Seoul Arbitration Lecture 2019

John Beechey CBE -‘An International Arbitral Legal Order’:

Unicorn, Global Reality or an Aspiration that has had its Day?’

Abstract: The Lecture will consider the extent to which the widespread adoption of
international principles in place of particular national norms, including those of the law
of the seat, might constitute evidence of the establishment of an international legal
order in arbitration and whether, if such an order exists it is likely to retain its current
structure in the face of the challenges with which it is confronted.

It is an honour to have been invited to give this year’s Seoul Arbitration Lecture and to
find myself back in a city I first had the occasion to visit some 30 years ago. Much has
changed - who then had heard of PSY and Gangnam style - but the warmth of the
welcome has not and for that I am most grateful to our hosts for this afternoon, KCAB
Chairman, Professor Hi-Taek Shin and his colleagues.
These are, on any view, interesting times, politically and socially in many parts of the
world. In the overall scheme of things, some will be tempted to dismiss preoccupations
about the future of international arbitration on the part of those of us who have had the
good fortune to practice in it during one of the most dynamic periods of its growth as an
exercise in introspection and the protection of our own interests. There is, of course, an
element of self-interest, but arbitration has proven a most effective and globally
adaptable means of resolving all manner of commercial disputes and it is now under
pressure. Better to look at something with an eye to the maintenance of international
best practice and to improvement and to seek to address the challenges with which the
practice of arbitration is faced than to be complacent that all is, and will continue to be,
just fine. There is no shame, quite the contrary, I suggest, in trying to ensure that something
that has served the international business community so well for so long, is in as good
shape as possible to continue to do so in the long term.

I. Introduction
It is now some 50 years since Dr Francis Mann wrote:
“In the legal sense no international commercial arbitration exists (...). Every system
of private international law is a system of national law. Every arbitration is a national
arbitration, that is to say, subject to a specific system of national law. (...) No one
has ever or anywhere been able to point to any provision or legal principle which
would permit individuals to act outside the confines of a system of municipal law.
Every right or power a private person enjoys is inexorably conferred by or derived

1
 from a system of municipal law which may conveniently and in accordance with
tradition be called the lex fori, (...) though it would be more exact (...) to speak of
the lex arbitri, or loi d’arbitrage.”1

Whether or not international commercial arbitration is an autonomous legal order,

detached from particular municipal laws, save for those of the jurisdictions in which
enforcement and recognition are sought, and a system “based on a general consensus
on governing principles, which give it its own legitimacy, govern both procedural and
substantive matters and are under-pinned by ‘comparative-law methodology’”2 has
been the subject of fierce debate ever since.

In his well-known judgment in Bank Mellat in 1984, the late renowned judge and
arbitrator, Sir Michael Kerr, stated:

“(…) despite suggestions to the contrary by some learned writers under other
systems, our jurisprudence does not recognise the concept of arbitral procedures
f1oating in the transnational firmament unconnected with any municipal system
of law.”3

23 years later, the French Cour de cassation issued its landmark decision in Putrabali.4 It
held that:
“[...] An international arbitral award, which is not anchored in any national legal
order, is a decision of international justice whose validity must be ascertained with
regard to the rules applicable in the country where its recognition and
enforcement are sought (…)”.5

At its height, this debate was regarded as one of the pressing issues in arbitration. It was
never the case, as one might be forgiven for assuming it was, that the proponents of
delocalised arbitration were contemplating a rejection of, or opposition to, national

1
F.A. Mann, ‘Lex Facit Arbitrum’ in P. Sanders (ed.), International Arbitration: Liber Amicorum for Martin Domke;
(The Hague, Martinus Nijhoff, 1967); pp. 241, 244-45, 248.
2
Gaillard, E. 2010, ‘Legal Theory of International Arbitration’ Leiden & Boston: Martinus Nijhoff Publishers (cited
in Lord Mance, ‘Arbitration - a Law unto Itself’ 30th Annual Lecture - The School of International Arbitration and
Freshfields Bruckhaus Deringer, 4 November 2015. Available at [https://www.supremecourt.uk/docs/speech-
151104.pdf], at p. 6). References to this Lecture Series will hereafter be to “the Freshfields Lecture”
3
Bank Mellat v. Heliniki Techniki SA [1984] 1 QB 291, 301.
4 Société PT Putrabali Adyamulia, v S.A. Rena Holding et autres, (“Putrabali”) June 29, 2007, XXXII, Y.B. Com.

Arb. 299 (2007) (France No 42). See Albert Jan Van Den Berg, ‘Enforcement of Arbitral Awards Annulled in Russia’
Case Comment on Court of Appeal of Amsterdam’, Journal of International Arbitration, 27(2) 179-198, 2010, p. 195.
5
Original in French reads: « [...] Mais attendu que la sentence internationale, qui n’est rattachée à aucun ordre
juridique étatique, est une décision de justice internationale dont la régularité est examinée au regard des règles
applicables dans le pays où sa reconnaissance et son exécution sont demandées (...) ». Cited in Albert Jan Van Den
Berg, Ibidem.

2
legal systems, a point to which I will return shortly. As is often the way, pragmatic
responses to issues identified by courts, scholars, commentators, practitioners and,
above all, users of arbitration have rendered the seemingly unbridgeable chasm
between the so-called ‘delocalised’ or ‘transnational’ and ‘seat theorist’ approaches
less acute. But the polemic bears further study, because it lies behind many of the
changes which might be seen as indicia of what has become as close to a global
model for the resolution of disputes as has yet been achieved – not least the
harmonisation and homogenisation of international arbitration laws and rules worldwide
and the relative speed with which these developments have unfolded.

II. The Debate: the Competing Theories

Professor Emmanuel Gaillard suggests that there are three competing visions of
international arbitration, defined by reference to the source of the arbitrator’s power to
adjudicate.6
Dependent upon that starting point, differing practical implications follow; for instance,
in relation to the arbitrator’s powers, the arbitral procedure, the determination of law
applicable to the dispute and the evergreen debate as to whether an award set aside
by the courts of one jurisdiction (i.e. the seat of arbitration) can nevertheless be
enforced by the courts of another (i.e. that of the place of enforcement).7
The differing theories can be summarised as follows:
(a) The Monolocal vision (or, the “seat theory”), pursuant to which, the sole source
of legitimacy and validity of international arbitration is to be found in the law of
the seat of the arbitration. The seat chosen provides the “exclusive basis for the
binding nature of the arbitration”8. This theory links an arbitration, including its
proceedings and the resulting award to the law of the seat where it took place,
irrespective of whether or not there is a particular point of connection with that
seat beyond its geographical location;9 whether its selection was a matter of the
most careful consideration or simply one of pure convenience is irrelevant.

