ale, e, wh whic ich h wo woul uld d rec ecur ur in ot othe herr hi hist stor oric ical al an and d ge geog ogra raph phic ical al se sett ttin ings gs,, wa wass that th at th thee ad adva vanc ncee wa waiv iver er of ac acce cess ss to ju judi dici cial al pr prot otec ecti tion onss an and d gu guar aran ante tees es sh shou ould ld no nott be 144 permitted in the abstract. That was coupled with a parallel perception that “[o]ne does do es no nott fi find nd wi with th an ar arbi bitr trat ator or th thee sa same me qu qual alit itie iess th that at it is as assu surred to fi find nd wi with th a ma maggistrate: the probity, the impartiality, the skilfulness, [and] the sensitivity of feelings necessary to render a decision.”145 The judicial decisions decisions that followed upon these observ obs ervati ations ons sig signif nifica icantl ntlyy lim limite ited d the pra practi ctical cality ity and use useful fulnes nesss of arb arbitr itrati ation on agr agreeeements in nineteenth-century (and early twentieth-century) France. As discussed below below,, it took some eight decades before this judicial hostility was moderated moder ated by the Fren rench ch courts and legis legislatur laturee — firs firstt in international international cases and 146 late la terr in do dome mest stic ic on ones es.. In Inde deed ed,, it wa wass on only ly wi with th Fra ranc ncee s ra rati tifi fica cati tion on of th thee Ge Gene neva va Protocol of 1923, discussed below, that agreements to arbitrate future international commercial disputes became fully enforceable in French courts.147 ’

e. Comm Commerci ercial al Arbit Arbitratio ration n in the Unite United d States States A broadly similar course was followed with regard regard to commercial arbitration in the United States during the eighteenth and nineteenth centuries as in England and 139. French Commercial Commercial Code, 1804, Arts. 51-63, 332; M. de Boisséson,Le droit français de l arbitrage interne et international¶10 (2d ed. 1990). 140. R. David, David,Arbitration in International Trade Trade90 (1985) (quoting Bellot). 141.. B. Bou 141 Bourbe rbeau, au,Procedu Procedure re civile civile, Tome IV 422 (qu (quote oted d in Rub Rubbel belinin-Dev Devich ichii & Loq Loquin uin,, Jur JurisC isClas lasseu seurr Proc. civ., Fasc. 1010 ¶19). 142. Mounier Mounier,, Rapport Rigaud, sur le projet de loi relative á l arbitrage forcé: forcé: DP 56, at 113. 143. Judgment of 10 July 1843, Cie L Alliance v. v. Prunier, Recueil Sirey 1843, 561 (French Cour de Cassation civ.) (quoted in R. David, Arbitration in Internationa Internationall Trade91 (1985)) & reprinted in 1992 Rev. arb. 399. See infra pp. 160-61. 144. Remarks by Avocat Général Hello regarding regardingJudgment of 10 July 1843, Cie L Alliance v. Prunier, 1992 Rev. arb. 404 (French Cour de cassation civ.) (“The obligation to nominate arbitrators in the arbitration agreement aims at avoiding incidents and proceedings regarding the composition of an arbitral tribunal, and mainly at warning the citizens against their own silliness, which would lead them to subscribe too easily and without anticipation to future arbitrations, without being assured of having capable and trustworthy persons as voluntary judges”); J.-L. Delvolvé, J. Rouche & G.H. Pointon, French Arbitra’

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tion145. LawJudgment and Practice ¶8July (2003). of 10 1843, Cie L Alliance v. v. Prunier, Prunier, infra pp. 160-61. 146. See infra pp. 57-59. 147. See infra pp. 29-31; French Commercial Code, 1925, Art. 631. ’

1. Introduction to International Arbitration

France. Consistent with America s role in the development of state-to-state arbitration tio n in the eig eighte hteent enth h cen centur turyy, arb arbitr itrati ation on was wid widely ely use used d to reso esolve lve com commer mercia ciall (an (and d other) disputes during Colonial times and the early years of the Republic. Despite this, over the course of the nineteenth century, significant judicial (and legislative) hostility to arbitration agreements emerged, as American courts developed a peculiarly radical interpretation of historic English common law authority. Importantly, the resulting judicial hostility to the arbitral process did not prevent the use of extra’

judicial148 and commercial mechanisms for enforcing arbitration agreements and awards, but it non noneth ethele eless ss und undoub oubted tedly ly obs obstru tructe cted d use of arb arbitr itrati ation on in the nineteenth-century United States. This hostility was only fully overcome in the early twenti twe ntieth eth cen centur turyy, whe when n det determ ermine ined d eff effort ortss by Ame Americ ricaa s bus busine iness ss com commun munity ity resulted in enactment of the Federal Arbitration Act (“FAA”) and similar state arbitration legislation. Diffi Di fficul cultie tiess in re resol solvin ving g pri privat vatee dis dispu putes tes ex exist isted ed fr from om the ear earlie liest st day dayss of Eur Europe opean an settlement settl ement in North America America — which was hardly hardly surprisin surprising, g, in light of the lack of governmental administrative structures and trained lawyers in the colonies, coupled with the fluid, sometimes chaotic dynamism of colonial life. Equally unsurprising is the use of various forms of arbitration to address these difficulties. Early Dutch settlers in New York, frustrated with efforts to replicate wholesale European judicial institutions, turned to the election of a council of “arbitrators,” which was in fact a ’

149 form of judicial body whose jurisdiction appears in at least some cases to have been mandatory. Nonetheless, from an early date, it was also common to refer disputes in New Amsterdam to true consensual arbitration:

[T]he arbitrators were left to the choice of the litigants, or appointed by the court. . . . These references were frequent upon every court day, and . . . though the amount involved was frequently considerable, or the matter in dispute highly important, . . . appeals to the court from the decision of the arbitrators were exceedingly rare. 150

Some commentators conclude that, after the 1664 hand-over of administration in New York to the English, the use of arbitration in commercial matters was one of the enduring features of continuing Dutch influence.151 Arbitration of commercial matters was widespread in the American colonies during the seventeenth and eighteenth centuries. Drawing on English, as well as Dutch, practice, the colonists found the flexibility, practicality, and speed of arbitral processes well-suited to their conditions: “From whatever source they derived the practice, the colonists engaged in extensive arbitration throughout the period of English rule.”152 Relying on court files (relatively sparse and terse), newspaper accounts (more fulsome), merchants books, and chamber of commerce records, historians

148. SeeBenson,An Exploration of the Impact of Modern Arbitration Statutes on the Development of Arbitration in the United States, 11 J.L. Econ. & Org. 479, 481-82 (1995). 149. 14 9. J. Aue Auerba rbach, ch,Justice Justice Without Without Law? 32 (19 (1983) 83);; Jon Jones, es, Three Centuries of Commercial Arbitration in New York: A Brief Survey, 1956 Wash. U. L.Q. 193, 195 (1956). 150. Jones Jones,, Thr Three ee Cen Centur turies ies of Com Commer mercia ciall Arb Arbitr itrati ation on in New York ork:: A Bri Brief ef Sur Survey vey, 19 1956 56 Was ash. h. U. L. L.Q. Q. 19 193, 3, 196 (1956)(quoting Daly, History of the Court of Common Pleas , in 1 Smith xxix (N.Y.C.P. 1855)). of the, State New York Three Centuries of Commercial 151. A. in Flic Flick k (ed.), (ed.) 14-16 (1933); Jones, Arbitration New York:, 3AHistory York: Brief Survey 1956ofWash. U. L.Q. 193, 197-98 (1956). 152. Jones Jones,, Thr 1956 56 Was ash. h. U. L. L.Q. Q. 19 193, 3, Three ee Cen Centur turies ies of Com Commer mercia ciall Arb Arbitr itrati ation on in New York ork:: A Bri Brief ef Sur Survey vey, 19 198 (1956).

A. Historical Overview Overvi ew of International Arbitration

have sk have sketch etched ed a pic pictur turee of wid widesp espre read, ad, rout outine ine use of arb arbitr itrati ation on in Col Coloni onial al com commer mer-cial matters, including in transactions between businesses in different colonies, typically by agreement between the parties after disputes had arisen. 153 Following the American Revolution, the routine use of arbitration to resolve commercial disputes did not diminish. On the contrary contrary,, as New York York developed over the course of the nineteenth century from a small, closely knit colonial town into a cosmopolitan center of commerce, the use of arbitration grew apace with the expansion 154

of commercial affairs.

One commentator concludes:

[I]t is clear that arbitration has been in constant use in New York York from its beginnings to 1920. It did not suddenly come into being at that time because of the passage of a statute making agreements to arbitrate future disputes enforceable. Rather, it has existed with and without the benefit of statutes, and both separate from, and in connection with, court adjudication.155

The dri drivin ving g mot motiva ivatio tion n for arb arbitr itrati ation on in com commer mercia ciall mat matter terss dur during ing thi thiss per period iod con con-tinued to be the perception by businesses “that government courts of the period did not apply commercial law in what the merchant community considered to be a just and expeditious fashion.”156 As its role as the dominant U.S. commercial and financial center would suggest, New York practice was representative of the country as a whole at the time. Research into specific jurisdictions, including New Jersey, Pennsylvania, Connecticut, Massachusetts, Delaware, Virginia, and Ohio, reveals a history similar to that in New York. Y ork.157 As one early nineteenth-century commentator noted, the commercial arbitrat tr atio ion n sy syst stem em es esta tabl blis ishe hed d by Ne New w Yor ork k me merrch chan ants ts of offe ferred a le lead ad th that at “h “has as be been en ta tak ken 158 by the merchants of [Philadelphia] and other cities.” Some So me ea earl rlyy le legi gisl slat ativ ivee ef effo fort rtss we werre ma made de to su supp ppor ortt th thee ar arbi bitr tral al pr proc oces esss in co comm mmer er-cial matters. In 1791, the New York legislature enacted a statute st atute virtually identical to 159 England s 1698 Arbitration Act, providing for the enforcement of agreements to arbi ar bitr trat atee fu futu turre di disp sput utes es wh wher eree th they ey ha had d be been en ma made de a ru rule le of co cour urt. t.160A 1793 American insurance policy contained an arbitration clause, making it clear that the legislation had a practical orientation.161 ’

153. Bens Benson, on,An Exploration Exploration of the Impact Impact of Modern Arbitration Statutes on the Development Development of Arbitration Arbitration in the United States, 11 J.L. Econ. & Org. 479, 481-82 (1995); Aiken, New Netherlands Arbitration in the 17th Century, 29 Arb. J. 145 (1974). 154. Jones Jones,, Thr Three ee Cen Centur turies ies of Com Commer mercia ciall Arb Arbitr itrati ation on in New Yor ork: k: A Bri Brief ef Sur Survey vey, 19 1956 56 Was ash. h. U. L. L.Q. Q. 19 193, 3, 213-14 (1956). 155. Id. at 21 2111-18 18.. See als alsoo Benson,An Exploration of the Impact of Modern Arbitration Statutes on the Development of Arbitration in the United States, 11 J. J.L. L. Ec Econ on.. & Or Org. g. 47 479, 9, 48 4811-85 85 (1 (199 995) 5) (“ (“Ar Arbi bitr trat atio ion n ac actu tual ally ly wa wass in widespread use if the United States almost three centuries before modern arbitration statutes were passed in the 1920s; its history traces back to the colonial period.”). 156. Bens Benson, on,An Exploration Exploration of the Impact Impact of Modern Arbitration Statutes on the Development Development of Arbitration Arbitration in the United States, 11 J.L. Econ. & Org. 479, 482 (1995). 157. G. Wilner, Wilner, Domke on Commercial Arbitration §2.04 (3d ed. Update 2006); Gwynne, The Oldest Arb. b. J. 11 117, 7, 12 120 0 (1 (193 937) 7);; Od Odio iorn rne, e,Arbitration Under American Tribunal Tribunal, 1 Ar Under Early New Jersey Jersey Law, 8 Arb. J. 117 (1953). 158. J. Higgins,Sampson against the Philistines, or the Reformation of Lawsuits32, 32 (2d ed. 1805). 159. See supra p. 16. 160. 1791 N.Y. N.Y. Laws 219-20. 161. “to And is agreed, that if anyone Dispute should by arise theother Loss by onthe thisAssurer, Policy; it Policy; shall be referred twoitindifferent Persons, to be chosen therelating Assured,tothe who shall have full Power to adjust the same; but in case they cannot agree, then such two persons shall choose a third; and any two of them agreeing, shall be obligatory to both parties.” 1793 Insurance Company of

1. Introduction to International Arbitration

Nonetheless, it appears that the principal means by which arbitration agreements and arbitral awards were enforced during the Colonial era was through non-legal or extra-l ex tra-legal egal comm commerc ercial, ial, pr professi ofessional, onal, and other mecha mechanisms nisms..162 That is in part beca be caus usee of th thee ch char arac acte terr of U. U.S. S. co comm mmer erci cial al af affa fair irss at th thee ti time me,, an and d in pa part rt be beca caus usee of the general lack of satisfactory legal or judicial enforcement mechanisms. Desp De spit itee th thee pr prev eval alen ence ce of co comm mmer erci cial al ar arbi bitr trat atio ion n as a me mean anss of di disp sput utee res esol olut utio ion, n, and the existence of some early legislative and judicial support, many nineteenthcentury American courts developed a puritanical version of English common law hostility to agreements to arbitrate future disputes. Indeed, for some decades, U.S. cour co urts ts he held ld fl flat atly ly th that at ag agrree eeme ment ntss to ar arbi bitr trat atee fu futu turre di disp sput utes es we werre co cont ntra rary ry to pu publ blic ic policy and revocable at will; unlike England, U.S. courts appear to have developed no alternative legal mechanisms, whether through the use of penalty clauses or rules of court, to make such agreements enforceable.163 Joseph Story Story,, a pre-emi pre-eminent nent U.S. authority in a wide range of legal fields, reflected ninete nin eteent enth-c h-cent entury ury Ame Americ rican an jud judici icial al hos hostil tility ity to arb arbitr itrati ation on agr agreem eement ents. s. In 184 1845, 5, he stated the common law position in the United States, inherited from England and elaborated with particular vigor: Now we all know that arbitrators, at the common law, possess no authority whatsoever, even ev en to ad admi mini nist ster er an oa oath th,, or to co comp mpel el th thee at atte tend ndan ance ce of wi witn tnes esse ses. s. Th They ey ca cann nnot ot co commpel the production of documents and papers and books of account, or insist upon a discovery of facts from the parties under oath. They are not ordinarily well enough acquainted with the principles of law or equity, equity, to administer either effectually, effectually, in complicated cases; and hence it has often been said, that the judgment of arbitrators is but rusticum judicium. Ought then a court of equity to compel a resort to such a tribunal, by which, however honest and intelligent, it can in no case be clear that the real legal or equitable rights of the parties can be fully ascertained or perfectly protected? . . . [An arbitration agreement is not specifically enforceable because it] is essentially, essentially, in its very nature nature and character, character, an agreement which which must rest rest in the good faith and honor of the parties, and like an agreement to paint a picture, to carve a statue, or to write a book bo ok . . . mu must st be le left ft to th thee co cons nsci cien ence ce of th thee pa part rtie ies, s, or to su such ch rem emed edyy in da dama mage gess fo forr 164 the breach thereof, as the law has provided.

While this left open the possibility of recovering money damages for breach of an arbitratio arbit ration n agr agreemen eement, t,165 th this is wa wass vi virt rtua uall llyy ne neve verr an ef effe fect ctiv ivee (o (orr ev even en ve very ry pl plau ausi sibl ble) e)

North American Insurance Policy olicy,, quoted in Wimm & Davis, Arbitration of Reinsurance Disputes: Is There a Better Way? Way?, Dispute Res. J. (Oct. 2004). 162. Bens Benson, on,An Exploration Exploration of the Impact Impact of Modern Arbitration Statutes on the Development Development of Arbitration Arbitration in the United States, 11 J. J.L. L. Ec Econ on.. & Or Org. g. 47 479, 9, 48 488 8 (1 (199 995) 5) (“ (“[A [A]r ]rbi bitr trat atio ion n wa wass be bein ing g de deve velo lope ped d an and d exp xpan ande ded d under the auspices of trade associations, mercantile exchanges, and other commercial organizations where nonlegal sanctions apparently were relativ relatively ely strong.”); J. Auerbach, Justice Without Law? 19-46 (1983). 163. Robert Lawrence Co. v. Devonshire Devonshire Fabrics, Inc., 271 F.2d 402, 406 (2d Cir Cir.. 1959) (discussing American courts hostility to arbitration); J. Cohen, Commercial Arbitration and the Law 226-52 (1918); Sayre, Development of Commercia Commerciall Arbitration Law , 37 Yale L.J. 595, 595-97 (1927-1928). 164. Tobey v. v. County of Bristol,,23 F. Cas. 1313, 1321-22 (C.C.D. Mass. 1845). See alsoPrince SteamShipping Co. v. Lehman, 39 F. 704 (S.D.N.Y. 1889)(“Such agreements have repeatedly been held to be agai ag ains nstt pu publ blic ic po poli licy cy an and d vo void id.” .”); ); Me Meac acha ham m v. Ja Jame mest stow own n F. & C. R.R R.R.. Co Co., ., 10 105 5 N. N.E. E. 65 653, 3, 65 656 6 (N (N.Y .Y.. 19 1914 14)) (Cardozo, J., concurring) (“It is true that some judges have expressed the belief that parties ought to be ’

free about such matters as they please. Indthis state, the long been settled the trar tr aryyto . . contract . . Th Thee ju juri risd sdic icti tion on of ourr co ou cour urts ts is es esta tabl blis ishe hed by la law w, an and d is law nott has no to be dimi di mini nish shed ed,, an anyyto mor mo re conthan th an it is to be increased, by the convention of the parties.”). 165. Finucane Co. v. Bd. of Educ. of Rocheste Rochesterr, 82 N.E. 737 (N.Y. (N.Y. 1907).

A. Historical Overview Overvi ew of International Arbitration

meanss of en mean enfo forrce ceme ment nt,, si sinc ncee ad adeq equa uate te pr proo ooff of in inju jury ry res esul ulti ting ng fr from om a ref efus usal al to ar arbi bi-166 trate was virtually impossible. Relying on literal interpretations of the English common law in Vynior’s Case and Kill v. Hollister, and evidencing a disdain for the arbitral process reminiscent of early nineteenth-century French authors,167 Story s influential academic commentaries adopted similar reasoning: ’

[W [W]h eree th thee st stip ipul ulat atio ion, n, th thou ough gh no not t ag agai ains nst t th thee po poli licy cy thee la th law w, ye yettas is an an agreement, effo ef fort rt to di dive vest st the]her ordinary jurisdiction of the common tribunals of of justice, such in case of any disputes, to refer the same to arbitrators, Court of Equity will not, any more than th an Co Cour urts ts of La Law w, in inte terf rfer eree to en enfo forrce th that at ag agrree eeme ment nt,, bu butt th they ey wi will ll le leav avee th thee pa part rtie iess to their own good pleasure in regard to such agreements. . . . The regular administration of justice might be greatly impeded or interfered with by such stipulations if they were specif spe cifica ically lly enf enfor orced ced.. And at all eve events nts cou court rtss of jus justic ticee ar aree pr presu esumed med to be bet better ter ca capab pable le of administering and enforcing the rights of the parties than any mere private arbitrators, as well from their superior knowledge as from their superior means of sifting the controversy contr oversy to the very bottom.168

Citing this and other similar rationales, American courts applied an extreme interpreta pr etatio tion n of Eng Englis lish h com common mon law pr prece eceden dents ts to wit withho hhold ld mea meanin ningfu gfull jud judici icial al enfo en forrce ceme ment nt of ar arbi bitr trat atio ion n ag agrree eeme ment ntss th thrrou ough ghou outt mu much ch of th thee ni nine nete teen enth th 169

century. Moreover, U.S. courts and legislatures did not quickly follow the path ofScott v. Avery or the 1889 English Arbitration Act, which had taken steps to facilitate the enforcement of arbitration agreements in England.170 As the Second Circu Circuit it once wrote, “[one] of the dark chapters in legal history concerns the validity validity,, interpretation and enforceability of arbitration agreements” by U.S. courts in the nineteenth century. 171 Importantly, even while many U.S. courts refused to enforce commercial arbitration tio n agr agreem eement entss dur during ing the mid middle dle and lat latee nin ninete eteent enth h cen centur turyy, arb arbitr itrati ation on remained both popular and effective in American commercial settings: “The use of commercial arbitration developed during the colonial and post revolutionary periods in spite of this [judicial] hostility.” 172 As already noted, it did so on the basis of non-legal commercial sanctions and enforcement mechanisms, including through

166. Akti Aktiesel eselskabe skabett Kor Korn-Og n-Og Foder Foderstof stof v. Re Rederia deriaktie ktiebolag bolaget et Atla Atlanten nten,, 250 F. F. 935, 937 (2d Cir Cir.. 1918 1918)) (breach (breac h of con contra tract ct yie yields lds onl onlyy “no “nomin minal al dam damage ages” s” unl unless ess arb arbitr itral al ex expen penses ses hav havee act actual ually ly bee been n inc incurr urred) ed);; Munson v. Straits of Dover S.S. Co., 99 F. 787, 789 (S.D.N.Y. 1900) (“[N]o case is to be found in which . . . any other than nominal damages have ever been indicated to be recoverable recoverable,, because too loose, indefinite and incapable of verification.”), affd, 100 F. 1005 (N.Y. 1900); Sayre, Development of Commerciall Arbitration Law, 37 Yale L.J. 595, 604-05 (1927-1928). Commercia 167. See supra pp. 16-17, 18-19. 168. J. Story, Story, 1Commentaries on Equity Jurisprudence as Administered in England and America §670 (13th ed. 1886). 169. SeeKulukundis Shipping Co. v. Amtorg Trading Corp., 126 F.2d 978, 982-86 (2d Cir. 1942), for a detailed (and influential) historical review of the enforceability of arbitration agreements at common law.See also S. Rep. No. 68-536, at 2-3 (1924) (citing “[judges ] jealousy of their rights as courts, coupled with the fear that if arbitration agreement agreementss were to prevail and be enforced, the courts would be ousted of much of their jurisdiction”); G. Born, International Commercial Arbitration46 (2009). ’

’

supra 170. pp. 17-18. 171. See Robert Lawrenc Lawrence e Co. v. Devonshire Fabrics, Fabrics, Inc., 271 F.2d 402, 406 (2d Cir. Cir. 1959). 172. Bens Benson, on,An Exploration Exploration of the Impact Impact of Modern Arbitration Statutes on the Development Development of Arbitration Arbitration in the United States, 11 J.L. Econ. & Org. 479, 483 (1995).

1. Introduction to International Arbitration

membership in commercial guilds, societies, or religious groups, all of which proved sufficiently resilient to overcome judicial hostility. hostility.173 Moreover, even with regard to judicial enforcement, other movements were afoot in the United States by the late nineteenth century. Courts in a number of American jurisdictions rejected the common law notion that arbitration agreements were either unenforceable or revocable, and instead upheld them,174 while also enforcing arbitral awards with minimal judicial review.175 Rejecting Story s doctrinal authority, an ’

1858 Virginian decision declared, in terms that could have been written 150 years later, that: The anc ancien ientt pr princ incipl iple, e, tha thatt agr agreem eement entss for the fin final al set settle tlemen mentt of dis disput putes es by arb arbitr itrati ation on were against the policy of the law and void because tending to oust the courts of their jurisdiction, is against the spirit of modern times, and courts are now very liberally inclined toward submission of matters to arbitration, and place as liberal a constructio construction n upon the submission as the intentions of the parties justify. justify. The intention of the parties 176 is the guiding start in construing the submission.

Soon thereafter, the U.S. Congress enacted legislation encouraging efforts to use arbitr arb itrati ation on to re resol solve ve int intern ernati ationa onall com commer mercia ciall dis disput putes, es, alt althou hough gh it doe doess not app appear ear 177 thatt the sta tha statut tutee had sig signif nifica icant nt pra practi ctical cal eff effect ects. s. What did continue to have practi pra ctical cal eff effect ect,, tho though ugh,, wer weree com commer mercia ciall and pr profe ofessi ssiona onall ass associ ociati ations ons,, whi which ch ensured that arbitration remained a central part of commercial life, even during the “dar “d ark k ch chap apte ters rs in le lega gall hi hist stor oryy,” wh when en U. U.S. S. co cour urts ts we werre mo most st ho host stil ilee to ar arbi bitr trati ation on an and d 178 agreements to arbitrate. U.S. U. S. jud judici icial al and leg legisl islati ative ve hos hostil tility ity to com commer mercia ciall arb arbitr itrati ation on sub substa stanti ntiall allyy er erode oded d in the late nineteenth and early twentieth centuries. American judicial opinions began beg an inc incrreas easing ingly ly to que questi stion on the wis wisdom dom of Sto Story ry s vi view ews, s,179while commercial pressure for legislative reform built.180 This pressure eventually had its effect, and in 1920, New York enacted legislation providing for the validity and specific enforcement of arbitration agreements. That was followed in 1925 by similar provisions in the FAA (which are discussed in detail below), which paralleled negotiation and ’

173. Bens Benson, on,An Exploration Exploration of the Impact Impact of Modern Arbitration Statutes on the Development Development of Arbitration Arbitration in the United States, 11 J. J.L. L. Ec Econ on.. & Or Org. g. 47 479, 9, 48 4844-85 85 (1 (199 995) 5) (N (New ew Yor ork k St Stoc ock k Ex Exch chan ange ge;; Qu Quak aker ers; s; Ne New w Yor ork k Chamber of Commerce). 174. Burchell v. Marsh, 58 U.S. 344, 351-52 (U.S. S. Ct. 1854); Snodgrass v. v. v. Gavit, 28 Pa. 221 (1857) (dictum); Condon v. Southside R.R. Co., 14 Gratt. 320 (V (Va. a. 1858); Doolittle v. Malcom, 8 Leigh 608 (Va. (Va. 1837). See generallyBenson,An Exploration of the Impact of Modern Arbitration Statutes on the Development of Arbitration in the United States , 11 J.L. Econ. & Org. 479, 485-87 (1995) (discussing cases). 175. Doolittle v. v. Malcolm, 8 Leigh 698 (Va. (Va. 1837); Ebert v. Ebert, 5 Md. 353 1854) (“every reasonable intend int endmen mentt is now mad madee in fav favor or of [ar [arbit bitral ral]] awa award rdss . . . and and tha thatt allmatte allmatters rs hav havee bee been n dec decide ided d by the them, m, unless the contrary shall appear on the face of the award.”). 176. Condon v. v. Southside R.R. Co., 14 Gratt. 320 (Va. (Va. 1858). 177. 17 7. 22 U.S U.S.C. .C.A. A. §16 §161 1 (W (West est 192 1927) 7) (du (duty ty of for foreig eign n ser servic vicee off office icers rs to enc encour ourage age use of arb arbitr itrati ation on and to facilitate arbitral processes) processes).. 178. Bens Benson, on,An Exploration Exploration of the Impact Impact of Modern Arbitration Statutes on the Development Development of Arbitration Arbitration in the United States, 11 J.L. Econ. & Org. 479, 488 (1995) (“Arbitration was being developed and expanded under the auspices of trade associations, mercantile exchanges, and other commercial organizations where nonlegal sanctions apparently were relative relatively ly strong”). Seealso Bernstein, Op Optin tingg Outof the Leg Legal al Sys Sys-tem: Extra Legal Contractual Relations in the Diamond Industry, 21 J. Legal Stud. 115 (1992). 179. United States Asphalt Ref. Co. v. Trinidad Trinidad Lake Petroleum Petroleum Co., 222 F. 1006, 1008-09, 1010-11 (S.D.N.Y. 1915); Hamilton v. Liverpool & London & Globe Ins. Co., 136 U.S. 242-55 (U.S. S. Ct. 1890) (recogni (recognizing arbitra arbitration tion awa rd determining damages, decided question question oof f liability). 180. zing To Valida alidate te Cert Certain ainaward Agreemen Agr eements ts for Arbit Arbitrati ration on, H. H.R. R.where Rep ep.. court No.. 68 No 68-9 -96 6 at1 general (192 (1 924) 4);; Ch Cham ambe berr of thee St th Stat atee of New York, Report of the Committee on Arbitration (1917); Sayre,Development of Commercia Commerciall Arbitration Law, 37 Yale L.J. 595, 595 & n.2 (1927-1928).

A. Historical Overview Overvi ew of International Arbitration

adoption of the 1923 Geneva Protocol (also discussed below).181While the New York York arbitration law allowed the annulment of awards for fraud, corruption, and similar grounds, it enacted a sea change from the American common law by instituting a default rule that contracts to arbitrate should be enforced by the courts. 182

f. Comm Commerci ercial al Arbitrati Arbitration on in Other Other European European Jurisdi Jurisdiction ctionss in the 18th and 19th Centuries The history of commercial arbitration in other nations did not always involve the samee deg sam degre reee of jud judici icial al or leg legisl islati ative ve hos hostil tility ity as occ occasi asiona onally lly dem demons onstra trated ted in eighte eig hteent enthh- and nin ninete eteent enth-c h-cent entury ury Eng Englan land, d, Fran rance, ce, and the Uni United ted Sta States tes.. Hi Histo storirically,, commercial arbitration was commonly used by merchants in what is today Gercally many, perhaps particularly because of the lack of a centralized government (until compar com parati ativel velyy re recen cently tly)) and the dem demand andss of int inters erstat tatee com commer merce. ce.183 Th Thus us,, a Ge Germ rman an comm co mmen enta tato torr at th thee be begi ginn nnin ing g of th thee tw twen enti tieth eth ce cent ntur uryy co coul uld d ob obse serv rve, e, wi with th reg egar ard d to historic German experiences: “arbitral tribunals have at all times been regarded as an urgent necessity by the community of merchants and legislation has always granted them a place alongside the ordinary courts. . . .” 184 The importance of arbitration in commercial matters was recognized, and given effect, in thestatutory civil codes of Baden (in 1864), Prussia (inof1864), and Bavaria (in 1869). All of these codifications confirmed the role arbitration in the resolution of commercial disputes, while granting arbitrators varying degrees of freedom from local procedural and substantive requi requirements rements and judicial control.185 These various developments led to the treatment of arbitration in the first German Code of Civil Procedure of 1877 (which would remain the fundamental basis for Germany s legal regime for arbitration until 1998). The 1877 Code of Civil Procedure incorporated provisions that freed arbitrators from the obligation to apply strict legal rules (and, concurrently, concurrently, from judicial review of the substance of awards). The drafters of the Code explained: ’

By submitting themselves to arbitration the parties want to escape from the difficulties and complexities arising from the application of the law. They intend that the law as betwee bet ween n the them m sho should uld be wha whatt the arb arbitr itrato ators, rs, acc accor ordin ding g to the their ir co consc nscien ientio tious us conviction convictio n — ex aequeo et bono — deter determine. mine. They will therefor thereforee as a rule cons consider ider the arbitr arb itrato ators rs to be fri friend endly ly med mediat iator orss —amiables compositeurs, as th thee Be Belg lgia ian n dr draf aftt says — and it is obvio obvious us that they do so consider them them whenever whenever they appoint as arbitrat tr ator orss pe pers rson onss wh who o ar aree no nott le lear arne ned d in th thee la law w. As a ru rule le th ther eref efor oree th thee go goal al of ar arbi bitr trat atio ion n is attained only when the arbitrators are not bound to follow the ordinary rules of law when giving their awards awards..186

181. See infrapp. 29-31, 49-50; U.S. FAA, 9 U.S.C. §§1 et seq.; Act of Apr. 19, 1920, ch. 275, 1920 N.Y. Laws 803-07; Samuel, Arbitration Statutes in England and the USA , 8 Arb. & Disp. Res. L.J. 2, 7-13 (1999). 182. Ston Stone, e,Rustic Justice: Community and Coercion Under the Federal Arbitration Act, 77 N.C. L. Rev. 931, 982-87 (1999). 183. See supra pp. 13-15. 184. W. Haeger,Schiedsgerichte für Rechtsstreitigkeiten der Handelswelt 2 (1910) (quoted in Berger, The New German Arbitration Law in International Perspective Perspective, 26 Forum Int l 1, 1 (2000)). ’

Das Schiedsgericht im modernen Zivilprozeß 185. A. Lindheim,des 17 (1891). 186. Begründung Entwurfs einer Zivilprozessordnung , Deutscher Reichstag, II, Legislatur-Periode, I, se sess ssio ion n 18 1876 76,, ad no no.. 6, p. 47 476 6 (q (quo uote ted d in Co Cohn hn,, Com Commer mercia ciall Arb Arbitr itrati ation on and the Ru Rules les of Law Law:: A Com Compar parati ative ve Study, 4 U. Toronto L.J. 1, 16 (1942)).

1. Introduction to International Arbitration

At the same time, at the end of the nineteenth and beginning of the twentieth centuries, German courts gave active support to the arbitral process, including by pioneering the development of what would later be termed the separability doctrine, in order to facilitate the enforcement of arbitration agreements. 187 By the turn of the twentieth century, permanent arbitral tribunals, organized under the auspices of trade organizations, became a common feature of German business life. In 1909, 1,030 cases were pending before such arbitral tribunals in 188

Berlin alone. Contemporaneous authors generally praised the arbitral process, highli hig hlight ghting ing its eff effici icienc encyy, tru trustw stwort orthin hiness ess,, and the com commer mercia ciall goo good d sen sense se of arb arbitr itraa189 tors with industry experience. Like some common law courts, however, the German courts came in the next decades to “guard[] their rights with extreme jealousy, and were only too inclined to sett as se asid idee aw awar ards ds [o [on n th thee ba basi siss of of]] ev even en a sl slig ight ht fa fail ilur uree to co comp mply ly wi with th th thee pr prov ovis isio ions ns of 190 the Code.” The provisions of the German Code of Civil Procedure left considerable leeway to local courts to interfere with the arbitral process, curtailing the practical value of arbitration.191 As already described, the Napoleonic Code (and Cour de Cassation, in an 1843 decision) had adopted a similarly anti-arbitration course in France, which persisted until the 1920s.192 Belgian courts refused, unusually, to follow the approach of the French Cour de Cassation and gave effect to agreements to arbitrate future dis193

putes. Netherlands took a similar an Arbitration Act as part of itsThe Code of Civil Procedure in 1838approach, to provideenacting a comprehensive legal frame194 work for commercia commerciall arbitration. The Dutch and Belgian approach reflected the Low Countries historical fondness for arbitration, 195 which can be attributed in significant part to their mercantile cultures and the influence of Roman law. 196 Swiss cantonal legislation and constitutions were also generally supportive of arbitration during this era.197 ’

187. See infra pp. 173-201. 188. W. Haeger, Haeger, Schiedsgerichte für Rechtsstr Rechtsstreitigkeiten eitigkeiten der Handelswelt21 (1910). 189. Id. at 24. Arbitration Germany but seethat Arbitration inGerman England Weiss, We iss, 43 Law Q. Rev. 205, 206 (1927); Kahn, and190. Germany , 12 J. Comp.inLegis. & ,Int l L. 58, 76-77 (1930) (suggesting Weiss s view of courts is too bleak); Nussbaum, Schiedsgerichtsschriftsteller Schiedsgerichtsschriftstellerei ei zwecks Störung internationa internationaler ler Beziehungen 384, 2 Internationales Jahrbuch für Schiedsgerichtswesen (1928) (arguing that Weiss misrepresents German law). 191. Nussbaum, Schiedsgerichtswe Schiedsgerichtswesen sen, 42 Zeitschrift für Zivilprozessrecht 254, 259-260 (1912) referring to Judgment dated 28 January 1908, Entscheidungssammlung Reichsgericht (RGZ) 69, 52, 55 (German Reichsge Reichsgericht). richt). 192. See supra pp. 18-19. 193. Judgment of 17 December 1936, Pas. 1936 I 457, 458 (Belgian Cour de cassation); R. David, Arbitration in International Trade 98 (1985); Keutgen & Huys, Chronique de Jurisprudence: L arbitrage (1950 à 1975), Journal des Tribunaux Tribunaux 53, 54 (1976); G. Keutgen & G. Dal,L arbitrage en droit droit belge et international ¶42 (2d ed. 2006). 194. A. van den Berg, Berg, R. van Delden, & H. Snijders,Netherlands Arbitration Law §1.1 (1993); Rovine, Lillich, Marks, & Spiegel, Iran/United States Claims Tribunal, 76 Am. Soc y Int l L. Proc. 1, 5 (1982) (remarks by Arthur Rovine) (noting that under 1838 Act, arbitral awards were enforced “unless there [was] a gross fraud or the decision [was] without reason”); Sanders, The Netherlands, VI Y.B. Comm. Arb. 60 (1981) (describing Dutch arbitral procedure under 1838 law). ’

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195. van Bladel, Bladel, Arbitration in the Building Industry in the Netherlands , 54-May Disp. Resol. J. 42, 43 (1999). 196. Aik Aiken, en,New Netherlands Arbitration in the 17th Century, 29 Arb. J. 145, 146-49 (1974). 197. R. David, David,Arbitration in International Trade Trade101-02 (1985).

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B. OVER VERVIEW VIEW OF CONTE CONTEMPORA MPORARY RY INTERN INTERNA ATIONA TIONAL L ARBITRATION ARBITRA TION CONVENTIONS With this historical background background,, the foundations for the contemporary legal regime for international arbitration were laid at the end of the nineteenth and beginning of the twentieth centuries. As discussed below, the basic legal framework for international commercial arbitration was established in the first decades of the twentieth century, with the 1923 Geneva Protocol and 1927 Geneva Convention, with the enactment of national arbitration legislation that paralleled these instruments, and with the development of effective institutional arbitration rules. Building on these foundations, the current legal regime for international commercial arbitration was developed in significant part during the second half of the twentieth century, with countries from all parts of the globe entering into international arbitration conventions (particularly the New York Convention) and enacting national arbitration statutes designed specifically to facilitate the arbitral process; at the same time, national cour co urts ts in mo most st st stat ates es ga gave ve rob obus ustt ef effe fect ct to th thes esee le legi gisl slat ativ ivee in inst stru rume ment nts, s, of ofte ten n ext xten endding or ela elabor borati ating ng on the their ir ter terms. ms. As dis discus cussed sed bel below ow,, thi thiss avo avowed wedly ly “pr “pro-a o-arbi rbitra tratio tion n” regime ensures the enforceability of both international arbitration agreements and arbitral awards, gives effect to the parties procedural autonomy and the arbitral tri’

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bunal and governmental seeks to insulate the arbitral process from interferences procedural by national discretion, courts or other authorities. At the same time, during the past several decades, the current legal regime for international investment arbitration was developed, including particularly through the adoption of the ICSID Convention198 and an extensive network of “bilateral investment treaties” (“BITs”).199 Similarly, if less extensively and comprehensively, the 189 1899 9 Hag Hague ue Peac eacee Co Confe nferrenc encee ado adopte pted d the Con Conven ventio tion n for the Paci acific fic Set Settle tlemen mentt 200 of International Disputes (which was subsequently amended in 1907), followed by the 1929 General Act on the Pacific Settlement of International Disputes. 201 These instruments reflected a generally, “pro-arbitration” approach to the use of international arbitration to resolve interstate disputes peacefully, while setting forth a basic legal framework in which international arbitrations could be conducted.

