Effectiveness of International Commercial Arbitration as a Dispute Settlement Mechanism

Arangio-Ruiz (1994), pp. 87–88.

This was even institutionalized, when in Imperial Rome the Emperor granted a determined group of experts the ius respondendi ex auctoritate principis. Among the jurists, historic names such as Papinian, Ulpianus, Modestinus and others can be found. Schulz (1960), p. 13.

Even though, according to David, this must be considered a new form of justice administration from the public authorities rather than, properly, arbitration. Something similar can be said of arbitration in Roman Law. At the time, arbitration could be convened via the stipulatio, establishing a sanction (penalty clause) in case the other party failed to comply with what had been decided. Arbitration could also be convened in a “consensual” contract, but in such a case, what had been decided by the arbitrator could be revised by the judge if manifestly unjust or contrary to good faith, see David (1985), p. 13.

Várady et al. (2009), pp. 58–60.

Várady et al. (2009), p. 65.

In light of the clear intention of Congress, the Court understood as its obligation to remove the old hostility towards arbitration (Marine Transit Corporation v. Dreyfus (1932)). Mosk (2005), p. 328.

Price Waterhouse Coopers and the Queen Mary University of London conducted a survey in 2013, with the following results: 52% of the businesses surveyed preferred arbitration as a means of resolution of conflicts. This percentage is even higher in sectors such as construction and energy, where 68% and 56% prefer arbitration over other means of dispute resolution. See http://​www.​arbitration.​qmul.​ac.​uk/​research/​2013/​index.​html.

This much cited quote can be found in Mustill (1989), p. 43.

See http://​www.​uncitral.​org/​uncitral/​es/​uncitral_​texts/​arbitration/​NYConvention_​status.​html.

See http://​www.​uncitral.​org/​pdf/​english/​texts/​arbitration/​ml-arb/​07-86998_​Ebook.​pdf.

“Diary of Humphrey O’Sullivan, 6 January 1831”, in Park (2006), p. 423.

Blackaby et al. (2009), p. 27.

The tendency to apply transnational law in arbitration is particularly strong in areas in which national laws are developing at different paces, such as frustration, invalidity and interests, see Smit (1998), p. 109.

Von Mehren (1992), p. 62.

Juenger (1997), p. 202.

Oppetit (2006), pp. 278–279, footnote. An interesting recent description of the “acculturation” phenomena can be found in Sánchez Cordero (2016), pp. 51 ff.

Blessing (1997), p. 48.

Cited by Smits (2004), p. 239.

Menkel-Meadow et al. (2005), p. 449.

Mustill (1987), p. 149.

David (1985), p. 12.

See http://​www.​iccwbo.​org/​products-and-services/​trade-facilitation/​incoterms-2010.

Basedow (2010), pp. 9–10.

Audit (1988), pp. 176–177.

Berman and Dasser (1998), p. 65.

Two categories of usages can be derived from Articles 8 and 9 of the CISG and Article 1(8) of the UNIDROIT Principles, regarding “usages and practices”. The first category comprises the usages deriving from commerce itself, and the second category covers practices known by the parties to the contract and observed by them in their business. The UNIDROIT provision is even more direct in the sense that no knowledge of the usage on the part of the actual parties is required. See a discussion in Vogenauer (2015).

Goode (1997), pp. 16–17.

ICC Case 3380/1980, cited by Craig et al. (2000), p. 102.

Goode (1997), p. 29.

It is widely known that extra-State normativity in international commercial transactions became the subject of debate following Berthold Goldman’s seminal article published in 1964, see Goldmann (1964), p. 184 et seq. The doctrine of lex mercatoria discussed in that paper—and immediately furthered by the subsequent French doctrine on the matter—was once treated as a “phantom” created by Sorbonne Professors. See Teubner (1997), p. 151. After initial strong hesitations (see, for instance Mustill (1987), p. 150), recognition of the doctrine is now undeniable, both in the arbitral world and in large parts of the scholarly sector of commercial law, even though the expression has been severely criticized as a “wicked misnomer” or a “contradiction in terms”. Lowenfeld (2002), p. 72. To avoid a contradiction in terms, some, for instance, propose referring to the phenomena as principia mercatoria.

Gama and Saumier (2011), pp. 62–63. This results in “levelling the playing field” between arbitration and litigation, at least in countries that have adopted the UNCITRAL Model Law. Pertegás and Marshall (2014), p. 979. It is no longer necessary to include an arbitral clause to assure that the choice of non-State law will be respected.

