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The Application of
Substantive Law by
International Arbitrators
Bibliographic reference
Horacio A. Grigera Naón,
'Chapter 6. Can Arbitrators
Deal With Hierarchical
Conflicts of Laws (e.g. Between
a Law and the Constitution?)',
in Fabio Bortolotti and Pierre
Mayer (eds), The Application
of Substantive Law by
International Arbitrators,
Dossiers of the ICC Institute of
World Business Law, Volume 11
(© Kluwer Law International;
International Chamber of
Commerce (ICC) 2014) pp. 97 -
108
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© 2018 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Chapter 6. Can Arbitrators Deal With Hierarchical Conflicts
of Laws (e.g. Between a Law and the Constitution?)
Horacio A. Grigera Naón
(*)
To situate the issues to be addressed in this paper, a practical example may prove useful.
ICC Arbitration case No. 6320 (1992) (1) concerned a dispute between Brazilian and US parties.
The contract was governed by Brazilian law chosen by the parties, and the seat of the
arbitration was Paris, France. In the arbitration the Brazilian party alleged the violation by the
US Respondent of the US Racketeering Influence and Corrupt Organization Act (RICO) and,
pursuant to such statute, sought treble damage compensation from the respondent. The
Brazilian party argued that RICO is a loi de police (or international mandatory rule) applicable
to the dispute although Brazilian law was the proper law.
Among other things, the respondent pleaded the unconstitutionality of RICO. The Arbitral
Tribunal pronounced itself as follows:
“As an initial matter, the Tribunal will not decide on Defendant's contention of the alleged
unconstitutionality of the RICO statute and the amendments intended to be made to it. As to
the unconstitutionality of a national statute, an international arbitral Tribunal might first
doubt whether it is empowered to decide upon it, notwithstanding the jurisdiction it has to
decide upon the application of the statute. Indeed, to decide that a statute enacted in a
sovereign state is unconstitutional, and to refuse to apply it for that reason, would mean that a
Tribunal rejects the validity and effects of an element of the law of such state, which is in force
inside the territory of such state, and has not been declared unconstitutional by its competent
courts. In the view of this Tribunal, it is highly probable that it does not possess and cannot
exercise such an extraordinary power, in any case where the statute in question does not
infringe upon transnational public policy, as indeed the RICO statute does not.
The Tribunal notes that the RICO statute has not been declared unconstitutional by the
Supreme Court of the United States, and is still in force in the United States and applied by its
courts. Accordingly, its application cannot be rejected because of its being unconstitutional,
but only if the Tribunal were to determine that the conditions of its application were not
fulfilled, with regard to its own provisions or to principles and/or rules of international law”.
In a note to this case, the commentator wrote:
“Sans doute aucun, l'organisation politique des Etats-Unis échappe à l'arbitre, juge privé
chargé de résoudre un différend contractuel auquel le constituant américain n'a jamais voulu
confier le soin de prendre parti sur le fonctionnement des institutions”. (2)
This arbitral decision illustrates the multifaceted nature of the problem.
In the first place, a declaration of unconstitutionality may be reserved to the exclusive
jurisdiction of the courts of the country enacting the legal text whose unconstitutionality is
sought. Raising the unconstitutionality issue would bring about the exclusive jurisdiction of the
courts of such country, for example if its constitutional law or its public laws command the
jurisdiction of its courts whenever a claim of unconstitutionality is made, irrespective of the
location of the seat of the arbitration.
Such approach is consistent with a Kelsenian view regarding the “abrogation” of an
“unconstitutional” statute: (3)
“The application of the constitutional rules concerning legislation can be effectively
guaranteed only if an organ other than the legislative body is entrusted with the task of testing
whether the law is constitutional it if — according to the opinion of this organ — it is
“unconstitutional”. There may be a special organ established for this purpose, for instance, a
special court, a so-called “constitutional court”; or the control of the constitutionality of
statutes, the so-called “judicial review”, may be conferred upon the ordinary courts, and
especially upon the Supreme Court. The controlling organ may be able to abolish completely
the “unconstitutional” statute so that it cannot be applied by any other organ. If an ordinary
court is competent to test the constitutionality of the statute, it may be entitled to refuse to
apply it in the concrete case when it considers the statute unconstitutional. As long as a
statute has not been annulled, it is “constitutional” and not “unconstitutional”, in the sense
that it contradicts the constitution. It is then the will of the constitution that this statute be
valid”.