1899 and 1907 1907 Convent Conventions ions for for the Pacifi Pacificc Settlement Settlement of Internation International al Disputes

By the beg beginn inning ing of the twe twenti ntieth eth cen centur turyy, pr propo oposal salss for mor moree uni univer versal sal sta statete-toto-sta state te arbitration mechanisms became credible. Although seldom discussed in today s literature, an 1875 project of the Institut de Droit International produced a draft procedural code, based on existing interstate arbitral practice and designed to provide ’

198. See Con Conven ventio tion n on the Set Settle tlemen mentt of Inv Invest estmen mentt Dis Disput putes es Bet Betwee ween n Sta States tes and Nat Nation ionalsof alsof Oth Other er States, produced at Washington, D.C., 18 March 1965;infrapp. 39-40. 199. See infra p. 40. See fortion the Pacific of International Disputes (First Hague 189200. 1899), 9), Art Arts. s.Convention 15-29 1529;; Con Conven ventio n for the PSettlement acific aci fic Set Settle tlemen ment t of Int Intern ernati ationa onall Dis Disput putes es (Se (Secon cond d Conference, Hague Hag ue Con Con-ference, 1907);infra pp. 27-28. 201. SeeGeneral Act on the Pacific Settlement of International Disputes, 93 L.N.T L.N.T.S. .S. 345;infrap. 28.

1. Introduction to International Arbitration

basic procedural guidelines and mechanisms for future ad hoc arbitrations.202 The proje pr oject ct pr provi ovides des imp impre ressi ssive ve tes testim timony ony to bot both h the fr frequ equenc encyy of int inters erstate tate arb arbitr itrati ations ons and the perceived desirability of more consistent, transparent, and internationally neutral procedures for such arbitrations. In 18 1899 99,, th thee Ha Hagu guee Pea eace ce Co Conf nfer eren ence ce pr prod oduc uced ed th thee Ha Hagu guee Co Conv nven enti tion on of 18 1899 99 on the Pacific Settlement of Disputes, which included chapters on international arbitration and established a “P “Permanent ermanent Court of Arbitration,” to administer state-to-state 203

arbitration under the Convention. These provided the foundation for more formal interstate adjudication, in the Permanent Court of International Justice and International Court of Justice,204 as well as the founding of the Permanent Court of Arbitration.205At the same time, arbitration remained a preferred preferred method of resolving interstate disputes, often selected by states during the twentieth century in preference to standing international judicial bodies. 206 Thus, Article XVI of the Convention recorded the contracting states recognition that “[i]n questions of a legal nature, and especially in the interpretation or application tio n of Int Intern ernati ationa onall Con Conven ventio tions, ns,”” int intern ernati ationa onall arb arbitr itrati ation on was the “mo “most st eff effect ective ive,, and an d at th thee sa same me ti time me th thee mo most st eq equi uita tabl ble, e, me mean anss of se sett ttli ling ng di disp sput utes es wh whic ich h di dipl plom omac acyy has failed to settle.” Articles XV to IXX of the Convention prescribed a set of rules regarding the constitution of interstate arbitral tribunals and the conduct of interstate arbitrations; among other things, the 1899 Convention established the Perma’

nen nent t Cou Court rt of Arb Arbitr itrati ation on (se (seate ated d in the Hag Hague) ue),, for adm admini iniste sterin ring g int inters erstat tatee arbitrations. Thee 18 Th 1899 99 Co Conv nven enti tion on wa wass rev evis ised ed in 19 1907 07,, wi with th th thee ne new w Co Conv nven enti tion on fo forr th thee Pac acif ific ic Settle Set tlemen mentt of Int Intern ernati ationa onall Dis Dispu putes tes inc includ luding ing the add additi ition on or ame amendm ndment ent of a num num-207 ber of provisions regarding international arbitral proceedings. In 1929, a “General Act on Pacific Settlement of International Disputes” was negotiated (with a number of states, principally Western European, ultimately ratifying the Act).208 As with the 1899 and 1907 Conventions, the Act sets forth a basic legal framework (subject to contrary agreement by the parties) for international arbitrations between state parties.

202. Institut de Droit Droit International, International,Projet de règlement pour la procédur procéduree arbitrale internationale(Session de La Haye, 1875). See G.Born, International Commercial Arbitration15-16 (2009). 203. Conv Conventio ention n for the Pa Pacific cific Sett Settlemen lementt of Inter Internati national onal Disp Disputes utes (F (First irst Hagu Haguee Confer Conference ence,, 1899 1899), ), Arts. 15-29. See also Caron, War and International Adjudication: Reflections on the 1899 Peace Conference, 94 Am. J. Int l L. 4 (2000); Werner, Interstate Political Arbitration: What Lies Next?, 9 J. Int l Arb. 69, 71-72 (1992). 204. See generally S. Rose osenne nne,, I The Law and Practice of the International Court, 1920-1996 10-4 10-40, 0, 99-1 99-106 06 (3d ed. 1997). 205. Caron, War and International Adjudication: Reflections on the 1899 Peace Conference, 94 Am. J. Int l L. 4, 16-17 (2000). 206. Charney Charney,, Third Party Dispute Settlement and International Law , 36 Colum. J. Int l L. 65, 68 (1997) (“While the establishment of the World Court was particularly significant, ad hoc arbitrations . . . continue to be important” in the twentieth century.); A. Stuyt, Survey of International Arbitrations 1794-1989 (3d ed. 1990); Merrills, The Mosaic of International Dispute Settlement Procedures: Complementary or Contradictory, 54 Neth. Int l L. Rev Rev.. 361 (2007). 207. Convention for the Pacific Settlement of International Disputes (Second Hague Conference, ’

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See S. Rose Hague ue Peac eacee Con Confer ferenc encee of 1899 and 190 1907 7 and Int Intern ernati ationa onall Ar Arbit bitra ratio tion: n: Rep Report ortss 1907). osenne nne ed. ed.,, The Hag and Documents (2001). 208. General Act on Pacific Settlement Settlement of International Disputes, done at Geneva on September 26, 1928, 93 L.N.T.S. 345, entered into force on August 16, 1929.

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Geneva Genev a Proto Protocol col and Genev Geneva a Conve Convention ntion

During the first decades of the twentieth century, businesses and lawyers in developed ope d sta states tes cal called led for leg legisl islati ation on to fac facili ilitat tatee the use of arb arbitr itrati ation on in re resol solvin ving g dom domeses209 ticc an ti and, d, pa part rtic icul ular arly ly,, in inte tern rnat atio iona nall co comm mmer erci cial al di disp sput utes es.. Thes Th esee ap appe peal alss emphasized the importance of reliable, effective, and fair mechanisms for resolving international disputes to the expansion of international trade and investment. In 1923, initially under the auspices of the newly founded International Chamber of Commerce, major trading nations negotiated the Geneva Protocol on Arbitration Clauses Clau ses in Comm Commer ercial cial Matte Matters. rs.210 The Pr Proto otocol col was ul ultim timate ately ly rat ratifi ified ed by the Un Unite ited d Kingdo Kin gdom, m, Ger German manyy, Fran rance, ce, Jap Japan, an, Ind India, ia, Bra Brazi zil, l, and abo about ut two doz dozen en oth other er 211 nations. Although the United States did not ratify the Pr Protocol, otocol, the nations that did so represented a very significant portion of the international trading community at the time. The Geneva Geneva Protocol Protocol played played a critical critical — if often underapp underappre reciated ciated — rol rolee in the develo dev elopme pment nt of the leg legal al fra framew mework ork for int intern ernati ationa onall com commer mercia ciall arb arbitr itrati ation. on. Among other things, Article I of the Geneva Pr Protocol otocol declared that Each of the Contracting States recognizes recognizes the validity of an agreement whether relating relating to existing or future differences between parties subject respectively to the jurisdiction of different contracting states by which the parties to a contract agree to submit to arbitration all or any differences that may arise in connection with such contract relating to commer com mercia ciall mat matter terss or to any ot other her mat matter ter cap capabl ablee of set settle tlemen mentt by arb arbitr itrati ation, on, whe whethe therr or not the arbitration is to take place in a country to whose jurisdiction none of the parties is subject.212

This provision was complemented by Article IV, which provided that: The tribunals of the Contracting Parties, on being seized of a dispute regarding a contract made between persons to whom Article 1 applies and including an arbitration agreement whether referring to present or future differences which is valid by virtue of the said article and capable of being carried into effect, shall refer the parties on the application of either of them to the decision of the arbitrators. 213

In these two provisions, the Geneva Protocol planted the seeds for a number of prin pr inci cipl ples es of en enor ormo mous us fu futu turre im impo port rtan ance ce to th thee in inte tern rnat atio iona nall ar arbi bitr tral al process pr ocess — inclu including ding the pr presump esumptive tive validity validity of agr agreemen eements ts to arbit arbitrate rate future future (as well as existing) disputes, the obligation of national courts to refer parties to arbitration, the concept of arbitrating “commercial” disputes and disputes “capable of settlement by arbitration,” and the obligation to recognize international arbitration agreements on an equal footing with domestic arbitration agreements. As discussed 209. G. Born, Born,International Commercial Arbitration 58 (2009); I. Macneil, American Arbitration Law: Reformation, Nationalizatio Nationalization, n, Internationa Internationalization lization25-26 (1992); Benson, An Exploration of the Impact of Modern Arbitration Statutes on the Development of Arbitration in the United States, 11 J.L. Econ. & Org. 479, 491-94 (1995) (emphasizing the role of lobbying from the legal profession). 210. G. Born, Born,International Commercia Commerciall Arbitration59 (2009); A. van den Berg, The New York Arbitration Convention of 1958 6-7, 113-18 (1981); Lorenzen, Commercial Arbitration — International and Interstate Aspects, 43 Yale L.J. 716, 750 (1933-1934). 211. L.N.TProtocol, L.N.T.S. .S. 158 212. 27 Geneva Proto col,(1924). Art. I. The Convention also permitted Contracting States to limit its scope to “contracts which are considered as commerci commercial al under its national law.”Id. at Art. I. 213. Geneva Protocol, Protocol, Art. IV. IV.

1. Introduction to International Arbitration

below, all of these basic themes reappeared repeatedly in international conventions and an d na nati tion onal al le legi gisl slat atio ion n ov over er th thee ne next xt 80 ye year arss an and d rem emai ain n th thee fo foun unda dati tion on of th thee co conn214 temporary legal framework for international commercial arbitration. The Protocol also established standards which made international arbitration agreementsmore enforceable than domestic arbitration agreements had historically been in many nations,215 re refle flecti cting ng a del delibe iberat ratee pol policy icy of pr promo omotin ting g the use of arb arbitr itrati ation on to re resol solve ve international commercial disputes. Additionally,, Article III of the Geneva Pr Additionally Protocol otocol attempted to provide for the recognition of international arbitral awards. It declared that: Each Contracting State undertakes to ensure the execution by its authorities and in accordance with the provisions of its national laws of arbitral awards made in its own territory.216

This pr This provi ovisio sion n was ex extr treme emely ly lim limite ited, d, pr provi ovidin ding g onl onlyy for Con Contra tracti cting ng Sta States tes to enfo en forrce aw awar ards ds ma made de on th thei eirr ow own n ter terri ritor toryy (i (i.e .e., ., no nott “f “for orei eign gn”” aw awar ards ds,, ma made de in ot othe herr countr cou ntries ies). ). Eve Even n the then, n, enf enfor orcem cement ent was re requ quir ired ed onl onlyy in acc accor ordan dance ce wit with h loc local al law — eff effect ective ively ly mak making ing the com commit mitmen mentt dep depend endent ent on eac each h ind indiv ividu idual al sta state te s ar arbi bi-tration legislation. In contrast to the simple, but dramatic, provisions of the Geneva Protocol regarding arbitration agreements, Article III s treatment of arbitral awards was at best tentative and incomplete. Thee Ge Th Gene neva va Prot otoc ocol ol wa wass au augm gmen ente ted d by th thee Ge Gene neva va Co Conv nven enti tion on fo forr th thee Ex Exec ecut utio ion n 217 of Foreign Arbitral Awards of 1927. Recognizing the Protocol s deficiencies in dealing with this issue, the Geneva Convention expanded the enforceability of arbitral awards rendered pursuant to arbitration agreements subject to the Geneva Protocol. toc ol. It did so by requ equiri iring ng the reco ecogni gnitio tion n and enf enfor orcem cement ent of suc such h “fo “fore reign ign”” awa award rdss within any Contracting State (rather than only within the state where they were made, as un unde derr th thee Proto otoco col) l) an and d fo forb rbid iddi ding ng su subs bsta tant ntiv ivee ju judi dici cial al rev evie iew w of th thee me meri rits ts of su such ch 218 awards in recognition proceedings. Regrettably, the Convention placed the burden of proof in recognition proceedings on the award-creditor, requiring the award-creditor to demonstrate both the existence of a valid arbitration agreement,219 concerning an arbitrable subject matter,220 and that the arbitral proceedings had been conducted in accordance with the parties agreement.221 The Con Conven ventio tion n als also o requ equir ired ed the awa award rd-cr -credi editor tor to sho show w tha thatt ’

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222

the arbitral award had become “final” in the place223 of arbitration and was not contrary to the public policy of the recognizing state. This requirement of finality led

214. See See inf infra ra pp. 3131-36 36 (Ne (New w York Con Conven ventio tion), n), 3838-39 39 (Eu (Euro ropea pean n Con Conven ventio tion), n), and 4242-47 47 (UNCITRAL Model Law). 215. See supra pp. 15-26 andinfra pp. 159-73. 216. Geneva Protocol, Protocol, Art. III. 217. Geneva Convention on the Execution of Foreign Foreign Arbitral Awards, 1929, 92 L.N.T.S. L.N.T.S. 302 (1929). SeeG. Born,International Commercial Arbitration61 (2009); A. van den Berg,The New York Arbitration Convention of 19586-7, 113-18 (1981). 218. Geneva Convention, Arts. Arts. I, II, III, IV. IV. 219. Geneva Convention, Convention, Art. 1(a). 1(a). 220. 221. 222. 223.

Geneva Conven 1 Geneva Convention, Convention, Convention, tion, Art. Art. 1(b). 1(b). 1(c). (c). Geneva Convention, Convention, Art. 1(d). 1(d). Geneva Convention, Convention, Art. 1(e). 1(e).

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to the so-called “double exequatur” require requirement ment — wher whereby eby an award could effeceffectivelyy only be rec tivel recogniz ognized ed abroad under the Genev Genevaa Conv Convention ention if it had been con224 firmed by the courts of the place of the arbitration. This proved a major source of uncertainty regarding the finality of international arbitral awards. Despite their shortcomings, the Geneva Protocol and Geneva Convention were major steps towards today s legal framework for international commercial arbitration. tio n. Mos Mostt fun fundam dament entall allyy, bot both h ins instru trumen ments ts est establ ablish ished, ed, if onl onlyy imp imperf erfect ectly ly,, the bas basic ic ’

225

principle princi pless of the pr presu esumpt mptive ive val validi idity ty of int intern ernati ationa onall arb arbitr itrati ation on agr agreem eement entss and arbitral awards,226 and the enforceability of arbitration agreements by specific performance,227 as well as recognition of the parties autonomy to select the substantive law governing their relations228 and to determine the arbitration procedures. 229 Furt urther her,, the Gen Geneva eva Pr Proto otocol col and Con Conven ventio tion n bot both h ins inspir pired ed and par parall allele eled d national legislation and business initiatives to augment the legal regime governing international commercial arbitration agreements. In 1920, New York enacted arbitratio tra tion n leg legisl islati ation, on, lar largel gelyy par parall alleli eling ng the Pr Proto otocol col,, to ens ensur uree the val validi idity ty and enf enfor orcece230 ability of commercial arbitration agreements. With an eye towards ratification of the Gen Geneva eva Pr Proto otocol col,, Fran rance ce ado adopte pted d leg legisl islati ation on in 192 1925 5 tha thatt mad madee arb arbitr itrati ation on agr agreeee231 ments valid in commercial transactions, while similar legislation was enacted in England.232 Also in 1925, the United States enacted the Federal Arbitration Act — provid providing ing ’

the firstarbitration federal legislation in the United States of governing domestic (andprovided international) agreements. The centerpiece the FAA was §2, which 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,”233 while §§9 §§ 9 an and d 10 of th thee Ac Actt pr prov ovid ided ed fo forr th thee pr pres esum umpt ptiv ivee va vali lidi dity ty an and d en enfo forrce ceab abil ilit ityy of ar arbi bi-234 tral awards. Much like the 1923 Geneva Protocol, the stated purpose of the FAA was to reverse decades of judicial mistrust in the United States of arbitration and render arbitration agreements enforceable on the same terms as other contracts. 235

3. New York Con Conven ventio tion n The Geneva Protocol and the Geneva Convention were succeeded by the United Nation Nat ionss Co Conve nventi ntion on on the Reco ecogni gnitio tion n and Enf Enfor orcem cement ent of For oreig eign n Arb Arbitr itral al Awards.236 Generally referred to as the “New York Convention,” the treaty is by far the most significant contemporary legislative instrument relating to international 224. See See infr infraa pp. 112 1126, 6, 113 1133-3 3-34; 4; A. van den Ber Berg, g, The New York Arb Arbitr itrati ation on Con Conve venti ntion on of 195 1958 8 7 (198 (1981). 1). 225. See infra pp. 159-73. 226. See infra pp. 1126, 1131-33. 227. See infra pp. 261-80. 228. See infra pp. 924-34. 229. See infra pp. 724-28. 230. See G. Bor Born, n,International (2009) 09);; Actof Apr Apr.. 19, 192 1920, 0, ch.275, 192 1920 0 N.Y. InternationalCommercia Commerciall Arbitration 62 (20 Laws 803-807 (providing for validity of arbitration agreements). 231. French Commercial Commercial Code, 1925, Art. 631.See also von Mehren,International Commercial Arbitration: The Contribution of the French Jurisprudence, 46 La. L. Rev. 1045, 1049-51 (1985-1986) (discussing impact of 1925 amendment). 232. See Samuel, Arbitration Statutes in England and the USA , 8 Arb. & Disp. Res. L.J. 2, 13 (1999); G. Born, International Commercial Arbitration62 (2009). 233. U.S. FAA, FAA, 9 U.S.C. §2. For discussion discussion of §2, see infra pp. 49-50. 234. U.S. FAA, FAA, 9 U.S.C. §§9-10. For For discussion of §§9 and 10,see infrapp. 49-50, 1086-91, 1101-04, 1107-08. 235. See supra pp. 19-25 andinfrapp. 163-65,172. 236. 330 U.N.T.S., U.N.T.S., No. 4739; http://www.uncitral.or http://www.uncitral.org. g.

1. Introduction to International Arbitration

commercial arbitration. It provides what amounts to a universal constitutional charter for the international arbitral process, whose sweeping terms have enabled both national courts and arbitral tribunals to develop durable, effective means for enforcing international arbitration agreements and arbitral awards. Thee Co Th Conv nven enti tion on wa wass ad adop opte ted d — li lik ke ma many ny na nati tion onal al ar arbi bitr trat atio ion n st stat atut utes es — specif spe cifica icall llyy to add addrress the nee needs ds of the int intern ernati ationa onall bus busine iness ss com commu munit nityy, and in par par-ticular to improve the legal regime provided by the Geneva Protocol and Geneva 237

Convention for the international arbitral process. The first draft of what became the Convention was prepared by the International Chamber of Commerce in 1953. The ICC introduced the draft with the observation that “the 1927 Geneva Convention was a considerable step forward, but it no longer entirely meets modern economic nom ic re requ quir ireme ements nts,” ,” and wit with h the fai fairly rly rad radica icall obj object ective ive of “ob “obtai tainin ning g the ado adopti ption on 238 of a new international system of enforcement of arbitral awards.” Preliminary drafts of a revised convention were prepared by the ICC and the United Nations Economic and Social Council (“ECOSOC”), which then provided thee ba th basi siss fo forr a th thrree ee-w -wee eek k co conf nfer eren ence ce in Ne New w Yor ork k — th thee Un Unit ited ed Na Nati tion onss Co Conf nfer eren ence ce 239 on Commerci Commercial al Arbitration Arbitration — attend attended ed by 45 states in the Sprin Spring g of 1958. The New York York Conferen Conference ce resulted resulted in a docum document ent — the New York York Convention Convention — that was in many respects a radically innovative instrument, which created for the first time a comprehensive legal regime for the international arbitral process. ’

The original drafts ofent theofNew York Convention focused entirely on thefor recogn ogniti ition on and enf enfor orcem cement arbitr arb itral alawards , wi with th nowere seri se riou ous s at atte tent ntio ion n to th the e en enfo rce ce-240 ment of international arbitration agreements. This drafting approach paralleled that of the Geneva treaties (where the Geneva Protocol dealt with arbitration agreements and the Geneva Convention addressed awards).241 It was only late in the Conferenc fer encee tha thatt the del delega egates tes re recog cogniz nized ed the lim limita itatio tions ns of thi thiss app appro roach ach and con consid sider ered ed a proposal from the Dutch delegation to extend the treaty from the recognition of award awa rdss to int intern ernati ationa onall arb arbitr itrati ation on agr agreem eement ents. s. Tha Thatt app appro roach ach,, whi which ch was eve eventu ntuall allyy adopted, and the resulting provisions provisions regarding regarding the recognition and enforcement of international arbitration agreements form one of the central elements of the Convention.242 The text of the Convention was approved on June 10, 1958, by a unanimous vote of the Conference (with only the United States and three other countries abstaining).243 The Convention is set forth in English, French, Spanish, Russian, and Chinese texts, all of which are equally authentic. 244 The text of the Convention is only a 237. 23 7. A. vanden Ber Berg, g, The New York Arbi (1981) 1) (“alt (“although houghthe the Genev Genevaa Trea reaties ties wer weree Arbitrat tration ion Conve Conventio ntion n 7 (198 undoubted undoub tedly ly an imp impro rovem vement ent in com compar pariso ison n wit with h the pr previ evious ous sit situat uation ion,, the theyy wer weree sti still ll con consid sider ered ed ina inaddequate”). 238. Enforce Enforcement ment of Internationa Internationall Arbitral Awards, Report and Pre Preliminary liminary Draft Convention(ICC Publication No. 174 1953), reprinted in9(1) ICC Ct. Bull. 32, 32 (1998). 239. Sanders, The History of the New York Convention , in A. van den Berg ed., Improving the Efficiency of Arbitration Agreements Agreements and Awards: 40 Years Years of Application of the New York York Convention11, 12 (ICCA Congress Series No. 9 1999). 240. G. Born, Born,International Commercia Commerciall Arbitration93 (2009); A. van den Berg, The New York Arbitration Convention of 19588-10, 56 (1981). 241. See supra pp. 29-31. 242. See infra pp. 33-34, 159-73. 243. For a brief summary of these negotiations, negotiations,see A. van den Berg, The New York York Arbitration Convention of 1958 1-10 History of the Convention Improving ing (1981); (198 1); Sande Sanders, rs, The inA. van va nYork den de nConvention Berrg ed Be ed., .,Improv the Efficiency of Arbitration Agreements and Awards: 40 New YearsYork of Application of, the New 11 (ICCA Congress Series No. 9 1999). 244. New York York Convention, Art. XVI.

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few pages long, with the instrument s essential substance being contained in five concisely drafted provisions (Articles I through V). Despite its brevity, the Convention is now widely regarded as “the cornerstone of current international commercial arbitration.”245 In the apt words of Judge Stephen Schwebel, formerly President of the International Court of Justice, “It works.” 246 Or Or,, as the late Sir Michael Kerr put it, the New York Convention “is the foundation on which the whole of the edifice of international arbitration rests.”247 ’

It is of ofte ten n sa said id th that at th thee Co Conv nven enti tion on di did d no nott pr prov ovid idee a de deta tail iled ed le legi gisl slat ativ ivee reg egim imee fo forr all as all aspe pect ctss of in inte tern rnat atio iona nall ar arbi bitr trat atio ions ns (a (as, s, fo forr exa xamp mple le,, th thee UN UNCI CITR TRAL AL Mo Mode dell La Law w 248 would later do ). Rather, the Convention s provisions focused on the recognition and enforcement of arbitration agreements and arbitral awards, without specifically regu egulat lating ing the con conduc ductt of the arb arbitr itral al pr proce oceedi edings ngs or oth other er asp aspect ectss of the arb arbitr itral al pr proocess. As one national court has observed, the Convention was designed to “encouragee th ag thee rec ecog ogni niti tion on an and d en enfo forrce ceme ment nt of commer commercial cial arbitr arbitration ation agr agreement eementss in international contracts and to unify the standards by whichagreements to arbitrate are observed and arbitral awardsare enforced in the signatory nations.” 249 Within these fields, an essential objective of the Convention was uniformity: The Convention s drafters sought to establish a single uniform set of international legal standards for the enforcement of arbitration agreements and arbitral awards.250 In particula parti cularr, the Conv Conventio ention n s pr provi ovisio sions ns pr presc escrib ribee uni unifor form m int intern ernati ationa onall rul rules es tha that: t: (a) ’

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require courts to recognize enforce arbitral awards IIIe and an d IV IV), ),national subj su bjec ectt to a li limi mite ted d nu numb mber er and of sp spec ecif ifie ied d eforeign xcep xc epti tion ons s (A (Art rtic icle le V) V);;251(Articles (b) req requir uire national courts to recognize the validity of arbitration agreements, subject to specified exceptions (Article II);252 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)).253 The Convention s exceptions to the obligation to recognize foreign arbitral awards are limited to issues of jurisdiction, procedural regularity and fundamental fairness, compliance with the parties arbitration agreement me nt,, an and d pu publ blic ic po poli licy cy;; th they ey do no nott in incl clud udee rev evie iew w by a rec ecog ogni niti tion on co cour urtt of th thee me merr254 its of the arbitrators substantive decision. The New York Convention made a number of significant improvements in the reg egim imee of th thee Ge Gene neva va Pr Prot otoc ocol ol an and d Ge Gene neva va Co Conv nven enti tion on fo forr th thee en enfo forrce ceme ment nt of in inte terrnational arbitration agreements and arbitral awards. Particularly Particularly important were the New York Convention s shifting of the burden of proving the validity or invalidity of arbitral awards away from the party seeking enforcement to the party resisting ’

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245. A. van den Berg, Berg,The New York Arbitration Convention of 19581 (1981). See also G. Born, International Commercial Arbitration95 (2009). 246. Schw Schwebel, ebel,A Celebration of the the United Nations New York Convention on the Recognition Recognition and Enforcement Enforcement of Foreign Arbitral Awards, 12 Arb. Int l 83, 85 (1996). 247. Kerr Kerr,, Concord and Conflict in International Arbitration, 13 Arb. Int l 121, 127 (1997). 248. See infra pp. 43-47. 249. Scherk v. v. Alberto-Culver Co., 417 U.S. 506, 502 n.15 (U.S. S. Ct. 1974) (emphasis added). 250.. A. van den Ber 250 Berg, g, The New York Ar Arbit bitrat rationConve ionConventi ntion on of 195 1958 8 1, 6, 5454-55,168-6 55,168-69, 9, 262 262-63 -63,, 274 274,, 357 357-58 (19 (1981) 81) (“t (“the he sig signif nifica icance nce of the New York Con Conven ventio tion n for int intern ernati ationa onall com commer mercia ciall arb arbitr itrati ation on mak makes es it even more important that the Convention is interpreteduniformlyby the courts.”); Patocchi Patocchi & Jermini, in S. Berti et al. eds., International Arbitration in Switzerland Art. 194 ¶20 (2000) (“The provisions of the Convention . . . are to be interpreted and construed taking into account the need for a uniform interpretation of the Convention in all the contracting States.”). ’

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251. 252. 253. 254.

New Y III and V. New York York York ork Convention, Convention, Arts. Art. II(1). New York York Convention, Art. II(3). New York York Convention, Arts. V(1), V(2);infrapp. 1135-36.

1. Introduction to International Arbitration

enforcement,255 its recognition of substantial party autonomy with respect to choice of arb arbitr itral al pr proce ocedur dures es and law app applic licabl ablee to the arb arbitr itrati ation on agr agreem eement ent,,256 an and d it itss ab aboolition of the previous “doubleexequatur” requirement (which had required that arbitral tr al aw awar ards ds be co conf nfir irme med d in th thee ar arbi bitr tral al se seat at be befo forre be bein ing g rec ecog ogni nize zed d ab abrroa oad) d)..257 The Convention s various improvements were summarized by the President of the U.N. Conference on the Convention as follows: ’

[I]t was already apparent that the document represented an improvement on the Geneva Convention of 1927. It gave a wider definition of the awards to which the Convention applied; it reduced and simplified the requirements requirements with which the party seeking recognition or enforcement of an award would have to comply; it placed the burden of pr proo ooff on th thee pa part rtyy ag agai ains nstt wh whom om rec ecog ogni niti tion on or en enfo forrce ceme ment nt wa wass in invo vok ked ed;; it ga gave ve th thee partie par tiess gr great eater er fr freed eedom om in the cho choice ice of the arb arbitr itral al aut author hority ity and of the arb arbitr itrati ation on pr proocedures; it gave the authority before which the award was sought to be relied upon the right to order the party opposing the enforcement to give suitable security.258

More gen More genera erally lly,, the these se pr provi ovisio sions ns of the Con Conven ventio tion n wer weree int intend ended ed to pr promo omote te the use of arbitration as a means of resolving international commercial disputes, in order to facilitate international trade and investment.259 Despit Des pitee the Con Conven ventio tion n s br brev evit ityy an and d fo focu cuss on ar arbi bitr trat atio ion n ag agrreem eemen ents ts an and d ar arbi bitr tral al awards, the significance of its terms can scarcely be exaggerated. The Convention s ’

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provisions effected a fundamental restructuring of the international legal regime for provisions 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 arbitr arb itrati ation on agr agreem eement ent)) unt until il the their ir con conclu clusio sion n (r (reco ecogni gnitio tion n of the awa award rd). ). In so doi doing, ng, the Convention established for the first time a comprehensive international legal framework for international arbitration agreements, arbitral proceedings, and arbitral awards. Morreo Mo eove verr, th thee te term rmss of th this is le lega gall fr fram amew ewor ork k we werre im impo port rtan antt an and d rem emar arka kabl blyy in inno no-vative. Considering only the Convention s pr provi ovisio sions ns man mandat dating ing reco ecogni gnitio tion n of arb arbiitral awards, subject to a limited, exclusive list of exceptions, one delegate to the New York Y ork Conference termed the Convention a “very bold innovation.”260 Equally, the Convention s introduction of uniform international legal standards mandatorily ’

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261 requiring and enforcement agreements, subject to the onlyrecognition specified exceptions, was alsoofainternational bold advance.arbitration Taken together, the

255. SeeNew York Convention, Arts. III, IV, V; suprapp. 30-31, 33 andinfrapp. 1132-33. The shift in the bur burden den of pr proof oof was acc accomp omplis lished hed by Art Articl icles es III and V, whi which ch re requi quire red d the awa award rd-cr -credi editor tor to pr prese esent nt onlyy min onl minima imall evi eviden dence ce in sup suppor portt of re recog cognit nition ion of an awa award rd (in Art Articl iclee III) III),, whi while le spe specif cifyin ying g onl onlyy lim limite ited d grounds, which needed affirmatively to be proven, that could result in non-recognition (in Article V). See infrapp. 1132-34. 256. SeeNew York Convention, Arts. V(1)(a), 1(d); supra pp. 30-31, 33 andinfra pp. 728-33, 1057. 257. See supra pp. 30-31 andinfra pp. 1133-39. 258. U.N. Doc. E/CONF. E/CONF. 26/SR.25 at 2 (1958). 259.. Kaveri 259 Kaveritt Ste Steel el andCrane Ltdv. Ko Kone ne Cor Corp., p., 87 D.L D.L.R. .R.(4t (4th) h) 129 (19 (1992) 92) (“i (“itt is com common mon gr groun ound d tha thatt the evident purpose of Alberta s acceptance of the [New York] Convention is to promote international trade and commerce by the certainty that comes from a scheme of international arbitration”); Park, Neutrality,, Predictability and Economic Cooperation, 12(4) J. Int l Arb. 99 (1995); A. van den Berg, The New Neutrality ’

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York260. Arbitration Convention of 6/SR.13 195817-19 U.N. Doc. E/Conf.2 E/Conf.26/SR.13 at 3(1981). (1958). (1958). 261. The effect of the Convention on the recognition and enforcement of international international arbitration agreements agreemen ts is discussed below.See infrapp. 159-73, 322-40, 340-421.

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Convention s provisions regarding the recognition of arbitral awards and agreements also had the indirect effect of providing an international legal framework within which the arbitral proceedings could be conducted largely in accordance accordance with the parties desires and the arbitrators directions. Despite its present significance, the New York Convention initially attracted relative ti vely ly fe few w si sign gnat ator orie iess or ra rati tifi fica cati tion ons. s. On Only ly 26 of th thee 45 co coun untr trie iess pa part rtic icip ipat atin ing g in th thee Conf Co nfer eren ence ce si sign gned ed th thee Co Conv nven enti tion on pr prio iorr to it itss en entr tryy in into to fo forrce on Ju June ne 7, 19 1959 59.. Ma Many ny ’

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of the countries that did sign the Convention prior to June 1959, such as Belgium, the Netherlands, Sweden, and Switzerland, did not ratify it for several years thereafter. Other nations, including the United Kingdom and most Latin American and African states, did not accede to the Convention until many years later later..262 The Un Unite ited d 263 States did not ratify the Convention until 1970. Over time, however, states from all regions of the globe reconsidered their position,264 and today, some 144 nations have ratified the Convention. 265 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 depart dep arted ed fr from om tra tradit dition ionss of dis distru trust st of int intern ernati ationa onall arb arbitr itrati ation on and rat ratifi ified ed the Con Con-266 vention. The Convention has thus realized its drafters original aspirations and come to serve as a global charter for international arbitration. ’

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Article VII of the Newbilateral York Convention provides that the Convention does the not affect the validity of any or other multilateral arrangements concerning recognition and enforcement of foreign arbitral awards (except the Geneva Pr Protocol otocol and Geneva Convention, which are terminated as between Contracting States to the New York Convention).267 Article VII(1) of the Convention 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 tr trea eati ties es of th thee co coun untr tryy wh wher eree su such ch aw awar ard d is so soug ught ht to be rel elie ied d up upon on.” .”268Article VII has been interpreted by many national courts, in a “pro-enforcement” fashion, to permit agreements and awards to be enforced under either the Convention, as well as un unde derr an anot othe herr tr trea eaty ty (i (iff th that at tr trea eaty ty is by it itss te term rmss ap appl plic icab able le), ), or un unde derr na nati tion onal al la law w, 269 if more favorable than the Convention.

262. For example, prior to 1980, the New York Convention Convention had not been ratified by (among others) Algeria, Argentina, Bahrain, Bangladesh, Bolivia, Burkina Faso, Cameroon, China, Costa Rica, Guatemala,, Guine mala Guinea, a, Hait Haiti, i, Indon Indonesia esia,, Ke Kenya, nya, Laos Laos,, Leban Lebanon, on, Malay Malaysia, sia, Mali, Mauri Mauritania tania,, Mozam Mozambique, bique, Nepal Nepal,, Panama, Paraguay, Peru, Saudi Arabia, Senegal, Singapore, Turkey, Uruguay, Venezuela, Viet Nam, and Zimbabwe. Between 1980 and the present, all of these states acceded to the Convention. 263. In the United States, historic distrust of arbitration and the domestic domestic debate over the appropriate scope of the federal treaty power and the authority of the several states led to an initial recommendation dati on fro from m the U.S. deleg delegatio ation n agai against nst ratif ratifying ying the Conve Convention ntion.. Sprin Springer ger,, The Unit United ed Nati Nations ons Conv Conventi ention on on the Recognition and Enforcement of Foreign Arbitral Awards , 3 Int l Law. 320 (1969); Czysak & Sullivan, American Arbitration Law and the UN Convention, 13 Arb. J. 197 (1958). 264.. In 197 264 1970, 0, the Uni United ted Sta States tes re recon consid sider ered ed its pos positi ition on and acc accede eded d to the Con Conven ventio tion. n. See Quigley, Accession by the United States to the United Nations Convention on the Recognition and Enforceme Enforcement nt of Foreig oreign n Arbi, 70 Yale L.J. 1049 (1961); tral Awards Message from the President on the Convention on the Recognition and Enforcement Enforce ment of Foreign Foreign Arbitral Awards, S. Exec. Doc. E, 90th Cong., 2d Sess. 18 (1968). 265. Seehttp://www.uncitral.org. for a list of states that have ratified the Convention. 266. In ratifying the Convention, many states have attached reservations reservations that can have significant consequences in private disputes. These reservations frequently deal with reciprocity and limiting the ’

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Convention to disputes arisingVII(2). from “commercial” relations.See infrapp. 118-29, 151-57. 267. NewsYork Yapplicability ork Convention, Arts. VII(1), 268. New York York Convention, Arts. VII(1), VII(2). 269. SeeG. Born, International Commercial Arbitration, 2722-25, 2397-2403 (2009).