6
Emmanuel Gaillard, ‘International Arbitration as a Transnational System of Justice’ in A J van den Berg (with
assistance of the Permanent Court of Arbitration) (eds) in International Council for Commercial Arbitration;
Arbitration: The Next Fifty Years? p. 67 [Available at:
https://www.shearman.com/~/media/Files/NewsInsights/Publications/2012/06/International-Arbitration-as-a-
Transnational-Sys__/Files/View-the-full-article-International-Arbitration-
__/FileAttachment/IA060812internationalarbitrationastransnationals__.pdf]
7
Ibidem.
8
Ibidem.
9
Ibidem.

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 (b) The Westphalian vision (or, the “international theory”), on the basis of which, the
legitimacy of the international arbitration process comes from its recognition by
a number of States all of which acknowledge the legitimacy of an adjudication
process based on the parties’ common intent and the binding nature of the
resulting award and all of which maintain an equally legitimate right to decide
for themselves the conditions under which they will enforce an arbitral award.10
For these purposes, the jurisdiction of the seat is just one among a number of
potentially relevant legal systems; the fact that it is the jurisdiction within which
an arbitration takes place does not determine that it is the legal forum defining
the extent of the role of the arbitrators; and

(c) The Transnational vision, which is broader than the Westphalian approach as it
considers the community of States and the measures that they adopt
collectively, rather than the laws of each State individually. The source of
legitimacy of arbitration is derived both from international legal instruments
developed by consensus between States, such as the New York Convention11 or
statute based upon the UNCITRAL Model law and from certain soft law
guidelines, which have come to reflect an internationally recognised standard
of best practice. The source of validity and legitimacy, therefore, comes from the
collective normative of States and the arbitrators’ perception that they play a
judicial role, not on behalf of a particular state, but for the benefit of the
international community.12

The task of circumscribing the concept of ‘delocalisation’ is not straightforward; but it is

exemplified by arbitrations which are:
(A) detached from the procedural rules of the territory/geographical place of
arbitration;
(B) detached from the procedural rules of the territory/geographical jurisdiction

10
Ibidem.
11
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) Treaty No. 4739. United
Nations Treaty Series, 330, pp. 3-82. Available at: http://www.newyorkconvention.org/english (Accessed: 27 October
2019). Any discussion on ‘delocalisation’ and, in fact, on any topic of international arbitration would be incomplete
without mentioning the role played by the New York Convention which, to date, has been ratified by 161 states. In
fact, as Professor Roy Goode explains (n 16) if there is one thing in common between the territorialist/transnationalist
advocates, is that both parties resort to the New York Convention in support of their propositions: “territorialists on
the ground that numerous provisions of the Convention explicitly recognize the role of the lex loci arbitri; the
advocates of party autonomy and the statelessness of awards, on the ground that Article VII plainly establishes the
right of enforcement states to allow enforcement of a foreign award which complies with their domestic law, despite
its annulment by the court of origin, where that annulment is not a ground under the domestic law for refusal of
recognition of the award.”
12
Emmanuel Gaillard (n 6).

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 of any municipal law;
(C) detached from the substantive law of the place of arbitration; and
(D) detached from the domestic substantive law of any municipal jurisdiction.13
I have spoken elsewhere14 about the use of delocalised substantive principles (i.e. the
UNIDROIT Principles of International Commercial Contracts) in international commercial
arbitration and the extent to which these transnational principles can alone be said to
be capable of governing arbitration disputes independent of national governing laws.
I noted that although increasing reference was made to the UNIDROIT Principles of
International Commercial Contracts in international commercial arbitration - and to a
lesser extent, in investment arbitration - the analysis of available data suggested that
these principles were more often used in the context of an exercise to corroborate a
decision based upon the application of domestic or international law, rather than on a
stand-alone basis, independent of national systems of law.
My remarks today, however, seek to look beyond the application of delocalised
principles to the substance of a particular dispute to their impact upon what might in
the broadest terms be considered the international arbitration model.

III. Arguments for and against each theory

(a) Arguments supporting the delocalisation theory
Professor Sir Roy Goode suggests that the origins of the concept of a ‘stateless’,
‘delocalised’ and ‘detached’ international arbitration are to be found in the English
courts’ historically negative view of arbitration – which was regarded as an “off-shoot”
of proceedings in the High Court15 to be treated with caution as a process by which the
jurisdiction of the courts might be ousted.16 A pattern of persistent interference in the
arbitral process – undermining the parties’ choices as to finality, confidentiality, speed
and predictability, led to the emergence of delocalisation as a “‘security blanket’,
enabling the arbitral process to be independent of the national legal system at the seat

13
Jie Li, ‘The Application of the Delocalisation Theory in Current International Commercial Arbitration Practice’
[2011] I.C.C.L.R. 1, p. 384. See also O O Olatawura, ‘Delocalized Arbitration under the English Arbitration Act
1996; an Evolution or a Revolution?’ (2003) 30 Syracuse J. Int’l Law & Com, p. 51.
14
2018 University of Roma TRE-UNIDROIT 6th Annual International Arbitration Lecture; ‘UNIDROIT Principles
of International Commercial Contracts – from Scepticism to Confidence’).
15
See, Michael Mustill and Stephen Boyd, Commercial Arbitration. p. 432-433; 583.
16
See Roy Goode, ‘The Role of the Lex Loci Arbitri in International Commercial Arbitration’ [2001] 17 Arb Int 1,
p. 20. See also Halifax Financial Services Ltd v Intuitive Systems Ltd [1999] 1 All ER 664 in which McKinnon J
stated that: “(…) arbitration clauses do not oust the court’s jurisdiction, which would be against public policy”.

5
of arbitration.” 17 That proposition was summarised with characteristic pithiness by
Professor Rusty Park, who observed that delocalisation stood for minimal judicial
intervention by national courts of the arbitral situs.18
The notion of the delocalisation of international arbitration is founded on the principle
of party autonomy.19 Its proponents say that delocalisation gives effect to the will of the
parties. Their intent to resolve their dispute by arbitration gives binding force to an
award, and not the lex arbitri.20 From this, it follows not only that party autonomy would
seem to trump national systems, but also that the arbitral process is self-regulating,
enabling parties to establish by private agreement how their dispute is to be resolved.
That autonomy extends to determining who the decision-makers will be, which
procedural rules will govern the internal lex arbitri,21 in which place or seat the arbitration
will take place and whether or not the parties wish to exercise rights available to them
to limit the intervention of the national legal system which might otherwise regulate the
conduct of an arbitration which has its seat in that jurisdiction.
All this amounts to an exercise in what Jan Paulsson has described as: “… the freedom
to choose a binding and predictable method for resolving international business
disputes may be effectively exercised”.22
In Gotaverken Arendel A.B.,23 the parties had entered into a contract containing an
arbitration clause providing for arbitration in Paris under the International Chamber of
Commerce (ICC) Rules. The French Court of Appeal held that, not only did the parties