This is a central concern of the arbitrators deciding ICC case 6320, and the commentator's
remark echoes such concern. In the US, the “… federal judiciary is supreme in the exposition of
the law of the Constitution, and that principle has ever since been respected by the Court and
the Country as a permanent and indispensable feature of our constitutional system”. (4) A US
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 Supreme Court decision declaring the unconstitutionality of a statute has the final and general
effect of invalidating the statute. This attribute of the judicial function is a key aspect of the
division of powers in the US (5) or, for that matter, of many democratic constitutions: it sets
limitations on legislative authority.
For this reason, when considering the relationship between the constitution and constitutional
issues addressed by arbitrators, it has been contended that questions of constitutional law
addressed by arbitrators are to be subject to de novo review by US courts, “… both to promote
separation-of-powers principles and to provide essential fairness to individual litigants when
their constitutional rights are at stake (…)”. (6) Also, it has been pointed out that an arbitral
determination ignoring the application of a constitutional provision could be set aside for
manifest disregard of the law, to the extent this means of recourse is still available after the
P Hall Street US Supreme Court decision. (7) Be that as it may, in the US the function of declaring
the unconstitutionality of laws is not vested in arbitral tribunals. Although it does not seem
that the arbitrators in ICC case 6320 undertook an in depth analysis of US law in such respect,
it is obvious that they refrained from looking into the constitutionality of RICO because they
considered improper to exercise their jurisdictional power in connection with constitutionality
matters most likely within the purview of the exclusive jurisdiction of the national court system
to which the legal rule attacked as unconstitutional belonged.
However, not all national jurisdictions take the same approach.
In Argentina, doctrinal opinions generally support the view that arbitrators may decide on the
unconstitutionality of laws and regulations. Although the Argentine Supreme Court has not yet
addressed this issue, a certain number of court decisions follow or reflect these opinions. It is
worth mentioning that these opinions and decisions mostly followed the enactment in
Argentina of emergency legislation to address the 2001 economic crisis, whose constitutionality
was subject to attack. (8) Such emergency legislation has also given rise to some — often
broadly publicized — arbitral BIT claims against Argentina within and without the ICSID
system.
The theoretical premise is that arbitrators, although not part of the Argentine judiciary, are
vested with jurisdiction like judges. Argentina has a diffuse system of constitutionality control,
i.e., any Argentine judge may declare a law or statute unconstitutional. Argentina has not
adopted an abstract system of constitutionality control according to which a decision on
unconstitutionality — in some such systems reserved to a Supreme Court or Constitutional
Court — would bring about as a general effect the obliteration or general prohibition to apply
the law declared unconstitutional.
Consistent with this theoretical premise, since the arbitral function is also of jurisdictional
nature, arbitrators may also decide on the unconstitutionality of the laws, and their decisions
on unconstitutionality have the same effects of those made by an Argentine judge. Thus, an
arbitral decision declaring the unconstitutionality of a law only has the effect of invalidating
the application of such law to the case before the arbitral tribunal, but not of abrogating it
with general or erga omnes effects.
Any question of unconstitutionality may end up being heard by the Argentine Supreme Court
by way of an extraordinary recourse of unconstitutionality. Although the Supreme Court's
decision has not the effect of derogating the law, it is not binding on the rest of the judiciary
and only excludes the application of the law declared unconstitutional to the instant case, the
rationale of unconstitutionality decisions by the Supreme Court is normally followed by the
inferior courts.
This raises an additional issue. A multiplication of means of recourse or to set aside arbitral
awards, particularly when an arbitral decision on the merits is subject to review, undermines
the finality of arbitral determinations and the efficacy of arbitration as an alternative to
judicial adjudication. Such recourse could also have the effect (in the country of the seat of the
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arbitration) of suspending the enforcement of the award and delay its enforcement, until the
recourse of unconstitutionality is finally decided. Adding to the panoply of means to set aside
arbitral awards an extraordinary means of recourse when constitutionality matters are at
stake, would conspire against the desired finality of arbitral awards and their swift
enforcement.
