Directorate of Distance Education

NALSAR University of Law, Hyderabad

Reading Material

Post-Graduate Diploma in
Alternative Dispute Resolution

1.4 International Commercial Arbitration

By:
Mr. Ajar Rab
Partner Rab & Rab Asociates LLP
B.A. LL.B. National Law School of India University Bangalore
LL.M. Bucerius Law School, Hamburg, Germany
Visiting Faculty National Law School of India University Bangalore

(For private circulation only)

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© NALSAR University of Law, Hyderabad (Print 2019)

(For private circulation only)

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 TABLE OF CONTENTS

CHAPTER I – EVOLUTION OF INTERNATIONAL COMMERCIAL ARBITRATION ........ 9

THE JOURNEY FROM THE GENEVA CONVENTION TO THE NEW YORK CONVENTION. ..................... 11
Distinctions between the Geneva Convention and the New York Convention ............................. 13

CHAPTER II – DEFINITION OF ARBITRATION ...................................................................... 15

DEFINITION OF ‘COMMERCIAL’ ........................................................................................................ 16

MEANING OF COMMERCIAL UNDER INDIAN LAW ............................................................................ 19
DEFINITION OF ‘INTERNATIONAL’ .................................................................................................... 22

CHAPTER III – THE MONOPOLY OF INTERNATIONAL ARBITRATION ........................ 27

NEUTRALITY ..................................................................................................................................... 27
INTERNATIONAL ENFORCEABILITY .................................................................................................. 27
ADVANTAGES ................................................................................................................................... 27
Flexibility...................................................................................................................................... 27
Party Autonomy ............................................................................................................................ 28
Confidentiality .............................................................................................................................. 28
Additional Powers of Arbitrators ................................................................................................. 29
Continuity of Role ......................................................................................................................... 29
DISADVANTAGES .............................................................................................................................. 29
Conflicting Awards ....................................................................................................................... 29
Judicialization .............................................................................................................................. 29
Costs ............................................................................................................................................. 30
Delay ............................................................................................................................................ 30

CHAPTER IV – OVERVIEW OF THE REGIME GOVERNING INTERNATIONAL

COMMERCIAL ARBITRATION ................................................................................................... 31

AGREEMENT OF THE PARTIES ........................................................................................................... 31

ARBITRATION RULES ........................................................................................................................ 31
NATIONAL LAWS .............................................................................................................................. 32
INTERNATIONAL ARBITRATION PRACTICE ....................................................................................... 32
INTERNATIONAL TREATIES............................................................................................................... 33

CHAPTER V – TYPES OF ARBITRATIONS ............................................................................... 34

AD HOC ARBITRATION...................................................................................................................... 34
Advantages of Ad hoc Arbitration ................................................................................................ 34
Disadvantages of Ad hoc Arbitration ........................................................................................... 35
INSTITUTIONAL ARBITRATION ......................................................................................................... 35
Advantages of Institutional Arbitration ........................................................................................ 37
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 Disadvantages of Institutional Arbitration ................................................................................... 38
ARBITRAL INSTITUTIONS .................................................................................................................. 38
International Chambers of Commerce ......................................................................................... 38
The London Court of International Arbitration ........................................................................... 39
Swiss Chambers’ Arbitration Institution ...................................................................................... 39
Vienna International Arbitration Centre ...................................................................................... 39
Stockholm Chambers of Commerce Arbitration Institute ............................................................. 39
Singapore International Arbitration Centre ................................................................................. 40
World Intellectual Property Organization ................................................................................... 40

CHAPTER VI – THEORIES IN INTERNATIONAL ARBITRATION ...................................... 41

CHAPTER VII – NATIONAL ORDER APPROACH/

TERRITORIALITY/JURISDICTIONAL THEORY..................................................................... 43

CHAPTER VIII – CONTRACTUAL THEORY ............................................................................ 47

CHAPTER IX – THE HYBRID THEORY ..................................................................................... 50

CHAPTER X – DELOCALIZATION/AUTONOMOUS THEORY ............................................. 52

CHAPTER XI – TRANSNATIONAL THEORY ............................................................................ 58

CHAPTER XII – DIFFERENCE BETWEEN PUBLIC INTERNATIONAL LAW AND

PRIVATE INTERNATIONAL LAW .............................................................................................. 59

PUBLIC INTERNATIONAL LAW .......................................................................................................... 59

PRIVATE INTERNATIONAL LAW........................................................................................................ 59
DISTINCTION ..................................................................................................................................... 60

CHAPTER XIII – SOVEREIGN IMMUNITY ............................................................................... 61

JURISDICTIONAL IMMUNITY ............................................................................................................. 61

IMMUNITY FROM EXECUTION ........................................................................................................... 62

CHAPTER XIV – LAWS GOVERNING ARBITRATION ........................................................... 63

LAW GOVERNING THE CAPACITY OF THE PARTIES .......................................................................... 63

LAW GOVERNING THE AGREEMENT TO ARBITRATE ........................................................................ 65

CHAPTER XV – LEX ARBITRI ....................................................................................................... 70

CHAPTER XVI – LAW GOVERNING THE CONTRACT ......................................................... 76

CHAPTER XVII – LAW GOVERNING ENFORCEMENT OF AWARD .................................. 79

DOMESTIC AWARD ............................................................................................................................ 79

FOREIGN AWARD .............................................................................................................................. 79
The New York Convention ............................................................................................................ 79

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 The 1961 European Convention ................................................................................................... 80
The 1965 Washington Convention................................................................................................ 80
The Panama Convention .............................................................................................................. 80
National Laws and Model Laws ................................................................................................... 80

CHAPTER XVIII – COMPOSITION OF TRIBUNAL ................................................................. 81

APPOINTMENT OF ARBITRATORS ..................................................................................................... 81

NUMBER OF ARBITRATORS .............................................................................................................. 81
QUALIFICATIONS .............................................................................................................................. 82
NATIONALITY ................................................................................................................................... 83
METHOD OF SELECTION ................................................................................................................... 84
OBLIGATIONS OF ARBITRATORS....................................................................................................... 84
CHALLENGES TO THE ARBITRATOR.................................................................................................. 85
TRUNCATED TRIBUNALS .................................................................................................................. 86
DETERMINATION OF JURISDICTION .................................................................................................. 87
COMPETENCE-COMPETENCE ............................................................................................................ 87
SEPARABILITY .................................................................................................................................. 88
COSTS AND FEES............................................................................................................................... 90

CHAPTER XIX – INTERIM MEASURES ..................................................................................... 92

CHAPTER XX – LIMITATIONS ON THE POWER OF ARBITRAL TRIBUNAL TO GRANT

PROVISIONAL RELIEF .................................................................................................................. 98

CHAPTER XXI – STANDARDS FOR PROVISIONAL RELIEF ............................................. 104

CHAPTER XXII – TYPES OF INTERIM MEASURES ............................................................. 110

ORDERS PRESERVING STATUS QUO ............................................................................................... 112

ORDERS PROHIBITING AGGRAVATION OF PARTIES’ DISPUTE........................................................ 113
ORDERS REQUIRING SPECIFIC PERFORMANCE OF CONTRACTUAL OR OTHER OBLIGATION ......... 114
ORDERS REQUIRING SECURITY FOR LEGAL COSTS........................................................................ 115
ORDERS FOR PRESERVATION OR INSPECTION OF PROPERTY ......................................................... 116

CHAPTER XXIII – EMERGENCY ARBITRATION ................................................................. 118

CHAPTER XXIV – SETTING ASIDE AN AWARD ................................................................... 121

PURPOSE OF SETTING ASIDE AN AWARD ....................................................................................... 121

REQUIREMENTS FOR SETTING ASIDE AN AWARD .......................................................................... 121
Legal Basis for Setting Aside an Award ..................................................................................... 121
National Courts .......................................................................................................................... 122
Time Limits ................................................................................................................................. 123

CHAPTER XXV – GROUNDS FOR CHALLENGE ................................................................... 124

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 GROUNDS UNDER THE MODEL LAW ............................................................................................... 124
JURISDICTIONAL GROUNDS ............................................................................................................ 125
Incapacity or invalid agreement to arbitrate ............................................................................. 125
Excessive jurisdiction of the tribunal ......................................................................................... 125
Arbitrability ................................................................................................................................ 126
Procedural Grounds ................................................................................................................... 126
SUBSTANTIVE GROUNDS ................................................................................................................ 128
Public Policy .............................................................................................................................. 128
Other Grounds under National Laws ......................................................................................... 128

CHAPTER XXVI – EFFECTS OF CHALLENGE ...................................................................... 130

COURT REJECTS CHALLENGE AND UPHOLDS AWARD ................................................................... 130

COURT ACCEPTS CHALLENGE ........................................................................................................ 130
REMISSION .................................................................................................................................... 1311

CHAPTER XXVII – RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL

AWARDS .......................................................................................................................................... 132

THE DISTINCTION BETWEEN RECOGNITION AND ENFORCEMENT .................................................. 132

REGIME GOVERNING THE RECOGNITION AND ENFORCEMENT ...................................................... 133
The New York Convention ........................................................................................................ 1334
The 1961 European Convention ............................................................................................... 1344
The 1965 Washington Convention .............................................................................................. 134
The Panama Convention ............................................................................................................ 135
National Laws and Model Laws ................................................................................................. 135
REQUIREMENTS FOR ENFORCEMENT .............................................................................................. 135
Jurisdiction of the Enforcement Court ....................................................................................... 135
Required Documents .................................................................................................................. 136
Time Limits ............................................................................................................................... 1366

CHAPTER XXVIII – GROUNDS FOR NON-ENFORCEMENT UNDER THE CONVENTION

............................................................................................................................................................ 137

INCAPACITY AND INVALIDITY ........................................................................................................ 137

LACK OF DUE PROCESS .................................................................................................................. 138
THE ARBITRATOR HAS ACTED BEYOND THEIR JURISDICTION....................................................... 139
PROCEDURAL IRREGULARITY OR COMPOSITION OF TRIBUNAL ..................................................... 140
THE AWARD IS NOT BINDING OR HAS BEEN SUSPENDED OR SET ASIDE ....................................... 140
SUBJECT MATTER NOT ARBITRABLE.............................................................................................. 141
PUBLIC POLICY ............................................................................................................................... 142

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CHAPTER XXIX – PUBLIC POLICY .......................................................................................... 143

INDIAN CONTEXT............................................................................................................................ 144

CHAPTER XXX – ENFORCEMENT OF AWARD ANNULLED AT THE SEAT .................. 147

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 Chapter I – Evolution of International Commercial Arbitration

International Arbitration has gained prominence in the last decade and appears to be the go-to choice
for the resolution of international commercial disputes. Even though this method of dispute resolution
has only recently taken the lime light, the roots of international arbitration go way back to ancient times
first appearing in the 6th Century BC in the city-states of ancient Greece and the Roman Empire.1 While
then the method was used mainly for political disagreements and political disputes2, with the advent of
increasing trade, the method was also often used to settle a commercial dispute.3

The use of arbitration declined in the medieval ages and only scant references were there in Germany,
Italy, France, and England.4 However, with the growth of international trade especially in Europe,
commercial centers such as port cities of the Mediterranean saw a rise in the submission of disputes to
a specialized tribunal with the application of “lex mercatoria” which are a set of customary laws
developed and used by the tradesman.5 Lex mercatoria is often referred to as “customary commercial
law, customary rules of evidence and procedure and the general principle of commercial law”.6

It was in the 17th century that Hugo Grotius, often regarded as the father of international law, wrote
about arbitration and its advantages in the settlement of international disputes.7 Subsequently, in 1698
the arbitration statute, drafted by John Locke, became the law in England promoting settlement of a
dispute with the exclusion of unnecessary legal constraints and difficulties.8

With the turn of the century in 1794, the Jay treaty between Great Britain and the United States saw the
establishment of the arbitral tribunal comprising an equal number of arbitrators delegated by the parties 9
to settle issues that had emerged after the American war of independence. The treaty is considered
remarkable as it set up different types of commissions to settle the disputes between the two state actors.
Majorly there were three types of commission Disputes in relation to boundaries, claims for
compensation due to British Nationals, and claims from US nationals against Great Britain for treatment
of their property. The treaty paved the way not only for the modern arbitration followed today but also
for settling disputes between actors of two different states.

1
Gdbor Szalay, A brief History of International Arbitration, its role in the 21st Century and the examination of
the Arbitration Rules of certain Arbitral Institutions with regards to privacy and confidentiality, 7 (2016).
2
Frank D Emerson, History of Arbitration Practice and Law, 19 l State L R, 1. 155-156, (1970).
3
Temin P, Statistics in Ancient History. Massachusetts Institute of Technology (MIT) Department of Economics
Working Paper No. 13-06 (2013).
4
Gdbor Szalay, A brief History of International Arbitration, its role in the 21sT Century and the examination
of the Arbitration Rules of certain Arbitral Institutions with regards to privacy and confidentiality, 8,9 (2016).
5
W.R. Slomanson, Historical Development of Arbitration and Adjudication. 1 Miskolc J. Int’l Law 2 238, (2004).
6
Guilhem, J. Lex Magica, A Lex Mercatoria Reflection, 37 Thomas Jefferson L R, 1, 125-126, (2014).
7
H.S. Fraser, A Sketch on the History of International Arbitration, 11 Cornell L R 2, 182, (1926).
8
J. Oldham, Arbitration in America, the Early History. 31 Law and History Review 1, 246 (2013).
9
J.T. Newcomb, New Light on Jay's Treaty, 28 American J. Int’l L 4 686-689 (1934).
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In 1768, the New York chamber of commerce was established with the objective of promoting the use
of arbitration between Great Britain and the United States as the only civil tribunal. 10 In France, the
decree of 16 - 24 August 1790 defined arbitration as “the most reasonable means of dispute resolution
between citizens”.11

The industrial revolution in the 19th century spread international trade and commerce to all parts of the
world and arbitration seem like the only viable option to resolve such disputes. The treaty of Guadalupe
Hidalgo in 1848 contained the first arbitration clause which put an end to the Mexican War.12 Following
the line of the Jay treaty, the treaty of Washington was signed in 1871 between Great Britain and the
United States to resolve matters arising out of the Revolutionary War.13

England was the forerunner in developing the culture of arbitration by passing the Common Law
Procedure Act of 1854 which placed commercial arbitral tribunals under the oversight of the domestic
courts for the purposes of reviewing arbitral awards and at the same time the Arbitration Act of 1889
regulated several aspects of commercial arbitration.14

It was in 1899 and 1907 the Hague Peace Conferences that the most important document in the history
of international arbitration i.e. the Hague Convention was adopted by the international community as
the first multilateral treaty using arbitration between states in certain matters and establishing the system
of arbitration. Under the Hague Convention, the Permanent Court of Arbitration with its seat at The
Hague was established creating the first permanent tribunal as opposed to the several ad hoc ones in the
past.15

The Hague Convention paved the way for the several multilateral treaties that would appear in the 20th
century, especially after World War II as foreign investments started to flow and became influential.
Disputes between high profile companies and States started to garn more attention and the impact on
the general public and the business environment became more tangible leaning to the establishment of
more arbitral tribunals in the world of international arbitration.16

Gradually, many chambers of commerce around the world started providing for their own set of
arbitration rules and the freedom to select a jurisdiction to govern international commercial disputes.

10
J.T. Newcomb, New Light on Jay's Treaty, 28 American J. Int’l L 4 686-689 (1934).
11
Noussia K, Confidentiality in International Commercial Arbitration, Springer Verlag Berlin Heidelberg, 14
(2010).
12
H.S. Fraser, A Sketch on the History of International Arbitration, 11 Cornell L R 2, 199-200, (1926).
13
W. R. Slomanson, Historical Development of Arbitration and Adjudication, 1 Miskolc J Int’l L 2, 238 (2004).
14
Noussia K, Confidentiality in International Commercial Arbitration, Springer Verlag Berlin Heidelberg, 14
(2010).
15
M.O Hudson, The Permanent Court of Arbitration, 27 American J Int’l L 3, 441-446, (1933).
16
NEWCOMBE, A. & PARADELL, L. LAW AND PRACTICE OF INVESTMENT TREATIES, STANDARDS OF TREATMENT
CHAPTER 1, HISTORICAL DEVELOPMENT OF INVESTMENT TREATY LAW 21-24, (KLUWER LAW INTERNATIONAL
2009).
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This led to an obvious problem of enforcement of awards passed by different arbitral tribunals all over
the world. To fill this void the Geneva Protocol on Arbitration Clauses and the Geneva Convention on
the Execution of Foreign Arbitral Awards of 1927 was adopted. However, there was a great
dissatisfaction from the Geneva Treaties and so it was the International Chamber of Commerce (ICC)
which proposed a preliminary draft Convention in 1953 for recognition and enforcement of arbitral
awards.

The growth of arbitration requires sample or model rules, which signatory States may utilize and agree
upon to regulate arbitration. This led to the adoption of Arbitration Rules by the United Nations
Commission on International Trade Law (UNCITRAL) in 1976. Along the same lines, there was a need
to create a sample or model law for nations to adopt in their respective countries and thus, in 1985 the
UNCITRAL Model Laws was created.

The purpose of the UNCITRAL Model Law was to help and guide member states with respect to the
regulation of arbitration and provide a model which could be incorporated into the national law of each
country comprising procedure, jurisdiction, the composition of the tribunal, etc.

The Model Law also laid down the scope of interference by domestic courts and the obligations to
respect the choice of the parties to have their disputes settled by arbitration including recognition and
enforcement of the awards. With the Model Law and the UNCITRAL Arbitration Rules providing for
procedural aspect, there was a great need for a neutral governing law. This need was fulfilled in 1994
by the UNIDROIT Principles on International Commercial Contracts.

The Journey from the Geneva Convention to the New York Convention.

After World War I, it was evident that where the international community would see a profit and
peaceful commerce, wars were likely to destroy that profit and it was with this idea in mind that the
ICC was created and the first International Court of Arbitration was set up. The objective was to provide
for an international arbitral process that it could be integrated into a system of compliance effective
across borders.17

The first difficulty that arose was that the arbitration would only be after the agreement has a dispute
which arises, this is called a compromise as has been discussed earlier. In many countries, an agreement
to arbitrate all disputes that might arise in the future in connection with a contract was not valid. It was
also common that, even in countries in which the agreement to arbitrate was valid, it often did not
effectively prohibit a court from taking jurisdiction over the dispute. If one of the parties commenced

17
MARIKE PAULSSON, THE 1958 NEW YORK CONVENTION IN ACTION xxii, 3-4 (2016).
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an action in court in spite of an agreement to arbitrate, there might later be an action for damages for
breach of the agreement to submit the dispute to arbitration, but that tended to be an empty remedy.

It was in this context that the Geneva Protocol on Arbitration Clauses of 1923 and the Convention on
the Execution of Foreign Arbitral Awards, 1927 came into existence providing that “Each of the
Contracting States recognizes the validity of an agreement whether relating to existing or future
differences between the 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 commercial matters or to any other matter capable of
settlement by arbitration, whether or not the arbitration is to take place in a country to whose
jurisdiction none of the parties is subject.”

The arbitral tribunal was to be governed by the will of the parties and by the law of the country in whose
territory the arbitration took place. The content of the Protocol is today incorporated into Articles II and
V (d) of the 1958 New York Convention with only minor changes. However, there were many problems
with the Geneva Convention. While it was never clear as to what was the need for the ICC to present
the preliminary draft convention, the explanatory note claimed that it was necessary to replace the 1927
Geneva Convention.18

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. In particular, the Convention’s provisions prescribe uniform
international rules that:

a. Require national courts to recognize and enforce foreign arbitral awards (Articles III and IV),
subject to a limited number of specified exceptions (Article V);
b. Require national courts to recognize the validity of arbitration agreements, subject to specified
exceptions (Article II); and
c. Require national courts to refer parties to arbitration when they have entered into a valid
agreement to arbitrate that are subject to the Convention (Article II (3)).

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

18
INTERNATIONAL CHAMBER OF COMMERCE [ICC], Enforcement of International Arbitral Awards.
Report and Preliminary Draft Convention (ICC Publication No. 174, 1953), reprinted in ICC Ct. Bull. 32 (1998);
Convention on the Recognition and Enforcement of Foreign Awards, Travaux Preparatoires - Final Act and
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, at 32, U.N. DOC E/Conf.26/8/Rev.1
(1958). For this Proposal for a new Convention and Explanatory Note, see
http://www.newyorkconvention.org/travaux+preparatoires/history+1923+-+1958.
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agreement and public policy; they do not include a review by a recognition court of the merits of the
arbitrators’ substantive decision.

The problem with the Geneva Convention was that it required the awards to be first confirmed in the
jurisdiction where they were made before they could be enforced in another jurisdiction. This
requirement of two separate judicial processes was known as double exequatur.19 One of the goals of
the New York Convention was to simplify enforcement without having to resort to this requirement of
double exequatur and creating an entirely new structure for enforcement which currently exists in
Article IV and V of the New York Convention.

The New York Convention shifted the burden of proof to the respondent and created a presumption of
enforceability in favor of the arbitral award. The idea was to make the enforcement of the award easy
and in a speedy manner. The result of the changes in the New York Convention was that 157 Countries
signed the convention and over 1800 decisions have been rendered worldwide over the treaty.20

Distinctions between the Geneva Convention and the New York Convention

Broadly the differences between the two Conventions i.e. the 1927 Geneva Convention and 1958 the
New York Convention are as follows:

Under the Geneva Convention, a party seeking enforcement had to prove the negative fact that there
was no reason for the refusal. Whereas, under the New York Convention the party seeking enforcement
had to supply the original arbitral award or a duly certified copy of it and the original arbitration
agreement or a duly certified copy of it to get the enforcement done. The party resisting enforcement
has to prove, why the enforcement should be refused, the only exceptions are either that the subject
matter is not capable of settlement by arbitration or that enforcement of award contrary to the public
policy of that country. Apart from these two exceptions the burden of proof was reversed against the
respondent and in the favor of the person seeking the enforcement.

Under the Geneva Convention, the party seeking enforcement of the award had to prove that the award
was final in the country where it d been made, whereas, under the New York Convention the party
resisting enforcement has to prove “the award has not yet become binding on parties, or has been set
aside or suspended by competent authority of the country in which, or under the law in which, that
award was made.”

19
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 213 (2ND
EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
20
Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (June 10, 1958), 330
U.N.T.S.
38, available at http://www.newyorkconvention.org [hereinafter ―New York Convention].
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Another key difference between the two conventions is that the Geneva Convention restricted the
autonomy of the parties as proceeding under the Geneva Convention had to be in accordance with both,
the agreement of the parties and the law governing the arbitral procedure. Under the New York
Convention, the enforcement of an arbitral award can be challenged if the composition of the arbitral
tribunal or the arbitral procedure was not in accordance with the agreement of the parties, failing such
agreement, not in accordance with the law of the country where the arbitration took place. Clearly, the
New York Convention affords considerably greater freedom in the conduct of the arbitration
proceeding. Parties are at liberty to refer to existing arbitration rules or draft rules themselves for the
arbitration proceedings, the nomination of arbitrators and matters relating to evidence, etc. It is only in
the circumstances that the parties failed to provide for these things that the law of the seat would apply.

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 Chapter II – Definition of Arbitration

Arbitration is a reference to the decision of one or more persons of a particular matter in difference
between the parties. It is the submitting of a disputed matter to the judgment of one or more persons
called arbitrators. In its broadest sense, arbitration is a substitution, by consent of parties, of another
tribunal for the tribunals provided by the ordinary processes of law; a domestic tribunal; as contra-
distinguished from a regularly organized court proceeding according to the course of law; depending
upon the voluntary act of the parties disputant in the selection of judges of their own choice. Its object
is the final disposition, in a speedy and inexpensive way, of the matters involved, so that they may not
become the subject of future litigation between the parties.

HIRST LJ described arbitration as “a procedure to determine the legal rights and obligations of the
parties judicially, with binding effect, which is enforceable in law, thus reflecting in private proceedings
the role of a Civil Court of law”.

FOUCHARD, GAILLARD, GOLDMAN remarks that “arbitration is a device whereby the settlement of
a question, which is of interest for two or more persons, is entrusted to one or more other persons;
the arbitrator or arbitrators; who derive their powers from a private agreement, not from the
authorities of a State, and who are to proceed and decide the case on the basis of such an agreement.”
(a key definition in bold.)

Sir ROBERT RAYMOND C.J. was held to have stated: “An arbitrator is a private extraordinary judge
between party and party, chosen by their mutual consent, to determine controversies between them.
And arbitrators are so called because they have an arbitrary power; for if they observe the submission
(arbitration agreement) and keep within due bounds, their sentences are definite from which there lies
no appeal.”

Further, Q. HOGG, a renowned scholar, defines arbitration as a reference for binding judicial
determination of any matter in controversy capable of being compromised by an agreement by way of
accord and satisfaction or rendered arbitrable by statute between two or more parties to some person or
persons other than a Court of competent jurisdiction.

Another scholar RONALD BERNSTEIN describes arbitration as a procedure “Where two or more persons
agree that a dispute or a potential dispute between them shall be decided in a legally binding way by
one or more impartial persons in a judicial manner, that is upon evidence put up before him or them,
the agreement is called an arbitration agreement or a submission to an arbitration. When, after a
dispute has arisen, it is put before such person or persons for the decision, the procedure is called
arbitration, and decision, when made, is called an award.”

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GARY B BORN, the most seminal authority on the international commercial arbitration, defines
arbitration as “a process by which parties consensually submit a dispute to a non-governmental
decision-maker, selected by or for the parties, to render a binding decision resolving a dispute in
accordance with neutral, adjudicatory procedure affording the parties an opportunity to be heard.”

REDFERN AND HUNTER, another major authority, opines that arbitration is essentially a very simple
method of resolving disputes. Disputants agree to submit their disputes to an individual whose judgment
they are prepared to trust. Each puts its case to this decision maker, this private individual—in a word,
this ‘arbitrator’. He or she listens to the parties, considers the facts and the arguments, and makes a
decision. That decision is final and binding on the parties—and it is final and binding because the parties
have agreed that it should be, rather than because of the coercive power of any state. Arbitration, in
short, is an effective way of obtaining a final and binding decision on a dispute, or series of disputes,
without reference to a court of law (although, because of national laws and international treaties such
as the New York Convention, that decision will generally be enforceable by a court of law if the losing
party fails to implement voluntarily).

In the Indian Context, arbitration is defined as per section 2(1) (a) of the Arbitration and Conciliation
Act, 1996, where arbitration means any arbitration whether or not administered by the permanent
arbitral institution.

Definition of ‘Commercial’

The phrase “Commercial” in the international commercial arbitration needs a close examination. There
are no uniform criteria to determine as to what disputes are commercial. The term ‘commercial’ can be
understood in the context of international arbitration wherein arbitration is related to two parties
resolving a dispute having commercial relations between them and the dispute stems from that
commercial relationship. However, there cannot be an absolute definition of the word commercial, as
different nations have adopted their own definition. To ascertain whether the dispute is commercial or
not, it is seen if the parties attached to it are carrying out anything commercial in nature. It is pertinent
to specify, whether the nature of the dispute or the transaction involved or undertaken is commercial or
not.

As mentioned above, none of the international convention concretely defines what commercial means
but there are some attempts. The European Convention on International Commercial Arbitration 1961
(Geneva) does not specifically define “commercial”. It gives a general definition with a reference – “to
arbitration agreements concluded for the purpose of settling disputed arising from international trade”
in the convention.21 Similarly, Panama Convention in its text of one of the articles22 only uses the term

21
Article 1( 1 ) (a), Geneva Convention.
22
Article 1, Inter-American Convention on International Commercial Arbitration, 1975 (Panama)
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“commercial”, when it says, “ An agreement in which parties undertake to submit to arbitral decision
any differences that may arise or have arisen between them with respect to a commercial transaction
is valid…”

In the New York Convention, the distinction between the commercial and non-commercial arbitration
is reflected under Article 1(3) which contains what is known as commercial reservation. The reason
why it was inserted because, in the absence of this provision, it would be practically impossible for
some civil law countries, which has their reservations pursuant to commercial transactions and non-
commercial transaction. Interestingly, convention approximately one-third of the contracting states
have made use of this commercial reservation enshrined under the New York Convention.

The New York Convention argues that the term ‘commercial’ should be characterized by the virtue of
‘national law’ because the municipal courts have time and again interpreted the scope of the term
‘commercial’.

However, a significant attempt is made by the Model Law to come up with a tentative definition
envisaged in the footnote to an article23 which reads as:

The term commercial should be given a wide interpretation so as to cover matters arising from all
relationships of commercial nature, whether contractual or not. Relationships of a commercial nature
include, but are not limited to, the following transactions: any trade transaction for the supply or
exchange of goods or services ; distribution agreement; commercial representation or agency ;
factoring ; leasing constructions of works ; consulting ; engineering; licensing ; investment ; financing
; banking ; insurance ; exploitation agreement or concession ; joint venture and other forms of
industrial business cooperation; carriage of goods or passengers by air, sea rail or road”.

This definition though contained in the footnote, the drafters have given an inclusive and open-ended
description to the term “commercial” which would be applicable to all aspects of international business.
Internationally, the approach has been to interpret the term “Commercial” as widely as possible and the
definition given by Model Law is more or less accepted on a universal scale and it serves as an important
purpose.

It is pertinent to note that a number of countries have enacted their Arbitration laws based on the Model
Law on arbitration, which make reference to commercial arbitration or commercial transactions.
However, none of these jurisdictions have defined the term “commercial”. Further, there were some
attempts made by the arbitral institutions to define the term commercial such as The CIETAC (China
International Economic and Trade Arbitration Commission) Arbitration Rules24 which defins

23
Article 1 , UNCITRAL (United Nations Commission on International Trade Law) Model Law(i.e. Model Law
on International Commercial Arbitration, adopted by UNCITRAL on June 21, 1985
24
Article 2.
17
“Commercial Disputes” to “include disputes between an enterprise with a foreign investment and
another Chinese legal or physical person and/or other economic organisations through utilizing the
capital, Technology or service form foreign countries, international organisations or form the Hong
Kong SAR, Macao and Taiwan regions.25

The Moscow International Commercial Arbitration Court (ICAC) paragraph 1(2) of 1995 Rules is
another definition paragraph, which provides that matters which may be referred to it include disputes
arising from contractual or other civil law relationship in the course of foreign trade and other forms
of international economic affairs between enterprises with foreign investment, international
associations and organisations set up in the territory of the Russian federation and from purchase and
sale(delivery) of goods, contracts of service or labour, exchange of goods and/ or services, carriage of
goods and passengers, commercial representation or agency, leasing, scientific-technical exchange,
exchange with other results of intellectual activity, construction of industrial and other objects,
licensing operations, investment, crediting and settlement operations, insurance, joint ventures and
other forms of industrial and business co-operation.26

The United-States of America has taken the most liberal approach as it excludes only matters arising
out of legal relationships, whether contractual or not, which are not considered as commercial under the
national law of the US27 from the scope of New York Convention. In US even the international
employment contracts have been considered to be a commercial relationship28, itself shows the liberal
approach, which it has adopted. In the case of Societe Generale de Surveillance, S.A. v. Rayetheon
European Management and Systems Co., an American company was involved in a dispute with a French
Company in a contract for the field testing, inspection, and evaluation of missiles. Even though the
contract was strictily one about services, and not about an exchange of commodities, the court held that
it was commercial. The court also observed that there is a strong judicial policy favouring the
submission of contractual disputes to arbitration particularly under the provisions of the Federal
ArbitrationAct and the term commerce should be broadly construed.

25
CIETAC Rules, Articles 2(3) and (4).
26
Supra n. 1, at p. 55.
27
U.S. Reservation on Accession to the New York Convention (took effect from 29 December 1970). It is
understood that personal , matrimonial and domestic employment matters are not of a commercial nature as quoted
in Supra n.1 at p. 56.
28
See paragraph International Inc. (Nova Scotia, Canada) and paragraph Inc. (US) and Pictorious Incorporated
(Nova Scotia, Canada) and Philip Cox and Paul Davies v. Ralph Barhydt (US) 928 F Supp 983, XXII YBCA 901
(1998) (ND Cal 1996).
18
While some countries while adopting the Model Law incorporated the text of the footnote to Article
into a provision of their law29 some just reproduced the text in a schedule30 and others have not included,
for various reasons, the definition of “Commercial” into their laws.31

Meaning of Commercial under Indian Law

As far as India is concerned, India has adopted a different approach whereby it has clubbed the term
“commercial” with “international commercial arbitration” and has defined is along with in Section 2(1)
(f), The Arbitration and Conciliation Act, 1996. 32 The “commercial” aspect of the term defined as:
“dispute arising out of legal relationships, whether contractual or not, considered as commercial under
the law in force in India” according to Section 2. The meaning of the term derives its importance from
the fact that it demonstrates the extent to which the scope of international arbitration would be covered
by the Act.

In case an international arbitration does not come within the meaning of term “commercial” as used in
the 1996 Act, it would not be considered as arbitrable in India.33 Similarly, if India were to adopt a
restricted definition of the term “commercial” , it could lead to foreign awards not being enforced ,
since the subject matter of the dispute was not one that the Indian law would have considered as
commercial34. It seems the legislature has deliberately omitted any reference to the explanatory note of
Article 1(1) of the UNCITRAL Model Law on International Commercial Arbitration also as to give
discretion to the courts to decide the issue based upon the facts and circumstances of each case. 35 This
would also enable the courts to expand or narrow the definition of “commercial” as the case may be
talking onto accounts the contemporary requirements36 or peculiar facts before the court.

The judicial trend in recent in recent times display a trend where the courts are taking a broader view
of the term “Commercial” or “commercial transaction”. The court in the case of Atibari Tea Co. Ltd v.
State of Assam37, the court has made an effort to describe what all activities can come under commercial
nature. It held that, “in the complexities of modern conditions, in their wide sweep are included carriage
of persons and goods by road, rail, air, and waterway, building contracts, banking, insurance,
transactions in the stock exchanges and forwards markets, communication of information, supply of

29
The countries like Canada (British Columbia International Commercial Arbitration Act 1986), Bulgaria,
,Cyprus, Egypt, Ireland, Nigeria, Oman, Russia and Ukraine;
30
These countries are Australia, Bahrain, Bermuda, Canada, Malta, and Singapore.
31
These countries are Germany , Greece , Hong Kong , Hungary, Iran, Libya and Zimbabwe.
32
Section 2(1)(f), The Arbitration and Conciliation Act, 1996.
33
See Supra n. 47 at p. 135.
34
Section 44 of the Act reads: “ … unless the context otherwise requires, “foreign award” means an arbitral award
on differences between persons arising out of legal relationships, whether contractual ornot, considered as
commercial under the law enforced in India…”
35
See supra n. 47 at p. 135.
36
Lakshmi Jambholkar, “ International Commercial Arbitration : Recent Developments in Indian Law”,
19(6)Journal of international Arbitration, 601-68(2002) p. 602.
37
AIR 1961 SC 232.
19
energy, postal and telegraph services and many more activities-too numerous to be exhaustively
enumerated- which may be called commercial intercourse.”

But it does not mean that if the agreement is merely commercial nature, it will fall under the
international commercial arbitration and will invoke the provision of the arbitration laws. In fact, it
must also be established that the dispute is commercial by virtue of a provision of law or an operative
legal principle in force in India. In Indian Organic Chemicals Ltd. v. Chemtex Fibres Ltd., the Bombay
High court held this view and remarked “In order to involve the provision of the (convention), it is not
enough to establish that an agreement is commercial. It must be also be established it is commercial by
virtue of a provision of law or an operative legal principle in force in India.” 38

Further, in Renusagar Power Co. Ltd v. General Electric Co39., the courts have shed more light on this
issue and have held that “It is obvious that since the Act is calculated and designed to subserve the
cause of facilitating international trade and promotion thereof by providing for speedy settlement of
disputes arising in such trade through arbitration any expression or phrase occurring therein should
receive, consistent with its literal grammatical sense a liberal construction.” The court, in Fatehchand40
observed that any service or activity which in the modern complexities of business would be considered
to be a lubricant for the wheels of commerce is ‘commercial’.

A comprehensive remark of the court in the case of Kamani Engg. Corp. Ltd. v. Societe De Traction
Et. D’ Electricity Sociate Anonyme41 pertaining to the issue is worth mentioning:

“It is difficult to find the exact meaning of the phrase “matters considered as commercial under the
law in force in India”. Neither side was been able to point out any particular law wherein the phrases
“commercial” or “matters commercial” have been defined. The intent of the Legislature while using
the above phrase was that in matters of commercial contracts foreign arbitrations and awards should
be recognized and enforced. Having regard to the purpose of the Act, widest meaning must be given to
the word “commercial”. The contract, in this case, was on the face of it only a contract for technical
assistance; it did not involve the defendants into any business of the plaintiffs; it was not in any sense
participation in profits between the parties; by this contract, the defendants refused to be involved into
any business of the plaintiffs and/or any contracts of the plaintiffs; they have scrupulously kept
themselves out of any commercial relations with the plaintiffs. Accordingly, it was held that contract
was more like a retainer or contract that was made between a solicitor, a counsel and an advocate on
the one hand and a client on the other. Such a contract cannot be described as commercial.”

38
AIR 1978 BOM 106.
39
1994 Supp (1) SCC 644.
40
Fatechand Himmatlal v. State of Maharashtra, 1977 AIR 1825.
41
AIR 1965 Bom 114.
20
The Court, on some occasions, took a narrow approach. In Josef Meisanur Gmbr and Co. v. Kanauria
Chemicals and Industries Ltd.42 the court was of the view that a contract for supply of technical Know-
how and expertise to a party consideration of fee payable by the other party did not contain any element
for transaction between merchants and traders as understood in India la and so did not qualify as
“commercial”. Likewise, view has been expressed by some other High courts. 43

44
Similar narrow approach was reflected in Indian Organic Chemicals Ltd. v. Chemtex Fibres Ltd.,
where Bombay High Court held that … In order to involve the provisions of (the convention), it is not
enough to establish that an agreement is commercial. It must also be established that it is commercial
by virtue of a provision of law or an operative legal principle in force in India”.