17
Zaherah Saghir and Chrispas Nyomby, ‘Delocalisation in International Commercial Arbitration: A Theory in Need
of Practical Application’, [2016] I.C.C.L.R, Issue 8, p. 270.
18
William Park, ‘Why courts review arbitral awards’ in Arbitration of International business disputes: studies in law
and practice (Oxford; OUP. 2007) Section II D(2), p. 436.
19
Party autonomy in contracts has developed alongside the principle of sovereignty. French jurist Charles Dumoulin
emphasised with respect to contracts that “the will of the parties is sovereign”; (See M. Elein, ‘The Applicable Law
to International Commercial Contracts and the Status of Lex Mercatoria: With a Special Emphasis on Choice of Law
Rules in the European Community’ - Boca Raton, FL: Universal Publishers, 2010, p. 9). See also Julian Lew
‘Achieving the Dream: Autonomous Arbitration’, 2006, the 20th Annual Freshfields Lecture of the SIA, Queen Mary
University of London, available at: https://academic.oup.com/arbitration/article/22/2/179/208671, who suggested
that: “In the field of international arbitration, the principle of the autonomy of the arbitration agreement is of general
application, as an international substantive rule upholding the legality of the arbitration agreement, quite apart from
any reference to a system of choice of law, because the validity of the agreement must be judged solely in the light of
the requirements of international public policy”.
20
See Goode (n 16) p. 31.
21
As opposed to external lex arbitri, it refers to the internal rules regulating all usual aspects of an international
arbitration procedure; such as the ICC Rules 2017, the London Court of International Arbitration Rules (LCIA) 2014,
Stockholm Chamber of Commerce (SCC) Rules 2017, among others.
22
Jan Paulsson "Delocalisation of International Commercial Arbitration: When and Why it Matters" [1983] I&CLQ
32.1: 53-61. p. 53.
23
Gotaverken Arendal AB v. Libyan General National Maritime Transport Company (GMTC) (1981). It was
emphasised that just as parties have freedom to choose the lex arbitri they wish to oversee their arbitration, so, too,
they can choose to exclude the application of a particular national law (in this case, French procedural law).

6
have the freedom to choose the legal order they wished as the (internal) lex arbitri of
their arbitration, they were also entitled to exclude the application of that municipal
law to the proceedings. In other words, the choice of the parties of – in this case – the
ICC Rules and not French statutory arbitral procedure, to govern the arbitral
proceedings, detached the arbitral proceedings from the local law. The Court held that
the mere choice of a seat in France, did not imply the application of French procedural
law to the proceedings. For its part, the Swedish court at the enforcement stage, treated
the award as enforceable without testing whether the award was binding under French
law. The fact that an award is made in France, under the ICC Rules, therefore, does not,
of necessity, make it a French award.
Similarly, in Titan Corporation v Alcatel CIT SA, the Svea Court of Appeal rejected a
challenge to an award rendered in Stockholm in an arbitration with Stockholm as the
place of arbitration and to which the Swedish Arbitration Act applied, holding that the
arbitration had no other connection with Sweden. Neither the parties nor the dispute
had any connection with Sweden; the arbitrator was from the UK; and the hearings
were held in Paris and London. The Court concluded that it had no judicial interest in
the challenge proceedings.24
In his 2006 Freshfields Lecture,25 Professor Julian Lew drew attention to a decision of the
English Court of Appeal in Occidental Exploration Production Co. v. Republic of
Ecuador26, which went in the other direction. The case involved claims by Occidental
against Ecuador arising out of its termination of a Participation Contract between
Occidental, Ecuador itself and its state-owned oil company, Petroecuador, for the
exploration and exploitation of hydrocarbons in the Ecuadorian Amazon. Occidental
alleged that Ecuador was in breach of the US-Ecuador BIT. In the absence of agreement
between the Parties, the place of arbitration was fixed in London, a neutral venue, by
the arbitral tribunal.
Professor Lew criticised the Court of Appeal for a decision which, he maintained,
“ignore[d] certain fundamentals of international arbitration.” He said that:
“The Court's reference to the 'usual procedural supervisory remedies provided
under English law' ignores that in the context of arbitration like this, English court
supervision is inappropriate and undesirable. Equally, the fact that the award was

24
The Titan Corporation v Alcatel CIT SA, Case No. RH 2005. However, in The Russian Federation v. RosInvest Co
UK Ltd, Case No. NJA 2010, it was held that if an arbitration is seated in Sweden and the Swedish Arbitration Act is
applicable to the arbitral proceedings, then the Swedish courts would have judicial interest and thus a resulting award
could be challenged before them. See Anders Relden, ‘The Swedish Supreme Court Emphasizes International
Arbitration Law Principles’, Kluwer Arbitration Blog, March 25 2011,
http://arbitrationblog.kluwerarbitration.com/2011/03/25/the-swedish-supreme-court-emphasizes-international-
arbitration-law-principles/ (stating that the Titan Case no longer represents good law).
25
See above Julian Lew (n 19).
26
[2005] EWCA Civ 1116.

7
 made in England does not make it an English award. It is an international award,
between non-English parties, made by international arbitrators of different
national origins, and the seat of the arbitration was a mere coincidence. In the
absence of an express agreement, there is no basis for a national court to assume
that a US multinational and the government of Ecuador intended English law to
govern these issues.
[and]
In contrast, it is to avoid this type of national court interference with arbitration
that courts in France and the USA and elsewhere will enforce awards even if they
are being challenged or have been set aside in the country where made”.27

But contrary to the impression that might be formed in light of Sir Michael Kerr’s colourful
invocation of the firmament, delocalisation does not lead ineluctably to avoidance of,
and detachment from, national systems of law. As Jan Paulsson explains:
[T]he question is rather whether in certain situations international arbitration may
be liberated from the local peculiarities of a place of arbitration chosen either
fortuitously or for reasons of neutrality having nothing to do with the parties’
attachment to local rules of arbitration”28

such that an award might be accepted by the legal order of the enforcing jurisdiction,
whatever the peculiarities and constraints of the lex arbitri might be.29 Thus, Paulsson
argues, rather than international arbitration proceedings and awards resulting from
them being subject to the constraints of a domestic law, the effects of the process and
the award “should be limited only by the minimum norms of transnational currency such
as those reflected in the major international conventions”.30

