11

DISPUTE RESOLUTION
International commercial arbitration

1. What is arbitration? Introduction (yellow)

In this chapter, we will consider the typical means by which international commercial
disputes are resolved. Instead of litigating a dispute before a court of law in a particular
jurisdiction, the parties to an international commercial contract may prefer to have their
dispute resolved through arbitration. It will be seen in this chapter that there are several
advantages to arbitration compared to litigation, including its more flexible nature and the
near-global enforceability of arbitration awards under the UNCITRAL Convention on
the Recognition and Enforcement of Foreign Arbitral Awards 1958, often referred to in
this context as the “New York Convention”. Arbitration is a form of alternative dispute Meaning
resolution in the sense that it is an alternative to litigating before a national court. Whilst
the procedure of arbitration proceedings can to a large extent be determined by the par-
ties, the final outcome of any arbitration proceedings will be a decision made by the
arbitrator(s) which is binding on the parties in much the same way as a court judgment.
The decision by the parties to an international commercial contract to take any disputes
which might arise to arbitration rather than litigation is based on their contractual agree-
ment. This can be achieved either by means of an arbitration clause included in the
contract between the parties, or through a separate agreement to submit a dispute which
has arisen to arbitration (a “submission agreement”). As we will see in this chapter, this
agreement will determine matters such as the choice of arbitrators, the location of the
arbitration proceedings, the procedural rules under which the proceedings will be con-
ducted, and the substantive rules of law which the arbitrators will apply in resolving the
dispute.

1.1 Why choose arbitration? Advantages of arbitration

One might ask why parties to international commercial contracts might prefer arbi-
tration to litigation. There are a number of reasons, some practical and some reflecting
DOI: 10.4324/9781315692807-11
236 Dispute resolution

As we know,
the particular characteristics of arbitration. As we saw in Chapter 2, litigation has to be
conducted before a national court, either chosen by the parties through a choice-of-
forum clause in their contract or determined on the basis of whatever rules of private
international law apply to their situation. This court will have set rules of procedure
which will have to be followed. The national court hearing the dispute will consist of
a judge or several judges who will be excellent lawyers, but may not know a great deal
about the particular trade sector in which the parties operate, nor have the particular
technical expertise which might be relevant in resolving the dispute. To overcome
this, the parties, or rather their lawyers, would have to present a potentially substantial
amount of background material to the court to ensure that all relevant non-legal fac-
tors are before the court to assist the judge(s) with their task. Arbitration, on the other
hand, can be located wherever the parties might choose (although it will often be one
of the leading global arbitration organisations), the parties can select arbitrators with
relevant expertise, and the parties can determine how formal or informal the pro-
ceedings need to be. Moreover, a national court has to resolve the dispute on the basis
of the law applicable to the contract between the parties, whereas in arbitration, the
parties are able to ask the arbitrators to resolve the dispute on the basis of rules of law
which may differ from the applicable law. Once a decision has been handed down by
a court, it may become necessary to take steps to enforce the judgment in another
jurisdiction, but unless there is an agreement for the recognition of judgments from a
foreign court in place, this could be a complex and time-consuming process. Awards
handed down in international commercial arbitration proceedings are recognised in
almost every jurisdiction around the world.
However, as well as these practical advantages, arbitration proceedings are con-
ducted in private. The privacy of arbitration proceedings is important because it avoids
both unnecessary publicity and the wider economic impact this could have on the
parties involved, and it also protects the details of the parties’ commercial relationship
and any proprietary knowledge from becoming public. Moreover, arbitration pro-
ceedings are subject to a duty of confidentiality, which means that nothing from the
proceedings – whether evidence, witness statements or the final award – may be made
public unless all parties consent to this. In Ali Shipping Corporation v Shipyard Trogyr,1
the English Court of Appeal held that the duty of confidentiality of arbitration pro-
ceedings would prevent a party in arbitration proceedings from relying on evidence
obtained during a previous arbitration between the same parties. The Court noted that
the duty of confidentiality was an incident of the private nature of arbitration pro-
ceedings and recognised, in English Law, as an implied term arising as a “necessary
incident of a definable category of contractual relationships”,2 i.e., it would be implied
into an arbitration because of the fact that it is an arbitration agreement,3 without
further need to consider whether such a term would be required on the basis of the

1 Ali Shipping Corporation v Shipyard Trogyr [1999] 1 W.L.R. 314.

2 The formulation used by Lord Bridge in Scally v Southern Health and Social Services Board
[1992] 1 A.C. 294 at p.307 to explain one of two instances when a term is implied into
a contract.
3 Potter LJ in Ali Shipping at p.326.
 Dispute resolution 237

business efficacy or officious bystander tests.4 There would only be a limited number
of exceptions to this principle: (i) disclosure of confidential material with the consent of
the person who originally produced it; (ii) by order of a court (e.g., an order for dis-
closure where court proceedings result from the arbitration); and (iii) where this is rea-
sonably necessary for the protection of the legitimate interests of an arbitrating party.5