However, this view was overturned by the Bombay High court in European Grain & Shipping Ltd. v
Extractions (P) Ltd.,45 holding that, the mere use of the word “under” preceding the words “law in force
in India” would not, necessarily mean that you have to find out a statutory provision or provision of law
which specifically deals with the subject of a particular legal relationship being commercial in nature.
It was stated that the contract, which was for sale and purchase of a commodity, was clearly a contract
which brought about a legal relationship’, which was commercial in nature under the Indian law.

Similar view was expressed by the Gujrat High Court in Union of India v. Owner & Parties Interested
in Motor Vessel M/V Hoegh Orchid46, when the court dealing with the question as to whether the
contract in question was of “Commercial” nature, said that the term “commerce” … is a word of the
largest import and takes in its sweep all the business and trade transactions in any of their forms,
including the transportation, purchase, sale and exchange of commodities between the citizens of
different countries.

However, the Supreme Court in its landmark judgment of R.M. Investment trading Co. v. Boeing Co.,
47
took a progressive view by expanding the scope of “Commercial” used in Foreign Awards
(Recognising and Enforcement) Act, 1961. The court observed that the expression “commercial” has
to be construed broadly, having regard to manifold activities, which are an integral part of international
trade today. In this case, there was an agreement between an Indian party and Boeing Company to
provide consultancy services for promotion of sale of Boeing Aircraft in India. Such transactions was
held to be commercial by the court as it observed, “the Indian party was required to play an active role
in promoting the sale of the aircraft of Boeing to customers and was required to provide ‘commercial
and managerial assistance and information which may be helpful to Boeing’s sales efforts with

42
AIR 1986 Cal. 45.
43
Suresh Sinha v. Akuhari, AIR 1957 Pat. 256; National Thermal Power Corporation v. Singer (1992) 2 Comp.
L J 256.
44
AIR 1978 Bom. 106
45
AIR 1983 Bom. 36.
46
AIR 1983 Guj. 34.
47
AIR 1994 SC 1136.
21
customers’. This would show that the relationship between Indian Party and Boeing was commercial in
nature.

An interesting question arose in Harendra H Mehta v. Mukesh H Mehta48, where in the court continuing
its progressive interpretation trend of “Commercial” held that an arbitral award dividing a jointly run
family business between two brothers is a “commercial” award, stating that the award satisfied all the
requirements of international commercial arbitration.

The wider interpretation enlarges the scope for the uses of ADR mechanism. Commercial disputes are
suitable for resolution through ADR mechanisms/ processes, as the likely chances for the intrusion of
public interests are very bleak. Thus, it is clear that there is lack of clarity in India on the meaning of
“commercial” in the filed of international commercial arbitration. although the act, is arbitration
friendly in tenure, nevertheless there is a danger that the court exercising its discretion in settling
disputes arising from the contract by applying the provisions of the act, may well rely on past
proceedings, as there is no statutory definition of “Commercial”.

While it is impossible to exhaustively list each and every commerical relationship, an express
Amendment to the Indian Act in the main body of the statute, similar to Footnote 2 of the Model Law,
would help in bringing about clarity and certainty. It would be advantageous for the global business if
courts globally give liberal construction to commercial. Only then, international commercial arbitration
would be ble to subserve the cause of facilitating international trade and promotion thereof by providing
for speedy settlement of disputes arising in such trade through arbitration. Otherwise, the world business
community would be busy interpreting the word ‘commercial’ and in the process defeating the very
purpose of commercial arbitration.

Definition of ‘International’

The term ‘international’ draws the line between arbitrations which are domestic or national from those
which go beyond national limits, called as ‘international’ or ‘transnational’.49 Technically, it can be
argued that every arbitration is a national or a domestic arbitration since they are eventually taking place
at some country, in accordance with the laws applicable in that particular country. 50 However, in reality,
the same may not be true if not interpreted narrowly. Arbitration proceedings are conducted in
accordance with the place of arbitration, i.e. law of the seat (lex arbitri), however, in international

48
AIR 1999 SC 2054.
49
Judge Jessup used this term to describe rules of law that govern cross-border relationships and transactions: see
Jessup, Transnational Law (Yale University Press, 1956).
50
Francis A. Mann, Lex Facit Arbitnim, 2(3) ARB. Int’l 245 (1983).
22
arbitration, parties are usually not connected with the law of the seat i.e. the seat is usually a neutral
country.51

The Model Law explains when an arbitration is international. According to Article 1 (3) of the Model
law, arbitration is international if:

a. the parties to an arbitration agreement have, at the time of the conclusion of that
agreement, their places of business in different States; or

b. one of the following places is situated outside the State in which the parties have their
Places of business:

I. the place of arbitration if determined in, or pursuant to, the arbitration

agreement;

II. any place where a substantial part of the obligations of the commercial
relationship is to be performed or the place with which the subject-matter of the
dispute is most closely connected; or

c. The parties have expressly agreed that the subject-matter of the arbitration agreement
relates to more than one country.

The difference between domestic and foreign arbitration can be determined by examining the
relationship, dispute, and connection between the parties i.e. if any foreign elements are found while
examining which provides for possible connection or nexus with other jurisdiction, the subject matter
will be considered to be an ‘International’.52

There are various factors which determine whether the arbitration in international or not such as:53

a) The nationality and domicile of the arbitrator or arbitrators;

b) The nationality of the parties;

51
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 1.21
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
52
EMMANUEL GAILLARD AND JOHN SAVAGE CHAPTER I - DEFINITION OF INTERNATIONAL COMMERCIAL
ARBITRATION', IN EMMANUEL GAILLARD AND JOHN SAVAGE (EDS), FOUCHARD GAILLARD GOLDMAN ON
INTERNATIONAL COMMERCIAL ARBITRATION, 46 (KLUWER LAW INTERNATIONAL; KLUWER LAW INTERNATIONAL
1999).
53
EMMANUEL GAILLARD AND JOHN SAVAGE CHAPTER I - DEFINITION OF INTERNATIONAL COMMERCIAL
ARBITRATION', IN EMMANUEL GAILLARD AND JOHN SAVAGE (EDS), FOUCHARD GAILLARD GOLDMAN ON
INTERNATIONAL COMMERCIAL ARBITRATION, 46, 47(KLUWER LAW INTERNATIONAL; KLUWER LAW
INTERNATIONAL 1999).
23
 c) The domicile, residence or company headquarters of the parties;

d) Other connecting factors related to the substance of the dispute (such as the
place where the contract was signed, the place where it was performed, the
location of any property involved and the place where any loss was suffered).

e) The nationality or headquarters of the arbitral institution;

f) The seat of the arbitration;

g) The place where the award will be enforced;

h) The law chosen to govern the arbitral proceedings;

i) The law chosen to govern the merits of the dispute

In India, international commercial arbitration is defined under Section 2 (1) (f) of the Arbitration and
Conciliation Act, 1996, which mandate the requirement of one of the parties to be a “ foreign entity”
for arbitration to be international commercial arbitration.

This section and the underlying issue was closely examined in the controversial judgment of TDM
Infrastructure Pvt. Ltd. v. UE Development India Pvt. Ltd.54 (“TDM”). In this case, there were two
parties which were companies registered under the Companies Act of 1956. However, the directors and
the shareholders of the petitioner company were residents of Malaysia and the Board of Directors of
the petitioner also sat in Malaysia. The respondent entered into a contract with the petitioner, which
also contained an arbitration clause. This arbitration clause mandated that the law applicable in case of
a dispute would be the Indian Arbitration Act of 1940 and amendments thereafter.

Subsequently, differences arose between the parties. When the arbitration agreement was resorted to,
the Respondent proposed an amendment to the arbitration clause by changing the venue of arbitration
to Kuala Lumpur, Malaysia, and applying the law of Malaysia, and the Malaysian Arbitration Act of
2005. This proposal was rejected by the petitioner, subsequent to which both parties proposed nominees
that were rejected by the other party. Therefore, an application was made under Sections 11(5) and
11(6) of the Arbitration and Conciliation Act of 1996 for the appointment of a sole arbitrator.

Section 11 of the Arbitration & Conciliation Act, 1996 deals with the procedure to appoint arbitrators.
Section 11(12) states that only in cases of International Commercial Arbitration, the Chief Justice of
India can exercise jurisdiction to appoint an arbitrator. In all other matters i.e. domestic arbitration, the

54
(2008) 2 Arb LR 439.
24
appointment of the arbitrator has to be carried out by Chief Justices of High Courts. Thus, the matter
hinged upon the issue whether this was a case of International Commercial Arbitration.

Section 2(1)(f)(ii) of the Arbitration & Conciliation Act defines International Commercial Arbitration
as an arbitration where at least one of the parties is a body corporate which is incorporated in any
country other than India. Section 2(1)(f)(iii) also defines International Commercial Arbitration wherein
a party is a company or an association or a body of individuals whose central management and control
is exercised in any country other than India.

It was contended by the UE Development group that as TDM Infrastructure Group is incorporated in
India, it should also be legally deemed to be situated in India notwithstanding the fact of its directors
being foreign nationals. Thereby, as both the companies would be incorporated in India, Section
2(1)(f)(ii) would not be applicable and the matter would be one of domestic arbitration. On the other
hand, TDM Infrastructure raised the contention that as its central management and control is exercised
from Malaysia, its day-to-day management does not take place in India. Therefore, as per Section
2(1)(f)(iii), it was International Commercial Arbitration and the Chief Justice of India could appoint the
arbitrator.

The Supreme Court held that the present case is not a case of international commercial arbitration, as
both the parties have been incorporated in India and thus, it does not have the jurisdiction under the Act
to nominate an arbitrator in this case. The Supreme Court did not accept the contention of the petitioner
that the court had the jurisdiction to appoint an arbitrator in the present case as the central management
and control of the company was exercised in Malaysia and this would bring it under the definition of
international commercial arbitration provided in section 2(1)(f)(iii). The court held that in a case where
such a company is registered in India and in a dispute where the opposite party is also an Indian entity,
refuge to a foreign law cannot be taken. The court was of the opinion that when both the companies are
registered in India, section 2(1)(f)(ii) would be taken into account and not section 2(1)(f)(iii).

Regarding the question as to whether the arbitration agreement falls under the purview of Section 2(1)(f)
of the Act, the Court held that the determination of the nationality of the parties was crucial in the matter
of appointment of an arbitrator. A company that is incorporated in India can therefore only have Indian
nationality and where both the parties have Indian nationalities, then the arbitration between them
cannot be said to be an international commercial arbitration. Thus the question of applicability of clause
(iii) of Section 2(1)(f) would not arise.

The reasoning in TDM failed to take into consideration the use of the word “or” in between Section
2(1)(f)(ii) and (iii) and consequently ignored the intention of the Legislature that a company would be
deemed to be a foreign national either if it was incorporated outside India or if its central management
was located outside India. The Supreme Court clearly went against what is expressly written in the Act.

25
Thus, the court has failed to provide for a solid reasoning to support its decision. As a consequence, an
Indian subsidiary of a foreign corporate cannot seek to indulge in international commercial arbitration
under the 1996 Act with another Indian entity or individual. In other words, any foreign party would
think twice before conducting business with an Indian company, as the arbitration clause would then
get subject to Indian Courts even if the place of functioning and management of the company is
different.

The judgment marked out the scope of international commercial arbitration and domestic arbitration by
testing them on the criterion of nationality and domicile. Such narrow approach is not in line with the
international trends and especially in this present era of globalization, when the contracts between the
companies are becoming more and more complex by the day and the jurisdictions are blending into
each other, such narrow approach is contradictory to the essence of the arbitration laws which is to
make it pro arbitration and respect the party autonomy.

Unfortunately, TDM inspired the Law Commission to propose an amendment to the definition of
international commercial arbitration, in Section 2(f)(iii) by removing the reference to a company, which
is already covered in Section 2(f)(ii). The intention behind the proposal was that the test for determining
the residence of a company must be based on the its place of incorporation and not the place of central
management/control. This re-enforced the place of incorporation principle laid down by TDM.

The amendment made it clear that the place of incorporation shall be the sole factor to determine
whether a company/body is a foreign national for the purpose of deciding whether arbitration qualifies
as an international commercial arbitration. Following the amendment, the position of law is that in an
arbitration between an Indian party and a company/body corporate which

1. Is incorporated outside India, irrespective of the place of central management of the body
corporate, the arbitration would be classified as an international commercial arbitration.
2. Is incorporated in India, irrespective of the place of central management of the body corporate,
the arbitration would be not be an ICA.

26
 Chapter III – The Monopoly of International Arbitration

Arbitration as a method of dispute resolution is used in almost 90 % of the international contracts. There
is a dearth of any institutional or organizational mechanism which may provide the same benefit that a
mechanism of arbitration provides. Therefore, it may not be out of place to say that the international
commercial arbitration enjoys the monopoly of being the most preferred dispute resolution method
across jurisdictions and borders.

Neutrality

One of the key problems in international trade dispute was a crucial question of litigation before which
party’s national court? The inherent fear being that the courts were likely to favor the resident of their
country as opposed to sitting in judgment with impartiality and independence. Sometimes the concern
was also that the courts in a particular country might lack a connection with any of the parties or with
the subject matter of the disputes. International commercial arbitration addresses both these concerns
as this method secures a high degree of neutrality as parties can choose arbitrators of their choice, who
can come from a different nationality, ethnicity, different legal background or non-legal background.
While many consider, nationality to raise the same concern as to the domestic court, sometimes having
an arbitrator of the nationality of one of the parties is essential to understand cultural differences, trade
and usage, customs and very often the economic and business aspects of the dispute.

International Enforceability

Arbitration scores over all other forms of dispute resolution as it provides for a binding decision now
enforceable in 183 signatories of the New York Convention. At the end of the arbitration (if no
settlement has been reached), the arbitral tribunal will issue its decision in the form of an award. In this
regard, three points should be emphasised. First, the end result of the arbitral process will be a binding
decision and not a recommendation that the parties are free to accept or reject as they please. Secondly
the award will be final; it will not, as is the case with some court judgments, be the first step on a ladder
of appeals, like an expensive game of ‘snakes and ladders’. Thirdly, once the award has been made, it
will be directly enforceable by court action, both nationally and internationally.

Advantages

The monopoly of international commercial arbitration exists because of its various inherent advantages
which are missing in other forms of dispute resolution.

Flexibility

Alongside this neutrality, the flexibility to hold hearings at any place and time in the world makes
arbitration extremely attractive to those with a busy schedule and located at different parts of the world.
27
Moreover, with over 80 jurisdictions that have adopted the Model Law with almost no or minor
amendments, the consistency, predictability and enforcement concerns have all been addressed. The
national courts of various jurisdictions have adopted the Model Law which are bound to reject the
unwarranted challenges and interference in the arbitral process. There is also a sufficient evidence of
specialized commercial and arbitration courts being set up in Dubai, Singapore, Germany, and England
with the broad objective of promoting arbitration in these jurisdictions.55

Party Autonomy

One other advantage for the monopoly of international commercial arbitration is the ability of the parties
to choose from a pool of experience of international arbitrators who are more likely to have a business
mindset and who are more up to speed with international commerce. These advantages often reflect
very clearly in the creation of arbitral institutions. An arbitral institution has experienced arbitrators
empaneled and whenever parties opt to have their disputes resolved by referring the disputes to one of
the arbitration institutions, the parties elect their choice of arbitrators from those empaneled with the
institution, thereby ensuring both expertise and neutrality.

Another key feature of arbitration is its advantage of party autonomy or party control i.e. the ability and
freedom of the parties to choose not only their arbitrators but also the procedure to be followed by the
arbitral tribunal. Very often, and especially in the country like India, several judges don’t have the
required know-how, technical expertise and commercial understanding to adjudicate disputes in niche
industries and hence arbitration scores yet again as the go-to choice for dispute resolution. Furthermore,
arbitration helps in reducing and almost eliminating prejudices, assumptions, and principles of judge
acquired by years of training and practice in international law.

Confidentiality

Arbitration continues as the method of choice because it provides parties the confidentiality that is never
available in a courtroom trial. With the modern age and the advent of social media, trial by media and
trial by social media have become more frequent than ever and arbitration is the only avenue to litigate
a cause without public attention. There may be trade secrets or competitive practices to protect, or there
may simply be a reluctance to have details of a commercial dispute (or some bad decision making)
made the subject of adverse publicity.56

55
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 1.104
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
56
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 1.105
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
28
Additional Powers of Arbitrators

Sometimes, an arbitral tribunal may possess greater powers than those of a judge. For example, under
some systems of law or some rules of arbitration, an arbitral tribunal may be empowered to award
compound interest, rather than simple interest, in cases in which the relevant court has no power to do
so.57

Continuity of Role

Finally, there is a useful continuity in arbitration: an arbitral tribunal is appointed to deal with one
particular case, and its task is to follow that case from beginning to end. This enables the tribunal to
become acquainted with the parties, their advisers, and the case, as it develops through the documents,
pleadings, and evidence. Such familiarity should help to move the case along—and it may indeed
facilitate a settlement.58

Disadvantages

Conflicting Awards

There is no system of binding precedents in international arbitration—that is, no rule that means that an
award on a particular issue, or a particular set of facts, is binding on arbitrators confronted with similar
issues or similar facts. Each award stands on its own. An arbitral tribunal that is required, for example,
to interpret a policy of reinsurance may arrive at a different conclusion from that of another tribunal
faced with the same problem. The award of the first tribunal, if it is known (and it may not be known,
because of confidentiality) may be of persuasive effect, but no more.59

Judicialization

It means that the arbitrations tend to be conducted more frequently with procedural intricacy and are
more often subjected to judicial intervention and control. Moreover, procedures such as testimony of
witnesses and taking documents on record are time consuming and may cost considerable amount of
money.60

57
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 1.106
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
58
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 1.107
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
59
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 1.116
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
60
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 1.118
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
29
Costs

International arbitration was once a relatively inexpensive method of dispute resolution. It is no longer
so. There are several reasons for this. First, the fees and expenses of the arbitrators (unlike the salary of
a judge) must be paid by the parties—and in international arbitrations of any significance, these charges
are substantial. Secondly, it may be necessary to pay the administrative fees and expenses of an arbitral
institution— and these too may be substantial. It may also be thought necessary to appoint a secretary
or ‘administrative assistant’ to administer the proceedings. Once again, a fee must be paid. Finally, it
will be necessary to hire rooms for meetings and hearings, rather than make use of the public facilities
of the courts of law.61

Delay

Finally, a major complaint is that of delay, particularly at the beginning and at the end of the arbitral
process. At the beginning, the complaint is of the time that it may take to constitute an arbitral tribunal,
so that the arbitral process can start to move forward. At the end of the arbitration, the complaint is of
the time that some arbitral tribunals take to make their award, with months—and sometimes a year or
more—passing between the submission of post-hearing briefs and the delivery of the long-awaited
award.62

61
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 1.123
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
62
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 1.126
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
30
 Chapter IV – Overview of the Regime Governing International
Commercial Arbitration

In most arbitrations, the primary task of the arbitrators is to understand the facts and to apply the contract
terms to the facts. Most often than not, procedural issues are addressed by the rules chosen by the
parties. Though one may gather the impression that arbitration is governed entirely by the choice of the
parties and the parties are free to choose whatever they want, it must be remembered that the contract
of the parties and their disputes do not exist in a legal vacuum. In fact, it is a combination of layers of
laws and rules that are applicable to international commercial arbitration.63 The following are the
essential aspects of regulatory framework that merits a discussion.

Agreement of the Parties

The first and foremost starting point of the regulatory framework is the agreement of the parties. This
defines the contours of the whole arbitration process beginning with the most fundamental requirement
i.e. the consent to submit the resolution of the dispute to arbitration. If the arbitration agreement or the
agreement of the parties becomes invalid, then there is no requirement to proceed to any other law as
there is no legal basis for arbitration.

It must be remembered that the arbitration clause in the main contract survives the challenge to the main
contract and even if the main contract is determined or held to be invalid, that by itself does not make
the arbitration agreement invalid. This is known as the ‘doctrine of separability’. Therefore, if a party
alleges the conclusion of the main contract through fraud or misrepresentation, the same can be
adjudicated upon in an arbitration proceeding. In order to avoid arbitration altogether, the party alleging
fraud must show that there was no intention to have their dispute resolved through arbitration in the
first place.

Arbitration Rules

Once the arbitration agreement is found to be valid, the next applicable law is the arbitration rules
chosen by the parties. The same can be those model arbitration rules adopted internationally such as the
UNCITRAL Arbitration Rules or they can be created by the parties or the parties may choose to refer
their dispute to an international arbitration institution, in which case the rules of that institution would
apply. It must be noted that the parties are free to vary arbitration rules as per their arbitration agreement
which is why many arbitration rules provide for the language “unless otherwise agreed in writing by
the parties”. This goes on to show that the arbitration rules accepted by the parties are not mandatory,
but rather a default rule that will apply if the parties have not reached their own agreement on a particular

63
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 55 (2ND
EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
31
topic.64 In the event, the parties do reach an agreement, the agreement of the parties will trump the
arbitration rules unless a rule is considered mandatory by an arbitral institution.

National Laws

The next regulatory framework comprises both the substantive law and the lex arbitri (the law of the
seat of arbitration). Since many countries worldwide have accepted the UNCITRAL Model Law into
their domestic law, the law of the seat of many jurisdictions now has some uniformity. The Model Law
is not to be interpreted as being in conflict with the arbitration rules but has to work in conjunction with
arbitration rules. That is the reason that many of the Model Law provision uses the same default
language i.e. “until unless otherwise agreed by the parties”. Thus, if the parties have chosen a provision
contrary to the provision of Model Law, or if the arbitration rules provide for something different from
the Model Law, then the arbitration rules prevail over the Model Law. It must be remembered that by
choosing the seat of arbitration i.e. the place where the courts would exercise supervisory jurisdiction
and provide orders in support of arbitration e.g. interim measures, appointment of arbitrators, assistance
in taking evidence, setting aside the arbitral award, etc., the parties inevitably chose the domestic
arbitration law of the seat i.e. the lex arbitri.

Another aspect of the regulatory framework is the substantive law or the most basic choice of the parties
i.e. the law governing the contract which is usually contained in a ‘Governing law’ clause in an
agreement. This law is the one in which the rights and the liabilities of the parties are defined. Usually,
the party with the higher bargaining power will try to impose or choose its own national laws like the
law governing the contract. However, sophisticated parties, or parties with extensive experience in
international trade and commerce, or evenly balanced parties in terms of bargaining power may choose
international law or international principle such as the United Nations Conventions on Contract for the
International Sale of Goods (CISG) or the UNODROIT Principles of international Commercial Contract
or Lex mercatoria. If the parties have not chosen a governing law, then the tribunal will determine the
law applicable.

International Arbitration Practice

In the event, there are gaps or lacunae in the above-mentioned regulatory framework, then arbitration
tribunal take resort to international arbitration practice, some of which have been codified as rules or
guidelines. For example, the International Bar Association Rules on the Taking of Evidence, on the
Rules of Ethics, and Conflict of Interest in International Arbitration. The American Arbitration
Association and the American Bar Association have also provided a code of ethics for arbitrators.
Similarly, the UNCITRAL has codified the Notes on Organizing Arbitral Proceedings “to assist
arbitration practitioners by providing an annotated list of matters which an arbitral tribunal may wish

64
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 6 (2ND
EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
32
to formulate decisions during the course of arbitration proceedings…….”65 It is pertinent to note that
these are considered as soft law and are not binding on the arbitral tribunal as they are usually used to
fill gaps or harmonize the arbitration practice across the world.

International Treaties

After international arbitration practice, the framework taken resort to is that of international treaties
beginning with the New York Convention as it governs both arbitration agreement and awards and
because 183 countries are a signatory to it. Other treaties of importance are the Inter-American
Convention on International Commercial Arbitration (the Panama Convention), the European
Convention on International Commercial Arbitration, and the Convention on the Settlement of
Investment Disputes Between States and National of other States ( Washington Convention or the
ICSID Convention).66

The Panama Convention is similar to the New York Convention but is geographically localized to Latin
America as it is ratified or adopted by 14 South and Central American countries and by the United
States and Mexico. Similarly, the European Convention supplements the New York convention in
Europe between the contracting States. The ICSID Convention, on the other hand, was promoted by the
World Bank to encourage investors to invest in developing countries and give the right to the investor
to take action against the governments. Thus, the ICSID deals with the investor-state dispute as opposed
to a commercial dispute between two parties.

65
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 7 (2ND
EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
66
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 8 (2ND
EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
33
 Chapter V – Types of Arbitrations

One of the choices parties must make when they decide to arbitrate is what kind of arbitration do they
want to opt for, whether they want their arbitration to be ad hoc or administered by an arbitral institution.
There are obvious advantages and disadvantages of both kinds of arbitrations but before dealing with
them, it is prudent to understand the concepts of ad hoc arbitration and institutional arbitration.

Ad hoc Arbitration

According to PROF KROLL ad hoc arbitration is where the arbitration mechanism is established
specifically for the particular agreement or dispute. In ad hoc arbitration the parties may establish their
own rules of procedure (so long as these rules treat the parties with equality and allow each party a
reasonable opportunity of presenting its case). Alternatively, and more usually, the parties may agree
that the arbitration will be conducted without involving an arbitral institution, but according to an
established set of rules, such as those of UNCITRAL, which provide a sensible framework within which
the tribunal and the parties may add any detailed provisions as they wish—for example, rules providing
for the submission of pre-trial briefs or the agreement of expert reports.67 When the parties fail to agree
on these issues, e.g. they have agreed only “arbitration” or “arbitration in a nominated city”, usually
default provisions of the law of the place of arbitration will be applicable.68

Where parties are silent and have not selected an institutional arbitration, the arbitration will be ad hoc.
Further, in ad hoc arbitration, the power of constitution of the tribunal is vested upon the parties, where
they are absolutely free as to choose their arbitrator(s). This freedom is recognized in all national legal
system across the world. Since the constitution of the tribunal is directly done at the choice of the parties
to an arbitration, ad hoc arbitration is cheaper and expeditious in nature.69 On the other hand, it is
pertinent to note that, the efficiency of ad hoc arbitration process depends upon the drafting of the
arbitration agreement. In ad hoc arbitration, if a party fails to select an appointing authority then the
national arbitration laws of many jurisdictions permit the courts of that jurisdiction to appoint
arbitrators.

Advantages of Ad hoc Arbitration

One of the distinct features of ad hoc arbitration is that it can be designed in accordance to need and
desirability of the parties, for this to be concluded in a proper manner and for that cooperation amongst

67
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION 42 (6TH
EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
68
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 32 (THE HAGUE: KLUWER LAW INTERNATIONAL, 2003).
69
EMMANUEL GAILLARD & JOHN SAVAGE, FOUCHARD GAILLARD GOLDMAN ON INTERNATIONAL COMMERCIAL
ARBITRATION 534(KLUWER LAW INTERNATIONAL, 1999).
34
the parties is necessary.70 Ad hoc arbitration is occasionally said to be more flexible and less expensive.
Also, it is more confidential as compared to institutional arbitration. Ad hoc arbitration is independent
of all institutions. In ad hoc, arbitration parties need not pay heavy fees of the arbitral institution. In ad
hoc arbitrations parties have more options as to craft their own laws.71

Disadvantages of Ad hoc Arbitration

The principal disadvantage of ad hoc arbitration is that it depends for its full effectiveness on
cooperation between the parties and their lawyers, supported by an adequate legal system in the place
of arbitration. It is not difficult to delay arbitral proceedings, for example by refusing at the outset to
appoint an arbitrator, so that there is no arbitral tribunal in existence and no agreed book of rules to say
what is to be done.72 It will then be necessary to rely on such provisions of law as may be available to
offer the necessary support.

Institutional Arbitration

According to Prof. Kroll, institutional arbitration is where parties submit their disputes to an arbitration
procedure, which is conducted under the auspices of or administered or directed by an existing
institution. There are a large number of institutions of different kinds. These institutions aim to provide
an arbitration service specifically, or within the context of their overall activities and objectives, and
takes help of their infrastructure to organize a smooth running of the arbitration procedure. 73 There are
many such institutions, some better established than others. Amongst the most well known are the ICC,
ICSID, the LCIA, and the International Centre for Dispute Resolution (ICDR).74

Every arbitration institution has its own special characteristics. It is essential that parties are aware and
take account of these. It is tied in with an understanding of the special requirements of different
arbitration systems and rules. Institution also authorize the tribunal to select arbitrators in a particular
dispute and adjudicate upon the following: a challenge to the arbitrator, for designating the place of
arbitration, the fee payable, review of awards and etc. It is pertinent to note that, institutions do not
arbitrate themselves. However, it is the duty of the appointed arbitrators to resolve the dispute between

70
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION 43 (6TH
EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
71
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 11 (2ND
EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
72
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 1.145
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
73
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 32 (THE HAGUE: KLUWER LAW INTERNATIONAL, 2003).
74
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION 44 (6TH
EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
35
parties. Moreover, arbitrators are not the employees of the institutions. When parties fail to appoint an
arbitrator, then by the virtue of the rules of the institutions, arbitrator(s) are appointed.

A further feature of institutional arbitration is the situation in which the institution itself reviews the
arbitral tribunal's award in draft form before sending it to the parties. A review of this kind, which is
built into the ICC Rules, serves as a measure of ‘quality control’. 75

The best-known international commercial arbitration institutions are:

 The International Chamber of Commerce (“ICC”)

 The American Arbitration Association (“AAA”) and its International Centre for Dispute
Resolution (“ICDR”)

 The London Court of International Arbitration (“LCIA”)

 The Stockholm Chamber of Commerce Arbitration Institute (“SCC”)

 The Singapore International Arbitration Center (“SIAC”)

 The Hong Kong International Arbitration Centre (“HKIAC”)

 The Vienna International Arbitral Centre (“VIAC”)

 The Japan Commercial Arbitration Association (“JCAA”)

 The World Intellectual Property Organization (“WIPO”)

 The Swiss Chambers’ Arbitration Institution (“SCAI”)

 The German Institution of Arbitration (“DIS”)

 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”)

75
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 1.152
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
36
  The Indian Council of Arbitration (“ICA”)

 JAMS International

Advantages of Institutional Arbitration

Institutional arbitration is conducted in accordance with the prescribed set of rules of particular
institutions and is supervised and administered according to that institution. This mitigates the risk of
failure and a sudden breakdown of the process at the beginning of the arbitration process. It also reduces
the risk of technical defects, which can arise during the time of arbitration proceeding or at the time of
rendering the award.

The institution involvement is very helpful, at the time of appointment of arbitrators, challenging the
arbitrator, selection of seat, fixing the fees. They will ensure that the arbitral tribunal is appointed, that
advance payments are made in respect of the fees and expenses of the arbitrators, that time limits are
kept in mind, and generally that the arbitration is run as smoothly as possible.

Moreover, various arbitral institutions have drafted their rules in a manner, which makes the arbitral
process more reliable and speedier, such as provisions in institutional rules concerning competence-
competence, separability, provisional measures, consolidation and joinder, disclosure, arbitrator
impartiality, corrections and challenges to awards, replacement of arbitrators and truncated tribunals,
costs and the like.76

Another advantage of institutional arbitration is the fact that there is a “comfort” element in its existence.
There have been many cases under the rules of each institution, and every year it has a continuing
number of new arbitrations. This provides an obvious comfort, as the parties know that the institution
has experience in the way it establishes the tribunal and arranges for the award to be issued.77

An important advantage of institutional arbitration is that it avoids the discomfort of the parties and the
arbitrators discussing, agreeing and fixing their remuneration. Most institutions have a mechanism for
collecting from the parties the money from which the arbitrators will be paid and without directly
involving the arbitrators. This means that the arbitrators are able to maintain a certain level of material
detachment. This has the very definitive advantage of allowing the arbitrators to focus solely on the
substance of the case rather than discuss with the parties a matter that is personal to them.78

76
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 171 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
77
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 36 (KLUWER LAW INTERNATIONAL, 2003).
78
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 36 (KLUWER LAW INTERNATIONAL, 2003).
37
Disadvantages of Institutional Arbitration

In institutional arbitration, the parties pay a fixed fee in advance for the ‘costs of the arbitration’—that
is, the fees and expenses of the institution and of the arbitral tribunal. This fixed payment is assessed
on an ad valorem basis. If the amounts at stake in the dispute are considerable and advisers experienced
in international arbitration represent the parties, it may be less expensive to conduct the arbitration ad
hoc. The need to process certain steps in the arbitral proceedings through the machinery of an arbitral
institution inevitably leads to some delay in the proceedings. Moreover, the time limits imposed by
institutional rules are often unrealistically short.79

The great thing about arbitration is that the parties are not forced to chose any one particular kind of
arbitration. This is where the concept of party autonomy is very crucial in the arbitration regime. It is a
fundamental principle of international commercial arbitration80 that parties are free to choose form of
the arbitration for resolving their disputes as they can either go for ad hoc arbitration or institutional
arbitration.81

Arbitral Institutions

As discussed previously, there are obvious advantages of using services of arbitral institutions and is a
popular mode of dispute resolution. Therefore, it is prudent to run through the famous and the most
reliable arbitral institutions.

International Chambers of Commerce

It is one of the most prestigious arbitral institutions which is inclusive of members from all legal
professionals from all around the world. ICC has its secretariat, which has permanent, and professional
administrative staff. The basic features of ICC are, firstly, that every award is scrutinized by the court
of arbitration, and the award is not provided to the parties till the time it has been reviewed by the court.
However, the court cannot change the award, if it thinks anything erroneous or incorrect, it sends the
award back to the arbitrators inclusive of comments.82 Another notable requirement of the ICC is that
at the outset of the arbitration, the parties are required to complete and sign a document called the “terms

79
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 1.152
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
80
THOMAS E. CARBONNEAU, THE LAW AND PRACTICE OF ARBITRATION 21-22 (2d ed. 2007);
EMMANUEL GAILLARD & JOHN SAVAGE, FOUCHARD GAILLARD GOLDMAN ON INTERNATIONAL COMMERCIAL
ARBITRATION ¶ 46(KLUWER LAW INTERNATIONAL, 1999)
81
Karl-Heinz Böckstiegel, Party Autonomy and Case Management Experiences and Suggestions of an Arbitrator,
11 Schiedsvz 1, 2 (2013); Kinga Timár, The Legal Relationship Between the Parties and the Arbitral Institution,
2013 (1) ELTE L.J. 103, 105 (2013).
82
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 11(2ND
EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
38
of reference” which consist a summary of claims and relief sought by the parties, place of arbitration,
scheduling, etc.83

The London Court of International Arbitration

LCIA is founded in 1892 and it is the second popular European institution in the field of international
arbitration. The LCIA is one of the most promising and successful arbitral institutions these days. It has
appointed five successive non-English presidents, and its vice-presidents include a number of non-
English practitioners. In recent years, fewer than 20% of the LCIA’s cases have involved any U.K.
parties. LCIA is famous for an expeditious expedition formation of an arbitral institution. Most LCIA
arbitrations are seated in London. In the absence of agreement by the parties to the contrary, London
will be selected by the LCIA as the arbitral seat under Article 16(1) of the LCIA Rules.

Swiss Chambers’ Arbitration Institution

Switzerland’s premier arbitration institute is famous for its comprehensive set of rules which are
particularly detailed and contain provisions regarding competence-competence, confidentiality,
expedited procedure, emergency, interim relief, arbitrator immunity, and consolidation and joinder, etc.

Vienna International Arbitration Centre

This arbitral institution, based in Vienna, Austria was established in 1975. VIAC is the only arbitral
institution that strictly conducts international arbitration as enunciated in its rules. 84 There has to be one
non-Austrian origin or that dispute be of an international character to be conducted in VIAC.

Stockholm Chambers of Commerce Arbitration Institute

Founded in 1917, the SCC emerged as an important forum for resolving the dispute between parties of
USSR and China during the 1970s and 1980s.85 The SCC is one of the most preferred foreign arbitral
institutions for Chinese state-owned entities. The SCC typically appoints members of the Swedish bar,
with international experience, or former Swedish judges, as arbitrators. SCC arbitrations are usually
seated in Sweden, although other places of arbitration can be chosen.86

83
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 11 (2ND
EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
84
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 191 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
85
Ross, The SCC and Ulf Franke: The Sino-Swedish Connection, Global Arb. Rev. (27 April 2010).
86
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 191 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
39
Singapore International Arbitration Centre

The SIAC was established in 1991, especially for resolving disputes pertaining to construction,
shipping, banking, and insurance contracts, but by the significant rise commercial and financial aspect
of Singapore, it emerged as an international hub and SIAC has seen a variety of dispute pertaining to
energy, financial, joint venture, sales, and other matters. SIAC is based upon UNCITRAL Model Law
and was revised in 2007, 2010, 2013.

World Intellectual Property Organization

The Arbitration center of WIPO was established in 1994 in Geneva, Switzerland. Their arbitration rules
are designed only for an intellectual property dispute. WIPO’s Arbitration Rules contain detailed
provisions pertaining to intellectual property disputes which include provisions relating to discovery,
disclosure, and protection of trade secrets, and confidentiality of arbitral proceedings.87

87
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 195 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
40
 Chapter VI – Theories in International Arbitration

The first module discusses the importance of international commercial arbitration, and its rise in the
world and over time it has become an organized and striking way to resolve disputes between parties
that are in different regions. It is also important to understand that International Commercial Arbitration
caters to a large number of people who are from different regions of the world, coming from different
socio-cultural environments which leads to different interpretations of the same laws and statutes that
exist.

It is also noted that different interpretations have been given by national courts on various aspects of
arbitration. The reason for the same is that different national courts adopt different theories in relation
to international commercial arbitration. For example, if we were to analyze the issue of delocalization
which has been dealt with by different courts namely French, American and British. French and
American courts have more emphasis on the contractual element and enforced some arbitral awards
which have been set aside at the place of arbitration whereas the English Courts are still embracing the
jurisdictional nature.