27
Professor Julian Lew QC (n 19 above).
28
Paulsson, (n 22) p. 54.
29
Ibidem. p. 53.
30
Ibidem. Jan Paulsson provides a practical (albeit hypothetical) example in support of his ‘delocalised proposition’:
Parties to an international commercial arbitration have been given [supposedly by an institution or the tribunal] as the
seat of arbitration the capital of country A. None of the arbitrators is a national of country A and the disputed contract
has no nexus with that country. A majority award is rendered, but the losing party seeks to set it aside on the ground
that the dissenting arbitrator had not signed the award. The winning party alleges that according to the stipulated ICC
Rules of Arbitration, majority awards are valid, and do not require the dissenting arbitrator to sign the award.
Unfortunately, the lex arbitri, not only states that all arbitrators must sign the award, but, importantly, that any
provision to the contrary is invalid. An unfortunate result is obtained when this rule is applied to international
arbitration where the legitimate expectation of the parties is that the majority rule will prevail, and that the
effectiveness of the process cannot be sabotaged by one arbitrator. Mr Paulsson therefore asks: “Why does this
necessarily have to mean that the award is annulled erga omnes? Could not country B recognise the award simply
by holding that under its law the result of the arbitration is perfectly valid and the reason for annulment in country
A is so peculiar to country A that the annulment is properly deemed to be limited to that country? Might not country

8
No less an authority than Judge Dominique Hascher has observed that:
“The French concept of arbitration is based on the premise that there is an
arbitral legal order, which is distinct from the legal order of individual States… It is
this arbitral legal order - and not a national legal order - that confers juridicity to
arbitration.”31

But Judge Hascher is no more arguing that international arbitration does not ultimately
derive its legitimacy or validity from laws enacted by States, than do Jan Paulsson and
Emmanuel Gaillard. As Professor Gaillard explains, there is a deal of difference between
an autonomous legal order and an a-national legal order. 32 The transnational
approach is predicated on the basis that international arbitration is anchored in the
collectivity of legal systems. States collectively negotiate treaties and conventions
which they then ratify and incorporate into their national legal systems. In the field of
international arbitration, two stand out examples are the New York and Washington
Conventions. While the willingness of states to abide by those obligations and the
effectiveness of their enabling legislation may be subject to considerable variation, that
does not detract from the point that international arbitration: “embraces [as opposed
to rejects] the laws derived from national legal systems”.33
(i) Awards set aside in the seat of arbitration
Proponents of the delocalisation theory find support for their position in the New York
Convention. A court faced with an application to enforce an award which has been
set aside by the courts of the seat of arbitration may do so on the basis that it has been
satisfied that an application of local standards peculiar to the jurisdiction in question
had led to an unjust or unsustainable result.
Article V(1)(c) of the New York Convention provides that:
“1. Recognition and enforcement of the award may be refused, at the request
of the party against whom it is invoked, only if that party furnishes to the
competent authority where the recognition and enforcement is sought, proof
that:

A in fact be relieved that whilst it has been able to uphold its local law, the international consequences thereof have
been limited in a case which in fact had no local connection?”
31
Dominique Hascher, “The Review of Arbitral Awards by Domestic Courts - France” in Emmanuel Gaillard, ed.,
IAI Series on International Arbitration, No 6. The Review of International Arbitration Awards (Juris 2010) p. 97.
32
See Emmanuel Gaillard (n 6), who explains that contrary to the transnational theory of arbitration, the lex
mercatoria theory “stemmed from a more critical view of national legal systems, arising out of the perceived
inadequacy of those systems to address disputes arising in a global commercial environment and through its
selectivity, constituting a form of “legal darwinism””.
33
Emmanuel Gaillard, ‘Transcending National Legal Orders for International Arbitration’ in A J van den Berg (with
assistance of the Permanent Court of Arbitration) (eds) in International Council for Commercial Arbitration;
International Arbitration: The Coming of a New Age? Kluwer Law International [2013] p. 373.

9
 [...]
(e) The award has not yet become binding on the parties or has been set aside
or suspended by a competent authority of the country in which, or under the
law of which, that award was made.
The argument put forward is that the term ‘may’ gives the enforcement courts discretion
as to whether or not they should follow the decision of the courts of the seat of
arbitration.
Article VII of the same text, in turn, states:
1. The provisions of the present Convention shall not affect the validity of
multilateral or bilateral agreements concerning the recognition and
enforcement of arbitral awards entered into by the Contracting States nor
deprive any interested party of any right he may have to avail himself of an
arbitral award in the manner and to the extent allowed by the law or the treaties
of the country where such award is sought to be relied upon.

In accordance with that provision, it is suggested that as well as entering into more
flexible multilateral agreements, the legislature of a state in which enforcement of an
award is sought could enact laws, which pose lesser restrictions upon the enforcement
of foreign arbitral awards than the standards set out in the Convention itself – as in the
case of French law (see below), which declines to treat it as axiomatic that the setting
aside of an award by the courts of the seat would preclude enforcement of that award
in France.
Professor Gaillard suggested that:
“[T]he drafters of the Convention moved away from the notion that the seat of
the arbitration is somehow the controlling state, (...); rather, they shifted the
authority to review awards for enforcement to the states at the place (or places)
of enforcement. But if a state chooses to enforce awards according to more
liberal standards, it is free to do so. More specifically, the Convention does not
prohibit a state from enforcing an award which has been set aside at the seat of
the arbitration, or in the country of the law governing the arbitration. As such, any
positions taken by the courts of the seat with respect to the validity of the award
do not have a binding effect in other legal systems.”34

Other scholars and commentators have argued that the standards according to which
an award “shall” be recognised are those of the country in which recognition and
enforcement are sought. This is based on an understanding of Article III of the same
Convention, which provides that:

34
Gaillard (n 6).

10
 Each Contracting State shall recognize arbitral awards as binding and enforce
them in accordance with the rules of procedure of the territory where the award
is relied upon [...]
In his work ‘Legal Theory of International Arbitration’, Professor Gaillard notes that:
“Their adherence to these international standards does not suggest that these
courts exercise no control over the recognition of the award in their own national
legal system. To the contrary, the New York Convention has preserved the
discretion of every legal system to decide for itself, based on the collective
guidelines set forth in the Convention and its own standards, whether or not an
award meets the conditions of recognition and enforcement.”35

An example of the discretion inherent in a municipal law is to be found in the French

Code of Civil Procedure.36 The well-known Hilmarton case37 involved the payment of a
commission by a French company, OTV, to an English company, Hilmarton, following
the successful procurement by Hilmarton of a contract in Algeria for OTV. The tribunal
seated in Switzerland rendered an award in favour of OTV, which then sought to enforce
it in France. However, that same award, was set aside by the Swiss Supreme Court upon
the application of Hilmarton. A reconstituted tribunal in Switzerland found against OTV,
issuing a fresh award. Hilmarton sought enforcement of the second award in the French
courts. There were thus two contrary applications for execution before the French
courts. One of the arguments put forward by Hilmarton was that the first award had
been annulled and that its enforcement would be contrary to international public
policy.