1.2 The legal framework for international commercial arbitration --Enforceability

In this chapter, we will examine the legal framework which supports international
commercial arbitration. There are two international texts which are of particular
relevance. The first is the New York Convention on the Recognition and Enfor-
cement of Foreign Arbitral Awards 1958, which has been ratified by 168 countries6
around the world. Its primary purpose is to deal with the recognition and enfor-
cement of both arbitration agreements and arbitration awards. Thus, it seeks to
ensure, where parties have agreed to resolve their dispute by arbitration, that courts
do not allow the parties (usually one of the parties) to take this dispute to court
instead. More importantly, it provides for the recognition of an arbitration award
in all of the Contracting States, which makes their enforcement considerably easier.
The second is the UNCITRAL Model Law on International Commercial Arbitration,
which was first issued in 1985, and amended in 2006. This Model Law is intended to
provide national legislatures with a template for modernising, or creating, a domestic legal
regime which facilitates all stages of the process of international commercial arbitration. It
is necessary to have national legislation on international commercial arbitration, because
arbitration effectively diverts the parties’ dispute from the court system, and so there needs
to be a clear framework which governs the process of international commercial arbitra-
tion. In a sense, just as any international commercial contract ultimately has to be gov-
erned by a particular national law, so do arbitration proceedings. It will be explained later
that each arbitration must be located somewhere, even if only notionally. This location is
known as the “seat of arbitration”, and the country, or jurisdiction, where the seat is
located provides the legal regime governing the arbitration (often referred to as the lex
arbitri). The lex arbitri deals, in particular, with the process by which a jurisdiction recog-
nises the existence of an arbitration tribunal and the conduct of its proceedings, as well as
relevant procedural aspects. The UNCITRAL Model Law therefore offers a model for
each jurisdiction to ensure that its lex arbitri is suitable for international commercial arbi-
tration, and to ensure a high level of convergence among different jurisdictions.7

4 These are the alternative formulations for determining whether to imply a term into a
particular contractual relationship between identified parties: see Marks and Spencer plc v
BNP Paribas Securities Services Trust Company (Jersey) Ltd [2015] UKSC 72.
5 Potter LJ in Ali Shipping at p.327. For an example of the final situation (treating it as
disclosure in the interests of justice), see John Foster Emmot v Michael Wilson & Partners
Ltd [2008] EWCA Civ 184.
6 Figure correct as at April 2021.
7 Legislation based on the Model Law has been adopted in 85 countries (a total of 118
jurisdictions): see https://uncitral.un.org/en/texts/arbitration/modellaw/commercial_a
rbitration/status [accessed May 2021].
238 Dispute resolution

The Model Law addresses a range of issues: the recognition of the arbitration
agreement; the composition of the arbitral tribunal; the jurisdiction of the tribunal;
the conduct of the arbitration proceedings; issuing of the arbitration award; possible
recourse against the award; and recognition of the award. Many of its provisions
are default rules which apply in respect of matters which the parties to the arbi-
tration have not settled in their arbitration agreement.
In addition to these two UNCITRAL texts, there are other sets of international
rules of relevance to the conduct of the arbitration proceedings. Whilst arbitration is,
in principle, a flexible process and the parties have considerable leeway in determining
the procedural aspects of their arbitration, in practice, many arbitration proceedings
will be conducted by or under the auspices of the established arbitration centres. Each
of these will have its own set of procedural rules which will be applied in arbitration
proceedings conducted at these arbitration centres. In addition, both UNCITRAL
and the International Chamber of Commerce (ICC) have published their own set of
arbitration rules,8 which can be adopted by the parties to arbitration proceedings to set
out the procedure which will be followed in their proceedings. In addition, the Interna-
tional Bar Association has published Rules of Ethics for International Arbitrators9 and Guide-
lines on Conflicts of Interest in International Arbitration,10 both of which seek to ensure the
proper conduct of arbitrators, especially with regard to impartiality and independence.

1.3 Private international law aspects

Although arbitration is separate from the court system of any particular jurisdiction,
we have already seen that arbitration proceedings are governed by the law of the
country/jurisdiction where the arbitration has its seat (lex arbitri). Therefore, in
choosing the location for their arbitration, the parties may need to consider the
requirements of the lex arbitri.
For a time, there was a debate as to whether control of international commercial
arbitration under the lex arbitri was necessary at all. In particular, Paulsson11 claimed
that there was no need for the lex arbitri to play any role, and that any control regarding
the validity or enforceability of arbitration proceedings and the resulting award should
purely be a matter for the State where enforcement of the award is sought. This claim
was justified on the basis that international commercial arbitration, by its very nature,
should be disconnected from national controls and be governed solely by the

8 UNCITRAL, UNCITRAL Arbitration Rules and Rules on Transparency in Treaty-Based

Investor-State Arbitration (New York, 2014); International Chamber of Commerce, Arbi-
tration Rules – Mediation Rules (Paris, 2017), text available at https://iccwbo.org/dispute-
resolution-services/arbitration/rules-of-arbitration/ [accessed February 2020].
9 International Bar Association, Rules of Ethics for International Arbitrators (London, 1987).
10 International Bar Association, IBA Guidelines on Conflicts of Interest in International Arbi-
tration (London, 2014).
11 J. Paulsson, “Abitration unbound: award detached from the law of its country of origin”
(1981) 30 International and Comparative Law Quarterly 358; Paulsson, “Delocalisation of
international commercial arbitration: when and why it matters” (1983) 32 International
and Comparative Law Quarterly 53.
 Dispute resolution 239

provisions of the New York Convention. However, this idea of “delocalisation” of

arbitral proceedings did not gain much traction and has failed to gain acceptance.
In addition to the lex arbitri, it will also be necessary to have regard to the law gov-
erning the contract between the parties itself, particularly where this contains an arbi-
tration clause. The law governing the contract will also be relevant for resolving the
dispute between the parties, unless the parties have asked the arbitrators to decide on
the basis of different rules of law (see below). Where a separate arbitration agreement is
concluded, this may be subject to a different governing law than the law applicable to
the contract itself. Finally, as discussed below, the parties may choose whether the
arbitrators should apply the law governing the contract or a different law/set of legal
rules when resolving the dispute.