Generally speaking, the various theories can be classified into four. The jurisdictional theory, the
contractual theory, the hybrid theory, and the autonomous theory. The jurisdictional theory is based on
the State having complete control in regulating any commercial arbitration within their jurisdiction. The
contractual theory, however, gives emphasis to the valid arbitration agreement that exists for dispute
resolution between parties, thus if it exists they should be given complete independence in handling the
arbitration according to their needs.

The hybrid theory as the name suggests takes a middle ground between the jurisdictional and contractual
theory. It preserves the idea that International commercial arbitration has both contractual and a
jurisdictional character.

The autonomous theory has been developed recently, it dismisses the traditional approach and places
emphasis on the purpose of international commercial arbitration. Instead of fitting arbitration into the
existing legal framework, this theory defines arbitration as an autonomous institution, which should not
be restrained by the law of the place of arbitration. Thus, it advocates the idea of total sovereignty for
the institution. There is another similar kind of theory propounded by legendary Prof. Gaillard which is
in similar lines of the delocalization theory. It is known as the transnational theory and will be discussed
in brief.

41
Therefore, it’s important to study a theory a national court applies in respect of international commercial
arbitration which also affects its attitude towards the procedure of arbitration. The main purpose of the
study seeks to understand two main questions; 1) what is the conceptual framework of arbitration
theories? and, 2) whether all theories are successful and fruitful? The following is an attempt to explain
these theories in detail:

42
 Chapter VII – National Order Approach/ Territoriality/Jurisdictional
Theory

The current theory of territoriality or the national order is the reverse of the delocalization theory which
provides that arbitration is firmly anchored in the give legal system. REDFERN & HUNTER explains this
theory by giving an example that just as the law of contract ensures that contracts are performed and
are not reduced to mere anti promises, in the same way, the lex arbitri ensures that the arbitral process
works as it should.88 This theory finds acceptance in the model law which provides for functions that
the courts have to perform in support of arbitration proceedings.

The practical application of this theory is that first it should be checked whether there is any local law
requirement at the seat which must be observed in order to obtain a valid award. Second, it should be
checked that not every country is suitable to be designated as the seat of arbitration, parties should, in
fact, choose the seat which is most pro-arbitration and neutral. In practice, the territorial approach
prevails over delocalization because it is easy to comprehend and apply and at the same time it promotes
reliability and certainty in international commercial arbitration. Thus, the law of the seat remains the
important sources of the law governing arbitration and the delocalization theory seems more of an
aspiration.

The jurisdictional theory invokes the impact of the supervisory powers of the states, especially that of
the seat of arbitration. Although the jurisdictional theory does not dispute the idea that an arbitration
has its origin in the arbitration agreement, it maintains the validity of arbitration agreements and
arbitration procedures needs to be regulated by national laws and the validity of an arbitral award is
decided by the laws of the seat and the country where the recognition or enforcement is sought.
Moreover, the proponents of this theory state that all arbitration procedures have to be regulated by the
rules of law chosen by the parties if there are any, and those rules of law chosen by the parties also have
to be regulated by the laws in force in the place of arbitration. It is argued that arbitrators resemble
judges of national courts because the arbitrators’ powers are drawn from the states by means of rules of
law. As with judges, arbitrators are required to apply the rules of law of a specific state to settle the
disputes submitted to them.

The jurisdictional theory provides a strong basis for the national courts exercising supervisory powers
over the arbitration process that takes place in their normal jurisdictional limits. Such supervisory
powers find mention in the New York Convention of 1958, which as the first module mentions is the
cornerstone document dealing with International commercial arbitration. According to Article V, in the
absence of the express choice of law, the validity of arbitration agreements arbitral awards the

88
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION 182
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
43
composition of the arbitral authority and the arbitral procedures have to be decided in accordance with
the law of the country where the arbitration takes place. Also, the supervisory powers over the validity
of the arbitral awards can be exercised by the courts where recognition or enforcement is sought, if the
subject matter of the difference is not arbitrable under the law or the enforcement of such an award
would be against public policy.

The jurisdiction over the arbitration, which might have no connection with the country, is based on
three theoretical arguments, namely, the arbitrator’s right to make binding adjudication is derived from
a delegation by the state of its exclusive powers in the field that every act is subject to the law in force
where it occurred, and the application of the lex fori (law of the forum) and the use of its courts are
sometimes more efficient than any other system.

It is understood that arbitrators can only deal with only those disputes that the parties have chosen to
arbitrate. The same has been discussed in detail in the first module. However, such a choice cannot
overrule the mandatory rules of the lex fori.

In the absence of the parties’ express choice of law, the issue of arbitrability will be governed by the
law of the seat where the arbitration takes place. An arbitral award may be challenged before the courts
if the arbitrator deals with issues that haven't been given to him or are beyond the scope of the laws that
are applying to the arbitration.

In addition, under the jurisdictional theory, the courts in the country where the recognition or
enforcement is sought also have regulatory power over the issue in stages of recognition or enforcement.
Under, Article V (2) the courts have the discretion to refuse to recognize or enforce an arbitral award if
it finds that “The subject matter of the difference is not capable of settlement by arbitration under the
law of that country.” The same applies if the recognition or enforcement of the award will be contrary
to the public policy of that country.

To elaborate further the Mitsubishi case89 can be taken as an example. The case involved an anti-trust
dispute which was prohibited from being resolved by means of arbitration in a domestic case. The
Supreme Court of the United States enforced the parties' arbitration agreement involving an antitrust
dispute, even assuming that a contrary result would be forthcoming in a domestic context. Thus, through
this analysis, it can be interpreted that there is a supervisory relationship that exists between courts and
arbitration through the above-mentioned theory.

In relation to arbitrators, the jurisdictional theory mainly follows the approach of the delegation theory.
According to the delegation theory, in order to settle disputes between parties, an arbitrator must possess
a delegated authority given by a state in which he sits to conduct an arbitration. An award made by the

89
Mitsubishi Motors v. Soler Chrysler-Plymouth, 473 U.S. 614 (1985).
44
arbitrator lacking this authority will be void and can be challenged. Due to this delegated power, the
advocates of the jurisdictional theory deny that the arbitrator’s power is originated from the parties’
arbitration agreement. They maintain that the arbitrator’s power is drawn from the State by means of
the local law on the ground that it is in the public interest to permit private individuals to decide disputes
when the parties have agreed. Because of the special status granted by the states, arbitrators are regarded
as resembling judges of national courts. The difference, however, being that a judge gets his nomination
and authority directly from the sovereign, whilst an arbitrator derives his authority from the sovereign
but his nomination is a matter for the parties to decide upon.

In accordance with this theory, an arbitral award should be granted the same status and effect as a
judgment made by a national court judge since the arbitrators are regarded as equivalents of judges.
Because of a similar status of judgments, in the absence of the voluntary performance of the award by
the losing party, the awards will have to be enforced by the court where the recognition or enforcement
is sought.

The arbitration agreement is necessary to give the arbitrators their authority, but once that authority has
been conferred on them, provided they keep within the limits of the task given to them, their freedom
is absolute and the arbitration agreement has no influence on their award which is based on quite
different matters.

Regarding the choice of the proper law, in most jurisdictions, judges of national courts, while dealing
with international commercial disputes submitted to them, are only allowed to apply the law of their
own country or the national laws of other states if the parties choose to do so. Alternatively, in the
absence of parties’ express choice of the proper law, they have to choose substantive law in accordance
with the choice of law rules of the place where the seat is.

Basically the principle argument being that this leads to a close relationship between the place of
arbitration and the procedural rules to be applied to international commercial arbitration, under the
jurisdictional theory arbitrators are only allowed to choose the proper law of the contract in accordance
with the procedural law chosen by the parties if there is any, and the lex fori. The consequence of the
theory is to allow arbitrators no greater freedom in the application of substantive law that judges have.
Arbitrators are required to decide the issues arising from international commercial arbitration according
to municipal laws, which also include the choice of law rules of the place where arbitration is held.

According to several jurists who are proponents of this theory they believe that no proper definition of
international commercial arbitration has been provided despite the “numerous attempts that have been

45
made in recent years to define an ‘international commercial arbitration’ there has been a failure to
produce a clear formula.”90

Furthermore, it is stated that in accordance with strict interpretation, every arbitration is a national one
and it should be governed by the municipal laws of the country where it is held. The so-called
“international arbitration” is a fallacy since no arbitration can exist in a legal vacuum. Just as every
system of private international law is a system of national law, every arbitration is a national arbitration,
that is to say, subject to a specific system of national law.

Within the framework of International Commercial arbitration, only the lex fori can provide such a
complete and effective control over the arbitration procedures to decide the relevant issues arising from
the arbitration.

90
Francis A. Mann, Lex Facit Arbitnim, 2(3) ARB. Int’L 245 (1983).
46
 Chapter VIII – Contractual Theory

The proponents of the contractual theory argue that arbitration is based on the agreement between the
parties. There is a denial that any strong links exist between the arbitration proceedings and the law of
the place in which the arbitration takes place. It’s also maintained that parties have the freedom to decide
the relevant issues concerning the arbitration procedures and this freedom should normally not be
restricted with by the powers of any state.

The theory attempts to explore the nature of arbitration from a contractual viewpoint. Although it cannot
be denied that arbitration can be influenced by the relevant national laws, it is argued that arbitration
has a contractual character that originates from the agreement between the parties. Since this kind of
contract is voluntarily made between the parties, it allows them to determine the time and place of
arbitration, select the arbitrators to hear the case and choose the laws governing both procedural and
substantive matters.

The contract of which the arbitration clause is a part is a voluntary agreement. No law requires the
parties to make such a contract, and it also does not give another party to arbitrarily impose things on
the other.

In most jurisdictions, the mechanism of international commercial arbitration is designed on the

foundation laid down by contractual theory. The actors to arbitration have over the years expressed a
need for a more flexible and informal method of dispute settlement, most courts tend to follow the
contractual theory and interpret the relationship between the parties and the arbitrators as a contract.

To elucidate further the case, in Cereals S.A v. Tradax Export S.A.91 the court held that the relationship
between parties and arbitrators is contractual in nature. Moreover, the arbitrators become parties to the
agreement as soon as they accept the invitation to an appointment. The court also observed “it is the
arbitration contract that the arbitrators became parties to by accepting appointments under it. All
parties to the arbitration are, as a matter of contract bound by the terms of the arbitration contract.”

A similar decision was given in the case of K/S Norjarl A/S v. Hyundai Heavy Industries.92 The court
stated that arbitrators were entitled to reasonable remuneration. This entitlement was based on a
trilateral contract between the two parties and the arbitrators. The implied terms of this contract require
the arbitrators to “conduct the arbitration with due diligence and at a reasonable fee”, by using all the
reasonable means in entering on and proceeding with the reference.

91
[1986] 2 Lloyd’s Rep 301.
92
[1991] 1 Lloyd’s Rep. 260.
47
Moreover, the contractual relationship discussed here is, in fact, comprised of two contracts, one is a
contract between the parties that is the arbitration agreement, while the other is the appointment
agreement between the parties and the arbitrators. As far as the contract between the parties is
concerned, subject to the statutory exceptions, to commence an arbitration there must be a valid
arbitration agreement that exists between the parties. On the other hand, relation to the contract between
the parties and the arbitrators, consent from both the parties and arbitrators is essential to form a valid
appointment of the arbitrators, since the appointment of arbitrators cannot be carried out by one party’s
unilateral decision.

The delegation theory that is given by the jurisdictional theory is rejected by those who believe
arbitration is governed by contractual theory. Thus, the argument that arbitrators are similar to judges
of national courts is rejected. The most widely accepted theory puts arbitrators as agents of the parties.
The opinion is that arbitrators do not perform any public function, arbitrators obtain their powers and
authority from the parties’ agreement when they are appointed. Being agents of parties, arbitrators
represent the parties who appoint them to resolve the dispute according to the parties’ instructions;
moreover, any decisions, that is, arbitral awards, made by the agents have a binding effect on the parties.

However, even amongst the people who are advocates of the contractual theory, there are jurists who
disagree that arbitrators are agents of the parties. The other viewpoint that is given is that the powers of
arbitrators are drawn from the parties’ arbitration agreement which allows the arbitrators to judge.

Another major criticism of the agent theory exists. It states that with respect to the relationship between
principal and agent, the agent works on the principal’s behalf and in their best interest. However, this
cannot apply to the relationship between arbitrators and the parties within the present arbitration
framework. Three reasons can be given for the same. The first one being that contrast to the role of
agents, arbitrators are appointed to resolve the dispute between the parties independently and
impartially, rather than being appointed to fight for the best interests of the party who appoints them, in
fact, arbitrators are obliged to determine the rights of parties in an impartial manner since they owe an
equal obligation for fairness to both sides.

Secondly, it is important for an arbitrator to be financially independent of the parties who appoint them.
However, an agent cannot have that freedom. Thirdly, the scope of the agent’s and the arbitrator’s
powers. According to the idea that arbitrators are agents, agents represent the authority within a scope
of the authorization. Thus, agents can only decide upon matters authorized by the principals. However,
it doesn’t really shape out the work that an arbitrator does. Arbitrators possess powers that the parties
don’t such as summoning witnesses in certain countries or order security of costs against one of the
parties.

48
Applying the agent theory to awards, the awards can be regarded as contracts made by arbitrators who
act as agents of the parties. As a result of this principle and agent relationship, the contract, that is, the
arbitral award has a binding effect on the principals, that is, the parties. The parties must accept the
arbitrators’ award as “having the binding contractual force and to voluntarily give effect to it.”

The awards are said to have a contractual nature, as the arbitrators do not hold their power from the law
or judicial authorities, but from the parties’ agreement. The award thus has its genesis in its contractual
nature.

According to the ethos of contractual theory, the parties are offered unlimited autonomy in choosing
both the procedural law governing the arbitration and the proper law governing the contract. When it
comes to the issue pertaining to the procedural law, in absence of any express choice of law made by
the parties the lex fori can be used to fill the gap.

49
 Chapter IX – The Hybrid Theory

The Jurisdictional and Contractual theories, both, have their merits and demerits, however, for a lot of
theorists there remain grey areas that neither of the theories covers and satisfy in isolation. Thus, the
hybrid theory is developed to cover the lacunae of both the theories and find a middle path that satisfies
what is lacking from both of the other theories.

The hybrid theory thus is a compromise between the two theories that have been discussed so far. The
development of the hybrid theory leads us to the suggestion that the nature of the International
commercial arbitration is a mechanism with dual character. The contractual element remains from the
fact that the genesis develops from the initiation of a private contract.

However, since it is conducted within national legal regimes in order to determine powers of the parties,
and for the recognition and validity of the awards. Thus, arbitration has been defined as mixed sui
generis, which has its origins in the parties’ agreement and draws its jurisdictional effects from the civil
law. In a more concise sense, arbitration has a jurisdictional nature involving the application of the
rules of procedure while it derives its effectiveness from the arbitration agreement between the parties.

REDFERN AND HUNTER most appropriately explain it as “international commercial arbitration is a

hybrid. It begins as a private agreement between the parties. It continues by way of private proceedings,
in which the wishes of the parties are of great importance. Yet it ends with an award that has binding
legal force and effect and which, on appropriate conditions being met, the courts of most countries of
the world will be prepared to recognize and enforce. The private process has a public effect,
implemented by the support of the public authorities of each state expressed through its national
laws.”93

Thus, on one hand, the parties’ have the freedom to make their contract agreements, select the arbitrators
and choose the procedural laws, while on the other, the issues relating to the arbitral proceedings and
the validity of the arbitration agreements are subject to the mandatory rules and public policy of the lex
fori.

ROBERT HUNTER further elucidates on this hybrid nature: “the arbiter is required to decide the whole
matters submitted to him or her by means of a “decree arbitral” or “award”, and in so doing must not
merely adhere to some rule, principle, criterion or standard; he or she must not contravene the law.
Though the power of the arbitrator over submitters is based on contract, there is thus a jurisdictional
as well as a contractual element in arbitration.”94

93
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 2.34
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
94
ROBERT L & C. HUNTER, LAW OF ARBITRATION IN SCOTLAND, 3 (1987).
50
It has been pointed out that there exists a close link between the arbitration procedure and the forum of
arbitration. The constitution of arbitration and the powers of the arbitrator are based on the parties’
agreement while the validity of the agreement and enforcement of awards have to be decided in
conformity with public policy or mandatory rules of the relevant laws, for example, the lex fori and the
law of the country where the enforcement is sought.

The relationship between the arbitrators and the parties is regarded as contractual in nature. This
contractual nature reflects the arbitration agreement made between the parties. Under the arbitration
agreement, the parties must submit their disputes to arbitration and select the arbitrators who are
considered competent to resolve the disagreement. Thus, logically, arbitrators obtain their powers from
the parties within the scope of authorization. However, the extent of the arbitrator’s power is subject to
the scrutiny of the mandatory rules of lex fori and the public policy rules of the enforcing state.

The hybrid theory recognizes the significance of the supervisory powers of the national courts of the
place of arbitration and enforcing states. It maintains that, in the absence of any express agreement
between the parties, the law of the seat will be applied to govern the arbitration. Arbitrators are required
to decide the proper law of the contract in accordance with the conflict of laws rules of the lex fori. In
other words, arbitrators have to apply the law expressly chosen by the parties to the dispute; however,
in the case where no expressed choice of law can be found, they have to resort to the conflict of law
rules of the place of arbitration in order to decide the law governing the substantive issues.

51
 Chapter X – Delocalization/Autonomous Theory

One of the first effort to delocalize arbitration was made primarily in the 1980s, which categorized
delocalization as stateless, floating or a-national arbitration. The theory proceeds on the premise that
international arbitration should not be constrained by the domestic law of the seat where the arbitration
takes place. This is supported by the fact that the parties usually opt for the neutral seat of arbitration,
neither party has their presence, business interests or assets. The parties opt for the seat as a matter of
convenience and many a time might not even be aware that but choosing a seat of arbitration, the parties
will be bound by the mandatory laws of that country.

The concern with restricting arbitration to its seat is that the peculiarities of local laws and local courts
system would reduce the effectiveness of arbitration proceeding and the same ought not to be imposed
simply because the arbitration has taken place in a particular jurisdiction. Since the proceedings to set
aside an award are usually filed at the seat of arbitration, it is apprehended that local courts might vacate
the award under local law rendering the entire process fruitless.

It is argued by the proponents of delocalization that international arbitration should be a self-regulating

process free from court interference and hence no State should be concerned about the private dispute
between two parties, who are neither its citizen nor have any connection to such state. Furthermore, the
proponents argued that there is no reason why the law of the seat and its conflicts of law rules should
necessarily be applicable when an arbitration tribunal had to choose the governing law.

The jurists who support this theory place arbitration on a “supra-national” level and recognize its
autonomous nature. In order to allow arbitration to enjoy the expansion it deserves, while all along
keeping it within appropriate limits, its nature may have to be taken as neither contractual nor
jurisdictional as autonomous.

As has been said by Samuel “The question is to know whether arbitration does not extend beyond its
two components to establish an autonomous institution, the nature of which should not be defined by
reference to the contractor to jurisdiction, but whose legal authority is to be justified both by its purpose
and by the guarantee necessary for those parties who do not bring their disputes before the official
courts.”

This theory proceeds on the basic premise that a single legal system should govern arbitration i.e. the
place of enforcement of the award as opposed to the current system where the law of the seat regulates
the arbitration and then the law of the place of enforcement (where the losing parties assets are located)
regulates the enforcement. Thus, based on the autonomous theory, arbitration agreements and arbitral
awards were enforceable in any country. The belief is that there needs to be an institution that does the
same job. Thus, the proposed idea is of an original system, free from both the contractual and

52
jurisdictional notions, would permit the necessary speed and guarantees which the parties legally claim
to be brought together.

Some jurisdictions such as the French court have been moved to be liberal and more accepting for the
delocalization theory. The Paris Court of Appeal in General National Maritime Transport Co. v. Société
Gotaverken Arendal A.B.95 held that even though the seat of arbitration is Paris, the arbitral proceedings
were not subject to the French Law. The court in this instance was interpreting Article 11 of the 1975
ICC Rules (now Article 15 of the 1998 ICC Rules), which provided that:

“The rules governing the proceedings before the arbitrator shall be those resulting from these rules
and, where these rules are silent, any rules which the parties (or, failing them, the arbitrator) may
settle, and whether or not reference is thereby made to a municipal procedural law to be applied to the
arbitration.”

The argument, therefore, was that a municipal procedural law need not be applied to arbitration in view
of the complete party autonomy provided under Article 11. The court ultimately held:

“[I]n view of the very clearly-worded clause of the ICC rules, the place of arbitration, selected
specifically to ensure neutrality of the arbitration proceedings, is not significant and may not be
regarded as an implicit submission by the parties to French procedural law.”

In another case, in Société AKSA S.A. v. Société Norsolor S.A.96 the French courts had to interpret the
ICC Rules and reach a conclusion as to the law of the seat since the parties have not provided expressly
for the same. The court ultimately held that even though the arbitration took place in Paris, the award
was a non-French award and subject to the remedies available for foreign awards. Thus, the court
refused to attribute French law to the arbitration seated in Paris. It is pertinent to mention that these
decisions are specific to ICC arbitration and much other arbitration institutes are clearly tied to a
particular place.

Authors such as RENATA favors the delocalization theory as detaching international arbitration from
mandatory procedural laws of the seats could impact the award and make the same unenforceable if the
award does not comply with the local law of the seat.97 However, it must be remembered that not all

95
Renata Brazil-David, Harmonization and Delocalization of International Commercial Arbitration, 28 J Int’l
Arbitration 5, 454, 445-466 (KLI 2011).
96
(1981) 70 RCDIP 545.
97
Renata Brazil-David, Harmonization and Delocalization of International Commercial Arbitration, 28 J Int’l
Arbitration 5, 454, 445-466 (KLI 2011).
53
jurisdiction is as liberal as France or the United States. In fact, English Law and English judges typically
attach the greater significance to the law of the seat.98

As far as the choice for the proper law is concerned, instead of confining arbitration within the national
or international legal framework. The autonomous theory invokes the creation of a real “supra-national”
law for international commercial arbitration. Under this truly supra-national arbitration, parties are
entitled to choose any rules of law, a national system of law, international law, the new lex mercatoria
the general principles of law or even amiable composition to govern their relationship. Furthermore,
it’s advocated that international commercial arbitration creates its own law to be applied to international
commercial disputes.

It is also argued that in international commercial arbitration the arbitrator’s power to choose the proper
law should not be restricted within the scope of national laws. They should be free to decide the dispute
on the basis of whether the municipal system of law or the general principles of international law,
custom, usages of trade good sense, fairness, and justice.

In this context, it is imperative to study the observation which a renowned author LANDO makes. He
says that “by choosing the lex mercatoria the parties oust the technicalities of national legal systems
and they avoid rules which are unfit for international contracts. Thus they escape peculiar formalities,
brief cutoff periods, and some of the difficulties created by domestic laws that are unknown in other
countries such as common law rules on consideration and privity of contract. Furthermore, those
involved in the proceedings- parties, counsel, and arbitrators – plead and argue on an equal footing,
nobody has the advantage of having the case pleaded and decided by his own law and nobody has the
handicap of seeing it governed by foreign law. ”

Another renowned scholar, Luzzatto presents a similar observation and states that “the detachment of
the arbitral procedure from any municipal legal system and its organization according to the free will
of the parties to the dispute require, therefore, that the operation of the said autonomy is recognized by
means of an international convention, which also makes this aspect of international commercial
arbitration relevant with regard to national laws. When the parties' autonomy becomes able to regulate
the whole of arbitration procedure without any connection with municipal laws, and when international
regulations provide the parties with machinery and facilities which may enable arbitration proceedings
to fulfill their purpose without any resort to municipal courts, then it can be said that international
commercial arbitration is recognized as such, in its truly international character, by the legal systems
of the States which are parties to the convention.”

98
Renata Brazil-David, Harmonization and Delocalization of International Commercial Arbitration, 28 J Int’l
Arbitration 5, 455, 445-466 (KLI 2011).
54
The counter to the theory of delocalization is that arbitration cannot exist in a vacuum as it requires the
assistance of the courts before, during, and after the arbitral process e.g. for requesting interim relief,
appointment of arbitrator, preserving evidence, etc. therefore, every arbitration must conform at a
minimum to the mandatory laws of the seat of arbitration. This is also required to ensure that a private
system of dispute resolution is not used to defraud parties and it’s not tainted by corruption and more
importantly there is court sanctioned enforcement of various orders of the tribunal.99

In 1985, Belgium attempted to incorporate the delocalization theory but providing that non-Belgian
citizen who had no business in Belgium would not be permitted to apply to a Belgium court to set aside
an arbitral award. It was believed that with no judicial review of the award in Belgium party would be
attracted to Belgium as a destination for arbitration. However, the reality was that nobody opted for
Belgium for the seat because of the lack of possible court review. This clearly suggested that parties in
international arbitration prefer court supervision at the place of arbitration.

The idea behind having judicial control over arbitration proceeding is to ensure that the integrity of the
award within the national border and the deficiencies in the integrity of the awards should be dealt with
at the seat.100 The counter to this argument is that once parties have expressly chosen an alternative
dispute resolution method, the parties have clearly expressed their reservation to be governed by the
national courts. Even if, it is said that the choice to arbitrate does not necessarily exclude the option to
go to court, it is clear that the party’s intent for the court is to take the back seat. The delocalization
theory finds its roots in party autonomy as the advantages of arbitration are freedom and flexibility and
that parties should have the freedom to not be tied down by the peculiarities of mandatory law and the
seat.

It is necessary to clarify that the argument of detaching arbitration from the law of the seat does not
mean that the arbitration should be detached completely from the supervision of national laws but only
means that the courts at the seat should not perform any role in the arbitration. As it is, the award will
always be subject to challenge at the place of enforcement.

RENATA argues that, the role of the courts at the seat may well be discharged by arbitral institutions as
the institutions can appoint an arbitrator if the parties fail to do so, replace an arbitrator, if necessary,
order interim or conservatory measures once the tribunal has been constituted or have emergency

99
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 57 (2ND
EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
100
William Park, The Lex Loci Arbitri and International Commercial Arbitration, 32 Int'l & Comp. L.Q. 21
(1983).
55
arbitration before the constitution of the tribunal. Furthermore, arbitral institutions can also deal with
maintaining the integrity of the award by scrutinizing the same.101

While delocalization holds the promise of minimum court interference, there are still issues which can
only be resolved by courts such as passing orders against third parties which have not consented to the
arbitration agreement. Also, courts have wider powers to grant interim measure as opposed to the
arbitral tribunal and more importantly the power to enforce the order. Similarly, it is only the courts that
can compel the appearance of a witness or bringing on record evidence. The most pertinent question
that is to be addressed when one leans in favor or in against of delocalization is whether the courts at
the seat support arbitration or disrupt the arbitration process? In the country like India, where courts
have time and again have intervened in almost every step of the arbitral process in order to exercise
control over the arbitration proceeding, the delocalization theory may make India more pro-arbitration.
However, the pro and cons need to be weighed before one can blindly accept the detachment of local
law to international arbitration.

One of the downsides of delocalization is also the fact that the award previously set aside at the seat of
arbitration may be enforced at the seat due to the detachment from local law. However, this concern is
misplaced as Article V(1)(e) of the New York Convention provides for a possible ground that an award
will not be enforced if it had been set aside in the country of its origin. Though it must be clarified that
the same is discretionary because of the use of the word “may” in Article V(1)(e) of the New York
Convention.

In Ticaret Sirketi v. Norsolor102, French Cour de Cassation held that an award that had been set aside in
Austria can be enforced in France. The court placed reliance on Article VII of the New York
Convention, which provides the following:

“[T]he provisions of the present Convention shall not … deprive any interested party of any right he
may have to avail himself of an arbitral award in the manner and to the extent allowed by the law or
the treaties of the country where such award is sought to be relied upon.”

This trend was later followed by the French Cour de Cassation in Hilmarton v. OTV103 which permitted
enforcement of the award which had been annulled in Switzerland. Similarly, the same court in P.T.
Putrabali Adyamulia v. Rena Holding104 permitted enforcement of the award which was annulled by
the English Court. The court held that:

101
Renata Brazil-David, Harmonization and Delocalization of International Commercial Arbitration, 28 J Int’l
Arbitration 5, 458, 445-466 (KLI 2011).
102
Ticaret Sirketi v. Norsolor, Cass. 1e civ., October 9, 1984, 1985 Rev. Arb 431.
103
Hilmarton v. OTV, Cass. 1e civ., March 23, 1994, 1994 Rev. Arb. 327.
104
PT Putrabali Adyamulia v. Rena Holding, Cass. 1e civ., June 29, 2007, Arret no. 1021.
56
“An arbitration award which is not linked to the legal order of a particular country, is a ruling of
international justice, the validity of which is examined in the light of the rules of the country in which
its recognition and enforcement is sought.”

Detaching awards from the local law of the seat has also been followed in the United States in
Chromalloy Aeroservices v. the Arab Republic of Egypt105, where the Court in America allowed the
enforcement of an award set aside by the Court of Appeal in Cairo. Similarly, in Karaha Bodas Co.,
L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara106, the Fifth Circuit Court enforced
an award set aside by the Indonesian Court, as the award had not been set aside at the seat i.e.
Switzerland.

It is pertinent to note that these decisions have also been criticized for making arbitration unpredictable
and unreliable. This could also affect the monopoly of international arbitration as a method of dispute
resolution. In fact, in two decisions post Chromalloy, In Baker Marine (Nig.) Ltd. v. Chevron Ltd107 and
in Spier v. Calzaturificio Tecnica S.p.A.108, the courts refused enforcement of awards set aside in Nigeria
and Italy. The rationale for rejection was that “the governing agreements made no reference to United
States law, and nothing suggested that the parties intended United States domestic arbitral law to
govern their disputes.”

Contrasting this approach with those of the English Courts in Bank Mellat v. Helliniki Techniki S.A.109,
the English Court of Appeal held that:

“Despite suggestions to the contrary by some learned writers under other systems, our jurisprudence
does not recognize the concept of arbitral procedures floating in the transnational firmament,
unconnected with any municipal system of law.”

In Naviera Amazonica Peruano S.A. v. Compania Internacional de Seguros del Peru110, the court
categorically rejected the delocalization theory and held that:

“English law does not recognize the concept of a “delocalized” arbitration … Accordingly, every
arbitration must have a “seat” or locus arbitri of forum which subjects its procedural rules to the
municipal law which is there in force”

105
Chromalloy Aeroservices v. Arab Republic of Egypt, 939 F. Supp. 907 (D.D.C. 1996).
106
Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d 274, 287–
88 (5th Cir. 2004).
107
Baker Marine (Nig.) Ltd. v. Chevron Ltd., 191 F.2d 194 (2d Cir. 1999).
108
Spier v. Calzaturificio Tecnica S.p.A., 71 F. Supp. 2d 279 (S.D.N.Y. 1999).
109
Bank Mellat v. Helliniki Techniki S.A., [1984] Q.B. 291 (English Court of Appeal).
110
Naviera Amazonica Peruano S.A. v. Compania Internacional de Seguros del Peru, [1988] 1 Lloyd's Rep. 116
(Civ. Div.) (English Court of Appeal).
57
 Chapter XI – Transnational Theory

Transnational theory is a recent addition to the theories of arbitration propounded by eminent jurist
Prof. Emmanuel Gaillard who essentially suggests that there is a transnational system of legal order
known as the arbitral legal order which stems from various national legal orders or systems which
together constitutes the transnational nature of the international arbitration. What Prof. Gaillard means
that national legal systems are not excluded from this transnational legal order, but the arbitral process
no longer hinges on the particularities of the national legal order at the seat of the arbitration or
elsewhere. Instead, this theory recognizes that the validity and legitimacy of international arbitration is
rooted in the collectivity of national legal orders, as opposed to one or even several individual national
legal systems. In other words, the arbitral legal order incorporates and reflects the trends stemming from
national legal systems. Transcending national legal orders is therefore not synonymous with the creation
of an a-national legal order or the delocalised approach, which would be characterized by a rejection
of, or opposition to, national legal systems.111

In fact, the contrary view is that the transnational view of international arbitration is a vision that
embraces rather than rejects the laws derived from national legal systems, acknowledging and following
trends developed collectively by national legal systems. The views developed collectively by the
community of nations can been seen in instruments such as the 1958 New York Convention, the
UNCITRAL Model Law and numerous guidelines which reflect a common view as to how an
arbitration should be conducted so as to be recognized as a legitimate means of adjudication. 112 Thus,
the transnational theory recognizes an arbitral legal order that is founded on national legal systems,
while at the same time transcending any individual national legal order.113

The transnational vision acknowledges that national courts may have differing approaches to questions
brought before them but this does not mean that the parties have accepted that any particular local court
has the ultimate decision-making power as regards the outcome of an international arbitration. If parties
intended for national courts to have this authority they could have chosen to submit their dispute to the
local courts rather than an arbitral tribunal. Thus, arbitrators endorsing a transnational view would likely
consider that they are not bound by decisions rendered by local courts, particularly in situations where
such courts appear to be improperly attempting to assist a local party in the arbitral process.

111
Emmanuel Gaillard, The Representations of International Arbitration, Journal of lnternational Dispute
Settlement 9 (2010).
112
Emmanuel Gaillard, International Arbitration as a Transnational System of Justice in Arbitration - The Next
Fifty Years, ICCA Congress Series no. 16, 66 (2011).
113
EMMANUEL GAILLARD, LEGAL THEORY OF INTERNATIONAL ARBITRATION 16 (Martinus Nijhoff Publishers
2010).
58
 Chapter XII – Difference between Public International Law and Private
International Law

As discussed in the previous modules, “international” of international commercial arbitration comes

from the fact that the parties are based in different foreign jurisdictions or has some relation to its
functionality based out of a foreign jurisdiction. Naturally, the law applicable then in such transactions
should be international law and its branches. Therefore, the current section delves into the nature of
international law vis-à-vis international commercial arbitration and its applicability and distinction
between its branches viz. public international law and private international law.

International law is the set of legal rules that govern relations between states or international
organizations or between private persons in an international context. It comprises of certain norms,
which consists of texts ratified by different states, agreements, conventions, protocols and international
treaties. Such law can be bilateral meaning it governs two states or could be multilateral which means
that it governs several states. The idea behind international law is to apply the norms in respective
signatory’s territory, only if there is reciprocity, by granting them a level higher than their national
standards. It is important to note that international law is binding on the state even if a rule of domestic
law is contradictory to it.

As mentioned earlier, international law consists of two branches:

Public International Law

In general, public international law refers to all the legal rules governing international relations between
public entities such as States and International Organisations.

According to Velimir Zivkovic, “public international law is, most broadly speaking, a system of norms
that governs relationship between legal entities recognized in the sphere of international law; primarily
although not exclusively sovereign states an international organizations.”

Public international law’s principal focus traditionally has been the State. It regulates states, and
attempts to do so uniformly, but doesn’t restrict States to directly deal in business or seek to promote
an environment supportive of business. Hence, States may enter into treaties that have a business
purpose and impose duties on them relating to privating actors within their jurisdiction.

Private International Law

In general, private international law is the set of rules applicable to the relations of private persons of
different nationality. The idea is to resolve conflicts of law arising out of relations between foreign
59
persons, in particular to know which law applies to the relationship and to deal with conflicts of
jurisdiction.

Private international law has a bit of deceiving name. It is actually a branch of national laws that deals,
mostly, with determining what the applicable law should be when there is a foreign element in the
relationship (foreign national involved, place of event was abroad, etc.). It is actually called in common
law states conflict of laws which perhaps explains it better.

The main concept of private international law is the “foreign element”. Private international law is the
area of law that comes into play whenever a court is faced with a question that contains a foreign
element, or a foreign connection. The mere presence of such a foreign element in a legal matter raises
a number of questions and it is the function of private international law to provide an answer to these
questions and to ensure just solutions.

Private international law is increasingly referenced in international arbitrations; arbitral tribunals are
beginning to develop truly transnational principles, rules, and methodologies of private international
law that are completely devoid of connections with the State.114 States regularly conclude treaties on
private international law or otherwise harmonize their domestic laws relevant to private international
disputes.115

Distinction

The divide between the public and private international law suggests that the two occupy different,
mutually exclusive domains. On one hand, public international law comprises the legally binding rules
and principles governing states’ interactions.116 On the other hand, private international law concerns
the civil and commerical interactions of private actors who might hail from different States but who are
subject to domestic law regarding jurisdiction, the applicable law, and the enforcement of judgments.
While public international law is commonly regarded as truly international, private international law is
generally considered to be international only in name.117 Further, public international law concepts
shape a State’s application of its own law whereas; private international law principles shape application
of public international law in national courts.

114
Emmanuel Gaillard, Aspects Philosophiques Du droit De L’Arbitrage International, 329 COLLECTED COURSES
OF THE HAGUE ACADEMY OF INTERNATIONAL LAW 49 (2007).
115
Diego P. Fernandez Arroyo and Makane Moise Mbengue, Public and Private International Law in
International Courts and Tribunals: Evidence of an Inescapable Interaction, 56 COLOUMBIA JOURNAL OF
TRANSNATIONAL LAW 797, at 800 (2018).
116
Diego P. Fernandez Arroyo and Makane Moise Mbengue, Public and Private International Law in
International Courts and Tribunals: Evidence of an Inescapable Interaction, 56 COLOUMBIA JOURNAL OF
TRANSNATIONAL LAW 797, at 800 (2018).
117
Diego P. Fernandez Arroyo and Makane Moise Mbengue, Public and Private International Law in
International Courts and Tribunals: Evidence of an Inescapable Interaction, 56 COLOUMBIA JOURNAL OF
TRANSNATIONAL LAW 797, at 801 (2018).
60
 Chapter XIII – Sovereign Immunity

The doctrine of sovereign immunity is a well-established principle of international law, based on comity
and the equality of states. According to the doctrine of sovereign immunity, a sovereign state should
not be impleaded in the courts of another sovereign state against its will. Its rationale is to promote the
functioning of all governments by protecting states from the burden of defending litigation abroad. 118
Over centuries foreign states were considered to enjoy absolute immunity from jurisdiction and
measures of execution in courts other than their own. Actions against state parties could only be brought
with their express consent which was also required for any measure of execution. In the twentieth
century the growing involvement of states in commercial activities led to a progressive erosion of the
absolute immunity doctrine. Most countries now follow a restrictive immunity doctrine.119

Accordingly, when one party to a contract is a State or State entity, there is a risk that it will claim
sovereign or State immunity from the jurisdiction of another State. However, if a State has agreed to an
arbitration clause in its contract, that agreement is generally considered a waiver of its immunity, so
that it should be bound to arbitrate under the rules and laws that govern the arbitration.120 State immunity
does not prevent a state or state agency from agreeing to submit to the authority of an arbitral tribunal.
It is a well-established principle of international law that a sovereign is bound by an agreement to
arbitrate contractual disputes,121 and the ability so to submit may itself be seen as an incident or attribute
of sovereignty.