The Paris Court of Appeal expressly recognised that the fact that an award had been
set aside at the seat of arbitration was not a ground for refusing enforcement pursuant
to Article 1502 of the New Civil Code of Procedure. Nor, it concluded, was the
enforcement of an award which had previously been set aside contrary to international
public policy. The French Cour de cassation agreed. Rejecting Hilmarton’s argument,
the Court held:

“The [first] award rendered in Switzerland is an international award which is not

integrated in the legal system of that State, so that it remains in existence even if
set aside and its recognition in France is not contrary to international public

35
Gaillard, Emmanuel. Legal Theory of International Arbitration, BRILL, 2010 (page 29 et seqs).
36
Decree No. 2011-48 of 13 January 2011, reforming the law governing international arbitration.
37
ICC Award No. 5622, 1993 Rev. Arb. 327; XIX Y.B. Com. Arb. Y.B. 105 (1994) (cited in ‘Emmanuel Gaillard,
‘The Enforcement of Awards Set Aside in the Country of Origin’, ICSID Review - Foreign Investment Law Journal,
Volume 14, Issue 1, Spring 1999, Pages 16–45, https://doi.org/10.1093/icsidreview/14.1.16).

11
 policy” 38

The second award could not be enforced as a matter of res judicata by reason of the
order for the enforcement of the first Award.

In International Bechtel Co v Department of Civil Aviation of the Government of Dubai

(DAC), a dispute governed by UAE law, the place of arbitration was Dubai. At that time,
the UAE (including Dubai) was not a New York Convention Contracting State.39 I must
declare an interest at this point, because I was counsel for Bechtel in the arbitration. The
sole arbitrator, a distinguished Swiss practitioner appointed by the Dubai International
Arbitration Centre, rendered an award against the DAC. As it was required to do under
Dubai law at the time, Bechtel moved to have the award confirmed in the Dubai courts.
At first instance and on appeal up to and including the Court of Cassation in Dubai, the
award was annulled. The basis of the objection upheld by the courts was that the oath
administered to a prominent witness for the DAC had not been in conformity with the
prescribed form. The objection was particularly egregious, because DAC’s legal team,
headed by the Attorney General, had sought the agreement of Bechtel and the
approval of the arbitrator to the form of admonition that it had prepared and which it
proposed be administered to the witness. Bechtel then sought enforcement of the
award in France. The Tribunal de Grande Instance of Paris granted enforcement over
the objection of the DAC that recognition and enforcement of an award which had
been annulled at the place of arbitration would be contrary to international public
policy – a ground for refusal to grant recognition and enforcement in French law.
Rejecting DAC’s arguments, the Court of Appeal held that the basic contention that
an award set aside in the seat of arbitration could not possibly be enforced in another
jurisdiction, (i.e. French courts) was incompatible with fundamental principles of French
arbitration law. It noted that the main purpose of the New York Convention was to
eliminate all types of hurdles to the effectiveness of international arbitral awards. Further,
the Court held that the particular judicial effect of the grounds of annulment was
restricted to the UAE and need not be given weight by the French courts.40

The US courts have similarly enforced an award even though it had previously been
annulled at the seat of arbitration. In Chromalloy,41 they granted enforcement of an
award nullified by the Egyptian Court of Appeal in deference to US public policy. In the

38
Cour de Cassation, 1st Civil Chamber, Hilmarton, 23 March 1994, Rev Arb 1994.327, note Ch Jarosson; JDI,
1994.701, note E Gaillard; Rev Crit DIP, 1995.356, note B Oppetit; RTD Com, 1994.702, obs. J C Dubarry and E
Loquin (cited in Michael Polkinghorne, ‘Enforcement of Annulled Awards in France: The Sting in The Tail’
[Available at https://www.international arbitration-attorney.com/wp-content/uploads/enforcement-of-
annulledawards-in-francethe-sting-in-the-tailthis-article-was-published-in-sli.pdf]).
39 That changed in 2006.
40
Ibidem.
41
Chromalloy Aero Service Inc. v. Ministry of Defence of the Republic of Egypt, 936 F. Supp. 907, 1996.

12
court’s view, Article VII of the New York Convention, required that an interested party
was not to be deprived of any right of which it might avail itself in respect of an arbitral
award “in the manner and to the extent allowed by the law of the country where such
award is sought to be relied upon.”42 Further in reaching its determination, the court
pointed to the fact that the parties in their arbitration agreement had provided that the
resulting award would be subject to no “appeal or other recourse.” The court’s decision
was therefore consistent with the parties’ expressed intention. But the fact that
Chromalloy has not been followed in other decisions of the US Courts in which
enforcement of an annulled award has been refused suggests that it falls into the
category of an exceptional case. Spier v Calzarturificio Tecnica SpA, is a case in which
the Southern District Court of New York refused to enforce an award set aside by the
Italian courts and which might be seen as indicative of the more likely approach of the
US courts.43

(ii) Arbitration Laws

Title II of the French Code of Civil Procedure (arts. 1504 et seq.) regulates international
arbitration (international defined, pursuant to art. 1504, as a matter in which
“international trade interests are at stake”).
The transnational approach adopted in French arbitration law is evident. Of particular
interest is art. 1505, which, in pertinent part, reads:
In international arbitration, and unless otherwise stipulated, the judge acting in
support of the arbitration shall be the President of the Tribunal de grande instance
of Paris when:
(1) the arbitration takes place in France; or
(2) the parties have agreed that French procedural law shall apply to the
arbitration; or
(3) the parties have expressly granted jurisdiction to French courts over disputes
relating to the arbitral procedure; or
(4) one of the parties is exposed to a risk of a denial of justice.

Sub-articles (2) and (3) clearly reflect that transnational approach: according to French
law, parties have the ability to provide in their arbitration agreements that irrespective
of the place of arbitration, French procedural law shall apply to the arbitral procedure,
thus automatically giving jurisdiction to the French courts to support those proceedings,
and/or that that the French courts shall have jurisdiction over disputes relating to the

42
Chromalloy Aero Service Inc. v. Ministry of Defence of the Republic of Egypt, 936 F. Supp. 907, 1996.
43
Ibidem. 71 F Supp 2d 279 (SDNY, 1999) (See Michael Polkinghorne, ‘Enforcement of Annulled Awards in France:
The Sting in The Tail’ [Available at https://www.international arbitration-attorney.com/wp-
content/uploads/enforcement-of-annulledawards-in-francethe-sting-in-the-tailthis-article-was-published-in-sli.pdf]).