2. The international nature of international commercial arbitration

Scope of International Arbitration
As with any other aspect of International Commercial Law, the scope of application of
the rules on international commercial arbitration requires there to be an international
dimension. Article 1 of the UNCITRAL Model Law provides the criteria for deter-
mining whether an arbitration is international. The criterion in Art. 1(3)(a) of the
Model Law is familiar: it treats an arbitration as international if the parties to an arbi-
tration agreement12 have their respective places of business13 in different States at the
time the arbitration agreement is concluded. However, there are a number of alter-
native ways of treating an arbitration as international where the parties have their
places of business in the same State. Thus, if either the place of arbitration, identified
on the basis of the arbitration agreement, is located outside of the State where the
parties have their places of business, or if the place where a substantial part of the
obligations under the main contract is to be performed, or the place with which the
subject-matter of the dispute is most closely connected, is located outside of that State,
then the arbitration is also treated as international.14 Finally, an arbitration will be
international if the parties agree expressly that the subject-matter of the arbitration
agreement relates to more than one country.15

3. The arbitration agreement

The decision to go to arbitration is essentially consensual in that the parties to a con-
tract either agree in their contract or after a dispute has arisen that they will seek a
resolution through arbitration rather than litigation. If there is an arbitration clause in
the commercial contract between the parties, the principle of the separability, or

12 Which would also include an arbitration clause in the contract between the parties.
13 As is common in other International Commercial Law instruments, if a party has mul-
tiple places of business, the relevant place of business is that with the closest relationship
to the arbitration agreement. Moreover, for a party without a place of business, its
habitual residence is used instead (see Art. 1(4) of the UNCITRAL Model Law).
14 Art. 1(3)(b)(i) and (ii).
15 Art. 1(3)(c).
240 Dispute resolution

autonomy, of the arbitration clause is crucial. For example, Art. 16(1) of the UNCI-
TRAL Model Law provides that “an arbitration clause which forms part of a contract
shall be treated as an agreement independent of the other terms of the contract” and
that, consequently, a decision regarding the effectiveness or validity of the commercial
contract does not affect the validity of the arbitration agreement.
The arbitration agreement between the parties is therefore essential. Generally,
the parties have the freedom to determine a whole range of issues in the arbitration
agreement,16 although often, parties will not set out the detail but rather defer to
the rules of their chosen arbitration institution or specify the rules on the basis of
which the arbitration should be conducted. If the parties decide not to do this,
they will have to use the arbitration agreement to determine a range of issues.
The first is to decide on the individual arbitrators, and the number of arbitrators
(usually, there will be a sole arbitrator or a panel of three, with one appointed by each
party, and a neutral third one chosen by the two others). Secondly, the seat of the
arbitration has to be chosen. This will determine the lex arbitri, i.e., the legal regime
governing the arbitration. Third, the parties have to agree on the scope of the arbi-
tration, i.e., they need to set out the issues which they wish to refer to arbitration. The
arbitrator(s) can only consider those issues which have been referred for arbitration and
they are not permitted to consider other issues which are only raised at a later point;
otherwise, the award is can be challenged17 and/or refused recognition.18 Fourth, the
arbitration agreement needs to set out the procedural rules which the arbitrators must
follow. Finally, the arbitration agreement should state which substantive rules the
arbitrators should use in resolving the dispute, particularly if the parties intend for this
to be done on the basis of legal rules which differ from the law applicable to their
commercial contract.

3.1 Validity
In order to be valid and therefore enforceable, there are a number of formal conditions
which an arbitration agreement must satisfy. The criteria for validity can be deter-
mined on the basis of Art. II of the New York Convention, which sets out the criteria
for recognising arbitration agreements. The first requirement is that it has to be in
writing.19 The New York Convention pre-dates the use of digital methods of com-
munication, but electronic documents should now be recognised as fulfilling this
requirement. Indeed, Art. 7 (Option 1) of the Model Law makes this clear: according
to Art. 7(4), the requirement for an arbitration requirement to be in writing is met by
an electronic communication (such as e-mail) “if the information contained therein is

16 T.E. Carbonneau, “The exercise of contract freedom in the making of arbitration

agreements” (2003) 36 Vanderbilt Journal of Transnational Law 1190.
17 Cf. Art. 34(2)(iii) of the Model Law.
18 Art. 36(i)(a)(iii) of the Model Law, and Art. V(1)(c) of the New York Convention.
19 Art. II(1) New York Convention; Art. 7 (Option 1 – definition and form of arbitration
agreement) Model Law. Note that Option 2 for Art. 7 does not contain any form
requirements.
 Dispute resolution 241

accessible so as to be useable for subsequent reference”.20 Digital forms of arbitration

agreements should therefore meet the requirement that they are in writing.
Secondly, under the New York Convention21 there may be a need for a sig-
nature of the parties, particularly in respect of a separate arbitration agreement22 but
also potentially of the arbitration clause in the commercial contract. The drafting of
Art. II(2) of the New York Convention is not entirely clear. It states that the “term
‘agreement in writing’ shall include an arbitral clause in a contract or an arbitration
agreement, signed by the parties or contained in an exchange of letters or tele-
grams”. It is plausible that the requirement that there is a signature only relates to a
separate arbitration agreement, but it could also apply to an arbitral clause in the
parties’ commercial contract. If this also applies to the arbitral clause, a related
question is whether it would suffice for the contract as a whole to have been
signed, or whether a separate signature against the arbitral clause would be
required. In the case of electronic documents, a functional equivalent to a signature
would be needed. In any case, a signature is not always required if the arbitration
agreement (and possibly also the contract) is contained in an exchange of written
communications. Art. II(2) refers to an “exchange of letters or telegrams”, but an
exchange of e-mails should suffice.
A further essential requirement, in additional to the formal requirements as to
writing and (possibly) signature, is that there is a “defined legal relationship”23 between
the parties from which the dispute which is referred to arbitration may arise, or has
arisen. A dispute arising from the parties’ contractual relationship would satisfy this
requirement, although it need not be based on a contractual relationship. Finally, the
subject-matter of the dispute must be one that is capable of being settled by arbitration.
This is known as the arbitrability of the issue(s) referred to arbitration.