State immunity exists at two levels: first, at the level of jurisdiction; and secondly, at the level of
execution. Accordingly, there may be both immunity from jurisdiction and immunity from execution.

Jurisdictional Immunity

The defence of immunity from jurisdiction has been raised in arbitration as well as in national courts
acting in support of arbitration. Concerning the jurisdiction of the arbitration tribunal, the private nature
of arbitration raises the question whether the doctrine of sovereign immunity applies at all. The
arbitration can proceed validly only on the basis that the state concerned has agreed to arbitrate, and
such an agreement is generally held to be a waiver of immunity. In the United Kingdom, for example,
the State Immunity Act 1978 provides that where a state has agreed in writing to submit existing or

118
BROWNLIE, PRINCIPLES OF PUBLIC INTERNATIONAL LAW 329 (5th edn, Oxford University Press 1998).
119
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 743 (KLUWER LAW INTERNATIONAL, 2003).
120
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 56 (2ND
EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
121
This principle of international law is highlighted in the award of 12 April 1977 of Mahmassani, sole arbitrator
in Libyan American Oil Co. (Liamco) v Government of the Libyan Arab Republic (1982) 62 ILR 140, at 178.
61
future disputes to arbitration, the state is not immune in respect of proceedings in the courts of the
United Kingdom that relate to the arbitration.122

Generally, if the state agrees to arbitration it cannot at a later stage invoke its sovereign immunity to
resist the jurisdiction of the tribunal and thereby defeat the agreement it entered into. Such behaviour
would violate general principles of law and good faith which are expressed in the principle of estoppel.
This is clear in the international instruments and is also recognised by international practice. 123 For
example, In Anglo-Iranian Oil Case, it was held by the International Court of Justice that a State’s
refusal to carry out an obligation to arbitrate in accordance to the terms of the contract with an alien
amounts to a grave violation of International Law and denial of justice even when the State maintains
that the contract is void ab initio. It must also be noted that the principles of justice, equity, fairness and
good conscience would be defeated if the state invokes its internal legal or constitutional prohibitions
when the state party does not have the facility or opportunity to verify the officials’ credentials &
competence to bind the state.

Immunity from Execution

The fact that a state cannot claim immunity from jurisdiction does not necessarily mean that the state is
not immune from the actual execution of the award. Problems are most likely to arise when a winning
party attempts to enforce and execute its award against a state or state entity. If the state concerned
wishes to evade its obligations,124 it may do so by claiming immunity from execution. It may be thought
inappropriate that a state or state entity can escape its legal obligations in this way, but this is the logical
result of conferring immunity upon states. Moreover, whilst the existence of an arbitration agreement
is usually held to be a waiver of immunity from jurisdiction, such a waiver is generally not held to
extend to immunity from execution. By way of example, statute in England125 requires separate waivers
in respect of execution and jurisdiction. Easily evident, if a foreign state is allowed to invoke immunity
from execution of an arbitral award, the purpose of the entire process would be frustrated. It is now
well-recognized that a state which consents to arbitration like any other party de facto commits to carry
out the resulting arbitral award too.

122
English State Immunity Act 1978, s. 9. See Svenska Petroleum Exploration AB v Government of the Republic
of Lithuania (No. 2) [2006] EWCA Civ 1529.
123
ICC case no 2321, I YBCA 133 (1976) 135; Delaume, Sovereign Immunity and Transnational Arbitration, 3
Arb Int 28, at 30 (1987).
124
If it did not, presumably the question of enforcement would not arise, since it would carry out the award
voluntarily.
125
State Immunity Act 1978, s. 13(3).
62
 Chapter XIV – Laws Governing Arbitration

Arbitration is the preferred means of dispute resolution because of the substantial autonomy and control
over the process that the parties can avail which are not present in the traditional court administered
system. In arbitration, parties have the flexibility to choose the following:

a) Who judges the dispute between the parties i.e. the arbitrator or a group of
arbitrators;

b) What rules of procedure and evidence are to be applied by the arbitrators;

c) The place at which the arbitration is to be conducted i.e. the venue;

d) The law under which the parties would want the dispute to be decided e.g. Indian
Contract Act, CISG, UNIDROIT Principles, etc.;

e) The law governing the arbitration agreement i.e. the law distinct from the main
contract for the purposes of determining the validity, interpretation, and
enforcement of the arbitration clause, irrespective of the validity or invalidity of
the main contract;

f) The seat of arbitration (lex arbitri) i.e. the place where the courts would exercise
supervisory jurisdiction and provide orders in support of arbitration e.g. interim
measures, the appointment of arbitrators, assistance in taking evidence, setting
aside the arbitral award, etc.

Law Governing the Capacity of the Parties

In arbitration, award can be refused if one or both of the parties did not have the capacity to enter into
the arbitration agreement or there is no valid arbitration agreement. In order to fully understand the
scope of this ground for refusal, it is necessary to refer to Article V (1) (a) of the New York Convention.

Recognition and enforcement of the award may be refused, at the request of the party against whom it
is invoked, only if that party furnishes to the competent authority where the recognition and enforcement
are sought, proof that:

(a) The parties to the agreement referred to in article II were, under the law applicable to them, under
some incapacity, or the said agreement is not valid under the law to which the parties have subjected it
or, failing any indication thereon, under the law of the country where the award was made;

63
In 1955, the early draft of the language used was “that the parties against whom the award is invoked,
being under legal incapacity, was not properly represented.” This provision was substantially similar
to Article 2 (b) of the Geneva Convention and Article IV (c) of the ICC Draft. Of all the country, New
Zealand suggested that their drafts should specify by what law these criteria are to be interpreted and
the law of the seat should be that law. However, this suggestion was dropped from the convention and
the Netherlands introduced it as a last-minute amendment but that did not spark any substantial
discussion.126

Under Article V(1) (a) of the New York Convention, the ground for refusal of recognition and
enforcement of the arbitral award is where either party did not have the capacity enter into an arbitration
agreement. This means that the party that entered into that arbitration agreement did not have the power
to contract at the time of execution or consummation of the agreement. The party may be a juridical
person, a government entity or the government itself. This is known as subjective arbitrability.
However, it should be noted that questions of subjective arbitrability are of limited practical relevance
and arise rarely.

The key point of consideration while determining incapacity of the party the relevant time frame is
important and the incapacity should exist at the time of entering into the agreement. Most courts
construe the question of incapacity narrowly,127 especially courts in the United States.

Though on first impression it appears that questions related to agency would fall within incapacity i.e.
whether a person acting on behalf of the parties is validity authorized and empowered to enter into an
arbitration agreement or not does not fall within the question of subjective arbitrability but within the
national law designated by the conflict of law rules of the seat.

Incapacity refers to the lack of complete knowledge or free will to enter into arbitration. A weaker party
in a contract negotiation may claim incapacity. A Canadian Court found incapacity to mean evidence
of oppression, high-pressure tactics, or misrepresentation. However, these were not present in the case
before the court.128

The phrase “under the law applicable to them” in article V (1) (a) should be understood as a choice of
law provision i.e. the law of the seat and does not necessarily mean law applicable to the arbitration
agreement.

126
PATRICIA NACIMIENTO, ARTICLE V(I)(A), IN HERBERT KRONKE, PATRICIA NACIMIENTO, ET AL. (EDS),
RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS: A GLOBAL COMMENTARY ON THE NEW YORK
CONVENTION 217 (KLI 2010).
127
PATRICIA NACIMIENTO, ARTICLE V(I)(A), IN HERBERT KRONKE, PATRICIA NACIMIENTO, ET AL. (EDS),
RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS: A GLOBAL COMMENTARY ON THE NEW YORK
CONVENTION 218-219 (KLI 2010).
128
Grow Biz International Inc. v. DLT Holding Inc. and Debbie Tanton, 2001 PESCTD 27 YCA XXX (2005).
64
The second part of Article V (1) (a) deals with a refusal to enforce an award in the absence of a valid
arbitration agreement. The validity of the main contract has to be examined separately from the validity
of the arbitration agreement as per the doctrine of separability. Most jurisdiction including the New
York convention requires the arbitration agreement in writing and signed by the parties. The writing
requirement may also be satisfied if the modern means of communication would amount to signing i.e.
expressly showing consent to arbitration.

Law Governing the Agreement to Arbitrate

Usually, it is the lex arbitri which deals with the formal validity of the arbitration agreement. However,
the law governing the arbitration agreement itself may be governed by any number of laws. Most likely
it will be the law of the place of the arbitration or the law governing the main contract. The validity of
an arbitration agreement is mainly a matter of consent and governed by ordinary principles of the
contract law. The question of consent arises either at the beginning when party resist arbitration or post-
arbitration when one party resist enforcement or applies to set-aside the award

In an ICC award,129 the tribunal was faced with the question of the validity of the arbitration agreement
at the beginning of the arbitration proceeding and applying the law governing the contract, the
arbitration agreement would have been invalid, whereas, the arbitration agreement will be valid in
accordance with the law of the seat. The tribunal applied the law of the seat and held that the agreement
was valid.

Article 178 (2) of the Swiss Private International Law Act provides the following “as to the substance,
the arbitration agreement shall be valid if it complies with the requirements of the law chosen by the
parties, or the law governing the object of the dispute, and, in particular, the law applicable to the
principal contract, or with Swiss law.” Thus, Switzerland has a very broad concept of the law governing
the validity of the arbitration agreement and if the arbitration agreement is valid either under the law of
the seat or the law governing the contract or the law of the forum then such arbitration agreement would
be valid.

Under the Model Law, an arbitration agreement will not be valid under the law to which the parties
have subjected it and in the absence of choice, under the law of the seat. Since the parties rarely choose
a specific to govern the arbitration agreement, most often under the Modern Law, the invalidity of the
arbitration agreement is determined by the arbitration seat.

Article 16(4) of the LCIA Rules provide for the following:

129
ICC Award in Case No. 6162, Consultant (France) v. Egyptian Local Authority (1992) XVII YearBook
Commercial Arbitration 153.
65
“The law applicable to the Arbitration Agreement and the arbitration shall be the law applicable at the
seat of the arbitration, unless and to the extent that the parties have agreed in writing on the application
of other laws or rules of law and such agreement is not prohibited by the law applicable at the arbitral
seat.”

One of the landmark judgments of the English court is the case of Sulamérica Cia Nacional de Seguros
SA and others v. Enesa Engenharia SA130 and or where the English Court of appeal held that the
governing law of an arbitration agreement was English law even though the parties have expressly
chosen the Brazilian law as the law governing the contract and the exclusive jurisdiction of the courts
in favor of Brazilian Courts. The court laid down the test to determine the law applicable to the
arbitration agreement as to the following:

The English Court of Appeal held that the law of the arbitration agreement was to be determined by the
application of the three-stage inquiry established at common law.

1. “If the parties made an express choice of law to govern the arbitration agreement, that choice
would be effective, regardless of the law applicable to the contract as a whole.
2. Where the parties failed expressly to specify the law of the arbitration agreement, it was
necessary to consider whether the parties had made an implied choice of law.
3. Where it was not possible to establish the law of the arbitration agreement by implication, it
was necessary to consider what would be the law with the ‘closest and most real connection’
with the arbitration agreement.”

The court accepted that in the absence of any contrary choice, it can be naturally assumed that the
parties intended for the same law to govern the main contract as well as the arbitration agreement.
On the facts and circumstances of the case, However, the court came into the conclusion that there
was enough material to show that the parties did not intend that the Brazilian law should apply to
the agreement. This position of law was previously held in C v D and XL Insurance Ltd v. Owens
Corning.131 In both cases, the court came to the conclusion that by choosing London as a seat of
arbitration, there was an implied choice in favor of English Law as the Law governing the
Arbitration agreement.

The Supreme Court of Sweden in the BUL Bank case clearly held that

“…no particular provision concerning the applicable law for the arbitration agreement itself was
indicated [by the parties]. In such circumstances the issue of the validity of the arbitration clause should

130
2012 EWHC 42 (Comm).
131
[2000] 2 Lloyd’s Rep. 500.
66
be determined in accordance with the law of the state in which the arbitration proceedings have taken
place, that is to say, Swedish law.”

Thus, Supreme Court categorically ignored the Austrian Law as the express choice of law by following
a rationale that the arbitration clause ought to be treated as a separate agreement subject to a separate
law.

Similarly, in the case of Brussels Tribunal de Commerce, in Matermaco v. PPM Cranes132 reading
Article II (1) and V (2) (a) of the New York Convention held the law of Belgium (being the seat) to
apply to the question of arbitrability, even though the parties had chosen the law of the State of
Wisconsin to apply to the contract. The court held that:

“…and a consistent interpretation of the Convention requires that the arbitrable nature
of the dispute be determined, under the said Articles II and V, under the same law, that
is, the lex fori. Hence it is according to Belgian law that the arbitrable nature of the
present dispute must be determined.”

The importance of the law of the seat is paramount in the United States. The Federal Arbitration Act of
1925 is a body of federal substantive law and that it self-constitutes the law governing the arbitration
agreement despite an express choice of the foreign law. This view has been affirmed by several cases
such as Pedcor Mgt Co. Inc. Welfare Benefit Plan v. North American Indemnity133, AT&T Mobility LLC
v. Concepcion, County of Nassau v. Chase,134 all of which state that the FAA preempts the state law
which contradicts the purpose of FAA. Hence once the dispute is covered by the FAA, Federal Law
applies.

However, this approach is not universally consistent and there are tribunals and courts that resort to the
law governing the contract to determine the validity of the arbitration agreement. In ICC award in case
no 2626135 the arbitral tribunal held that “it is commonly accepted the choice of law applicable to the
principal contract also tacitly governs the situation of the arbitration clause, in the absence of a specific
provision.”

Reading of article 34 (2) (a) (i) of the Model Law, the law to which the parties have subjected the
agreement would mean the substantive law chosen by the parties as the parties would have implicitly
chosen the laws of the arbitration agreement as well. Various courts and tribunals have taken various

132
XXV Y.B. Comm. Arb. 673 (Brussels Tribunal de Commerce) (2000).
133
343 F.3d 355 (5th Cir. 2003).
134
131 U.S. 1740 (2011).
135
ICC Award in CaseNo. 2626; S. Jarvin and Y. Derains, Collection of ICC Arbitral Awards, 316 1974–1985
(1990).
67
approaches. The French Cour de cassation136 held that it is the intention of the parties that determines
the validity or invalidity of the arbitration agreement not the provisions of any national law. The court
observed that:

“[B]y virtue of a substantive rule 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 French law and
international public policy, on the basis of the parties' common intention, there being no need to refer
to any national law.”

This is also in line with the theory of delocalization as it seems reasonable that once the parties have
chosen the law governing the contract and the law of the seat, if the two laws conflict, the tribunal would
be involved in a lengthy analytical effort to determine the validity of the arbitration agreement whereas,
a simple intent of the parties test would be easier to apply and to meet the expectation of the parties.137

The U.K Supreme Court examined the French approach in Dallah Real Estate and Tourism Holding
Co. v. Ministry of Religious Affairs, Government of Pakistan138 and applying French law held the
following:

“[Under French law,] arbitration agreements derive their existence, validity and effect from supra-
national law, without it being necessary to refer to any national law. If so, that would not avoid the
need to have regard to French law ‘as the law of the country where the award was made’ under Article
V(1)(a) of the Convention and s. 103(2)(b) of the 1996 Act. The Cour de Cassation is, however, a
national court, giving a French legal view of international arbitration; and Dallah and the Government
agree that the true analysis is that French law recognizes transnational principles as potentially
applicable to determine the existence, validity, and effectiveness of an international arbitration
agreement, such principles being part of French law.”

However, many commentators such as REDFERN & HUNTER mention that it is illogical to state that
when parties choose a particular law to govern their agreement, some other law which the parties have
not chosen be applied to one of the clauses in the entire agreement simply because it is contained in the
arbitration clause. Professor Lew states:

“There is a very strong presumption in favor of the law governing the substantive agreements the
arbitration clause also governing the arbitration agreement. This principle has been followed in many

136
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 47 (2ND
EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
137
Bridas S.A.P.I.C. v. Govt. of Turkmenistan, 345 F. 3d 347, 356 (5th Cir. 2003).
138
[2010] UKSC 46.
68
cases. This could even be implied as an agreement of the parties as to the law applicable to the
arbitration clause.”

A French commentator has offered a similar view:

“The autonomy of the arbitration clause and of the principal contract does not mean that they are
totally independent one from the other, as evidenced by the fact that acceptance of the contract entails
acceptance of the clause, without any other formality.”

It must be pointed out though this view runs contrary to the argument, that the arbitration agreement is
autonomous and separable from the other clauses in the agreement. In fact, it is this autonomy of this
arbitration clause which paves the way for the possibility that it may be governed by the different law.
This view is supported by the New York Convention as it provides that the award must be valid ‘under
the law to which party had subjected it’ or in absence of any indication thereon ‘under the law of the
country where the law was made’ i.e. the law of the seat.

69
 Chapter XV – Lex Arbitri

Lex arbitri or the law of the seat is the fundamental framework for the arbitration proceeding. However,
various jurisdictions have their own narrations regarding lex arbitri. In modern times it includes the
provisions which regulate the following matters (i) matters internal to the arbitration; (ii) the external
relationship between courts and arbitration; and (iii) the broader relationship of arbitration and the
public policies of the jurisdiction.139 It is defined as the body of law which: 140

“Legitimizes and provides a general legal framework for international arbitration. The relevant
law might itself be found in an independent statute on international arbitration or it might be a
chapter in another law, such as a civil procedure code or a law also governing domestic
arbitration. [It] can also include other statutes and codes (even those not specifically dealing
with arbitration), and case law which relates to the basic legal framework of international
arbitrations seated there

It is pertinent to note that the precise definition of lex arbitri may vary among the jurisdictions but there
is some mutual ground i.e. it must govern the following:

a. Appointment of arbitrators

b. The relationship between arbitration and national courts for supervision and
assistance

c. Mandatory rules, public policy exceptions141

ALASTAIR HENDERSON, one of the pioneer of this field, argues that the term ‘seat’ and ‘place’ can be
used interchangeably, but the term ‘seat’ is most preferred as it replicates the more appropriate juridical
nature of the concept, the nexus between applicable law and territorial attachment142. Similarly, the term
‘venue’ is not similar to the term ‘seat’. The seat of arbitration flows from its juridical seat, whereas,

139
Alastair Henderson, Lex Arbitri, Procedural Law and the Seat of Arbitration - Unravelling the Laws of the
Arbitration Process, 26 SAcLJ 886, (2014).
140
Simon Greenberg, Christopher Kee, J. Romesh Weeramantry, International Commercial Arbitration: An Asia-
Pacific Perspective (CUP 2011).
141
Alastair Henderson, Lex Arbitri, Procedural Law and the Seat of Arbitration - Unravelling the Laws of the
Arbitration Process, 26 SAcLJ 886, (2014).
142
Alastair Henderson, Lex Arbitri, Procedural Law and the Seat of Arbitration - Unravelling the Laws of the
Arbitration Process, 26 SAcLJ 886, (2014).
70
‘venue’ simply refers to the physical and geographical seat of arbitration which can be moved from one
place to another in accordance with the convenience of the arbitral tribunal and parties.143

It is important to determine the seat of arbitration because the law of the seat will be the law governing
the arbitration i.e. lex arbitri, Parties prefer the pro-arbitration and arbitration-friendly jurisdictions
where their disputes can be resolved, so that the entire arbitral process can be protected from the
unwarranted interruptions and prejudices. However, if there arises a need of the court interruption, the
local laws of the ‘seat’ will apply.

It is also referred to as the ‘procedural law’ or ‘curial law’. Lex arbitri is a procedural law but it also
possesses some substantive elements. However, there is still an ambiguity between the lines and various
countries have a various opinion upon the following:

a. The courts at the seat are for all practical purposes the only national courts with the
power to annul an award and144

b. The national courts of the “seat” may exercise this power to annul awards on the basis
of whatever grounds for vacatur the local lex arbitri provides -- unfettered by
international conventions145

c. And then, finally and most critically: Should the legitimacy of the arbitral proceeding
be called into question by annulment at the seat (on whatever grounds), such a
determination will be conclusive146

The legitimacy of an arbitration agreement is linked to the fate of the arbitration proceedings as for
which the role of the seat is vital. Moreover, if tribunals jurisdiction is based upon the consent provided
in arbitration agreement, the law of the seat i.e. lex arbitri determines the power of the national courts
of the seat to resolve any jurisdictional issues and parties to an arbitration agreement may wish to ensure
coherence between the law and procedure for determining the validity of the agreement 147. Therefore,
with the inevitable qualifications, it is important to know about the law of the seat beforehand, for better
understanding of the law governing the proceeding of the arbitration tribunal. The concept of law of the
seat originated from Article 2 of the Geneva Protocol on Arbitration Clauses 1923148:

143
The Government of India v. Petrocon India Limited, [2012] 1 LNS 974.
144
C. v. D., [2007] EWCA Civ. 1282.
145
W. Laurence Craig, Some Trends and Developments in the Laws and Practice of International Commercial
Arbitration, 30 Tex. Int’l L.J. 1, 11 (1995).
146
Emmanuel Gaillard, Aspects philosophiques du droit de l'arbitrage international (2008).
147
FirstLink Investments Corp. Ltd., at ¶ 15.
148
Article 2, Geneva Protocol on Arbitration Clauses 1923.
71
“The arbitral procedure, including the constitution of the arbitral tribunal, shall be governed by the
will of the parties and by the law of the country in whose territory the arbitration takes place”

Moreover, the UNCITRAL Model Law has taken a similar stance, stipulating that its provision will
only apply “If the place of arbitration is in the territory of the State”.

Similarly, the UNCITRAL Model Law is the perfect example to understand the concept of lex arbitri
as the Model Law has been adopted by almost 183 Countries. However, it has not been adopted
uniformly, various countries have modified it according to their need, but the major elements are
uniform in all the countries who have adopted the Model Law.

The law of the seat determines the issues encapsulated under lex arbitri:149

a. The formal validity of the arbitration agreement;

b. The capacity to resolve of the dispute through arbitration;

c. The composition of the tribunal;

d. Fundamental procedural guarantees;

e. The supervisory role of the courts; and

f. The judicial review of the arbitral awards

The scope of lex arbitri varies from one jurisdiction to another because states have their own discretion
as to what issues need to be determined and as per what law. It is certain, that this notion confirms the
purely contractual notion of arbitration proceedings. Moreover, the concept of lex arbitri is not the same
for domestic and international arbitration.150

It is pertinent to note the lex arbitri affects number of issues of arbitral process pertaining to the
arbitration agreement and arbitral procedure. As explained above, the countries have their own
reservations as to what issues and up to what extent it should be governed by a particular law. However,
parties should choose the more arbitration-friendly jurisdiction as to their ‘seat of arbitration’ otherwise
they would have to deal with unwarranted interferences.151

149
J.-F.Poudret & S. Besson, Comparative Law of International Arbitration 84 (2007).
150
A. Bělohlávek, Procesnípředpisy a rozhodčířízení [Title in translation: Procedural Laws and Arbitration],
(12) Právnífórum, 431 (2007).
151
Alexander J. Belohlavek, Importance of the Seat of Arbitration in International Arbitration: Delocalization
and Denationalization of Arbitration as an Outdated Myth, 31 ASA Bulletin 2, 262-292 (Association Suisse de
l'Arbitrage; KLI 2013).
72
For effective conduct arbitral process depends upon the rules and regulations of the law of the seat. This
can easily be determined by, taking reference to local laws for judicial assistance, even if the members
of the tribunal has the power to grant provisional measure of protection, e.g. inspection or preservation
of the property, because tribunals do not have powers to enforce such orders, particularly, when that
disputed property is in possession of some third party, then it becomes paramount to take the assistance
of the courts.152

Moreover, the choice of place of arbitration can have certain consequences, because the law of particular
place grants certain powers to the state tribunals and courts not known the parties such as consolidation
of arbitral proceedings. There can be a conflict between lex arbitri and a different system of law
regarding the arbitrability of the dispute i.e. whether or not the particular subject matter of dispute can
be resolved through arbitration or not.

At this juncture it is pertinent to state few examples of the matters with which the lex arbitri is expected
to deal during the course of arbitral proceedings, followings are:153

a. The definition and form of an agreement to arbitrate;

b. whether a dispute is capable of being referred to arbitration (that is, whether it is

‘arbitrable’ under the lex arbitri);

c. the constitution of the arbitral tribunal and any grounds for challenge of that
tribunal;

d. the entitlement of the arbitral tribunal to rule on its own jurisdiction;

e. equal treatment of the parties;

f. freedom to agree upon detailed rules of procedure;

g. interim measures of protection;

h. statements of claim and defense;

i. hearings;

j. default proceedings;

152
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION 169
TH
(6 EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
153
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION 168-
169 (6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
73
 k. court assistance, if required;

l. the powers of the arbitrators, including any powers to decide as amiables

compositeurs;

m. the form and validity of the arbitration award; and

n. the finality of the award, including any right to challenge it in the courts of the place
of arbitration

In the case of James Miller v. Whitworth Street Estates154, where an English party entered into a contract
with a Construction company of Scotland for doing certain work on a building in Scotland. In this case,
English Law was chosen by the parties to govern the interpretation of the contract, parties chose
Scotland as the seat of arbitration and after the hearing of the evidence, the English Company requested
the Tribunal to “state a case” before the High Court. However, the tribunal denied the request because
under the law of Scotland the arbitrator is the final adjudicator of both factual as well as a legal question.
Moreover, the House of Lords favored the arbitrator’s refusal.

With respect to this issue, certain guidelines were laid down in the case of Habas Sinai Ve Tibbi Gazlar
Istihsal Endustrisi AS v. VSC Steel Company Ltd155, where Hamblen J. provided the following guidance:

a. Even if an arbitration agreement forms part of the substantive contract (as is

commonly the case), its proper law may not be the same as that of the substantive
contract;

b. The proper law is to be determined by undertaking a three-stage inquiry into (i)

express choice, (ii) implied choice and (iii) the system of law with which the
arbitration agreement has the closest and most real connection;

c. Where the substantive contract does not contain an express governing law clause, the
significance of the choice of the seat of the arbitration is likely to be ‘‘overwhelming.’’
That is because the system of law of the country of the seat will usually be that with
which the arbitration agreement has its closest and most real connection;

d. Where the substantive contract contains an express choice of law, this is a strong
indication or pointer in relation to the parties’ intention as to the governing law of the
agreement to arbitrate, in the absence of any indication to the contrary;

154
[19701] I All E.R. 796 (H.L.).
155
[2013] EWHC 4071.
74
 e. The choice of a different country for the seat of the arbitration is a factor pointing the
other way. However, it may not in itself be sufficient to displace the indication of
choice implicit in the express choice of law to govern the substantive contract; and

f. Where there are sufficient factors pointing the other way to negate the implied choice
derived from the express choice of law in the substantive contract, the arbitration
agreement will be governed by the law with which it has the closest and most real
connection. That is likely to be the law of the country of the seat, being the place where
the arbitration is to be held and which will exercise the supporting and supervisory
jurisdiction necessary to ensure that the procedure is effective.

Similarly, in the case of Union of India v. Mc Donnell Douglas156, court made a detailed analysis on
this particular issue and held that:

“It must be pointed out that the law of the seat or place where the arbitration is held, is normally
the law to govern that arbitration. The territorial link between the place of arbitration and the
law governing that arbitration is well established in the international instruments, namely, the
New York Convention of 1958 and the UNCITRAL Model Law of 1985. It is true that the terms
“seat” and “place” are often used interchangeably”. “If parties have not made an express
agreement as to the law to govern the arbitral proceedings then it is usually the law of the seat
of arbitration will apply to the procedure”

A lot of cases placed reliance on the popular opinion of REDFERN AND HUNTER, which explains the
seat theory as157 “the concept that arbitration is governed by the law of the place in which it is held,
which is the (“seat” or “forum” or locus arbitri) of the arbitration, is well established in both the theory
and practice of international arbitration.”

156
[1993] 2 Lloyds Rep. 48.
157
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 3.51
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
75
 Chapter XVI – Law Governing the Contract

One of the key advantages of arbitration is the flexibility it affords to the parties to choose the law under
which their dispute should be decided. Therefore, once the parties choose the law governing the contract
any dispute that arises out of, or in connection with the contract, will be decided under the said law.
This law can be the national law of one of the parties, or national law of a neutral jurisdiction, or the
United Nation Convention on International Sale of Goods (CISG) or lex mercotaria embodied in the
UNIDROIT Principles on International Contracts.

It is to these questions that attention must now be turned. The choices that may be available to the
parties include:

a. National law;

b. Public international law (including the general principles of law);

c. Concurrent laws (and combined laws—the tronc commun doctrine);

d. Transnational law (including international development law, the lex mercatoria,

codified terms and practices, and trade usages); and

e. Equity and good conscience.

Even if parties do agree on such neutral law such as the CISG or the UNIDROIT, it is still advisable to
choose the national law as there may be questions which are not covered in either of these laws,
especially questions regarding the validity of the contract. At this point, it is necessary to explain the
concept of lex mercatoria.

One of the ideas promoted by the delocalization movement was a detachment of law from a particular
jurisdiction. In this light, lex mercatoria or the law of the merchant which refers to the non-legal
standards based in custom and practice which are universally followed becomes important. While the
concept of lex mercatoria appears to be vague and uncertain, there is some agreement about what
comprises lex mercatoria. Some characteristics definition are as follows:

a. A loosely organized system of transnational legal principles, rules, and standards

derived from the usages, customs, and practice of international commerce.158

158
L. Yves Fortier, The New, New Lex Mercatoria, or, Back to the Future, 17 Arb. Int 121, 128 (2001).
76
 b. General principles of law, transnational rules, a method of decision making.159

c. Customary commercial law.160

d. “Transnational substantive rules of law and trade usages and the method of their
application to international economic transactions.”161

e. A set of substantive rules developed to regulate international trade in the business

community, which are derived “not only from international commercial dealings,
standard clauses, international conventions and arbitral awards but also from
various sets of legal rules issued by the International Chamber of Commerce (ICC)
or other international organizations”162

Moreover, while lex mercatoria is incapable of a specific definition, various common themes emerge
from the above. First, it is not based on any one particular legal system but in co-operating international
commercial rules, general principles of law, standards and trade usages. An example of lex mercatraia
is contained in the UNIDROIT Principles of International commercial contracts. The preambles to these
principles state that they apply when parties choose for them to apply or when the contract is governed
by the general principle of law, the lex mercatoria or the like.

Another example of lex mercatoria can be found in the ICC’s Uniforms Customs and Practice for
Documentary Credits (UCP 600) which govern all letters of credit, the ICC’s INCOTERMS which
comprise the International Commercial Terms such as FOB and CIF. There is also a growing group of
commentators which includes arbitration awards as well as principle derived from international
conventions or the International Public Law to be part of lex mercatoria.

It is pertinent to remember that freedom to choose governing law stems from the concept of party
autonomy163 and many international conventions support this free choice of the parties such as the
European Community Convention on the law applicable to contractual obligations (Rome Convention),
CISG, the Inter-American Convention on the law applicable to international contract like the Mexico
City Convention. However, party autonomy is not unlimited license to choose any law and is subject to

159
Emmanuel Gaillard, Transnational Law: A Legal System or a Method of Decision Making? 17 Arb. Int. 59,
59–61 (2001).
160
Roy Goode, The Role of the Lex Loci Arbitri in International Commercial Arbitration, 17 Arb. Int. 19, 21
(2001).
161
Antonis Patrikios, Resolution of Cross-Border E-Business Disputes by Arbitration Tribunals: The Emergence
of the Lex Informatica, 38 U. Tol. L. Rev. 271, 273 (2006).
162
Dr. Beda Wortmann, Choice of Law by Arbitrators: The Applicable Conflict of Laws System, 14 Arb. Int. 97,
101(1998).
163
Apple & Eve, LLC v. Yantai North Andre Juice Co. Ltd. 610 F. Supp. 2d 226, 228–29 (E.D.N.Y. 2009);
Bautista v. Star Cruises, 396 F. 3d 1289, 1302 (11th Cir.2005).
77
mandatory law i.e. a law that cannot be excluded by a contract term and hence is subject to the public
policy of the country.

In the United States under the Restatement Second, Conflict of Laws, there must be a substantial
relationship between the party or the transaction or the law must be chosen or the reasonable basis for
the parties’ choice.164 However, New York is the exception to this rule and will enforce the parties’
choice of New York Law even if there is no relationship with the State of New York. There have been
efforts in the United States to align the practice with international standard in the area of choice of law.
Therefore, in 2001, the Uniform Commercial Code was amended to delete the “reasonable relationship”
requirement for a contractual choice of law.

It must be emphasized that the choice of law clause is not to be taken casually as any changes in the
law applicable to the contract may bring about changes in the contract itself e.g. a change in regulation
regarding Bitcoin or Cryptocurrencies may make the entire contract illegal. Accordingly, it is not
enough to know the agreement between the parties but it is imperative to know the law applicable to
the agreement. In a purely domestic contract, the law applicable will be the national law of the country.

It is pertinent to note that the party autonomy or the freedom of the parties exist at the time of making
of the contract and not subsequent. Therefore, it cannot be that the parties choose the applicable law
once the dispute has arisen. However, Rome I Regulation provides for a subsequent agreement of the
parties to change their choice of law.

164
Germany, Court of Appeal, Hamm, Yearbook Commercial Arbitration, XXII (1997) at 707, 709.
78
 Chapter XVII – Law Governing Enforcement of Award

Domestic award

Often awards arising out of international arbitration proceedings are actually enforced under the regime
for domestic awards. Though each state is generally free to determine which awards it considers to be
domestic, the relevant criterion is normally the place of arbitration. As a consequence, recognition and
enforcement of award rendered within a country is usually governed by the provisions on domestic
awards. irrespective of the national or international character of the underlying arbitration. The national
legislature is generally free to regulate the recognition and enforcement of domestic awards. There are
no international conventions imposing a minimum standard as exist for foreign awards. In general,
however, national arbitration laws have adopted a pro-enforcement approach also for domestic
awards.165

Foreign award

The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958
constitutes the backbone of the international regime for the enforcement of foreign awards. There are a
number of other international conventions and bilateral treaties that provide for the enforcement of
foreign awards.166 A brief look at major international conventions, treaties, and national laws are as
follows:

The New York Convention

The New York Convention is the most widely accepted international convention which has significantly
simplified the enforcement of foreign awards and harmonized the national rules for the enforcement of
foreign awards.167 Article III of the New York Convention clearly provides that each contracting state
shall recognize arbitration awards as binding and enforce them in accordance with the rules of
procedure of the territory where the award is relied on.” Moreover, Article III mandates that a foreign
award must be enforceable without unnecessary inconvenience or excessive fees, and the conditions
must not be more onerous than those for domestic awards.168

165
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 690 (KLUWER LAW INTERNATIONAL, 2003).
166
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 692 (KLUWER LAW INTERNATIONAL, 2003).
167
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 692 (KLUWER LAW INTERNATIONAL, 2003).
168
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 693 (KLUWER LAW INTERNATIONAL, 2003).
79
The 1961 European Convention

The 1961 European Convention deals with the enforcement of foreign awards indirectly. It provides
that an award set aside at the seat of arbitration may be recognized by the courts of states applying the
Convention.169

The 1965 Washington Convention

The 1965 Washington Convention is yet another convention with more than 130 countries as signatory
which provides for its own enforcement procedures. Each member state is under an obligation to
recognize an award rendered pursuant to the convention and enforce the pecuniary obligations imposed
by the award considering it as a final judgment of the court in that state.170

The Panama Convention

The 1975 Inter-American Convention on International Commercial Arbitration (Panama Convention)

is a convention of the American Region ratified by more than 15 South American states and the US
which is more or less similar to New York Convention as it adopts the same standard.171

National Laws and Model Laws

It is of no surprise that various national arbitration laws also contain a provision dealing with the
enforcement of foreign awards. However, a majority of them are in line with the New York Convention
and have incorporated the verbatim text of the relevant international conventions or have simply
provided that the enforcement of foreign awards will be governed by the New York Convention. 172
Model Law, under Article 36, also provides the grounds on which a court may refuse the enforcement
of an award. These grounds are akin to the grounds mentioned under Article V of the New York
Convention.

169
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 693 (KLUWER LAW INTERNATIONAL, 2003).
170
Article 54(1), The Washington Convention, 1965.
171
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 695 (KLUWER LAW INTERNATIONAL, 2003).
172
Articles 1710-1723, Belgium, Judicial Code; Articles 34-40, Brazil’s Arbitration Law; Articles 62-64, China’s
Arbitration Law; England, Sections 66, 99, and104, The English Arbitration Act, 1996.
80
 Chapter XVIII – Composition of Tribunal

The fundamental component of an arbitration proceeding is its tribunal. Since dispute resolution through
arbitration proceedings lack some of the safeguards of a national legal system, the quality of arbitration
tribunal has a significant impact on the entire arbitration proceedings. In general, because parties know
that they will not be able to appeal any decision on the merits, they want to choose the best arbitrator
they can to make that decision. Therefore, a focus on the peculiarities of the arbitration tribunal and its
various facets is important since all of it bear on the integrity of the process and on the efficiency and
effectiveness of the dispute’s resolution.