1. Introduction to International Arbitration

In virtually all Contracting States, the New York Convention has been implemented through national legislation. The practical effect of the Convention is thereforre de fo depe pend nden entt on bo both th th thee co cont nten entt of su such ch na nati tion onal al le legi gisl slat atio ion n an and d th thee interpretations given by national courts to the Convention and national implementing legislation.270 As noted above, an important aim of the Convention s drafters was uniformity. uniformity.271 Thee fu Th fulf lfil illm lmen entt of th that at ai aim m is de depe pend nden entt up upon on th thee wi will llin ingn gnes esss of na nati tion onal al le legi gisl slat atur ures es ’

and courts, in different Contracting States, to adopt uniform interpretations of the Convention. In general, national courts have risen to the challenge of adopting uniform interpretations of the Convention s provisions.272 That process has accelerated in recent decades, as national court decisions have become increasingly available in foreig for eign n jur jurisd isdict iction ionss and nat nation ional al cou courts rts hav havee inc incrreas easing ingly ly cit cited ed aut author horiti ities es fr from om for for-273 eign and international sources in interpreting the Convention. It al also so be bear arss em emph phas asis is th that at th thee Co Conv nven enti tion on is a “c “con onsti stitu tuti tion onal al”” in inst stru rume ment nt..274 The Convention s text is drafted in broad and general terms, designed for application in a multitude of states and legal systems, over a period of decades. By necessity, necessity, as well as design, the interpretation of the Convention must evolve and develop over time, as national courts and arbitral tribunals confront new issues, develop more refined analyses, and implement the treaty s underlying objectives. The process of interpretation and application of the Convention can be uneven ’

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an and d sl slow ow,,which butt it is bu very well we ll-a -ada dapt ed to th thee ev evol olvi ving ng need ne edss ofcommercial thee in th inte tern rnat atio iona nall ar arbi bitr tral al process, byve itsrynature is pted characterized by changing demands and conditions. It is also well-adapted to the nature of the Convention s constitutional structure, which leaves a substantial role for national law and national courts to play in the int intern ernati ationa onall arb arbitr itral al pr proce ocess, ss, but wit within hin the int intern ernati ationa onall fra framew mework ork and lim limiitations imposed by the Convention s provisio provisions. ns. ’

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4. Int Interer-Ame Americ rican an Con Conven vention tion In the early years of the twentieth century, much of South America effectively turned its bac back k on int intern ernati ationa onall com commer mercia ciall arb arbitr itrati ation. on. Onl Onlyy Bra Brazi zill rat ratifi ified ed the Gen Geneva eva Pr Prootoco to col, l, an and d ev even en it di did d no nott ad adop optt th thee Ge Gene neva va Co Conv nven enti tion on.. So Sout uth h Am Amer eric ican an st stat ates es we werre 270. See infra pp. 44-61. 271. See supra pp. 33-34. 272. 27 2. Ear Early ly ex exper perien ience ce was mor moree mix mixed. ed. P. San Sander ders, s, Commentary, I Y.B .B.. Co Comm mm.. Ar Arb. b. 20 207 7 (1 (197 976) 6);; II Y.B .B.. Comm. Arb. 254 (1977); IV Y.B. Y.B. Comm. Arb. 231 (1979); J. Lew, L. Mistelis & S. Kröll,Comparative Inter21,, 72 729 9 (2 (200 003) 3);; A. va van n de den n Be Berrg, The New York Conv national Commerci Commercial al Arbitration 21 Conventi ention: on: Its Inte Intended nded Effec Effects, ts, Its Interpretation, Interpretation, Salient Problem Areas26 (ASA Special Series No. 9 1996). 273. For rep repres resentat entative ive ex example amples, s,see Les Lesoth otho o Hig Highla hlands nds Dev Dev.. Aut Auth. h. v. Imp Impre regil gilo o SpA [20 [2005] 05] 2 All ER (Comm) 265, 280-81 (House of Lords) (citing U.S. authority); Fiona Trust & Holding Corp. v. Privalov [2007] EWCA Civ. 20 (English Ct. App.), affd, [2007] UKHL 40 (House of Lords) (citing U.S. and German aut author hority ity); ); Kar Karaha aha Bod Bodas as Co. v. Peru erusah sahaan aan Pert ertamb ambang angan an Min Minyak yak Dan Gas Bum Bumii Neg Negara ara,, 36 364 4 F.3d 274(5th Cir Cir.. 200 2004) 4) (ci (citin ting g Eng Englis lish, h, Hon Hong g Kong ong,, Swe Swedis dish, h, Swi Swiss,and ss,and oth other er aut author horiti ities) es);; TMR Ene Energ rgyy Lim Lim-ited ite d v. Sta State te Pr Prope operty rty Fund of Ukr Ukrain ainee, XXI XXIX X Y.B. Com Comm. m. Arb Arb.. 607 607,, 630 (Ca (Canad nadian ian Fed. Ct. 200 2003) 3) (20 (2004) 04) (citing English authority); Hebei Import & Export Corp. v. Polytek Eng g Co. Ltd, XXIVa Y.B. Comm. Arb. 652, 668 (Hong Kong Kong Ct. of Final App. 1998) (1999) (1999) (citing U.S. and Indian authorities); Gas Auth. Auth. of India, Ltd v. SPIE-CAPAG SA, XXIII Y.B. Comm. Arb. 688, 694 (Delhi High Ct. 1993) (1998) (citing U.S. authority); Brostrom Tankers AB v. Factorias Vulcano SA, XXX Y.B. Comm. Arb. 591, 596-97 (Dublin High Ct. 2004) (2005) (citing U.S. authority). ’

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Cf. Carbonneau, Receptioncharter” of Arbitration in United States Law , 40 Me. 274. L. Rev. 262, 272 (1988) (New York Convention isThe “universal of international commercial arbitration); Landau, The Requirement Requir ement of a Written Form Form for an Arbitration Agreement: Agreement: When “Written” Means “Oral”19, 64 (ICCA Congress Series No. 11 2003) (New York Convention is a “living document”).

B. Overvie Overview w of Contemporar Contemporary y Internatio International nal Arbitrati Arbitration on Conventio Conventions ns

very reluctant to ratify the New York Convention, for the most part only beginning to do so in the 1980s. Nevertheless, in 1975, the United States and most South American nations negotiated the Inter-American Convention on International Commercial Arbitration (“Inter-American Convention”), also known as the “Panama Convention.”275 The United States ratified the Convention in 1990; other parties include Mexico, Brazil, Argentina,, Venezuela, Colombia, Chile, Ecuador Argentina Ecuador,, Peru, Costa Rica, El Salvador Salvador,, Gua276

temala, Honduras, Panama, Paraguay, and Uruguay. The Inter-American Convention is similar to the New York Convention in many respects: Indeed, the Convention s drafting history makes clear that it was intended to provide the same results as the New York Convention.277Among other things, the Inter-American Convention provides for the presump presumptive tive validity and enforceabili enforceability ty 278 279 of arbitration agreements and arbitral awards, subject to specified exceptions similar to those in the New York Convention.280 The Inter-American Convention nonetheless introduces significant innovations, nott pr no pres esen entt in th thee Ne New w Yor ork k Co Conv nven enti tion on.. It do does es so by pr prov ovid idin ing g th that at,, wh wher eree th thee pa parrties ti es ha have ve no nott exp xprres essl slyy ag agrree eed d to an anyy in inst stit itut utio iona nall or ot othe herr ar arbi bitr trat atio ion n ru rule les, s, th thee ru rule less of the Inter-American Commercial Arbitration Commission (“IACAC”) will govern.281 In turn, the Commission has adopted rules that are almost identical to the UNCITRA UNC ITRAL L Arbit Arbitratio ration n Rule Rules. s.282 The Con Conven ventio tion n als also o int intrrodu oduces ces pr provi ovisio sions ns ’

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rapp egard ega rding ing the consti con ion of osing the arbitr itral al tribu tri andality) the partie par tiess desir freedom freedom to appoin oint t arb arbitr itrato ators rsstitut oftution their the ir cho choosi ngarb (rega (r egar rdle dless ssbunal ofnal nation nat ionali ty)..283 Less desirably ably,, the InterInt er-Ame Americ rican an Con Conven ventio tion n dep depart artss fr from om the New York Con Conven ventio tion n by omi omitti tting ng pr proovisions dealing expr expressly essly with judicial proceedings brought in national courts in breach of an arbitration agreement.284

275. Inter Inter-Amer -American ican Conve Conventio ntion n on Inter Internatio national nal Comme Commerci rcial al Arbit Arbitratio ration, n, sign signed ed in Pa Panama nama on January 30, 1975. The Convention is reprinted at III Y.B. Comm. Arb. 15 (1978) and http:// www.sice.oas.or www .sice.oas.org. g. 276. http://www.sice.oas.org. 277. See House Report No. 501, 101st 101st Cong., 2d Sess. 4 (1990),reprinted in1990 U.S.C.C.A.N. 675, 678 (“The New York Convention and the Inter-American Convention are intended to achieve the same resul re sults, ts, and the their ir key pr provi ovisio sions ns ado adopt pt the sam samee sta standa ndard rds, s, phr phrase ased d in the leg legal al sty style le app appro ropri priate ate for eac each h organ or ganiza izatio tion. n. It is the Com Commit mittee tee s exp xpec ecta tati tion on,, in vi view ew of th that at fa fact ct an and d th thee pa para rall llel el le legi gisl slat atio ion n un unde derr th thee Federal Arbitration Act that would be applied to the Conventions, that courts in the United States would achieve a general uniformity of results under the two conventions.”); Productos Mercantiles e Industriales, ale s, SA v. Fabe aberrge USA USA,, 23 F.3d 41, 45 (2d Cir Cir.. 199 1994) 4) (“t (“the he leg legisl islati ative ve his histor toryy of the Int Interer-Ame Americ rican an Con Con-vention s implementing statute . . . clearly demonstrates that Congress intended the Inter-American Convention to reach the same results as those reached under the New York Convention”). 278. Inter-American Convention, Art. 1. 279. Inter-American Convention, Convention, Arts. 4, 5. 280. Inter-American Convention, Art. 5. 281. Inter-American Convention, Art. 3. The Inter-American Commercial Commercial Arbitration Commission is composed of national sections in about a dozen nations; the AAA is the U.S. national section. IACAC s administrative headquarters is located in OAS facilities in Washington, D.C., and is overseen on a dayto-day basis by a Director General. 282. IACAC Rules, http://www.sice.oas.or http://www.sice.oas.org. g. ’

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283. Convention, Art. 2. II(3) 284. Inter-American Compare New York Conventio Conve ntion, n, Art. II(3);;infra pp. 267267-80. 80. See alsoA. van den Berg, The New York Arbitration Convention 102 (19 (1981) 81) (“t (“the he Pana anama ma Con Conven ventio tion n sho shows ws a cer certai tain n num number ber of lac lacuna unaee and obs obscucurities in comparison with the New York York Convention”).

1. Introduction to International Arbitration

Europe opean an Con Conven vention tion 5. Eur The 1961 European Convention on International Commercial Arbitration285 is one of the world s most important regional commercial arbitration treaties. Drafting of the European Convention began in 1954, aimed at producing a treaty that would impro imp rove ve upo upon n the the then-e n-exis xistin ting g leg legal al fra framew mework ork for int intern ernati ationa onall arb arbitr itrati ation on inv involv olv-286 ing parties from European states and particularly East-West trade. The drafting process was protracted (and delayed by the intervening New York Convention), but ulti ul tima matel telyy co conc nclu lude ded d wi with th si sign gnin ing g of th thee Co Conv nven enti tion on in Ge Gene neva va on Ap Apri rill 21 21,, 19 1961 61..287 The European Convention 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. Faso.288 The Convention consists of 19 articles and a detailed annex (dealing with certain procedural matters). The Convention addresses the three principal phases of the international arbitral process pr ocess — arbit arbitration ration agreements, agreements, arbitral procedur procedure, e, and arbit arbitral ral awar awards. ds. Wit With h regard to arbitration agreements, the Convention does not expressly provide for their presumptive validity, but instead provides for a specified, limited number of base ba sess fo forr th thee in inva vali lidi dity ty of su such ch ag agrree eeme ment ntss in pr proc ocee eedi ding ngss co conc ncer erni ning ng rec ecog ogni niti tion on of 289 awards. With regar regard d to the arbitral procedur procedure, e, the Convention limits the role of ’

na nati onal al co cour urts ts an and conf co nfir irms msthe theearbitration th auto au tono nomy my of thee pa th part rtie iess an and thee ar arbi bitr trat ator (or r ar arbi bi-290d th traltion institution) todconduct proceedings. With regard regar dors tos (o arbitral awards, the Convention is designed to supplement the New York Convention, essential ti ally ly de deal alin ing g on only ly wi with th th thee ef effe fect ctss of a ju judi dici cial al de deci cisi sion on an annu null llin ing g an aw awar ard d in th thee ar arbi bi-291 tral seat in other jurisdictions (and not with other recognition obligations). The Convention s impact in individual litigations has not been substantial (owing to the limited number of Contracting States, all of whom are also party to the New York Y ork Convention). Nonetheless, the Convention s effects on international arbitration doctrine have been significant. This is particularly true with regard to the arbitrators jurisdi jurisdicti ction on to con consid sider er cha challe llenge ngess to the their ir own jur jurisd isdict iction ion (so (so-ca -calle lled d 292 “competence-competence”) an and d th thee pa part rtie iess (and arbi arbitrator tratorss ) au auto tono nomy my to de dete terr293 mine mi ne th thee ar arbi bitr tral al pr proc oced edur ures es.. Thee Co Th Conv nven enti tion on is cu curr rren entl tlyy so some mewh what at ’

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285. European Convention on International Commercial Commercial Arbitration, 21 April, 1961, 484 U.N.T.S. U.N.T.S. 349. See G. Born, International Commercial Arbitration102-03 (2009); A. van den Berg, The New York Arbitration Convention92-98 (1981). 286. A. van den Berg, Berg, The New York Arbitration Convention 93 (1981) (European Convention s “main purpose is arbitration in EastEast-Wes Westt trade”). 287. See Hascher, European Convention on International Commercial Arbitration of 1961 — Commentary, XX Y.B. Comm. Arb. 1006 (1995). 288. G. Born, Born,International Commercial Arbitration102 (2009). 289. Eur European opean Convention, Convention, Art. V(1) (“eit (“either her non-existen non-existentt or null and void or had lapse lapsed”). d”). See G. Born, International Commercial Arbitration, 569-70 (2009). 290. European Convention, Arts. III, IV, IV, V, V, VI, VII, VII , and Annex. 291. European Convention, Convention, Art. IX. A. van den Berg, The New York Arbitration Convention 96 (1981) (“the European Convention cannot function without the New York Convention as the former is built upon the latter”). 292. European Convention, Arts. V, V, VI. As discussed below, below, Article V confirms the arbitral tribunal s ’

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competence-competen competence-competence ceto topermit consider challenges to itsofown jurisdiction, while Article VI arbitral providestribunal. in principle for national courts initial resolution jurisdictional objections by the SeeG. Born, International Commercial Arbitration861-63 (2009). 293. European Convention, Convention, Art. IV and Annex.

B. Overvie Overview w of Contemporar Contemporary y Internatio International nal Arbitrati Arbitration on Conventio Conventions ns

dated — re dated refle flecti cting ng its ori origin ginss dur during ing the Col Cold d War — and efforts efforts are underway underway to 294 revise its provisi provisions. ons.

6. IC ICSI SID D Co Conv nven entio tion n The International Centre for the Settlement of Investment Disputes (“ICSID”) is a specia spe cializ lized ed arb arbitr itrati ation on ins instit tituti ution, on, est establ ablish ished ed pur pursua suant nt to the soso-cal called led “IC “ICSID SID Con Con-vention” or “W “Washington ashington Convention Convention”” of 1965.295 ICSID was established at the initiative of the International Bank for Reconstruction and Development (“IBRD” or “World Bank”) and is based at the World Bank s Washington headquarters. The ICSID Convention is designed to facilitate the settlement of “investment disputes” (i.e., “legal dispute[s] arising directly out of . . . investment[s]”) that the parties ti es ha have ve ag agrree eed d to su subm bmit it to IC ICSI SID. D.296 Inv Investm estment ent dis disput putes es ar aree def define ined d as controversies that arise out of an “investment” and are between a Contracting State or designated state entity (but not merely a private entity headquartered or based in a Co Cont ntra ract ctin ing g St Stat ate) e) an and d a na nati tion onal al of an anot othe herr si sign gnat ator oryy st stat ate. e.297As to such disputes, the Convention provides both conciliation298 and arbitration procedures. ICSID arbitrations are governed by the ICSID Convention and the ICSID Arbitration Rules.299 ’

The ICSID Convention contains aFirst, number of comparatively unusual provisions relating to international arbitration. ICSID awards are directly enforceable in 300 sign si gnat ator oryy st stat ates es,, wi with thou outt an anyy me meth thod od of rev evie iew w in na nati tion onal al co cour urts ts.. Th This is is a su subs bsta tanntial difference from the New York Convention model, where arbitral awards are subject to annulment (in the arbitral seat) and non-recognition (elsewhere). (elsewhere). Second, when a party challenges an ICSID award, the Convention empowers the Chai Ch airm rman an of th thee Ad Admi mini nist stra rati tive ve Co Coun unci cill of ICS ICSID ID to ap appo poin intt an ad ho hocc co comm mmit itte teee to 301 review, and possibly annul, awards; if an award is annulled it may be resubmitted to a new arbitral tribunal.302 The ICSID annulment mechanism was initially criticize ci zed, d, on th thee gr grou ound ndss th that at it pe perm rmit itss un undu duly ly ext xten ensi sive ve ap appe pell llat atee rev evie iew w, as we well ll as po posssibilities for political influence; more recent commentary and experience has been generally favorable.303

294.. Uni 294 United ted Nat Nation ion Eco Econom nomic ic andSocia andSociall Cou Counci ncil, l, Eco Econom nomic ic Com Commis missio sion n for Eur Europe ope,, Doc Doc.. No.trade No.trade// 2000/7, ¶¶25-28 (10 April 2000); http://www.unece.org/ie/Wp5/eucon.htm (Web site of expert advisory group charged with reviewing the European Convention for possible revisions). 295. Convention on the Settlement of Investment Disputes Between States and Nationals of Other States Sta tes,, pr produ oduced ced at Wash ashing ington ton,, D.C D.C., ., 18 Mar March ch 196 1965. 5. The Con Conven ventio tion n can be fou found nd at 575 U.N U.N.T .T.S. .S. 160 (No. 8359) (1966) and at www/worldbank.or www/worldbank.org/icsid/. g/icsid/.See Documentary Supplement, pp. 21-39. 296. ICSID Convention, Art. 25(1). 25(1). 297. SeeC. Schreuer et al., The ICSID Convention: A Commentary Art. 25 ¶¶3, 212, 230, 268 (2009). 298. ICSID Convention, Arts. Arts. 28-35. 299.. C. Sch 299 Schre reuer uer et al. al.,, The ICSID Convention: A CommentaryArt. 44 ¶1 (2009). The ICSID Arbitration Rules are available at www www.worldbank.or .worldbank.org/icsid. g/icsid. 300. ICSID Convention, Arts. Arts. 53-54. 301. ICSID Convention, Art. Art. 52.See C. Schreuer et al., The ICSID Convention: A Commentary Art. 52 ¶¶340-349, 355-387 (2009). Art. 302. ICSID Convention, Art. 52.See C. Schreuer et al., The ICSID Convention: A Commentary Art. 52 (2009). 303. E.g., Redfern, ICSID — Losing Its Appeal? , 3 Arb. Int l 98 (1987). ’

1. Introduction to International Arbitration

Nearly 150 countries, from all geographical regions of the world, have ratified the ICSID Convention.304 ICSID s casel caseload oad has very significantl significantlyy incr increased eased in the past two decades, particularly as a consequence of arbitrations brought pursuant to bilateral investment treaties (“BITs”) or investment protection legislation.305 ICSID curren entl tlyy is ad admi mini nist ster erin ing g mo morre th than an 10 100 0 ca case ses, s, wi with th to tota tall am amou ount ntss in di disp sput utee exc xcee eedi ding ng 306 $30 billion, and ICSID tribunals have issued more than 100 awards. ’

7. Bilater Bilateral al Investme Investment nt Treati Treaties es or Inves Investment tment Protectio Protection n Agreements Agreements Bilateral investment treaties (“BITs”) or investment protection agreements (“IPAs”) became common during the 1980s and 1990s as a means of encouraging capital invest inv estmen mentt in dev develo elopi ping ng mar mark kets ets..307 Ca Capit pitalal-ex expor portin ting g sta states tes (in (inclu cludin ding g the Uni United ted States, most Western European states, and Japan) were the earliest and most vigorous proponents of the negotiation of BITs, principally with countries in developing regions. More recently, states from all regions of the world and in all stages of development have entered into BITs. A recent tally indicated that more than 2,500 BITs are presently operative.308 Most Mo st BIT BITss pr provi ovide de sig signif nifica icant nt sub substa stanti ntive ve pr protec otectio tions ns for inv invest estmen ments ts mad madee by for for-eign investors, including guarantees against expropriation and denials of fair and equitable treatment.309 BITs also frequently contain provisions that permit foreign investors to require international arbitration (typically referred to as “investor-State arbi ar bitr trat atio ion n”) of sp spec ecif ifie ied d ca cate tego gori ries es of in inve vest stme ment nt di disp sput utes es wi with th th thee ho host st state — incl including uding in the absen absence ce of a traditional traditional contractual contractual arbitration arbitration agreement agreement 310 with the host state. The possibility of “arbitration without privity” is an important option in some international disputes and represents a substantial development in the evolution of international arbitration.311 In addition, many BITs contain provisions dealing with the finality and enforceability of international arbitration awards issued pursuant to the treaty.312 A sample BIT (between the United Kingdom and Bosnia-Herzegovina) is included in the Documentary Supplement. 304. See http://www.worldbank.org. In the past year, several states (including Bolivia, Venezuela, Ecuador) Ecuado r) hav havee re renun nuncia ciated ted or lim limite ited, d, int intent ention ionss to re renou nounce nce,, or hav havee the their ir acc access ession ionss to the ICSI ICSID D Con Con-vention. 305. See infra p. 40. the Most of 12, International Investment Agreements: A Common Agenda (OECD/ICSID/ 306. Dani Danino, no,MakingDecember UNCTAD Symposium, 2005), available at http://worldbank.int/icsid/highlights/addressrd-004.htm. 307. Ther Theree ar aree also multilateral multilateral convention conventions, s, in addi addition tion to the ICSID Conve Conventio ntion, n, in particular particular regions or economic sectors. These include the Energy Charter, Charter, the North American Trade Agreement, Agreement, and the ASEAN Investment Agreement. 308. UNCT UNCTAD, AD, 1 Bila Bilateral teral Inves Investment tment Trea reaties ties 1995 1995-200 -2006: 6: Tren rends ds In Inves Investment tment Rulem Rulemakin aking g (UNCTAD/ITE/IIA/2006/5); UNCTAD, IIA Monitor No. 3 (2006), The Entry into Force of Bilateral Investment Treaties, UNCTAD/WEB/ITE/IIA/2006/9. See also Parra,The Role of ICSID in the Settlement of Investment Disputes, 16 ICSID News (1999). 309. For commentary, commentary, see C. McLachlan, L. Shore & M. Weiniger, International Investment Arbitration ¶¶1.24-1.30, ¶2.20 (2007); J. Pauls Paulsson, son,Denial of Justice in International Law (2005). 310. UNCT UNCTAD, AD, 100-1 100-114 14 Bila Bilateral teral Inves Investmen tmentt Trea reaties ties 1995 1995-200 -2006: 6: Tren rends ds In Inves Investmen tmentt Rule Rulemaki making ng (UNCTAD/ITE/IIA/2006/5). 311. See infra pp. 457-62; Paulsson, Arbitration Without Privity, 10 ICSID L. Rev. 232 (1995); C. Schreuer et al., The ICSID Convention: A Commentary Art. 25 ¶¶378,392-467191, 196-217 (2009). 312. For For comm commentar entaryy on BIT BITs, s,see UNCT UNCTAD, AD, 116-1 116-18 8 Bila Bilateral teral Inves Investment tment Trea reaties ties 1995 1995-200 -2006: 6: Tren rends ds In Inves Investmen tmentt Rule Rulemakin making g (UNCT (UNCTAD/IT AD/ITE/IIA/ E/IIA/2006 2006/5); /5); R. Dolz Dolzer er & M. Stev Stevens, ens,Bilateral Investment Treaties (1995); K. Vandevelde, United States Bilateral Investment Treatie reaties: s: Policy and Practice(1992); L. Reed et al., A Guide to ICSID Arbitration(2004); R. Bishop et al ., Foreign Foreign Investment Disputes — Cases, Materials and Commentary (2 (200 005) 5);; C. Du Duga gan n et al., Inve Investor stor-Sta -State te Arbi Arbitrat tration ion (20 (2008) 08);; A. Bjo Bjorkl rklund und et al., Inves Investment tment Disp Disputes utes ackee, ee,Bilateral Investment Under NAFTA: An Annotated Guide to NAFTA Chapter 11 (2006); Yack Investment Treat Treaties, ies, Credible Credible

C. Overvie Overview w of Natio National nal Arbitr Arbitration ation Legisl Legislation ation

C. OV OVER ERVIEW VIEW OF NA NATIONA TIONAL L ARBITRA ARBITRATION TION LEGISLA LEGISLATION TION Many nations have enacted arbitration legislation, which implements the New York Convention (or other, other, regional arbitration treaties) and provides a basic legal framework for international arbitration agreements, arbitral proceedings, and arbitral awards. These statutory regimes are directed primarily at international commercial arbitration but, in some instances, extend to international investment or interstate arbitration. National arbitration statutes are of fundamental importance in giving effect eff ect to — or cr creat eating ing obstacle obstacless to — the function functioning ing of the internat internation ional al arb arbitr itral al process. Despite occasional rhetoric as to the “autonomy” of the international arbitral process,313 it is essential to the efficient functioning of the arbitral process, and the realization of the parties objectives in agreeing to arbitrate, that national courts give effect to such agreements and provide support for the arbitral process. The enac en actm tmen entt of le legi gisl slat atio ion n ac acco comp mpli lish shin ing g th thes esee en ends ds ha hass be been en a ma majo jorr ob obje jecti ctive ve — an and d 314 achievemen achie vementt — of developed developed trading trading states over the past 50 years. Over the past several decades, large numbers of developed and less-developed states have enacted revised or improved legislation dealing with international commercial arbitration. The extent of these legislative revisions is striking, both in number numb er and dive diversity rsity.. Impor Important tant new enactm enactments, ents, or thor thorough ough rev revisio isions, ns, have ’

occurred in Algeria (1993), Australia (1989 and 2009), Austria (2005), Bangladesh (2001), Bahrain (1994), Brazil (1996), Bulgaria (1993), Cambodia (2006), China (199 (1 991 1 an and d 19 1994 94), ), Co Colo lomb mbia ia (1 (199 991) 1),, Co Cost staa Ri Rica ca (1 (199 997) 7),, Cr Croa oati tiaa (2 (200 001) 1),, Cz Czec ech h Rep epub ub-lic (19 (1994) 94),, Den Denmar mark k (20 (2005) 05),, Eng Englan land d (19 (1996) 96),, Egy Egypt pt (19 (1994) 94),, Finl inland and (19 (1992) 92),, Ger German manyy (1998), Greece (1999), Hong Kong (1997), India (1996), Indonesia (1990), Ireland (1998), Italy (1994), Mexico (1989 and 1993), Nicaragua (2005), Norway (2004), Peru (1992), Poland (2005), Russia (1993), Scotland (2009), Singapore (1994), Spain (2004), Tunisia (1993), Turkey (2001), and the United Arab Emirates (1992). Particularly in civil law jurisdictions, early arbitration legislation was often a part or chapter within the national Code of Civil Procedure.315 This continues to be the case ca se in a nu numb mber er of ju juri risd sdic icti tion onss ev even en to toda dayy.316 In co comm mmon on la law w ju juri risd sdic icti tion ons, s, th thee te tenndency den cy was (an (and d re remai mains) ns) to ena enact ct sep separa arate te leg legisl islati ation on dea dealin ling g spe specif cifica ically lly wit with h 317 arbitr arb itrati ation on (or int intern ernati ationa onall arb arbitr itrati ation) on).. Thee gr Th grow owin ing g po popu pula lari rity ty of th thee 318 UNCITRAL Model Law on International Commercial Arbitration has made the latter lat ter app appro roach ach of sta standnd-alo alone ne arb arbitr itrati ation on leg legisl islati ation on inc incre reasi asingl nglyy com common mon..

Commitment, and the Rule of (International) Law: Do BITs Promote Foreign Direct Investment?, 42 Law & Soc. Rev. 805 (2008). 313. SeeG. Born, International Commercial Arbitration1294-1310 (2009). 314. Id. at 109; Strong,Research in International Commercial Arbitration: Special Skills, Special Sources, 20 Am. Rev. Rev. Int l Arb. 119 (2009). 315. M. de Boisséson,Le droit français de l arbitrage interne et international international ¶¶8-11 (2d ed. 1990); Weiss, Arbitration in Germany, 43 Law Q. Rev. 205, 206 (1927). 316. E.g., French French New Code of Civil Procedure; Netherlands Code of Civil Procedu Procedure; re; German Zivilprocessordnung processor dnung (“ZPO”); Belgian Judicial Code. ’

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317. E.g., Samuel,Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. J. 1, 32 (1999); U.S. FAA, 9 U.S.C. §§1-16; English Arbitration Act, 1996; Japanese Arbitration Act; Singapore International Arbitration Act; Indian Arbitration and Conciliation Act, 1996. 318. See infra pp. 43-47.

1. Introduction to International Arbitration

many,, but not all,319 cases, national arbitration statutes are As discussed below, in many appli app licab cable le onl onlyy to int intern ernati ationa onall (no (nott dom domesti estic) c) arb arbitr itrati ations ons,, or con contai tain n sep separa arate te par parts ts dealing differently with domestic and international arbitration. This approach has generally been adopted in order to permit the application of particularly “proarbitration” rules and procedures in the international context, which may not (for histor his torica icall or oth other er re reaso asons) ns) be app appro ropri priate ate for pu pure rely ly dom domest estic ic mat matter ters. s.320 Nevertheless, a number of countries have adopted the same legislation for both domestic and international arbitrations (even then, however, with specific provisions that treat the two fields differently with regard to particular subjects).321 Broadly speaking, there are two categories of national arbitration legislation: statutes which are supportive of the international arbitral process (increasingly, but not alwa al ways ys,, mo mode dele led d on th thee UN UNCI CITR TRAL AL Mo Mode dell La Law) w) an and d st stat atut utes es wh whic ich h ar aree no nott su supp ppor orttive of the arbitral process. Both of these types of legislation are discussed below.

1. Suppo Supportive rtive Nation National al Arbitr Arbitration ation Legis Legislation lation Most states in Europe, North America, and Asia have adopted legislation that provides effective and stable support for the arbitral process. In many cases, developed jurisdictions have progr progressively essively refined their national arbitration statutes, adopting either amendments or new legislation to process make their regimes maximally supportive for the international arbitral andarbitration attractive to users. Thus, over the past 40 years, virtually every major developed country has substantially revised or ent entir irely ely repl eplace aced d its int intern ernati ationa onall arb arbitr itrati ation on leg legisl islati ation, on, in eve every ry cas case, e, to fac facili ilitat tatee 322 the arbitral process and promote the use of international arbitration. Paralleling the main features of the New York Convention, the pillars of modern arbitration statutes are provisions that affirm the capacity and freedom of parties to enter into valid and binding agreements to arbitrate future commercial disputes, 323 provide mechanisms for the enforcement of such agreements by national courts (through orders to stay litigation or to compel arbitration), 324 prescribe procedures for confirming or annulling arbitral awards,325 and require the recognition and enforcement of foreign arbitral awards.326 In many cases, natio national nal arbitration arbitration statutes also authorize limited judicial assistance to the arbitral process; this assistance can inc includ ludee sel select ecting ing arb arbitr itrato ators, rs, enf enfor orcin cing g a tri tribun bunal al s or orde ders rs wi with th res espe pect ct to ’

319. See infra pp. 139-51. 320. The reasoning for distinguishing distinguishing international matters from from domestic ones rests on the greater jurisdictional, choice-of-law choice-of-law,, and enforcement uncertainties in the international context and the need for predictability and certainty in international commerce. See supra pp. 13-14. These considerations have been bee n re relie lied d on in som somee nat nation ional al cou court rt dec decisi isions ons.. See Mitsu Mitsubishi bishi Motor Motorss Corp. v. Sole Solerr Chrys Chryslerler-Plymo Plymouth, uth, Inc., 473 U.S. 614 (U.S. S. Ct. 1985); Scherk v. Alberto-Culver Co., 417 U.S. 506, 517 n.10 (U.S. S. Ct. 1974); Judgment of 3 June 1997,177 Bull. civ. civ. L. (F (French rench Cour de cassation civ. civ. 1e). 321. 32 1. For ex examp ample, le, Eng Englan land, d, Spa Spain, in, and Ger German manyy s ena enactm ctment ent of the UNC UNCITR ITRAL AL Mod Model el Law del delete eted d provisions limiting the legislation s application to “international” arbitrations, extending it to all arbitration. German ZPO, §1025; English Arbitration Act, 1996, §2; Spainish Arbitration Act, Art. 3. 322. This includes legislation in France, Switzerland, Germany, Germany, Austria, Italy, Spain, and all other Continenta Conti nentall Eur European opean states. It also includes England, Canada (and its pro province vinces), s), Aust Australia ralia,, and New Zealand, as well as India, Japan, Korea, Singapore, Malaysia, and Hong Kong. ’

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The principal exception is the United States, where the FAA dates to 1925, while U.S. implementing legislation for the New York Convention dates to 1970. See infra pp. 47-52. 323. See infra pp. 159-73, 281-457. 324. See infra pp. 261-80. 325. See infra pp. 1047-1109. 326. See infra pp. 1125-1205.

C. Overvie Overview w of Natio National nal Arbitr Arbitration ation Legisl Legislation ation

evidence-taking or discovery, and granting provisional relief in aid of arbitration.327 In addition, most modern arbitration legislation affirms the parties autonomy to agree upon arbitral procedures and, sometimes, the applicable substantive law governing the parties dispute, while narrowly limiting the power of national courts to interfere in the arbitral process, either when arbitral proceedings are pending or in reviewing reviewin g arbitral awards.328 As one distinguished authority put it, one focus of national legislative developments over the past four decades ’

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is fo foun und d in th thee wi wide deni ning ng of th thee pa part rtie iess aut autono onomy my in regu egulat lating ing qua qualif lifyin ying g asp aspect ectss of the arbitration (number and manner of appointment of arbitrators; seat and language of the arb arbitr itrati ation; on; rul rules es app applic licabl ablee to the pr proc oceed eeding ings; s; ru rules les app applic licabl ablee to the mer merits its of the dispute; and waiver of means of recourse against the award).329 ’

The central objective of these legislative enactments 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, developed and other states have sought to promote the use of arbitration exp xprres essl slyy as a wa wayy of mi miti tiga gati ting ng su such ch ri risk sks. s.330Among other things, they have done so through enactment of modern arbitration statutes, giving effect to the constitutional principles of the New York Convention, ensuring the validity and enforceability of international arbitration agreements and awards, and facilitating the autonomy of the arbitral process.

a. UNCI UNCITRAL TRAL Mode Modell Law and 2006 Rev Revision isionss The United Nations Commission on International Trade Law (“UNCITRAL”) Model Law on International Commercial Arbitration (“UNCITRAL Model Law”) is the single most important legislative instrument in the field of international commercial arbitration. It has been adopted in a substantial (and growing) number of jurisdictions and served as a model for legislation and judicial decisions in many others.331 Recent revisions to the Model Law (in 2006) sought to improve its legislative framework,332 introducing new features and providing a good representative example of ongoing legislative efforts aimed at improving the international arbitral process. Thee Mo Th Mode dell La Law w wa wass in init itia iated ted by a pr prop opos osal al fr from om th thee As Asia ian n Afr Afric ican an Le Lega gall Co Cons nsul ulta ta-tive Committee to supplement the New York Convention with a protocol regarding

327. See infra pp. 768-78, 778-91. 328. See infra pp. 735-48. 329. Bernardini Bernardini,, The Role of the International Arbitrator , 20 Arb. Int l 113, 115 (2004). 330. See supra pp. 13-14, 34; Konkan Railways Corp. v. Mehul Constr Constr.. Co., (2000) 7 S.C. 201 (Indian S. Ct.) (“T (“To o attract the confidence of the international mercantile mercantile community and the growing volume of India s trade and commerci commercial al relationship with the rest of the world after the new liberalisation policy of the Gov Govern ernmen ment, t, Ind Indian ian Parl arliam iament ent was per persua suaded ded to ena enact ct the Arb Arbitr itrati ation on and Con Concil ciliat iation ion Act of 199 1996 6 in UN UNCIT CITRA RAL L Mo Mode del. l. . . .” .”); ); S. Rep ep.. No No.. 70 702, 2, 91 91st st Co Cong ng., ., 2d Se Sess ss.. 11-2 2 (1 (197 970) 0) (“ (“In In th thee co comm mmit itte teee s vie view w, the pr provi ovisio sions ns of S. 327 3274 4 [im [imple plemen mentin ting g the New York Con Conven ventio tion] n] wil willl ser serve ve the bes bestt int inter erest estss of Ame Ameriri’

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cans doing business abroad by encouraging them to submit their commercial disputes to impartial arbitration for awards which can be enforced in both U.S. and foreign courts.”). 331. See supra p. 41 and infra pp. 45-46. 332. See infra pp. 45-46; UNCITRAL Model Law, 2006 Revisions.