13
arbitral procedure.
Sub-article 4 goes a step further. It contemplates a situation in which the jurisdiction of
the French court may be invoked by a party to an arbitration other than on a
consensual basis and in circumstances in which it considers itself to be exposed to a risk
of a denial of justice. That amounts to a ‘hook’ upon which to ground the assumption
of jurisdiction over the dispute by the French courts, no matter where the arbitration is
taking place, or where the parties are coming from: that on any view is indicative of a
transnationalist approach.
In contrast, the English Arbitration Act adopts a less expansive approach to the
assumption of jurisdiction by the English courts over foreign arbitral proceedings.
Considerable weight is attached to a connection with the court’s jurisdiction. Section
44 (court powers exercisable in support of arbitral proceedings) affords the court a wide
discretion NOT to exercise any power otherwise available to it if concludes that the fact
that the seat of the arbitration is outside England and Wales would make it
inappropriate to do so.44 Article 2(4) of the 1996 English Arbitration Act states that the
English courts:
“may exercise a power conferred by any provision of this Part (Part 1; Arbitration
Pursuant to an Arbitration Agreement) where (a) no seat of the arbitration has
been designated, and (b) by reason of a connection with England and Wales,
the court is satisfied that it is appropriate to do so.”

One particular point of tension that can arise if a tribunal takes the position that the
courts of the seat do not have a determinative effect upon its powers to conduct the
arbitration arises in the context of anti-suit injunctions. Empirical experience makes it
clear that, regrettably, the use of these powerful measures is not immune from abuse.
On occasion, they have been deployed in circumstances in which a court has no
objectively reasonable basis upon which to restrain arbitral proceedings taking place
within its jurisdiction, much less those beyond the jurisdiction. In such a case, one could
argue that, on the basis of an adoption of a transnational approach, an arbitral tribunal
faced with an anti-suit injunction which considered that there was no legitimate basis
for the order and that its true purpose was wrongfully to interfere in the arbitral process,
could disregard the intervention of the court and carry on with the arbitration in order
to ensure that the parties’ arbitration agreement is not frustrated.
Whether or not it would actually do so depends on a pragmatic assessment of the risks
of ignoring the order – and not simply the risk of any eventual award being set aside. If
a member of the tribunal is a national of, and resident in, the jurisdiction of the courts in

44
Even in these cases the court “may refuse to exercise any such power if, in the opinion of the court, the fact that
the seat of the arbitration is outside England and Wales […] makes it inappropriate to do so” (English Arbitration
Act, in fine).

14
which the order was made, a breach of the order by the tribunal might expose that
arbitrator to sanction. If no such considerations arise then a tribunal might well
determine that it should proceed in the knowledge that a competent court of
enforcement could nevertheless uphold the award despite any set aside order made
by the court of the seat and by which the anti-suit injunction had been made.
A case in point was the way in which an arbitral tribunal seated in Abuja, Nigeria dealt
with an injunction issued by the Federal Court of Nigeria. 45 The arbitration dispute
concerned various Production Sharing Contracts (“PSCs”) entered into between the
claimants; oil companies including Shell Nigeria Exploration and Production Company
Ltd, Esso Exploration and Production Nigeria (Deep Water Ltd), AGIP Exploration Ltd and
Total Exploration and Production Nigeria Ltd, on the one hand; and the respondent
Nigerian National Petroleum Corporation, (“NNPC”), on the other. The dispute
concerned the method to be adopted in the computation of petroleum profit tax (PPT),
education tax, royalty and investment tax and operating costs. Allegedly acting under
the instructions of the defendant, NNPC, the Nigerian Federal Inland Revenue Service
(FIRS) requested an injunction from the Nigerian Federal High Court, asserting that some
of the issues in dispute in the arbitration were issues of taxation, which were not
arbitrable. On 4 May 2012 the Nigerian High Court granted FIRS’ application and,
among other things, it ordered the arbitral tribunal to refrain from “continuing with or
purporting to take any benefits from or abiding by any obligations no matter howsoever
described or arising from the arbitral proceedings or awards made pursuant thereto.”46
The Tribunal, however, carried on with the arbitration proceedings and, on 30 May 2013,
rendered a Partial Final Award in favor of the claimants.47
(b) Arguments supporting the seat theory
As Sir Roy Goode observes:

“(...) the traditional theory of territoriality is based on the general principle of

international law that a state is sovereign within its own borders and that its law
and its courts have the exclusive right to determine the legal effect of acts done
(and consequently of arbitral awards made) within those borders.”48

45
Federal High Court of Nigeria in the Abuja Judicial Division, Judgment of 29 February 2012 in Suit No. FHC/ ABJ
I CS/774/ 11 between Federal Inland Revenue Service (Plaintiff) and Nigerian National Petroleum Corporation, Shell
Nigeria Exploration and Production Company Limited, Esso Exploration and Production (Deep Water) Limited,
Nigerian AGIP Exploration Limited and Total Exploration and Production Nig. Limited (Defendants). See Emmanuel
Gaillard, (n 33 above), p. 375.
46
Ibidem.
47 See Uzoma H Azikiwe, Festus Onyia, ‘Nigeria’, GAR, 11 May 2018 [Available at:
https://globalarbitrationreview.com/print_article/gar/chapter/1169345/nigeria?print=true#endnote-010]; See also
Emmanuel Gaillard (n 34 above) See also Law360 ‘Shell Units Wants $1.4B Nigerian Contract Award enforced,
‘https://www.law360.com/articles/801103/shell-units-wants-1-4b-nigerian-contract-award-enforced.
48
Goode (n 16).

15
A supervisory court applies the lex loci arbitri to arbitrations seated within its territorial
jurisdiction, with the aim, first, of protecting both the procedural integrity of the
arbitration and the public policy of that State, and, second, of providing the assistance
of the court should it be required in support of the arbitration (e.g. by enforcing an
arbitration agreement, to injunct or stay proceedings brought in breach of an
arbitration agreement, to enforce arbitral orders, including orders for interim measures,
summoning witnesses and dealing with the appointment or removal of an arbitrator). In
addition, courts have the power to set aside an award which has been rendered
contrary to the most basic principles of due process or natural justice and to exercise
such (generally limited) powers to entertain applications by way of an appeal against
an arbitral decision.
The 1996 English Arbitration Act specifically recognised the legal effect of the seat of
arbitration; section 3 makes clear that “the seat of the arbitration” means the “juridical
seat” of the arbitration (...)”.
As we have already seen, the English court has demonstrated its scepticism of the
Transnational or International theory. (See Kerr LJ in Bank Mellat [fn 7] supra).

It is the absence of any real connection that gives rise to reservations about the
transnational approach - Sir Roy Goode again:

“Even the most ardent advocates of party autonomy appear to accept that
arbitration must act within some system of law. Their case is that the only
relevant system is that of the state of enforcement. But this argument never
gets off the ground, for it presupposes that the arbitral process works in a
complete legal vacuum unless and until application is made to enforce the
award as a foreign award. If that were so, then at the time of its rendering the
award would have no legal underpinnings at all. It would undoubtedly be the
product of the parties’ agreement, under which they assented to be bound,
but (… ) that assent is no more than an agreement, lacking any legal force
unless accepted as binding by the relevant national law; and the only possible
law is the lex loci arbitri.”