See Official Comment of UNCITRAL to Article 28. See also the report of the WG of UNCITRAL, 18 meeting, March 1985 (A/CN.9/264), pp. 60–63.

The author of this article has personal knowledge of this due to his participation in the deliberations on the matter.

Dezalay and Garth (1996), p. 75.

Dezalay and Garth (1996), chapter 2.

Dezalay and Garth (1996), chapter 3.

See in http://​www.​adejesus.​com.

This was brought to my attention by attendants to this event, held annually in the month of November in Miami.

English law and the law of the United States were more frequently chosen, accounting for a quarter of all contracts. Other choices were the laws of Switzerland, France and Germany. ICC Dispute Resolution Bulletin, 2016, Issue 1, p. 17. Cuniberti conducted an empirical study of more than 4400 international contracts concluded around 12,000 parties based on an analysis of data published with respect to the contractual practices of parties participating in ICC arbitrations (the “ICC Arbitration Data”). His study (from 2007 to 2012) reveals that, when international commercial parties agree to go for a law other than their own, they generally choose the law of one of five jurisdictions: England, Switzerland, United States, France and Germany, see Cuniberti (2014), pp. 3–5. However, as it was pointed out, the selection of non-state law did was not comprised in this research, see Boele-Woeli (2016), p. 97.

See in Drahozal (2003), p. 30.

2010 International Arbitration Survey: Choices in International Arbitration, Queen Mary, University of London, School of International Arbitration (SIA) and White & Case, http://​www.​arbitration.​qmul.​ac.​uk/​docs/​123290.​pdf, pp. 11 ff.

The survey was conducted within the Fondecyt (National Foundation for Scientific and Technological Development, Chile) Project No. 1110437. Elina Mereminskaya, Bofill Mir & Alvarez Jana Abogados, for ITA, Results of the Survey on the Use of Soft Law Instruments in International Arbitration, 6 June 2014, http://​kluwerarbitratio​nblog.​com/​blog/​2014/​06/​06/​results-of-the-survey-on-the-use-of-soft-law-instruments-in-international-arbitration.

Horvath (2011), pp. 251–271.

In-house counsel value the features of the arbitration process that distinguish it from litigation, Queen Mary 2013, http://​www.​arbitration.​qmul.​ac.​uk/​research/​2013/​index.​html.

Blessing (1997), p. 42.

See, for example, Lando (2003), p. 126.

International Commercial Arbitration Committee’s Report and Recommendations in Ascertaining the Contents of the Applicable Law in International Commercial Arbitration, Arbitration International 2010/2, p. 198.

Glenn (2001), pp. 58–59.

It must be taken under consideration that, commonly, transnational transactions involve particular factors, such as the distance between buyers and sellers, or certain requirements as the licenses to import and export that depend of the authorities, or prohibitions for currency transfers and endless eventualities. David (1969), pp. 11–12.

See Juenger (2000), pp. 1139–1140.

See recently Micklitz (2016), p. 168 ff.

The Constitutional Court of Germany rendered a landmark decision in this sense on the year 1971, followed by others, such as one of the Italian Court in 1987. In addition, the Court of Justice of the European Union, in at least one occasion, based its decision on the European Convention on Human Rights, for instance, when it held that the scope of the exception of public policy of the duty of recognizing civil rulings of other member states must be interpreted pursuant to said convention (Krombach v Bamberski, Case C-7/98, (2000) ECR I-1935), see Reimann (2006), pp. 1392–1393.

This terminology, coined by Kegel, is well explained by Symeonides. Material justice limits the objective of Private International Law to simply choosing the State that will provide the applicable law without considering to the content and the substantive quality of the arrived solution. Substantive justice looks for the better substantive solution to a multi-State case, see Symeonides (2001), pp. 125–128.

Lalive (1984), p. 28.

See, for instance, Fernández Arroyo (2016), pp. 271–272.

Derains (1995), II.2. As creatures of the parties’ consent, arbitrators must show special fidelity to shared expectations expressed in the contract or treaty, Park (2016), p. 893.

Vicente (2016), p. 74.

Schweizerisches Bundesgericht (Switzerland), December 16, http://​www.​unilex.​info.

Bortolotti (2014), p. 8.

Berger (2014), pp. 80–84.

Berger (2014), pp. 89–90.

Berger (2014), pp. 80–90.

Brunner (2008), pp. 30–32.

Goode (1992), p. 1.

Paulsson (2013), p. 232.

