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Integration and International Dispute Resolution in Small States pp 235–250Cite as

International Arbitration and Domestic Laws: A Symbiotic Interaction?

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Part of the book series: The World of Small States ((WSS,volume 3))

Abstract

A symbiotic relationship is a biological interaction, optional or obligatory, as the case may be, where dissimilar organisms cooperate with each other to survive or improve their ‘life quality’. In such a relationship, both organisms benefit from this interaction, which could be termed a “win-win” scenario. If we take this analogy and transpose it to international arbitration and governing contract law, these questions may come to mind: how much weight is attributed to arbitration and governing contract law choices in cross-border transactions? How is this relationship nurtured? Is it nurtured at all? Is there any connection between arbitration and choice of law of which we should be aware?

The author holds a PhD degree in International Commercial Law from the University of Basel, Switzerland.

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Notes

  1. 1.

    The initial links between arbitration and choice of law have been explored in Moser (2016), p. 95.

  2. 2.

    Moser (2015), p. 19.

  3. 3.

    The Survey results are available in Moser (2015), p. 19.

  4. 4.

    The Survey full data is available at [http://www.arbitration.qmul.ac.uk/docs/123295.pdf].

  5. 5.

    2006 International Arbitration Study: Corporate Attitudes and Practices, p. 5, Chart 2.

  6. 6.

    2006 International Arbitration Study: Corporate Attitudes and Practices, p. 5, Chart 2: 73% being the total of “international arbitration” preference, either alone (29%) or in combination with other ADR mechanisms (44%).

  7. 7.

    Ibid, p. 6, Chart 3.

  8. 8.

    Ibid, p. 7, Chart 4.

  9. 9.

    The Survey full data is available at [http://www.pwc.co.uk/assets/pdf/pwc-international-arbitration-2008.pdf].

  10. 10.

    International Arbitration: Corporate attitudes and practices (2008), p. 8, Chart 6.

  11. 11.

    Ibid, p. 5, Chart 2.

  12. 12.

    As Professor Park advises, “[…] Particularly for international transactions, arbitration often justifies itself by reference to a more level playing fields, not speed and economy. In a stubbornly heterogeneous world lacking a supra-national judiciary with mandatory jurisdiction, arbitration enhances a relative measure of adjudicatory neutrality, which in turn promotes respect for share ex ante expectations at the time of a contract or investment”, (2010), pp. 25–53, p. 33.

  13. 13.

    International Arbitration: Corporate attitudes and practices (2008), p. 6, Chart 3.

  14. 14.

    This topic is further explored in Moser (2010).

  15. 15.

    International Arbitration: Corporate attitudes and practices (2008), p. 7, Chart 5.

  16. 16.

    Ibid, p. 7, Chart 4.

  17. 17.

    Transaction costs reflect the burden that parties experience when they use the market, e.g., costs incurred in negotiating, drafting and enforcing a contract. One of the most intricate concerns of such costs relates to the amount spent on negotiating, predicting behaviour, choice of partners, preparation and management of agreement, in addition to the legal fees, drafting and printing costs, costs of researching the effects and probability of a contingency, and the costs to the parties and the courts of verifying whether a contingency occurred. One cannot forget that a cross-border sale may involve multiple additional variables: language and cultural barriers, foreign law most often unrelated to one (or both) parties, and any non-contractible variable that can generate transaction costs. See Schwartz and Scott (2003), pp. 540, 562–568; Hermalin et al. (2007), pp. 3–138, pp. 53–54; Moser (2015), p. 21. The costs to investigate a foreign law and prove it are even more burdensome. See Schwenzer and Hachem (2009), p. 465.

  18. 18.

    The Survey full data is available at [http://www.arbitration.qmul.ac.uk/docs/123290.pdf].

  19. 19.

    Choices in International Arbitration 2010, p. 5, Chart 1.

  20. 20.

    Ibid, p. 29, Chart 25.

  21. 21.

    The Survey full data is available at [http://www.arbitration.qmul.ac.uk/docs/123282.pdf] (PricewaterhouseCoopers 2013).

  22. 22.

    Ibid, p. 6, Chart 1.

  23. 23.

    Ibid, p. 7, Chart 3.

  24. 24.

    Ibid, p. 9, Chart 6.

  25. 25.

    The Survey full data is available at [http://www.arbitration.qmul.ac.uk/docs/164761.pdf].

  26. 26.

    2015 Improvements and Innovations in International Arbitration, p. 5, Chart 1.

  27. 27.

    Ibid, p. 6, Chart 2.

  28. 28.

    Ibid, p. 7, Chart 3.

  29. 29.

    The Survey full data is available at [http://www.arbitration.qmul.ac.uk/docs/189659.pdf] (Pinsent Masons 2016).

  30. 30.

    A summary of the findings can be found at [http://kluwerarbitrationblog.com/2016/12/15/post-queen-mary-ip-survey/].

  31. 31.

    See, in this sense, Professor Julian Lew QC (2006), p. 185, remarking that “[...] International arbitration, before neutral arbitrators, in a third country, with non-national or international procedures being followed, has become the essential mechanism for the settlement of all kinds of international business disputes”.

  32. 32.