Other respected authorities in the field of international arbitration including Alan

Redfern and Martin Hunter consider the idea of ‘delocalisation’ to be “illusory” and
incapable of realisation in practice; they contend that arbitration should be under the
control of both the place of the seat of arbitration and that of enforcement.49 For their

49
Redfern and Hunter, Law and Practice of International Commercial Arbitration (Sweet and Maxwell, 3th edn
London 1999, at para 2-25.

16
part, both Gary Born and Albert van den Berg have castigated as “infamous” decisions
failing to give strong support to the law of the seat, 50 the latter questioning how a
‘sentence flottante’ could be said to come within the ambit of the New York
Convention.
In his 2015 Freshfields Lecture, Lord Mance, argued that arbitration is not, and should not
become, a law unto itself. He contended that, in the ordinary course of events,
decisions of the court of the seat should be treated as final and binding. In his view,
there is a preponderance of evidence to establish that the choice of the place of
arbitration is usually the consequence of a thorough evaluation of its legal effects; it is
rarely just a matter of pure convenience or happenstance. But there are numerous
occasions on which the choice of a seat is neither the result of a considered assessment
which is the subject of an eventual agreement between the Parties, nor a ‘snap of the
fingers’ decision. It was (and I assume is still) not infrequently the case that the ICC Court
would be called upon to fix a place of arbitration in the absence of an agreement
between the Parties. If I might give a practical example, in terms of a case in which no
specific place of arbitration has been contractually pre-agreed, a party based in Milan
argues for arbitration there, while its counterparty based in Frankfurt presses the case
for the arbitration to be held there. In the absence of agreement, the ICC fixes Geneva
or Paris. There is no other link between the place of arbitration and the parties. The ICC’s
choice is driven by a desire to find a ‘neutral’, recognised and reputable seat. The
decision of the Court is not, one hopes, capricious; it is based upon the ICC’s institutional
knowledge and a concern to minimise the risk to the integrity of the arbitral process. The
assessment may not be as detailed as that made by parties armed with full knowledge
of all of the facts and who have their own interests to protect, but it is a rational,
objective and reason-based decision nonetheless. Parties seek the reassurance of the
ready availability of reliable and impartial court assistance and enforcement in case of
breaches to that ‘party-agreed law.’ The results of the 2019 Queen Mary-White & Case
Survey were consistent with those of its previous surveys:

“Preferences for a given seat continue to be primarily determined by its “general

reputation and recognition,” followed by users’ perception of its ‘formal legal
infrastructure’; the “neutrality and impartiality of its legal system;” the “national
arbitration law” and its “track record in enforcing agreements to arbitrate and
arbitral awards.”51

50
See Lord Mance, ‘Arbitration - A Law unto Itself?’ – 30th Annual Lecture organised by The School of International
Arbitration and Freshfields Bruckhaus Deringer [Available at: https://www.supremecourt.uk/docs/speech-
151104.pdf] at p. 4.
51
http://www.arbitration.qmul.ac.uk/media/arbitration/docs/2018-International-Arbitration-Survey---The-Evolution-
of-International-Arbitration-(2).PDF

17
Those are criteria which weigh with the ICC and, I dare say, many other arbitral
institutions called upon to fix a place of arbitration in the absence of party agreement,
too. Is its choice to be regarded as more one of mere convenience than the Parties’
own agreement upon a place of arbitration, simply because it was made by a third
party and based upon different (and solely objective) criteria? I am not sure that it does,
and I would have some difficulty with the proposition that the influence of the courts of
the seat would be somehow diminished as a result.
Lord Mance also expressed his disagreement with what he regarded as the
“overstretched” French interpretation of the New York Convention. In his view, Article
VII of the NYC does not allow, nor could its drafters have envisaged it to allow, the
enforcement court to make use of its own local laws to relax the standards for refusing
enforcement under the New York Convention. In Lord Mance’s opinion, disconnecting
an arbitration from the law of the seat conflicts with, rather than promotes, party
autonomy
Professor Goode takes a similar view that the text of the New York Convention does not
support the idea of a stateless award either. He cites Albert Jan van den Berg, a leading
authority on the Convention, who noted that:

“It is not only the legislative history of the Convention which seems to be contrary
to the Convention’s applicability to the ‘a-national’ award. The system and text
of the Convention too appear to be against such interpretation. The Convention
applies to the enforcement of an award made in another State. Those who
advocate the concept of the ‘a-national’ award, on the other hand, deny that
such award is made in a particular country (‘sentence flottante’, ‘sentence
apatride’). How could such award then fit into the Convention’s scope?”52

Article V(1)(a) and (e) of the Convention link both an arbitration agreement and an
international award either to the law to which the parties have subjected them, or to
the place where they “were made”. That cannot be a fiction; an arbitration cannot
exist in a vacuum. Rather, in the absence of an agreed law, that place ought
reasonably to be the seat of the arbitration. At least on the face of it, it is difficult to
maintain that the New York Convention promotes the detachment of an award from
the jurisdiction of the seat as opposed to linking it expressly to the seat.
The issues that arise may be illustrated by the Putrabali case to which I referred earlier.
An award made in favour of the successful party in the arbitration, Rena, was set aside
by the English courts upon the application of the losing party, Putrabali, on the basis of

52
Albert Jan van den Berg, The New York Convention of 1958 (Deventer, Kluwer Law and Taxation Publishers
1981) at p. 37: “after 18 years Professor van den Berg’s book is still the seminal work on the New York Convention”
(cited in Goode n 16).

18
an error of law. Thereafter, the arbitral tribunal issued a new award in favour of Putrabali.
Rena went on to enforce its first award before the French courts and succeeded even
before Putrabali was able effectively to enforce the second award issued in its favour.53
But Lord Mance did not suggest that such a situation should never be contemplated:

“The current English view is therefore that a foreign court may, consistently with the
NYC, take a different view of an award to that taken by the law and courts of the
seat, by relying on the word “may” in article V.I.” 54

He counselled caution, however:

“(...) this is only in exceptional circumstances when justified on some recognised

common law principles, and not as a matter of open discretion.”55

I would respectfully agree with Lord Mance: the drafters of the New York Convention,
when adopting the word ‘may’ in the chapeau of Article V(1) – as opposed to ‘shall’
as appeared in the draft and as it repeatedly appears in another parts of the eventual
text56 - intended to give room for discretion. But it is a discretion to be exercised with
caution. The point had been made by Lord Mance himself when he was in the Court of
Appeal. In Dardana Ltd v Yukos Oil Co Ltd57, referring to the use of the word “may” in
the chapeau of Article 103(2) of the English Arbitration Act (which in turn reflects Article
V of the Convention), he stated:

“The use of the word “may” must have been intended to cater for the possibility
that, despite the original existence of one or more of the listed circumstances, the