At least in Argentina, and despite some opinions suggesting a different position, (9) it is
generally accepted that arbitral decisions on unconstitutionality are not subject to this
extraordinary recourse. Arbitral awards may only be subject to limited means of recourse,
normally before a court of appeals which, in the case of the National Code of Civil and
Commercial Procedure, applied by Federal Courts in Argentina, are set forth in its Articles 758
and 760. The decision of a court of appeals on the recourse against an arbitral award may be
subject to the extraordinary recourse of unconstitutionality before the Supreme Court if the
question addressed in the award and adjudicated in such decision in turn gives rise, per se, to
such extraordinary recourse, and this has been the position of the Argentine Supreme Court so
far. (10)
Apparently, these decisions only concerned arbitrations, the seat of which was in Argentina,
involving the application of Argentine law. It is difficult to dispute that arbitrators,
international or not, are subject to the laws and the jurisdiction of the courts of the seat of the
arbitration in regard to their authority to address and decide on the constitutionality of the
laws of the country of the seat. On the other hand, it could also happen — as it was the

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 relatively recent case of France — that the legal order of the country of the seat does not
provide for the a posteriori constitutionality control of its legal norms.
However, since the rationale underlying Argentine court decisions and doctrinal trends
mentioned above is that the function of both judges and arbitrators is jurisdictional in nature,
it would be inconsistent with such rationale to maintain that the arbitral function would be
deprived of its jurisdictional characteristics whenever the seat of the arbitration is outside
Argentina.
If the scenario of ICC case 6320 were changed, and also simplified, by imagining that the
proper law of the contract giving rise to the dispute is Argentine law including a statute like
RICO, it would have been difficult for the arbitrators, if true to such rationale, to refuse to
exercise their jurisdictional powers to decide on the plea of unconstitutionality.
Perhaps, if there were a clear trend of court decisions in Argentina indicating that only arbitral
tribunals, the seat of which is in Argentina, have the power to decide on pleas of
unconstitutionality of Argentine laws, because any such decisions are subject to review by the
Argentine courts (including the Argentine Supreme Court), arbitrators sitting outside of
Argentina following the reasoning of the arbitrators in ICC case 6320 would be reluctant to
exercise their jurisdictional powers to decide on the unconstitutionality claim, since a
determination on the constitutionality of an Argentine law not subject to the control of
Argentine superior courts (including the Argentine Supreme Court), would be in violation of the
institutional balance between the legislative and the judicial branches under the Argentine
constitutional law system. A declaration of unconstitutionality by international arbitrators
P escaping such control would deprive the national courts of the opportunity to finally decide on
the unconstitutionality issue as the only “organs” vested, under the country's constitution, with
the ultimate authority.
This indeed raises the more general problem, going beyond the Argentine example (or
characterizing the national constitutionality control system as diffuse or abstract), that is
squarely addressed by the arbitrators in ICC case 6320. Assuming that the seat of the
arbitration is a country other than the country the constitutionality of one of its laws is being
challenged before the arbitrators, do they have the authority to declare the
unconstitutionality of such law despite the fact that a persuasive argument may be made that
such matter is reserved to the exclusive jurisdiction of the courts of such country?
Since international arbitrators lack lex fori, they are not necessarily bound by jurisdictional
restrictions found in a national legal system, at least when the seat of the arbitration is not the
country having enacted the statute alleged as unconstitutional. Indeed, the parties have
entrusted them with the mission of deciding their disputes in accordance with the applicable
law. As expressed in ICC case 6320, the parties gave the arbitrators the power to apply the RICO
statute, which carries with it the inherent authority to construe and interpret it. The mere
assertion of exclusive jurisdiction by national courts of law, other than those of the seat of the
arbitration in respect of a disputed issue submitted to the arbitrators, does not automatically
bring about the exclusion of the jurisdiction of arbitrators flowing from an arbitration
agreement the validity or existence of which has not been successfully attacked before a
competent court of law.
Although perhaps doubtful about their jurisdiction to decide on the unconstitutionality issue
before them, the arbitrators in ICC case 6320 do not seem to be plainly saying that they lack
jurisdiction to do so. What they are clearly saying is that, assuming they have jurisdiction to
declare a statute unconstitutional, there would still be serious reasons for them to refrain from
exercising their arbitral authority or powers in such respect. The real question then becomes
whether it would be proper or prudent for them to exercise their jurisdictional powers in order
to: “… reject[s] the validity and effects of an element of the law of such state, which is in force
inside the territory of such state, and has not been declared unconstitutional by its competent
courts…”.