1. Introduction to International Arbitration

party-adopted arbitration rules.333 The origins of the UNCITRAL Model Law are detail det ailed ed in a Repo eport rt by the UN Sec Secrreta etary ry-Ge -Gener neral, al, tit titled led “P “Poss ossibl iblee Feat eatur ures es of a Mo Model del Law of International Commercial Arbitration.” Among other things, the Report declared that: The ultimate goal of a Model Law would be to facilitate international commercial arbitration and to ensure its proper functioning and recognition.334

The Secretary Secretary-General -General s Report also identified a number of “defects” in national laws, which the New York Convention had been addressed towards remedying, but which persisted in national legal systems: ’

To give only a few examples, such provisions may relate to, and be deemed to unduly restrict, the freedom of parties to submit future disputes to arbitration, or the selection and appointment of arbitrators, or the competence of the arbitral tribunal to decide on its own competence or to conduct the proceedings as deemed appropriate taking into accoun acc ountt the par partie tiess wishes. Other such restr restrictions ictions may relate to the choice of the applicable law, both the law governing the arbitral procedure and the one applicable to the substance of the dispute. Supervision and control by courts is another importance feature not always welcomed by parties especially if exerted on the merits of the case. 335 ’

The Report was the basis for extensive consultations and debates involving states, the bus busine iness ss and int intern ernati ationa onall arb arbitr itrati ation on com commun munity ity (e. (e.g., g., Int Intern ernati ationa onall Cou Counci ncill for Commer Com mercia ciall Arb Arbitr itrati ation; on; ICC Int Intern ernati ationa onall Cou Court rt of Arb Arbitr itrati ation) on),, and re regio gional nal or orgaga336 nizations (e.g., Asian-African Legal Consultative Committee). These discussions ultim ul timate ately ly pr produ oduced ced the curr current ent dra draft ft of the Mo Model del Law Law,, whi which ch UN UNCI CITRA TRAL L approved in a resolution adopted in 1985; the Model Law was approved by a U.N. General Assembly resolution later the same year.337 The Model Law was designed to be implemented by national legislatures, with the objective of further harmonizing the treatment of international commercial arbitration in different countries. The Law consists of 36 articles, which deal comprehensively with the issues that arise in national courts in connection with international arbitr arb itrati ation. on. Amo Among ng oth other er thi things ngs,, the law con contai tains ns pr provi ovisio sions ns con concer cernin ning g the enf enfor orcecementt of arb men arbitr itrati ation on agr agreem eement entss (Ar (Artic ticles les 7-9 7-9), ), app appoin ointme tment nt of and cha chall lleng enges es to arb arbiitrators 10-15), jurisdiction of arbitratorsincluding (Article 16), provisional measures (Article(Articles 17), conduct of the arbitral proceedings, language, seat (or place) of arb arbitr itrati ation, on, and pr proce ocedur dures es (Ar (Artic ticles les 1818-26) 26),, evi eviden dencece-tak taking ing and dis discov covery ery (Article 27), applicable substantive law (Article 28), arbitral awards (Articles 29-33), sett se ttin ing g as asid idee or va vaca cati ting ng aw awar ards ds (A (Art rtic icle le 34 34), ), an and d rec ecog ogni niti tion on an and d en enfo forrce ceme ment nt of fo forreign arbitral awards, including bases for non-recognition (Articles 35-36).

333. Note to the Secretary General, 8 UNCITRAL Y.B. Y.B. 233 (1977). 334. Report by the Secretary Secretary General, General, Possible Features of a Model Law of International Commercial Arbitration, UN Doc. A/CN.9/207, at ¶¶9-11 (14 May 1981). 335. Report by the Secretary General, Possible Features of a Model Law of International Commercial Arbitration, UN Doc. A/CN.9/207, at ¶10 (14 May 1981). 336. H. Holtzmann Holtzmann & J. Neuhaus,A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative Legislative History and Commentary12-13 (1989). 337. Resolu Resolution tion No. 40/72 of the U.N. General Assembly, Assembly, dated December 11, 1985.

C. Overvie Overview w of Natio National nal Arbitr Arbitration ation Legisl Legislation ation

Under the Model Law, Law, written international arbitration agreements are presumptively valid and enforceable, subject to limited, specified exceptions. 338 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. 339 The Model Law also adopts the separability doctrine340 and expressly grants arbitrators the authority (competence-competence) to consider their own jurisdiction.341 The Model Law prescribes a principle of judicial non-intervention in the arbitral proceeding.342 It also affirms the parties autonomy (subject to specified due process limits) with regard to the arbitral procedures343 and, absent agreement between the parties, the tribunal s authority to prescribe such procedures. procedures.344 The basic approach of the UNCITRAL Model Law to the arbitral proceedings is to define a basic set of procedu pr ocedural ral rules which — subj subject ect to a very limited number of fundamental, fundamental, nonderoga der ogable ble pri princi nciple pless of fai fairne rness, ss, due pr proce ocess, ss, and equ equali ality ty of tr treat eatmen mentt345 — th thee par ar-346 ties are free to alter by agreement. The Model Law also provides for judicial assistance to the arbitral process in prescribed respects, including provisional measures, constitution of a tribunal, and evidence-taking. 347 The Mod Model el Law man mandat dates es the pr presu esumpt mptive ive val validi idity ty of int intern ernati ationa onall arb arbitr itral al awar aw ards ds,, su subj bjec ectt to a li limi mite ted, d, exc xclu lusi sive ve li list st of gr grou ound ndss fo forr an annu nulm lmen entt of ar arbi bitr tral al aw awar ards ds in the arbitral seat; these grounds precisely parallel those available under the New York Y ork Convention for non-recogniti non-recognition on of an award (i.e., lack or excess of jurisdiction, ’

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non-compliance 348 arbitration agreement, due process violations, public policy, non-arbitrability).with The Model Law also requires the recognition and enforcement of foreign arbitral awards (made in arbitral seats located outside the recognizing state), again on terms identical to those prescribed in the New York Convention. 349 Duri Du ring ng th thee 25 ye year arss si sinc ncee th thee UN UNCI CITR TRAL AL Mo Mode dell La Law w s ado adopti ption on (in 198 1985), 5), sig signif nifiicant developments have occurred in the field of international commercial arbitration. In 2006, UNCITRAL adopted a limited number of amendments to the Model Law.350 The principal revisions were made to Article 2 (the addition of general interpretative principles),351 Article 7 (the definition and written form of an arbitration ’

338. UNCITRAL Model Law, Law, Arts. 7-8; infra pp. 159-73, 322-421. 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). ’

infra 339. Law pp.173-201. 261-80. 340. UNCITRAL UNCITRAL Model Model Law, Law,, Art. Law, Art. 8(1); 16;infra pp. 341. UNCITRAL Model Law, Law, Art. 16;infrapp. 201-34. 342. UNCITRAL Model Law, Law, Art. 5;infra pp. 745-46. 343. UNCITRAL Model Law, Law, Art. 19(1);infrapp. 727-28. 344. UNCITRAL Model Law, Law, Arts. 19(2), 24(1);infrap. 730. 345.. UNC 345 UNCITR ITRAL AL Mod Model el Law Law,, Art Arts. s. 18 (“Th (“Thee par partie tiess sha shall ll be tr treat eated ed wit with h equ equali ality ty and eac each h par party ty sha shall ll be given a full opportunity of presenti p resenting ng his case.”), 24(2) (“The parties shall be given sufficient advance noti no tice ce of an anyy he hear arin ing g an and d of an anyy me meet etin ing g of th thee ar arbi bitr tral al tr trib ibun unal al fo forr th thee pu purp rpos oses es of in insp spec ecti tion on of go good ods, s, other property or documents.”); infrapp. 731-33. 346. This addressed addressed concerns that national mandatory laws were unduly constraining constraining arbitral procedures dur es and tha thatt the def defini initio tions ns of man mandat datory ory and non non-ma -manda ndator toryy pr proce ocedur dural al law lawss wer weree unc unclea learr. Re Repor portt by the Secretary General, Possible Features of a Model Law of International Commercial Arbitration , UN Doc. A/CN.9/207, at ¶¶12-13 (14 May M ay 1981). 347. UNCITRAL Model Law, Law, Arts. 9, 11-13, 27;infra pp. 642, 705-06, 772-74, 865. 348. UNCITRAL Model Law, Law, Art. 34;suprapp. 32-33 andinfra pp. 1095-99. 349. UNCITRAL Model Law, Law, Arts. 35, 36;infrapp. 1132, 1131-37. 350. UNCITRAL Model Law, Law, 2006 Revisions; Revisions; Menon & Chao, Reforming the Model Law Provisions on Interim Measures Measures of Protection, 2 Asian Int l Arb. J. 1 (2006); Sorieul, UNCITRAL s Current Work Work in the Field of Inter Internati national onal Comme Commerc rcial ial Arbi Arbitrat tration ion,22J.Int l Arb Arb.. 543 (20 (2005) 05);; J. Paul aulsso sson n & G. Petr etroch ochilo ilos, s,Report: Revision of the UNCITRA UNCITRAL L Arbitration Rules(2006), available on www www.uncitral.or .uncitral.org. g. 351. UNCITRAL Model Law, Law, 2006 Revisions, Art. 2A. ’

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1. Introduction to International Arbitration

provisional onal measures agreement),352 Article 17 (the availability of and standards for provisi 353 from international arbitral tribunals and national courts), and Article 35 (procedures dur es for reco ecogni gnitio tion n of awa awarrds) ds)..354 Th Thee 20 2006 06 rev evis isio ions ns of th thee Mo Mode dell La Law w ma mak ke us usef eful ul 355 improvements (for the most part ). Nonetheless, the most important accomplishment me nt of th thee rev evis isio ions ns is th thei eirr ta tang ngib ible le ev evid iden ence ce of th thee on ongo goin ing g pr proc oces esss by wh whic ich h st state atess and business representatives seek to improve the international legal regime for the arbitral process. The Model Law and its revisions represent a significant further step, beyond the New York Convention, towards the development of a predictable “pro-arbitration” legal framework for commercial arbitration. But the Model Law goes beyond the Convention by prescribing in significantly greater detail the legal framework for international arbitration, by clarifying points of ambiguity or disagreement under the Convention,356 and by establishing directly applicable national legislation. Some So me 50 ju juri risd sdic icti tion onss ha have ve ad adop opte ted d le legi gisl slat atio ion n ba base sed d on th thee Mo Mode dell La Law w as of ea earl rlyy 2010, including Australia, Bermuda, Bulgaria, Canada, Cyprus, Germany, Hong Kong, India, Mexico, New Zealand, Nigeria, Norway, the Russian Federation, Scotland, Singapore, Spain, Tunisia, Tunisia, and various U.S. states.357At least as important, the Model Law has set the agenda for reform of arbitration statutes, even in states (like England and Switzerland) where it has not been adopted. Moreover, decisions by courts in jurisdictions that have adopted the Model Law are beginning to produce a reasonably international body of precedent concerning its meaning and 358 application.uniform The German Ministry of Justice explained some of the reasons for adopting the UNCITRAL Model Law during Germany s enactment of legislation derived predominantly from the Model Law: ’

If we want to reach the goal that Germany will be selected more frequently as the seat of international arbitrations in the future, we have to provide foreign parties with a law that, by its outer appearance and by its contents, is in line with the framework of the Model Law that is so familiar all over the world. This is necessary, in particular, in view of the fact that in negotiating international contracts, usually not much time is spent on thee dr th draf afti ting ng of th thee ar arbi bitr trat atio ion n ag agrree eeme ment nt.. Th Thee pu purp rpos osee of th thee Mo Mode dell La Law w, to ma mak ke a si siggnificant contribution to the unification of the law of international arbitration, can only be met if one is willing to prefer the goal of unification instead of a purely domestic 359 approach whenofit the comes to theofquestion of the necessity and the scope as well as to the determination contents individual rules.

352. UNCITRAL Model Law, Law, 2006 Revisions, Art. 7;infrapp. 104-18, 322-40. 353. UNCITRAL Model Law, Law, 2006 Revisions, Revisions, Arts. 17, 17A-17J;infrapp. 817-18, 823-25, 845, 865. 354. UNCITRAL Model Law, Law, 2006 Revisions, Art. 35;infra p. 1127. 355. As disc discussed ussed below, below, the 2006 Revisions Revisions authorizati authorization on of ex parte pro provisi visional onal measures measures is of doubtful wisdom and has attracted substantial criticism. See infrapp. 838-39. 356. In parti particula cularr, the Model Law mak makes es clea clearr the gro grounds unds for annul annulling ling inte internati rnational onal arbit arbitral ral awar awards, ds, defines the (limited) scope of national court interference in the arbitral process, and prescribes the types and extent of judicial support for international arbitrations. 357. For an updated list of jurisdictions adopting the Model Law Law,, see www.uncitral.org/uncitral/en/ uncitral_texts/arbitration/1 uncitral_te xts/arbitration/1985Model_arbitration 985Model_arbitration_status.html. _status.html. 358. 35 8. H. Al Alva vare rez, z, N. Ka Kapl plan an & D. Ri Rivk vkin in,,Model Law Decisions: Cases Cases Applying the UNCITRAL UNCITRAL Model Law on International Commercial Arbitration (2003); Case Law on UNCITRAL Texts (“CLOUT”) UNCITRAL Model Law on Inter Internati national onal Comme Commerci rcial al Arbit Arbitratio ration, n, www www.or .org/en g/englis glish/clo h/clout/MA ut/MAL-thesa L-thesaurus/ urus/clou cloutt search-etm. 359. Bundestags Drucksache Drucksache No. 13/5274 of 12 July July 1996,reprinted in Berger, The New German Arbitration Law 140 (1998) (quoted in Berger, The New German Arbitration Law in International Perspective , 26 Forum Int l 1, 4 (2000)). ’

C. Overvie Overview w of Natio National nal Arbitr Arbitration ation Legisl Legislation ation

These objectives objectives — access accessibil ibility ity,, inter internatio national nal uniformity uniformity,, and a tested structure structure — 360 have been cited in other jurisdictions. That said, it is noteworthy that the world s leading international arbitration centers te rs ha have ve ge gene nera rall llyy no nott ad adop opte ted d th thee UN UNCI CITR TRAL AL Mo Mode dell La Law w. Th That at is tr true ue,, in pa part rtic icuular, of France, Switzerland, England, the United States, the Netherlands, Belgium, and Sweden.361 In each of these jurisdictions, legislatures (and arbitration practitioners) have extensively debated the advisability of adopting the Model Law but decided in favor of alternative solutions. Equally, at least some distinguished practition ti oner erss co cons nsid ider er th thee Mo Mode dell La Law w to be a co cons nser erva vati tive ve,, ov over erly ly de deta tail iled ed ba basi siss fo forr na nati tion onal al 362 arbitration legislation. Notwithstanding these criticisms, the UNCITRAL Model Law s con contri tribut bution ionss to the int intern ernati ationa onall arb arbitr itral al pr proce ocess ss ar aree eno enormo rmous us and it remains, appropriately, the dominant “model” for national arbitration legislation. ’

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b. Uni United ted Sta States tes of Ame Americ ricaa The United States is an important center for international arbitrations, and U.S. compan com panies ies ar aree eve even n mor moree imp import ortant ant par partic ticipa ipants nts in the int intern ernati ationa onall arb arbitr itral al 363 process. De Desp spit itee ge gene nera rall co conc ncer erns ns ab abou outt th thee U. U.S. S. le lega gall sy syst stem em (f (foc ocus used ed on ju jury ry tr triials, discovery, punitive damages, and delays), the United States has remained popu364

larInternational as an international arbitral over theStates past three decades. arbitration in seat the United is governed by an outwardly complex, but ultimately satisfactory, legal framework. Most important issues relating to international arbitration agreements and arbitral awards are governed primarily by U.S. federal (rather than state) law. In particular, the Federal Arbitration Act (or “FAA”) sets forth a basic statutory regime for arbitration, with separate chapters for both domestic arbitration (Chapter 1) and international arbitrations subject to the New York and Inter-American Conventions (Chapters 2 and 3).365 The FAA has the dist di stin incti ction on — an and d bu burrde den n — of be bein ing g th thee ol olde dest st ar arbi bitr trat atio ion n st stat atut utee in an anyy ma majo jorr ju juri rissdiction. Additionally, although limited, the role of state law in the enforcement of international arbitration agreements is occasionally important.366

SeeLaw Reform on the the UNCITRAL 360. Commission of Law of Arbitration 6, 11 (1 (198 987) 7) (“ (“th thee Mo Mode delHong l La Law w .Kong . . ha hased., s th theeReport adva ad vant ntag age e ofAdoption maki ma king ngof[H [Hon ong g Kon ong] g] la law w Model inte in terrnationally recognisable and accessible”; “[The] primary reason for recommending the adoption of the Model Law . . . is the need to make knowledge of our legal rules for international commercial arbitration tio n mor moree acc access essibl iblee to theinter theinternat nation ional al com commun munity ity.. . . . We ar aree con convin vincedthat cedthat it is muc much h bet better[to ter[to avo avoid id changes than] trying to improve what is already the result of many years work by an international group of experts”); Singapore Law Reform Committee ed., Report of the Sub-Committee on Review of Arbitration Laws 13 (19 (1994) 94) (“I (“Iff Sin Singap gapor oree aim aimss to be an int intern ernati ationa onall arb arbitr itrati ation on cen centr tree it mus mustt ado adopt pt [th [thee Mod Model el law expressing] a world view of international arbitration.”). 361. See infra pp. 47-61. 362.. E. Gai 362 Gailla llard rd & J. Sav Savage age eds eds., .,F Fouchard ouchard Gaillar Gaillardd Goldman on International InternationalCommercia Commerciall Arbitration ¶204 (1999). 363.. The Uni 363 United ted Sta States tes was the sea seatt for app appro roxim ximate ately ly 5.6 per percen centt of all ICC arb arbitr itrati ation on fil filed ed in 200 2006, 6, 7.9 percent in 2000, and 7.6 percent in 1990. G. Born, International Commercial Arbitration 132 (2009). More U.S. companies are parties to ICC arbitrations than any other nationality. In 2006, for instance, 10.73 percent of the parties to ICC arbitrations were American, more than from any other nation. 2006 Statistical Report, 18 ICC Ct. Bull. 6 (2007). 364. SeeG. Born, International Commercial Arbitration132 (2009). 365. U.S. FAA, FAA, 9 U.S.C. §§1-15 (domestic and non–New York York or Inter-American Convention international arbitrations), 201-08 (New York Convention), 301-307 (Inter-American Convention). 366. For a discussion of the respective roles of federal and state law in international arbitration in the United States,see infra pp. 52-55.

1. Introduction to International Arbitration

(1)) Une (1 Unenfo nforrceab ceabili ility ty of Arb Arbitra itration tion Agr Agreem eement entss Und Under er U.S U.S.. Law in the Nin Ninetee eteenth nth Cen Century tury

As discussed above, U.S. courts were hostile towards agreements to arbitrate future disputes for the better part of the nineteenth century. Even more so than English courts (where legislative reforms had intervened), American judges refused to grant specif spe cific ic enf enfor orcem cement ent of arb arbitr itrati ation on agr agreem eement entss and per permit mitted ted the their ir re revoc vocati ation on at any 367 time. This grudging approach towards arbitration agreements reflected a variety of factors, including concern about private agreements “ousting” the courts of jurisdiction, skepticism about the adequacy and fairness of the arbitral process, and suspicions that arbitration agreements were often the product of unequal bargaining power.368 These attitudes began to shift during the late nineteenth century, including in some U.S. state court decisions.369 More importantly, following sustained lobbying from the business community, New York enacted an arbitration statute in 1920 designed to reverse common law hostility to arbitration and to render arbitration agreements enforceable in New York courts.370 The New York statute provided a model for what becam becamee feder federal al legislation legislation dealing with arbitration arbitration — the Federa Federall 371 Arbitration Act, originally titled the “United States Arbitration Act.” Thee FAA wa Th wass st strron ongl glyy su supp ppor orte ted d by th thee U. U.S. S. bu busi sine ness ss co comm mmun unit ityy, wh whic ich h sa saw w li liti tiga ga-tion as increasingly expensive, slow, and unreliable: “The clogging of your courts is 372

suchintended that the delays amount to a virtual of justice,” and the proposed was to “enable business men todenial settle their disputes expeditiously and FAA eco373 nomically.” With virtually no opposition or amendment, the bill that became the t he FAA wa wass un unan anim imou ousl slyy ad adop opte ted d in 19 1925 25 by bo both th th thee Ho Hous usee of Rep eprres esen enta tati tive vess an and d th thee Senate. Thee Ac Th Actt s st stat ated ed pu purp rpos osee wa wass to rev ever erse se th thee ho host stil ilit ityy th that at U. U.S. S. co cour urts ts ha had d de deve velo lope ped d towards arbitration agreements in commercial matters, and in particular the common law rules that arbitration agreements were revocable or unenforceable as contrary to public policy. According to the FAA s legislative history: ’

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The need for the law arises from an anachronism of our American law. Some centuries ago, ag o, be beca caus usee of th thee je jeal alou ousy sy of th thee En Engl glis ish h co cour urts ts fo forr th thei eirr ow own n ju juri risd sdic icti tion on,, th they ey ref efus used ed to enf enfor orce ce spe specif cific ic agr agreem eement entss to arb arbitr itrate ate upo upon n the gr groun ound d tha thatt the cou courts rts wer weree the therreby ousted from their jurisdiction. This jealousy survived for so long a period that the principle became firmly embedded in the English common law and was adopted with it by thee Am th Amer eric ican an co cour urts ts.. Th Thee co cour urts ts ha have ve fe felt lt th that at th thee pr prec eced eden entt wa wass to too o st strron ongl glyy fi fixe xed d to be 374 overturned without a legislative enactment.

This historical description was not entirely accurate, omitting to note that English law had in fact developed reasonably effective mechanisms for enforcing arbitration 367. See G. Bor Born, n,Internationa Internationall Commercia Commerciall Arbitration 133 (200 (2009); 9);supra pp pp.. 19 19-2 -25 5 an and dinfra pp. 169169-70; 70; Red Cross Line v. v. Atlantic Fruit Co., 264 U.S. 109, 121-22 (U.S. S. Ct. 1924); Tobey Tobey v. County of Bristol, 23 Fed. Cas. 1313 (C.C.D. Mass. 1845). 368. SeeG. Born, International Commercial Arbitration133 (2009). 369. Id. at 133 (2009); suprapp. 24-25. 370. N.Y N.Y.. Arbitration Law, Law, L. 1920, c. 275, Consol. c. 72. See suprapp. 24-25. 371. SeeG. Born, International Commercial Arbitration133 (2009). 372. 37 2. Hea Hearin rings gs on S. 421 4213 3 and S. 421 4214 4 Bef Befor oree the Sub Subcom commit mittee tee of the Sen Senate ate Com Commit mittee tee on the Jud Judiiciary, 67th Cong., 4th Sess., at 14 (1923) (Letter from H. Hoover, Secretary of Commerce). 373. Hear Hearings ings on S. 4213 and S. 4214 Before the Subcommittee Subcommittee of the Senate Committee Committee on the Judiciary,, 67th Cong., 4th Sess., at 14 (1923) (ABA Report). Judiciary 374. 65 Cong. Rec. Rec. 1931 (1924). (1924).

C. Overvie Overview w of Natio National nal Arbitr Arbitration ation Legisl Legislation ation

agreements, while American courts (and legislatures) had failed to do so.375 Neverthel th eles ess, s, th this is exp xpla lana nati tion on ca capt ptur ured ed on onee of th thee key st stat atut utor oryy ob obje jecti ctive vess of th thee FAA AA:: “t “the he fundamental conception underlying the law is to make arbitration agreements valid, irrevocable, and enforceable. enforceable.””376 (2) The Federa Federall Arbitratio Arbitration n Act: Act: Chapter Chapter One

As noted above, the FAA currently consists of three chapters: (a) the “domestic” FAA, 9 U.S.C. §§1-16, enacted in 1925 and applicable to agreements and awards affecting either interstate or foreign commerce; (b) the New York Convention s implem imp lement enting ing leg legisl islati ation, on, 9 U.S U.S.C. .C. §§2 §§20101-10, 10, ena enacte cted d in 197 1970 0 and app appli licab cable le onl onlyy to awards and agreements falling within the New York Convention; and (c) the InterAmerican Convention s implementing legislation, 9 U.S.C. §§301-07, enacted in 1990 199 0 and app applic licabl ablee onl onlyy to awa award rdss and agr agreem eement entss fal fallin ling g und under er the Int IntererAmerican Convention. The centerpiece of the domestic FAA is §2, which provides that arbitration agreements involving interstate and foreign commerce377 “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”378 In turn, §§3 and 4 of the Act provide the principal mechanisms for ’

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enfor enforcing §2 s gen genera eral l rul ruleeoftha that t arb arbitr itrati ation on agreem agr eement entssproceedings aree pr ar presu esumpt mptive ively ly val valid. Sec-Sec tion 3cing requires “any court the United States” to stay before it,id. if they invo in volv lvee is issu sues es th that at ar aree “r “ref efer erab able le to ar arbi bitr trat atio ion, n,”” wh whil ilee §4 req equi uirres “U “Uni nited ted St Stat ates es di diss379 trict court[s]” to issue orders compelling arbitration of such issues. Other sections of the FAA address address limited aspects of the arbitral process. Section 5 grants district courts the power to appoint arbitrators if the parties either have not done so or have agreed upon an appointment procedure which proves unworkable.380 Se Sect ctio ion n 7 of th thee Ac Actt au auth thor oriz izes es th thee is issu suan ance ce of “s “sub ubpo poen enas as”” (o (orrde ders rs to pr prov ovid idee evidence) by arbitral tribunals and permits U.S. district courts to issue compulsory process to assist tribunals in taking evidence.381 In turn, §§9, 10, and 11 of the FAA provide that arbitral awards may be confirmed as U.S. judgments, subject to only a limited number of enumerated exceptions.382 These sections also set forth procedures for confirming, vacating, or correcting arbitral awards subject to the Act.383 The FAA is re remar markab kably ly bri brief ef and and,, by con contem tempor porary ary sta standa ndard rds, s, re relat lative ively ly sk skele eletal tal.. It is notable how many subjects are notdirectly addressed by the FAA. The statute does not expressly deal with such matters as the separability doctrine, the allocation of competence between U.S. courts and arbitrators to resolve disputes over arbitration agreements (competence-competence), challenging arbitrators, provisional relief, the conduct of arbitral proceedings, interlocutory judicial review, review, choice of law, form 375. SeeG. Born, International Commercial Arbitration134 (2009); supra pp. 15-18, 19-25. 376. Hear Hearings ings on S. 4213 and S. 4214 Before the Subcommittee Subcommittee of the Senat Senatee Committee on the Judiciary,, 67th Cong., 4th Sess. at 2 (1923). Judiciary 377.. The FAA app 377 applie liess to arb arbitr itrati ation on agr agreem eement entss and awa award rdss aff affect ecting ing eit either her int inters erstat tatee or for foreig eign n com com-merce. mer ce. U.S U.S.. FAA, 9 U.S U.S.C. .C. §1. The These se jur jurisd isdict iction ional al gra grants nts hav havee bee been n int interp erpre reted ted ex expan pansiv sively ely.. See infra pp. 149-50. The FAA s focus was principally domestic, although it also expressly applies to “foreign commerce.” U.S. FAA, 9 U.S.C. §1. 378. U.S. FAA, FAA, 9 U.S.C. §2. 379. U.S. FAA, FAA, 9 U.S.C. §§3-4. For a discussion discussion of §§3 and 4, see infra pp. 261-80. 380. SeeU.S. FAA, 9 U.S.C. §5; infra pp. 643-44. 381. SeeU.S. FAA, 9 U.S.C. §7; infra pp. 1052-53, 1091-92. 382. SeeU.S. FAA, 9 U.S.C. §§9-11; infra pp. 1052-53, 1091-92. 383. See infra pp. 1068-69, 1070. ’

1. Introduction to International Arbitration

of the award, and costs. Notable also is the relative brevity of the FAA on most of the issues which it does address, such as the grounds and procedures for challenging either arbitration agreements or arbitral awards.384 (3) The Federa Federall Arbitration Arbitration Act: Act: Chapters Chapters Two Two and Three Three

After U.S. ratification of the New York Convention in 1970, Congress enacted amendments to the FAA, in a second chapter to the Act, implementing the Convention.385 In ratifying the New York Convention, Congress was motivated (as with the domestic FAA in 1925) by a desire for more efficient dispute resolution: [I]t is im [I]t impo port rtan antt to no note te th that at ar arbi bitr trat atio ion n is ge gene nera rall llyy a le less ss co cost stly ly me meth thod od of res esol olvi ving ng di dissputes put es tha than n is ful full-s l-scal calee lit litiga igatio tion n in the co court urts. s. To the ex exten tentt tha thatt arb arbitr itrati ation on agr agreem eement entss avoi av oid d li liti tiga gati tion on in th thee co cour urts ts,, th they ey pr prod oduc ucee sa savi ving ngss no nott on only ly wi with th th thee pa part rtie iess to th thee ag agrree ee-ment but also for the the taxpayers — who must bear the burden burden for maintaining maintaining our court court system.386

In addition, Congress sought to facilitate the development of a stable and effective system of international commercial dispute-resolution, on which U.S. companies expanding into global markets could rely, in order to promote international trade and investment.387 Like the original domestic Act, the FAA s second chapter is remarkably brief. It provides that arbitration agreements shall be enforceable and contains provisions authorizing U.S. courts to compel arbitration pursuant to such agreements (including in foreign arbitral seats).388 The Act s second chapter also provides for the recognition and enforcement of awards that are subject to the Convention, simply by incorporating the Convention s terms.389 In 199 1990, 0, the Uni United ted Sta States tes ena enacte cted d imp implem lement enting ing leg legisl islati ation on for the Int Interer390 American Convention, codified as a third chapter to the FAA. The chapter incorpora po rate tess mu much ch of th thee Ne New w Yor ork k Co Conv nven enti tion on s im impl plem emen enti ting ng le legi gisl slat atio ion n by 391 reference, add adding ing add additi itiona onall pr provi ovisio sions ns to dea deall wit with h the Int Interer-Ame Americ rican an Com Commer mer-392 cial Arbitration Commission s rules and the relationship between the New York and Inter-American Conventions.393 Lik Likee the domestic FAA, FAA, at the heart of the third chapte cha pterr ar aree pr provi ovisio sions ns re requ quiri iring ng the enf enfor orcem cement ent of spe specif cified ied arb arbitr itrati ation on agr agreem eement entss and awards, together with very briefly described procedures for doing so. 394 ’

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384. 38 4. Th Thee do dome mest stic ic FAA co cons nsis ists ts of on only ly 17 ar arti ticl cles es,, a nu numb mber er of wh whic ich h ar aree ar arch chai aicc or im imma mate teri rial al.. Th This is contrasts with the much lengthier English Arbitration Act and UNCITRAL Model Law, suprapp. 43-47 andinfrapp. 59-61, while roughly paralleling French and Swiss legislative style, infrapp. 55-59. 385. U.S. FAA, FAA, 9 U.S.C. §§201-10. §§201-10. 386. 116 Cong. Rec. 22, 732-33 (daily ed. July 24, 1970) (Hamilton (Hamilton Fish). Fish). See also id., at 22, 731 (Andrew Jacobs). 387. S. Rep. No. 702, 91st Cong., Cong., 2d Sess. 1-2 (1970); Aksen,American Arbitration Accession Arrives in the Age of Aquarius, 3 Sw. U. L. Rev. 1 (1971). 388. U.S. FAA, FAA, 9 U.S.C. §201;infra pp. 172, 265-66. In addition, the amendments expand federal subject matter jurisdiction and removal authority in cases falling under the Convention. U.S. FAA, 9 U.S.C. §§203, 205. 389. U.S. FAA, FAA, 9 U.S.C. §§206, §§206, 207;infrapp. 1136-1205. 390. U.S. FAA, FAA, 9 U.S.C. §§301-08; §§301-08;infrapp. 36-37. 391. U.S. FAA, FAA, 9 U.S.C. §302. §302. 392. U.S. FAA, FAA, 9 U.S.C. §§303 & 306. 393. U.S. FAA, FAA, 9 U.S.C. §305; §305; G. Born,International Commercial Arbitration(2009). 394. U.S. FAA, FAA, 9 U.S.C. §§202, 206 & 207 and 302, 303 303 & 304.

C. Overvie Overview w of Natio National nal Arbitr Arbitration ation Legisl Legislation ation

There is considerable “overlap” among the various sources of U.S. federal law affecting affec ting inter internation national al arbit arbitratio ration n agr agreement eementss and awar awards. ds. Arbit Arbitral ral awar awards ds and agreements falling under the New York Convention are of course governed by both the Convention and the second chapter of the FAA (which implements the Convention). tio n). In add additi ition, on, how howeve everr, the these se awa award rdss and agr agreem eement entss ar aree pot potent ential ially ly gov govern erned ed by the first, “domestic” chapter of the FAA, to the extent it is not “in conflict” with the Convention.395 This potentially confusing structure has the effect that domestic U.S. arbitration law (and judicial authority) serves as a “gap filler” of sorts, although the prec pr ecis isee te term rmss of th this is me mech chan anis ism m ha have ve no nott be been en de defi fini niti tive vely ly ar arti ticu cula late ted d by U. U.S. S. co cour urts ts.. Desp De spit itee th thee br brev evit ityy of th thee FAA AA,, in tr true ue co comm mmon on la law w fa fash shio ion, n, U. U.S. S. co cour urts ts ha have ve de deve vell396 oped a fairly expansive body of “federal common law” of arbitration. While not readily accessible to non-U.S. parties or practitioners, this case law provides a workablee leg abl legal al regi egime me for int intern ernati ationa onall arb arbitr itrati ations ons..397 Thi Thiss jud judici icial al aut author hority ity als also o applies, indeed more broadly than in domestic matters, in the context of international arbitrations subject to the New York and Inter-American Conventions.398 The federal common law of arbitration is of uncertain scope but clearly extends to such subjec sub jects, ts, dis discus cussed sed bel below ow,, as the sep separa arabil bility ity pr presu esumpt mption ion,, the com compet petenc enceecompetence doctrine, the interpretation and validity of international arbitration agreements, the parties autonomy with regar regard d to arbitral procedures, procedures, the tribunal s procedural powers, and the availability of provisional relief in connection with arbi’

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399

trations. Importantly, asFAA also override discussed(or below, the FAAinconsistent and the federal law rules derived from the “preempt”) state common (and foreign ei gn)) la law w ru rule less go gove vern rnin ing g th thee sa same me su subj bject ects, s, pa part rtic icul ular arly ly ru rule less th that at se seek ek to de deny ny ef effe fect ct 400 to agreements to arbitrate and arbitral awards. With respect to arbitration agreements, U.S. courts have repeatedly embraced the separability doctrine,401 have defined in considerable and influential detail the allocation of competence between courts and arbitrators to decide disputes over the formation, matio n, vali validity dity,, and inter interpre pretatio tation n of arbit arbitration ration agr agreemen eements, ts,402 have str strongly ongly affirmed the presumptive validity of arbitration agreements (subject only to limited, neutral excep exceptions), tions),403 and hav havee fas fashio hioned ned a dec decide idedly dly “pr “pro-a o-arbi rbitra tratio tion” n” app apprroac oach h to 404 the interpretation of arbitration agreements.