Appointment of Arbitrators

One of the most significant things a lawyer is supposed to do while resolving a client’s dispute is to
choose arbitrators who will preside over the proceedings and issue an award. The skill, experience, and
knowledge of the arbitrators will have a significant impact on the quality of the process and of the
award.173 There are several different methods of appointing an arbitral tribunal. The most common are
by the agreement of the parties, by an arbitral institution, by means of a list system, by means of the co-
arbitrators appointing a presiding arbitrator, by a professional institution or a trade association, or by a
national court.

Number of Arbitrators

In a commercial arbitration, the norm is to either appoint one or three arbitrators. Ideally, appointing a
sole arbitrator is more convenient and effective since the costs will be less and it will be easier to manage
the scheduling and other procedural aspects. Moreover, it is quicker since a sole arbitrator has to make
decisions on its own without actually waiting for other arbitrators. Yet, the preference is for three
arbitrators because they bring more to the table in terms of experience and knowledge as compared to
one, especially when huge amount of money is at stake.174 In addition, it is generally believed that the
award is more likely to be within the parties’ expectations when considered by three arbitrators, and
that unusual or inexplicable awards are less likely to occur. If the dispute is particularly large and
complex, three arbitrators may be more likely to arrive at a better, more comprehensive understanding
than one arbitrator. Further, when parties are from different countries and cultures, a comfort level is

173
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 122
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
174
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 123
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
81
provided when each party is able to select one arbitrator who comes from a similar cultural or legal
background.175

Parties may mutually decide on the number of arbitrators to be appointed in their arbitration agreement
but if they have not agreed for a number, there are various arbitral rules which have different resolutions
as to the number of arbitrators. Some rules will default to a sole arbitrator unless the matter seems
particularly complex or involves a huge some of money.176 Others default to three arbitrators, regardless
of the circumstances.177 However, the English Arbitration Act for example provides in Section 15(3)
that if there is no agreement as to the number of arbitrators, the tribunal shall consist of a sole arbitrator.
The Model Law, for example, provides in Article 10(1) that the parties are free to determine the numbers
of arbitrators. Similar provisions can be found in most other arbitration laws.178

Qualifications

As mentioned earlier, parties can choose arbitrators who have knowledge and experience in the area of
the subject matter of dispute. This eliminates the time and effort that would be necessary, if parties were
litigating before a randomly selected judge, to educate the judge about the particular industry or the
matter at issue.179

Further, while parties prefer arbitrators with a legal background, there are many arbitrators with non
legal background who are appointed for their technical expertise along with general experienced non
lawyer who are also reasonably well-versed in the relevant law. In fact, quite often, professors are also
appointed as arbitrators with a good legal background. However, professors in general are not favored
due to lack of practical knowledge or technical expertise.180

Sometimes arbitrators are also preferred for their language fluency i.e. the ability to be fluent in a
particular language which may be important to the parties. However, most important aspect is the
availability of these arbitrators as parties often want to engage well-known arbitrators, but these
arbitrators may be so busy with other arbitrations that scheduling hearings become extremely

175
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 123
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
176
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 123
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
177
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 123
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
178
England, Arbitration Act section 15(1); Switzerland, PIL Article 179(1); Sweden, Arbitration Act section 12;
Austria, CCP section 580; Netherlands, CCP Article 1026(2); the various arbitration rules often contain
comparable provisions; see only WIPO Rules Article 14(1); AAA ICDR Rules Article 5.
179
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 124
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
180
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 125
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
82
difficult.181 Most importantly, the arbitrators must have a great reputation for fairness, integrity and
wisdom.

Such qualifications can be spelled out in the arbitration clause, if agreed by the parties. For example,
the parties could assert, for example that all arbitrators must speak English, they all must have
experience in the construction industry, and the language of the arbitration must be English.182

Nationality

Ideally, the nationality or the country in which the arbitrator was born or the passport that he or she
carries should be irrelevant. The fundamental criteria should be the qualifications, experience, and
integrity of the arbitrator. Even the spirit of the Model Law provides that no person shall be precluded
by reason of his nationality from acting as an arbitrator, unless otherwise agreed by the parties. 183
However, the usual practice in international arbitration is to appoint a sole arbitrator (or a presiding
arbitrator) of a different nationality from that of the parties to the dispute.

The current practice under most sets of institutional rules is that the sole or presiding arbitrator will
almost certainly be someone of a different nationality from that of the parties to the dispute. 184 Article
6(7) of the UNCITRAL Rules, for example, provides that, in making the appointment, the appointing
authority shall have regard to such considerations as are likely to secure the appointment of an
independent and impartial arbitrator and shall take into account as well the advisability of appointing
an arbitrator of a nationality other than the nationalities of the parties.

Article 13(5) of the ICC Rules goes further and provides that ‘the sole arbitrator or the chairman of an
arbitral tribunal shall be of a nationality other than those of the parties’. Another provision allows an
exception to this rule ‘in suitable circumstances and provided that neither of the parties objects’, but
nevertheless the general rule is clear: it is a rule of neutral nationality. The LCIA and HKIAC Rules
take a similar line. Article 6(1) of the LCIA Rules provides: Where the parties are of different
nationalities, a sole arbitrator or the presiding arbitrator shall not have the same nationality as any
party unless the parties who are not of the same nationality as the arbitral candidate all agree in writing
otherwise.185

181
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 125
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
182
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 126
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
183
Model Law, Article 11(1).
184
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 4.63
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
185
HKIAC Rules, Art. 11(2)
83
Method of Selection

The arbitrator selection procedure can vary, depending on the parties’ agreement and on the institutional
rules. If parties do not state in their arbitration clause how they want to select arbitrators, but they choose
rules to govern the process, the selection will take place according to the institutional rules. However,
even if parties did not agree on a method of selection in their arbitration clause, if they can agree at the
time of the arbitration, they can generally select the arbitrators, depending on institutional rules. If the
parties cannot reach agreement, however, the institution will choose the arbitrators.186

However, in Ad Hoc Arbitration, parties need to be particularly careful to specify their method of
arbitrator selection because there is no institution to intervene. The selection method should be clear.
There should be a time frame for making the selection, and a statement of how the issue will be resolved
if parties cannot agree on a sole arbitrator or if they do not make their choice of a party-selected
arbitrator within the allotted time frame. It becomes readily apparent that in an ad hoc arbitration, even
more than in an institutional arbitration, the arbitration clause must be carefully and thoughtfully
drafted. A carelessly drafted clause may result in the parties litigating rather than arbitrating their
dispute.187

Obligations of Arbitrators

Arbitrators have the obligation to be impartial and independent. This obligation is stated in numerous
laws and rules.188 Impartiality generally means that the arbitrator is not biased because of any
preconceived notions about the issues and has no reason to favor one party over another. Independence
generally means that the arbitrator has no financial interest in the case or its outcome. It can also mean
that the arbitrator is not dependent on one of the parties for any benefit, such as employment or client
referral, and that the arbitrator does not have a close business or professional relationship with one of
the parties.189

As international law firms and multinational corporations have grown exponentially, the question of
what conflicts prevent an arbitrator from being impartial and independent has become more complex.
If an arbitrator has a serious conflict, she should not accept an appointment as arbitrator. If there is some
possible conflict, which may not be serious, the arbitrator is supposed to disclose this to the parties, so

186
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 126
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
187
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 133
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
188
UNCITRAL Model Law, art. 12(1–2); UNCITRAL Rules, art. 12(1); LCIA Rules, arts. 5.2, 10.3; ICDR Rules,
art. 7(1); ICC Rules, art. 11(1). See also IBA Rules of Ethics, art. 3.1.
189
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 136
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
84
they can decide whether they wish to challenge the arbitrator’s appointment. The UNCITRAL Model
Law and a number of arbitration rules require that an arbitrator disclose without delay any circumstances
likely to give rise to justifiable doubts as to her impartiality or independence. 190 This obligation occurs
not only at the time of appointment, but continues throughout the entire arbitral proceedings.

Perhaps the most fundamental obligation is to render an enforceable award, or at least to make best
efforts to render an enforceable award.191 Although this could be considered an ethical or a moral
obligation, some arbitral institutions impose the obligation in their rules.192

Challenges to the Arbitrator

A party can challenge the appointment of an arbitrator and seek his removal at the time the tribunal is
constituted – or later, if new facts come to light. The primary ground for challenging an arbitrator is a
conflict of interest, but arbitrators can also be challenged for improper conduct – for example, repeatedly
falling asleep at the hearings, having inappropriate ex parte conversations with one of the parties, or
simply not moving the arbitration forward in a timely manner.193

In an institutional arbitration, the rules of the institution will provide the bases for bringing the challenge
and the procedure to do so. For example, the LCIA Rules provide that an arbitrator may be challenged
on the basis of “justifiable doubts as to his impartiality or independence,” or if she “becomes unable or
unfit to act.”194 The Rules explain further that the arbitrator may be considered unfit if she does not act
fairly or impartially or does not conduct the proceedings with diligence.195

If the challenge is not successful, in many jurisdictions the party that brought the challenge may take
the issue to a court. The UNCITRAL Model Law permits such a challenge within thirty days of receipt
of notice that the challenge was rejected.196 No appeal is permitted from the court’s decision. If the
particular jurisdiction does not provide for review of a rejected challenge to an arbitrator, a party may
have to wait until the final award to obtain court review of the decision.

As international arbitration becomes increasingly adversarial, possibilities increase that a challenge to

an arbitrator is simply a tactic to delay the proceedings. It is important, however, that parties have
confidence in the arbitrators and the proceedings, which means they must have the right to challenge

190
UNCITRAL Model Law, art. 12(1). See also CIETAC rules, art. 25; LCIA Rules, art 5.3; ICDR Rules, art.
7(1).
191
Martin Platte, An Arbitrator’s Duty to Render Enforceable Awards, 20 J. Int’l Arb. 307 (2003).
192
LCIA Rules, art. 32.2; ICC Rules, art. 41
193
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 147
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
194
LCIA Rules, arts. 10.1, 10.3.
195
LCIA Rules, art. 10.2.
196
UNCITRAL Model Law, art. 13(3).
85
an arbitrator who does not inspire confidence. Challenges may be very well grounded. Moreover, many
arbitrators will simply withdraw if they believe the parties do not have confidence in them.

Truncated Tribunals

Most party-appointed arbitrators act properly and in good faith. It occasionally happens, however, that
a party-appointed arbitrator refuses to participate in the arbitration, or submits a resignation without
sufficient reason. If this takes place early in the proceedings, or if the case is one in which the interests
of justice do not require a quick decision, a replacement may be appointed.197

Appointing a new arbitrator may, however, be impractical when the resignation, or refusal to participate,
occurs late in the arbitral proceedings. Finding and appointing a replacement, and allowing the new
arbitrator to become familiar with the case, inevitably causes delay. The situation is particularly
aggravated if the arbitrator chooses to resign, or refuses to participate, when the stage of the tribunal's
deliberations is reached. In such cases, and in cases in which a quick conclusion to the arbitration is
essential, the only sensible course may be for the two remaining arbitrators to continue with the
proceedings and to render an award without the participation of the third arbitrator.198

A number of celebrated cases provide examples of situations in which arbitral tribunals have continued
proceedings and rendered awards as truncated tribunals.199 Most of these have been ad hoc arbitrations,
but there have been cases under the UNCITRAL Rules200 and the ICC Rules201 in which proceedings
have been continued and awards rendered by truncated tribunals.

It has been argued that the underlying rationale to ensure an equal representation of the parties in the
tribunal, is affected where one of the party appointed arbitrator does not participate in part of the
proceedings. Furthermore it has been maintained that an award rendered by a truncated tribunal of two
arbitrators is not in accordance with the agreement of the parties on a three-member tribunal.202

It must be noted that the the prevailing view in international arbitration practice is that truncated
tribunals should be allowed to proceed in such situations and to render an award, thus preventing an
obstructive and partisan arbitrator from frustrating the whole arbitration.203

197
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 4.154
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
198
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 4.155
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
199
These cases were discussed at the 1990 ICCA Congress: see Schwebel and Böckstiegel, Preventing delay or
disruption of arbitration, (1991) 5 ICCA Congress Series 241, at 270– 274.
200
Sedco Inc. v National Iranian Oil Co., Case No. 129, reprinted in (1985) 8 Iran–US CTR 34.
201
Böckstiegel, Preventing delay or disruption of arbitration (1991) 5 ICCA Congress Series 271.
202
Szurski, The Constitution of the Arbitral Tribunal, ICCA Congress series no 9, 331.
203
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 323 (KLUWER LAW INTERNATIONAL, 2003).
86
Determination of Jurisdiction

The jurisdiction of the tribunal is fundamental to the authority and decision making power of the
arbitrators. Awards rendered without jurisdiction have no legitimacy. The absence of jurisdiction is one
of the few recognized reasons for a court to set aside or refuse recognition and enforcement of an
award.204

An arbitration tribunal faced with the issue of its own jurisdiction must first determine whether it is
competent to deal with the specific jurisdictional question or whether it must be referred to the court.
The question that follows is the form in which the decision should be made. Before it can decide on the
substantive issue in dispute an arbitration tribunal must ascertain that it has jurisdiction. This does not
mean that arbitrators always have to make a full inquiry into all aspects of their jurisdiction. Generally,
where both parties participate in the appointment of the tribunal and introduce their respective claims
and counterclaims without reservations, jurisdiction will not be an issue. Where the tribunal is
concerned about the scope of the arbitration agreement, and where there is no jurisdictional challenge,
it may ask the parties to confirm the jurisdiction of the tribunal over the issue before it, which will give
it jurisdiction if it did not exist before.205

To strengthen the jurisdiction of the arbitration tribunal and to minimize challenges being used to delay
or derail arbitration proceedings most modern arbitration laws employ different techniques. The central
element in those efforts is the recognition of the tribunal's authority to determine its own jurisdiction or
competence, the so called “competence-competence” principle.206

Competence-Competence

The doctrine of competence-competence, which is followed in most jurisdictions, provides that

arbitrators are competent to determine their own competence – that is, they are empowered to decide
their own jurisdiction to hear and determine the dispute before them.207

Sometimes the doctrine is criticized by those who assume that arbitrators will most likely find that they
have jurisdiction in order to avoid losing a good job opportunity. However, the view in many countries
is that by choosing arbitration, parties intend for an arbitrator to decide all disputes arising out of the

204
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 328 (KLUWER LAW INTERNATIONAL, 2003).
205
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 329 (KLUWER LAW INTERNATIONAL, 2003).
206
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 331 (KLUWER LAW INTERNATIONAL, 2003).
207
UNCITRAL Model Law, art. 16(1); French Code of Civil Procedure, art. 1465; Netherlands Arbitration Act,
art. 1052(1); ICDR Rules, art. 15(1); LCIA Rules, art. 23.1; ICC Rules, art. 6(3).
87
contract, even those concerning the jurisdiction of the arbitrator. However, it is pertinent to note that
not all countries endorse the competence-competence doctrine.208

The doctrine of competence-competence may well be related to a court’s approach as to whether it will
give a full or a prima facie review of the validity of the arbitration agreement, because a strong
competence-competence doctrine, as in France, will tend to result in very slight review by a court. But
some jurisdictions, such as China, have no competence-competence doctrine, so the tribunal will never
determine its own competence.209

Other countries, particularly countries that have adopted the UNCITRAL Model Law, permit arbitrators
in most instances to decide the issue of an arbitration agreement’s validity, viewing them as competent
to determine their own competence to hear the arbitration. As noted earlier, under the Model Law, a
tribunal can rule on a question of its own jurisdiction either as a preliminary question or in a final
award.210 If, however, the tribunal rules as a preliminary matter that it has jurisdiction, a party can
request within thirty days that a court review the decision and determine whether jurisdiction is
proper.211

The Model Law under Article 16(1) mentions that the arbitral tribunal may rule on its own jurisdiction,
including any objections with respect to the existence or validity of the arbitration agreement. For that
purpose, an arbitration clause which forms part of a contract shall be treated as an agreement
independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is
null and void shall not entail ipso jure the invalidity of the arbitration clause.

Separability

The doctrine of separability is another technique, recognized in arbitration rules and laws, which further
strengthens the jurisdiction of the arbitrator. While competence- competence empowers the arbitration
tribunal to decide on its own jurisdiction, separability affects the outcome of this decision. The doctrine
of separability establishes that an arbitration agreement has a separate life from the contract for which
it provides the means of resolving disputes and consequently survives the invalidity or breach of the
contract of which it is a clause. 212

The doctrine of separability essentially means that the arbitration clause in a contract is considered to
be separate from the main contract of which it forms part and, as such, survives the termination of the

208
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 91 (2ND
EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
209
Jingzhou Tao & Clarisse Von Wunschheim, Articles 16 and 18 of the PRC Arbitration Law: The Great Wall
of China for Foreign Arbitration Institutions, 23 Arb. Int’l 309, 312 (2007).
210
UNCITRAL Model Law, art.16(3).
211
UNCITRAL Model Law, art.16(3).
212
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 334 (KLUWER LAW INTERNATIONAL, 2003).
88
contract. The fundamental principle of arbitration law is that arbitrators have the power to rule on their
own jurisdiction. This principle is often presented as a direct result of the separability doctrine. It is
because of the autonomy of the arbitration agreement that any claim that the main contract is in some
way void will have no direct impact on the arbitration agreement.

In other words, when a party claims that the contract is void and argues that subsequently the arbitration
clause is also going to be void, the doctrine of separability will come into effect. Therefore, by treating
arbitration agreements as distinct from the main contract, separability rescues many arbitration
agreements from failing simply because they are contained in contracts the validity of which is
questioned.

If simply by denying that the main contract is valid one party can deprive the arbitrator of competence
to rule upon that allegation, this provides a loophole for parties to reject their obligation to arbitrate.
This defeats one of the main advantages of choosing arbitration over litigation as a means of dispute
settlement: speed and simplicity without the time and expense of the courts. The problem is worse in
international arbitration agreements, since there is no international court with compulsory jurisdiction
to determine and enforce the validity of the contract.

In most jurisdictions, this doctrine of separability permits the arbitrators to hear and decide the dispute
even if one side claims, for example, that the contract is terminated, or is invalid because it was
fraudulently induced. Such claims would not deprive the arbitrators of jurisdiction because they pertain
to the main contract and not specifically to the arbitration clause. Because the arbitration clause is
considered a separate and distinct agreement, it is not affected by claims of invalidity of the main
contract, and still confers jurisdiction on the arbitrators to decide the dispute. 213 The separability
doctrine is embodied in numerous arbitration laws and rules.214

The doctrine of separability came into picture in the French judgment of Gosset215 where the Cour de
Cassation held that “in international arbitration, the arbitration agreement, whether concluded
separately or included in the contract to which it relates, shall, save in exceptional circumstances, have
full legal autonomy and shall not be affected by the fact that the aforementioned contract may be
invalid.”

Similarly, the court in the United States of America in Prima Paint Corp v. Flood & Conklin
Manufacturing Co.216 held that claims of fraudulent inducement, directed at the underlying contract and
capable of rendering it voidable, did not impeach the arbitration clause contained in that contract. This

213
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 19 (2ND
EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
214
UNCITRAL Model Law, art. 16; English Arbitration Act, § 30; UNCITRAL Rules, art. 23(1); LCIA Rules,
art. 23(1).
215
Cour de Cassation, 1st Chamber May 1963 DAlloz P 545.
216
388 US 395.
89
was reaffirmed in Buckeye Check Cashing Inc. v. Cardegna217 where the court acknowledged that the
separability rule permits a court to “enforce an arbitration agreement in a contract that the arbitrator
later finds to be void.”

The UNCITRAL Model Law on International Commercial Arbitration incorporates the doctrine of
separability in Article 16(1). Similarly, in India, Section 16(1) of the Indian Arbitration Act gives
statutory recognition to the doctrine of severability. It provides that an arbitration clause, which forms
part of the contract, shall be treated as an agreement independent of the other terms of the contract and
a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity
of the arbitration agreement.

An arbitration agreement which forms or was intended to form part of another agreement shall not be
regarded as invalid, non-existent or ineffective because that other agreement is invalid or did not come
into existence or has become ineffective, and it shall for that purpose be treated as a different
agreement.218 In view of the provisions of sub-section (1) of section 16 of the Act, the Arbitration
agreement can be invalidated on the ground which relates to the arbitration agreement and not merely
a consequence of the invalidity of the main agreement. The challenge must be based on facts which are
specific to the arbitration agreement. Allegations that are parasitical to a challenge to the validity of the
main agreement will not do.219

Another famous case in this context is the Fiona Trust & Holding Corp. v. Privalov220where the House
of Lords held that a claim that the parties’ underlying contract was obtained by fraud by bribing one of
the parties employee does not effect the alleged contract’s putative arbitration agreement, unless the
fraud was directly and specifically towards the arbitration agreement.

The doctrine of separability serves a very significant purpose in the international arbitral process. It
restricts the challenges to jurisdictional objections to be focused specifically and property on the
arbitration agreement itself rather than the underlying contract. Even if the parties’ underlying contract
is invalid or non-existent, this will often not affect the associated arbitration agreement, which will
remain fully effective as a means to resolve the parties’ disputes.

Costs and Fees

An arbitration is not necessarily less expensive for the parties than a lawsuit. However, cost savings
may come from the fact that there is generally no appeal on issues of fact or law. In addition, arbitral
tribunals generally do not permit the same level of discovery as courts, which can reduce costs

217
546 US 460.
218
Harbour Assurance Co. (UK) Ltd. v. Kansa General International Insurance Co. Ltd. (1993) QB 701; Section
16(1) Arbitration Act, 1996.
219
Premium Nafta Products Ltd. v. Fili Shipping Co. Ltd. (2007) UKHL 40
220
(2007) UKHL 40.
90
substantially. On the other hand, the parties have to pay for the arbitrators and the costs of any institution
that administers the arbitration, as well as legal fees, and those costs can be extensive.221

In an institutional arbitration, the arbitrators’ fees generally must be approved by the institution and are
sometimes determined by it. Parties may discuss fees with their party-appointed arbitrator, but not with
the other two arbitrators. In ad hoc arbitrations, on the other hand, in which fees may be discussed, all
parties should participate in discussions with all arbitrators about their fees. Sometimes the presiding
arbitrator is paid more than the party-selected arbitrators because he or she has additional obligations
and duties.

Normally, parties are expected to pay some initial fees and costs in advance. If the respondent refuses
to pay its share, the arbitration will not go forward unless the claimant pays the respondent’s share.
Although this initially burdens the claimant, the payments may be allocated against the respondent in
the final award.222

221
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 156
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
222
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 156
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
91
 Chapter XIX – Interim measures

Interim or conservatory measures are also referred to as provisional measures and the same are
extremely important in international arbitration and international litigation. The relief sought by means
of the request of an interim measure is usually to protect the rights or interest of the alleged innocent
parties. Since there may be a gap between a request for arbitration and the formation of the arbitration
tribunal, the subject matter or evidence may disappear or irreparable or non-compensatory damages
may occur frustrating the rights of one of the parties or making enforcement impossible.

The objective of the interim measure is to achieve the effectiveness of judicial protection so that parties
in dispute can be stopped from causing prejudice, harm or causing unwarranted damages to another
party.223 However, in the past, there was certain embargo upon the power’s exercised by the arbitrators
and tribunals at the time of granting provisional relief.224 In the modern era of arbitration, various
national laws took the forward steps and reduced those limits and vested more powers to the arbitrators
and tribunals for granting interim measures. Provisional measures or the conservatory measures are
very much important in international commercial arbitration for protecting parties and their legitimate
concerns.225

Provisional measures are also known as “pre-award”, “interim”, “protective” or “conservatory”

measures, these terms are quite often used interchangeably226. However, these terms are used in specific
places for specific purposes such as “provisional” or “interim” orders are made prior to the final awards
where the relief granted is not usually framed for protecting the parties during the course of proceedings
and such orders are subject to alteration, modification or even elimination at the time of final award.
E.g. provisional or interim decisions include grants of interim protective measures aimed at preserving
the status quo or interim determinations (such as permitting a party to remain in possession of property
or to exercise contract rights) during the pendency of a proceeding.227

On the other hand, “protective” or conservatory” measures are used when relief granted is for protecting
or conserving the rights of the parties. E.g. “protective” measures include provisional or final orders

223
Opinion of Advocate General Tesauro, The Queen v. Secretary of State for Transp., ex parte Factortame Ltd,
Case No. C-213/89, [1990] E.C.R. I-02433, ¶18 (E.C.J.).
224
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2427 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
225
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2427 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
226
UNCITRAL Model Law, Art. 9 (“interim measures” and “interim measure of protection”); Swiss Law on
Private International Law, Art. 183 (“provisional or conservatory measures”); 2012 ICC Rules, Art. 28(2)
(“interim or conservatory measures”); LCIA Rules, Art. 25 (“interim and conservatory measures”); ICSID Rules,
Rule 39 (“provisional measures for the preservation of [a party’s] rights”).
227
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2428 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
92
prohibiting a party from engaging in particular conduct (e.g., using intellectual property rights or other
property).”228

One of the leading definitions is as follows:

“Properly defined, “provisional measures” are awards or orders issued for the purpose of protecting
one or both parties to a dispute from damage during the course of the arbitral process. Most often, as
discussed below, provisional measures are “intended to preserve a factual or legal situation so as to
safeguard rights the recognition of which is sought from the [tribunal] having jurisdiction as to the
substance of the case”229

According to the European Court of Justice, interim measures are “intended to preserve a factual or
legal position so as to safeguard rights the recognition of which sought from the court having
jurisdiction as to the substance of the case”.230 The aim is to redistribute the risk for a duration of the
arbitration shifting it from the party applying for the interim measure to the other party.

The 2006 revisions to Article 17 of the UNCITRAL Model Law provide a representative list of “interim
measures” as follows:231

“An interim measure is any temporary measure, whether in the form of an award or in another
form, by which, at any time prior to the issuance of the award by which the dispute is finally
decided, the arbitral tribunal orders a party to:

a. Maintain or restore the status quo pending determination of the dispute;

b. Take action that would prevent, or refrain from taking action that is likely to cause,
current or imminent harm or prejudice to the arbitral process itself;

c. Provide a means of preserving assets out of which a subsequent award may be

satisfied; or

d. Preserve evidence that may be relevant and material to the resolution of the dispute

However, it must be remembered that the arbitrator or tribunal needs to be empowered to order interim
measures. The Model Law provides for an ‘opt-out’ mechanism where “unless the parties agree

228
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2428 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
229
Van Uden Maritime BV v. Kommanditgesellschaft in Firma Deco-Line, Case No. C-391/95, [1998] E.C.R. I-
7091, 7133 (E.C.J.).
230
Van Udel Maritime BV, trading as Van Uden Africa Line v. Kommanditgesellschaft in Firma Deco-Line
[1998] ECT 1 7091, 7133.
231
Article 17 (2), UNCITRAL Model Law, 2006 Revision.
93
otherwise”, the arbitrators can grant interim measures. The powers of arbitrators to grant an interim
measure can be acknowledged by examining three specific questions:232

a. Applicability of international conventions;

b. Applicable national laws; and

c. The parties to an arbitration agreement, including institutional rules

d. Powers of arbitrators to grant interim measure under International conventions

International conventions do not directly address the powers of the arbitrators to grant the interim
measure, e.g. the Geneva Protocol Convention and the Geneva Convention and the New York
Convention also do not specify anything directly in regard to the powers of the arbitrator for making
any interim orders and the same is with the Inter-American convention.233 However, the European
Convention unlike the above-mentioned convention, acknowledges provisional relief under Article VI
(4):

“[a] request for interim measures or measures of conservation addressed to a judicial

authority shall not be deemed incompatible with the arbitration agreement, or regarded as a
submission of the substance of the case to the court”

The language used in the aforementioned provision enables the parties to seek provisional or interim
measures from the national courts, without waiving their right to arbitrate or violating the agreement
entered between the parties.234 Furthermore, the ICSID Convention, under Article 47, recognizes the
power of the arbitral tribunal to grant provisional relief:

“Except as the parties otherwise agree, the Tribunal may if it considers that the circumstances
so require, recommend any provisional measures which should be taken to preserve the
respective rights of either party.”

232
JULIAN LEW, COMMENTARY ON INTERIM AND CONSERVATORY MEASURES IN ICC ARBITRATION CASES, 11(1)
ICC CT. BULL. 23, 30 (2000).
233
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2429 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
234
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2429 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
94
The ICISID convention ensures power to the tribunal to and subsequently rule upon the request of the
provisional measure and the orders passed under Article 47 are binding in nature.235

U.S. Federal Arbitration Act

The FAA does not talk about the powers of the arbitrators to grant the provisional measure. However,
the courts of the United States have now broadly recognized the power of the arbitral tribunal to grant
interim measure.236 Earlier courts use to interpret the arbitration agreement between the parties narrowly
and held that the arbitrator’s lack the power of granting the interim orders. 237 As opposed to the earlier
times now, the lower courts of the United States has held that arbitrators are authorized to grant
provisional measure unless otherwise agreed by the parties.238

In the case of Next Step Med. Co. v. Johnson & Johnson Int’l,239 , the lower court of the United States
held that: “arbitrators normally have the power to grant interim relief unless the parties specify
otherwise in the contract”. Subsequently, under the FAA, in the case of Reins. Mgt Corp. v. Ohio
Reins. Corp240, the court held that “temporary equitable relief in arbitration may be essential to
preserve assets or enforce performance which, if not preserved or enforced, may render a final award
meaningless”

Certainly, refusing to give effect to an arbitration agreement, which provides arbitrators power to order
interim measure or provisional relief is contrary to the FAA basic principle that an agreement to
arbitrate is fully enforceable; that rule incorporates disputes over interim relief and all other types of
disputes, permitting the agreement between the parties for grant of interim relief.241

235
RSM Prod. Corp. v. Repub. of Grenada, Award in ICSID Case No. ARB/10/6 of 14 October 2010; Occidental
Petroleum Corp. v. Repub. of Ecuador, Decision on Provisional Measures in ICSID Case No. ARB/06/11 of 17
August 2007.
236
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2436 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
237
Swift Indus., Inc. v. Botany Indus., Inc., 466 F.2d 1125, 1134 (3d Cir. 1972); Charles Constr. Co. v. Derderian,
586 N.E.2d 992 (Mass. 1992); Recyclers Ins. Group Ltd v. Ins. Co. of Am., 1992 WL 150662 (E.D. Pa.).
238
Toyo Tire Holdings of Ams. Inc. v. Cont’l Tire N. Am., Inc., 609 F.3d 975 (9th Cir. 2010); Arrowhead Global
Solutions, Inc. v. Datapath, Inc., 166 F.Appx. 39, 44 (4th Cir. 2006); Meadows Indem. Co. Ltd v. Arkwright Mut.
Ins. Co., 1996 WL 557513 (E.D. Pa.); Konkar Maritime Enter., SA v. Compagnie Belge d’Affretement, 668
F.Supp. 267, 271 (S.D.N.Y. 1987); Compania Chilena De Navegacion Interoceanica SA v. Norton, Lilly & Co.,
652 F.Supp. 1512, 1517 (S.D.N.Y. 1987); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. DeCaro, 577 F.Supp.
616, 625 (W.D. Mo. 1983).
239
619 F.3d 67, 70239.
240
935 F.2d 1019, 1022-23 (9th Cir. 1991).
241
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2437 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
95
 The courts in the United States has upheld that, it is implied that the arbitrators have the power to grant
interim measure by virtue of arbitration agreement between the parties.242 As one of the courts of the
United States also held that:

“[I]n general…, in the absence of an agreement or statute to the contrary, an arbitrator has
inherent authority to order a party to provide security while the arbitration is continuing. It is
reasonable to assume that parties, in agreeing to arbitration, implicitly intended that the
arbitration not be fruitless and that interim orders to preserve the status quo or to make
meaningful relief possible would be proper. In such a circumstance, the arbitrator’s authority
to act would reasonably be implied from the agreement to arbitrate itself.”243

Various commentators are of the opinion that the arbitration tribunals have the power to grant
provisional relief.244 Moreover, now there is no embargo on the extent of powers exercised by the
tribunals other than any limits prescribed in the agreement to arbitrate between the parties. Moreover,
Section 8 (b) of the revised Uniform Arbitration Act provides as follows:

“After an arbitrator is appointed and is authorized and able to act: (1) the arbitrator may issue
such order for provisional remedies, including interim awards, as the arbitrator finds necessary
to protect the effectiveness of the arbitration proceeding and to promote the fair and expeditious
resolution of the controversy, to the same extent and under the same conditions as if the
controversy were the subject of a civil action.”

English Arbitration Act

The English Arbitration Act of 1996 mentions about provisional measure in an indirect form. It provides
that, absent to any contrary agreement, an arbitral tribunal may issue orders concerning the preservation,
detention, inspection, or sampling of property which is the subject matter of the dispute, 245 and for
preserving evidence. Moreover, for other types of an interim measure, “the parties are free to agree
that the tribunal shall have the power to order on a provisional basis any relief which it would have the
power to grant in a final award.”246 These provisions of English Arbitration Act empowers the English

242
Next Step Med. Co. v. Johnson & Johnson Int’l, 619 F.3d 67, 70 (1st Cir. 2010); Toyo Tire Holdings of Am.
Inc. v. Cont’l Tire N. Am., Inc., 609 F.3d 975 (9th Cir. 2010); Arrowhead Global Solutions, Inc. v. Datapath, Inc.,
166 F.Appx. 39, 44 (4th Cir. 2006); Banco de Seguros del Estado v. Mut. Marine Office, Inc., 344 F.3d 255 (2d
Cir. 2003); Island Creek Coal Sales Co. v. City of Gainesville, 729 F.2d 1046 (6th Cir. 1984).
243
Charles Constr. Co. v. Derderian, 586 N.E.2d 992 (Mass. 1992); See also Gilmer v. Interstate/Johnson Lane
Corp., 500 U.S. 20 (U.S. S.Ct. 1991); Banco de Seguros del Estado v. Mut. Marine Office, Inc., 344 F.3d 255 (2d
Cir. 2003). Compare Swift Indus., Inc. v. Botany Indus., Inc., 466 F.2d 1125 (3d Cir. 1972).
244
C.C. Higgins, Interim Measure in Transnational Martime Arbitration, 65 Tulane L. Rev. 1519, 1535-36.
(1990).
245
§38(4), English Arbitration Act, 1996.
246
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2438 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
96
seated arbitral tribunal to grant interim measure unless otherwise agreed by the parties, tribunals are
also authorized to order any relief that it could grant in its final award. 247 However, it is pertinent to
mention that the approach enshrined under the English Arbitration Act of 1996 is less desirable as
compared to the FAA and the Model Law.248

247
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2439 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
248
Gary B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2439 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
97
 Chapter XX – Limitations on the Power of Arbitral Tribunal to Grant
Provisional Relief

Across the globe, the power of the arbitral tribunal to grant an interim measure is well recognized in the
community of international arbitration. However, these powers do have certain restrictions. These
restrictions are the result of the inherent nature of the arbitral process, which is a byproduct of
contractual legal relationship entered between the parties, these limitations are also result of domestic
laws of the country.

Arbitral tribunal lacks the power for granting interim relief against the third party. It is pertinent to note
that the powers of the arbitral tribunal are restricted to the parties to the arbitration and the respective
agreement entered between the parties.249 As per D. CARON250, “an arbitral tribunal’s jurisdiction
encompasses only the parties before it [and] interim measures may not be directed to non-parties”.
Resultantly, an arbitrator can grant provisional measure only against the party to the arbitration. They
do not possess the power to order against the third party e.g. attachment or preservation of property held
by a third party.251

However, the limitation is evident in UNCITRAL Model Law and some other national legislation which
authorizes an arbitral tribunal to “order any party to take such interim measures of protection” 252

deemed necessary. This is also made obvious by the Belgian Judicial Code, which provides that
“[w]ithout prejudice to the powers accorded to the courts and tribunals by virtue of article 1683, and
unless otherwise agreed by the parties, the arbitral tribunal may order any interim or conservatory
measures it deems necessary. However, the arbitral tribunal may not authorize attachment orders”.253

When there are no limits envisaged upon the powers exercised by the arbitrator’s with respect to the
third party, then too, it is implied that the arbitral tribunal’s authority is limited to the parties involved
in the arbitration. Moreover, the tribunals cannot order the attachment orders of assets which are in
control or custody of the third party.254

249
Christopher Huntley, The Scope of Article 17: Interim Measures Under the UNCITRAL Model Law, 740
PLI/Lit. 1181, 86 (2005); E Schwartz, The Practices and Experience of the ICC Court, in ICC, Conservatory and
Provisional Measures in International Arbitration 45, 59 (1993).
250
D. CARON & L. CAPLAN, THE UNCITRAL ARBITRATION RULES: A COMMENTARY 517 (2D ED. 2013).
251
Julian Lew, Commentary on Interim and Conservatory Measures in ICC Arbitration Cases, 11(1) ICC Ct.
Bull. 23, 25 (2000).
252
Article 17, UNCITRAL Model Law; §593(1) Austrian ZPO; §25(4), Swedish Arbitration Act; Article 17 (1),
Greek International Commercial Arbitration Law.
253
Belgian Judicial Code, Art. 1691; French Code of Civil Procedure, Art. 1468.
254
McDonnell, The Availability of Provisional Relief in International Commercial Arbitration, 22 Colum. J.
Transnat’l L. 273, 283 (1983-1984).
98
Further, the arbitral tribunal generally lacks the authority to enforce the provisional measure because
the enforcement of orders passed by the tribunals is done by the courts at the application of one or the
other party.255

Similarly, with the final relief, an arbitral tribunal lacks the power to compel the partied for direct
compliance of the award or interim awards256. This is also evident from the language of the Swiss Law
on Private International Law, which provides that “[i]f the party so ordered [by the arbitral tribunal to
take specified provisional measures] does not comply therewith voluntarily, the arbitral tribunal may
request the assistance of the competent court.”257 Even on the absence of such verbatim, it is abundantly
clear that, in all arbitration’s regime, the tribunal cannot order to adopt a coercive measure to enforce
its own final awards. However, an arbitral tribunal can procure the compliance of the provisional
measure indirectly through express or implied threat of adverse inferences against a non-compliant
party.258 Relatively various commentators are of the view that259: “[T]he fact that arbitral tribunals can
draw adverse conclusions from failure to comply with their decisions concerning [provisional]
measures encourages voluntary compliance with such orders”

The legislation has limited the power of the arbitral tribunal to grant the provisional relief. 260 The
original text of UNCITRAL Model law 1985 grants power to the tribunal to issue provisional measure
which they opined to be necessary for “in respect of the subject matter of the dispute”. 261 That Article
17 of the UNCITRAL Model Law, limits the scope of the arbitral tribunal for granting interim measure
related to “preserve the status quo or to prevent the disappearance of assets” 262. Such ‘narrow
interpretation’ of Article 17 refers to the subject matter of the dispute is totally justified on the grounds
that “a broad interpretation of the subject matter could lead to a slippery slope whereby the tribunal will
define the all-encompassing term to include anything and everything”263

255
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2446 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
256
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2447 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
257
S. BERTI, IN S. BERTI ET AL. (EDS.), INTERNATIONAL ARBITRATION IN SWITZERLAND ART. 183, ¶16 (2000).
258
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2448 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
259
JULIAN LEW, COMMENTARY ON INTERIM AND CONSERVATORY MEASURES IN ICC ARBITRATION CASES, 11(1)
ICC CT. BULL. 23, 24 (2000). See also E Schwartz, Conservatory and Provisional Measures in International
Arbitration 45, 59 (1993).
260
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2448-2449 (2nd ed. Kluwer Law International 2014).
261
Article 17, UNCITRAL Model Law.
262
A. REDFERN & M. HUNTER (EDS.), LAW AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION ¶7.23
(5TH ED. 2009).
263
Christopher Huntley, The Scope of Article 17: Interim Measures Under the UNCITRAL Model Law, 740
PLI/Lit. 1181, 78 (2005).
99
This particular measure is of the general support for the interpretation of Article 17 in the Model Law
drafting history264. However, the better view is that the drafting history is ambiguous265 and that such
interpretations are not in coherence with the objective of Model Law266.