4. The arbitration panel

Arbitral Tribunal - Composition
It is important that care is taken in determining the composition of the arbitration
panel, both with regard to the number of arbitrators and their expertise in respect
of the subject-matter of the dispute. Unlike a court of law, an arbitration panel is
not a permanent tribunal, but only established when the need arises. Where the
arbitration is conducted under the auspices of an arbitration body or centre, there
will be some external oversight of the panel. Should it become necessary, this will
allow for an arbitrator to be replaced without great difficulty. However, in the case
of an ad hoc arbitration largely arranged by the parties and not conducted through

20 This has become an established way of spelling out what the functional equivalent of
“in writing” would be in the context of electronic communications. See Chapter 12 at
2.1.
21 No mention is made in the UNCITRAL Model Law for a signature requirement.
22 See, e.g., Celio Moore v Seven Seas Cruises LLC and Voyager Vessel Co (U.S. District
Court, Southern District of Florida, case no 19–22085-CIV-MORENO) of 5 July 2019
(agreement initialled on each page and signed on final page).
23 Art. II(1) New York Convention.
242 Dispute resolution

an arbitration body, there will be less external oversight to ensure the proper con-
duct of the proceedings. If there are concerns over an arbitrator, it would only be
possible to remove the arbitrator by a court and in accordance with the rules of the
lex arbitri.24
Where the parties make their own arrangements for the appointment of the arbi-
tration panel, care must be taken to ensure that the integrity of process is maintained
and there is no risk of any conflicts of interest or bias. The parties should make sure
that the arbitrator(s) they intend to appoint have the appropriate qualifications,
experience of the parties’ trade, and any expertise that may be relevant to the issues to
be arbitrated in order to maximise the chances of a speedy and accurate resolution of
their dispute. This is particularly important because there will usually be no possibility
of appeal or review of the arbitration award on the merits but only on procedural
grounds.25 So it is important to choose the right panel to minimise the risk that the
arbitrators will make a serious error about the content or application of the relevant
law. Relevant knowledge or experience of the trade or industry will be important.
Moreover, if the dispute involves complex points of law, it would seem sensible to
appoint a legal expert as one of the arbitrators. There will also be more practical fac-
tors, such as whether all the arbitrators and the parties share a common language in
which to conduct the proceedings, the availability of the arbitrators to conduct the
proceedings (especially where these are likely to be lengthy) and the reputation of the
arbitrators. All of this will have inevitable cost implications, because arbitrators will
charge for the time spent on the arbitration, and those with expertise and a high
reputation are likely to be able to command higher-than-average fees.
Usually, arbitration panels consist either of a sole arbitrator or of a panel of three
arbitrators, (with the latter being the default position under the Model Law26),
although any number could be chosen. The parties should avoid an even number of
arbitrators to avoid a possible deadlock of the panel if it cannot agree on the outcome.
Key advantages of choosing more than one arbitrator are that this facilitates more
deliberation between the arbitrators of the issues raised, and also that this makes it
easier to bring together complementary expertise from different areas. For example,
one arbitrator might have expertise in the legal issue relevant to the arbitration,
another might have relevant technical expertise related to the factual issues of the
dispute, and a third might have experience in the parties’ trade sector. The award
reached by a multi-arbitrator panel might therefore have greater authority and be
more readily accepted by the parties. Generally, it seems advisable to use a panel of
three arbitrators where the dispute is likely to be complex and involve multiple
issues, and where large sums of money are at stake.
Whilst there is the theoretical possibility to choose arbitrators primarily based on
their expertise, there is also a likelihood that the parties are not able to agree on the

24 See Arts. 13(3) and 14(1) of the UNCITRAL Model Law.

25 Cf. Art. 34 UNCITRAL Model Law. Note that under section 69 of the UK’s Arbi-
tration Act 1996, there is a limited possibility of appealing to court on a point of law.
26 See Art. 10(2) UNCITRAL Model Law.
 Dispute resolution 243

particular arbitrators to be appointed to the panel which will hear their dispute. In
such circumstances, it the default approach is that each party appoints one arbitrator
each, and the two appointees will select a third arbitrator who will also act as chair
of the panel.27
The way in which the selection process will be conducted will depend on the type
of arbitration. For ad hoc arbitrations, the parties have generally more freedom, but also
greater responsibility, in choosing their arbitrators. In the case of an arbitration under
institutional rules, the rules of the chosen institution may specify how the arbitrators
should be selected. In particular, the parties might be invited to make their selection
from a pre-determined list of arbitrators drawn up by the institution.