395. Section ion 208 of the FAA prov ides that the domestic domes FAA “applie “applies snfli tolict actions and proceedi pro ceedings brough brou ghtt Sect unde un der r th this is ch chap apte ter r to thee provides th ext xten ent t th that at [the [t he dome do mest stic ictic FAA AA] ] is no not t in co conf ct with wi th th this is ch chap apte ter r or ngs thee th convention as ratified by the United States.” 396. Buck Buckeye eye Check Cashing, Inc. v. v. Cardegna, 546 U.S. 440, 447-48 (U.S. S. Ct. 2006); Southland Corp.v Co rp.v.. Kea eati ting ng,, 46 465 5 U. U.S. S. 1 (U (U.S .S.. S. Ct Ct.. 19 1984 84); ); Mo Mose sess H. Co Cone ne Me Mem. m. Ho Hosp sp.. v. Me Merrcu cury ry Co Cons nstr tr.. Co Corp rp., ., 46 460 0 U.S. U. S. 1 (U (U.S .S.. S. Ct Ct.. 19 1983 83); ); Pr Prim imaa Pai aint nt Co Corp rp.. v. Fl Floo ood d & Co Conk nkli lin n Mf Mfg. g. Co Co., ., 38 388 8 U. U.S. S. 39 395 5 (U (U.S .S.. S. Ct Ct.. 19 1967 67). ). 397. Cf. Samuel, Arbitration Statutes in England and the USA , 8 Arb. & Disp. Res. J. 1, 32 (1999) (“The [FAA] falls in the category of ‘small but perfectly formed.’ It is very resilient and loosely enough drafted in the right places to enable the court to do the right thing for the arbitral process.”). 398. SeeG. Born,International Commercia Commerciall Arbitration775-76,781-85 (2009); Mitsubishi Motors Corp. v.. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (U.S. S. Ct. 1985). v 399. See infra pp. 52-53. 400. See supra pp. 19-25 and infra pp. 159-73, 340-421; Scherk v. Alberto-Culver Co., 417 U.S. 506, 516-17 (U.S. S. Ct. 1974). 401. See Buckeye Check Cashing, 546 U.S. at 445; Prima Paint Co., 388 U.S. at 402; infrapp. 173-201. 402. SeeFirst Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. S. Ct. 1995); Howsam v. Dean Witter Reynolds, Reynolds, 537 U.S. 79 (U.S. S. Ct. 2002); Pacificare Pacificare Health Systems v. v. Book, 538 U.S. 401 (U.S. S. Ct. 2003); infra pp. 201-34. 403. See Buckeye Check Cashing, 546 U.S. 440; Doctors Associates v. Casarotto, 517 U.S. 681 (U.S. S. Ct. 1996); Southland Corp., 465 U.S. 1; infra pp. 159-73. 404. See First Options of Chicago, 514 U.S. 938; Mitsubishi Motors Corp., 473 U.S. at 628; infrapp. 46380. ’

1. Introduction to International Arbitration

With respect respect to the arbitral process, U.S. courts have emphasized the parties freedom to agree upon arbitration rules and procedures,405 the arbitrator s discretion in presi pr esidin ding g ove overr the arb arbitr itral al pr proce ocess ss and ado adopti pting ng arb arbitr itral al pr proce ocedur dures, es,406 an and d th thee ve very ry 407 limited scope for interlocutory judicial review of the arbitrator s decisions. U.S. judicial decisions have also provided (with some excepti exceptions) ons) for court-order court-ordered ed pro408 409 visional measures and disclosure, as well as judicial support for constitution of arbitral tribunal.410 Finally inally,, with respect to arbitral awards, U.S. courts have permitted vacatur (annulment me nt)) of aw awar ards ds ma made de in th thee Un Unit ited ed St Stat ates es on li limi mite ted d gr grou ound nds, s, ge gene nera rall llyy pa para rall llel elin ing g those in the New York Convention, but also permitting a limited degree of substantive ti ve ju judi dici cial al rev evie iew w of th thee me meri rits ts of th thee ar arbi bitr trat ator orss awa awarrd (u (unde nderr the soso-cal called led “ma “manini411 fest disregard” doctrine). With regard to foreign arbitral awards, U.S. courts have held that such awards are presumptively valid and enforceable, subject only to the New York Convention s specified exceptions.412 ’

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(4)) U.S (4 U.S.. Stat Statee Arbi Arbitra tratio tion n Laws Laws

The rol The olee of th thee FAA wi with thin in th thee U. U.S. S. le lega gall sy syst stem em,, an and d in pa part rtic icul ular ar in rel elat atio ion n to th thee 413 laws la ws of th thee 50 st stat ates es,, ca can n ap appe pear ar co comp mple lex. x. Th Thee ba basi sicc pr prin inci cipl ples es ca can n no none neth thel eles esss be readily summarized. In principle, a U.S. federal statute will override, or “preempt,” inconsistent U.S. state sta te law sub substa stanti ntive ve rul rules es add addrress essing ing the sam samee sub subjec jects. ts.414Accordingly Accordingly,, insofar as the FAA was int intend ended ed to add addrress par partic ticula ularr sub substa stanti ntive ve top topics ics or gen genera erall fie fields lds,, it wil willl pr pree415 empt state law addressing those topics or fields. Thee U. Th U.S. S. Su Supr prem emee Co Cour urtt ha hass he held ld th that at th thee do dome mest stic ic FAA “c “con onta tain inss no exp xprres esss pr preeempt em ptiv ivee pr prov ovis isio ion, n, no norr do does es it ref efle lect ct a co cong ngrres essi sion onal al in inte tent nt to oc occu cupy py th thee en enti tirre fi fiel eld d 416 of arbitration.” At the same time, the Court has also repeatedly declared that the 405. See Mitsu Mitsubishi bishi Moto Motors rs Corp Corp.., 473U.S. at 628 (a par party ty agr agreei eeing ng to arb arbitr itrati ation on “tr “trade adess the pr proce ocedur dures es and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration”); McDonald v. City of West Branch, 466 U.S. 284, 292 (U.S. S. Ct. 1984); infra pp. 726-28. 406. See infra p. 730. 407. See infra pp. 746-47. 408. See infra pp. 854-58, 865-66. 409. 410. See See infra infra pp. pp. 788-91. 642-43. 411. See infrapp. 1095-99, 1101-04. This substantive review is referred referred to under the rubric of “manifest disregard of law.” As discussed below, following a recent U.S. Supreme Court decision in Hall Street Associates LLP v. v. Mattel, Inc., there is some uncertainty as to whether “manifest disregard” remains remains a basis b asis for vacatur under the FAA. See infra p. 1104. 412. See infra pp. 1132, 1136-1205. 413. 41 3. The There re has bee been n a vig vigor orous ous deb debate ate on the Sup Supre reme me Cou Court rt con concer cernin ning g the pr preem eempti ptive ve eff effect ect of the FAA. Compare Southland Corp. v. Keating, 465 U.S. 1 (U.S. S. Ct. 1984) (Burger, C.J.), with id. at 25 (O Con Connor nor,, J., dis dissen sentin ting); g); All Allied ied-B -Bruc rucee Term ermini inix x Co. v. Dob Dobson son,, 513 U.S U.S.. 265 (U. (U.S. S. S. Ct. 199 1995) 5) (Br (Breye eyerr, J.) with id. at 285 (Scalia, J., dissenting). Academic debate has been just as robust. Compare Drahozal, In Defense of Southland: Reexamining Reexamining the Legislation History History of the Federal Arbitration Arbitration Act, 78 Notre Dame L. Rev. 101 (2002), withI. MacNeil, American Arbitration Law: Reformation, Nationalization and International Internationalization ization 83-147 (1992). 414. 41 4. Ame Americ rican an Ins Ins.. Ass n v. Gar Garame amendi ndi,, 539 U.S U.S.. 396 (U. (U.S. S. S. Ct. 200 2003); 3); Hin Hines es v. Da David vidowi owitz, tz, 312 U.S U.S.. 52 (U.S. S. Ct. 1941). 415. The U.S. Supreme Court has repeatedly held that the FAA FAA preempts particular state law rules. Allied-Brucee Terminix Allied-Bruc Terminix Co. v. Dobson, 513 U.S. 265 (U.S. S. Ct. 1995); Southland Corp. v. Keating, 465 U.S. 1 (U.S. S. Ct. 1984); Perry v. Thomas, 482 U.S. 483 (U.S. S. Ct. 1987); G. Born, International Commercial Arbitration Arbitration140-44, 485-94, 571-72, 833-34 (2009). 416. SeeVolt Info. Sciences, Inc. v. Board of Trustees, 489 U.S. 468, 477 (U.S. S. Ct. 1989) (“The FAA contains no express pre-emptive pre-emptive provision, nor does it reflect a congressional congressional intent to occupy the entire ’

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C. Overvie Overview w of Natio National nal Arbitr Arbitration ation Legisl Legislation ation

FAA cr crea eate tess a bo body dy of su subs bsta tant ntiv ivee fe fede dera rall ru rule less rel elat atin ing g to ar arbi bitr trat atio ion: n: In en enac acti ting ng th thee FAA, “C “Cong ongrress dec declar lared ed a nat nation ional al pol policy icy fav favori oring ng arb arbitr itrati ation on and wit withdr hdrew ew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration.” 417 As a consequence, it is well-settled that U.S. state law rules that single out and purport to render interstate and int intern ernati ationa onall arb arbitr itrati ation on agr agreem eement entss inv invali alid, d, ill illega egal, l, or re revoc vocabl ablee ar aree pr preem eempte pted d 418 by the FAA. As noted above, it is also settled, in both domestic and international contexts, that the FAA419 and federal law establish the presumptive separability of the arbitration agreement and provide the exclusive standards for interpreting arbitration agreements420 and for confirming and vacating arbitral awards.421 Noneth Non ethele eless, ss, in a pur purely ely dom domest estic ic con conte text, xt, iss issues ues con concer cernin ning g the for format mation ion of arb arbiitration agreements, as well as at least some issues of substantive and formal validity, are governed primarily by generally applicable state contract law. 422 In contrast, ther th eree is su subs bsta tant ntia iall lo lowe werr co cour urtt an and d ot othe herr au auth thor orit ityy ho hold ldin ing g th that at fe fede dera rall co comm mmon on la law w, derived from the New York Convention, governs the formation and validity ofinternational(as distinguished from domestic) arbitration agreements.423 Apart from these complex complexities, ities, U.S. state law is applicable to arbitration agreements and and awards awards when — but only only when — the Conventi Convention on and FAA FAA (and the the federal common law derived from both sources) are inapplicable. That may be the case, for example, because the agreement or award does not affect interstate or foreign commerce (which by definition virtuallytoimpossible in international commercial matters). State lawismay also be applicable issues bearing on arbitration that federal statutory and common law do not directly or indirectly address. Although the issue is unsettled, that may include the availability of court-assisted discovery, provisional relief, or consolidation.424 Every state of the Union has adopted legislation dealing with commercial arbitration. Many states have enacted some version of the “Uniform Arbitration Act.” First proposed in 1924 by the Conference of Commissioners on Uniform State Laws, 425

field of arbitration. But even when Congress has not completely displaced state regulation in an area, state law may nonetheless be preempted to the extent that it actually conflicts with federal law.”). 417. Southland Corp., 465 U.S. at 10. See also Buckeye Check Cashing , 546 U.S. at 444-48 (“Section 2 embodies the contracts.”). national policy favoring arbitration and places arbitration agreements on equal footing with all other 418. See infrapp. 159-73;Southland Corp., 465 U.S. at 10; Allied-Bruce Terminix Co., 513 U.S. 265; Doctors Associates, 517 U.S. 681. 419. See infrapp. 173-201; Buckeye Check Cashing Inc., 546 U.S. 440; Prima Paint Corp., 388 U.S. 395. 420. See infra pp. 463-80; Mitsubishi Motors Corp., 473 U.S. at 628. 421. See infra p. 1104. 422.. Perryv. Tho 422 Thomas mas,, 482 U.S U.S.. 483 483;;Allied-Bruce Terminix Co., 51 513 3 U. U.S. S. 26 265; 5;First Options of Chicago, 514 U.S. 938. In contrast, state laws that are specifically directed towards the formation or validity of arbitration agreements (as distinguished from other types of agreement agreements) s) are preempted by the FAA.See AlliedBruce Terminix Terminix Co., 51 513 3 U. U.S. S. 26 265; 5; Southland Corp., 46 465 5 U. U.S.1; S.1; G. Bor orn n,Internationa Internationall Commercial Arbitration Arbitration 140-44, 487-90 (2009). 423. SeeG. Born, International Commercial Arbitration491-92 (2009); Smith/Enron Cogeneration Ltd. P shi ship p v. Smi Smith th Cog Cogene enerat ration ion Int l, Inc Inc., ., 198 F.3d 88 (2d Cir Cir.. 199 1999)( 9)(“Whe “When n we ex exer ercis cisee jur jurisd isdict iction ion und under er Chapter Two of the FAA, we have compelling reasons to apply federal law, which is already welldeveloped, to the question of whether an agreement to arbitrate is enforceable”); InterGen NV v. Grina, 344 F.3d 134, 143 (1st Cir. 2003). 424. See infra pp. 54-55. 425. SeeLerner, The Uniform Arbitration Act: 25-Year Retrospective, N.Y.L.J. N.Y.L.J. 1 (July 9, 1981); Pirsig,The New Uniform Arbitration Arbitration Act, 11 Bus. Law. 44 (1956); Pirsig, Some Comments on Arbitration Legislation Legislation and the Uniform Act, 10 Vand. L. Rev. 685 (1957); Report of the National Conference of Commissioners on Uniform State Laws, 50 A.B.A.J. 134, 134-62 (1925). ’

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1. Introduction to International Arbitration

the current, revised text of the Act was adopted by the Conference in 2000, making substantial changes to earlier versions.426 The Uniform Arbitration Act has been enacted in some 38 states and the District of Columbia,427 and has influenced arbitration legislation in other U.S. states. The original Uniform Arbitration Act was substantially similar to the FAA. Among other things thi ngs,, it re requ quir ired ed spe specif cific ic enf enfor orcem cement ent of arb arbitr itrati ation on agr agreem eement entss (as to bot both h ex exist isting ing 428 and fut futur uree dis disput putes) es) an and d pr prov ovid ided ed fo forr th thee rec ecog ogni niti tion on an and d en enfo forrce ceme ment nt of ar arbi bitr tral al award awa rdss wit with h onl onlyy lim limite ited d ju judic dicial ial re revie view w.429 The Revi evised sed Un Unifo iform rm Arb Arbitr itrati ation on Act use use-fully adds a number of additional provisions, broadly paralleling the UNCITRAL Model Mo del Law Law,, con concer cernin ning g the con consti stitut tution ion of the arb arbitr itral al tri tribun bunal, al,430 provisional measures,431 the arbi arbitral tral pr procedu ocedure, re,432 the form of awards,433 and immunity of arbitrators.434 Nevertheless, a number of U.S. states have not adopted the Uniform Arbitration Act, and a few have rejected its generally “pro-arb “pro-arbitration” itration” lead. Several state statutes do not permit arbitration of various categories of claims, such as tort, real property, and insurance claims.435 Other U.S. states have enacted legislation requiring that arbitr arb itrati ation on cla clause usess be con conspi spicuo cuousl uslyy ide identi ntifie fied d (e. (e.g., g., pri printe nted d in cap capita itall let letter ters, s, pla placed ced 436 on the front of any contract, etc.). And some state statutes do not provide for the same general rule of enforceabil enforceability ity and limited judicial review of arbitral awards that the FAA and Uniform Arbitration Act require.437 In addition, especially in recent years, some U.S. states have enacted legislation designed to fill perceived gaps left in the U.S. federal framework for international

426. National Conference Conference of Commissioners on Uniform State Laws, Revised Uniform Arbitration Act (2000). The drafters of the Act observe: “The Uniform Arbitration Act, promulgated in 1955, has been one of the most successful Acts of the National Conference of Commissioners on Uniform State Laws.” Revised Uniform Arbitration Act, Prefatory Note (2000). 427. The Revised Uniform Arbitration Arbitration Act (2000) has been adopted by 12 states: Alaska, Colorado, Colorado, Hawaii, Hawa ii, Neva Nevada, da, New Jerse Jerseyy, New Mex Mexico, ico, Nort North h Car Carolina olina,, North NorthDak Dakota, ota, Oklah Oklahoma, oma, Ore Oregon, gon, Utah, and Washington. W ashington. The 1956 Act remains in effect in 28 jurisdictions: Arizona, Arkansas, Delaware, District of Columbia, Florida, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Pennsylvania, Pennsylvania, South Carolina, South Dakota, TenTennessee, Texas, Texas, Vermont, Vermont, Virginia, Virginia, and Wyoming. Alaska did not repeal the 1956 Act when it adopted the 2000 Act. 428. Revise Revised d Uniform Arbitration Act, §§4, 6, 7. 429. Revise Revised d Uniform Arbitration Act, Act, §§22-23. 430. Revise Revised d Uniform Arbitration Act, Act, §§11-12. 431. Revise Revised d Uniform Arbitration Act, Act, §8. 432. Revise Revised d Uniform Arbitration Act, §§9, 15-17. 433. Revise Revised d Uniform Arbitration Act, Act, §19. 434. Revise Revised d Uniform Arbitration Act, Act, §14. 435. E.g., Ark. Stat. Ann. §34-511 (Supp. 1983) (tort claims); Ohio Rev. Code Ann. §2711.01 (1981) (real property disputes); Ky. Ky. Rev. Rev. Stat. §417.050 (Supp. 1984) (insurance disputes). These state rules are preempted by the FAA in almost all circ*mstances. See infrapp. 159-73, 421-62. 436. See, e.g., Cal Cal.. Civ Civ.. Pr Proc. oc. Cod Codee §12 §1295( 95(b) b) (W (West est 199 1999) 9) (r (requ equiri iring ng spe specia ciall not notice ice of arb arbitr itrati ation on cla clause usess in medical services contracts); Cal. Civ. Proc. Code. §1298 (West 1999) (requiring special notice of arbitration clauses in real property contracts); Mo. Ann. Stat. §435.400 (Vernon 1999) (requiring notice of arbitration clause to appear in ten point capital letters before signature line); S.C. Code Ann. §15-48-10 (Law. Co-op. 1999) (requiring front-page notice of arbitration clause in all but employment contracts, lawyer/client and doctor/patient pre-arrangements, and personal injury claims). These state law rules are also pre-empted by the FAA in almost all cases.See Doctor s Assoc. Inc. , 517 ’

U.S. 681 (state statute requiring special notice for arbitration clauses pre-empted by the FAA); Morrison v. Colo. Permanente Medical Group, 983 F. Supp. 937 (D. Colo. 1997) (state notice requirement requi rement for medical malpractice arbitration clauses pre-empted by FAA).See infrapp. 322-40. 437. 43 7. Ga. Cod Codee Ann Ann.. §7§7-111 111 (Su (Supp. pp. 198 1984); 4); Neb Neb.. Re Revv. Sta Stat. t. §25 §25-21 -2115 15 (19 (1979 79); ); Pa. Con Cons. s. Sta Stat. t. Ann Ann.. tit tit.. 42, §7302(d)(2) (1982).

C. Overvie Overview w of Natio National nal Arbitr Arbitration ation Legisl Legislation ation

arbitration.438 In particular, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Maryland, North Carolina, Ohio, Oregon, and Texas have adopted statutes purporting to deal comprehensively with the subject of international arbitration. 439 The extent to which these statutes are preempted by the FAA and federal common law principles remains unclear. To date, however, both these statutes and state law more generally have played a distinctly secondary role in the international arbitral process.440 One potential exception to this general rule was the Supreme Court s decision in Volt Information Sciences, Inc. v. Board of Trustees .441 There, a California choice-of-law clause in the parties purely domestic contract was interpreted, in vaguely defined circ*mstances, to incorporate state procedural rules relating to arbitration, and the FAA was held not to preempt this result. Subsequent U.S. Supreme Court decisions,442 and most lower court decisions, decisions,443 have interpreted Voltnarrowly, holding that general choice-of-law clauses ordinarily do not encompass state arbitration laws and that the FAA preempts state law rules that impede the enforcement of arbitration agreements. ’

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c. Swiss Law on Pri Private vate Inter Internation national al Law ’

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Switzerland is one of Europe s, and the world s, leading centers for international commercial arbitration.444 Its arb arbitr itrati ation on leg legisl islati ation, on, and aca academ demic ic com commun munity ity,, hav havee also been at the forefront of developments in the field of international arbitration over the past century. International arbitration in Switzerland is governed primarily by a ch chap apte terr of th thee fe fede dera rall Sw Swis isss La Law w on Pri riva vate te In Inte tern rnat atio iona nall La Law w, wh whic ich h en ente terred in into to effect in 1989. The arbitration chapter is noteworthy for its brevity, comprising only 19 articles, drafted in brief, declarative terms. 445 438. SeeBesson,The Utility of State Laws Regulating International Commercial Arbitration and Their Compatibility with the FAA, 11 Am. Rev. Int l Arb. 211 (2000); Garvey & Heffelfinger, Towards Federalizing U.S. Internationall Commercial Arbitration Internationa Arbitration Laws, 25 Int l Law. 209 (1991); McClendon, State International Arbitration Laws: Are They Needed or Desirable, 1 Am. Rev. Int l Arb. 245, 250 (1990). 439. Cal. C.C.P. C.C.P. §§1297.11et seq. (California); Colorado International Dispute Resolution Act, Colo. Rev.. Stat. §§13-22-501 through 13-22-507; UNCITRAL Model Law on International Commercial ArbiRev ’

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tration, Conn. Gen. Stat. §§50a-100 through 50a-136 (Connecticut); International Arbitration Act, 39 Fla. Stat. Ann. §684; Ga. Code Ann. §§9-9-30 through 9-9-43Florida (Georgia); (Georgi a); Hawaii International Arbitration, Mediation, and Conciliation Act, Haw. Rev. Rev. Stat. §§658D-1 through 658D-9 (Supp. 1989); Maryland International Commercial Arbitration Act, Md. Cts. & Jud. Proc. Code Ann. §§3-2B-01 throug thr ough h 3-2 3-2B-09 B-09;; Nor North th Car Caroli olina na Int Intern ernati ationa onall Com Commer mercia ciall Arb Arbitr itrati ation on Act Act,, N.C N.C.. Gen Gen.. Sta Stat. t. §§1 §§1-56 -567.3 7.30 0 -1.567.68; International Commercial Arbitration Act, Ohio Rev. Code §§2712.01 through 2712.91; Oregon International Commercial Arbitration and Conciliation Act, Or. Rev. Stat. §§36.450-36.558; Texas General Arbitration Act, Tex. Rev. Civ. Stat. Ann. Articles 249-1 through 249-43. 440.. Gener 440 Generall allyy app applic licabl ablee sta state te law pr provi ovides des mos mostt bas basic ic rul rules es of con contra tract ct law gov govern erning ing the for format mation ion of dom domest estic ic arb arbitr itrati ation on agr agreem eement ents; s; fed federa erall com common mon law pri princi nciple pless app appear ear to app apply ly to the for format mation ion and validity of international arbitration agreement agreementss subject to the New York and Inter-American Conventions.See G. Born, International Commercial Arbitration481-97 (2009). State law can, of course, also provide the substantive rules governing the merits of the parties dispute. 441. 489 U.S. 468 (U.S. (U.S. S. Ct. 1989). 442.. Mas 442 Mastr trobu obuono ono v. She Shears arson on Leh Lehman man Hut Hutton ton,, Inc Inc., ., 514 U.S U.S.. 52 (U. (U.S. S. S. Ct. 199 1995); 5);Doctor s Associates Inc., 517 U.S. 681. 443. SeeG. Born, International Commercial Arbitration449-51 (2009). 444. Switzerland was the seat for approximately 16 percent percent of all ICC arbitrations filed in 2006, 15.5 perrce pe cent nt in 20 2000 00,, an and d 15 15.4 .4 pe perrce cent nt in 19 1996 96 (i (in n ea each ch ca case se,, se seco cond nd be behi hind nd Fra ranc ncee in th thee nu numb mber er of IC ICC C ar arbi bi-trations).See G. Born, International Commerci Commercial al Arbitration 125 (2009). 445.. Cha 445 Chapte pterr 12 of the Swi Swiss ss Law on Pr Priva ivate te Int Intern ernati ationa onall Law is tra transl nslate ated d in Weng enger er,, in S. Ber Berti ti et al. eds.,International Arbitration in Switzerland(2000). See Documentary Supplement at pp. 123-27. ’

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The Swi Swiss ss Law on Pr Priva ivate te Int Intern ernati ationa onall Law re repla placed ced,, ins insofa ofarr as int intern ernati ationa onall arb arbii446 tratio tra tion n is con concer cerned ned,, the Swi Swiss ss Int Interer-Can Canton tonal al Con Concor cordat dat.. Und Under er the revi evised sed Swi Swiss ss legislati legis lation, on, inter internation national al arbit arbitration ration agr agreement eementss are re readily adily and effec effectivel tivelyy enfor enforced. ced. 447 The Law expressly recognizes the separability doctrine and prescribes a specialized iz ed “pr “pro-a o-arbi rbitra tratio tion n” cho choice ice-of -of-la -law w regi egime, me, pur pursua suant nt to whi which ch int intern ernati ationa onall arb arbitr itraation agreements, providing for arbitration in Switzerland, are substantively valid provided they conform to either (a) the law chosen by the parties (where the parties have made a specific choice of law for the arbitration agreement); (b) the law applicabl ca blee to th thee di disp sput utee (i (in n pa part rtic icul ular ar,, th that at ap appl plic icab able le to th thee pa part rtie iess under underlyin lying g comme commerr448 cial contract); or (c) Swiss law. The Swiss Law on Private International Law also expressly confirms the arbitrators competen competence-com ce-competenc petence, e, whil whilee gener generally ally permi permitting tting arbit arbitral ral tribu tribunals nals to 449 reso esolve lve jur jurisd isdict iction ional al cha challe llenge ngess in the fir first st ins instan tance. ce. Sw Swis isss la law w al also so pr prov ovid ides es fo forr th thee 450 arbitrability of a wide range of disputes, and the Swiss Federal Tribunal has adopted a relatively expansive “pro-arbitration” rule of interpretation of the scope of international arbitration agreements.451 Where claims subject to an arbitration agreement are asserted in Swiss courts, the parties arbitration agreement will be given effect by dismissing judicial proceedings.452 Under the Swiss Law on Private International Law, the parties freedom to agree upon the applicable procedural and substantive law is expressly recognized. recognized.453Judi’

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cial interference by Swiss courts in the arbitration process (other than regarding the availability of provisional measures and evidence-taking in aid of a tribunal) is narrowly limited.454 As to arbitral awards made in Switzerland, actions to annul are limited to grounds generally paralleling those in the New York Convention.455 Parties can agree to exclude even this review of international arbitral awards, provided that none of the partie par tiess is dom domici iciled led in Swi Switze tzerla rland. nd.456 Swi Swiss ss cou courts rts wil willl reco ecogni gnize ze and enf enfor orce ce for foreig eign n arbitral awards without substantial judicial review, subject only to the limits of the New York Convention.457 Many judicial functions relating to international arbitration are centralized, with the Swiss Federal Tribunal generally having original jurisdiction in annulment actions.458

446. SeeM. Blessing, in H. Honsell, N.P. N.P. Vogt, Vogt, A. Schnyder & S. Berti eds., International Arbitration in Switzerland Introduction Introduction to Arbitration — Swiss and International Perspectives Perspectives¶414 (2000). 447. Swiss Law on Private International Law, Law, Art. 178(3). 448. Swiss Law on Private International Law, Law, Art. 178(2). 449. Swiss Law on Private International Law, Law, Art. 186. 450. Swiss Law on Private International Law, Law, Art. 177. 451. SeeG. Born, International Commercial Arbitration1072-73 (2009). 452. See Judgment of 29 April 1996, DFT 122 III 139 (Swiss Fed. Trib.) (where party challenges jurisdiction under arbitration agreement providing for seat in Switzerland, Swiss court must decline jurisdiction, unless it concludes upon a prima facie examination that the arbitration agreement is null and void, inoperative or incapable of being performed); Judgment of 16 January 1995, DFT 121 III 38 (Swiss Fed. Trib.) (where party challenges jurisdiction under arbitration agreement providing for seat abroad, Swiss court must subject the question of validity and scope of the agreement to full judicial consideration); Wenger We nger,, in S. Berti et al. eds., International Arbitration in SwitzerlandArt. 186 ¶¶5 et seq. (2000). 453. Swiss Law on Private International Law, Law, Arts. 182 & 187. 454. Swiss Law on Private International Law, Law, Arts. 179(2),(3), 180(3), 183(2), 183(2), 184(2), & 185. 455. Swiss Law on Private International Law, Law, Art. 190(2). 456. Swiss Law on Private International Law, Law, Art. 192. 457. Swiss Law on Private International Law, Law, Art. 194. 458. Swiss Law on Private International Law, Law, Art. 191(1).

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d. Frenc rench h New New Code Code of Civil Civil Pr Procedu ocedure re France is one of the leading centers for international commercial arbitration in Europe Eur ope and and,, ind indeed eed,, the wor world. ld. Mo More re int intern ernati ationa onall arb arbitr itrati ations ons ar aree repo eporte rtedly dly sea seated ted 459 in Fran rance ce tha than n any oth other er Eur Europe opean an jur jurisd isdict iction ion,, and Fre rench nch arbit arbitratio ration n legis legislatio lation n and judicial decisions have considerable international importance. International arbitration in France is governed by the French New Code of Civil Proce Pr ocedur dure, e, princi pri ncipal pally ly as ado adopte pted d in dec decrrees pr promu omulga lgated ted on May 14, 198 1980, 0, and Ma Mayy 460 12, 1981. The two decrees added Articles 1442-1507 to the French New Code of Civil Pr Procedure. ocedure.461Articles 1442 to 1491 of the New Code of Civil Pr Procedure ocedure apply to domestic arbitrations, while Articles 1492 to 1507 apply to “international” arbitrations.462 If th thee pa part rtie iess to an in inte tern rnat atio iona nall ar arbi bitr trat atio ion n ag agrree th that at th thee ar arbi bitr trat atio ion n is go govverned by French law, law, the provisi provisions ons on domestic arbitration apply by analogy analogy,, unless 463 specifically provided otherwise by the parties (or by French law). The provisions of the New Code of Civil Procedure have produced a strongly proarbitration legal framework for international commercial arbitration. Both French courts and academics have interpreted French legislation, and developed nonstatutory doctrine, in a manner that has been highly supportive of the international arbitral process.464 Frenc ench h law emp emphat hatica icall llyy reco ecogni gnizes zes the aut autono onomy my of the arb arbitr itrati ation on agr agreem eement ent (or 465

separability separabil ity doctri doctrine) ne) and466 provi pr ovides des for the pr presu esumpt mptive ive val validi idity ty and enf enfor orcea ceabil bility ity of arb arbitr itrati ation on agr agreem eement ents. s. It al also so exp xprres essl slyy gr gran ants ts ar arbi bitr trat ator orss th thee po powe werr (competence-competence) to decide challenges to their jurisdiction. 467 Further, if claims that are allegedly subject to an arbitration agreement are brought in French cour co urts ts,, pr prio iorr to co cons nsti titu tuti tion on of th thee ar arbi bitr tral al tr trib ibun unal al,, th thee Ne New w Co Code de of Ci Civi vill Pr Proc oced edur uree

459. SeeG. Born, International Commercia Commerciall Arbitration121-122 (2009). France has historically been the seatt for mor sea moree ICC arb arbitr itrati ations ons tha than n any oth other er sta state. te. Fran rance ce was the sea seatt for app appro roxim ximate ately ly 17. 17.2 2 per percen centt of all the ICC arbitrations filed in 2006, 14.5 percent in 2000, and 15.5 percent in 1999. Id. at 121-22. 460. The two decrees added Articles 1442-1507 to the French French Code of Civil Procedure. Procedure. See VII Y.B. Comm. Arb. 271 (1982), for English translations. 461. SeeVII Y.B. Comm. Arb. 271 (1982), for English translations. 462. The term is defined to include matters involving involving cross-border cross-border transfers of goods or services.See Commercial Arbitration296-98 (2009). G. 463. Born,FInternational rench New Code of Civil Proce Procedure, dure, Art. 1495 (“Where the international arbitration is governed by French law, the provisions of Titles I, II, and II of the present Book shall apply only in the absence of a specific agreement, and subject to Articles 1493 and 1494.”). 464. E. Gaillard & J. Savage eds., Fouchard Gaillard Goldman on International Commercial Arbitration ¶¶148-51 (1999). 465. See Judgment Judgment of 7 May 1963, 91 J.D.I. (Clunet) 82 (1964) (French Cour de cassation) (“In international arbitration, the arbitration agreement, whether concluded separately or included in the contract to which it relates, shall, save in exceptional circ*mstances . . . , have full legal autonomy and shall not be aff affect ected ed by the fac factt tha thatt the afo afore remen mentio tioned ned con contra tract ct may be inv invali alid”) d”);; E. Gai Gailla llard rd & J. Sav Savage age eds eds., ., Fouchard F ouchard Gaillard Gaillard Goldman on International Commercial Commercial Arbitration¶¶391et seq. (1999). 466. Judgment of 17 December 1991,1993 Rev. arb. 281 (Paris Cour d appel) (“in the field of international arbitration, the principle of the autonomy of the arbitration agreement is of general application, as an international substantive rule upholding the legality of the arbitration agreement”);Judgment of 20 December 1993, 121 J.D J.D.I. .I. (Cl (Clune unet) t) 432 (19 (1994) 94) (F (Fre rench nch Cou Courr de cas cassat sation ion)) (“by vir virtue tue of a sub substa stanti ntive ve rul rulee of international arbitration, the arbitration agreement is legally independent of the main contract containing or referring to it, and the existence and effectiveness of the arbitration agreement are to be assessed, subject to the mandatory rules of Fr French ench law and international public policy policy,, on the basis of the parties common intention, there being no need to refer to any national law”); E. Gaillard & J. Savage eds.,Fouchar Fouchardd Gaillar Gaillardd Goldman on International Commercial Commercial Arbitration ¶¶436-37 (1999). 467. French New Code of Civil Procedure, Procedure, Art. 1466; E. Gaillard & J. Savage eds., Fouchard Gaillard Goldman on International Commercial Commercial Arbitration¶¶650-60 (1999). ’

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provides provi des for dis dismis missal sal of the jud judici icial al pr proce oceedi edings ngs,, ex excep ceptt whe wherre the arb arbitr itrati ation on agr agreeee468 ment is “manifestly null”; if claims which are allegedly subject to arbitration are brought in French courts after the arbitral tribunal is constituted, then the court is required to dismiss them pending a jurisdictional decision by the arbitrators. 469 With regar regard d to the law applicable to the arbitration agreement, French courts have develo dev eloped ped a re relat lative ively ly unu unusua suall doc doctri trine ne tha thatt arb arbitr itrati ation on agr agreem eement entss ar aree aut autono onomou mouss from national law and instead are subject to specialized principles of international law.470 The non-arbitrability doctrine has not been invoked to any significant extent 471 by French courts, except in labor and consumer matters. In contrast to a numb number er of developed jurisdictions, French courts do not appear to have developed “proarbitration” rules of interpretation of arbitration agreements. 472 French courts generally afford the parties to an arbitration agreement substantial autono aut onomy my wit with h resp espect ect to cho choice ice-of -of-la -law w, pr proce ocedur dural al rul rules, es, sel select ection ion of arb arbitr itrato ators, rs, and 473 the like. In particular, French law expressly provides that arbitrators sitting in France are generally not bound by local rules of civil procedure procedure applicable in French courts and have very wide discretion in adopting arbitral procedures. 474 The New Code of Civil Procedure also grants French courts the power to assist in constituting an arbitral tribunal475 and to issue court-ordered provisional measures in aid of arbitration.476 The efficacy of France s arbitration legislation is materially advanced through its centralization of most arbitration-related judicial proceedings ’

in the Tribunal de Grande Instance in Paris, which has developed a very substantial expertise in the field.477 The 1981 Decree also reformed French law relating to recognition and enforcement of international arbitral awards. Among other things, the New Code of Civil Procedure permits actions in French courts to annul international arbitral awards made in France, on limited grounds (substantially similar to, and sometimes more 468. Fre 468. rench nch New Cod Codee of Civ Civil il Pr Proce ocedur dure, e, Art Art.. 14 1458( 58(2); 2); E. Gai Gailla llard rd & J. Sav Savage age eds eds., .,F Fouchard ouchard Gaillard Gaillard Goldman on International Commercial Commercial Arbitration ¶¶668-82 (1999); infrapp. 202, 205-07. 469. French New Code of Civil Procedure, Procedure, Art. 1458; E. Gaillard & J. Savage eds.,Fouchard Gaillard Goldman on International Commercial Commercial Arbitration ¶¶668-82 (1999). 470. E. Gaillard & J. Savage eds., Fouchard Gaillard Goldman on International Commercial Arbitration ¶¶418¶¶4 18-19 19 & 436 436-37 -37 (19 (1999) 99).. See Judgment of 4 July 1972, 99 J.D J.D.I. .I. (Cl (Clune unet) t) 843 (19 (1972) 72) (F (Fre rench nch Cou Courr de cas cas-sation) (“. . . having drawn attention to the international nature of the contract between the parties and to the total autonomy of arbitration agreement in the field of international arbitration, the Court of Appeals rightly held the disputed clause to be applicable in the present case.”);Judgment of 20 December 1993,121 J.D.I. (Clunet) 432 (1994) (French Cour de cassation) (“by virtue of a substantive rule of internation nat ional al arb arbitr itrati ation, on, the arb arbitr itrati ation on agr agreem eement ent is leg legall allyy ind indepe epende ndent nt of the mai main n con contra tract ct con contai tainin ning g or referr re ferring ing to it, and the ex exist istenc encee and eff effect ective ivenes nesss of the arb arbitr itrati ation on agr agreem eement ent ar aree to be ass assess essed, ed, sub subjec jectt to the man mandat datory ory rul rules es of Fre rench nch law and int intern ernati ationa onall pub public lic pol policy icy,, on the bas basis is of the par partie tiess common intention, there being no need to refer to any national law.”). See infrapp. 165-66. 471. SeeE. Gaillard & J. Savage eds., Fouchar Fouchardd Gaillar Gaillardd Goldman on International Commercial Arbitration ¶574 (1999) (antitrust, intellectual property, property, bankruptcy, and corporate law issues). 472. 47 2. E. Gai Gailla llard rd & J. Sav Savage age eds eds., .,F Fouchar ouchardd Gaillar Gaillardd Goldman on International InternationalCommercia Commerciall Arbitration ¶481 (1999);infrapp. 463-80. 473. French New Code of Civil Procedure, Arts. 1443, 1460, 1494, & 1496; E. Gaillar Gaillard d & J. Savage eds.,Fouchar Fouchardd Gaillar Gaillardd Goldman on International Commercial Arbitration¶¶753, 1171, 1200, 1427 (1999) . 474. French New Code of Civil Procedure, Arts. 1460 & 1494; E. Gaillard & J. Savage eds., Fouchard Gaillardd Goldman on International Commercial Arbitration¶¶1200-02 (1999); G. Born, International CommerGaillar cial Arbitration 1780-62, 1785-86 (2009). 475. French New Code of Civil Procedure, Procedure, Arts. 1493 & 1457. 476. E. Gaillard & J. Savage eds., Fouchard Gaillard Goldman on International Commercial Arbitration ¶¶1306-08 (1999). 477. Id. at ¶1290. Among other things, the Tribunal de Grande Instance is responsible for selecting arbitr arb itrato ators rs and dea dealin ling g wit with h oth other er pr probl oblems ems in con consti stitut tuting ing a tri tribun bunal, al, in cas cases es whe where re the par partie tiess hav havee not agreed upon institutional or other mechanisms. See French New Code of Civil Procedure, Arts. 1457, 1493;Judgment of 22 November 1989,1990 Rev. arb. 142 (French Cour de cassation Civ. 2e). ’

C. Overvie Overview w of Natio National nal Arbitr Arbitration ation Legisl Legislation ation

lib libera erall tha than, n, tho those se in the New York Con Conven ventio tion). n).478 Th Thee Ne New w Co Code de of Ci Civi vill Proc oced edur uree also als o pr provi ovides des for the re recog cognit nition ion and enf enfor orcem cement ent of int intern ernati ationa onall arb arbitr itral al awa award rdss on 479 the same grounds.

e. Engli English sh Arbi Arbitrati tration on Act, 1996 England is a significant center for international commercial arbitration, whose popularity has increased over the past two decades.480 The continuing spread of English as the language of international business, and the development of London as an international financial and business center, promise continued growth in England s importance as an arbitral center. Both international and domestic arbitrations seated in England, Wales, or Northern Ireland are governed by the English Arbitration Act, 1996, which provides a detailed (110 separate sections) statement of English arbitration law. 481 The Act is base ba sed d rou ough ghly ly on th thee UN UNCI CITR TRAL AL Mo Mode dell La Law w, wh whil ilee in intr trod oduc ucin ing g a nu numb mber er of fo form rmal al 482 and substantive innovations. The Act departed from the historic common law approach towards arbitration legislation (e.g., addressing isolated issues, often in response to judicial decisions483), in favor of greater codification (derived in part from the Model Law).484 Indeed, the Act has produced the somewhat anomalous ’

res esul ultt th that at th thee cr crad adle le of co comm mmon on la law w ju juri risp spru rude denc ncee no now w bo boas asts ts a su subs bsta tant ntia iall llyy lo long nger er,, more detailed statutory statement of international arbitration law than any civil law jurisdiction (and, specifically, specifically, France and Switzerland, whose arbitration statutes are exceptional for their brevity485). The English Arbitration Act, 1996, was preceded in the twentieth century by three other oth er maj major or pie pieces ces of arb arbitr itrati ation on leg legisl islati ation, on, ena enacte cted d in 195 1950, 0, 197 1975, 5, and 197 1979. 9.486 The 1950 and 1975 Acts established a highly regulated legal regime for arbitration in England, with substantial scope for judicial involvement in the arbitral process and review of arbitral awards.487 In particular, particular, English legislation prior to 1979 provided