In accordance to a reasoning not very much removed from a forum non conveniens approach,
these arbitrators' answer to such a question was to decide not to exercise their jurisdiction
(directly originated in the will of the parties) in respect of the unconstitutionality issue, in
order not to invade, as the commentator of the award suggested, the institutional realm of the
national State involved.
In other words, though perhaps empowered to decide on the unconstitutionality issue, the ICC
Case 6320 arbitrators did not consider that they had the obligation to exercise such power, and
finally opted not to exercise it after a thoughtful evaluation of whether it would be prudent to
decide the unconstitutionality issue or not. (11) This raises, of course, another problem, even
under the laws of the seat of the arbitration: arbitrators may be deemed not to have properly
fulfilled their mission if they fail to exercise, by a sort of forum non-conveniens analysis, their
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jurisdiction when they have it. Not fulfilling the arbitral mission is tantamount to an
inexcusable failure to live up to arbitral duties.
As lucidly perceived by the ICC case 6320 arbitrators, the dilemma they were confronted with
may be put as follows: Should arbitrators change an element of the applicable law as so far
applied in the country enacting it by declaring the unconstitutionality of such element? Isn't
the arbitrator's role to apply the applicable law, particularly the law chosen by the parties, as
it was when contracting, or when the dispute arose? Wouldn't the suppression by the
arbitrators of an element of such a law defeat legitimate expectations of the parties when

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 contracting and choosing arbitration to resolve their disputes, with the risk of deviating from
their mission?
Another possible (but not explicit) factor could have been certain general policy
considerations. The more international commercial arbitration gets involved in extending its
scope of influence in areas that cannot be disassociated from the institutional structure of
national States, the higher are the chances of State intervention, engineered in isolation or in
coordination with other States, aimed at limiting or interfering with the international arbitral
process. One could then perhaps speak in terms of an arbitral systemic interest in not invading
such areas of the legal domestic realm through arbitral adjudication. As it has been pointed
out, the reasoning of arbitrators is determined, not only by their mission as defined by the
parties, but also by their own views on their mission premised on the nature and scope
considered by them to inhere in the arbitral function. (12)
The answer of the ICC case 6320 arbitrators to such questions is clearly “no”: international
arbitrators should not exercise their authority in a way leading to a suppression of an existing
element of the applicable law, at least when they are not sitting in the country whose law is
being attacked as unconstitutional and hypothetically vesting arbitrators with authority to
decide on the constitutionality of its laws. To declare a law unconstitutional is to declare it
invalid, or in other words, to render inexistent an otherwise existing and applicable rule of law
belonging to the legal system the arbitrators are bound to apply. (13) So long as the competent
organ defined by the constitution has not declared the unconstitutionality of a specific legal
norm, such norm is constitutional and is, therefore, valid and applicable.
It seems obvious that if an arbitral award decreeing the unconstitutionality of the statute is
taken for recognition or enforcement in the country whose law has been declared
unconstitutional, such enforcement or recognition might be rejected, for example because
contrary to such country's public policy, or because arbitral asserted jurisdiction or authority
could not supersede the exclusive jurisdiction of the courts of the forum to determine
unconstitutionality issues. Indeed, article 41 of the 2012 ICC arbitration rules maintains the
requirement — already present in previous versions of the ICC Rules — that the arbitral
tribunal “… shall make every effort to make sure that the award is enforceable at law”.
However, although arbitrators do not necessarily ignore (and may be required by the
applicable arbitration rules to take account of) the laws of the country of possible enforcement
or recognition of their awards to ensure their effectiveness, such factor (assuming the
arbitrators would be able to predict with some certainty the country of enforcement of the
P award) is not normally determinative of arbitral jurisdictional powers or their exercise. Rather,
the arbitrators' main concern is not to infringe the mandatory laws of the country of the seat
and to privilege, when confronted with national legal systems vying for application to arbitral
proceedings or to the scope of their authority, the application of the one most favourable to
the fulfilment of their mission, which is of course deciding the disputes entrusted to them in a
final way.