4.1 Independence and impartiality

One common feature of all arbitration panels is that they must adhere to the principles
of impartiality and independence. Impartiality entails that an arbitrator must not be biased
in respect of the issues before the arbitral panel nor against or in favour of any of the
parties. An arbitrator’s independence means that they should not have any link to one
of the parties, nor should they have any financial interest in the outcome of the dis-
pute. Accordingly, under Art. 12(1) of the UNCITRAL Model Law, an arbitrator is
obliged from the moment he or she is approached for appointment to disclose any
circumstances which might create “justifiable doubts” as to that arbitrator’s impartiality
or independence.28 Moreover, a justifiable doubt as to an arbitrator’s impartiality or
independence can be a ground for challenging that arbitrator in accordance with Art.
12(2) Model Law.29 Similarly, the IBA’s Guidelines on Conflicts of Interest stress the
absolute duty of an arbitrator to be impartial and independent of the parties.30 The
Guidelines focus, in particular, on possible instances of a conflict of interest between
those of an arbitrator and those of the parties. Instances are divided between three
“lists”: a red list, orange list and green list. As might be expected, situations in the green
list are deemed to involve no objective conflict of interest. The orange list sets out
situations where there is a possibility of a conflict of interest which could undermine
the arbitrator’s impartiality and/or independence, and so the arbitrator is obliged to
disclose this to the parties (under General Standard 3 of the Guidelines). The red list is
divided into waivable and non-waivable situations. The non-waivable list covers
situations where an arbitrator is also one of the parties, a legal representative or
employee of one of the parties, has a significant financial interest in one of the parties
or the outcome of the arbitration, or regularly advises one of the parties and gains

27 Art. 11(3)(a) UNCITRAL Model Law. Where the two arbitrators fail to agree on the
third, the competent court under the lex arbitri will appoint the third arbitrator.
28 The ICC Arbitration Rules put this simply as an obligation on each arbitrator to be, and
to remain, impartial and independent of the parties involved in the arbitration (Art. 11
(1) ICC Arbitration Rules).
29 Both aspects of the UNCITRAL Model Law are also reflected in Arts. 11 and 12 of the
UNCITRAL Arbitration Rules.
30 General Standard 1 IBA Guidelines.
244 Dispute resolution

significant financial income from this. These are all such serious situations of conflict
that they disqualify that person from serving as an arbitrator. Those in the waivable
category of the red list are less serious and can be waived by the parties if they are fully
aware of the nature of the conflict of interest and expressly state that they would be
willing to have this person serve as an arbitrator.31 The orange list details those situations
where there might be doubt as to a person’s impartiality or independence, and the
arbitrator is obliged to disclose this to the parties.32 Following disclosure, the parties have
to decide whether to object to this person serving as arbitrator, but if they do not raise
any concerns, the person can act as arbitrator. The disclosure itself does not mean that
the person lacks the impartiality and independence required of an arbitrator.33

5. Conducting the proceedings

Once the arbitration panel has been appointed, proceedings can commence. The
precise procedure that will be followed for the proceedings will depend on whether
the arbitration is conducted on an institutional or ad hoc basis. In the former case, the
procedural rules governing the arbitration will be those of the chosen institution. In
the latter case, the lex arbitri will provide any rules applicable to the proceedings.34
Generally, there will be an initial meeting of the panel with the parties to discuss
whatever preliminary matters might arise, and to confirm the procedure which will
be followed for the arbitration. They may confirm the terms of reference and the
issues which are to be resolved by the arbitration panel (bearing in mind that
arbitration panels may only consider those issues which the parties have agreed to
refer to arbitration). This might include a decision of whether it will be necessary
to hold hearings for the parties to present their arguments, and supporting evi-
dence, or whether it would be sufficient for the arbitrators to proceed on the basis
of written submissions from the parties and documentary evidence.35 Any docu-
ments either party intends to rely on must be disclosed to the opposite party. As far
as witnesses are concerned, they will generally provide written statements, but the
parties can agree to direct examination and cross-examination of witnesses.

5.1. Role of courts in arbitration

The general rule is that the courts of the jurisdiction where the arbitration is located
will not generally have any role in the arbitral process. However, there may be some
instances where assistance from the courts is required, even after the arbitration has
commenced. The extent to which this happens varies between jurisdictions.
An initial need for recourse to a court will arise where it becomes necessary to
enforce an agreement to arbitrate and therefore to stay or abandon proceedings

31 General Standard 4(c) IBA Guidelines.

32 General Standard 3(a) IBA Guidelines.
33 Explanation (c) to General Standard 3.
34 See Chapter V of the UNICTRAL Model Law.
35 Art. 24 UNCITRAL Model Law.
 Dispute resolution 245

commenced by one of the parties, where the issues brought before a court should
be taken to arbitration instead.36 We have already noted that courts can also be
asked to assist with the appointment, and also the removal, or arbitrators.
A court might be called upon where its coercive powers are required to ensure that
the parties do not act in a way that would undermine the arbitral process, including
orders necessary to conserve the parties’ assets to ensure that they can meet any obli-
gations arising from the final award.37 Arbitration panels are able to make orders for
interim measures and related orders,38 but they will not have the enforcement powers
which a court has in respect of any orders it has made and therefore courts can be
asked to enforce any interim orders made by an arbitration panel.39

6. Rules of law applied by arbitration panel Applicable law

To the extent that the dispute between the parties raises questions of law, the arbitra-
tion panel will have to apply the law to the issues raised in the dispute to determine
what the outcome should be. The key question here is which law the arbitration panel
should apply. Before a court of law, the answer to this would be simple: the dispute
has to be resolved on the basis of the law which applies to the contract or the particular
legal issues before the court (if they are non-contractual). To the extent that the parties
have not chosen the applicable law, or if their choice is not effective, the rules of pri-
vate international law applied by the court hearing the case will determine the
applicable law.
The situation is not quite as simple as that in the context of international commer-
cial arbitration, which, far from being a drawback, is one of the particular character-
istics of arbitration compared to litigation. Article 28 of the UNCITRAL Model Law
sets out how the applicable law should be determined in the context of international
commercial arbitration.
First, Article 28 gives priority to “such rules of law as are chosen by the parties as
applicable to the substance of the dispute”.40 There are two things to note: first, the
overriding criterion is the choice made by the parties. This means that the parties can
choose the substantive law to be applied in the arbitration afresh, and they are not
bound by the law deemed to be the applicable law in their contract. They can also
choose a law that would not be applicable through the application of private interna-
tional rules. Secondly, the phrase “rules of law” does not restrict the parties’ choice of
the law of a particular jurisdiction. The parties could also choose relevant international
conventions (or even model laws) which might not otherwise be applicable to their
contract, as well as other rules agreed internationally such as the UNIDROIT