478. French New Code of Civil Procedure, Procedure, Arts. 1504 & 1502. 479. French New Code of Civil Procedure, Procedure, Art. 1502. 480. See G. Born, International Commercial Arbitration127 (2009). The United Kingdom was the seat for ap for appr prox oxim imat atel elyy 6. 6.5 5 pe perrce cent nt of al alll IC ICC C ar arbi bitr trat atio ions ns fi file led d in 20 2006 06,, 10 10.1 .1 pe perrce cent nt in 20 2000 00,, an and d 6. 6.7 7 pe perrce cent nt in 1990. Id. at 127 n.765. 481.. Eng 481 Englis lish h Arb Arbitr itrati ation on Act Act,, 19 1996, 96, §2( §2(1) 1) (“t (“the he pr provi ovisio sions ns of thi thiss Part app apply ly whe where re the sea seatt of the arb arbiitration is in England and Wales or Northern Ireland”). In contrast, the previous p revious English Arbitration Act, 1950, and the English Arbitration Act, 1979, did not define the arbitrations to which their provisions applie app lied. d. The sco scope pe of app applic licati ation on of the these se Act Actss was det determ ermine ined d by com common mon law pri princi nciple pless of jur jurisd isdict iction ion (which held that the English courts could generally only intervene in arbitrations held within the jurisdiction or subject to English law). 482. Goode Goode,, The Role of the Lex Loci Arbitri in International Commercial Arbitration , 17 Arb. Int l 19, 19 (2001) (200 1) (“the Arbitration Arbitration Act 1996 1996,, unlik unlikee early versions versions of the draft Arbit Arbitratio ration n Bill prepared prepared for the Departmental Advisory Committee on Arbitration, bears the strong impress of the Model Law”); Saville, The Origin of the New English Arbitration Act 1996: Reconciling Speed with Justice in the Decision-Making Process, 13 Arb. Int l 237 (1997). The Act differs from the UNCITRAL Model Law in a number of respects. For a sum summar maryy of the mos mostt imp import ortantof antof the these, se,see R. Mer Merkin kin,,Arbitration Law ¶1. ¶1.22 22 (20 (2004 04 & 200 2007 7 Upd Update ate). ). 483. See supra pp. 15-18, 47-52. 484. Samu Samuel, el,Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2, 24-32 (1999). 485. Compare the 19 (short) sections of the Swiss Law on Private International Law, the 16 (shorter) sectio sec tions ns of the Fre rench nch New Cod Codee of Civ Civil il Pr Proce ocedur dure, e, and the 31 (sh (short ort)) sec sectio tions ns of the FAA, inc includ luding ing sub sub-stantially duplicative implementing legislation for the Inter-American and New York York Conventions. 486. SeeSamuel,Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2, 14, 19 (1999); Hunter, Arbitration Procedure in England: Past, Present and Future , 1 Arb. Int l 82 (1985). 487. Samu Samuel, el,Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2, 19 (1999). ’

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for a widely criticized “case stated” procedure, which had granted parties to arbitration ti onss se seat ated ed in En Engl glan and d a ma mand ndat ator oryy ri righ ghtt of ac acce cess ss to th thee En Engl glis ish h co cour urts ts to rev evie iew w de novo no vo is issu sues es of En Engl glis ish h la law w th that at ar aros osee in th thee co cour urse se of ar arbi bitr tral al pr proc ocee eedi ding ngss (w (wit itho hout ut th thee 488 possib pos sibili ility ty of ex exclu clusio sion n agr agreem eement entss to con contra tract ct out of suc such h revi eview) ew).. The Arbi Arbitratio tration n Act, 1979, revised this historic approach and established a more acceptable, if by no means ideal, regime for international arbitrations in England. 489 Under the Arbitration Act, 1979, agreements to arbitrate were presumptively enfo en forrce ceab able le in En Engl glan and, d, in incl clud udin ing g by me mean anss of a st stay ay of na nati tion onal al co cour urtt li liti tiga gati tion on,, an and d English courts imposed few “non-arbitrability” constraints. Moreover, although not formally accepting the “separability” doctrine, English courts did not in fact permit challenges to the parties underlying contract to interfere unduly with the arbitral process.490 The 1979 Act amended, but did not eliminate, the historic “case stated” procedure: The Act permitted parties to enter into exclusion agreements, which waived the right to judicial review of the merits of the arbitrators award (save for cases involving shipping, commodities and insurance). 491 Where no such excl exclusion usion agreement existed, more demanding judicial review persisted, which was the cause for continuing criticism in many quarters.492 In response to these (and other) criticisms, the English Arbitration Act, 1996, was adopted, following an extensive consultation process with both English and foreign sources.493 Th Thee Ac Actt wa wass in inte tend nded ed to — an and d di did d — si sign gnif ific ican antl tlyy im impr prov ovee th thee le legi gisl slat ativ ivee ’

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framework for international arbitration in England. The Act compiled all prior English legislative provisions relating to arbitration into a single statute, based in large part on the UNCITRAL Model Law, and sought to introduce a modern “proarbitration” legislative regime for international arbitration in England.494 The 1996 Act provides expressly for the validity of written (and some other) arbitration agreements (as to both existing and future disputes) and for the stay of English court proceedings concerning claims subject to valid arbitration agreements.495 The Act also provid provides es for the t he separability of arbitration agreements496 and for recognition of the arbitral tribunal s competence-competence to rule on its own jurisdiction.497 Recent English judicial decisions have interpreted the competencecompet com petenc encee doc doctri trine ne br broad oadly ly and ado adopte pted d a ro robus bustt “pr “pro-a o-arbi rbitra tratio tion n” app appro roach ach to the ’

488. 48 8. Eng Englis lish h Arb Arbitr itrati ation on Act Act,, 197 1979, 9, §§1 §§1(3) (3)(a) (a) & (b) (b),, 3; Mac Macass assey ey,,English Arbitration, XV J. In Inst stit itut utee Ar Arb. b. 63 (1947); Pioneer Shipping v. B.T.P B.T.P.. Tioxide (The “Nema”) [1982] A.C. 724 (House of Lords); Antaios Compania v. Salen,see Rederierna AB (The “Antaios”) A.C. (House of Lords). 489. ForNaviera a criticalSAoverview, overview Samuel,Arbitration Statutes in [1985] England and191 the USA , 8 Arb. & Disp. Res. L.J. 2, 19 (1999) (“A great deal of ink has been spilt on this ill-conceived piece of compromise legislation.”). 490. Ashville Inv. Inv. v. v. Elmer Contractors [1988] 2 Lloyd s Rep. 73 (English Court of Appeal); Samuel, Separability in English Law, 3 J. Int l Arb. 95 (1986). The severability presumption was recognized in England in Harbour Assur. Co. (UK) Ltd v. Kansa Gen. Int l Ins. Co. Ltd [1993] 1 Lloyd s Rep. 455 (English Court of Appeal). See G. Born, International Commerci Commercial al Arbitration, 336-40 (2009). 491. See English Arbitration Act, 1979, §§3 & 4; R. Merkin, Arbitration Law ¶22.5 (2004 & Update 2007). 492. Marrio Marriott, tt,The Politics of Arbitration Reform, 14 C.L.Q. 125 (1995). 493. SeeU.K. Departmental Advisory Committee on Arbitration Law, 1996, Report on the Arbitration Bill (February 1996), reprinted in 13 Arb. Int l 275 (1997); Supplement to the Departmental Advisory Committee on Arbitration Law of February 1996 (January 1996), reprinted in 13 Arb. Int l 317 (1997). 494. Chukwumerije,Reform and Consolidation Consolidationof of English Arbitration ArbitrationLaw Law,8Am.Rev.Int l Ar Arb. b. 21 (1 (199 996) 6);; Mustill,A New Arbitration Act for the United Kingdom? The Response of the Departmental Advisory Committee to the UNCITRAL Model Law,6 Arb. Int l 3 (1990); Saville, The Origin of the New English Arbitration Act 1996: Reconciling Speed with Justice in the Decision-Making Process Process, 13 Arb. Int l 237 (1997). ’

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495. English Arbitration Act, 1996, §§5, 6 & 9; G. G. Born,International Commercial Arbitration573, 1026 (2009). 496. English Arbitration Arbitration Act, 1996, §7;infra pp. 173-201. 497. 49 7. Eng Englis lish h Arb Arbitr itrati ation on Act Act,, 199 1996, 6, §§3 §§30, 0, 31, 67; Aeb Aeberl erli, i,Jurisdictional Jurisdictional Disputes Under the Arbitration Act 1996: A Procedural Route Map, 21 Arb. Int l 253, 260-65 (2005); infra pp. 201-34. ’

C. Overvie Overview w of Natio National nal Arbitr Arbitration ation Legisl Legislation ation

interpretation of international arbitration clauses.498 The Act does not address the subject of non-arbitrable disputes or claims, but English courts have adopted a narrow view of the doctrine.499 Thee 19 Th 1996 96 Ac Actt co cont ntai ains ns a nu numb mber er of pr prov ovis isio ions ns gr gran anti ting ng ar arbi bitr trat ator orss br broa oad d fr free eedo dom m 500 in conducting arbitral proceedings, with a minimum of judicial interference. This freed fr eedom om inc includ ludes es wid widee aut author horiza izatio tion n wit with h resp espect ect to pr proce ocedur dural al and evi eviden dentia tiary ry mat mat-501 502 ters, appointment of experts, ordering the payment of security for the costs of the arbitration,503 and granting conservatory or provisional measures.504 Among othe ot herr th thin ings gs,, it is no now w cl clea earr th that at ar arbi bitr trat ator orss co cond nduc ucti ting ng ar arbi bitr tral al pr proc oceed eedin ings gs se seat ated ed in Engl En glan and d ar aree no nott ob obli lige ged d to ap appl plyy lo loca call ru rule less of En Engl glis ish h ci civi vill pr proc oced edur uree or ev evid iden ence ce..505 The Act also provides for English judicial assistance to arbitrations sited in England, includ inc luding ing in tak taking ing evi eviden dence, ce,506 appo appointin inting g or rem removing oving arbit arbitrators rators,,507 and gra granti nting ng 508 provisional provisi onal measures. With respect to awards made in England, the Act departs entirely from the historic “case stated” procedure and provides only limited grounds for annulling international arbitral awards made in England. The Act s grounds for annulling awards are now no w li limi mite ted d to la lack ck of su subs bsta tant ntiv ivee ju juri risd sdic icti tion on of th thee ar arbi bitr tral al tr trib ibun unal al,, li limi mite ted d ca categ tegoories of “serious irregularity” in procedural matters, and limited appeals on points of law la w (w (whi hich ch ma mayy on only ly be br brou ough ghtt wi with th le leav avee of th thee co cour urtt an and d ma mayy be excl clud uded ed by ag agrree ee-509 ment between the parties). The Act also provides for the recognition and enforce’

mentt of for men foreig eign n arb arbitr itral al awa award rds, s, pri primar marily ily by inc incorp orpora oratin ting g the pr provi ovisio sions ns of the New York Convention.510 York

498. SeeFiona Trust & Holding Corp. v. Privalov [2007] EWCA Civ. 200 (English Court of Appeal), affd, Fiona Trust v. Privalov [2007] UKHL 40 (House of Lords); Film Fin. Inc. v. Royal Bank of Scotland [2007] EWHC 195 (Comm.) (English Court of Appeal); Vee Vee Networks v. Econet Wireless Int l Ltd [2004] EWHC 2909 (Q.B.); infrapp. 463-80. 499. See R. Mer Merkin kin,,Arbitration Law ¶3. ¶3.17 17 (20 (2004 04 & Upda Update te 200 2007); 7); ET Plu Pluss SA v. Jea Jeann-P Paul Well eller er & The Channel Tunnel Group Ltd [2005] EWHC 2115 (Q.B.). 500. The Act underscores underscores the parties autonomy and the arbitral tribunal s discretion to conduct the ’

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arbitral proceedings. English Arbitration Act, 1996, §§33 & 34. Reflecting Article 5 of the UNCITRAL Model Law, the English Arbitration Act, 1996, provides that, in matters covered by Part I (“Arbitration Pursua Pur suant nt to an Arb Arbitr itrati ation on Agr Agreem eement ent”) ”) “th “thee cou court rt sho should uld not int interv ervene ene ex excep ceptt as pr provi ovided ded by thi thiss par part). t).”” SeeEnglish Arbitration Act, 1996, §1(c). 501. English Arbitration Act, 1996, 1996, §34(1) (“It shall be for the tribunal to decide all procedural procedural and evidential matters, subject to the right of the parties to agree any matter”). 502. English Arbitration Arbitration Act, 1996, §37. §37. 503. Id. 504. English Arbitration Arbitration Act, 1996, §§38(4) §§38(4) & 39. 505. This contrasts with the English English Arbitration Act, 1950, which operated on the presumption presumption that arbitr arb itrato ators rs wer weree to act in acc accor ordan dance ce wit with h the or ordin dinary ary rul rules es of evi eviden dence ce und under er app applic licabl ablee Eng Englis lish h law law.. See Land Sec. plc v. Westminster City Council [1994] 44 EG 153 (English High Court). 506. English Arbitration Arbitration Act, 1996, §44. §44. 507. English Arbitration Act, 1996, 1996, §§16, 18, 19 & 24. 508. English Arbitration Arbitration Act, 1996, §44. §44. 509. English Arbitration Act, 1996, §§67-69. §§67-69. English courts have held that appeal for error of law is impliedly excluded excluded where the parties have chosen a substantive applicable law other than English law or where the parties have chosen chosen a set of institutional rules, such as the ICC Rules, which excludes excludes the right of appeal to the extent possible. Athletic Union of Constantinople v. v. National Basketball Assoc. [2002] 1 Lloyd s Rep 305 (English Court of Appeal); Sanghi Polyesters Ltd (India) v. Int l Inv. (KFC, Kuwait) [2000] 1 Lloyd s Rep 480 (Q.B.). 510. English Arbitration Arbitration Act, 1996, §§100-104. §§100-104. ’

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1. Introduction to International Arbitration

2. Less Suppo Supportive rtive Nation National al Legis Legislation lation Some nations regarded international commercial arbitration with a mixture of suspicion pic ion and hos hostil tility ity dur during ing muc much h of the twe twenti ntieth eth cen centur turyy.511 Thi Thiss hos hostil tility ity ar arose ose fr from om a reluctance to compromise perceived principles of national sovereignty and from doubts concerning the fairness, neutrality, and efficacy of contemporary internationall comme tiona commerci rcial al arbit arbitration ration.. Altho Although ugh histo historic ric distru distrust st for intern internationa ationall arbit arbitratio ration n has waned substantially in recent decades, it has not entirely disappeared and continues tin ues to inf influe luence nce leg legisl islati ation, on, ju judic dicial ial dec decisi isions ons,, and oth other er act action ionss in som somee cou countr ntries ies.. Deve De velo lopi ping ng co coun untr trie iess in ma many ny pa part rtss of th thee wo worl rld d ref efus used ed fo forr mu much ch of th thee tw twen enti tieth eth cent ce ntur uryy to en enfo forrce ag agrree eeme ment ntss to ar arbi bitr trat atee fu futu turre di disp sput utes es.. Th This is wa wass pa part rtic icul ular arly ly tr true ue 512 in Latin America and much of the Middle East. Some developing states took the position that international arbitration agreements were an unjustifiable infringement upon national sovereignty, which was to be vigorously resisted.513 In many cases, arbitration agreements were valid only if they concerned an existing (not a futur fut ure) e) dis disput pute, e, whi which ch was the sub subjec jectt of a sub submis missio sion n agr agreem eement ent com commit mittin ting g the par par-514 ties to resolve the dispute by arbitration. In Latin America, the Calvo doctrine (first articulated in 1896) declared, among other things, that foreign nationals were mandatorily subject to the jurisdiction of local courts, which could not be ousted by international arbitration agreements.515 The doctrine was incorporated into national legislation and constitutional instruments, men ts, whi which ch not inf infre requ quent ently ly rend ender ered ed int intern ernati ationa onall arb arbitr itrati ation on agr agreem eement entss 516 invalid. Political declarations from developing states also reflected the continuing hostility of many developing states towards international arbitration, even well into the twentieth century. A 1971 declaration of the Andean Commission declared: [No agreement concerning foreign investment shall] withdraw possible . . . controversies from the national jurisdiction of the recipient country. country.517 511. E.g., Kassis, The Questionable Validity of Arbitration and Awards Under the Rules of the International Chamber of Commerce, 6 J. Int l Arb. 79 (1989); Shalakany, Arbitration and the Third World: A Plea for Reassessing Bias Under the the Specter of Neo-Liberalism Neo-Liberalism, 41 Ha Harv rv.. In Intt l L. J. 41 419 9 (2 (200 000) 0);; So Sorn rnar araj ajah ah,, The UNCITRAL Model Law: A Third World Viewp Viewpoint oint, 6 J. Int l Arb. 7 (1989); Sornarajah, The Climate of International Arbitration, 8 J. Int l Arb. 47 (1991). See G. Born, International Commercial Arbitration144 (2009). 512. Naon Naon,, Arbitration in Latin America, 5 Int l Arb. 137 (1989); S. Saleh, Commercial Arbitration in the Arab Middle East 49-50 (1984); El-Ahdab, Enforcement of Arbitral Awards in the Arab Countries, 11 Arb. Int l 169 (1995); N. Blackaby, D. Lindsey & A. Spinillo, International Arbitration in Latin America 3-10 (2003). 513. Shalakany Shalakany,, Arbitration and the Third World: A Plea for Reassessing Bias Under the Specter of NeoLiberalism, 41 Harv. Int l L.J. 419, 427 et seq. (2000) (“national judicial sovereignty is the price of capitulation lat ion to a his histor torica ically lly bia biased sed dis disput putee set settle tlemen mentt mec mechan hanism ism . . . a ‘sy ‘syste stem m tha thatt is wei weight ghted ed in fav favor or of the capital capit al exp exportin orting g stat states.’ es.’”); ”); Sorn Sornaraja arajah, h, The UNCITRAL Model Law: A Third World Viewpoint,6 J.Int l Ar Arb. b. 7 (1989) (“there is a definite ambivalence in the attitudes of developing countries towards international commercial commerci al arbitration”) arbitration”);; Afro-Asian Legal Consultative Committee, Report of the Seventeenth, Eighteenth and Nineteenth Sessions held in Kuala Lumpur (1976), Baghdad (1977) and Doha (1978), at 131 (in (insti stitut tution ional al arb arbiitratio tra tion n rul rules es do “no “nott wor work k out par partic ticula ularly rly fav favour ourabl ablyy for the dev develo elopin ping g cou countr ntries ies in the mat matter ter of ven venue, ue, choice of arbitrators, as also fees and charges leviable by the institutions concerned”). 514. Naon Naon,,Argen Argentine tine Law and the ICC Rules: A Comment on the ECOFISA Case, 3 Wor orldArb ldArb.. & Me Med.Re d.Rep. p. 100 (19 (1992) 92);; Bra Brazil zilian ian Arb Arbitr itrati ation on Act (La (Law w 930 9307 7 of 199 1996), 6), Art Arts. s. 6-7 (ar (argua guably bly re requi quirin ring g pos post-d t-disp ispute ute com com-promis). 515. C. Calvo, Calvo,Derecho Internacional Teórico Teórico y Pràtico de Europa y América(1868); C. Calvo, Le droit international théorique et pratique (4th ed. 1870 1870-72) -72).. See Naon,Arbitration and Latin America: Progr Progress ess and Setbacks, 21 Arb. Int l 127, 134-37 (2005). 516. SeeGarcia-Amador, 2 The Changing Law of International Claims 481-482 (1984); Baker & Yoder, ICSID and the Calvo Clause: Hindrance to Foreign Foreign Direct Direct Investment in LDCs, 5 Ohio St. J. Disp. Resol. 75, 91 (1989). 517. 51 7. Dec Decisi ision on 24 of the And Andean ean Com Commis missio sion n Con Concer cernin ning g Tre reatm atment ent of For oreig eign n Cap Capita ital, l, Art Articl iclee 51, 10 Int l Leg. Mat. 15 (1971). ’

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C. Overvie Overview w of Natio National nal Arbitr Arbitration ation Legisl Legislation ation

The same principles were later reflected in various declarations associated with the “New International Economic Order Order.” .”518 Against this backgrou background, nd, contemporary arbitration legislation in some developing states still does not provide effective enforcement of agreements to arbitrate future disputes; such provisions are sometimes either revocable at will or unenforceable in broad categories of disputes.519 Similarly, in a number of states, international arbitral awards are subject to either de novo judicial review or to similarly rigorous scrutiny on other grounds.520 Finall inallyy, some natio national nal court courtss have been pr prepar epared ed to interf int erfer eree in the int intern ernati ationa onall arb arbitr itral al pr proce ocess ss — for exam xample ple,, by pur purpor portin ting g to remove arbitrators, to resolve “preliminary” issues, to bar foreign lawyers from appearing, or to enjoin arbitrations.521 None No neth thel eles ess, s, du duri ring ng th thee la last st de deca cade de,, a nu numb mber er of st stat ates es th that at hi hist stor oric ical ally ly di dist stru rust sted ed international arbitration have ratified the New York York Convention and/or enacted leg522 islation supportive of the arbitral process. This includes India, China, Saudi Arabia, Argentina, Algeria, Bahrain, Brazil, Tunisia, Turkey, Nigeria, Peru, (at least for a time) Russia, Ecuador, Ecuador, and Venezuela. Although there is often little practical experience with the application of arbitration legislation in such states, these statutes have the potential for providing a more stable, predictable framework for international arbitration. Unfortunately, even where national law is superficially supportive of the international arbitral process, many national courts have displayed a readiness to hold arbitration agreements or awards invalid or to interfere with the arbitral process. That is part pa rtic icul ular arly ly tr true ue wh when en na nati tion onal al co cour urts ts ar aree req eque uest sted ed to do so by lo loca call co comp mpan anie ies, s, st stat atee 523 entities, or individuals. Moreover, the early years of the twenty-first century have witnessed a potential resurgence resurgence of historic ideological opposition to at least certain 518. Charter of Article 2(2) Economic Rights and Duties of States, U.N. Res. Res. 3281 (XXIX), 29 U.N. GAOR Supp. (No. 31), U.N. Doc. A/9631 (1974); Permanent Sovereignty Over Natural Resources, G.A. Res. 3171 (XXVII), 28 U.N. Doc. GOAR Supp. (No. 30), U.N. Doc. A/9030 (1973). 519. See infra pp. 159-73; Naon, Argentine Law and the ICC Rules: A Comment on the ECOFISA Case , 3 World Wo rld Arb. & Med. Rep. 100 (1992); Brazilian Arbitration Act, Arts. 6-7 (arguably requiring post-dispute compromise). 520. See infra pp. 169-72; 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) (“As a consequence of the evidence given, the arbitration process and the award from the 21st of December of 2001 . . . between between the compa companies nies Elect Electrific rificadora adora del Atlá Atlántico ntico S.A. E.S.P and Termo ermorio rio E.S.P. is annulled.”). 521. For a detailed account of efforts made by some states to frustrate the arbitration of international disputes,see Kan Kantor tor,,International Project Finance Finance and Arbitration With Public Sector Entities: When Is Arbitrability a Fictio Fiction? n?, 24 Fordham Int l L.J. 1122, 1171-72 (2001) (“a substantial risk exists that courts in developing countries will intervene to halt arbitration of disputes between investors and public authorities of that count country ry,, parti particula cularly rly in cir circ*ms c*mstance tancess of perva pervasive sive econo economic mic and polit political ical turmo turmoil il and corrup corruption tion.”). .”). 522. Alfar Alfaro o & Guima Guimarey rey,, Who Shoul Shouldd Deter Determine mine Arbi Arbitrabi trability? lity? Arbi Arbitrat tration ion in a Chang Changing ing Econ Economic omic and Polit olitiical Environment, 12 Arb. Int l 415, 424-26 (1996); A. Asouzu, International Commercial Arbitration and African Stat States: es: Prac Practice tice,, Parti articipa cipation tion and Insti Institutio tutional nal Deve Developm lopment ent (200 (2001); 1); Asouz Asouzu, u, The Ado Adopti ption on of the UNC UNCITR ITRAL AL Model Law in Nigeria: Implications on the Recognition and Enforcement of Arbitral Awards, (1999) J. Bus. Law. 185; Naon,Arbitration in Latin America: Overco Overcoming ming Traditional Hostility (An Update), 22 U. Mi Miam amii In Inte terr-Am Am.. L. Rev. 203, 231-34 (1991); Naon, Arbitration and Latin America: Progress and Setbacks, 21 Arb. Int l 127, 149-76 (2005). 523. Naon Naon,,Arbitration and Latin America: Progress Progress and Setbacks, 21 Arb. Int l 127, 150 (2005) (“despite the rosy landscape generally presented by the black letter law on arbitration in Latin America after its recen re centt mod modern ernisa isatio tion, n, its sub substa stance nce or spi spirit rit has not alw always ays bee been n pr prope operly rly und unders erstoo tood d or appl applied ied.. In cer cer-tain cases, the Latin American courts have ignored express legal provisions aimed at facilitating arbitration or ensuring its efficacy efficacy,, or advanced results notoriously incompatible with the policies favourable to arbitration underlying the new and updated legal arbitration framework”); Alfaro & Lorenti, The Growing Opposition of Argentina to ICSID Arbitral Tribunals: Tribunals: A Conflict Between International and Domestic Law?,6 J. World Inv. Inv. & Trade 417 (2005). ’

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1. Introduction to International Arbitration

aspects of the international arbitral process, with developing states524 and commentators525 co cond ndem emni ning ng th thee le legi giti tima macy cy an and d fa fair irne ness ss of th thee pr proc oces ess. s. It rem emai ains ns to be se seen en how substantial and long-lived this trend is, although it has thus far attracted little interest outside a limited number of states.

D. OVE VER RVI VIEW EW OFAD HOCAND AND INSTITUTIONAL ARBITRATION ARBITRA TION International arbitrations may be either “institutional” or “ad hoc .” There are vitally important differences between these two forms of arbitration. Institutional arbitrations are conducted pursuant to institutional arbitration rules, almost always overseen by an appointing authority with responsibility for various issues relating to constituting the arbitral tribunal, fixing the arbitrators compensation, tio n, and sim simila ilarr mat matter ters. s.526 In con contra trast, st,ad hoc arb arbitr itrati ations ons ar aree con conduc ducted ted wit withou houtt the benefit of an appointing and administrative authority or (generally) pre-existing arbitration rules, subject only to the parties arbitration agreement and applicable national arbitration legislation. ’

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1. Ins Institu titution tional al Arb Arbitra itratio tion n A number of organiz organizations, ations, located in differen differentt countries, provide institutional arbitration services, often tailored to particular commercial or other needs. The bestknown kno wn int intern ernati ationa onall com commer mercia ciall arb arbitr itrati ation on ins instit tituti utions ons ar aree the Int Intern ernati ationa onall Chamber of Commerce (“ICC”), the American Arbitration Association (“AAA”) and its International Centre for Dispute Resolution (“ICDR”), and the London Court of International Arbitration (“LCIA”). Each of these organizations is described below. Also active in the field are the Stockholm Chamber of Commerce Arbitration Institute (“SCC”), the Singapore International Arbitration Center (“SIAC”), the Japan Commer Comm ercial cial Arbit Arbitratio ration n Assoc Associatio iation n (“J (“JCAA CAA”), ”), the Hong Ko Kong ng Intern Internation ational al Arbit Arbitraratio tion n Cen Centr tree (“H (“HKIA KIAC”) C”),, the Worl orld d Int Intell ellect ectual ualInstitution Prope Pr operty rty Or Organ izati ation on (“WI (“WIPO” PO”), ), the the Swiss Chambers of Commerce, the German ofganiz Arbitration (“DIS”), Intern Int ernati ationa onall Arb Arbitr itral al Cen Centr tree of the Aus Austri trian an Eco Econom nomic ic Cha Chambe mberr (“V (“VIAC IAC”” or “Vienna International Arbitral Centre”), the Chinese International Economic and Trade Arbitral Center (“CIETAC”), the Cairo Regional Centre for International Commercial Arbitration (“CRCICA”), the Australian Centre for International Commercial Arbitration (“ACICA”), the Kuala Lumpur Regional Centre for Arbitration (“KLRCA”), and the Indian Council of Arbitration (“ICI”). There are also a number

524. SeeICSID, Bolivia Submits a Notice under Article 71 of the ICSID Convention (May 16, 2007) (notifying Republic of Bolivia s denunciation of ICSID Convention), available at http://www.worldbank.org/ icsid/highlights/05-16-07.htm;“Trade benefits at risk as Ecuador scraps US Treaty”, Reuters (May 7, 2007) (Ecuador threatens termination of BIT with United States). 525. SeeShalakany, Arbitration and the Third World: A Plea for Reassessing Bias Under the Specter of NeoLiberalism, 41 Harv. Int l L.J. 419, 430 (2000); Franck,The Legitimacy Crisis in Investment Treat Treatyy Arbitration: Public International Law Through Inconsistent Decisions, 73 Fordham L. Rev. 1521 (2005). 526. See infra pp. 64-65, 66-67, 69-74. ’

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D. Ov Overv ervie iew w ofAd Ad Hocand and Institutional Arbitration

of less widely known regional or national arbitral institutions, often dealing with industry-specific matters (e.g., insurance or commodities arbitrations).527 In the field of investment arbitration, the International Centre for the Settlement of Investment Disputes (“ICSID”) was established to deal with investment disputes under the ICSID Convention.528 It has adopted institutional arbitration rules for investment disputes (the ICSID Arbitration Rules).529 Similarly, in the context of state-to-state arbitrations, the Permanent Court of Arbitration (established pursuant to the 1899 and 1907 Hague Conventions on the Pacific Settlement of International Disputes) has adopted institutional rules for the arbitration of interstate disputes,530 as well as for the arbitration of disputes between states and non-state entities.531 These (and other) arbitral institutions have promulgated sets of procedural rules that th at ap appl plyy wh wher eree pa part rtie iess ha have ve ag agrree eed d to ar arbi bitr trat atio ion n pu purs rsua uant nt to su such ch ru rule les. s.532Among other oth er thi things ngs,, ins instit tituti utiona onall rul rules es set out the bas basic ic pr proce ocedur dural al fra framew mework ork and tim timeta etable ble for the arbitral proceedings. Institutional rules also typically authorize the arbitral institution to select arbitrators in particular disputes (that is, to serve as “appointing auth au thor orit ity” y”), ), to res esol olve ve ch chal alle leng nges es to ar arbi bitr trat ator ors, s, to de desi sign gnat atee th thee pl plac acee of ar arbi bitr trat atio ion, n, to fix or influence the fees payable to the arbitrators, and (sometimes) to review the arbitrator s awards to reduce the risk of unenforceability on formal grounds. Each arbitral institution has a staff (with the size varying significantly from one institution to another) and a decision-making body. ’

It is fu fund ndam amen enta tall th that at ar arbi bitr tral al in inst stit itut utio ions ns do no nott th them emse selv lves es ar arbi bitr trat atee th thee me meri rits ts of the par partie tiess di disp sput ute. e. Th This is is th thee res espo pons nsib ibil ilit ityy of th thee pa part rtic icul ular ar in indi divi vidu dual alss se sele lect cted ed as arbitrators.533Arbitrators are virtually never employees of the arbitral institution but, instead, are private persons selected by the parties. 534 If parties cannot agree upon an arbitrator, most institutional rules provide that the host institution will act as an “appointing authority,” which chooses the arbitrators in the absence of the parties agreement. ’

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527.. In a num 527 number ber of ind indust ustrie ries, s, spe specia cializ lized ed arb arbitr itral al re regim gimes es pr provi ovide de wel well-e l-esta stabli blishe shed d mea means ns of dis disput putee resolution. Examples include maritime, commodities, construction, insurance and reinsurance, and labor arbit arbitrati ration. on. See D. Johns Johnson, on,International Commodity Arbitration (199 (1991); 1); F. Ro Rose, se,International Commercial and Maritime Arbitration(1988); C. Ambrose & K. Maxwell, London Maritime Arbitration (2d ed. 2002); AAA, www www.adr .adr.org .org (providing descriptions and rules for construction, textil textile, e, apparel, labor labor,, pension, consumer cons umer,, and insu insurance rance arbit arbitratio rations). ns). See als Proce ocedur dures es for the Reso esolut lution ion of U.S U.S.. Ins Insura urance nce and Re Reininalsoo Pr surance Disputes (Reinsurance); ARIAS-UK Arbitration Rules (1997); London Maritime Arbitration Association Terms (2006) (maritime); German Maritime Arbitration Association Rules (2005) (maritime); Society of Maritime Arbitration Rules (maritime); AAA Labor Arbitration Rules (labor disputes); AAA Rules for Impartial Determination of Union Fees (organized labor fees); Rail Arbitration Rules of the National Grain and Feed Association (2005) (selected transport disputes); National Grain and Feed Association Arbitration Rules (2007) (selected commodities disputes). 528. See supra pp. 39-40. 529.. The ICSI 529 ICSID D Arb Arbitr itrati ation on Rul Rules es ar aree re repr produ oduced ced in the Doc Docume umenta ntary ry Sup Supple plemen mentt and ar aree ava availa ilable ble at www.worldbank.org/icsid. 530. PCA Optio Optional nal Rule Ruless for Arbit Arbitrati rating ng Dispu Disputes tes between Two State States, s, avail available able at http: http://ww //www w .pca-cpa.org/upload/files/2STATENG.pdf. 531.. PCA Opt 531 Option ional al Rul Rules es for Arb Arbitr itrati ating ng Dis Disput putes es bet betwee ween n Two Part arties ies of Whi Which ch Onl Onlyy One Is A Sta State, te, available at http://www.pca-cpa.org/upload/files/1STATENG.pdf. 532. The incorporation of institutional arbitration arbitration rules is discussed below, below,see infra p. 77. 533. See infra pp. 631-32. 534. SeeG. Born, International Commercial Arbitration149 (2009).

1. Introduction to International Arbitration

2. Ad HocArbitration Ad hoc ar arbi bitr trat atio ions ns ar aree no nott co cond nduc ucte ted d un unde derr th thee au ausp spic ices es or su supe perv rvis isio ion n of an ar arbi bitr tral al institution. Instead, parties simply agree to arbitrate, without designating any institution tut ion to adm admini iniste sterr the their ir arb arbitr itrati ation. on.Ad hoc arb arbitr itrati ation on agr agreem eement entss wil willl oft often en cho choose ose an arbitrator (or arbitrators) who is (or are) to resolve the dispute without institutional tio nal sup superv ervisi ision on or ass assist istanc ance. e.535 Th Thee pa part rtie iess wi will ll so some meti time mess al also so se sele lect ct a pre-existing pre-e xisting set of procedural rules designed to govern ad hocarbitrations. For international commercial disputes, the United Nations Commission on International Trade Law (“UNCITRAL”) has published a commonly used set of such rules, the UNCITRAL Arbitration Rules.536 Wheread hocarbitration is chosen, parties usually will (and certainly should) designate an appointing authority537 that will select the arbitrator(s) if the parties cannot agree and that will consider any subsequent challenges to members of the tribunal. If the parties fail to select an appointing authority, then the national arbitration statutes of many states permit national courts to appoint arbitrators (but this is less desirable than selection of an experienced appointing authority).538

Ad Hoc 3. Relative Relative Advanta Advantages ges and Disadv Disadvantag antages es of of Institution Institutional al and andAd Arbitration Both institutional and ad hoc arbitration have strengths. Institutional arbitration is conducted according to a standing set of procedural rules and supervised, to a greater or lesser extent, by a professional staff. This reduces the risks of procedural breakdowns, particularly at the beginning of the arbitral process, and of technical defects in the arbitration proceedings and arbitral award. The institution s involvement can be particularly constructive on issues relating to the appointment of arbitrators, the resolution of challenges to arbitrators, the selection of an arbitral seat, and fixing the arbitrators fees, where professional, specialized staff provide better service thanad hoc decisions by national courts with little, if any, experience or institutional resources for such matters.539 Equally important, many institutional rules contain provision provisionss that mak makee the arbi’

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tral process more reliable and expeditious. This includes provisions concerning competence-competence, separability, provisional measures, disclosure, arbitrator impartiality, corrections and challenges to awards, replacement of arbitrators and truncated tribunals, costs, and the like. 540 Less directly, an arbitral institution lends its standing to any award that is rendered, which may enhance the likelihood of voluntary compliance and judicial enforcement.541

535. See infra G. Born, International Commerci Commercial al Arbitration1400-1401 (2009). 536. For a discussion of the UNCITRAL Rules, Rules,see infra pp. 67-69. 537. See infra pp. 78-79. Most leading arbitration institutions (including the ICC, the AAA, and the LCIA) will act as an appointing authority, for a fee, in ad hocarbitrations. 538. See infra pp. 639-46; G. Born, International Commercial Arbitration1417-35 (2009). 539. 53 9. As dis discus cussed sed bel below ow,, nat nation ional al cou courts rts wil willl gen genera erally lly hav havee the pow power er,, und under er mos mostt dev develo eloped ped arb arbitr itraation tio n sta statut tutes es and whe where re the par partie tiess hav havee not oth otherwi erwise se agr agreed eed,, to ass assist ist the arb arbitr itral al pr proce ocess ss by app appoin ointin ting g arbitr arb itrato ators, rs, con consid sideri ering ng cha challe llenge ngess to arb arbitr itrato ators, rs, and fix fixing ing com compen pensat sation ion of arb arbitr itrato ators rs (wh (wher eree not oth oth-erwise agreed). See infrapp. 639-46, 705-08; G. Born, International Commercial Arbitration150 (2009). 540. SeeG. Born, International Commercial Arbitration346-48, 869-70 (2009). 541. Id. at 346-48, 869-70, 1382-84, 1394-98, 1408-17.

D. Ov Overv ervie iew w ofAd Ad Hocand and Institutional Arbitration

On the other hand, ad hoc arbitration is typically more flexible, less expensive (since it avoids sometimes substantial institutional fees), and arguably more confidential than institutional arbitration. Moreover, the growing size and sophistication of the int intern ernati ationa onall arb arbitr itrati ation on bar bar,, and the eff effica icacy cy of int intern ernati ationa onall leg legisl islati ative ve fra framemeworks for commercial arbitration, have partially reduced the relative advantages of institutional arbitration. Nonetheless, most experienced international practitioners fairly decisively prefer the more structured, predictable character of institutional arbitration and the benefits of institutional rules and appointment mechanisms, at least in the absence of unusual circ*mstances arguing for anad hoc approach.