Indeed, ICC arbitrators have decided under previous versions of the ICC Arbitration Rules
containing the requirement showing in article 41 of the 2102 ICC Arbitration Rules, that such
requirement “… is not relevant to the question of jurisdiction. It is obvious that if a tribunal
would decline to exercise jurisdiction on the basis of the possible difficulties of a future
enforcement in a given country, then there would be no award at all, susceptible of being
enforced in other jurisdictions. In this case there may be difficulties, perhaps not insuperable,
in the enforcement of this tribunal awards, in some national jurisdictions. But if this tribunal
finds, as it does, that it has jurisdiction, it cannot fail to exercise it. Otherwise, it would be
concurring in a failure to exercise jurisdiction and could even be accused of a denial of
justice”. (14) And now, as in its 1998 text, article 6 Appendix II to the 2012 ICC Arbitration Rules
setting forth the Internal Rules of the ICC International Court of Arbitration, privileges the
consideration, when the ICC Court is called to scrutinize arbitral awards, “… to the extent
practicable [of the] requirements of mandatory law at the place of the arbitration”, without
any reference to the country of possible enforcement of the award at stake.
It is interesting to point out that, consistently with such conclusion, when considering the RICO
unconstitutionality claim, the arbitrators deciding ICC case 6320 do not appear to have
weighed the possible fate of their award in the US courts as a factor to be taken into account in
their decision not to exercise their authority in connection with such claim. On the contrary,
these arbitrators reached their decision exclusively on the basis of whether it would be
appropriate or convenient to exercise their jurisdictional authority in a way that might lead to
the suppression of an element of the applicable law.
However, the ICC Case 6320 arbitrators also state they could still decide not to apply the law
attacked as unconstitutional “… only if the Tribunal were to determine that the conditions of
its application were not fulfilled, with regard to its own provisions or to principles and/or rules
of international law”. This would remain within the sphere of arbitral powers to interpret and
construe the applicable law, including international law, powers they are commanded to
exercise to properly discharge their duties in agreement with the parties' legitimate
expectations and express will. By proceeding along those lines arbitrators would be still fully
complying with their mission, even if not pronouncing themselves on the unconstitutionality
claim.
One such situation could arise when it becomes manifestly clear that a specific statute is
unconstitutional. In such an instance, rather than usurping the authority of the national courts

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 to declare the unconstitutionality of the law (i.e., with the effect of obliterating such law, be it
in respect of the case at hand [as would happen in Argentina, adhering to a diffuse
constitutional control system], be it with general effects across the board or erga omnes [as
P would happen in national legal orders adhering to an abstract constitutional control system]),
international arbitrators should simply deny weight in their decision-making process to such
statute and explain the reasons for such conclusion, in “…a fully and judiciously motivated
decision, reached after a painstaking ascertainment of the sources of national law…. (15)
Since such a decision would regard the merits of the dispute, it is unlikely that it will be
subject to review on the merits in the country of the seat, or — unless deprived of reasons — set
aside. It is equally unlikely that the courts of such a country will set aside an arbitral award
because the arbitrators decided not to exercise their jurisdiction to determine a claim of
unconstitutionality regarding a legal rule not belonging to the legal order of the country of the
arbitral seat.
As expressed in a leading public international law treatise:
“International tribunals cannot declare the unconstitutionality or invalidity of national law as
such. Only if it is transparently clear that a national law would be treated as unconstitutional
or invalid by the national courts should an international tribunal follow suit”. (16)
To “follow suit” should not necessarily be read as the arbitrators declaring a statute
unconstitutional, but as inviting them to get involved in a process of legal interpretation and
construction of the legal rule whose validity is questioned, primarily against the backdrop of
the national legal system to which it belongs. Issues regarding the hierarchy of laws within a
national legal system and conditioning their application may be resolved by looking at norms
and principles of interpretation existing in that system, such as those regarding the
retrospective application of legal norms, or the hierarchy of legal sources contemplated in the
national constitution of the State to which the law whose unconstitutionality is being sought. It
would not be improper either for international arbitrators to have recourse to generally
accepted interpretation principles in comparative law, without resorting to a declaration of
unconstitutionality. Such an approach would allow the arbitrators to fulfil their mission of
finding the most appropriate solution — in terms of the right construction and interpretation of
the applicable law — without usurping court adjudicatory powers directly stemming from State
institutional organization and therefore avoiding the potential impairment of the validity or
effects of their award.