36 See Art. II(3) of the New York Convention and Art. 8(1) of the UNCITRAL Model
Law.
37 Cf. Art. 17J UNCITRAL Model law.
38 See Arts. 17–17G UNCITRAL Model Law.
39 Arts. 17H–I UNCITRAL Model Law.
40 Art. 28(1) UNICTRAL Model Law. See also Art. 35(1) UNCITRAL Arbitration Rules
and Art. 21(1) ICC Arbitration Rules.
246 Dispute resolution

Principles on International Commercial Contracts.41 It might also be possible for the

parties to ask the arbitrators to resolve their dispute on the basis of the lex mercatoria.
Indeed, it has been argued that arbitrators might prefer this to the choice of a national
law or even international convention in view of the large margin of this discretion it
would give them in resolving the dispute.42
In the absence of an express choice made by the parties, the arbitration panel
will have to make that choice instead. Under the UNCITRAL Model Law, the
arbitration panel would be required to apply the substantive law “determined by
the conflict of laws rules which it considers applicable”.43 This is not dissimilar to
what would happen before a court of law, although the arbitrators are not bound
by one particular private international law44 regime and may, for instance, consider
whether the private international law regimes of the jurisdictions where the parties
have their respective places of business point to the same applicable law. By way of
comparison, under both the UNCITRAL and ICC arbitration rules, the arbitration
panel is empowered to apply the rules of law which the panel “determines to be
appropriate”.45 This gives the panel greater discretion than it would have if the
rules from the Model Law applied.
In addition to the greater flexibility with regard to the rules of law which the arbi-
tration panel can be required to apply to resolve the substantive issues of the dispute,
the parties can also choose to ask the arbitration panel to resolve the dispute without
reference to any rules of law and instead use what it regards as fair and equitable as the
relevant yardstick. Thus, Art. 28(3) of the UNCITRAL Model Law specifies that
“The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the
parties have expressly authorized it to do so.”46 It is crucial that the parties have given
express authorisation to the panel for this. The panel cannot decide of its own accord
that this would be the appropriate way of reaching a decision; moreover, it would also
not seem possible for the arbitration panel to choose this approach if the parties had
asked the arbitration panel to choose the most appropriate substantive rules itself,
because this is unlikely to be sufficient to be regarded as express authorisation.
Irrespective of which basis is chosen by which the arbitration panel is required to
resolve the dispute, the panel will always be required to reach its decision on the
basis of the terms of the contract between the parties, and account should be taken
of any applicable trade usages.47

41 There is little evidence that many parties make this choice, however: R. Michaels, “The
UNIDROIT Principles as global background law” (2014) 19 Uniform Law Review 643.
42 G. Cuniberti, “Three theories of lex mercatoria” (2014) 52 Columbia Journal of Transna-
tional Law 369.
43 Art. 28(2) UNCITRAL Model Law.
44 “Conflict of laws” and “private international law” are used interchangeably.
45 Art. 35(1) UNCITRAL Arbitration Rules; Art. 21(1) ICC Arbitration Rules.
46 See also Art. 35(2) UNCITRAL Arbitration Rules, and Art. 21(3) ICC Arbitration
Rules.
47 Art. 28(4) Model Law; see also Art. 35(3) UNCITRAL Arbitration Rules and Art. 21
(2) ICC Arbitration Rules.
 Dispute resolution 247

7. The award
At the end of the process, the arbitration panel will make its final determination and
issue its conclusions. This is the arbitration award. This is a final and binding decision
setting the outcome of the dispute between the parties. Any formalities which need to
be complied with will be determined by the lex arbitri and the relevant procedural rules
under which the arbitration was conducted. Generally, the award has to be in writing
and signed by the arbitrators.48 The arbitrators must give the reasons for the award,
unless the parties have dispensed with the requirement for reasons.49 It is important
that the parties have a written award in order for the award to be recognised and
enforced in the Contracting States of the New York Convention.50

8. Challenging an award

8.1 No challenge to an award based on its merits

Once the award has been handed down, the parties may wish to challenge the deci-
sion which the arbitration panel has reached. However, there is no appeals process
within international commercial arbitration, and, as a general rule, there is no possi-
bility to appeal an award to a court of law. This is so even when the arbitration panel
has made an error in applying the relevant rules of law to the substance of the dispute.
However, whilst the UNCITRAL Model Law does not envisage a possibility for the
parties to appeal to a court, the lex arbitri may provide for this.

8.1.1 Appeal on a question of law: the example of the UK’s Arbitration Act
1996
In the UK, for example, s.69(1) of the Arbitration Act 1996 provides for a limited
possibility for appeal to a court on a question of law. However, the parties may
exclude this possibility by agreement, e.g., by inserting a term to that effect into their
arbitration agreement. The possibility of an appeal under s.69 of the Arbitration Act
1996 is also precluded by the decision of the parties not to require the arbitration panel
to give reasons for its award.51
A party seeking to appeal on a question of law under s.69 must give notice to the
other parties to the arbitration, as well as the arbitral tribunal. In addition, all the parties
to the arbitration must agree with the decision to appeal.52 If they do not all agree, the
court may still give leave to appeal in any case,53 but it may only do so if the