The prerequisite that the interim measure to be issued in accordance with the “subject matter of the
dispute” shall not limit the power of the tribunal, in regard to the items whose ownership is in dispute.
However, Article 17 can be understood and interpreted as extending to the preservation of the
contractual rights or the stability of amongst the party.

In cases of dispute concerning the continuing existence or nature of the contractual relationship between
the parties, the interim measure for preserving all contours of that relationship is properly regarded as
being “in respect of the subject matter of the dispute”.267

Moreover, the same analogy can be extended for preserving the assets which are sufficient to satisfy
the claims of the party e.g. security for cost or damages. Such type of reliefs is properly considered as
being ‘in respect’ of the subject matter of the dispute between parties because it is “necessary” in order
that the dispute between the parties can be resolved fairly.268

The text of Article 17 of the Model Law was revised in 2006, subsequently, Article 17 (1) was amended
to omit the prerequisite that interim measure or provisional measure be “in the subject matter of
dispute”. Whereas, this particular amendment streamlined the Model Law, endorsing the broad
authority of the arbitral tribunal to grant interim measure. However, the 2006 amendment clarified the
existing subject matter of the Model Law.269

The tribunal lacks the power to order provisional relief until its constituted: it is pertinent that the arbitral
tribunal cannot grant interim orders until it is duly constituted. Similarly, the arbitral institution rules
impose more demanding requirements. Prior to the constitution of the tribunal, it does not have powers
to act or issue any sort of relief.

Moreover, it is evident, that such type of limitations has substantial practical significance. However,
the most crucial time for seeking interim measure is at the outset of the parties to the dispute, where,
one party may seek to dispose of relevant asset, property or evidence to cause prejudice or alter the

264
Report of the Secretary-General on the Analytical Commentary on Draft Text of A Model on International
Commercial Arbitration, U.N. Doc. A/CN.9/264, Art. 9, ¶4, XVI Y.B. UNCITRAL 104, 115 (1985).
265
H. Holtzmann & J. Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration:
Legislative History and Commentary, 332-33 (1989).
266
Katran Shipping Co. v. Kenven Transp. Ltd, [1992] 1 HKC 538 (H.K. Ct. First Inst.).
267
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2449 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
268
D. CARON & L. CAPLAN, THE UNCITRAL ARBITRATION RULES: A COMMENTARY 517-18 (2D ED. 2013).
269
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2450 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
100
commercial or contractual relationship of the party or can take other steps to forestall arbitration
proceedings.270

Meanwhile in absence of tribunal to which a request of the arbitral tribunal may be initiated in the initial
time when the dispute arose may effectively thwart the tribunal for granting provisional measure.271
Moreover, in many jurisdictions confer national courts with the concurrent jurisdiction to grant interim
measure before the constitution of the tribunal. Likewise, in India, courts have concurrent jurisdiction
for the grant of the interim measure before the constitution of the tribunal, envisaged under section 9 of
the Arbitration and Conciliation Act, 1996:

Interim measures etc. by Court.—

1. A party may, before or during arbitral proceedings or at any time after the making of the
arbitral award but before it is enforced in accordance with section 36, apply to a Court-

i. for the appointment of a guardian for a minor or person of unsound mind for the
purposes of arbitral proceedings; or

ii. for an interim measure of protection in respect of any of the following matters,
namely:-

a. the preservation, interim custody or sale of any goods which are the subject-
matter of the arbitration agreement;

b. securing the amount in dispute in the arbitration;

c. the detention, preservation or inspection of any property or thing which is

the subject-matter of the dispute in arbitration, or as to which any question
may arise therein and authorizing for any of the aforesaid purposes any
person to enter upon any land or building in the possession of any party, or
authorizing any samples to be taken or any observation to be made, or
experiment to be tried, which may be necessary or expedient for the purpose
of obtaining full information or evidence;

d. interim injunction or the appointment of a receiver;

270
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2450 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
271
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2451 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
101
 2. such other interim measure of protection as may appear to the Court to be just and convenient
and the Court shall have the same power for making orders as it has for the purpose of, and in
relation to, any proceedings before it. 1 Where, before the commencement of the arbitral
proceedings, a Court passes an order for any interim measure of protection under subsection
(1), the arbitral proceedings shall be commenced within a period of ninety days from the date
of such order or within such further time as the Court may determine.

3. Once the arbitral tribunal has been constituted, the Court shall not entertain an application
under sub-section (1), unless the Court finds that circumstances exist which may not render the
remedy provided under section 17 efficacious.

Specialized Institution Rules

In this background, it is imperative to refer to the specialized institutional rules that govern or provide
peculiar kind of interim relief such as Pre- Arbitral referees and Emergency arbitration. The ICC Rules
was the forerunner in adopting pre-arbitral referee’s procedure. The rules provide for the specialized
procedure for provisional measures, issued by a ‘referee’ appointed for the purpose of issuing
emergency relief before the constitution of the arbitral tribunal.272 The ICC pre-arbitral referee rules
came in force in 1990 but were used in very few avenues,273 because for using ICC rules, parties need
to agree in writing for the use of such specialized rules. However, in the early stage of negotiation
parties usually, shift their focus from such intricacies which can arise in the future.

As far as emergency arbitration is concerned, ICDR in 2006 was the first institution to adopt the concept
of emergency arbitrator and this procedure adopted a more ambitious stance for approaching the
problem of the interim measure at the beginning of arbitration proceeding. In emergency arbitrations, a
party can seek the appointment of an “emergency arbitrator” prior to the formation of the tribunal.274

The 2012 version of ICC Rules followed the same approach for adopting the provisions in pursuant to
‘emergency arbitrators’. According to it, emergency arbitration was referred to when a party “needs
urgent interim or conservatory measures that cannot await the constitution of an arbitral tribunal.”
The concept of ‘emergency arbitrator’ aims toward creating a temporary solution, however, the parties

272
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2451 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
273
Gaillard & Pinsolle, The ICC Pre-Arbitral Referee: First Practical Experience, 20 Arb. Int’l 13 (2004);
Christian Hausmaninger, The ICC Rules for A Pre-Arbitral Referee Procedure: A Step Towards Solving the
Problem of Provisional Relief in International Commercial Arbitration, 7 ICSID Rev Inv. L.J. 82 (1992).
274
Dunning et al., Using Article 37 of the ICDR International Arbitration Rules: Obtaining Emergency Relief, 62
Disp. Res. J. 68 (2007); M. Gusy, J. Hosking & F. Schwarz, A Guide to the ICDR International Arbitration Rules,
304-11 (2011); Lemenez & Quigley, The ICDR’s Emergency Arbitrator Procedure in Action, Part I: A Look at
the Empirical Data, 63 Disp. Res. J. 60 (2008); E. Schwartz, Interim and Emergency Relief in Arbitration
Proceedings, 63 Disp. Res. J. 56 (2008); Sheppard & Townsend, Holding the Fort Until the Arbitrators Are
Appointed: The New ICDR International Emergency Rule, 61 Disp. Res. J. 75 (2006).
102
are bound to comply with the emergency arbitrators’ orders. Moreover, the tribunal is not bound by the
orders of the emergency arbitrators.275

Similarly, other institutions such as NAI, SIAC, SWISS, SCC, and ACIA adopted the approach of ICC
Rule of 2012. In case of urgency a sole emergency arbitrator to be appointed for resolving the request
of an interim measure, arose prior to the constitution of the arbitral tribunal.276 It is pertinent to note that
all these institutions do not mandate the separate agreement between the parties. As GARY BORN
suggests:277

“At the same time, these Rules all require very prompt and professional action by the arbitral
institution and emergency arbitrator, which imposes burdens and risks on the institution, and thus,
the parties. Despite this, unless practical application in coming years is to the contrary, these
approaches appear to be sensible steps towards improving the arbitral process.”

275
2012 ICC Rules, Art. 29(1). Articles 29(1)(4) and Appendix V (Emergency Arbitration Rules) are collectively
defined as the “Emergency Arbitrator Provisions”.
276
2012 Swiss Rules, Art. 43; 2011 ACICA Rules, Art. 28(1); 2010 NAI Rules, Art. 42; 2010 SCC Rules,
Appendix II, Art. 8 (“Emergency decisions on interim measures” involving appointment of special “emergency
arbitrator”); 2013 SIAC Rules, Art. 26(2); Christopher Boog, Swiss Rules of International Arbitration – Time to
Introduce An Emergency Arbitrator Procedure?, 28 ASA Bull. 462 (2010).
277
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2453 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
103
 Chapter XXI – Standards for Provisional Relief

There are certain prerequisite, for grant of interim measures, such as (a) a risk of serious or irreparable
harm to the claimant; (b) urgency; and (c) no prejudgment of the merits; (d) while some tribunals also
require the claimant to establish a prima facie case on the merits; (e) a prima facie case on jurisdiction,
and to establish that the balance of hardships weighs in its favor, tribunal also looks towards the nature
of relief sought by the parties, and the injury suffered by each party, for final adjudication as to the
grant of provisional measure. According to the leading authority GARY BORN:278

“In particular, some provisional measures (e.g., preserving the status quo or ordering
performance of a contract or other legal obligation) will typically require strong showings of
serious injury, urgency and a prima facie case, while other provisional measures (e.g.,
preservation of evidence, enforcement of confidentiality obligations, security for costs) are
unlikely to demand the same showings.”

As far as risk of ‘reparable’ or ‘serious’ injury is concerned, the onus is upon the party to prove that the
if provisional relief not granted, the party will suffer “serious”, “substantial” or “irreparable” injury.279
In other words, “the Arbitral Tribunal may only order provisional measures, if the requesting party
has substantiated the threat of a not easily reparable prejudice”.280 Some authors are of the view that
“it is not appropriate to grant a measure where no irreparable or substantial harm comes to the movant
in the event the measure is not granted.”281

Some proponents argue that “irreparable” harm is a prerequisite for the grant of the interim measure. In
the case of Tokios Tokelés v. Ukraine,282 it was held that, “a provisional measure is necessary where
the actions of a party ‘are capable of causing or of threatening irreparable prejudice to the rights
invoked” and subsequently in the case of Plama Consortium Ltd v. Repub. of Bulgaria283, it was held
that, “provisional measures is must “to avoid the occurrence of irreparable harm or damage”.
Furthermore, the Permanent Court of International Justice has ascertained that injury is irreparable

278
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2468 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
279
W. Craig, W. Park & J. Paulsson, Annotated Guide to the 1998 ICC Arbitration Rules 137 (1998); K.-P. Berger,
International Economic Arbitration 336 (1993); JULIAN LEW, COMMENTARY ON INTERIM AND CONSERVATORY
MEASURES IN ICC ARBITRATION CASES, 11(1) ICC CT. BULL. 23 (2000).
280
Interim Award in ICC Case No. 8786, 11(1) ICC Ct. Bull. 81, 83-84 (2000). See also Interim Award in ICC
Case No. 8894, 11(1) ICC Ct. Bull. 94, 97 (2000); Islamic Repub. of Iran v. U.S.A., Decision No. DEC 116-
A15(IV) & A24-FT of 18 May 1993, 29 Iran-US C.T.R. 214 (1993).
281
JULIAN LEW, COMMENTARY ON INTERIM AND CONSERVATORY MEASURES IN ICC ARBITRATION CASES, 11(1)
ICC CT. BULL. 23, 28 (2000).
282
Procedural Order No. 3 in ICSID Case No. ARB/02/18 of 18 January 2005.
283
Order in ICSID Case No. ARB/03/24 of 6 September 2005.
104
where it “could not be made good simply by the payment of an indemnity or by compensation or
restitution in some other material form.”284

In the case of Behring Int’l, Inc. v. Islamic Repub. of Iran, It was held that, concept of irreparable
prejudice in international law is broader than Anglo-American law concept of irreparable injury and
does not necessarily require showing that injury complained of is not remediable by an award of
damages (i.e., where there is no certain pecuniary standard for the measure of damage). 285

The injury required for grant of interim measure is not ‘irreparable’ harm in what is perceived to be the
Anglo - American sense, but as an alternative, showing substantial, grave, or serious injury is enough.
However, in the United States, the ‘irreparable harm’“is a harm that cannot readily be compensated by
an award of damages. If this standard were strictly applied, most commercial disputes arbitrated under
the UNCITRAL Rules would not qualify for interim protection under Article 26, since the award of
money damages can, at least in theory, rectify nearly all commercial losses”286

It is not easy in the reign of international commercial arbitration to determine ‘irreparable harm’ which
cannot be compensated by money damages in a final award. ‘Irreparable harm’ requirement has set a
limit in the cases pertaining to the provisional measure especially when one party is insolvent or in the
cases where enforcement of the arbitral award would be impossible.287

GARY BORN suggests that for the formulation of the requirement for serious prejudice obscures more
complex considerations. On close examination, tribunals appear to consider:288

a. the extent to which the claimant will suffer a serious injury during the arbitral proceedings;

b. the extent to which such injury appears compensable in a final award; and

c. the extent to which it is just or fair that the burden or risk of loss during the arbitral
proceedings fall on one party or another (including considerations such as whether one
party is seeking to alter the existing status quo to its advantage during the arbitral
proceeding, the likelihood of success of each party on the merits of its case and the relative
hardship to each of the parties if provisional measures are or are not granted)

284
Denunciation of the Treaty of 2 November 1865 between China and Belgium, PCIJ Series A/B, No. 8, 7
(P.C.I.J. 1927).
285
Interim and Interlocutory Award in IUSCT Case No. ITM/ITL 52382-3 of 21 June 1985, 8 Iran-US C.T.R. 23
(1985).
286
S. Baker & M. Davis, The UNCITRAL Arbitration Rules in Practice: The Experience of the Iran-United States
Claims Tribunal, 139-40 (1992).
287
D. CARON & L. CAPLAN, THE UNCITRAL ARBITRATION RULES: A COMMENTARY 521 (2D ED. 2013).
288
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2471 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
105
Moreover, some authorities have persuaded this as a “balancing interest” or a “balancing of hardships”.
The 2006 and 2010 amendment to UNCITRAL Model in Article 12 and Article 26 has adopted a similar
approach289:

“[h]arm not adequately reparable by an award of damages is likely to result if the measure is not
ordered, and such harm substantially outweighs the harm that is likely to result to the party against
whom the measure is directed if the measure is granted.”290

That a party seeking interim relief need not prove the ‘serious injury’ is certain to occur but they need
to establish the existence of a sufficient risk or threat that can give rise to serious or grave harm if
provisional relief is not granted. Thus, “the Arbitral Tribunal may only order provisional measures if
the requesting party has substantiated the threat of a not easily reparable prejudice.”291 Moreover, a
similar approach is taken in the investment arbitration in the case of Occidental Petroleum Corp. v.
Repub. of Ecuador292, where the tribunal held that a measure is urgent where action prejudicial to the
rights of either party is likely to be taken before such final decision is given. Similarly, in the case of
Avena & Other Mexican Nationals (Mexico v. USA), the ICJ held that293 “interim measures of protection
when “prejudice was probable or possible,” or where serious harm could “not be excluded.”

As far as Urgency is concerned, various tribunals across the jurisdiction require proof of ‘urgency’ and
tribunal need to be persuaded that immediate or at least promptly an interlocutory action is mandated
in order to prevent the irreparable damage.294 Moreover, HUNTLEY states that: “Implicit within the term
‘necessary’ is the notion that the party requesting a measure faces harm to the rights it is pursuing in
the arbitration and that harm is so imminent that the requesting party cannot await the tribunal’s final
decision on the merits”295

Another reputed scholar S. ROSENNE states the relevance of the urgency of the matter” is “estimated
period likely to elapse before the decision of the court or tribunal on the principal claim,” because
urgency exists where requested measure is “something that cannot wait until the final decision in the
case.”296

289
Award in Summary Arbitral Proceedings in NAI Case No. 2212 of 28 July 1999, XXVI Y.B. Comm. Arb. 198
(2001).
290
UNCITRAL Model Law, 2006 Revisions, Art. 17A (1) (a); 2010 UNCITRAL Rules, Rule 26(3)(a).
291
Interim Award in ICC Case No. 8786, 11(1) ICC Ct. Bull. 81, 83-84 (2000).
292
Decision on Provisional Measures in ICSID Case No. ARB/06/11 of 7 August 2007.
293
Order of 5 February 2003, [2003] I.C.J. Rep. 77, 91 (I.C.J).
294
Biwater Gauff (Tanzania) Ltd v. United Repub. of Tanzania, Procedural Order No. 1 in ICSID Case No.
ARB/05/22 of 31 March 2006; Tokios Tokelés v. Ukraine, Procedural Order No.3 in ICSID Case No. ARB/02/18
of 18 January 2005.
295
Christopher Huntley, THE SCOPE OF ARTICLE 17: INTERIM MEASURES UNDER THE UNCITRAL MODEL LAW,
740 PLI. 1181, 75 (2005).
296
S. Rosenne, Provisional Measures in International Law, 135 (2005).
106
According to GARY BORN, the “urgency” requirement is closely related to the “serious harm”
requirement. The pre-award relief is generally not ordered until such time it is necessary to prevent such
serious damage from taking place. The exact degree of “urgency” which is required varies and can be
affected by practical considerations.297 Other proponents argue that, when there is a material risk of
grave harm, the arbitral tribunals fail to draw a line in the timing of orders of provisional relief.
However, the tribunals do not take time in granting the provisional relief when there are dire
consequences on the head of the parties.298 Tribunal in the case of Tokios Tokelés v. Ukraine299, held
that “a measure is urgent where action prejudicial to the rights of either party is likely to be taken
before such final decision is taken.”

With respect to the no prejudgment of merits, arbitral tribunals must refrain themselves from pre judging
the dispute300. An arbitral tribunal while adjudicating upon the provisional tribunal ought not to grant
the relief prayed by the parties in the final award.301 It is pertinent to note that the pre - judgment
requirement is an important notion that needs to be covered and following things need to be kept in
mind:302

a. a grant of provisional measures may not preclude the tribunal from ultimately deciding the
arbitration in any particular manner after the parties have presented their cases (e.g., provisional
measures should not make it more difficult for the tribunal to render a decision in favor of one
party or the other);

b. provisional measures have no res judicata or similar preclusive effect with regard to a decision
on the merits;

c. a tribunal must take care to ensure that it does not, in considering and deciding an application
for provisional measures, prejudge the outcome of the arbitration or even partially close its
mind to one party’s submissions or deny one party an opportunity to be heard in subsequent
proceedings; and

297
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2475 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
298
D. CARON, L. CAPLAN & M. PELLONPÄÄ, THE UNCITRAL ARBITRATION RULES: A COMMENTARY 548 (2006).
299
Procedural Order No. 3 in ICSID Case No. ARB/02/18 of 18 January 2005.
300
JULIAN LEW, COMMENTARY ON INTERIM AND CONSERVATORY MEASURES IN ICC ARBITRATION CASES, 11(1)
ICC CT. BULL. 23, 27 (2000).
301
JULIAN LEW, COMMENTARY ON INTERIM AND CONSERVATORY MEASURES IN ICC ARBITRATION CASES, 11(1)
ICC CT. BULL. 23, 27 (2000).
302
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2477-2478 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
107
 d. The same relief that is sought as final relief may ordinarily be issued on a provisional basis,
subject to later revision (although that relief might in some cases also be issued as partial final
relief prior to a final award).

Prima facie case or probability of success on merits is another important requirement for a grant of
provisional measure. Various authors are of the opinion that, the party seeking interim measure must
show prima facie case on merits of his case before the tribunal,303 the tribunal in one unidentified case
held that “the present Arbitral Tribunal is not a referee jurisdiction, but the jurisdiction of the merits
seized of provisional measures…The powers of the merits ruling provisionally are not limited like those
of the referee judge and a serious dispute does not prevent a broader appreciation, although on a
provisional basis, of the respective arguments of the parties.”304

The tribunal should consider the prima facie case presented by the parties in respect of their claims
while adjudicating whether to grant interim measure or not. It is pertinent to mention that the prima
facie case does not prejudge the merits of the dispute, whereas it is purely a provisional assessment
based upon a few early submissions and evidence.305

It is necessary for the tribunal to assess the existence of a prima facie case in order to make a
commercially-sensible and rational decision pursuant to interim measure. For example, if a claimant
licensee has failed to present a prima facie case of wrongful termination of a license agreement, while
the respondent licensor has presented a comprehensive defense as to why it was contractually entitled
to terminate, then a tribunal should be quite hesitant to order the respondent licensor to continue to
permit use of licensed property and to supply updates and similar assistance on a provisional basis
during the pendency of the arbitration.306

In matters, where parties are seeking interim measure has made a reliable, but no case of serious harm,
during the arbitration proceeding, then consideration of the merits of the case appears both appropriate
and sensible. In such situation the pertinent question arises is that how interim damage in the course of

303
M Wirth, Interim or Preventive Measures in Support of International Arbitration in Switzerland, 18 ASA Bull.
31, 37-38 (2000).
304
Partial Award in Unidentified ICC Case, discussed in E. A. Schwartz, The Practices and Experience of the
ICC Court, in ICC, Conservatory and Provisional Measures in International Arbitration 45, 60 (1993). Marc
Blessing, STATE ARBITRATIONS: PREDICTABLY UNPREDICTABLE SOLUTIONS? 22 J. Int’l Arb. 435 (2005); D.
CARON & L. CAPLAN, THE UNCITRAL ARBITRATION RULES: A COMMENTARY 523 (2D ED. 2013); ALI
YESILIRMAK, INTERIM AND CONSERVATORY MEASURES IN ICC ARBITRAL PRACTICE, 11(1) ICC CT. BULL. 31, 34
(2000).
305
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2479 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
306
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2479 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
108
arbitral proceeding should be apportioned during the pendency of the arbitral proceeding so that the
rights of the parties can be determined?

Prima Facie Jurisdiction: In the case of Bendone-Derossi Int’l v. Islamic Repub. of Iran,307 the tribunal
held that the showing of arbitral tribunal’s prima facie jurisdiction is sometimes the basic requirement
for the grant of the interim measure. In famous ICSID decision of Perenco Ecuador Ltd v. Repub. of
Ecuador308 and Quiborax SA v. Plurinat’l State of Bolivia,309 the learned tribunal held that: “While the
Tribunal need not satisfy itself that it has jurisdiction to determine the merits of this case for the
purposes of ruling on the application for provisional measures, it will not order such measures unless
there is at least a prima facie basis upon which such jurisdiction might be established.”

It is pertinent to note that, the analysis of jurisdiction in the request for an interim measure is limited to
the prima facie inquiry only. Moreover, the tribunal should refrain itself from making any ruling on
final jurisdiction rather tribunal limits itself to the question, whether there is a prima facie argument that
jurisdiction exists. It is pertinent to note that, given the urgency attached to the request of an interim
measure, a tribunal ought not to delay in adjudicating the case of provisional measure by examining the
full jurisdiction.

307
Interim Award in IUSCT Case No. ITM 40-375-1 of 7 June 1984, 6 Iran-US C.T.R. 130 (1984).
308
Decision on Provisional Measures in ICSID Case No. ARB/08/6 of 8 May 2009.
309
Decision on Provisional Measures in ICSID Case No. ARB/06/2 of 26 February 2010.
109
 Chapter XXII – Types of Interim Measures

The interim measure can be of various types. However, broadly almost all jurisdictions provide for at
least the kind of measures as contained in Article 17 (2) of the Model Law. In 2006, the Model Law
was amended to provide for “preliminary order” in Article 17 B of the Model Law. Preliminary order
is essentially the same as an interim order by the arbitral tribunal except that it is obtained ex-parte. A
preliminary order expires after 20 days and it is within that time or the earliest possible moment within
which the tribunal must hear the other party. After having heard the other party, the tribunal may issue
an interim measure either adopts or modifies a preliminary order or it can simply choose to let the order
expire. It is necessary to clarify that a preliminary order is binding upon the party but it is not an award
cannot be enforced by a court. Many commentators disagree with the need for the introduction of
preliminary order as it makes little sense to obtain an order which cannot be enforced by a court.

Section 17 (1) of the Indian Arbitration Act, 1996 provides for the following kinds of measures:

1. A party may, during the arbitral proceedings or at any time after the making of the arbitral
award but before it is enforced in accordance with section 36, apply to the arbitral tribunal

i. for the appointment of a guardian for a minor or person of unsound mind for the
purposes of arbitral proceedings; or

ii. For an interim Measure of protection in respect of any of the following matters,
namely:

a. the preservation, interim custody or sale of any goods which are the
subject-matter of the arbitration agreement;

b. Securing the amount in dispute in the arbitration;

c. the detention, preservation or inspection of any property or thing which is

the subject-matter of the dispute in arbitration, or as to which any question
may arise therein and authorize for any of the aforesaid purposes any
person to enter upon any land or building in the possession of any party
or authorizing any samples to be taken, or any observation to be made, or
experiment to be tried, which may be necessary or expedient for the
purpose of obtaining full information or evidence;

d. an interim injunction or the appointment of a receiver;

e. such other interim measure of protection as may appear to the arbitral

tribunal to be just and convenient and the arbitral tribunal shall have the
110
 same power for making orders, as the Court has for the purpose of, and in
relation to, any proceedings before it.

2. Subject to any orders passed in an appeal under section 37, any order issued by the arbitral
tribunal under this section shall be deemed to be an order of the Court for all purposes and
shall be enforceable under the Code of Civil Procedure, 1908 (5 of 1908), in the same
manner as if it were an order of the Court.

Which interim measure is more appropriate in the given facts and circumstances is to be determined on
the case to case basis may also be influenced by the domestic law or at the national laws of the seat of
arbitration? It should be remembered that interim measures should be granted in limited circumstance
as they can be determinative of the dispute and may be hard or even impossible to repair.310

In this context, it is necessary to clarify that interim measures in international arbitration can be granted
by the court as well as by the arbitral tribunal. Usually, interim measures are provided by the court
before the formation of the arbitral tribunal or in cases where the tribunal is not in the position to provide
effective relief. In all other cases, once the tribunal has been formed, it is the tribunal that grants the
interim measure. Taking the theory of delocalization further, another aspect has emerged in almost all
institutional arbitrations except the DIS i.e. emergency relief. This refers to the appointment of the
emergency arbitrator before the formation of the arbitral tribunal for the purposes of grant of interim
relief.

The ICDR was the first to amend its rules to provide for Emergency Measures of Protection.311 This
permits the appointment of an emergency arbitrator within one business day of the request of the
emergency relief and the emergency arbitrator has the power to award any interim or conservancy
measure being necessary.

There are a variety of provisional measures, which are dealt with in international arbitration 312 there is
a various form of an interim measure, which is granted or ordered towards the parties in dispute.
However, they cannot bypass the limits enshrined by the medium of national laws, or the parties to an
arbitration agreement.313 For protecting or preserving the rights of the parties the tribunal can grant any

310
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 586 (THE HAGUE: KLUWER LAW INTERNATIONAL, 2003).
311
Article 37 ICDR Rules.
312
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2483 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
313
CHRISTOPHER BOOG, THE LAWS GOVERNING INTERIM MEASURES IN INTERNATIONAL ARBITRATION, IN F.
FERRARI & S. KRÖLL (EDS.), CONFLICT OF LAWS IN INTERNATIONAL ARBITRATION 409, 431 (2010).
111
relief as mentioned under Article 17 (2) of UNCITRAL Model Law. 314 Such relief is granted through
orders which are again of different types.

Orders Preserving Status Quo

Status quo is one of the common forms of an interim measure between the parties in a dispute for
preserving the legal or contractual relationship, factual circumstances, etc. 315. Within the domain of
status quo, a party may be ordered to, not to take certain actions in relation to termination of contract,
disclosing secrets, revoking letter of credit, etc. 316 The prime examples of interim protection and such
orders are “measures that serve to preserve the status quo until the final decision on the merits is
rendered (preservation order)”.317

However, after the revision of UNCITRAL Model Law and UNCITRAL Rules tribunals are
empowered to order interim measures for restoring the status quo.318 An order preserving the status quo
can be issued by the tribunal for protecting one party from the prejudice or harm in the course of
proceedings319 or for preserving tribunal’s jurisdiction.320 Furthermore, the purpose of the status quo is
to protect the factual alterations, which can destabilize the final award of the tribunal.321

314
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2484 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
315
UNCITRAL Model Law, 2006 Revisions, Art. 17(2)(a).
316
Final Award in ICC Case No. 9324 in JULIAN LEW, COMMENTARY ON INTERIM AND CONSERVATORY
MEASURES IN ICC ARBITRATION CASES, 11(1) ICC CT. BULL. 23, 29 (2000); Plama Consortium Ltd v. Repub. of
Bulgaria, Procedural Order in ICSID Case No. ARB/03/24 of 6 September 2005; Tanzania Elec. Supply Co. v.
Independent Power Tanzania Ltd, Decision on the Respondent’s Request for Provisional Measures in ICSID Case
No. ARB/98/8 of 20 December 1999, 1999 WL 34765678.
317
P. Berger, International Economic Arbitration 339 (1993);W. Craig, W. Park & J. Paulsson, Annotated Guide
to the 1998 ICC Arbitration Rules 137 (1998).
318
UNCITRAL Model Law, 2006 Revisions, Art. 17(2)(a); Donald Francis Donovan, The Scope and
Enforceability of Provisional Measures in International Commercial Arbitration: A Survey of Jurisdictions, The
Work of the UNCITRAL and Proposals for Moving Forward 82-149 (ICCA Congress Series No. 11 2003).
319
Tokios Tokelés v. Ukraine, Procedural Order No. 1 in ICSID Case No. ARB/02/18 of 1 July 2003; Tanzania
Elec. Supply Co. v. Independent Power Tanzania Ltd, Decision on the Respondent’s Request for Provisional
Measures in ICSID Case No. ARB/98/8 of 20 December 1999, 1999 WL 34765678; Amco Asia Corp. v. Repub.
of Indonesia, Decision on Request for Provisional Measures in ICSID Case No. ARB/81/1 of 9 December 1983,
XI Y.B. Comm. Arb. 159, 159-60 (1986).
320
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2486 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
321
Award in ICC Case No. 6632, discussed in Reiner, Les mesures provisoires et conservatoires et l’arbitrage
international, notamment l’arbitrage CCI, 125 J.D.I. (Clunet) 853, 890 (1998); Tokios Tokelés v. Ukraine,
Procedural Order No. 1 in ICSID Case No. ARB/02/18 of 1 July 2003,; Rockwell Int’l Sys., Inc. v. Islamic Repub.
of Iran, Award in IUSCT Case No. ITM 20-430-1 of 6 June 1983, 2 Iran-US C.T.R. 369, 371 (1983); Stephen
Bond, The Nature of Conservatory and Provisional Measures, in ICC, Conservatory and Provisional Measures
in International Arbitration 8, 9 (1993); C. SCHREUER ET AL., THE ICSID CONVENTION: A COMMENTARY ART.
47, ¶¶14-15 (2D ED. 2009).
112
The tribunals are usually keen to order interim measure for maintaining the status quo for safeguarding
the subject matter of the dispute e.g. preservation of property in dispute etc.322 In the case of, Maffezini
v. Kingdom of Spain,323 the tribunal held that “An example of an existing right [justifying provisional
measures] would be an interest in a piece of property, the ownership of which is in dispute. A
provisional measure could be ordered to require that the property not be sold or alienated before the
final award of the arbitral tribunal. Such an order would preserve the status quo of the property, thus
preserving the rights of the party in the property.”

While granting the status quo, the tribunal shall look upon the injury that is likely to be suffered by the
parties in arbitration during the course of proceeding, and the existence of prima facie claims and
defenses presented by the parties. If the tribunal is of the opinion that one party has a relatively strong
prima facie case and can suffer serious prejudice during the course of arbitral proceedings, then the
tribunal shall order the restoration of status quo.

Orders Prohibiting Aggravation of Parties’ Dispute

Such orders are for refraining action of either of the parties for prohibiting their conduct or action which
can aggravate their dispute.324 Such orders are directed towards the parties for restraining them from
making any public statements in breach of their agreement 325. The ICC tribunal held that: “As held by
several ICC awards, provisional measures may be ordered not only in order to prevent irreparable
damage but also to avoid aggravation of the dispute submitted to arbitration” 326 Subsequently in the
case of Tokios Tokelés v. Ukraine327, tribunal held that “The parties to a dispute over which ICSID has
jurisdiction must…refrain from any action of any kind which might aggravate or extend the dispute.”
Similarly, in another ICSID Case of Amco Asia Indonesia, the tribunal referred to “the good and fair
practical rule, according to which both parties to a legal dispute should refrain…to do anything that
could aggravate or exacerbate the same, thus rendering its solution possibly more difficult.”328

Tribunal while passing orders for ‘preventing aggravation of the party’s dispute’ based their decision
on commercial desirability of restraining unilateral steps of the parties to improve the position of the

322
UNCITRAL Model Law, 2006 Revisions, Arts. 17(2)(a), (c); LCIA Rules, Art. 25(1)(b) (“order the
preservation, storage, sale or other disposal of any property”); 2013 CPR Rules, Rule 13; 2010 LCIA India Rules,
Art. 25(1)(b)
323
Procedural Order No. 2 in ICSID Case No. ARB/97/7 of 28 October 1999, 16 ICSID Rev.-For. Inv. L.J. 207,
(2001).
324
UNCITRAL Model Law, Art. 17(2)(b).
325
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2488-24 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
326
Order in ICC Case No. 7388, in Reiner, Les mesures provisoires et conservatoires et l’Arbitrage international,
notamment l’Arbitrage CCI, 125 J.D.I. (Clunet) 853(1998).
327
Order No. 1 in ICSID Case No. ARB/02/18 of 1 July 2003.
328
Amco Asia Corp. v. Repub. of Indonesia, Decision on Request for Provisional Measures in ICSID Case No.
ARB/81/1 of 9 December 1983, XI Y.B. Comm. Arb. 159, 161 (1986).
113
parties in the dispute. Thus, according to E. Shcwartz, “there is a tendency on the part of many arbitral
tribunals…consistent with the view that they often have of their mandate, to construe the requirement
of urgency sufficiently broadly to justify interim measures designed not so much to prevent irreparable
harm as to avoid the ‘aggravation’ of the dispute that is the subject matter of the arbitration.”329

Orders Requiring Specific Performance of Contractual or Other Obligation

This is the most common phenomenon in international arbitration, where the tribunal orders party to
perform specified acts pertaining out of their contractual legal relationship with the other party e.g. the
tribunal can order either of the party to fulfill their contractual obligation.330

Moreover, proponents are of the opinion that: “interim specific performance of the contract (as when,
for example, in a dispute relating to the termination of a charter party, the court prohibits any use of
the vessel not in accordance with the charter).”331 Similarly, other commentators stipulate that “if it is
justified by the protection of the interest in the issue, the arbitrator may even order the provisional
performance of the parties’ obligations until the matter has been decided.”332

Some orders require security for claims, i.e. one party to provide another party to pay. Security for other
party’s claims is the common form of interim measure granted by the tribunal in international
arbitration. Such type of orders is formulated for ensuring the substantive claims brought forward by
the party, not rendered insignificant if another party deliberately disperse its assets in the course of the
arbitral proceeding.