On the other hand, because of their decision-making freedom, the nature of their function
finding their source in the will of the parties, and their lack of lex fori the arbitrators are not
necessarily bound by the hierarchy of norms or legal sources spelled out in any national
constitution or legal system.
For example, it could be the case that a law which could be considered invalid by looking at
the hierarchy of norms or legal sources in a specific national legal order, has actually been
long observed by the citizenry without questioning its validity, has been invariably applied by
the courts and has never seen its constitutionality challenged. (17) In such scenario, the
legitimate expectations of the parties strongly militate against international arbitrators
refusing to apply such law, since the parties could not have predicted before the inception of
the arbitral proceedings that such rule would not apply in their case.
In reality, international arbitrators are most likely to pursue in this respect the same
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pragmatic course of action they normally follow when deciding, among other things, applicable
law questions. Conscious of their lack of imperium and that the main force of their award is the
integrity and quality of their analysis, their decision should show that it is supported by sound
reasons in order to persuade, not only the losing party to spontaneously abide by the award
but, eventually, also a national judge called to decide on the award's validity or enforceability,
that the case was properly decided. In reaching their decision on whether or not to apply a
specific legal rule, the arbitrators will consider the facts of the case and the applicable law,
and include, in their decision-making process, a number of factors, such as the hierarchy of
norms and legal sources under the relevant national legal order, their actual observance or
application by the citizenry or courts of the country to which such legal order belongs without
questioning their validity, and the legitimate expectations of the parties.
Of course, as indicated by the ICC case 6320 arbitrators, it is possible, in carrying out such
analysis primarily aimed at finding whether the law whose constitutionality or validity is
challenged is to be applied or not, that arbitrators are also called to address whether such
rule infringes international law — one could perhaps add, ordre public vraiment international
or “transnational public policy”. (18) In such a situation, the need to safeguard the
international order or the most basic principles enjoying world-wide consensus is often
inextricably associated with essential moral and ethical principles and prevails over whatever
contrary expectations the parties may have had when contracting or prior to the dispute. This
could be a reason to privilege the application of the constitutional provisions, also giving
expression to such transnational public policy or international law rules and principles, over
other national legal rules or statutes not compatible with the constitution. This would not
require a declaration of unconstitutionality of the latter.
However, in this respect, it is important to clearly differentiate between two matters: the
constitutionality of a law within the context of its own national constitutional system, and the
legal status and effects of such law when considered from the perspective of public

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 international law or a truly international public policy. The latter is a scenario entirely
different from the former, since what would be at stake is not the constitutionality of a specific
legal rule or its validity within the context of the national legal system to which it belongs, but
of its compatibility with international law or certain world-wide consensus on the superiority
and preemptive nature of certain principles.
If viewed from this latter perspective, unlike what would happen if a plea of
unconstitutionality were upheld by the arbitrators, the national legal system remains intact
and the specific legal rule being considered is neither obliterated nor its application
prohibited. The evaluation of the existence, validity or effects of such legal rule takes place in
a legal dimension — the international or transnational plane — different than the national
legal system at stake; therefore, whatever conclusions may have been reached on the meaning
and effects of such legal rule from an international law or truly international public policy
angle, absent treaty obligations leading to a different conclusion, the national legal system
being considered is not automatically affected, and its integrity is not shaken.
P International law or truly international public policy may also come into play if the arbitrators
were called to explore whether the legal norms on which the constitutional organization of the
State whose law is attacked as unconstitutional, including those which entrust the national
judiciary of such State with the power of deciding on the unconstitutionality of such State's
laws, should be considered lois de police of such State. For example, a State may not extend its
legislative jurisdiction, nor the jurisdiction to adjudicate of its courts, beyond the limits
authorized by international law. Such limits, of course, also come to bear in respect of the
application or taking into account of lois de police.