4. UNC UNCITR ITRAL AL Arb Arbitra itratio tion n Rul Rules es The UNCITRAL Arbitration Rules occupy an important position, both historically and in con contem tempor porary ary arb arbitr itrati ation on pra practi ctice. ce. In 197 1973, 3, UN UNCIT CITRAL RAL pr propo oposed sed the pr prepa epa-542 ration of model arbitration rules. The objective of the UNCITRAL Rules was to create cr eate a uni unifie fied, d, pr predi edicta ctable ble,, and sta stable ble pr proce ocedur dural al fra framew mework ork for int intern ernati ationa onall arb arbiitratio tra tions ns wit withou houtt sti stifli fling ng the inf inform ormal al and fle flexib xible le cha charac racter ter of suc such h dis dispu pute te re resol soluti ution on 543 mechanisms. Th Thee Ru Rule less ai aime med d to be ac acce cept ptab able le to co comm mmon on la law w, ci civi vill la law w, an and d ot othe herr 544 legal systems, as well as to capital-importing and capital-exporting interests. The Rules were promulgated by Resolution 31/98, adopted by the General Assembly of the United Nations on December 15, 1976, 545 and were extensively revised in June 2010.546 The UNCITRAL Rules were designed for use in ad hoc international commercial arbitrations. When they were adopted in 1976, the Rules were the only set of rules availa ava ilable ble spe specif cifica icall llyy for tha thatt pur purpos pose. e. Alt Althou hough gh alt altern ernati atives ves now exis xist, t,547 mos mostt sta states tes,, which generally will have supported the Rules in the United Nations debates, and thei th eirr st stat atee-ow owne ned d en enti titi ties es,, of ofte ten n fi find nd it di diff ffic icul ultt to ob obje ject ct to th thei eirr us usee in an ar arbi bitr trat atio ion n 548 agreement or arbitral proceeding. 542. Rep Report ort of the Un Unite itedd Nat Nation ionss Com Commis missio sion n on Int Intern ernati ationa onall Trad radee Law, 6t 6th h Se Sess ss., ., U. U.N. N. Do Doc. c. A/ A/90 9017 17,, ¶8 ¶85 5 (1973). 543. Report of the Secretary-General on the Revised Draft Set of Arbitration Rules, UNC UNCITR ITRAL, AL, 9th Ses Sessio sion, n, Introduction, ¶17, UN Doc. A/CN.9/112 (1975). See also UN General Assembly Resolution, dated 15 December 1976, II Y.B. Y.B. Comm. Arb. xi (“the establishment of rules forad hocarbitration that are acceptable in countries with different legal, social and economic systems would significantly contribute to the development of harmonious international economic relations”). 544. Report of the Secretary-General on the Preliminary Preliminary Draft Set of Arbitration Rules, UNCITRAL, 8th Session, UN Doc. A/CN.9/97 (1974), (1975) VI UNCITRAL Y.B. Y.B. 163, 176 (1975); D. Caron, L. Caplan & M. Pellonpää,The UNCITRAL Arbitration Rules: A Commentary 44-51, 565-79 (2006). 545. Report of the United Nations Commission on International Trade Trade Law, 40 U.N. GAOR Supp. (No. 17), Annex I, U.N. Doc. A/40/17 (1985), reprinted in 24 Int l Leg. Mat. 1302 (1985) and in II Y.B. Com. Arb. 161 (1977). See D. Caron, L. Caplan & M. Pellonpää, The UNCITRAL Arbitration Rules: A Commentary 2 et seq. (2006). 546. See2010 UNCITRAL Rules; UNCITRAL Press Release, June 29, 2010, UNIS/L/139. 547. The International Institute for Conflict Prevention Prevention and Resolution (formerly known as the CPR Institute for Dispute Resolution) has published, since 1989, a set of “Rules for Non-Administered Arbitration” (formerly called “Rules and Commentary for Non-Traditional Arbitration for Business Disputes”). The Permanent Court of Arbitration has promulgated several sets of rules, based on the UNCITRAL Rules, applicable to disputes between private and public parties, including the “P “Permanent ermanent Court of Arbitration Optional Rules for Arbitrating Disputes Between Two Two Parties of Which Only One Is a State” and the “Permanent Court of Arbitration Optional Rules for Arbitration Between International Organizations Organiz ations and Private Parties.” 548. Experience with the UNCITRAL UNCITRAL Rules has been positive. positive.See Permanent Court of Arbitration: Option Opt ional al Rul Rules es for Arb Arbitr itrati ating ng Dis Disput putes es Bet Betwee ween n Two Sta States tes,, eff effect ective ive 20 Oct Octobe oberr 199 1992, 2, 32 Int l Le Leg. g. Ma Mat. t. 572 (1993) (“Experience since 1981 suggests that the UNCITRAL Arbitration Rules provide fair and ’

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1. Introduction to International Arbitration

Like most institutional arbitration rules, the UNCITRAL Rules prescribe a basic procedural framework for the arbitration. This includes provisions for initiating an arbitration,549 selection and challenge of arbitrators,550 conduct of the arbitral proceedings,551 choice of applicable law,552 awards,553 and costs of the arbitration.554 The Rules also contain provisions confirming the presumptive separability of the arbi ar bitr trat atio ion n cl clau ause se fr from om th thee un unde derl rlyi ying ng co cont ntra ract ct an and d th thee tr trib ibun unal al s pow ower er 555 (competence-competence) to consider jurisdictional objections. Under the original UNCITRAL Rules, the Secretary General of the Permanent Court of Arbitration serv se rves es asui generis fun functi ction, on, of des design ignati ating ng a sui suitab table le app appoin ointin ting g aut author hority ity,, unl unless ess the 556 partie par tiess agr agree ee to a dif differ ferent ent app appoin ointme tment nt mec mechan hanism ism.. Th Thee rev evis ised ed 20 2010 10 Ru Rule less pr proovide instead for the PCA to serve directly as an appointing authority (absent contrary choice by the parties).557 The UNCITRAL Rules have contributed significantly to the harmonization of international arbitration procedures. That is reflected in part by the readiness of the AAA and the IACAC to base the ICDR Rules and IACAC Rules substantially on the UNCITRA UNC ITRAL L Rule Rules. s.558 A number of arbitral institutions have either adopted the UNCITRAL Rules entirely or have substantially adopted those rules in fashioning institutional rules.559 Although designed principally for international trade dispute pu tes, s, th thee Ru Rule less ar aree no nott li limi mite ted d to co comm mmer erci cial al ma matt tter erss an and d ha have ve be been en us used ed successfully in both state-to-state and investor-state arbitrations. The UNCITRAL ’

560

Rules wer Rules weree exte xtensi nsivel velyy re revis vised ed (af (after ter sev severa erall yea years rs of stu study) dy) in Ju June ne 20 2010 10.. Th Thee pr prin in-cipal revisions to the Rules include provisions for the parties choice of legal representatives,561 the PCA to act as appointing authority,562 arbitrator immunity immunity,,563 ’

effective procedures for peaceful resolution of disputes between States concerning the interpretation, application and performance of treaties and other agreements, although they were originally designed for commercial arbitration”); D. Caron, L. Caplan & M. Pellonpää, The UNCITRAL Arbitration Rules: A Commentary7 (2006) (“UNCITRAL Rules themselves are increasingly important”). 549. 1976 UNCITRAL Rules, Arts. Arts. 3-4; 2010 UNCITRAL Rules, Rules, Arts. 3-4. 550. 1976 UNCITRAL Rules, Arts. Arts. 5-13; 2010 UNCITRAL Rules, Rules, Arts. 6-15;infra pp. 631-38, 70513. 551. 1976 UNCITRAL Rules, Arts. 14, 15-25, 27-29; 2010 UNCITRAL UNCITRAL Rules, Arts. 17, 20-30;infra pp. 725-26, 729-30. 552. 1976 UNCITRAL Rules, Art. Art. 33; 2010 UNCITRAL Rules, Art. Art. 35;infrapp. 911-12, 930. 553. 1976 UNCITRAL Rules, Arts. 31-32, 35-37; 2010 2010 UNCITRAL Rules, Arts. 33-34, 36-39. 554. 1976 UNCITRAL Rules, Arts. Arts. 38-40; 2010 UNCITRAL Rules, Rules, Arts. 40-43. 555. 1976 UNCITRAL Rules, Art. Art. 21; 2010 UNCITRAL Rules, Art. Art. 23;infrap. 219. 556. 1976 UNCITRAL Rules, Art. 7. The parties can select an arbitral institution institution (like (like the ICC, AAA, or LCIA) as appointing authority without adopting that institution s rules. Alternatively, a designated individual or office-holder may be selected. 557. 2010 UNCITRAL UNCITRAL Rules, Art. Art. 6. 558. SeeG. Born, International Commercial Arbitration153 (2009) 559. This includes includes IACAC IACAC,, ICDR, HKIAC, Kuala Lumpur Regional Regional Centre for Arbit Arbitratio ration, n, Cair Cairo o International Commercial Arbitration Center, Center, and the Iran-U.S. Claims Tribunal. Tribunal. 560. The UNCITRAL Working Working Group on International Arbitration and Conciliation began studying possib pos sible le re revis vision ionss to the UNC UNCITR ITRAL AL Rul Rules es in 200 2006. 6. See Pauls Paulsson son & Petrochil etrochilos, os,Revision of the UNCITRAL UNCITRAL Arbitration Rules Rules(2007); Report of the Wo Working rking Group on Arbitration and Conciliation on the Work of its 47th Session (Vienna 10-14 September 2007), U.N. Doc. A/CN.9/641 (2007). 561. 2010 UNCITRAL UNCITRAL Rules, Art. Art. 5. 562. 2010 UNCITRAL UNCITRAL Rules, Art. Art. 6. 563. 2010 UNCITRAL Rules, Rules, Art. 16. ’

D. Ov Overv ervie iew w ofAd Ad Hocand and Institutional Arbitration

greater procedural efficiency, efficiency,564 responses to notice of arbitration,565 interim measures,566 and multi-party arbitrations.567

Leading Leadi ng Interna International tional Arbitr Arbitral al Instit Institutions utions

If institutional arbitration is desired, the parties must choose a particular arbitral institution and refer to it in their arbitration clause. 568 Parties ordinarily rely on one of a few established international arbitral institutions. This avoids the confusion and uncert unc ertain ainty ty tha thatt com comes es fr from om ine inexpe xperie rience nced d arb arbitr itrato atorr app appoin ointme tments nts and adm admini inistr straative efforts. All leading international arbitral institutions are prepar prepared ed to, and routinel routinelyy do, administer arbitrations seated almost anywhere in the world, and not merely in the place where the institution itself is located.569 There is, therefore, no need to select an arbitral 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 and expenses of the arbitrators. Every arbitral insti’

tution 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. All leading arbitral institutions periodically revise their institutional arbitration rules. Like the rules themselves, these revisions are the product of extensive consultations among leading practitioners, academics, business users, and arbitrators. These consultative processes are aimed at refining the institutional rules for the purpose of making arbitration agreements and awards more enforceable and arbitral proce pr oceedi edings ngs mor moree eff effici icient ent.. As wit with h the re refin fineme ement nt of nat nation ional al arb arbitr itrati ation on leg legisl islati ation, on, this is an example of the ongoing adaptation and improvement of the international arbitral process in response to criticisms, users needs, and changing conditions. ’

a. Internatio International nal Chamber Chamber of Commer Commerce ce Internat International ional Cour Court t of Arbitration The ICC s International Court of Arbitration was established in Paris in 1923 (in parallel with efforts by the international business community to secure adoption of thee Ge th Gene neva va Proto otoco coll an and d ref efor orms ms of ar arbi bitr trat atio ion n le legi gisl slat atio ion n in a nu numb mber er of de deve velo lope ped d ’

564. 2010 UNCITRAL Rules, Rules, Art. 17. 565. 2010 UNCITRAL Rules, Art. 4. 566. 2010 UNCITRAL Rules, Rules, Art. 26. 567. 2010 UNCITRAL Rules, Rules, Art. 10. 568. G. Born, Born,International Commercial Arbitration153, 1121-24 (2009). 569. See Forward, ICC Rules of Arbitration 3 (“ICC arbitrations are held in numerous countries, in most major languages, and with arbitrators from all over the world”); http://www.adr.org/about icdr (AAA s agreements with arbitral institutions in 43 countries worldwide “enable arbitration cases to be filed and heard virtually anywhere in the world”). ’

1. Introduction to International Arbitration

Thee IC ICC C rem emai ains ns th thee wo worl rld d s leadi leading ng inter internatio national nal comme commerc rcial ial arbit arbitratio ration n states).570 Th institution and has less of a national character than any other leading arbitral institution. The ICC s annual caseload was well above 300 cases per year during much of the 1990 19 90s, s, an and d it no now w exce ceed edss 80 800 0 ca case sess pe perr ye year ar..571 Mo Most st of th thes esee ca case sess ar aree in inte tern rnat atio iona nall disput dis putes, es, man manyy inv involv olving ing ver veryy sub substa stanti ntial al sum sums. s. The ICC s cas caselo eload ad inc includ ludes es dis dispu putes tes between parties from around the world, with parties outside Western Europe being involved in more than 50 percent of all ICC cases in many recent years. 572 Thee IC Th ICC C ha hass pr prom omul ulga gate ted d a se sett of IC ICC C Ru Rule less of Ar Arbi bitr trat atio ion n (w (whi hich ch ar aree pe peri riod odic ical ally ly revised, most recently in 1998) as well as the ICC Rules of Optional Conciliation, the ICC Rules for Expertise, the ICC Dispute Board Rules, and the ICC Rules for a PreArbitral Referee Procedure. Procedure.573 Under the ICC Rules, the ICC (through the Internation ti onal al Co Cour urtt of Ar Arbi bitr trat atio ion n (“ (“IC ICC C Co Cour urt” t”)) )) is ext xten ensi sive vely ly in invo volv lved ed in th thee admi ad mini nist stra rati tion on of in indi divi vidu dual al ar arbi bitr trat atio ions ns.. Am Amon ong g ot othe herr th thin ings gs,, th thee IC ICC C Co Cour urtt an and d it itss 574 Secretariat are responsible for service of the initial Request for Arbitration; fixing and receiving payment of advances on costs of the arbitration by the parties; 575 confirming the parties nominations of arbitrators;576 appointing arbitrators if a party defaults or if the parties are unable to agree upon a presiding arbitrator or sole arbitrator;577 considering challenges to the arbitrators including on the basis of lack of independence;578 reviewing and approving so-called “Terms of Reference,” which ’

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579

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define the issues and procedures for580the arbitration; reviewing a tribunal s draft award for formal and other defects; and fixing the arbitrators compensation.581 Thee IC Th ICC C s In Inte tern rnat atio iona nall Co Cour urtt of Ar Arbi bitr trat atio ion n is no not, t, in fa fact ct,, a “c “cou ourt rt”” an and d do does es no nott itself decide disputes or act as an arbitrator. Rather, the ICC Court is an administrative body that acts in a supervisory and appointing capacity under the ICC Rules. 582 It maintains a sizeable legal and administrative staff of some 60 persons, from more than 20 nationalities, organized organized as a Secretariat.583 Specialized teams of counsel and admini adm inistr strati ative ve sta staff ff ar aree ass assign igned ed to cas cases es ori origin ginati ating ng fr from om par partic ticula ularr geo geogra graphi phic, c, lin lin-guistic, and/or cultural regions. As detailed above, the Secretariat is substantially involved in the day-to-day supervision of arbitrations.584 ’

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570. See supra pp. 29-31. 571. Statistics, 20(1) ICC Ct. Bull. 5 (2009); Y. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration3 (2d ed. 2005). 572. Statistics,16(1) ICC Ct. Bull. 6-7 (2005). During 2004, parties to ICC arbitrations were from 116 different countries. Id. at 6. 573. See infra pp. 104-05; Documentary Supplement at pp. 203-24. 574. ICC Rules, Arts. Arts. 4(5) & 5(4). 575. ICC Rules, Art. 30. 576. ICC Rules, Arts. 7-9. 7-9. 577. ICC Rules, Rules, Art. Art. 9. 578. ICC Rules, Art. 11. 579. ICC Rules, Art. 18. 580. ICC Rules, Art. 27. 581. ICC Rules, Art. 31. 582. ICC Rules, Art. 1(2). The Court acts pursuant pursuant to internal rules governing its conduct. conduct.See ICC, Internal Rules Rules of the International International Court of Arbitration Arbitration; Y. De Dera rain inss & E. Sc Schw hwar artz tz,,A Guide to the ICC Arbitration Arbitration Rules1-8, 11-27 (2d ed. 2005); M. Büehler & T. Webster, Handbook of ICC Arbitration12-16, 23-26 (2005). 583. Statistics, 27(1) ICC Ct. Bull. 5 (2009). 584. The ICC s model arbitration clause provides: ’

“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 in accordance with the said Rules.”

D. Ov Overv ervie iew w ofAd Ad Hocand and Institutional Arbitration

ICC ICC ar arbi bitr trat atio ions ns ca can n be (a (and nd ar are) e) se seat ated ed al almo most st an anyw ywhe herre in th thee wo worl rld. d. In 20 2004 04,, fo forr 585 example, ICC arbitrations were conducted in 49 different countries. By far the most common seats for ICC arbitrations are France, Switzerland, England, other Western W estern European states, and the United States, as well as Singapore and Hong Kong.586 The ICC recently opened a regional office in Hong Kong, responsible for administration of ICC arbitrations seated in Asia. The ICC Rules are broadly similar to the UNCITRAL Rules 587 (and many other leading institutional rules) in providing a broad procedural framework for the arbitral proceedings. This includes provisions for filing a request for arbitration and other oth er ini initia tiall wri written tten ple pleadi adings ngs,,588 con consti stitut tuting ing an arb arbitr itral al tri tribun bunal, al,589 condu conducting cting the 590 591 arbitration, and making an award. As with most other institutional rules, only a skeletal procedural framework is provided, with the parties and arbitrators being accorded substantial freedom to adopt procedures tailored to particular disputes. Unusually,, the ICC Rules requi Unusually require re both a “T “ Terms of Refer Reference” ence” and procedural timetabl ta blee to be ad adop opte ted d by th thee Tri ribu buna nall at th thee ou outs tset et of pr proc ocee eedi ding ngss592 an and d th that at an aw awar ard d 593 be rendered within six months (absent extensions, which are freely granted). Also unus un usua uall llyy, th thee IC ICC C Ru Rule less pr prov ovid idee fo forr th thee IC ICC C Co Cour urtt to rev evie iew w dr draf aftt aw awar ards ds be befo forre th they ey 594 are finalized and executed by the arbitrators. Thee IC Th ICC C s ad admi mini nist stra rati tive ve fe fees es ar aree ba base sed d on th thee am amou ount nt in di disp sput utee be betw twee een n th thee pa parrties. With respect to arbitrators fees, the ICC Rules fix both a minimum and a maxi’

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595

mum amount that can be charged, based on the amount in dispute. With respect to administrative fees and charges, the ICC Rules provide for a sliding scale of char ch arge gess th that at is ag agai ain n ba base sed d up upon on th thee am amou ount nt in di disp sput utee be betw tween een th thee pa part rtie ies. s. Th Thee IC ICC C Rule Ru less req equi uirre th that at th thee pa part rtie iess pa payy an ad adva vanc ncee on th thee co cost stss of th thee ar arbi bitr trat atio ion n ca calc lcul ulat ated ed 596 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. 597 Thee IC Th ICC C s Ru Rule less ha have ve so some meti time mess be been en cr crit itic iciz ized ed as exp xpen ensi sive ve an and d cu cumb mber erso some me,,598 alth al thou ough gh th thee 19 1998 98 am amen endm dmen ents ts ref efle lect cted ed a co conc ncer erte ted d ef effo fort rt to me meet et th this is cr crit itic icis ism. m.599 ’

585. Statistics,16(1) ICC Ct. Bull. 10 (2005); Statistics, 17(1) ICC Ct. Bull. 14 (2006). 586. See Verbist, The Practice of the ICC International Court of Arbitration with Regard to the Fixing of the Place of Arbitration, 12Arb 12Arb.. In Intt l 347 (19 (1996) 96);; Jar Jarvin vin,, Th Thee Pl Plac acee of Ar Arbi bitr trat atio ion: n: a Re Revi view ew of th thee IC ICC C Co Cour urtt s Guiding Principles and Practices When Fixing the Place of Arbitration, 7 ICC Ct. Bull. 55 (1996). 587. See supra pp. 67-69. 588. ICC Rules, Arts. Arts. 4, 5. 589. ICC Rules, Arts. 7-12. 7-12. 590. ICC Rules, Arts. Arts. 13-23. 591. ICC Rules, Arts. Arts. 24-29. 592. 59 2. IC ICC C Ru Rule les, s, Ar Art. t. 18 18;; Y. De Dera rain inss & E. Sc Schw hwar artz tz,,A Guide to the ICC Rules of Arbitration Arbitration 246 246-66 -66 (2d ed. 2005). 593. ICC Rules, Art. 24(1). This time limit is routinely extended. extended. Y. Y. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration 305 (2d ed. 2005). 594. 59 4. IC ICC C Ru Rule les, s, Ar Art. t. 27 27;; Y. De Dera rain inss & E. Sc Schw hwar artz tz,,A Guide to the ICC Rules of Arbitration Arbitration 312 312-16 -16 (2d ed. 2005). 595. ICC Rules, Appendix III, Art. 2; Y. Y. Derains & E. Schwartz,A Guide to the ICC Rules of Arbitration 330 (2d ed. 2005). 596. ICC Rules, Art. 30. 597. ICC Rules, Art. 30(3). 30(3). 598. SeeWetter,The Present Status of the International Court of Arbitration of the ICC: An Appraisal , 1 Am. Rev. Int l Arb. 91 (1990); W. Craig, W. Park & J. Paulsson, International Chamber of Commerce Arbitration 35-36 (3d ed. 2000) (attempting to counter criticisms); Buehler, Costs in ICC Arbitration: A Practitioner s View, 3 Am. Rev. Int l Arb. 116 (1992). 599. SeeY. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration 5 (2d ed. 2005); W. Craig, W. Park & J. Paul Paulsson, sson,International Chamber of Commerce Arbitration35-36 (3d ed. 2000). ’

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1. Introduction to International Arbitration

Despite criticism of its costs and delays, the ICC clearly remains the institution of preference for many sophisticated commercial users.

b. Londo London n Court Court of Intern Internation ational al Arbit Arbitratio ration n Founded in 1892, the LCIA is, by many accounts, the second most popular European institution in the field of international commercial arbitration. The LCIA s annual caseload, which is generally increasing, has exceeded 200 disputes in recent years.600 Th Thee LC LCIA IA ha hass ma made de a de dete term rmin ined ed,, an and d so some mewh what at su succ cces essf sful ul,, ef effo fort rt in rec ecen entt years to overcome perceptions that it is a predominantly English institution. Among other things, it has appointed four succes successive sive non-English non-English presidents, presidents, and its vicepresi pr esiden dents ts inc includ ludee a num number ber of non non-En -Engli glish sh pra practi ctitio tioner ners. s. In rece ecent nt yea years, rs, few fewer er tha than n 601 20 percent of the LCIA s cases have involved any U.K. parties. Thee LC Th LCIA IA ad admi mini nist ster erss a se sett of ar arbi bitr trat atio ion n ru rule les, s, th thee LC LCIA IA Ar Arbi bitr trat atio ion n Ru Rule les, s, wh whic ich h were extensively extensively revised in 1998. Although identifiably English in drafting style, and to a lesser extent in procedural approach, the LCIA Rules generally provide a sound basis for international dispute resolution, particularly for parties desiring common law procedures (e.g., disclosure, security for costs). Broadly speaking, LCIA arbitration ti onss ar aree ad admi mini nist ster ered ed in a le less ss co comp mprreh ehen ensi sive ve fa fash shio ion n th than an IC ICC C ca case ses. s. Am Amon ong g ot othe herr ’

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things, in contrast to the ICC Rules, the LCIA Rules contain no Terms of Reference procedure and do not provide for institutional review of draft awards. In contrast to most other institutional rules, the LCIA Rules set out the powers of an LCIA arbitral tribunal in some detail. 602 The powers to order discovery603 and security for legal costs (i.e., a deposit or bank guarantee securing the estimated amounts that an unsuccessful claimant would be liable to reimburse to a successful respondent for its costs of legal representation)604 are prominently included among the arbitrators powers. A particular procedural advantage of the LCIA Rules is their provisi provision on for expe605 dited formation of the arbitral tribunal. Also unusually, unusually, the LCIA Rules also permitt in mi inte terv rven enti tion on of th thir ird d pa part rtie iess in LC LCIA IA ar arbi bitr trat atio ions ns (s (sub ubje ject ct to pr pres escr crib ibed ed 606 conditions). In 2006, the LCIA announced a decision to publish (in a redacted form) decisions of the LCIA Court on challenges to arbitrators. 607 ’

Like the thetments LCIA does not maintain a standing list n ordra panel ofedomin arbitrators. The LCIA LC IA sICC, appoin app ointme nts of arbitr arb itrato ators rs hav havee his histor torica ically lly bee been drawn wn pr predo minant antly ly from the English bar and retired judiciary, in large part because many LCIA cases have involved contracts governed by English law. In cases not involving English law, the LCIA s selections of arbitrators are more international. The LCIA fixes the arbitrators fe fees es ac acco corrdi ding ng to th thee ti time me exp xpen ende ded d by th thee ar arbi bitr trat ator orss at th thee ho hour urly ly ra rates tes ’

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A recent ICC task force studied ways to reduce costs and delay in ICC arbitrations. See Techniques for Controlling Time and Costs in Arbitration (ICC Publication 843 2007). 600. SeeLCIA Director General s Review (November 2009), http://www.lcia-arbitration.c http://www.lcia-arbitration.com. om. 601. LCIA Director Director General General s Review (January 2007), http://www.lcia-arbitration.c http://www.lcia-arbitration.com. om. 602. LCIA Rules, Arts. Arts. 14, 15, 19, 20, 20, 21 & 22. 603. LCIA Rules, Arts. Arts. 22.1(d) & (e). 604. LCIA Rules, Art. 25(2). 605. LCIA Rules, Rules, Art. 9. 606. LCIA Rules, Art. 22(1)(h); 22(1)(h); infrap. 897. 607. Nicholas & Partasides, Partasides,LCIA Court Decisions on Challenges to Arbitrators: A Proposal to Publish , 23 Arb. Int l 1 (2 (200 007) 7).. See also News Ar Archive chive on the LCIA webpag webpage, e, http: http://ww //www w.lci .lcia-arb a-arbitrat itration. ion.com, com, LCIA to publish challenge decisions (June 2006). ’

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D. Ov Overv ervie iew w ofAd Ad Hocand and Institutional Arbitration

published by the LCIA and fixed by agreement between the arbitrators and the LCIA.608 Most LCIA arbitrations are seated in London. In the absence of agreement by the part pa rtie iess to th thee co cont ntra rary ry,, Lo Lond ndon on wi will ll be se sele lect cted ed by th thee LC LCIA IA as th thee ar arbi bitr tral al se seat at un unde derr 609 Article 16(1) of the LCIA Rules.

c. American American Arbitrat Arbitration ion Associat Association ion and Intern Internation ational al Centre Centre for for Dispute Resoluti Resolution on The AAA was founded in 1926, following the merger of two New York arbitration institutions (themselves founded in the early 1920s).610 The AAA remains based in New York (with approximately 36 regional offices throughout the United States). 611 The AAA is the leading U.S. arbitral institution and reportedly handles one of the largest numbers of arbitral disputes in the world.612 The primary arbitration rules administered by the AAA are the AAA Commercial Arbitration Rules.613 These rules are used in a large majority of domestic U.S. arbitrations. Numerous other sets of AAA arbitration rules also exist, in particular for specialized types of disputes, and can be selected in the parties arbitration agreement.614 ’

Non-U Non -U.S. .S. par partie tiess hav haveepredisposition someti som etimes mes bee been n relu elucta ctant nt to agr agree ee to international arbitr arb itrati ation on und under er AAA rules, fearing parochial and unfamiliarity with practice. In rec ecen entt ye year ars, s, th thee AA AAA A ha hass ta tak ken a nu numb mber er of st step epss ai aime med d at ov over erco comi ming ng th this is im imag agee and enhancing its position as an international institution. In 19 1991 91,, th thee AA AAA A pr prom omul ulga gate ted d th thee AA AAA A In Inte tern rnat atio iona nall Ar Arbi bitr trat atio ion n Ru Rule les, s, de desi sign gned ed specifically for international arbitrations (which have since evolved into the current ICDR Rules).615 In 1996, the AAA established an “International Centre for Dispute Resolut Re solution ion”” (“IC (“ICDR” DR”), ), with ex exclus clusive ive res responsi ponsibili bility ty for admin administeri istering ng the AAA s 616 international arbitrations. The ICDR has administrative facilities in both New York Y ork and Dublin, Ireland, and offers a worldwide list of more than 500 potential arbitrators and mediators. The ICDR International Dispute Resolution Procedures (“ICDR Rules”) provide the applicable set of AAA arbitration rules in “international” disputes (except where the parties have otherwise agreed). 617 This alters the previous position, in which the ’

608. LCIA Rules, Art. 28(1). 609. LCIA Rules, Art. 16(1). 610. I. MacNe MacNeil, il, American American Arbitration Law: Reformation, Nationalization, Internationalization 84-88 (1992). 611. Deye & Britton, Arbitration by the American Arbitration Association, 70 N.D. L. Rev. 281, 281 n.1 (1994). 612. The AAA reports that it has administered administered some 2.5 million arbitrations since its foundation. 613. Seehttp://www.adr.org/sp.asp?id=22440. 614. For example, these include specialized rules for construction, energy, energy, health care, insurance, securities, labor, labor, and intellectual property disputes.See http://www.adr.org/sp.asp?id=28780. 615. The AAA s International Rules were preceded by a set of “Supplementary Procedures for Internation nat ional al Com Commer mercia ciall Arb Arbitr itrati ation, on,”” ado adopte pted d in 198 1982. 2. The AAA Sup Supple plemen mentar taryy Pr Proce ocedur dures es con contin tinue ue to be used use d in int intern ernati ationa onall cas cases es in whi which ch the par partie tiess hav havee sel select ected ed rul rules es oth other er tha than n the AAA Int Intern ernati ationa onall Arb Arbiitration Rules. The Supplementary Procedures (as amended in 1999) provide: “Recognizing that international arbitration cases often present unique procedural problems, problems, the AAA has created the following supplementary procedures to facilitate such cases when rules other than the International Arbitration Rules govern the proceedings. Unless the parties advise otherwise by the due date for the return of the first list, the AAA will assume that they are desired.” 616. See Introducti Introduction, on, ICDR Inter Internatio national nal Dispu Dispute te Re Resolu solution tion Pr Proced ocedure ures; s; see als alsoo http://www .adr.org/about_icdr. 617. ICDR Rules, Art. 1(1). ’

1. Introduction to International Arbitration

primarily domestic AAA Commercial Arbitration Rules provided the fall-back rules when parties to international agreements had agreed to AAA arbitration without designating a particular set of rules. The AAA/ICDR s international rules are based principally on the UNCITRAL Rules and were intended to permit a maximum of flexibility and a minimum of administrative supervision. They are periodically revised, most recently in June 2009.618 Unde Un derr al alll ve vers rsio ions ns of AA AAA A ru rule les, s, th thee AA AAA/ A/IC ICDR DR ad admi mini nist stra rati tive ve st staf afff pl play ayss a le less ss si siggnificant supervisory role than does the ICC Secretariat. Among other things, the AAA/ICDR does not receive or serve initial notices or requests for arbitration; does not require or review a Terms Terms of Refer Reference; ence; and plays a less significant role in setting 619 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 published on their resumes for parties to consider when receiving a list of potentiall arb tia arbitr itrato ators. rs. Com Compen pensat sation ion und under er the AAA AAA/IC /ICDR DR int intern ernati ationa onall rul rules es is ult ultima imatel telyy based on the arbitrators “amount of service,” taking into account their stated rates and the “size and complexity of the case.” 620 The ICDR/AAA s international rules allow the parties to agree on any procedure for appo appointin inting g arbi arbitrator trators. s.621 In pr prac acti tice ce,, mo most st AA AAA A ap appo poin intm tmen ents ts ar aree ba base sed d on a li list st proce pr ocedur dure, e, whe where reby by nam names es dra drawn wn fr from om the AAA s ros oste ters rs ar aree pr pres esen ente ted d to th thee pa part rtie iess 622 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 in approp appropriate riate international cases.623 Nonetheless, somee use som users rs hav havee fou found nd the AAA AAA/IC /ICDR DR app appoin ointme tment nt pr proce ocedur dures es and sel select ection ionss patchy, with less involvement of experienced international practitioners than other leading institutions. The AAA s caseload has increased significantly over recent decades. In 1997, it reported a total caseload of 11,130 cases (under its Commercial Arbitration Rules), rising to 12,068 cases (under its Commercial Arbitration Rules) in 2006. Similar growth is reported in international cases. The AAA also reports increases in its international natio nal caseload from 453 cases file filed d in 1999 to mor moree than 800 new international international 624 filings in 2009. On any measure, these statistics place the AAA among the world s most active international arbitral institutions. ’

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618. See http://www.adr.org/sp.asp?id=281 28144. 44. The 200 2006 6 re revis vision ionss add added ed Art Articl iclee 37 to the ICD ICDR R Rul Rules, es, which entitles parties to appoint an “emergency arbitrator” to hear requests for emergenc emergencyy relief prior to the formation of the entire arbitral tribunal. See infra p. 826. 619. Unusually Unusually,, the AAA Rules also provide for a waiver of punitive damage claims (unless (unless otherwise agreed). ICDR Rules, Art. 28(5). 620. ICDR Rules, Art. 32. Article 32 provides provides that “[t]he administrator administrator shall arrange an appropriate daily dai ly or hou hourly rly rat rate, e, bas based ed on suc such h con consid sidera eratio tions,with ns,with the par partie tiess and wit with h eac each h of thearbit thearbitrat rators ors as soo soon n as pr prac acti tica cabl blee af afte terr th thee co comm mmen ence ceme ment nt of th thee ar arbi bitr trat atio ion, n,”” an and d “[ “[i] i]ff th thee pa part rtie iess fa fail il to ag agrree on th thee te term rmss of compensation, the administrator shall establish an appropriate rate and communicate it in writing to the parties.” 621. ICDR Rules, Art. 6(1). 622. See ICDR Rule Rules, s, Art. 6; Intr Introduct oduction, ion, ICDR Inter Internati national onal Disp Dispute ute Re Resolu solution tion Pr Proced ocedure uress (describing the options available to parties for appointment of arbitrators, including the use of an AAA/ ICDR list). See also AAA Commercial Arbitration Rules, R-11 (providing, where the AAA s Commercial Arbitration Rules apply, apply, specific procedures for appointments from the AAA s National Roster Roster). ). 623. The ICDR maintains its own International International Panel Panel of Arbitrators. 624. AAA 2009 Preside President nt s Letter and Financial Statements (Annual Report), at 6 (2010); AAA 2000 President s Letter and Financial Statements (Annual Report), at 8 (2001). ’

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E. Elem Elements ents of Arbitr Arbitration ation Agre Agreemen ements ts

E. ELEMEN ELEMENTS TS OF ARBIT ARBITRA RATION TION AGREE AGREEMENTS MENTS As already discussed, international commercial arbitration is almost always consensual:625 Arbitration generally occurs only pursuant to an arbitration agreement betw be twee een n th thee pa part rtie ies. s. Th Ther eree is a sm smal all, l, bu butt im impo port rtan ant, t, ca cate tego gory ry of ca case sess in wh whic ich h in inte terrnational investment arbitrations may result without a consensual agreement, by virtue of provisions in international investment protection or other conventions or legislation.626 This category of arbitrations (without “privity”) is unusual, however, and underscores the essential requirement that international arbitration is consensual in character. It is, of course, possible for parties to agree to submit an existing dispute to arbitration, pursuant to a “submission agreement” or “compromis.” Typically, however, disput dis putes es ar aree arb arbitr itrate ated d as a con conseq sequen uence ce of pr pre-e e-exis xistin ting g arb arbitr itrati ation on cla clause usess in the par par-ties underlying commercial contract. In the state-to-state context, agreements to arbitr arb itrate ate ar aree enc encoun ounter tered ed in bil bilate ateral ral and mul multil tilate ateral ral tr treat eaties ies,,627 as we well ll as in su subm bmis is-628 sion si on ag agrree eeme ment ntss pr prov ovid idin ing g fo forr th thee ar arbi bitr trat atio ion n of di disp sput utes es th that at ha have ve al alrrea eady dy ar aris isen en.. Both private and state parties are largely free 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.629 Intern Int ernati ationa onall arb arbitr itrati ation on agr agreem eement entss or ordin dinari arily ly — and adv advise isedly dly — add addre ress ss a number of critical issues. These are: (a) the agreement to arbitrate; (b) the scope of the 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 choiceof-law clause. In particular cases, other provisions may be either vital to an effective international arbitration agreement or advantageous to one or both parties. 630 ’

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1. The Agr Agreem eement ent to Arb Arbitr itrate ate It is tautologic tautological al — but not always always the case case in practice practice — that any arbitrati arbitration on clause clause ’

631

mu must set tbitr fort fo rth hion the th part rtie sment agreem agr eement ent to arbitr itrate As matter, matter means that th atst se arbi ar trat atio ne pa agr ag ries eeme ee nts s sh shou ould ldarb (and (a ndate..us usua uall llyya drafting do)) exp do xpr res essl slyy, this ref efer er to

625. See supra pp. 32-33, 44-45; United Steelworkers of Am. v. Warrior and Gulf Nav. Co., 363 U.S. 574, 582 (U.S. S. Ct. 1960) (“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”). 626. See infra pp. 457-62. 627. For examples, examples, see the bilateral and multilateral treaties discussed above, suprapp. 39-40. 628. For examples of submission agreements, agreements,seethe Alabama Arbitration and the Abyei Arbitration, infrapp. 92-93. 629. There is a substantial body of commentary on drafting arbitration agreements, agreements, particularly in the commerci commercial al context.SeeBernardini,The Arbitration Clause of an Internationa Internationall Commercial Contract,9 J. Int l Arb. 45 (2002); Bishop, A Practical Guide for Drafting International Arbitration Clauses (2004); Bond, How to Draft an Arbitration Arbitration Clause Revisited, Revisited, 1 IC ICC C Ct Ct.. Bu Bull ll.. 14 (1 (199 990) 0);; G. Bo Born rn,,International Arbitration Arbitration and Forum F orum Selection Agree Agreements: ments: Drafting and Enforcing Enforcing 39 (3d ed. 201 2010); 0); P. Frie riedla dland, nd,Arbitration Clauses Clauses of InterInternational Contracts (2000); J. Paulsson et al., The Freshfields Guide to Arbitration and ADR (2d ed. 1999); Townsend, Drafting Arbitration Clauses, 58 Disp. Res. J. 1 (2003). 630. See infra p. 80. 631. The definition of an “arbitration” agreement agreement is discussed below. below. See infra pp. 104-18. ’

1. Introduction to International Arbitration

“arbitratio tration” n” — and not to exp expert ert determ determinati ination, on, accounting, accounting, conci conciliati liation, on, media“arbi tion, settlement, “ADR,” or some other form of non-judicial resolution. 632 As discussed in greater detail below, these other forms of alternative dispute resolution are not cat catego egoriz rized ed as “ar “arbit bitrat ration ion”” und under er man manyy int intern ernati ationa onall tr treat eaties ies and nat nation ional al arb arbiitration statutes, and will often not qualify for the “pro-enforcement” safeguards safeguards pro633 vided by these instruments. Accordinglyy, a fundamental element of any Accordingl international arbitration agreement is the parties undertaking that “all disputes shall be finally resolved by arbitration. . . .” Simila Sim ilarly rly,, mos mostt int intern ernati ationa onall arb arbitr itrati ation on agr agreem eement entss pr provi ovide de (an (and d sho should uld pr provi ovide) de) that disputes should be referred to arbitration for a “binding” or “final” disposition (and not to an advisory recommendation). 634 An arbitration clause also should not treat arbitration as a possible future option, applicable if the parties so agree after a disp di sput utee ar aris ises es.. Th Thus us,, ar arbi bitr trat atio ion n cl clau ause sess sh shou ould ld (a (and nd us usua uall llyy do do)) pr prov ovid idee th that at “a “all ll di dissputesshallbe finally resolved by arbitration. . . .” ’

2. Sco Scope pe of Arb Arbitr itratio ation n Agr Agreem eement ent Critical to any arbitration clause is its “scope” — that is, the categories categories of disputes or clai cl aims ms th that at wi will ll be su subj bjec ectt to ar arbi bitr trat atio ion. n. For exa xamp mple le,, an ag agrree eeme ment nt to ar arbi bitr trat atee ma mayy provide that all disputes between the parties, bearing any conceivable connection to their contractual relations, are subject to arbitration. Alternatively, the parties may agree that only contract claims that clearly arise under the express terms of the parties agreement (or particular provisions of that agreement) are to be arbitrated or that th at pa part rtic icul ular ar ty type pess of cl clai aims ms ar aree to be exc xclu lude ded d fr from om an ot othe herwi rwise se br broa oad d ar arbi bitr trat atio ion n agreement. There are a handful of formulae that are frequently used to define the scope of arbitration clauses.635 These formulae include “any” or “all” disputes: (i) “arising under this Agreement”; (ii) “arising out of this Agreement”; (iii) “in connection with this Agreement”; and (iv) “relating to this Agreement.” Alternative formulations are also used, including: (v) “all disputes relating to this Agreement, including any question tio n rega egard rding ing its ex exist istenc ence, e, val validi idity ty,, br breac each h or ter termin minati ation on”; ”; or (vi (vi)) “al “alll dis dispu putes tes re relat lat-636 ing to this Agreement or the subject matter hereof.” ’

a general rule,any parties draft international arbitration clauses broadly, broadly , to cover allAs disputes having connection with the parties dealings. Doing so avoids the expense arising from parallel proceedings (where certain contractual disputes are arbitr arb itrate ated d and oth other er con contra tractu ctual, al, or non non-co -contr ntract actual ual,, dis dispu putes tes ar aree lit litiga igated ted). ).637 It al also so avoids the uncertainties resulting from potentially inconsistent judgments and jurisdictional disputes over the scope of the various proceedings. Even Ev en wh wher eree th thee pa part rtie iess ha have ve ag agrree eed d in pr prin inci cipl plee to a br broa oad d ar arbi bitr trat atio ion n cl clau ause se,, th ther eree mayy be cl ma clai aims ms or di disp sput utes es th that at on onee pa part rtyy do does esnotwant submitted to arbitration. This can include matters such as intellectual property rights or payment obligations, ’

632. See infra pp. 113-15. 633. See infra pp. 104-18. 634. See infra pp. 113-14. Enforcing ing39 (3d ed. 635. G. Born, Born,International Arbitration and Forum Selection Agreements: Drafting and Enforc 2010). 636. The interpretation interpretation of these formulae is discussed below. below.See infra pp. 463-80. 637. See infra pp. 267-80, 474.