It is the most famous practice in the common law jurisdiction, where various arbitration rules and
statues, provide authority to the arbitrators to order security, for example:

 UNCITRAL Model Law, Art. 17(2) (c);

 English Arbitration Act, 1996, §39;
 Swedish Arbitration Act, §25(4);
 Canada Commercial Arbitration Act, 2013, Art. 17;
 Irish Arbitration Act, 2010, Art. 19;
 Singapore International Arbitration Act, 2012, Art. 12(1) (a);
 Australian International Arbitration Act, 2011, §23;

329
E. Schwartz, The Practices and Experience of the ICC Court, in ICC, Conservatory and Provisional Measures
in International Arbitration 45, 61 (1993).
330
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2491 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
331
Stephen Bond, The Nature of Conservatory and Provisional Measures, in ICC, Conservatory and Provisional
Measures in International Arbitration 8, 11 (1993).
332
P. Lalive, J.-F. Poudret & C. Reymond, Le droit de l’arbitrage interne et. international en Suisse Art. 183, ¶7
(1989).
114
  Indian Arbitration and Conciliation Act, Art. 17

Similarly, a tribunal in the case of On Time Staffing, LLC v. Nat’l Union Fire Ins. Co.,333 held that “the
[arbitral tribunal], in the absence of language in the arbitration agreement expressly to the contrary,
possesses the inherent authority to preserve the integrity of the arbitration process to which the parties
have agreed by, if warranted, requiring the posting of pre-hearing security.…Otherwise, an [arbitral
tribunal] with a well-founded concern that a party was financially unable to satisfy an eventual award
would have no recourse to protect itself against the risk that its significant expenditures of time and
effort would be for naught.”

It is pertinent to note that the request for security consists of the purest application of interim measure
to distribute the risk of the delay in an arbitration proceeding. The opposite issue which arises is that
who should take care of the risk involve and financial cost of reducing such risk that a party will fail to
satisfy the financial burden of the final award.

Orders Requiring Security for Legal Costs

Security for the legal cost is also termed as “security for cost” which is altogether different from security
for underlying substantive claims. Moreover, such type of orders mandates, either of the parties or both
of the parties to post security to cover the substantive amounts that can be awarded to the other party,
if it prevails in the arbitration proceedings and is authorized to recover legal costs.334

Security for the cost is the common form of provisional measure in arbitral proceedings having seat in
Commonwealth jurisdiction or England, where this type of relief is most commonly used. For eg.,
English Arbitration Act; Singapore International Arbitration Act, 2012, §12(1); Hong Kong Arbitration
Ordinance, 2013, §56; Australian International Arbitration Act, 2011, §23K; LCIA Rules; 2013 SIAC
Rules, Art. 24(k); 2013 HKIAC Rules, Art. 23(6), as opposed to civil law jurisdictions.

Previously, the arbitral tribunals without English or commonwealth jurisdiction were very doubtful
while ordering security for cost.335 However, now various tribunals are willing to consider the request

333
2011 U.S. Dist. LEXIS 50689 (S.D.N.Y.).

334
B Berger, Arbitration Practice: Security for Costs: Trends and Developments in Swiss Arbitral Case Law, 28
ASA Bull. 7 (2010); W. Craig, W. Park & J. Paulsson, Annotated Guide to the 1998 ICC Arbitration Rules 138
(1998); Y. DERAINS & E. SCHWARTZ, A GUIDE TO THE ICC RULES OF ARBITRATION 296-97 (2D ED. 2005); Peter
Fitzpatrick, Security for Costs Under the Arbitration Act, 1996, Int’l Arb. L. Rev. 139, (1998); Locknie Hsu,
Orders for Security for Costs and International Arbitration in Singapore, Int’l Arb. L. Rev. 108 (2000); Noah
Rubins, In God We Trust, All Others Pay Cash: Security for Costs in International Commercial Arbitration, 11
Am. Rev. Int’l Arb. 306 (2000).
335
A. Bucher & P.-Y. Tschanz, International Arbitration in Switzerland ¶161 (1988); Interim Awards in ICC
Case No. 8670, 11(1) ICC Ct. Bull. 77 (2000); Interim Award in ICC Case No. 8223, 11(1) ICC Ct. Bull. 71
(2000); Order No. 6 in Zurich Chamber of Commerce of 12 November 1991, 13 ASA Bull. 84, 90 (1995).
115
for considering the security for cost. At this juncture, it is important to reproduce the view of one of the
Swiss tribunals that held:336

“The traditional view in Switzerland was that lacking the parties’ explicit agreement to the
contrary, a Swiss Arbitral Tribunal had no authority to order security for a party’s legal
costs.…[T]he modern view expressed in Swiss legal doctrine and arbitral practice is that the
authority granted to the arbitrators by Article 183 [of the Swiss Law on Private International
Law] also extends to orders requesting a party to provide security for the opposing party’s
legal costs.”337

Some arbitral tribunals are of the opinion that burden levied by the security of cost order on one of the
parties may inhibit disproportionately with its chance to be heard, specifically in instances where the
party lacks financial resources to deposit security for cost. However, in cases where the security of cost
is ordered, the tribunal considers the financial status of the party from whom the security of cost is
requested.338

Orders for Preservation or Inspection of Property

Such type of orders is granted by the tribunals for the evidentiary purposes. Moreover, the national
legislation of the country grants authority for the same.339 Orders of preservation or inspection of the
property include the appointment of the neutral, independent expert for inspection of goods or other
property.340

Orders pertaining to preservation or production of material for evidentiary purposes cannot usually be
understood as interim relief. Also, such type of orders do not ask from the parties in dispute to take a
certain action, but instead it gives direction regarding disclosure and evidentiary matters a part of fact
finding the process of the tribunal.341

GARY BORN is of the opinion that “such requests are made simply to mitigate loss arising from the
pendency of the arbitration that would generally fall on both parties – as in the case of the sale of
perishable goods, which would otherwise become valueless. In these instances, there is a substantial

336
Order No. 4 in Zurich Chamber of Commerce Case No. 415 of 20 November 2001, 20 ASA Bull. 467, 470
(2002).
337
Interim Awards in ICC Case No. 8670, 11(1) ICC Ct. Bull. 77 (2000); Interim Award in ICC Case No. 8223,
11(1) ICC Ct. Bull. 71 (2000); Commerce Group Corp. v. Repub. of El Salvador, Decision on El Salvador’s
Application for Security for Costs in ICSID Case No. ARB/09/17 of 20 September 2012.
338
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2496 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
339
English Arbitration Act, 1996, §38(4); Christopher Huntley, The Scope of Article 17: Interim Measures Under
the UNCITRAL Model Law, 740 PLI Lit. 1181, 77 (2005).
340
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2497-2498 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
341
Compare Delphi Petroleum Inc. v. Derin Shipping & Trading Ltd, 73 F.T.R. 241 (Canadian Fed. Ct. 1993).
116
argument that a tribunal should generally order commercially-reasonable actions, without inquiry into
issues of serious harm to one party or into the prima facie merits of the parties’ claims, in order to
minimize the overall losses resulting from the parties’ dispute.”342

342
GARY B. BORN, CHAPTER 17 PROVISIONAL RELIEF IN INTERNATIONAL ARBITRATION IN INTERNATIONAL
COMMERCIAL ARBITRATION 2499 (2ND ED. KLUWER LAW INTERNATIONAL 2014).
117
 Chapter XXIII – Emergency Arbitration

In a majority of cases, parties may need an urgent interim relief even before an arbitral tribunal can be
constituted or when parties cannot even wait till the constitution of a tribunal. In such cases, emergency
arbitration comes into picture. Emergency arbitration is akin to the concept of emergency relief where
a party may want to protect their assets and evidence that might otherwise be altered or lost. In essence,
these measures seek to maintain status quo during the pendency of the dispute. In other words, the
emergency relief may be in the form of an order to the other party to maintain the status quo during the
arbitration – for example, by not selling disputed property, or by not using or licensing disputed
intellectual property.343 It is important to note that such arbitration is usually agreed to and arranged by
the parties themselves without recourse to a tribunal at the first instance. However, the Emergency
arbitrator provisions are applicable only to those parties that are signatories to the arbitration agreement
that is relied upon for the application or successors to such signatories. The procedure is applicable
unless parties have opted out of it. 344

Therefore, it is clear from the aforementioned that the objective of the emergency arbitration is to
provide urgent pro tem or conservatory measures to a party or for parties that cannot await the formation
of an arbitral tribunal. Emergency Arbitration can eliminate the hassle of applying before numerous
forums in different jurisdictions for obtaining a single instant relief. It is more time efficient than local
court proceedings and the proceedings in front of an arbitral tribunal are more trusted than ones in a
local jurisdiction. It also sets a behavioural standard for the parties. The parties are more likely to abide
by an emergency award, since the award also becomes precedence once the arbitral tribunal is
constituted.

In 2006, ICDR was the first institution to adopt the concept of emergency arbitrator followed by 2012
version of the ICC Rules, which were then followed, by other institutions such as NAI, SIAC, SWISS,
SCC, and ACIA adopted the approach of ICC Rule of 2012. 345

Under emergency arbitrator procedures, a sole arbitrator is appointed by the arbitral institution on an
expedited basis to determine applications for interim relief that cannot wait for the formation of the
substantive tribunal.346 Emergency arbitrators are free to set their own procedures, which should be

343
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 88 (2ND
EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
344
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 108
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
345
2012 Swiss Rules, Art. 43; 2011 ACICA Rules, Art. 28(1); 2010 NAI Rules, Art. 42; 2010 SCC Rules,
Appendix II, Art. 8 (“Emergency decisions on interim measures” involving appointment of special “emergency
arbitrator”); 2013 SIAC Rules, Art. 26(2); Christopher Boog, Swiss Rules of International Arbitration – Time to
Introduce An Emergency Arbitrator Procedure?, 28 ASA Bull. 462 (2010).
346
Martin J Valasek & Jenna Anne de Jong, Enforceability of Interim Measures and Emergency Arbitrator
Decisions, NORTON ROSE FULBRIGHT, available at, https://www.nortonrosefulbright.com/en-
in/knowledge/publications/6651d077/enforceability-of-interim-measures-and-emergency-arbitrator-decisions
(May 2018).
118
clear from the outset. Such procedures may include the timelines for exchange of submissions, a hearing
(if any), the scope of the reply submissions, the mode of communications between the parties and
evidence which can be adduced.347

An Emergency Arbitration is capable of granting interim measures or conservatory relief only for a
stipulated period of time. For all purposes, it exercises similar if not same functions as that of an ad hoc
tribunal which has been constituted for a limited purpose and would immediately be dissolved, once
the purpose is served or the said time frame in which such issues have to be decided, lapses.

Despite the interest and seeming demand for such relief, there are some questions over the enforceability
of arbitrator interim measures. Key questions arise from the very nature of the relief; that it is interim
binding and, in the case of emergency arbitrator decisions, is made by someone other than the
substantive tribunal. The form of the relief can also play a part — particularly where arbitrator interim
relief is in the form of an order rather an award.348

Generally, the relevant arbitral rules provide that decisions of emergency arbitrators are
interim-binding, in that they can later can be varied or suspended by the substantive tribunal once
formed. In some instances, such interim measures may expire by default after a certain period of time.349
Under most rules, including the ICC Rules, the emergency arbitrator's decision is interim in nature and
will not bind the arbitral tribunal with respect to any question, issue, or dispute determined in the
order.350 Although Article 29(2) of the ICC Rules requires the parties to undertake to comply with any
order made by the emergency arbitrator, the consequences of non-compliance are uncertain. Parties will
still need to rely on the support of the national courts to enforce interim measures granted by an
emergency arbitrator against non-compliant parties.

It is not yet clear how local courts will react to such requests, given that an interim ‘order’ is unlikely
to qualify as an award under the New York Convention. In some jurisdictions, specific legislative

347
Stephanie Khan and Benson Lim, Emergency Arbitrator Procedures: What Should a Practice Note of Best
Practices Consider? KLUWER ARBITRATION BLOG, available at,
http://arbitrationblog.kluwerarbitration.com/2019/01/11/emergency-arbitrator-procedures-what-should-a-
practice-note-of-best-practices-consider/ (2019).
348
Martin J Valasek & Jenna Anne de Jong, Enforceability of Interim Measures and Emergency Arbitrator
Decisions, NORTON ROSE FULBRIGHT, available at, https://www.nortonrosefulbright.com/en-
in/knowledge/publications/6651d077/enforceability-of-interim-measures-and-emergency-arbitrator-decisions
(May 2018).
349
Martin J Valasek & Jenna Anne de Jong, Enforceability of Interim Measures and Emergency Arbitrator
Decisions, NORTON ROSE FULBRIGHT, available at, https://www.nortonrosefulbright.com/en-
in/knowledge/publications/6651d077/enforceability-of-interim-measures-and-emergency-arbitrator-decisions
(May 2018).
350
Article 29(2), ICC Rules.
119
changes have been introduced to ensure that orders of emergency arbitrators are treated in the same way
as those of an arbitral tribunal.351

351
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 4.21
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
120
 Chapter XXIV – Setting Aside an Award

One of the premier advantages of an arbitration is the finality of the award. The major arbitration laws
and rules support such finality by limiting the possibility of setting aside the award. 352 The following
section is an attempt to study how an award can be set aside, the basic requirements of setting aside an
award, methods of setting aside an award, grounds for setting aside an award and ultimately the
consequences or the effects of such attempts to set aside an award.

Purpose of Setting Aside an Award

The purpose of setting aside an award before a national court of the seat of arbitration is to get the award
declared, in whole, or in part null and void. The consequence of such declaration is that the award now
would be treated as invalid and accordingly unenforceable not only by the courts of the seat of
arbitration but also by national courts elsewhere.353 It is important to note that the court reviewing the
challenge to an award cannot modify or adjust the terms of an award nor can it decide or adjudicate the
dispute according to their own whims and fancies or their own vision of the merits. 354 The procedure
for setting aside an award is a guarantee that the relevant courts may review the award if a party has a
good reason to be dissatisfied or aggrieved with the arbitration and the way in which the award was
rendered.355

Requirements for Setting Aside an Award

There are three pre-requisites that must be kept in mind in order to make a successful attempt of setting
aside an award.

Legal Basis for Setting Aside an Award

Almost every domestic arbitration law, as well as the international instruments regulating arbitration,
contain certain provisions for setting aside an award356 consisting of certain grounds or actions on which
an award can be set aside.357 The law that will govern the action will be the lex arbitri, or the curial law,

352
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 203
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
353
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.06
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
354
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.06
TH
(6 EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
355
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 664 (KLUWER LAW INTERNATIONAL, 2003).
356
Article 34, The UNCITRAL Model Law on International Commercial Arbitration, Articles 1704-1707,
Belgium Judicial Code; Articles 32-33, Brazil’s Arbitration Law; Articles 58-61, China’s Arbitration Law;
Sections 67-71, The English Arbitration Act, 1996.
357
Article 34, The UNCITRAL Model Law on International Commercial Arbitration.
121
which governs the arbitration proceedings at the situs.358 The procedural law for challenging an award
in the majority of the jurisdictions will be based on the UNCITRAL Model Law on International
Commercial Arbitration, which will provide the grounds on which an award can be challenged.359

National Courts

Before approaching the relevant courts for the setting aside of the award, parties who wish to set aside
an award should first exhaust all the possibilities of a review of the award by the tribunal that rendered
it360 or rely on the institution within which the award was made.361 The parties may also rely on other
available remedies such as any available process of appeal or any available provision for the correction
of the award or for an additional award.362

But if all these remedies are exhausted then the challenge to set aside an award must be filed with a
court which has jurisdiction to hear the application. According to the Model Law363 and the majority of
arbitration laws,364 this jurisdiction is with the court at the seat of arbitration.365 Applications made to
any other court, outside the place of arbitration are generally rejected. 366 Once the seat and the
nationality of the award have been ascertained, the competent authority would be the one to entertain
such challenge, normally a court of higher instance.367 For example, an award made in an arbitration
with its seat in England must be challenged in the English High Court, in Switzerland in the Swiss
Supreme Court (Tribunal Federal); in France, challenges are heard by the relevant court of appeal.368

358
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 203
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
359
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 203
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
360
Section 70(2), The English Arbitration Act, 1996.
361
Rule 12(6), GAFTA, Article 50, 52, 55 ICSID Rules.
362
Section 70(2), The English Arbitration Act, 1996.
363
Articles 34, 1, and 6, The UNCITRAL Model Law on International Commercial Arbitration.
364
Article 33, Brazil’s Arbitration Law; Article 58, China’s Arbitration Law; Sections 67-71, The English
Arbitration Act, 1996.
365
Unless otherwise agreed by the parties. It has been suggested that it is unnecessary and unhelpful to exercise
this freedom to choose another court. See, JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL,
COMPARATIVE INTERNATIONAL COMMERCIAL ARBITRATION 664 (KLUWER LAW INTERNATIONAL, 2003).
366
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 667 (KLUWER LAW INTERNATIONAL, 2003).
367
The competent court is designated in Article 6, The UNCITRAL Model Law on International Commercial
Arbitration.
368
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 669 (KLUWER LAW INTERNATIONAL, 2003).
122
If the above action fails or if the party does not bring an action to set aside then the losing party has still
another opportunity to resist enforcement. It can oppose the prevailing party’s efforts to enforce the
award in a different jurisdiction, where the losing party’s assets are located.369

In India, interestingly, the Indian Arbitration Act makes it explicitly clear that in order to set aside an
award, the parties have to file a written application under Section 34 of the Indian Arbitration Act. In
India, a written application is the only recognized mode for challenging an award. The application has
to be comprehensive in nature, indicating all points on which a party is aggrieved with the findings of
the arbitral tribunal.370 Merely stating that the award is bad in law and against facts would serve no
useful purpose. Hence, the challenger must state, in detail, the objections and challenges clearly.

Time Limits

Challenges to an award must be brought promptly as time is of the essence. Time limits to bring a
challenge to an award by an application to the relevant national court, are likely to be short and strictly
enforced.371 Failure to do so may bar a challenge to the award. As a matter of fairness, time limits start
to run from the time the award was deposited or is notified to the party wishing to challenge it.372

A majority of national laws require the parties to initiate the setting aside proceedings within weeks
rather than waiting for a month. The limit to bring such a challenge may be as short as twenty-eight
(28) days,373 often three (3)374 months and sometimes as long as six (6) months.375 The Model Law
under Article 34(3) prescribes the time limit of three (3) months from the notification of the award to
the party wishing to challenge it. While there may be very fewer chances of court condoning the delay,
the party looking to challenge an award outside the time limit must satisfy the court that there is a
justifiable and reasonable ground for condoning the delay.376

369
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 204
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
370
Dr. P.C. Kharbanda, Naresh Markanda et al, ARBITRATION STEP BY STEP 255 (Lexis Nexis, 2017).
371
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.10
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
372
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 670 (KLUWER LAW INTERNATIONAL, 2003).
373
Section 70(3), The English Arbitration Act; Articles 1486, 1505, France’s NCPC.
374
Article 1707(3), Belgium’s Judicial Code; Article 33(1), Brazil’s Arbitration Law; Article 1064(3)
Netherlands, CCP.
375
Article 59, China’s Arbitration Law.
376
In Aoot Kalmnoft v. Glencore International AG and Another [2002] 1 All ER 76 the request for an extension
of the time limit to challenge the award (14 weeks after the expiration of the 28 day time limit) was rejected.
123
 Chapter XXV – Grounds for Challenge

There are several grounds on which a challenge for setting aside an award may be brought in. The
applicable law in the jurisdiction where the challenge is brought defines the grounds that can be used.
According to REDFERN AND HUNTER, there are essentially three broad areas on which an arbitral award
is likely to be challenged before a national court at the seat of the arbitration. First, an award may be
challenged on jurisdictional grounds—that is, the non-existence of a valid and binding arbitration
agreement—or other grounds that go to the admissibility of the claim determined by the tribunal.
Secondly, an award may be challenged on what may broadly be described as ‘procedural’ grounds, such
as failure to give a party an equal opportunity to be heard. Thirdly, and most rarely, an award may be
challenged on substantive grounds, on the basis that the arbitral tribunal made a mistake of law. 377
These grounds often mirror the grounds listed in Article V of the New York Convention. Interestingly,
Article 34 of the Model Law also sets out the same grounds on which an award may be set aside.
Therefore, the following section is an attempt to briefly understand such different grounds on the basis
of which an award can be set aside.

Grounds under the Model Law

The grounds under the Model Law are as follows:378

• Lack of capacity to conclude an arbitration agreement or lack of a valid arbitration agreement;

• The aggrieved party was not given proper notice of the appointment of the arbitral tribunal, or
the arbitral proceedings, or was otherwise unable to present its case;

• The award deals with matters not contemplated by, or falling within, the arbitration clause or
submission agreement, or goes beyond the scope of what was submitted;

• The composition of the arbitral tribunal or the arbitral procedure was not in accordance with
the agreement of the parties, or with the mandatory provisions of the Model Law itself;

• The subject matter of the dispute is not capable of settlement by arbitration under the law of the
state in which the arbitration takes place; and/or

• The award (or any decision within it) is in conflict with the public policy of the state in which
the arbitration takes place.

377
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.36
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
378
Article, 34(2), The UNCITRAL Model Law on International Commercial Arbitration.
124
These grounds may be further categorized into jurisdictional, procedural and substantive grounds and
are expansively discussed further.

Jurisdictional Grounds

According to MOSES, jurisdictional challenges may be made to an award, but they are more typically
made at the beginning of the arbitration, rather than after the award is rendered. Under many laws, if a
party does not challenge the jurisdiction at the beginning of the arbitration, it may lose the right to
object.379 It is obviously more efficient to determine whether jurisdiction is proper at the beginning of
an arbitral procedure, rather than after parties have expended time, effort, and resources to reach the
final award. Thus, if a party waits until the award is handed down before it objects to the tribunal’s
jurisdiction, it may well have lost its opportunity to challenge.380 The grounds for challenge based on
the jurisdiction could be as follows:

Incapacity or invalid agreement to arbitrate

The first ground for challenging an award under Article 34(2)(a)(i) of the Model Law provides that:

“A party to the arbitration agreement...was under some incapacity; or the said agreement is not valid
under the law to which the parties have subjected it or, failing any indication thereon, under the law of
this State.”

An arbitration award made in the absence of an arbitration agreement or submission of parties is liable
to be set aside.381 The rationale behind this ground is the basic rule that the international arbitral process
is based on consent and that, absent consent, an arbitral award is invalid and ineffective.382

Excessive jurisdiction of the tribunal

A further ground of challenge under the Model Law is that the arbitral tribunal has far exceeded its
powers under the decision it has rendered. Article 34(2)(a)(iii) states:

The award deals with a dispute not contemplated by or not falling within the terms of the submission to
arbitration, or contains decisions on matters beyond the scope of the submission to arbitration,
provided that, if the decisions on matters submitted to arbitration can be separated from those not so

379
Section 31 and 73, The English Arbitration Act, 1996.
380
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 205
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
381
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 670 (KLUWER LAW INTERNATIONAL, 2003).
382
GARY B BORN, INTERNATIONAL COMMERCIAL ARBITRATION 3188 (2ND EDN., KLUWER LAW INTERNATIONAL,
2014).
125
submitted, only that part of the award which contains decisions on matters not submitted to arbitration
may be set aside;

According to REDFERN AND HUNTER, this ground of challenge contemplates a situation in which an
award has been made by a tribunal that did have jurisdiction to deal with the dispute, but which exceeded
its powers by dealing with matters that had not been submitted to it.383

According to MOSES, a tribunal may have had jurisdiction under the arbitration agreement, but
nonetheless could have rendered an award that it was not entitled to make. For example, if a party
claimed only a certain quantum of damages, and the tribunal awarded more than that amount, the
tribunal may have exceeded its jurisdiction.384 The award may also be challenged if the tribunal either
fails to consider all the issues before it or if it decides certain issues that were not before it. In some
instances, if a court finds that the tribunal has exceeded its powers, the issues that were improperly
decided may be severed, leaving the award as to other issues intact.385

Arbitrability

The concept of arbitrability constitutes yet another ground to challenge an award. In terms of the Model
Law, an award can be challenged if ‘the subject matter of the dispute is not capable of settlement by
arbitration’.386 The arbitrability of a dispute is usually linked to the underlying public policy of the state
in which the arbitration takes place.387 As a matter of example, there are many jurisdictions that prohibit
the arbitration of the disputes which deals with the matters of rights in rem and thus effects the world
at large. Such disputes cannot be resolved in private and hence are not arbitrable. However, arbitrability
ground will not cause many awards to be vacated, because few matters today are not considered
arbitrable.388

Procedural Grounds

One of the major and the most common ground for challenging and setting aside an award relates to the
deficiency in the procedure of the arbitration. As set out in Article 34(2)(c)(ii) of the Model Law, an
award can be challenged when ‘the party making the application was not given proper notice of the

383
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.45
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
384
Paris Lapeyre v. Sauvate [2001] Rev. Arb. 806.
385
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 206
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
386
Article 34(2)(b)(i), The UNCITRAL Model Law on International Commercial Arbitration.
387
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.51
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
388
Some matters that are usually not considered arbitrable in most jurisdictions include family law matters, such
as child custody, as well as criminal matters, tax issues, patent validity issues, and bankruptcy claims.
126
appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his
case’.

According to REDFERN AND HUNTER, certain minimum procedural standards must be observed in the
fair and proper conduct of international arbitration.389 These procedural standards are designed to ensure
that the arbitral tribunal is properly constituted, that the arbitral procedure is in accordance with the
agreement of the parties (subject to any mandatory provisions of the applicable law), and that the parties
are given proper notice of the proceedings, hearings, and awards.390 In essence, the ultimate purpose of
this is to ensure that the parties are given equal treatment and a fair hearing with a proper opportunity
to present their respective cases.391 Failure to observe these rules of procedure may be a ground for the
challenge of an award.392

Further procedural issues may include a challenge where the composition of the arbitral tribunal and
the procedure adopted in the arbitration are not in consonance with the agreement of the parties or,
failing such agreement, with the law.393 REDFERN AND HUNTER illustrates it with a proper example, i.e.
failure to comply with the agreement of the parties as to the appointment of the tribunal could include
cases in which an arbitrator does not meet the particular qualifications specified in the arbitration
agreement; failure to comply with the required procedure could include the rendering of an award
without reasons where such a requirement is imposed by law.394

Moreover, many national arbitral legislations provide for the setting aside of an award if the arbitral
tribunal (or a member thereof) did not satisfy applicable standards of independence and impartiality.
This basis for annulment is not specifically included in the annulment provisions of some national
arbitration statutes (e.g., UNCITRAL Model Law), but is nonetheless generally available in
contemporary international arbitration regimes.395 It is imperative to note that a procedural irregularity
or defect alone will not invalidate an award. The test is that of a significant injustice so that the tribunal
would have decided otherwise had the tribunal not made a mistake.396

389
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.53
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
390
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.53
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
391
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.53
TH
(6 EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
392
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.54
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
393
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.60
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
394
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.60
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
395
GARY B BORN, INTERNATIONAL COMMERCIAL ARBITRATION 3276 (2ND EDN., KLUWER LAW INTERNATIONAL,
2014).
396
Gannet Shipping Ltd. v. Eastrade Commodities Inc [2002] 1 All ER (Comm) 297, at 304.
127
Substantive Grounds

The most common grounds for a challenge to an award are jurisdiction, procedural irregularities,
arbitrability, etc. However, there are yet other grounds that come into play when all the other grounds
are properly met. These grounds may relate to the merits of the award and can pose a strong challenge
if there is a mistake of law, mistake of fact or anything contrary to public policy in the award.

The first two grounds can be relied on to make an appeal against the arbitral award, if the law permits
or unless the parties have agreed otherwise. However, such an appeal mechanism is supported by a few
jurisdictions and is subject to a lot of substantial limitations. For example, in England, the appeal cannot
be brought unless all the parties agree, or unless the court grants leave to appeal. 397 The court should
grant leave only if the tribunal was obviously wrong on the point of law, or the question is of general
public importance and the decision of the tribunal is open to doubt.398

Public Policy

If the arbitral award is in conflict with the public policy of its own country, it may be set aside by the
national court of the place of arbitration. Public policy is defined differently in different jurisdictions,
but in most, an award could be vacated if it was not consistent with fundamental notions of justice,
honesty, and fairness. Thus, corruption, fraud, or lack of integrity in the process could be considered a
violation of public policy, requiring the award to be annulled. In most Model Law jurisdictions, fraud
or corruption would probably be considered a proper ground for challenging an award as a violation of
public policy.399

Other Grounds under National Laws

Various other national laws have certain formal grounds which can be relied on to set aside an award.
These grounds could be if the award is made after the specified time limit is expired or if the award is
made with contrary decisions.400

Award made after the expiration of a certain time limit may be challenged if it was made after the
expiration of time limits agreed by the parties or provided for in the applicable rules or law.401

397
Section 69(2), The English Arbitration Act, 1996.
398
Section 69(3), The English Arbitration Act, 1996.
399
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 206
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
400
This ground can be found in Article 25(2)(j) of the European Uniform Law on Arbitration and Article
1704(2)(J) of the Belgian Judicial Code.
401
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 676 (KLUWER LAW INTERNATIONAL, 2003).
128
Further, In the United States, courts have created some non-statutory grounds for challenging an award.
For example, an award can be vacated if it is in violation of the “manifest disregard of the law” which
is a non-statutory ground for setting aside the award.402 This doctrine requires that a party show that the
arbitrator knew and understood the law, but deliberately disregarded it.403 The standard is rarely met
because it is quite difficult to show that an arbitrator deliberately disregarded the law that he knew and
understood.

In India, an award can be set aside on the following grounds:

 Incapacity of parties404
 Invalid arbitration agreement405
 Composition of arbitral tribunal not in accordance with the agreement406
 Party unable to present its case407
 Failure to consider vital documents408
 Award based on no evidence409
 Arbitrator acting beyond submission410
 Award in ignorance of terms of the contract411
 Award contrary to law or substance of the dispute412
 Inconsistent findings in the award413
 Failure to adjudicate414
 Award by the illegally constituted tribunal415
 Matter not capable of settlement416
 Award contrary to public policy417

402
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 208
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
403
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 208
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
404
Section 34(2)(a)(i), The Indian Arbitration Act, 1996.
405
Section 34(2)(a)(ii), The Indian Arbitration Act, 1996.
406
Mafatlal Securities Ltd. v. Birla Sun Life Securities Ltd. 2002 (2) Arb LR 304 (Bom); Harike Rice Mills v.
State of Punjab, 1998 (1) RAJ 223 (P&H.)
407
Section 34(2)(a)(iii), The Indian Arbitration Act, 1996.
408
Hindustan Lever Ltd. v. Shiv Khullar, 2008 (2) Arb LR 42 (Del).
409
State of Andhra Pradesh v. K.Krishnam Raju, 2004 (1) Arb LR 566 (AP).
410
Section 34(2)(a)(iv), The Indian Arbitration Act, 1996.
411
Bharat Coking Coal Ltd. v. Annapurna Const., (2003) 8 SCC 154.
412
ONGC Ltd. v. Saw Pipes Ltd., AIR 2003 SC 2629.
413
Union of India v. Pundarikakshudu, (2003) 8 SCC 168.
414
Punjab State v. Chander Bhan Harbhajan Lal, AIR 1964 P&H 424.
415
Niraj Kumar Bohra v. Union of India, 2009 (2) Arb LR 123 (Cal) (DB).
416
Section 34(2)(b)(i), The Indian Arbitration Act, 1996.
417
Section 34(2)(b)(ii), The Indian Arbitration Act, 1996.
129
 Chapter XXVI – EFFECTS OF CHALLENGE

The effects of a successful challenge vary depending upon the grounds of the challenge, the relevant
law, and the decision of the court that dealt with. The court entertaining a request for setting aside an
award has multiple options to deliver from. It may either reject the challenge and uphold the award, or
it may accept the challenge and set aside the award, in whole or in part. In some circumstances, it may
also remit the case back to the arbitration tribunal.

Court Rejects Challenge and Upholds Award

While there is no figures or data to support but it is generally accepted and quite obvious that most
challenges bear no fruits. When the relevant court rejects a challenge, the award is confirmed and its
national and international recognition is inevitable.418

Court Accepts Challenge

The consequence of a court accepting the challenge is the award getting annulled or vacated. This means
that the award is not enforceable in the country in which it was made and various other countries as
well. It is important to reiterate that the challenge may nullify the award it its entirety or in part. 419 If
the reason behind accepting the challenge to an award is the invalid arbitration agreement, then the
parties are no longer bound by it. The prevailing party should be able to initiate a court action on the
same issues. Dutch law, for example, explicitly states that when a decision setting aside an award
becomes final, the jurisdiction of the court shall revive.420 If an award is set aside for reasons other than
invalidity of the arbitration agreement, the agreement would survive the award and the parties would
still be bound to have their disputes settled by arbitration.421

If the award has been set aside on any procedural, jurisdictional or substantive grounds, the situation is
different and a substantial question arises as to whether or not a new arbitration can be started. If the
award has been set aside for procedural defects (for example lack of due process), the party who won
the arbitration, but lost the challenge, will have to resubmit the dispute to arbitration and the process
will start over again. This is a daunting prospect for even the most resilient claimant.422 Under the Swiss

418
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 679 (KLUWER LAW INTERNATIONAL, 2003).
419
Richard A Davis v. Prudential Securities Inc, 59 F 3d 1186 (11th Cir 1995), where the award was affirmed in
part, vacated in part and remanded.
420
Article 1067, Netherlands Arbitration Law. The provision appears to apply to all awards, not just those set
aside on jurisdictional grounds.
421
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 209
ND
(2 EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
422
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.91
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
130
Concordat Article 40(4) the tribunal must re-hear the issues unless the parties object on the basis that
the arbitrators participated in the previous proceedings.

The Model Law suggests a different approach. It suggests in Article 34(4) that the relevant court may
remit the case to the arbitration tribunal.423 The rationale behind this is if the problem with the award
can be resolved short of declaring it null and void, most courts will try to choose a solution that will not
require the parties to start all over again. Substantial duplication of effort, time, and resources would
not benefit either party. The English Arbitration Act, for example, specifically provides that a court
shall not “set aside or . . . declare an award to be of no effect, in whole or in part, unless it is satisfied
that it would be inappropriate to remit the matters in question to the tribunal for reconsideration.”424

Remission

The power to remit is essentially a means to ‘cure’ awards that might otherwise need to be set aside.
The purpose of remission is to revisit some, or all, of its findings by the tribunal425. According to Article
61 of the Chinese Domestic Arbitration Law, remission is an appropriate result of a successful
application for the setting aside of an award, subject to the discretion of courts.426 It states that “If the
People's Court that has accepted an application for setting aside an arbitration award considers that
re-arbitration can be carried out by the arbitration tribunal, it shall notify the tribunal that it should
re-arbitrate the dispute within a certain time limit and shall rule to stay the setting aside procedure. If
the arbitration tribunal refuses to re-arbitrate the dispute, the People's Court shall rule to resume the
setting aside procedure.”

As discussed before, Article 34(4) of the Model Law codifies remission officially. It states that “The
court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend
the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal
an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral
tribunal's opinion will eliminate the grounds for setting aside.” Generally, remission is the main remedy
in common law jurisdictions; it is of lesser significance in Model Law jurisdictions.427

423
Article 61, China’s Arbitration Law.
424
Section 68(3)(c), The English Arbitration Act, 1996.
425
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.51
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
426
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 682 (KLUWER LAW INTERNATIONAL, 2003).
427
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 682 (KLUWER LAW INTERNATIONAL, 2003).
131
 Chapter XXVII – Recognition and Enforcement of Foreign Arbitral
Awards

One of the most touted advantages and a primary reason of parties including an arbitration clause and
resorting to arbitration as a dispute resolution mechanism is the certain enforceability of the award. The
probability of the enforcement of an award is extremely high because of the universality and global
acceptance of international conventions that favors enforcement. 428 Undoubtedly, the recognition and
enforcement of awards play a crucial role in the success of the international arbitration as it also helps
in aiding the voluntary compliance due to the effective system for the enforcement of awards in case of
non-compliance.429 Therefore, a detailed discussion on recognition and enforcement are important as
they provide official recognition of the arbitration process and confirms its outcome or product. The
following section discusses the distinction between recognition and enforcement of foreign arbitral
awards, regime governing the recognition and enforcement, prerequisites for applications to have a
foreign award enforced and the grounds to refuse enforcement.

The Distinction between Recognition and Enforcement

The New York Convention and other relevant provisions always mention “recognition and
enforcement” together. As a common understanding, if the award is enforced, it ought to be recognized
but there may be instances where an award is recognized but not enforced.430 Hence, the distinction
between the two deserves a discussion.