The award in ICC case 6320 provided an illustration of the role that international law or
transnational law principles could play in such hypothetical scenario. As indicated, the party
invoking RICO pleaded its application as a loi de police. The arbitrators did not deny that they
had authority to determine whether RICO qualified as a loi de police and eventually apply lois
de police not belonging to the proper law. After a process of construction and interpretation of
the RICO statute aimed at assessing its substance and purpose, the arbitrators refused to
apply it, among other things because extending the application of RICO to the case at stake
would exceed international law limits on the extraterritorial exercise of US legislative
jurisdiction, and the treble damages sanction imposed by RICO, should it be found applicable,
is not generally and internationally accepted. (19)
Today it seems a generally accepted principle that the application of a ‘foreign’ loi de police
(i.e., a loi de police not belonging to the intervening forum) is not incompatible with (and
perhaps, in certain situations is commanded by) truly international public policy or ordre
public vraiment international, and that arbitrators, although not owing allegiance to any
specific forum (and the notion of a ‘foreign’ law does not apply to them) have the authority to
apply lois de police. (20) On the other hand, in certain situations, the conclusion may be
reached that the loi de police brings about the non-arbitrability of the subject matter it covers
or the exclusive jurisdiction of the courts of the national legal order to which the loi de police
belongs. (21) The underlying reason for the extension of court jurisdiction to follow the
extension of legislative jurisdiction is that the interests and policies underlying the loi de
police are so strong and fundamental, that its application or non-application cannot be
abandoned to any forum other than the national forum without risking that the very
substantive outcome sought by the loi de police might not be fulfilled.
It then seems reasonable to assume that had any party specifically raised the application of
US public and constitutional norms to limit their jurisdiction to adjudicate on the plea of
unconstitutionality before them as lois de police, the ICC Case 6320 arbitrators would have
considered whether such norms qualified as such and, for that reason, entitled to deferential
treatment save international law limitations on their international application.
It seems equally reasonable to take for granted that a State would consider that the
constitutional and public laws on the basis of which it is politically and institutionally
organized, including those vesting its national judiciary with the power to decide on the
unconstitutionality of such State's laws, are lois de police, or mandatory legal rules the State
P would expect to see taken into account and respected internationally. Among other things,
such laws establish the constitutional organization and allocation of powers among the
different government institutions corresponding to such State's national legal order, which
include the respective roles assigned to the legislative and judicial branch regarding the
creation, fashioning, modification and application of the national legal system and the
exclusive role assigned to the national judiciary in those processes.
As indicated above, since international arbitrators are not subject to any specific lex fori, a
mere assertion of non-arbitrability or exclusive jurisdiction — at least not originated in the
legal system of the country of the seat of the arbitration — cannot be imposed on them.
However, in the fulfilment of their mission, international arbitrators are called to carry out a
specific exercise to conclude, in the instant case, whether deference should be given to any
claims of non-arbitrability or exclusive jurisdiction associated with an alleged loi de police. (22)
Naturally — as also highlighted above — the perception of international arbitrators of the
nature and scope of their mission will play a preponderant role when reaching conclusions in
that respect.
Precisely one situation in which arbitrators should certainly seriously consider looking at such
legal rules with deference is when they directly relate to the institutional organization of a

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 State. In such context, the very substance, role and purpose of such rules legitimize their claim
for respect. The exercise by a State of its legislative jurisdiction to determine its constitutional
organization or the assertion of its courts' exclusive jurisdiction in order to ensure the
effectiveness of rules and principles engineering and underpinning such organization cannot
be considered exorbitant from the perspective of international law rules and principles
limiting the extraterritorial application of national law or the jurisdiction of national courts.
(23) The concern of safeguarding the cohesion and efficacy of its national legal order justify the
unilateral and legitimate interest of a State to see its mandatory laws in such legal field,
including those concerning their application by its own courts, treated with deference on the
international plane. (24)
P

References
*) Independent Arbitrator; former Secretary General, ICC International Court of Arbitration;
Council Member, ICC Institute of World Business Law
1) III Collection of ICC Arbitral Awards (1991-1995), at 577-582 (French), at 336-381 (English); Karl
Heinz Böckstiegel, Berthold Goldman, Serge Lazareff, arbitrators. Commented by DH.
2) Ibidem, at 583 (Note by DH).
3) H. Kelsen, General Theory of Law and State (1961 New York Edition) at 157.
4) Cooper vs. Aaron, 358 U.S. 1 (1958)
5) Marbury vs. Madison, 1 Cranch (5 U.S.) 137 (1803).
6) P. Rutledge, “Arbitration and the Constitution” at 39 (2013).
7) Hall Street Assoc. LLC vs. Mattel, Inc. 552 U.S. 576 (2008).
