The Jurisdictional Ties of Arbitrator Reasoning

Perhaps the primary dispute in the theory of international arbitration is that between the delocalised theory of arbitration and the jurisdictional theory.  That is, between the theory that international arbitration is fundamentally disconnected from any particular legal jurisdiction and the theory that ultimately each arbitration is best understood as playing a role within the legal system of the seat.  While the dispute is ongoing, it would be reasonable to say that the delocalised approached has achieved a clear dominance within the field’s self-conception (full disclosure: I lean strongly towards a jurisdictional approach myself).

One interesting question, then, is the degree to which the prominence of delocalisation in discussions of international arbitration represents a real dominance within the field, or perhaps only reflects the views of those with a prominent place to advance their views (i.e. this is a view consistently advanced by the “elite”, while not necessarily broadly embraced amongst arbitration practitioners), or has perhaps simply become a social norm within the field (i.e. arbitration practitioners are expected to express an adherence to this view in order to show they truly “belong”, whatever they may really think), or if there is perhaps a difference between theory and practice (i.e. perhaps when they think about arbitration, arbitration practitioners think that delocalisation does capture the essence of international arbitration, but when they are actually in a real-world situation they act in a way that is more consistent with a jurisdictional approach).

Initial results from the interviews (as always, subject to a closer analysis later), suggest that the final alternative may be the most accurate, but nonetheless that even this alternatuive is not completely accurate.  That is, interviewees certainly showed a diversity of views, and there is no single approach to this issue that characterises all those interviewed.  However, a significant trend did appear.

Firstly, when asked abstractly about questions of practice, interviewees would commonly emphasise very strongly that as arbitration practitioners they didn’t strictly have a jurisdiction.  They could, that is, practice arbitration anywhere in the world (as a matter of practical reality they may not, but they could).  This is, of course, true, but it is notable that this was a point repeatedly spontaneously made, rather than one that arose in response to a direct question on the issue (there was, of course, a related question, but not one that asked where they could practice arbitration).  Moreover, those making this point did not give the impression of simply repeating a rote answer, as they though were just emphasising something they knew was expected of them.  Rather, the point was consistently made earnestly, as something that was important to the way they saw their work as arbitration practitioners.

Nonetheless, despite this insistence on what might be called a delocalised self-conception, a different picture consistently developed when questions of actual practice occurred (e.g if they were asked what they would do if they were an arbitrator in an international arbitration and a particular issue arose).  Again, approaches to these questions certainly varied, and there was no single approach taken.  There was, though, a clearly dominant approach, in which despite the previous emphasis on the independence of arbitration practice from jurisdictional constraints, interviewees consistently emphasised their obligations to the law of the seat of the arbitration, as a constraint on their actions as an arbitrator even when requested to take an action by the parties.  In short, the dominant view, despite the previous emphasis on the delocalisation of arbitration practice, was that an arbitrator is not engaged in a free-floating dispute resolution process, private and distinct from all State legal systems.  Rather, an arbitrator owes certain obligations to the seat of an arbitration that override even the arbitrator’s obligations to the parties.  In short, the arbitrators saw themselves as located, in some way, within the legal system of the seat – consistent with the jurisdictional approach.

This said, it is also important to emphasise another consistent feature of the dominant approach taken by interviewees.  That is, they did not see themselves as having the same level of obligation to the seat as would a judge (to be clear, they were not expressly asked this question, rather this is a description of the way that they answered practical “what would you do” questions).  Instead, there was a clear balancing being undertaken between the right of the parties to decide how their arbitration runs, and the right of a State to decide what takes place in an arbitration operating under its legal system.  The focus of that balancing was the importance to the State of the rule in question.  So, where parties were asking for an action to be taken that would violate a public policy of the seat, interviewees were consistently unwilling to do this – even if the parties emphasised that they were unconcerned about potential enforcement problems.  However, if the parties were asking for an action to be taken that would breach a mandatory rule of the seat, but not one that the arbitrator saw as representing public policy, interviewees were more willing to take that action.

Importantly, what was being emphasised was not international public policy, or the interviewee’s own views of right and wrong, but explicitly the public policy of the seat.  In essence, interviewees seem to have embraced a view in which agreeing to serve as an arbitrator in an arbitration seated in a State, involves taking on obligations to that State not to breach its fundamental values (whether the arbitrator or the parties share those values or not).  Indeed, this was underlined by the willingness of some interviewees (although not all) to agree that if the parties were willing to change the seat of the arbitration to another jurisdiction that did not have the same public policy, so that there was no longer a conflict, the interviewee would have no problem with that, and would then take the action requested by the parties.  The concern, that is, was not with the action itself, but with the fact that the action violated the public policy of the seat.

As always, these interviews are in an early stage, and this may well be an area in which different results are generated in different locations across Europe – or it may not.  It is, though, an interesting suggestion that at the very least polar distinctions beween “delocalised” and “jurisdictional” simply may not accurately capture how arbitration truly functions, and a more nuanced understanding of the relationship between arbitration and national legal systems may be needed.

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