Brunner (2008), pp. 30–32. In this regard, Ralf Michaels, inter alia, notes that, “like ius commune and common law”, the Unidroit Principles “serve as a global background law” for which “we find, more and more, that judges and legislators justify their decisions against a global consensus (whether imagined or real) that they find, amongst others, in the UNIDROIT Principles.” They “are becoming, more and more, a sort of general benchmark against which legal arguments take place.” Michaels (2014), pp. 643–668, after note 63.

Derains (1995), p. 6.

Wolff (1958), p. 15.

In the Americas, the corrective formula has been accepted for many years through Article 9 of the 1979 OAS Inter-American Convention on General Rules of Private International Law, ratified by several countries in the region. This Convention admits equitable solutions to achieve justice in particular cases, notwithstanding the provisions of national laws potentially applicable to the transaction. The spirit of this formula is replicated in Article 10 of the Mexico Convention. The solution is received in Private International Law Rules of Mexico, Venezuela and Paraguay, see Moreno Rodríguez (2016), pp. 1171–1173.

Blessing (1997), p. 54. Hascher speaks of a progressive interpretation of the convention, favoring the lex mercatoria and international principles, see Hascher (1995), pp. 1030–1031.

Ad Hoc Arbitration in Costa Rica, 30.4.2001, accessible at www.​unilex.​info. In turn, the arbitral Tribunal references other ICC Awards in this regard—Awards 8908/1996 and 8873/1997; Bulletin of the International Arbitration Court, vol. 10/2-Fall-1999, p. 78 ff.

Ad Hoc Arbitral Award of 10.12.1997, accessible at www.​unilex.​info. Mayer even talks about the application of the UNIDROIT Principles in all situations, not as lex contractus, but specifically, when the content of a determined norm of the lex contractus is not clearly established, or is manifestly inadequate. Mayer (2002), pp. 75–76.

Blessing (1997), p. 42.

Born (2014), p. 2666.

Craig et al. (2000), pp. 638–639. They cite the ICC Case 4131/1982, in which an unanimous tribunal, presided by Professor Sanders, stated: “The decisions of (ICC) tribunals progressively create caselaw which should be taken into account, because it draws conclusions from economic reality and conforms to the needs of international commerce, to which rules specific to international arbitration, themselves successively elaborated, should respond” (p. 639).

Stipanowich (2015).

In the case CMI International, Inc. v. Iran of 1983 the arbitrators did not respect the selection of the law of Idaho after considering that the task of the arbitrators, as therein argued, was the search of justice and equity, which led them to ignore said selection. See Silberman and Ferrari (2010), p. 34, footnote.

Ferrari states that the international arbitration cannot be more international than the national rules applicable to a given issue in a specific case allow the arbitration to be. Ferrari (2016), p. 848. Many responses can be given to defend a different view, but one of them is that when the parties select an arbitral jurisdiction that in its laws contemplates a corrective formula, this authorizes the arbitrators to reach solutions of justice.

Fernández Arroyo (2013), pp. 233–234.

Bortolotti (2014), p. 7.

When the law was not selected, it appears that Article 28(2) of the UNCITRAL Model Law of 1985 only admits the application of non-State law when the parties chose it, not in the absence of choice. This was considered in 1987 by Lord Michael Mustill as a major blow to lex mercatorists. Mustill (1987), p. 181. However, subsequent case law indicates the contrary, and leading arbitral authorities, such as, inter alia, Emmanuel Gaillard, propose an extensive interpretation of Article 28(2). Gaillard (2010), p. 124. An express solution in this sense (regarding arbitration specifically) can be found, for instance, in Article 187(1) of the Swiss Private International Law and in the new Article 1511 of the Procedural Code of France. Contrary to a widespread orthodox conception, it is more predictable to apply transnational rules than classic “conflictualism”. Parties that have not taken the precaution of choosing the law that would govern their contract should not be surprised by the application of a rule generally accepted in comparative law. Gaillard (2010), p. 126. Based on a Von Mehren report, the 1989 Resolution of Santiago de Compostela of the Institute of International Law left aside a 1957 position, and now states, in its Article 6, that in the absence of choice, arbitrators can, if they deem it appropriate, apply general principles, that is, principles of non-State origin.

For instance, if the UNIDROIT Principles are going to be applied as an implied will of the parties, as far as possible, arbitral tribunals should seek confirmation from the parties at the start of the arbitration (e.g. when the terms of reference or equivalent instruments are drafted) that this was their real intention and, if it results that the issue is disputed, arbitral tribunals should give the parties a full opportunity to plead, possibly in view of a preliminary decision on the law applicable to the merits. Benedettelli (2016), p. 680.