Recognition is the national court proceedings in the form of a summary proceeding confirming the
award, which amounts to a judicial decision. By this way, the courts acknowledge the existence of the
arbitration and recognize the decision of the tribunal. According to LEW, MISTELIS, AND KROLL,
recognition is useful when the unsuccessful party initiates court proceedings for any or all of the issues
dealt with in the arbitration award. Recognition of the award will prevent court proceedings from being
held in respect of decided matters.431

In other words, when a court “recognizes” an award, it acknowledges the validity and the binding nature
of the award and thereby provides a preclusive effect with respect to the issues determined in the

428
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 211 (KLUWER LAW INTERNATIONAL, 2003).
429
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 687 (KLUWER LAW INTERNATIONAL, 2003).
430
Mark Dallal v. Bank Mellat [1986] QB 411, (1986) XI YBCA 547, 553, where an Iran-US Claims Tribunal
award was recognised but not enforced.
431
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 680 (KLUWER LAW INTERNATIONAL, 2003).
132
award.432 REDFERN AND HUNTER appropriately illustrate the above with the help of an example.
According to it, if a company is made a defendant in legal proceedings by a foreign supplier for goods
sold and delivered, but allegedly not paid for. Suppose that the dispute between the company and the
foreign supplier has already been submitted to arbitration and that an award has been made, in which
the foreign supplier's claim was dismissed. In these circumstances, the company will ask the court to
recognize the award as a valid defense to the foreign supplier's new claim. If the court is prepared to do
this, the claim is dismissed. The legal force and effect of the foreign award will have been recognized,
but the award itself has not been enforced.433

On the other hand, enforcement is a step further from recognition which gives effect to the mandate of
the award.434 Enforcement is a tool which a successful party uses to request the assistance of the court
to enforce the award by exercising its power and authority and penalize the opposite party for failure in
compliance of the award. According to REDFERN AND HUNTER, where a court is asked to enforce an
award, it is asked not merely to recognize the legal force and effect of the award, but also to ensure
that it is carried out, by using such legal sanctions as are available.435

According to MOSES, there could be the various meaning of enforcement in a different jurisdiction. It
may mean simply the process by which an international arbitration award is reduced to a judgment. In
other jurisdictions, it may mean using whatever official means are available in the enforcing jurisdiction
to collect the amount owed or to otherwise carry out any mandate provided in the award. 436

To sum up, a court that is prepared to grant enforcement of an award will do so because it recognizes
the award as validly made and binding upon the parties to it, and therefore suitable for enforcement. In
the present context, the terms ‘recognition’ and ‘enforcement’ do run together: one is a necessary part
of the other.437

Regime Governing the Recognition and Enforcement

The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958
constitutes the backbone of the international regime for the enforcement of foreign awards. There are a

432
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 212
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
433
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 11.21
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
434
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 690 (KLUWER LAW INTERNATIONAL, 2003).
435
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 11.22
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
436
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 212
ND
(2 EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
437
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 11.22
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
133
number of other international conventions and bilateral treaties that provide for the enforcement of
foreign awards.438 A brief look at major international conventions, treaties, and national laws are as
follows:

The New York Convention

The New York Convention is the most widely accepted international convention which has significantly
simplified the enforcement of foreign awards and harmonized the national rules for the enforcement of
foreign awards.439 Article III of the New York Convention clearly provides that each contracting state
shall recognize arbitration awards as binding and enforce them in accordance with the rules of
procedure of the territory where the award is relied on.” Moreover, Article III mandates that a foreign
award must be enforceable without unnecessary inconvenience or excessive fees, and the conditions
must not be more onerous than those for domestic awards.440

The 1961 European Convention

The 1961 European Convention deals with the enforcement of foreign awards indirectly. It provides
that an award set aside at the seat of arbitration may be recognized by the courts of states applying the
Convention.441

The 1965 Washington Convention

The 1965 Washington Convention is yet another convention with more than 130 countries as signatory
which provides for its own enforcement procedures. Each member state is under an obligation to
recognize an award rendered pursuant to the convention and enforce the pecuniary obligations imposed
by the award considering it as a final judgment of the court in that state.442

438
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 692 (KLUWER LAW INTERNATIONAL, 2003).
439
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 692 (KLUWER LAW INTERNATIONAL, 2003).
440
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 693 (KLUWER LAW INTERNATIONAL, 2003).
441
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 693 (KLUWER LAW INTERNATIONAL, 2003).
442
Article 54(1), The Washington Convention, 1965.
134
The Panama Convention

The 1975 Inter-American Convention on International Commercial Arbitration (Panama Convention)

is a convention of the American Region ratified by more than 15 South American states and the US
which is more or less similar to New York Convention as it adopts the same standard.443

National Laws and Model Laws

It is of no surprise that various national arbitration laws also contain a provision dealing with the
enforcement of foreign awards. However, a majority of them are in line with the New York Convention
and have incorporated the verbatim text of the relevant international conventions or have simply
provided that the enforcement of foreign awards will be governed by the New York Convention.444
Model Law, under Article 36, also provides the grounds on which a court may refuse the enforcement
of an award. These grounds are akin to the grounds mentioned under Article V of the New York
Convention.

Requirements for Enforcement

Jurisdiction of the Enforcement Court

In order to get the foreign award enforced in the court, the court should have valid jurisdiction over the
parties. To establish jurisdiction for enforcement actions, it is sufficient if the parties prove that there
are assets existing in that court’s territorial jurisdiction. A good thing about enforcement proceedings
is that such proceedings can be initiated at every place where the assets are located. 445 In the United
States, however, some courts have refused to enforce foreign arbitral awards either on the grounds that
there was no personal jurisdiction over the award debtor, or that the forum was inappropriate under the
doctrine of forum non conveniens (an inconvenient forum).446 It is important to note that no permission
for enforcement is needed in the country where the award was made. Under the New York Convention,
it is sufficient that the award is “binding” in the country of origin.447

443
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 695 (KLUWER LAW INTERNATIONAL, 2003).
444
Articles 1710-1723, Belgium, Judicial Code; Articles 34-40, Brazil’s Arbitration Law; Articles 62-64, China’s
Arbitration Law; England, Sections 66, 99, and104, The English Arbitration Act, 1996.
445
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 703 (KLUWER LAW INTERNATIONAL, 2003).
446
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 214
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
447
Article V(1)(e), Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958.
135
Required Documents

The New York Convention under Article IV prescribes certain minimum formalities to make
enforcement certain, clear and simple. The party seeking recognition or enforcement must submit to the
court an authenticated award or certified copy and, if necessary, translations and the original or a copy
of the arbitration agreement and, if necessary, translations. The rationale behind the same is to provide
authentic evidence of the entitlement of the party seeking enforcement.448

The same has to be accompanied by an application formally written to initiate the proceedings of
enforcement. It is also prudent to note that the party seeking enforcement also must produce a translation
of the award and the agreement if they are in a language other than the official language of the court in
which enforcement is sought.449

In India, an arbitral award becomes enforceable only upon application for its enforcement being made
by the party and upon the application being allowed by the court. The court may even refuse the
enforcement of an arbitral award on grounds mentioned in Article 36(1) of the UNCITRAL Model Law.
Even under section 66(1) of the English Arbitration Act, 1996, an arbitral award becomes enforceable
only when the leave of the court is given for enforcement thereof.

Time Limits

The time limits for the commencement of recognition and enforcement of arbitral award proceedings
are generally provided in the domestic legislations. It must be followed strictly. In the United States,
for example, time limits vary from state to state and, when it comes to recognition or enforcement of an
award, the relevant period may be anything from one year to three years.450

In India, an award can be enforced only after the time for making an application for setting aside the
award under section 34 has expired, or if such application has been made, it has been refused. During
this period, there is an automatic suspension of enforcement of the award and only thereafter, it shall
be enforceable under the Code of Civil Procedure in the same manner as if it were an order of the
court.451

448
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 703 (KLUWER LAW INTERNATIONAL, 2003).
449
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 704 (KLUWER LAW INTERNATIONAL, 2003).
450
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 11.33
TH
(6 EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
451
National Aluminum Co Ltd v. Pressteel & Fabrications (P) Ltd (2004) 1 SCC 540; Madavpura Mercantile Co-
operative Bank v. Shah Bhimani Chemicals Pvt Ltd, 2009 (2) Arb LR 287 Guj.
136
 Chapter XXVIII – Grounds for Non-Enforcement under the Convention

It is important to note here that under the New York Convention, the court do not deny the enforcement
of an award simply because the arbitrators made a mistake of the law or a fact. Instead, the permitted
grounds emphasize on the integrity of the procedure with special attention to the fairness to the parties
and a reasonable opportunity to present their case. There are few things worth noting before discussing
the grounds individually and in depth.

First, neither the Model Law or the New York Convention allows any scope of challenge on the merits
of an award to which the New York Convention applies.452 Second, the New York Convention and the
Model Law presents exhaustive grounds for refusal of recognition and enforcement. It must be noted
that these are the only grounds on which recognition and enforcement may be refused. Third, the New
York Convention lays down five (5) separate grounds on which recognition and enforcement of a
foreign award may be refused at the request of the party against whom it is invoked. The remaining two
grounds on which recognition and enforcement may be refused are grounds that may be invoked by the
enforcing court on its own motion.453

Fourth, it is important to understand that the enforcement courts are under no obligation to refuse the
enforcement if any of the grounds for the refusal of recognition and enforcement are met. Fifth, the
grounds for the refusal of the enforcement of the award has to be construed narrowly as the very
intention of the New York Convention and the Model Law is that the grounds for refusing recognition
and enforcement of arbitral awards should be applied restrictively.454

The grounds for refusing enforcement are as follows:

Incapacity and Invalidity

The first ground for refusal enshrined in Article V(1)(a) of the New York Convention is that there is
some incapacity of the party or the agreement is invalid either under the law chosen by the parties, or,
if the parties did not choose a governing law, then under the law of the country where the award was
made. A court may refuse enforcement if it is shown proof that “the parties to the agreement referred
to in Article II were, under the law applicable to them, under some incapacity, or the said agreement is

452
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 11.53
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
453
Article V(2), Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958.
454
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 11.60
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
137
not valid under the law to which the parties have subjected it or, failing any indication thereon, under
the law of the country where the award was made.”455

The issue of incapacity could involve matters such as sovereign immunity, or a question of whether the
arbitration agreement was signed by someone who did not have the authorization to act on the behalf
of the party. The invalidity issue may simply be a question of meeting the form requirements of the law
in question, which may be the law chosen by the parties or the law of the seat of arbitration. Questions
of invalidity may also concern the proper formation of a contract to arbitrate.456

Lack of Due Process

Another ground of refusing the recognition and enforcement of the award is if the party resisting
enforcement furnishes proof under Article V(1)(b) that “he was not given proper notice of the
appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his
case.” This is the most important ground for refusal under the New York Convention and the Model
Law. It is directed at ensuring that the arbitration itself is properly conducted, with proper notice granted
to the parties and procedural fairness.457

A party must be provided with notice of the appointment of the arbitrator and of the arbitral proceedings.
Parties must also be given a full opportunity to present their cases. Thus, the award will not be enforced
if the party did not receive proper notice or if the arbitrators prevented a party from being able to present
its case – that is if the party was denied a fair hearing.458 The principle behind this defense is to uphold
certain standards of fairness and equal treatment observed by the arbitration tribunal. Ultimately the
question of violation of due process is a matter of fact, which the parties will have to prove.

LEW MISTELIS AND KROLL gives various examples which can amount to a ground for challenge of an
award under this provision such as if a party has not been able to participate in the taking of evidence
or in discovery proceedings,459 that a party had been denied the right to introduce certain evidence,460
or to comment on an expert's report submitted to the tribunal461 or that the standards of adversarial

455
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 706 (KLUWER LAW INTERNATIONAL, 2003).
456
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 218
ND
(2 EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
457
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 11.71
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
458
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 220
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
459
Polytek Engineering Co Ltd v. Hebei Import and Export Corp, (1998) XXII YBCA 666 (High Court Hong
Kong, 16 January 1998).
460
US, Iran Aircraft Industries v. AVCO Corporation, 980 F 2d 141, XVIII YBCA 596 (1993) (2d Cir, 1992).
461
Paklito Investment Ltd v. Klockner East Asia Ltd, (1994) XIX YBCA 654 (Supreme Court of Hong Kong, 15
January 1993).
138
proceedings adopted by the tribunal deprived a party of its fundamental right to defense. 462 However, it
is only required that the tribunal gives the parties the opportunity to present their case. It is immaterial
if the party actually makes use of it or not, and in which way, does not generally affect the enforceability
of the award.463

The Arbitrator has Acted Beyond Their Jurisdiction

Another important ground for refusal of recognition and enforcement of award under the New York
Convention is enshrined in Article V(1)(c) which states that “the award deals with a difference not
contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions
on matters beyond the scope of the submission to arbitration, provided that, if the decision on matters
submitted to arbitration can be separated from those not so submitted, that part of the award which
contains decisions on matters submitted to arbitration may be recognized and enforced”

This provision covers two different issues. First, extra petita or the case where the tribunal rendered a
decision outside its jurisdiction or without jurisdiction, and second, ultra petita where the tribunal has
exceeded its jurisdiction. In either case it is assumed there is an arbitration agreement which in principle
confers jurisdiction on the tribunal.464 It is imperative to note that the arbitrator’s power comes from the
consent of the parties, and if the arbitrator exceeds the authority specifically given to her under the
parties’ arbitration agreement, then the resulting award is not enforceable under the New York
Convention.465

Extra petita defense covers cases where the tribunal has decided matters outside the jurisdiction
conferred upon it by the parties for example when the tribunal awards consequential damages while the
contract between the parties expressly excluded this type of damages466 or when the tribunal awards
remedies not specified in the contract despite the objection of one party.467

The defense of Ultra Petita comes into picture when the tribunals award more than requested. In such
cases, only those part which is within the mandate of the tribunal is enforced. For example, in an Italian

462
US firm v. German firm, II YBCA 241 (1977).
463
Sam Ming Forestry Economic Co v. Lam Pun Hing, (2000) 15(1) Mealey's IAR 12 (HCHK).
464
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 713 (KLUWER LAW INTERNATIONAL, 2003).
465
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 221
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
466
Fertilizer Corporation of India v IDI Management, 517 F Supp 948, VII YBCA 382 (1982).
467
In the Matter of the Arbitration between Millicom International v Motorola Inc and Proempres Panama SA,
2002 WL 472042, XXVII YBCA 948 (2002).
139
case, the court held that only the part of the award which is consistent with the mandate of the tribunal
is enforceable but not the remaining part of the award which exceeded the tribunal’s jurisdiction. 468

Procedural Irregularity or Composition of Tribunal

The composition of tribunal or procedure not in accordance with the arbitration agreement or the
relevant law is yet another ground for refusal of recognition and enforcement of an award under Article
V(1)(d) of the New York Convention. It states that enforcement can be refused if “the composition of
the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties,
or, failing such agreement, was not in accordance with the law of the country where the arbitration
took place.” It introduces two grounds on which enforcement may be refused. It establishes the
supremacy of party autonomy over the law of the place of arbitration and allows a national court to
refuse recognition and enforcement.469

In the circumstances, if the parties do not reach an agreement on either of these two matters, then the
constitution of the tribunal and the arbitral procedure must be in compliance with the law of the country
where the arbitration took place.470 This defense is rarely claimed, and when it is claimed, is not usually
successful.471 One of the famous examples of it is a Hong Kong Supreme Court judgment where it was
argued that enforcement of an award made in China should be refused because the composition of the
arbitral tribunal was not in accordance with the agreement of the parties. 472 The arbitrators who had
been appointed were on the Shenzhen list of arbitrators, but not (as specified in the arbitration
agreement) on the Beijing list.

The Award is not Binding or has Been Suspended or Set Aside

The next ground for refusal of recognition and enforcement under the New York Convention is
envisaged in Article V(1)(e) which allows for the refusal of enforcement when the award “has not yet
become binding on the parties or has been set aside or suspended by a competent authority of the
country in which, or under the law of which, that award was made.” Although no definition of “binding”
is provided in the New York Convention, most courts consider that an award is binding if there is no

468
General Organisation of Commerce and Industrialisation of Cereals of the Arab Republic of Syria v SpA Simer,
VIII YBCA 352 (1983).
469
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 714 (KLUWER LAW INTERNATIONAL, 2003).
470
Article V(1)(d), Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958.
471
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 222
ND
(2 EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
472
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 11.83
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
140
way of bringing an appeal on the merits. The choice of the word “binding” was made in the New York
Convention to try to avoid issues raised under its predecessor, the 1927 Geneva Convention.473

The drafters of the New York Convention intentionally chose the expression “not binding” and not the
word “final” (as was the case with the 1927 Convention). The reason was simply to avoid the problem
of the party seeking enforcement having to request leave for enforcement by the courts at the place of
arbitration. Therefore, if the award is not subject to a genuine appeal on the merits to a relevant forum
or court, it must be considered as “binding”.474 It is important to note here that partial awards are binding
and hence enforceable. Thus, if the above conditions are satisfied, the award is binding and may not be
used as a ground to refuse enforcement.

The second requirement under this provision is that the award should not have been previously set aside
or vacated in the country where rendered or under the law to which it was subjected. If the party resisting
enforcement has successfully applied for a suspension or setting aside of the award the enforcement
court may adjourn its decision.475 Keep in mind that to vacate an award, a losing party must apply to
the local court where the award was rendered. To enforce an award, the prevailing party must apply to
a court where the losing party’s assets are located.476

Subject Matter not Arbitrable

The Model Law, as well as the New York Convention, provides that recognition and enforcement of an
arbitral award may be refused “if the competent authority in the country where recognition and
enforcement is sought finds that the subject matter of the difference is not capable of settlement by
arbitration under the law of that country.” This means that a national court may refuse recognition and
enforcement if the subject matter cannot be settled by arbitration on its own territory. There may be
many kinds of dispute that are not arbitrable for example, criminal matters, IPR disputes, child custody
disputes, etc. that concerns the third parties and rights in rem and so will have to be decided in a court
of law.

Arbitrators, on the other hand, are expected to be responsible only to resolve the dispute with respect to
the parties before them, not to represent the public interest. 477 Therefore, the awards can be refused to
be enforced if it is passed on a subject matter which cannot be settled through arbitration. However, the

473
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 222
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
474
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 715 (KLUWER LAW INTERNATIONAL, 2003).
475
Article VI, Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958.
476
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 223
ND
(2 EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
477
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 226
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
141
concept of arbitrability has expanded considerably in recent decades as a consequence of a general
policy favoring arbitration. There are very few cases in which enforcement of an award has been refused
for lack of arbitrability of the underlying dispute.478

Public Policy

Recognition and enforcement of an arbitral award may also be refused if it is contrary to the public
policy of the enforcement state. Article V(2)(b) provides that recognition or enforcement of an arbitral
award may be refused if a court finds that it would be contrary to the public policy of that country. It is
quite understandable that a state may wish to have the right to refuse to recognize and enforce an
arbitration award that offends its own notions of public policy.479 This defense is only available “where
the enforcement would violate the forum state's most basic notions of morality and justice.”480 The
public policy exception set out in Article V(2)(b) is an acknowledgment “of the right of the State and
its courts to exercise ultimate control over the arbitral process.”481

The basic tenet of this provision is to protect the fundamental moral beliefs and social order of the
country where recognition and enforcement are sought from being harmed. 482 Some of the widely
recognized examples of violations of international public policy include biased arbitrators, lack of
reasons in the award, serious irregularities in the arbitration procedure, allegations of illegality, 483
corruption or fraud,484 the award of punitive damages and the breach of competition law. It is generally
rare that an award is successfully refused enforcement in a state because of the violation of its
international public policy. 485

478
Audi-NSU Auto Union AG v. Adelin Petit & Cie (Belgium), V YBCA 257 (1980).
479
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶
11.105 (6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
480
Parsons and Whittemore Overseas Co, Inc v Société générale de l'industrie du papier (RAKTA), 508 F 2d 969,
974 (2d Cir, 1974).
481
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 721 (THE HAGUE: KLUWER LAW INTERNATIONAL, 2003).
482
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 726 (THE HAGUE: KLUWER LAW INTERNATIONAL, 2003).
483
Soleimany v. Soleimany [1998] 3 WLR 811.
484
Westacre Investments Inc v. Jugoimport-SPDR Holding Co Ltd And Others [1999] 2 Lloyd's Rep 65 (CA).
485
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 722 (THE HAGUE: KLUWER LAW INTERNATIONAL, 2003).
142
 Chapter XXIX – Public Policy

According to PROFESSOR KROLL, it is difficult, if not impossible, to define the concept of public policy.
In 1853 the House of Lords identified the public policy notion as “that principle of law which holds
that no subject can lawfully do that which has a tendency to be injurious to the public, or against the
public good.”486 Public policy serves as the rationale on which a domestic court may refuse the
enforcement of an arbitral award, which is contrary to the laws or standards of the court’s jurisdiction.
If the court feels that enforcement of an award would violate the basic notions of morality and justice,
the court may vacate such award.487

Of course, each state has its own concept of what is required by its ‘public policy’. It is possible to
envisage, for example, a dispute over the division of gaming profits from a casino. The dispute may be
taken to arbitration and an award made. In many states, the underlying transaction that led to the award
would be regarded as a normal commercial transaction and the award would be regarded as valid.
However, in states that do not tolerate gambling, the award might well be set-aside on the basis that it
offends public policy by upholding and interpreting an illegal contract.488

One of the most cited explanations of the concept comes from the case of Parsons & Whittemore
Overseas Co., Inc. v. Societe Generale de I’Industrie du Papier489, in which the US Second Circuit
Court of Appeals in affirming the enforcement of an arbitral award against an American Company,
stated that “the public policy defense should be construed narrowly. Enforcement of foreign arbitral
awards may be denied on this basis only where enforcement would violate the forum state’s most basic
notions of morality and justice.”

The Supreme Court of Korea gave a narrow interpretation to the public policy principle in Adviso NV
(Netherlands Antilles) v Korea Overseas Construction Corp.490 The court stated that the basic tenet of
the public policy principle is to protect the fundamental moral beliefs and social order of the country
where recognition and enforcement is sought from being harmed. Similarly, in Switzerland, the court
acknowledged the same stance and upheld the restricted application of the public policy principle. 491
Further, German courts have held that an award will violate public policy if it conflicts with fundamental

486
Egerton v Brownlow (1853) 4 HLC 1.
487
Curtin, Kenneth-Michael, Redefining Public Policy in International Arbitration of Mandatory National Laws,
Def. Counsel J. 64, at 271 (1997).
488
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.82
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
489
508 F.2d 969 (2d Cir. 1974)
490
XXI YBCA 612 (1996).
491
Camera di Esecuzione e Fallimenti Canton Tessin, 19 June 1990, K S AG v CC SA, XX YBCA 762 (1995).
143
notions of justice, bonos mores, or conflicts with principles that are fundamental national or economic
values.492

Widely accepted examples of violations of international public policy include biased arbitrators, lack
of reasons in the award, serious irregularities in the arbitration procedure, allegations of illegality,
corruption or fraud, the award of punitive damages and the breach of competition law.493 It is generally
rare that an award is successfully refused enforcement in a state because of violation of its international
public policy. Although there are occasional examples of misuse of the public policy defense, in most
countries courts have been reluctant to refuse enforcement on public policy grounds.494

Indian Context

In India, the expression “public policy of India” has been held to mean fundamental policy of Indian
law, justice and morality.495 The Supreme Court in Renusagar Power Co. Limited v. General Electric
Company496 (“Renusagar”), recognized that merely a violation of Indian laws would not suffice to
attract the bar of public policy. Subsequently, the apex court in the 2003 decision of ONGC v. Saw
Pipes497 (“ONGC”) expanded the test of ‘public policy’ to mean an award that violates the statutory
provisions of Indian law or terms of the contract. Such an award is considered as ‘patently illegal’ and
therefore in violation of public policy. This interpretation practically affords the losing party an
opportunity to re-argue all the points afresh and prolong the final adjudication of the case.

The Court’s observation in ONGC is worth noting. The observed that the phrase ‘Public Policy of India’
used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept
of public policy connotes some matter which concerns public good and the public interest. What is for
public good or in public interest or what would be injurious or harmful to the public good or public
interest has varied from time to time. However, the award which is, on the face of it, patently in violation
of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely
to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning
given to the term ‘public policy’ in Renusagar’s case, it is required to be held that the award could be
set aside if it is patently illegal. Result would be – award could be set aside if it is contrary to: –

(a) fundamental policy of Indian law; or

492
See the decision of the Karlsruhe Court of Appeal of 14 September 2001 cf NIGEL BLACKABY, J. MARTIN
HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 10.83 (6TH EDN. KLUWER LAW
INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
493
JULIAN D.M. LEW, LOUKAS A. MISTELIS & STEFAN M. KRÖLL, COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION 722 (KLUWER LAW INTERNATIONAL, 2003).
494
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 229
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
495
Bharti Airtel Limited v. Union of India, 231 (2016) DLT 71
496
1994 Supp (1) SCC 644.
497
(2003) 5 SCC 705.
144
(b) the interest of India; or

(c) justice or morality, or

(d) in addition, if it is patently illegal.

The judgment in ONGC diverged from the interpretation given to the expression “public policy” in
Renusagar on the ground that Renusagar dealt with enforcement of an award which had attained finality,
whereas the issue before the court in ONGC was with regard to the validity of the arbitral award itself,
which was under challenge under Section 34 of the Act.

Thereafter, with the advent of the ruling in Venture Global v. Satyam Computers498 (“Venture
Global”), foreign awards i.e. awards passed in arbitrations seated outside India became amenable to
challenge under Section 34 of the Act. This resulted in foreign awards being subject to the broader test
of “public policy” as enunciated in ONGC.

Thus, ONGC coupled with Bhatia International v. Bulk Trading S.A.499 (“Bhatia International”) and
Venture Global led to an undesirable situation and opened the floodgates to petitions challenging
arbitral awards on the ground of ‘patent illegality.’ Any and all arbitral awards involving Indian parties
were being challenged before the Indian Courts and were completely re-heard on the merits, defeating
the entire purpose of the arbitration in the first place.

In Phulchand Exports Limited v. O.O.O. Patriot500 (“Phulchand”), the Supreme Court expanded the
meaning of the expression ‘public policy’ under section 48 of the Act, and held that the scope and
purport of the expression under section 34 and 48 are the same. Thus, even in a scenario where the
award attains finality, upon an action for enforcement of the foreign award being instituted, the parties
by virtue of the decision in Phulchand could apply the extremely broad standard of ‘public policy’ in
ONGC and almost re-open the entire matter.

The decision given in Phulchand has now been overruled by Shri Lal Mahal Ltd. v. Progetto Grano
Spa501 (“Lal Mahal”). In this matter, an award passed under the rules of the Grain and Feed Trade
Association, London and upheld by courts in the UK was sought to be enforced in India. Objection to
the enforcement of the award was raised under section 48 of the Act on the ground that the award was
contrary to the terms of the contract and thus patently illegal and in violation of ‘public policy’. The
Supreme Court held that the expression ‘public policy’ as found under Section 48 of the Act would not

498
(2008) 4 SCC 190.
499
(2002) 4 SCC 105.
500
(2011) 10 SCC 300
501
(2014) 2 SCC 433.
145
bring within its folds the ground of ‘patent illegality’. Further, such ground is limited to section 34 of
the Act where the issue is whether the award should be set aside or not.

The Court noted that the applicability of the doctrine of ‘public policy’ is comparatively limited in cases
involving conflict of laws and matters involving a foreign element such as a foreign seated arbitration.
The court ruled that the expression ‘public policy of India’ under Section 34 was required to be
interpreted in the context of the jurisdiction of the court where the validity of the award is challenged,
before it becomes final and executable in contrast to enforcement of an award after it becomes final.
The Supreme Court clarified that Section 48 does not offer an opportunity to have a second look at the
foreign award at the enforcement stage, or permit review of the award on the merits. Accordingly, the
court held that the meaning of the expression public policy under Section 48 is limited to fundamental
policy of India, interests of India, and justice and morality.

Thereafter, ONGC v. Western Geco International Ltd.502 against deliberated on the public policy issue
wherein a 3-judge bench of the Supreme Court widened the scope of ‘public policy’ and stated that the
expression must include all such fundamental principles as providing a basis for administration of
justice and enforcement of law in this country.

The Law Commission of India in its 246th Report recommended the restriction of the scope of “public
policy” in both sections 34 and 48 and bring the definition of public policy in line with the definition
propounded by the Supreme Court in Renusagar. The formulation proposed by the Commission was
even more stringent and did not include the reference to “interests of India” as the term is vague and is
capable of interpretational misuse, especially in the context of challenge to awards arising out of
international commercial arbitrations. Thus, under the formulation of the Commission, an award can be
set aside on public policy grounds only if it is opposed to the “fundamental policy of Indian law” or it
is in conflict with “most basic notions of morality or justice”.

These recommendations were incorporated in the 2015 Amendment of the Arbitration Act which
eventually amended Section 34 of the Indian Arbitration Act to include that an award is in conflict with
the public policy of India, only if:

 The making of the award was induced or affected by fraud or corruption;

 It is in contravention with the fundamental policy of Indian law; or
 It is in conflict with the most basic notions of morality or justice.

Therefore, the latest amendment curtails the expanse of public policy and hence reduces the scope of
judicial intervention.

502
(2014) SLT 564.
146
 Chapter XXX – Enforcement of Award Annulled at the Seat

If the award is annulled at the seat of arbitration, does it mean that the award will be unenforceable
elsewhere in the world? This is because, under both the New York Convention and the Model Law, a
competent court may refuse to grant recognition and enforcement of an award that has been set aside
by a court of the seat of arbitration.503 The use of the word “may” suggest discretion granted to the
courts, where the recognition and enforcement of an annulled award is sought. Few decisions have
declined to consider the recognition of awards that were annulled or refused confirmation in the place
where they were made.504 These decisions have generally contained little analysis, but apparently rest
on the (mistaken) notion that an award ceases to exist when it has been annulled in the arbitral seat. 505
However, various courts have taken the position that a vacated award can nonetheless be enforceable.506

At first sight, the proposition that an award may be refused recognition and enforcement if it has been
set aside or suspended by a court at the place (or seat) of the arbitration seems reasonable enough. If,
for example, an award has been set aside in Switzerland, it will be unenforceable in that country and it
might be expected that, if only as a matter of international comity, the courts of other states would
regard the award as unenforceable also.507 But this does not reflect the reality. Many courts have taken
the view that they will enforce an arbitral award even if it has been set aside by the courts of the seat of
the arbitration.508

Whether or not enforcement courts decide to enforce an annulled award is influenced by how the
enforcement courts characterize the nature and role of the arbitral seat. Broadly, one can relate this with
the seat theory i.e. where an award has been set aside by the competent authority in the country where
it was rendered, it ceases to exist and is not enforced. Secondly, with the delocalization theory according
to which the annulment decision has no bearing or enforcement, and an annulled award may be enforced
unless it falls within the grounds to refuse enforcement under the domestic law of the enforcement
court.509

503
Article V(1)(e), The New York Convention; Article 36(1)(a)(v), Model Law.
504
Clair v. Beradi, VII Y.B. Comm.Arb.319 (Paris Courd’appel) (1982) refusing to enforce award made in
Switzerland against French defendant after award was annulled as “arbitrary” by Swiss court; Judgment of 13
August 1979, Götaverken v. GMTC, VI Y.B. Comm. Arb. 237 (Swedish S.Ct.) (1981).
505
Judgment of 28 October 1999, XXV Y.B.Comm.Arb. 717, 718 (Oberlandesgericht Rostock) (2000) refusing
to recognize awards made, but annulled, in Russia, on grounds that they were no longer “binding” and therefore
not recognizable under German law.
506
MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 224
(2ND EDN., CAMBRIDGE UNIVERSITY PRESS, 2012).
507
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶
11.88 (6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
508
NIGEL BLACKABY, J. MARTIN HUNTER ET AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION ¶ 11.89
(6TH EDN. KLUWER LAW INTERNATIONAL; OXFORD UNIVERSITY PRESS 2015).
509
Albert Jan van den Berg, Enforcement of Annulled Awards, 9 (2) ICC INTERNATIONAL COURT OF
ARBITRATION BULLETIN 15, 15 (1998)
147
Under the seat theory, it is doubtful whether an enforcement court might recognize and enforce a foreign
award which had been set aside by courts in the arbitral seat. This is because the contemplated erga
omnes effect of a successful application to set aside an award would generally lead to the conclusion
that there was simply no award to enforce. In other words, if an award is annulled, the courts will refuse
enforcement as there does not longer exist an arbitral award and enforcing a non-existing arbitral award
would be impossible. In essence, it means that if the award is invalid under the law of the seat of the
arbitration, it cannot have any validity in any other jurisdiction.

Few landmark cases under this approach are the Baker Marine Case510 and the Termo Rio v.
Electranta511 case which held and confirmed that if the award has been set aside by the competent
authority in the country where it was rendered, the award ceased to exist simply because out of nothing
follows nothing. The rationale behind these cases is that enforcing courts should defer to decisions to
set aside an award made by the competent court in the country of origin. If the annulment decision of
an award was not recognized by courts in original jurisdiction but instead got recognized by courts in
the second attempt jurisdiction, this could cause considerable uncertainty for the parties to the
arbitration.

The problem with the seat theory is that it is in direct contravention to the text of Article V(1)(e) of the
New York Convention, which confers discretionary power to enforce the award. Moreover, seat theory
is grounded on an outdated assumption that the law of the seat court provides the award’s legal force.
The seat of arbitration is agreed upon by parties mainly out of convenience or compromise, instead of
inherent importance of the arbitral seat itself. Further, the parties’ agreement did not include submitting
to the exclusive jurisdiction of a particular court. By agreeing to extra-curial arbitration, they arguable
intended to avoid the reach of the seat court in the first place. The seat theory contradicts the parties’
intentions as it allows seat courts to interfere with the legal effect of the award. 512

Under the delocalization theory, it is believed that no state should have the final say on the validity of
the award. Accordingly, each enforcement court should be entitled to form its own view on the validity
of the award, regardless of what the courts at the seat of arbitration may think. This means that the
enforcing courts are free to ignore a decision setting aside an award by a court in the seat of arbitration.
The justification of the delocalized approach stems from Article VII of the New York Convention under
which the party seeking enforcement may rely on a more favourable provision in the country where

510
Baker Marine (Nig.) Limited v. Chevron (Nig.) Limited, Chevron Corp., Inc. and others v. Danos and and
Curole Marine Contractors, Inc. Judgement of the United States Court of Appeals, Second Circuit in Yearbook
Commercial Arbitration 1999 – Volume XXIVa, pp. 909-914.
511
Termo Rio S.A. E.S.P. (Colombia), Lease Co Group and others v. Electranta S.P. (Colombia), et al.
Judgement of the United States Court of Appeals, District of Columbia Circuit, in Yearbook Commercial
Arbitration 2008 – Volume XXXIII, pp. 955-969.
512
Pieter Sanders, New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
(1994) 6:55 Nethl Intl L Rev 199.
148
enforcement is sought. One of the prime examples of it is the decision rendered in Putrabali513 where
the court held that the impact of a national court’s decision to annul an award is confide to its own
jurisdiction and that the enforcement court decides whether to enforce based on its own rules. Moreover,
national courts of various jurisdictions have started following delocalization approach.

In France, the law governing international arbitrations provides that an award may be denied
enforcement only on the basis of five specific grounds.514 The setting aside of an award by the court in
the country where the award was rendered is not one of those specific grounds.515 Thus, a French court
will enforce a vacated award unless the basis for vacating the award was one of the specific grounds
listed in its law. For example, in Putrabali,516 the French Courts enforced an award set aside in England.
In doing so, the Cour de Cassation held that “An international arbitral award, which does not belong
to any state legal system, is an international decision of justice and its validity must be examined
according to the applicable rules of the country where its recognition and enforcement are sought.”
Therefore, French courts are by law under an obligation to enforce a foreign award even if it was set-
aside in the country of origin.

Similarly, European Convention on International Commercial Arbitration also provides that an award
will be set-aside only on the basis of one of the exclusive grounds set forth in the convention.517
Therefore, if the award is annulled at the seat for reasons other than the exclusive grounds, it would still
be enforceable in other jurisdictions.

In the United States, Courts in the landmark case of Chromalloy Aeroservices v. Arab Republic of
Egypt518 enforced an award that was set aside by the court at the place of arbitration. In this case, a U.S.
company had obtained an award against the State of Egypt, which was then set aside by the Egyptian
court. The U.S. court determined that under Article V it had discretion whether or not to enforce the
vacated award. Applying Article VII of the Convention, the court found that the U.S. Federal Arbitration
Act was a more favorable law that should permit the award to be enforced.519 Similarly, an award made
and challenged in Slovenia was enforceable in Austria,520 and an award made in Austria but partly set
aside there was enforceable in France.521

513
Société PT Putrabali Adyamulia v. Société Rena Holding et Société Mnogutia Est Epices [2007] Rev Arb
507.
514
French Code of Civil Procedure, arts., 1520, 1525. See also various rulings in the case of Hilmarton v. OTV,
from 1994 to 1997, discussed in Hamid G. Gharavi, Enforcing Set Aside Arbitral Awards: France’s Controversial
Steps beyond the New York Convention, 6 J. Transnat’l L. & Pol’y 93 (1996).
515
See French Code of Civil Procedure, art. 1520.

516
Société PT Putrabali Adyamulia v. Société Rena Holding et Société Mnogutia Est Epices [2007] Rev Arb 507.
517
484 U.N.T.S. 349 (1961), art. IX.
518
F. Supp. 907 (D.D.C. 1996).
519
Chromalloy Aeroservices v. Arab Republic of Egypt, F. Supp. 907, at 909 (D.D.C. 1996)
520
Kajo-Erzeugnisse Essenzen GmbH (Austria) v DO Zdravilisce Radenska (Slovenia), XXIVa YBCA 919
(1999).
521
Pabalk Ticaret Limited Sirketi (Turkey) v Norsolor SA (France), 24 ILM 360 (1985).
149
The discretion exercised by courts in recognizing and enforcing awards set aside at the place of
arbitration has been welcomed by many writers522 and criticized by others.523 In any event the practice
is justified as a matter of Article VII New York Convention and more favorable positions in national
law or international conventions as discussed above. While there may not be a unified interpretation or
approach used by either supporters of the seat theory or the delocalized theory as a lot of it will depend
on which jurisdiction the application for enforcement is filed, but establishing international standards
for annulment of awards can still give a reasonable hope to bring uniformity and certainty in this regard.

522
Chan, The Enforceability of Annulled Foreign Awards in the United States: A Critique of Chromalloy, 17
Boston U Int'l L J 141 (1999); Gaillard, Enforcement of Awards Set Aside in the Country of Origin: The French
Experience, ICCA Congress Series no 9, 505; Paulsson, The Case for Disregarding LSAS (Local Standard
Annulments) Under the New York Convention, 7 Am Rev Int'l Arb 99 (1996).
523
Bajons, Enforcing Annulled Arbitral Awards – A Comparative View, 7 Croat Arbit Yearb 55 (2000); Giarding,
The International Recognition and Enforcement of Arbitral Awards Nullified in the Country of Origin, in Briner,
Fortier, Berger and Bredow (eds), Law of International Business and Dispute Settlement in the 21st Century, Liber
Amicorum Karl-Heinz Böckstiegel (2000), 205; Rogers, The Enforcement of Awards Nullified in the Country of
Origin, ICCA Congress Series no 9, 548; Schwartz, A Comment on Chromalloy: Hilmarton à l'americaine, 14(2)
J Int'l Arb 125 (1997).
150