8) R. Caivano, “Planteos de Inconstitucionalidad en el arbitraje” 2 Revista Peruana de
Arbitraje 107-153 (2006); J. Rivera, “Cuestiones constitucionales en el arbitraje” DeCITA 297-
307 (2009).
9) Different legal systems may propound or be read as advancing different solutions on the
means of recourse directly available against arbitral awards. An example is a recent
Mexican law on Amparo, a means of recourse showing P 107 some similarity with the
extraordinary recourse of unconstitutionality in the Argentine system. Under Article 5(II) of
the Mexican Ley de Amparo Reglamentaria de los artículos 103 y 107 de la Constitución
Política de los Estados Unidos Mexicanos of 2 April 2013, acts of private persons may be
considered acts of authority directly subject to an Amparo means of recourse. It could then
be interpreted that, for Amparo purposes, an arbitral award is an act of authority. The
Instituto Mexicano del Arbitraje has expressed its strong position adverse to such
interpretation (Release of August 2013, at http://www.imarbitraje.org.mx/posturas).
10) L. Palacio, IX Derecho Procesal Civil, at 152-153 (1988).
11) H. Kelsen, “General Theory of Norms”, at 102-103 (Oxford 1991).
12) P. Mayer, “ L'arbitre international et la hiérarchie des normes ”, 2 Revue de l'arbitrage, 361,
no. 7 at 365-366.
13) H. Kelsen, supran. 11, at 28: “To be valid” in its specific –objective- meaning signifies “ought-
to-be-observed”. This “validity” of a norm is its characteristic, ideal, existence. That a norm is
“valid” means that it exists. A norm that is not “valid” is not a norm since it is not an existing
norm”.
14) Interim award of November 1984 in ICC Case 4695, Eduardo Jiménez de Aréchaga, Karl-
Heinz Böckstiegel, John H. Pickering, arbitrators, II Collection of ICC Awards 33 (1986-1990);
II Yearbook Commercial Arbitration 149 (1986).
15) J. Paulsson: “Unlawful Laws and the Authority of International Tribunals” 23 ICSID Review
Foreign Investment Law Journal, 215, at 232 (2008).
16) I. Brownlie, Principles of Public International Law (8th Edition by J. Crawford), at 53 (2012).
As pointed out by Jan Paulsson, ibidem, at 224-225: “An international tribunal may reject a
discriminatory law because it contravenes a treaty signed by Rex's predecessor (which
therefore is part of the national law), or a statute which disregards a prohibition of
retroactivity contained in the constitution, or indeed a purported modification of the
constitution which violated its own rules pertaining to the process of amendment” .
17) P.Mayer, ibídem, at no. 20-22, 373-375. A. Ross, “Sobre el Derecho y la Justicia”, Editorial
Universitaria de Buenos Aires (EUDEBA) (1963).
18) P. Lalive, Transnational (or Truly International) Public Policy and International Arbitration,
3 ICC Congress Series, “Comparative Arbitration Practice and Public Policy in Arbitration (P.
Sanders General Editor) 257 (1987).
19) A comment on some of these aspects of ICC Award 6320 is found in S. Lazareff, “Mandatory
Extraterritorial Application of National Law”, 11 Arbitration International 137, at 14-149
(1995).
20) P. Lalive, ibidem., no.77-88, at 277-284. Y. Derains, “Public Policy and the Law Applicable to
the Dispute in International Arbitration” in 3 ICCA Congress Series Comparative Arbitration
Practice and Public Policy in Arbitration, 226, at no.50, 251-252 (1987). L. Radicati di
Brozolo, “Arbitrage Commercial International et Lois de Police” 315 Recueil des cours 269,
at 438-493 (2005).
21) Ch. Seraglini, “Lois de police et justice arbitrale internationale”, no. 1036, at 488-489
(2001).
22) Ch.Seraglini, ibidem. No. 1038, at 490.

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 23) Except, of course, if the substance of the Constitution itself infringes international law (e.g.,
a Constitution accepting apartheid) or, also from an international law perspective, if there
are treaty limitations on the State's powers or jurisdiction under its public or
constitutional law.
24) Ph. Francescakis, “La théorie du renvoi et les conflits de systèmes en droit international
privé”, Sirey, 1958, no. 14 at 19.

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