48 Art. 31(1) UNCITRAL Model Law; Art. 34(2) UNCITRAL Arbitration Rules.
49 Art. 31(2) UNCITRAL Model Law; Art. 34(3) UNCITRAL Model Rules; Art. 32(2)
ICC Arbitration Rules.
50 Art. IV New York Convention.
51 S.69(1), Arbitration Act 1996.
52 S.69(2)(a), Arbitration Act 1996.
53 S.69(2)(b), Arbitration Act 1996.
248 Dispute resolution

criteria in s.69(3) are met. Thus, leave may only be given where (i) determining the
question of law raised will substantially affect the rights of one or more of the
parties; (ii) the question of law was one which the tribunal had been asked to
determine; (iii) on the basis of the findings of fact made by the tribunal, the deci-
sion of the tribunal on the question is either “obviously wrong”54 or “at least open
to serious doubt”55 where the question of law is of general public importance; and
(iv) it would be “just and proper in the circumstances”56 for the court to resolve
this question, despite the parties’ decision to take their dispute to arbitration. The
outcome of the appeal may lead to a judgment which either confirms or varies the
award, remits the award back to the tribunal so it can reconsider its decision in light
of the court’s decision regarding the question of law which was the subject of the
appeal, or sets aside the award in whole or in part.57 The court may give leave to
appeal its judgment to the Court of Appeal, but only where the question of law is
of general importance, or if there is another special reason why it should be
appealed.58
Section 69 of the Arbitration Act 1996 tries to strike a balance between the
general position that, once the parties have decided to take their dispute to arbi-
tration, the court should have no involvement in the resolution of the substance of
the dispute, and the significance of particular types of dispute for the development
of the common law. English commercial law is predominantly common law based,
and as such relies for its development on cases concerning unresolved or novel
questions of law to reach the courts. An example to anyone familiar with English
contract law is the inconsistency caused by the Court of Appeal’s decision in Wil-
liams v Roffey Bros59 for the doctrine of consideration. Whilst the Supreme Court
in Rock Advertising v MWB Business Exchange Centres60 may be criticised for not
discussing this issue when that case presented the first opportunity for the Court to
consider it, it is perhaps more striking that it took almost 30 years for this oppor-
tunity to arise in the first place. As arbitration will mean that a lower number of
cases will reach the court, one important aspect of s.69 of the Arbitration Act is that
it provides at least an occasional door for important points of law to reach the
courts, even where the dispute itself is resolved through arbitration. It is important
to bear in mind that s.69 generally requires the agreement of the parties before a
court can hear an appeal in any case, and if one of the parties to the arbitration
wishes to rule out this possibility altogether, it would push for an appropriate term
to be inserted into the arbitration agreement.

54 S.69(3)(c)(i), Arbitration Act 1996.

55 S.69(3)(c)(ii), Arbitration Act 1996.
56 S.69(4), Arbitration Act 1996.
57 S.69(7), Arbitration Act 1996. An award may only be set aside if the court is satisfied
that it would not be appropriate to remit the matter back to the tribunal.
58 S.69(8), Arbitration Act 1996.
59 Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5, [1991] 1 QB 1.
60 Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24.
 Dispute resolution 249

8.2 Permitted grounds for challenging an award

Whilst it is not generally possible to challenge an award on its merits, Article 34 of
the UNIDROIT Model Law provides a limited number of grounds on the basis of
which an arbitration award may be challenged. The types of challenge which may be
brought are limited to jurisdictional and procedural matters. It will become apparent
that the grounds for challenging an award are essentially the same as the grounds on
which the enforcement of an award under Article V of the New York Convention
may be refused. A challenge must be brought before the designated court61 of the lex
arbitri within three months from the date on which the party challenging the award
had received it.62
The first ground is that the arbitration agreement is invalid under the law which the
parties have chosen as the applicable law, or, in the absence of such choice, under the
law of the country where the award was made.63 A challenge is also possible if the
parties lacked capacity under the law applicable to them.64 In either case, the basis for
the challenge is that the entire arbitration lacked a basis as the arbitration agreement is
ineffective.
The second ground is that the party against whom the award is invoked was not
given the proper notice of the appointment of the arbitrator or of the arbitration
proceedings, or did not have the opportunity to present its case.65
A third ground is, in essence, that the arbitration panel exceeded its jurisdiction by
including matters not contemplated by the parties, not falling within the terms of
submission to arbitration, or it decides issues beyond the scope of what the parties had
agreed to submit to arbitration.66 If matters going beyond the arbitration panel’s jur-
isdiction can be separated from matters which it considered properly, then the award is
only open to challenge with respect of matters beyond the panel’s jurisdiction.67
A fourth ground for challenging an award is that the composition of the arbitral
tribunal or the arbitration proceedings was not in accordance with the agreement of
the parties, except where parties’ agreement was in conflict with a mandatory provi-
sion of the national law on which the Model Law is based.68 If there was no agree-
ment by the parties on these aspects, and if the composition of the arbitral tribunal or
the arbitration proceedings was not in accordance with the national rules given effect
to the Model Law, then the award can also be challenged.
A fifth reason when an award can be challenged is that the subject-matter of the
dispute was such that it could not be taken to arbitration under the law of the State
where the arbitration was located.69

61 See Art. 6 UNCITRAL Model Law.

62 Art. 34(3) UNCITRAL Model Law.
63 Art. 34(2)(a)(i) UNCITRAL Model Law.
64 Ibid.
65 Art. 34(2)(a)(ii) UNCITRAL Model Law.
66 Art. 34(2)(a)(iii) UNCITRAL Model Law.
67 Ibid.
68 Art. 34(2)(a)(iv) UNCITRAL Model Law.
69 Art. 34(2)(b)(i) UNCITRAL Model Law.
250 Dispute resolution

The final reason is that the award is in conflict with the public policy of the
State where the arbitration was located.70
These are the only grounds on which it is possible to challenge an award before
the courts of the lex arbitri envisaged under the UNCITRAL Model Law. There is,
of course, nothing that would prevent a State from adding additional grounds of
challenge in their national law. However, as international commercial arbitration is
a type of business on which there is considerable competition between different
arbitration centres, States are likely to be very cautious in making it easier to
challenge an award than permitted under the UNCITRAL Model Law.