    Survey report first published in Moser (2015), pp. 20 19.

  33. 33.

    These quotes were indicated by the Respondents throughout the 2014 Choice of Law Survey. The Survey report is available at [https://doi.org/10.1093/ulr/unv008].

  34. 34.

    These links or connections were first discussed in Moser (2016), pp. 95–111.

  35. 35.

    As opposed to courts, where litigants are at the same time taxpayers.

  36. 36.

    Studies show that arbitrators are viewed as experts who are able to verify dimensions of commercial contracts better than court judges. See, for example, Dixit (2003).

  37. 37.

    These costs are understood to encompass: administrative charges (as the case may be); arbitrators’ fees; legal and arbitration costs; reputational costs, i.e. costs of tainting its name in the market, the sum of which may not be easily quantified, and opportunity costs. While recalcitrant behaviour could also happen in court cases, the cost would then be diluted and diffused given the less publicity vis-à-vis arbitration cases which tend to be monitored closely by the arbitration community (institutions and specialised media vehicles).

  38. 38.

    See, in this sense, footnote 10 supra.

  39. 39.

    Park (2014), pp. 60–70, 60–61.

  40. 40.

    Park (2010), pp. 25–53, 43.

  41. 41.

    Oppetit (1998), p. 28 et seq.

  42. 42.

    Posner (2004), p. 38, available at [http://ssrn.com/abstract=610983].

  43. 43.

    In this connection, Professor Julian Lew QC remarks that the 1958 NYC establishes three fundamental standards for international arbitration: (1) the arbitration must conform with or come within the terms of the arbitration agreement; (2) the parties must be treated fairly and with equality (i.e. international due process); and (3) the award must respect international public policy both with respect to its content and its subject matter. Lew QC (2006), p. 189.

  44. 44.

    Mackaay and Rosseau (2008), pp. 362–400.

  45. 45.

    See more in Moser (2010), pp. 33–55.

  46. 46.

    Shavell (2003), p. 22, available at [http://ssrn.com/abstract=382040].

  47. 47.

    McConnaughay (1998), pp. 453, 522.

  48. 48.

    Posner (2004), op. cit., p. 19.

  49. 49.

    See footnotes 18–20 supra.

  50. 50.

    Vogenauer (2013), pp. 48–49.

  51. 51.

    2010 International Arbitration Survey: Choices in International Arbitration, p. 9, Chart 5.

  52. 52.

    Perret (2014), pp. 109–111, 109.

  53. 53.

    Ibid.

  54. 54.

    Asymmetry of information is generally acknowledged in scenarios where one party possesses information unavailable (or more detailed than) (that of) to the counterparty. Examples of asymmetry of information in contractual negotiations are discussed in Moser (2015), p. 19.

  55. 55.

    In relation to this topic, see Savare (2004), pp. 597–611, who warns that “(…) although arbitrators afford substantive law a certain degree of deference when rendering their decisions, they feel empowered to deviate from the law in the interests of justice…” (p. 606). The author further argues that “in any given arbitration, it is unclear to what extent arbitrators will apply the substantive laws selected by the parties or whether they are bound to apply any substantive law at all…” (p. 611).

    Debating the same topic, the author Giuditta Moss alerts that the freedom that arbitral tribunal typically enjoys in relation to the applicable laws has some limitations, “(…) the ordre public of the court that exercises judicial control may not be violated by the award and the tribunal may not render a decision in equity without having been empowered to do so by the parties. Between these two borders there are a wide range of possibilities to disregard the parties’ instructions, particularly by applying various rules of private international law…”. See Moss (2005), pp. 8–20, p. 20.

  56. 56.

    Hermalin et al. (2007), p. 52.

  57. 57.

    Convention on Recognition and Enforcement of Foreign Arbitral Awards, 7 ILM 1046 (1968) [New York Convention]. Ratified by 156 States, the New York Convention is available at [http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention.html].

  58. 58.

    For the purposes of this article, Small States are considered those under 1.5 million citizens.

  59. 59.

    http://www.fiji.gov.fj.

  60. 60.

    List of member states available at [http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG_status.html].

  61. 61.

    List of member states available at [http://www.uncitral.org/uncitral/en/uncitral_texts/electronic_commerce/2005Convention.html].

  62. 62.

    Full text available at [http://www.parliament.gov.fj/wp-content/uploads/2017/03/Bill-No.-37-International-Arbitration.pdf].

  63. 63.

    See footnote 57 supra.

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Authors and Affiliations

  1. London Court of International Arbitration, London, UK

    Gustavo Moser

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  1. Gustavo Moser
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  1. Faculty of Law, Victoria University of Wellington, Wellington, New Zealand

    Petra Butler

  2. Faculty of Law, University of Lausanne, Lausanne, Switzerland

    Eva Lein

  3. Faculty of Business and Law, Open University, Milton Keynes, United Kingdom

    Rhonson Salim

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Moser, G. (2018). International Arbitration and Domestic Laws: A Symbiotic Interaction?. In: Butler, P., Lein, E., Salim, R. (eds) Integration and International Dispute Resolution in Small States. The World of Small States, vol 3. Springer, Cham. https://doi.org/10.1007/978-3-319-74573-2_11

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