E. Elem Elements ents of Arbitr Arbitration ation Agre Agreemen ements ts

which are sometimes exclu excluded ded or carved out of the scope of the arbitration clause.638 Although these types of ex exclusions clusions can serve legitimate objectives, most parties conclud cl udee th that at it is be bett tter er to av avoi oid d ef effo fort rtss to exc xclu lude de pa part rtic icul ular ar ty type pess of di disp sput utes es fr from om ar arbi bi-tration, except in unusual circ*mstances. Such exclusions often 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. 639

3. Ins Institu titution tional al Arb Arbitra itratio tion n As discussed above, institutional arbitration is conducted pursuant to procedura procedurall rules rul es pr promu omulga lgated ted by a par partic ticula ularr arb arbitr itrati ation on ins instit tituti ution, on, whi which ch gen genera erally lly als also o 640 “administers” the arbitration. 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; parties wishing to invok invokee 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.641 In ca case sess wh wher eree th thee pa part rtie iess do no nott wi wish sh to ag agrree to in insti stitu tuti tion onal al ar arbi bitr trat atio ion, n, th they ey wi will ll sometimes select a pre-existing set of procedural rules designed for ad hoc arbitrations (such as the UNCITRAL Rules). 642 Arbitration clauses frequentl frequentlyy accomplish this result by references such as “all disputes shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules. . . .” ’

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Specifying Spec ifying the Seat or Place of the the Arbitr Arbitration ation

Another vital element of any international arbitration agreement is designation of thee “s th “sea eat” t” (o (orr “p “pla lace ce”) ”) of th thee ar arbi bitr trat atio ion. n.643 Th This is is th thee st stat atee wh wher eree th thee ar arbi bitr trat atio ion n ha hass 644 its legal or juridical seat and where the arbitral award will formally be made. It is also the place where many or all of the hearings in the arbitration will be conducted, although the tribunal may generally hold hearings elsewhere for reasons of convenience.645 The text of contractual provisions selecting the arbitral seat is not complex, usually providing only “The seat of the arbitration shall be. . . .” Asfrom discussed below, below there are a seat, number of legal consequences follow selection of,an arbitral making thisand onepractical of the most important that aspects of any int intern ernati ationa onall arb arbitr itrati ation on agr agreem eement ent..646 The These se con conseq sequen uences ces inc inclu lude de inf influ luenc enc-ing the choice-of-law governing the arbitration agreement, the selection of the procedural law of the arbitration and the national courts responsible for applying that law, the selection of the national courts responsible for issues relating to constitution 638. For examples of exclusions exclusions for particular types of issues,seeG. Born,International Arbitration and Forum F orum Selection Agreements: Agreements: Drafting and Enforcin Enforcingg 42–44 (3d ed. 2010). 639. See infra pp. 463-80. 640. See supra pp. 64-67. 641.. The 641 These se mod model el cla clause usess ar aree re repr produ oduced ced at G. Bor Born, n,International Arbitration and Forum Selection Agr Agreeeements: Drafting and EnforcingAppendix C (3d ed. 2010). 642. SeeG. Born,International Arbitration and Forum Selection Agreements: Drafting and Enforcin Enforcingg60-61, 63-64 (3d ed. 2010); suprapp. 67-69. 643. Seeinfrapp. 535-61 for a discussion of the concept of the arbitral seat. See alsoG. Born,International Commercial Arbitration1246-1310 (2009). 644. See infra pp. 535-36, 557-59. 645. See infra pp. 559-60. 646. See infra pp. 557-60.

1. Introduction to International Arbitration

of the tribunal, and the selection of the national courts responsible for (and arbitration law applicable to) annulment of arbitral awards. 647 All of these issues are of substanti sta ntial al imp import ortanc ancee to the arb arbitr itral al pr proce ocess ss (wh (which ich con contra trasts sts wit with h dom domest estic ic arb arbitr itrati ation on in many countries, where the selection of an arbitral situs is much less important).

5. Number Number,, Method Method of Selecti Selection, on, and and Qualificati Qualifications ons of Arbitr Arbitrators ators It is also common for international arbitration agreements to address the number, means of appointment, and qualifications of the arbitrators. As discussed below, selection of the arbitrators is one of the most critical issues in any arbitration. 648 Addressing this issue in the arbitration agreement is a vitally important precaution. Arbitration clauses often specify the number of persons who will comprise an arbitral tr al tr trib ibun unal al in th thee ev even entt of fu futu turre di disp sput utes es.. If th thee pa part rtie iess do no nott ag agrree up upon on th thee nu nummber of arb arbitr itrato ators, rs, lea leadin ding g ins instit tituti utiona onall arb arbitr itrati ation on rul rules es gen genera erally lly gra grant nt the institution power to do so; otherwise, national courts will have the power to decide, pursuant to default rules in national arbitration legislation.649 Nonetheless, relying on a judicial or institutional decision regarding the number of arbitrators can result in delays or jurisdictional disputes. As a consequence, parties often specify the number of arbitrators in their arbitration clause. The text of provisions designating the“Any of arbitrators is notresolved complex. For exampl example, e, a typical clause would provide: “number Any dispute shall be finally under thee [ — Ru th Rule les] s] by [t [thr hree ee ar arbi bitr trat ator ors] s][o [one ne ar arbi bitr trat ator or]] ap appo poin inte ted d in ac acco corrda danc ncee wi with th th thee said sa id Ru Rule les. s.”” An al alte tern rnat ativ ivee pr prov ovid ides es “t “the he nu numb mber er of ar arbi bitr trat ator orss sh shal alll be 650 [three][one].” It is also essential for an arbitration agreement to include some method for selecting the arbitrator(s) if the parties cannot agree upon their identities. The most common such mechanism is designation of an “appointing authority,” which will select a solee arb sol arbitr itrato atorr or pr presi esidin ding g arb arbitr itrato atorr in the eve event nt tha thatt the par partie tiess (or par party ty-nominated arbitrators) cannot do so, or if a party fails to select a party-nominated arbitrator.651 All leading institutional arbitration rules provide for such a role by the sponsoring institution when the parties agree to arbitrate under an institution s rules,652 and no special wording (aside from adopting the institution s rules) is nec’

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essary to select the institution as appointing authority. Finally, international arbitration agreements can either directly specify or indirect ectly ly inf influe luence nce the qua quali lific ficati ations ons and cha charac racter terist istics ics of the arb arbitr itrato ators. rs.653 For example, exampl e, most leading institutional arbitration rules provide that a presiding or sole arbi ar bitr trat ator or sh shal alll no nott ha have ve th thee sa same me na nati tion onal alit ityy as th that at of an anyy of th thee pa part rtie iess (u (unl nles esss ot othh654 erwise agr agreed). eed). An arbitration agreement can also requi require re (or prohibit) the 647. See infra pp. 557-60 for a discussion of these legal consequences. See also G. Born, International Commercial Arbitration1287-1304, 1680-86 (2009). Commercial 648. See infra p. 631; G. Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing Enforci ng70 (3d ed. 2010). 649. See infra pp. 623-24. 650. G. Born, Born,International Arbitration and Forum Selection Agreements: Drafting and Enforc Enforcing ing74 (3d ed. 2010). 651. See infra pp. 631-36. 652. See infrapp. 631-37; ICC Rules, Arts. 7-10; ICDR Rules, Art. 6; 2010 UNCITRAL Rules, Art. 6; 1976 197 6 UNC UNCITR ITRAL AL Rul Rules, es, Art Art.. 6. An ins instit tituti ution on wil willl als also o app appoin ointt an arb arbitr itrato atorr on beh behalf alf of a par party ty tha thatt fai fails ls to exercise its right under the parties arbitration agreement to do so. ICC Rules, Arts. 8(3)-8(4); LCIA Rules, Art. 5(4); ICDR Rules, Art. 6(3). 653. See infra pp. 646-53. 654. ICC Rules, Art. 9(5); 9(5); LCIA Rules, Art. Art. 6(1).Compare AAA Rules, Art. 6(4)). ’

E. Elem Elements ents of Arbitr Arbitration ation Agre Agreemen ements ts

appointme appoin tment nt of per person sonss wit with h leg legal al qua qualif lifica icatio tions ns or can requ equir iree par partic ticula ularr cr crede edenti ntials als 655 or expertise (such as accounting degrees or engineering experience).

6. Lan Langua guage ge of the Arb Arbitr itratio ation n Arbitration clauses in international agreements also frequently specify the language (or languages) of the arbitral proceedings and award. 656 Although sometimes overlooked, this is a point of vital importance, which can have a profound practical effect on the selection of the arbitrators and the character of the arbitral proceedings. Absent the parties agreement, institutional rules usually expressly authorize the arbitral tribunal to select a language (or languages) of the arbitration.657 This will often be the language of the underlying contract or arbitration agreement. Even if institutional rules do not address the issue, national law will ordinarily give the tribunal authority to select a language for the arbitration. 658 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. Cho Choice ice-of -of-La -Law w Clau Clauses ses 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 underlying contract and related disputes.659 In add additi ition on to the sub substa stanti ntive ve law gov govern erning ing the par partie tiess under underlyin lying g contr contract, act, other questions of applicable law frequently arise in connection with international arbitrations. Thus, as discussed in detail below, a different law may apply to the arbitration agreement (as distinguished from the parties underlying contract); that is because an ar arbi bitr trat atio ion n cl clau ause se wi will ll be de deem emed ed a “s “sep epar arab able le”” or “a “aut uton onom omou ous” s” co cont ntra ract ct in mo most st legal systems, that may not be subject to the same substantive law as the underlying contract.660 It is possible, and occasionally advisable, to adopt a choice-of-law clause thatt spe tha specif cifica icall llyy add addre resse ssess the law app applic licabl ablee to the arb arbitr itrati ation on agr agreem eement ent,, as dis distin tinct ct ’

’

from underlying contract. It isthe alsoparties possible for a different law to apply to the procedural conduct of the arbitration itself, separate from that governing the arbitration agreement or underlying

655. G. Born, Born,International Arbitration and Forum Selection Agreements: Drafting and Enforci Enforcing ng75 (3d ed. 2010). 201 0). Suc Such h pr provi ovisio sions ns ar aree oft often ensui generis, pr provi ovidin ding g “ea “each ch arb arbitr itrato atorr sha shall ll be a Cer Certif tified ied Pub Public lic Acc Accoun oun-tant” or “the arbitrators shall be practicing lawyers.” International arbitration clauses may also require particular language abilities, such as “each arbitrator shall be fluent in Spanish.” 656. Id. at 73-74. 657. 1976 UNCITRAL Rules, Art. 17; 2010 UNCITRAL UNCITRAL Rules, Art. 19; ICC Rules, Art. 15(3); ICDR Rules, Art. 14. 658. See infra p. 755. 659.. For 659 For a dis discus cussio sion n of the dra drafti fting ng of suc such h cho choice ice-of -of-la -law w cla clause uses, s,see G. Bor Born, n,Internationa Internationall Arbitration and Forum Forum Selection Agreements: Drafting and Enforcing79-80 (3d ed. 2010). 660. See infra pp. 173-201.

1. Introduction to International Arbitration

most st ca case ses, s, th thee pr proc oced edur ural al la law w of th thee ar arbi bitr trat atio ion n wi will ll be th that at of th thee ar arbi bi-contract.661 In mo 662 tral seat, although there are rare exceptions.

8. Other Prov Provisions isions of Internati International onal Arbitr Arbitration ation Agre Agreements ements Many int Many intern ernati ationa onall arb arbitr itrati ation on agr agreem eement entss als also o con contai tain n oth other er pr provi ovisio sions, ns, in add additi ition on to the essential elements discussed above. The existence and nature of these provisions varies from case to case, depending on the parties negotiations, drafting, and interests. The most common additional elements include: (a) costs of legal repr represenesentati ta tion on;; (b (b)) in inte terres estt an and d cu curr rren ency cy of an aw awar ard; d; (c (c)) di disc sclo losu surre or di disc scov over eryy po powe wers rs of tr triibunal; bun al; (d) fas fast-t t-trac rack k or oth other er pr proce ocedur dural al rul rules, es, inc includ luding ing soso-cal called led esc escala alatio tion n cla clause uses; s; 663 (e) state/sovereign immunity waivers; and (f) confidentiality. ’

F. OV OVER ERVIEW VIEW OF CHOICE CHOICE OF LA LAW W IN INTERNA INTERNATIONA TIONAL L COMMERCIAL ARBITRA ARBITRATION TION Parties frequently agree to arbitration to avoid the jurisdictional and choice-of-law uncertainties that arise when international disputes are litigated in national courts. Unfortunately,, international commercial arbitration can produce its own set of comUnfortunately plex, often unpredictable choice-of-law issues. (Choice-of-law uncertainties tend to be less significant in interstate and investment arbitrations, where international law at least nominally provides a single, uniform substantive legal regime governing the parties dispute.) Choice-of-law issues play an important role in international commercial arbitration ti on.. It is ne nece cess ssar aryy to di dist stin ingu guis ish h be betw twee een n fo four ur se sepa para rate te ch choi oice ce-o -off-la law w is issu sues es th that at ca can n 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.664 Although not common, it is possible for each of these four issues to be governed by a different national (or other) law. Each of the foregoing choice-of-law issues can have a vital influence on internationall arbi tiona arbitral tral pr proceedi oceedings. ngs. Diff Differ erent ent natio national nal laws provide provide diffe differen rentt — someti sometimes mes dramatical drama tically ly different different — rule ruless appl applicabl icablee at diffe differe rent nt stages of the arbitral process. process. 661. See infra pp. 567-77; G. Born, International Commercial Arbitration1310et seq. (2009). 662. See infra pp. 574-76. Parties sometimes include choice-of-law provisions that designate the procedural law applicable to arbitral proceedings .Significant complexities can arise from such provisions, and great care must be tak taken en in utilizing them.See infrapp. 575-76; G. Born,International Arbitration and Forum F orum Selection Agreements: Agreements: Drafting and Enforcin Enforcingg 64-66 (3d ed. 2010). 663. 66 3. G. Bor Born, n,International Arbitration and and Forum Forum Selection Agree Agreements: ments: Drafting and Enforcing Enforcing 82-1 82-110 10 (3d ed. 2010). 664. For a more detailed discussion,see G. Born, International Commercial Arbitration409-561, 131047, 210 2105-2 5-2248 248 (20 (2009) 09).. Add Additi itiona onall sub sub-ca -categ tegori ories es ari arise, se, for ex examp ample, le, wit with h re regar gard d to asp aspect ectss of the law gov gov-erning the arbitration agreement ( e.g.,the law governing issues of formal validity, substantive validity, capacity,, interpretation) or the arbitral proceedings (e.g.,the law governing the arbitrator s contract, the capacity availability of provisional relief, privileges).See infra pp. 234-60, 417, 446-48, 524-25, 819, 831-32. ’

F. Overvie Overview w of Choice of Law in Intern Internation ational al Commerci Commercial al Arbitration Arbitration

Understanding which national rules will potentially be applicable can therefore be critical.

Law Applic Applicable able to the the Substan Substance ce of the the Parties’ Parties’ Disput Dispute e

The parties underlying dispute will ordinarily665 be resolved under the rules of substan st anti tive ve la law w of a pa part rtic icul ular ar na nati tion onal al le lega gall sy syst stem em.. In th thee fi firs rstt in inst stan ance ce,, it wi will ll us usua uall llyy be the arbitrators who determine the substantive law applicable to the parties dispute. As discussed in detail below below,, international arbitral awards typically give effect to the parties agree agreeme ment ntss co conc ncer erni ning ng ap appl plic icab able le su subs bsta tant ntiv ivee la law w (“ (“ch choi oice ce-o -off-la law w 666 clauses”). The pri princi ncipal pal ex excep ceptio tion n is whe where re man mandat datory ory nat nation ional al law lawss or pub public lic pol poliicies purport to override private 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 (but not always) refer to some set of national or international conflict-of-laws rules. rul es. The These se var varyin ying g app appro roach aches es to the cho choice ice of sub substa stanti ntive ve law in int intern ernati ationa onall arb arbii667 tration are summarized here and examined in detail below. 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 adhe ad herre to th thee tr trad adit itio iona nall ap appr proa oach ch,, wh whil ilee ot othe hers rs lo look ok to th thee co conf nfli lict ctss ru rule less of al alll st stat ates es having a connection with the dispute; additionally, some authorities adopt either international conflict-of-laws rules or validation principles.668 ’

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Law Applic Applicable able to the Arbitr Arbitration ation Agre Agreement ement

As discussed elsewhere, arbitration agreements are universally regar regarded ded as presump presump-669 tively “separable” from the underlying contract in which they appear. One consequence of this is that the parties arbitration agreement may be governed by a diff di ffer eren entt na nati tion onal al la law w th than an th that at ap appl plic icab able le to th thee un unde derl rlyi ying ng co cont ntra ract. ct. Th This is ca can n oc occu curr either by the parties express choice of law or by the application of conflict-of-laws rules (which may select different substantive laws for the parties arbitration agree’

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ment and their underlying As described below,, four contract). below 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 und underl erlyin ying g con contra tract; ct; and (d) int intern ernati ationa onall pri princi nciple ples, s, eit either her app applie lied d as a sub sub-stantive body of contract law (as in France) or as rules of non-discrimination (as in most U.S. authority).670 ’

665. Parti Parties es sometimes agree to permit arbitrators to resolve their dispute without reference to law, that is, ex ae that aequ quoo et bo bono no or asamiable compositeur, see inf infra ra pp. 962 962-63 -63,, or by re refer ferenc encee to a non non-na -natio tional nal leg legal al system, see infra pp. 959-61. See also G. Born, International Commercial Arbitration2227-47 (2009). 666. See infra pp. 924-46; UNCITRAL Model Law, Art. 28(1); 1976 UNCITRAL Rules, Art. 33(1); 2010 UNCITRAL Rules, Art. 35(1). 667. See infra pp. 902-24. 668. See See infr infraa pp. 912 912-18 -18.. The There re is als also o aut author hority ity sup suppor portin ting g an arb arbitr itral al tri tribun bunal al s “dir “direct” ect” appli applicatio cation n of substantive rules of law law,, purportedly without prior recourse to any set of conflict of laws rules. See infra p. 918. 669. See infra pp. 173-201. 670. See infra pp. 23 2344-60 60 fo forr a di disc scus ussi sion on of th thee ch choi oice ce of la law w ap appl plic icab able le to th thee ar arbi bitr trat atio ion n ag agrree eeme ment nt.. ’

1. Introduction to International Arbitration

Procedura edurall Law Law Applicab Applicable le to the Arbitr Arbitral al Proce Proceedings edings 3. Proc The arbitral proceedings themselves are also 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 (i.e., the location selected by the parties as the 671

juridical arbitration). Amongplace otherofthings, the law of the arbitral seat typically deals with such issues as the app appoin ointme tment nt and qu quali alific ficati ations ons of arb arbitr itrato ators, rs, the qua quali lific ficati ations ons and pr profe ofessi ssiona onall responsibilities responsib ilities of parties legal representatives, the extent of judicial intervention in the arbitral process, the availability of provisional relief, the procedural conduct of thee ar th arbi bitr trat atio ion, n, th thee fo form rm of an anyy aw awar ard, d, an and d th thee st stan anda darrds fo forr an annu nulm lmen entt of an anyy aw awar ard. d. Diffe Di fferrent nat nation ional al law lawss tak takee sig signif nifica icantl ntlyy dif differ ferent ent app appro roach aches es to the these se var variou iouss iss issues ues.. In some countries, national law imposes significant limits or requirements on the conduct of the arbitration,672 and local courts have broad powers to supervise arbitral pr proceed oceedings. ings.673 Els Elsewh ewher ere, e, and in mos mostt dev develo eloped ped jur jurisd isdict iction ions, s, loc local al law aff affor ords ds intern int ernati ationa onall arb arbitr itrato ators rs vir virtua tually lly unf unfett etter ered ed fr freed eedom om to con conduc ductt the arb arbitr itral al process — subject only to basic requirements requirements of procedural procedural regularity regularity (“due process” 674 or “natural justice”). In some jurisdictions, parties are free to select the law governing the arbitral proceed ce edin ings gs (v (var ario ious usly ly ref eferr erred ed to as th thee675 proc pr oced edur ural al la law w of th thee ar arbi bitr trat atio ion, n, th thee cu curi rial al la law w, lex arbitri, loi de l’arbitrage the or the ). This includes, in many cases, the freedom to agree agr ee to the appl applicati ication on of a diff differe erent nt procedural procedural law than that of the arbit arbitral ral seat. This Th is se seld ldom om oc occu curs rs in pr prac acti tice ce,, an and d th thee ef effe fect ctss of su such ch an ag agrree eeme ment nt ar aree un unce cert rtai ain. n.676 ’

4. Choice Choice-of-Law -of-Law Rules Applic Applicable able in Internati International onal Arbitr Arbitration ation Selecting each of the bodie Selecting bodiess of law identified identified in the foregoing foregoing three three sections — the laws applicable to the merits of the underlying contract or dispute, to the arbitration agreemen agr eement, t, and to the arbi arbitral tral proceedings proceedings — ord ordinari inarily ly re requir quires es appl applicati ication on of confli con flictct-ofof-law lawss rul rules. es. In or order der to sel select ect the sub substa stanti ntive ve law gov govern erning ing the par partie tiess dispute, for example, the arbitral tribunal must ordinarily apply a conflict-of-laws sys’

tem. An tem. And, d, ju just st as di diff ffer eren entt st stat ates es ha have ve di diff ffer eren entt ru rule less of su subs bsta tant ntiv ivee la law w, th they ey al also so ha have ve different conflict-of-laws rules. An international arbitral tribunal must therefore decide at the outset what set of conflicts rules to apply. The actual practice of arbitral tribunals in selecting the law applicable to each of the foregoing issues varies significantly. Approaches include application of (a) the arbitral seat s conflict-of-laws rules; (b) “international” conflict-of-laws rules, either ’

671. See infrapp. 556-57, 562, 574; G. Born, International Commerci Commercial al Arbitration1326-27 (2009). Parties sometimes agree that hearings may be conducted somewhere other than the arbitral seat, for convenience nie nce,, but thi thiss in pri princi nciple ple is vir virtua tually lly nev never er hel held d to cha change nge the pr proce ocedur dural al law governin governing g the arbitration.See infra pp. 560-75. 672. For exa example, mple, foreign foreign lawy lawyers ers may not be permi permitted tted to appear in arbit arbitrati rations ons conducted conducted on national territory, see infra pp. 972-77, arbitrators may be prohibited from ordering discovery, administering oaths, or granting provisional relief,see infrapp. 771-74, 816-18, or detailed procedural requirements or time schedules may be mandatorily applicable, see infrap. 729. International Commercial 673. See p. 729; G. Born, 1287-95 (2009). 674. Theinfra United States, England, Switzerland, France, Arbitration France, and Singapore generally fall within this latter category. 675. See infra pp. 570-74 for a discussion of the choice of law applicable to the arbitral proceedings. 676. See infra pp. 574-75.

G. Overvie Overview w of Sources Sources of Informatio Information n about Intern Internation ational al Arbitratio Arbitration n

as a com compr prehe ehensi nsive ve cho choice ice-of -of-la -law w sys system tem or as int intern ernati ationa onall pri princi nciple pless of non non-discri dis crimin minati ation; on; (c) suc succes cessiv sivee app applic licati ation on of the con confli flictct-ofof-law lawss rul rules es of all int inter erest ested ed states; and (d) “direct” application of substantive law (without any express conflicts analysis).677 The current state of conflict-of-laws analysis in international arbitration has not kept pace with the parties aim of avoiding the peculiar jurisdictional, choice-of-law, and enforcement difficulties that attend the litigation of international disputes in national courts. There is often uncertainty, and wasted time and expense, as a consequence of contemporary conflict-of-laws analysis. Nonetheless, as discussed in greater detail below, recent national court decisions and arbitral awards suggest the way towards development of international principles of validation and nondiscrimination that hold promise of realizing more fully the aspirations of the international arbitral process.678 ’

G. OV OVER ERVIEW VIEW OF SOURCE SOURCES S OF INFOR INFORMA MATION TION ABOUT INTERNATIONAL ARBITRATION One of the perceived benefits of international arbitration is its confidentiality or, at least, privacy.679 Most international arbitral awards, and the submissions, hearings, and delib deliberatio erations ns in almo almost st all intern internationa ationall arbi arbitratio trations, ns, rem remain ain confi confidenti dential. al. Although it has benefits, the confidentiality or privacy of the arbitral process is at the same time an obstacle to practitioners, decision makers, and academics, all of whom frequently desire precedent, authority, or information about the arbitral process. There are a wide variety of sources of information about international commercial arbitration that are useful for both practitioners and academics.680 The number and detail of these sources has increased materially in recent years, and new projects are underwa und erwayy tha thatt wou would ld fur furthe therr ex expan pand d the cor corpus pus of ava availa ilable ble inf inform ormati ation on con concer cernin ning g the international arbitral process.

ICCA Yearb earbook ook of of Commercia Commerciall Arbitration Arbitration and ICC ICC Handbook Handbooks s

The Yearbook of Commercial Arbitration is published annually by the International Council for Commercial Arbitration. The Yearbooks contain excerpts of arbitration awards (usually redacted), national arbitration legislation, judicial decisions, and other materials relevant to international arbitration. The Yearbook is supplemented by handbooks on national arbitration legislation, containing international arbitration statutes from jurisdictions around the world.

677. See infra pp. 911-18; G. Born, International Commercial Arbitration409-561, 1310-47 (2009). 678. See infra pp. 918-19. infraispp. International Commercial Arbitration 679. See 808-10; G. Born, (2009). 680. There extensi ex tensive ve comm commentar entary y on inte internati rnational onal arbit arbitratio ration. n.2250-53 For bibli bibliograp ographies, hies, see, e.g., S. Strong, Research and Practice in International Commercial Arbitration: Sources and Strategies (2009); Hiramoto, A Path to Resources on International Commercial Arbitration 1980-1986, 4 Int l Tax & Bus. Law. 297 (1986); Pechota, Commercial Arbitration: An Internationa Internationall Bibliography(1992). ’

1. Introduction to International Arbitration

Mealey’s ’s Internat International ional Arbitr Arbitration ation Repor Reportt 2. Mealey Sincee 19 Sinc 1986 86,, Me Meal aley ey Pu Publ blic icat atio ions ns ha hass pu publ blis ishe hed d a mo mont nthl hlyy su summ mmar aryy of rec ecen entt ju judi dici cial al decisions concerning international arbitration and arbitral awards. TheInternational Arbitration Report is a source of timely information (with a recently introduced e-mail service) and provides full-text copies of significant awards and decisions.

3. Jou Journal rnal du Dro Droit it Inte Internat rnation ional al (Clu (Clunet net)) Published in French, the Journal du Droit International reprints excerpts and summariess of arb rie arbitr itral al awa awarrds and Fre rench nch ju judic dicial ial dec decisi isions ons con concer cernin ning g int intern ernati ationa onall arb arbitr itraation tio n and oth other er pri privat vatee int intern ernati ationa onall law sub subjec jects. ts. TheJournal is a si sign gnif ific ican antt so sour urce ce of extracts of otherwise unavailable arbitral awards, often with comments by leading French practitioners or academics.

4. Re Revu vuee Ar Arbi bitr trag age e Published four times a year, in French, the Revue Arbitrage contains articles relating to international and domestic arbitration as well as commentary on French judicial decisions and arbitral awards. The Revue was founded in 1955 and was for many years directed by the late Pr Professor ofessor Phillip Fouchard Fouchard and Mr Mr.. Charles Jarrosson.

5. Arb Arbitr itratio ation n Int Interna ernatio tional nal Arbitration International is a quarterly journal, published since 1985 by the LCIA. It provides commentary on international commercial arbitration, with a particular focus on Europe and England.

6. AS ASA A Bu Bull llet etin in The Bulletin of the Swiss Arbitration Association (“ASA”) is published quarterly. It contains excerpts of Swiss (and other) judicial decisions dealing with international arbitration, arbitral awards, and commentary on recent developments.

7. Col Collec lection tionss of ICC Awar Awards ds Four collections of ICC awards rendered between 1974 and 2000 have recently been publis pub lished hed.. The col collec lectio tions ns cov cover er awa award rdss mad madee bet betwee ween n 197 1974-1 4-1985 985,, 198 1986-1 6-1990 990,, 199 19911681 1995, and 1996-2000. In addition, the ICC has published a collection of procedural decisions in ICC arbitrations between 1993 and 1996. 682 Collectio Coll ection n ofrds1986-19 ICC Arbitral Arbit ral90 Awards Awa rds 1974-1985 1974-19 85 (199 681. 1. aldez S. Jar Jarvin vin.,&Colle Y. Der Derain ains s eds eds., (1990); S.ains Jarvin, Jarv in,D. Y.Has Derains Dera insr & J.68 Arnald Arn ez eds eds., Collection ctionof of ICC.,Arbi Arbitral tral Awards Awa 1986-1990 (1994) (19 94); ; J. Arn Arnald aldez, ez, Y0); . Der Derain s& Hasche cher eds.,Collection of ICC Arbitral Awards 1990-1995(1997); J. Arnaldez, Y. Y. Derains & D. Hascher eds., Collection of ICC Arbitral Awards 1996-2000(2003). 682. D. Hascher Hascher ed.,Collection of Procedural Decisions in ICC Arbitration 1993-1996 (1997).

G. Overvie Overview w of Sources Sources of Informatio Information n about Intern Internation ational al Arbitratio Arbitration n

Gaillard & Savag Gaillard Savagee (eds.), (eds.), Foucha Fouchard rd Gaillard Gaillard Goldma Goldman n on Internatio International nal Commercial Arbitration

The lea leadin ding g Fre rench nch com commen mentar taryy on int intern ernati ationa onall com commer mercia ciall arb arbitr itrati ation, on, pub publis lished hed in 1999 in English, is authored by a distinguished French French professor and practitioner, practitioner, together with a very able colleague. In addition to providing encyclopedic discussions of French international arbitration law and practice, the work also offers insightful comment on more general developments.

A. Redfern Redfern & M. Hunter Hunter,, Law and Pract Practice ice of Internatio International nal Commerc Commercial ial Arbitration

The leading English commentary on international commercial arbitration, Law and Practice of International Commercial Arbitration , is in its fifth edition. Authored by two resp espect ected ed Eng Englis lish h pra practi ctitio tioner ners, s, now ass assist isted ed by abl ablee coco-aut author hors, s, the boo book k is requ equir ired ed reading for any lawyer involved in international arbitration.

10. A. van den Berg, Berg, The The New New York York Arbitra Arbitration tion Conven Convention tion of of 1958 Albert van den Berg sThe New York Arbitration Convention of 1958 is the leading work on the New York Convention. The author is a distinguished Dutch academic and practitioner, and his work assembles in a single source detailed commentary and materials relating to the New York Convention. Although the book s effort to annotate the Convention s various articles with judicial decisions is now dated (from 1981), it remains required reading on the subject. ’

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11. H. Holtzmann Holtzmann & J. Neuha Neuhaus, us, Guide Guide to the UNCITRA UNCITRAL L Model Model Law Law on International Commercial Arbitration Howard Howar d Hol Holtzm tzmann ann and Jos Joseph eph Neu Neuhau hauss hav havee con contri tribut buted ed a pai painst nstaki aking ng stu study dy of the UNCI UN CITR TRAL AL Mo Mode dell La Law w an and d it itss hi hist stor oryy. Par arti ticu cula larl rlyy as th thee Mo Mode dell La Law w ga gain inss in ad adhe herrents, theGuidewill become a standard reference source for practitioners and courts.

12. UNC UNCITR ITRAL AL Dat Databa abases ses UNCITRAL maintains searchable, online databases of publicly available court decisions regarding the UNCITRAL Model Law.683

683. Case Law on UNCITRAL Texts: Texts: UNCITRAL Model Law on International International Commercial Arbitration, available at www www.uncitral.or .uncitral.org/english/clout g/english/clout/MAL-thesaurus/cloutSear /MAL-thesaurus/cloutSearch-etm. ch-etm.

1. Introduction to International Arbitration

Kluwer wer Arb Arbitra itration tion 13. Klu Released by Kluwer Law International, the KluwerArbitration on line service contains an extensive, computer-searchable computer-searchable library of arbitral awards, judicial decisions, and commentary.

14. OG OGEM EMIID An Internet-based discussion forum founded by the late Pr Professor ofessor Thomas Wälde, the “Oil-Gas-Energy-Mining-Infrastructure Dispute Management” is an innovative sourc sou rcee of re recen centt dev develo elopme pments nts,, wit with h on lin linee com commen ments, ts, re regar gardin ding g int intern ernati ationa onall arb arbii684 tration.

15. ALI Restate Restatement ment of Internation International al Commer Commercial cial Arbitr Arbitration ation Law The American Law Institute has recently announced a decision to produce a Restatement of International Commercial Arbitration Law.The Reporter of the project is Professor George Bermann, with collaboration from Professors Jack Coe, Chris Drahozal, and Catherine Rogers. The Restatementcan be expected to have a significant impact on U.S. international arbitration law.

684. The forum can be contacted at www.dundee.ac.uk/cepmlp; www.dundee.ac.uk/cepmlp; alternatively CEPMLP, Carnegie Building, University of Dundee, Dundee, DD1 4HN, Scotland, Tel: + 44 (0) 13 82 38 43 00.

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References