9. Enforcing the award

After the award has been handed down, the parties are expected to abide by it and
to take whatever action they are required to in order to comply with the award.
Thus, if the arbitration award provides for a payment of damages by one party,
then that party should do so. However, this may not always happen, and so it may
become necessary for one of the parties to take steps to enforce the arbitration
award. In most instances, this will mean having to apply to a court for the recog-
nition and enforcement of the award in the State where the party against whom
enforcement is sought has its place of business, or where the assets which are the
subject of the arbitration award are located.
The recognition and enforcement of arbitral awards is greatly facilitated by the New
York Convention. Article III of the Convention requires every Contracting State to
recognise arbitral awards as binding, and further that it should enforce arbitral awards
on the basis of whichever procedure applies in the State where enforcement is
sought.71 The fact that the New York Convention has been widely ratified, with
more than 160 Contracting States, effectively ensures the global recognition and
enforcement of arbitral awards. However, there is a possibility for a Contracting State
to declare,72 at the time of ratification, that it will apply the Convention only (i) in
respect of arbitral awards which were made in another Contracting State (and there-
fore not recognise and enforce, at least not on the basis of the Convention, arbitral
awards made in non-Contracting States);73 and that it will (ii) limit the recognition
and enforcement to awards arising from legal relationships considered as “commercial”
under the law of that State.74 In view of the large number of ratifications, a declaration

70 Art. 34(2)(b)(ii) UNCITRAL Model Law.

71 The conditions, fees and charges in respect of the enforcement of an international award
should not be “substantially more onerous” than those applicable in respect of domestic
arbitral awards: Art. III New York Convention.
72 Art. I(3) New York Convention.
73 A total of 79 Contracting States have made a declaration in respect of (i), including the
United Kingdom. See UNCITRAL, Status: Convention on the Recognition and Enforcement
of Foreign Arbitral Awards, https://uncitral.un.org/en/texts/arbitration/conventions/for
eign_arbitral_awards/status2 [accessed March 2021].
74 A declaration in respect of (ii) has been made by 47 States.
 Dispute resolution 251

to limit the recognition and enforcement to those handed down in another Con-
tracting State will be of increasingly limited practical significance.
There is a strong presumption under the New York Convention in favour of
recognition and enforcement. Consequently, it is not necessary for a party seeking
enforcement to advance any reasons for seeking enforcement in its application for
this. The party seeking the recognition and enforcement of an arbitral award is
only required to provide an authenticated original or certified copy of the arbitral
award and of the arbitration agreement.75
However, there are instances when a court may refuse to recognise and/or enforce an
arbitral award. This is possible where the party against whom enforcement is sought pro-
vides proof to the court or competent authority of the State where recognition and
enforcement is sought of the fact that one or more of the grounds listed in Article V of the
New York Convention exists. Most of the grounds in Article V are identical to those
listed in Art. 34 of the UNCITRAL Model Law as grounds for challenging an award, so
the first to fourth grounds mentioned above are also grounds for refusing the recognition
and enforcement of an award.76 A further ground on which recognition and enforce-
ment may be refused is where the award has either not yet become binding on the par-
ties, or where the award has already been set aside or suspended by a court or competent
authority in the State where, or under the law of which, the award was made.77
Furthermore, it was seen above that an award may be challenged before the courts of
the lex arbitri where the issues referred to arbitration are not capable of being arbitrated
under the law of that State, or where they are contrary to the public policy of that State.
In the same vein, recognition and an enforcement may be refused where the issues of
the arbitration are not arbitrable in, or against the public policy of, the State where
recognition and enforcement is sought.78 The upshot of this is that there are only limited
grounds on which a court or competent authority in the State where recognition or
enforcement is sought may refuse to do so. Moreover, the court or competent authority
has a discretion, rather than an obligation, to refuse recognition or enforcement on the
basis of one of these grounds. This is evident from the use of the word “may” in the
opening words of Art. V. In other words, a court may recognise and enforce an award
even where the party against whom enforcement is sought can make out one or more
of the grounds listed in Art. V of the New York Convention.

10. Conclusion
International commercial arbitration is an important and widely used method of
dispute resolution for international commercial transactions. It has some important
advantages over court-based dispute resolution, both in terms of the process itself

75 Art. IV(1) New York Convention. If necessary, a certified translation of the award and
the agreement into the official language of the State where enforcement is sought must
be provided by the party applying for enforcement: Art. IV(2).
76 See Art. V(1)(a)–(d) New York Convention.
77 Art. V(1)(e) New York Convention.
78 Art. V(2) New York Convention.
252 Dispute resolution

and the possibility of resolving the substantive issues of the dispute by applying
rules of law other than the applicable law. It also has the benefit of near-global
backing as a result of the extensive ratification of the New York Convention. This
has made it possible to resolve many disputes arising from international commercial
transactions away from national courts and the confines of the law applicable to the
transaction. However, this does not mean that the role of the courts in interna-
tional commercial dispute resolution has become entirely redundant. Some types of
disputes may not be amenable to arbitration and will have to be resolved before the
courts. Moreover, where arbitration proceedings involve the application of national
law rules, courts may still be involved in reviewing the correct application of this
where the lex arbitri so permits.