53
An interesting example of this disunity (between the contrasting French and English approaches - undermining of
comity) was Dallah Real Estate and Tourism Holding Co v The Ministry of Religious Affairs of Pakistan. The place
of arbitration was Paris. Dallah had been successful in obtaining three awards against Pakistan over the latter’s
objection that there was neither a contract, nor an arbitration agreement to which it was a party. That same year,
Dallah sought to enforce the award in England at which point Pakistan objected – successfully- that it was not a party
to the arbitration agreement. While the case was pending before the UK Supreme Court, Dallah requested a stay of
the proceedings and initiated enforcement proceedings before the French courts. The application to stay was refused
on procedural grounds. Contemporaneously, the Government of Pakistan attempted, unsuccessfully, to have the
awards annulled by the Paris Court of Appeal, which held that the arbitral tribunal was correct in finding it had
jurisdiction over the Government, albeit it was not a signatory to the arbitration agreement. In turn, the UK Supreme
Court decided not to allow the requested stay and, applying French law, found against Dallah, holding that the
Tribunal had been incorrect in its determination that it had jurisdiction. The result of this case was two inconsistent
decisions applying the same law on the jurisdiction point.
54 Lord Mance (n 51 above).
55 Lord Mance (n 51 above).
56
In a ‘word search’ covering the entirety of the text of the Convention, the word ‘shall’ appears 38 times; the word
‘may’ appears 13 times.
57 [2002] EWCA Civ 543.

19
 right to rely on them had been lost, by for example another agreement or
estoppel. Support for this is found in van den Berg.58

He went on:

The word “may” (…) does not have the “permissive”, purely discretionary, or I
would say arbitrary, force that the submission suggested. [The article] is designed
(…) to enable the court to consider other circumstances, which might on some
recognisable legal principle affect the prima facie right to have an award set
aside arising in the cases listed in s.103(2) [which are the same than those listed
under Article V of the Convention].59

If that were not so, namely, if courts of enforcement chose to adopt an open discretion
– ostensibly predicated upon a generous interpretation of the use in the Convention of
the word ‘may’ in the chapeau of Article V(I), or the discretion as to whether or not to
refuse to enforce an award set aside at the seat of the arbitration pursuant to Article VII
of the Convention, that would go against international comity of foreign judgments,
reciprocity and mutual trust.

There can be no serious basis to dispute the readiness of the English courts to enforce
awards in conformity with the New York Convention. But the English courts are still
cautious about enforcing an award which has been set aside at the seat of arbitration,
or which is the subject of a pending challenge. In a very recent case, AIC Limited v The
Federal Airports Authority of Nigeria, 60 the court was faced with an application to
enforce an award made in Nigeria whilst proceedings in Nigeria to have it set aside
were pending. The case arose out of a dispute between AIC Limited, a Nigerian
construction and property development company, and FAAN (the Federal Airports
Authority of Nigeria). The dispute turned upon a lease of land at the Murtala
Mohammed Airport in Lagos for the construction of a flightpath hotel and resort
complex.61 The award rendered in Nigeria, the place of arbitration, was subject to a set-
aside application by the losing party, FAAN. While that application was still pending,
AIC sought to enforce the award in England. The English High Court, in the exercise of
its discretion under s103(5) of the English Arbitration Act (which, in turn, gives effect to
Article VI of the New York Convention), decided to adjourn the decision to enforce the
Nigerian award until the set-aside application had been concluded. The English Court

58 Ibidem, at [8] (per Mance LJ).

59 Ibidem, at [18] in fine (per Mance LJ).
60
[2019] EWHC 2212.
61
Ibidem. See also a summary in Melanie Martin, ‘English Court Adjourns Enforcement of Nigerian Arbitral Award’,
Kluwer Arbitration Blog, October 14 2019, http://arbitrationblog.kluwerarbitration.com/2019/10/14/english-court-
adjourns-enforcement-of-nigerian-arbitral-award/

20
applied the criteria set out in English law. It considered (i) whether the application
before the court in the country of origin was bona fide and not a delay tactic; (ii)
whether the application before the court in the country of origin had at least a realistic
prospect of success; and (iii) the extent of the delay occasioned by an adjournment
and any resulting prejudice. It concluded that in the circumstances of the case, it was
more appropriate to hold its decision until the set-aside proceedings had been
concluded in Nigeria. The English court also took into account the fact that the
arbitration was a domestic Nigerian arbitration; that all parties to it were domiciled or
incorporated there; and that it was appropriate to give deference to the courts of the
seat. This is perhaps a good example of an exercise of judicial comity and an effort to
strike a balance between upholding the principles underpinning the New York
Convention and the avoidance of conflicting judgments.62
In his 2014 Clayton Utz University of Sydney International Arbitration Lecture, the doyen
of the Singapore arbitration practitioners, Michael Hwang SC, said that courts should
“supervise with a light touch but assist with a strong hand.” Lord Mance, agreed,
observing that “it is unrealistic, and I think unwise, to expect the latter without the
former”63
But for all the force of academic argument, perhaps one of the most telling arguments
against the concept of an uncompromisingly delocalised system of arbitration remains
the failure of the reforms introduced by the Belgian Legislature in an effort to promote
Belgium as a thoroughly modern and open seat of arbitration, The revised Article 1717
of the 1998 Belgian Code Judiciaire provided that a losing party to an international
arbitration held in Belgium should have no recourse at all to the Belgian courts for the
purposes of setting aside the resulting award. Far from prompting a flood of arbitrations,
parties shied away from a jurisdiction in which their rights of recourse had been so
dramatically curtailed, and the legislation has now been trimmed back.

IV Harmonisation of Rules and Voluntary Compliance of Arbitral Awards

One might fairly ask to what extent, in practice, the ‘delocalisation’ /seat theory
debate remains relevant today, not least, as the reported strike rate is that some 98% of
international awards worldwide are the subject of voluntary compliance and go
nowhere near a national court, whether that of the seat or of the place of

62
Ibidem.
63Lord Mance, ‘Arbitration - a Law unto Itself’ 30th Annual Lecture - The School of International Arbitration and
Freshfields Bruckhaus Deringer, 4 November 2015. Available at [https://www.supremecourt.uk/docs/speech-
151104.pdf], at p. 24.

21
enforcement.64 To a large extent, the acute points of debate some 30 years ago65 have
been blunted. The proponents of delocalisation sought the elimination of “local
peculiarities of the lex loci arbitri.” 66 It would be fair to say that many of those
peculiarities have been ironed out; and to the extent that they remain, they are the
exceptions to an international general rule. Where they do survive, they tend quickly to
become notorious and they can have a chilling effect on the readiness of parties to
locate their arbitrations in the jurisdictions in question. If there is a large degree of
comfort to be had elsewhere, why add to litigation risk?
Quite apart from the extraordinary worldwide adoption of the New York Convention
(there are now 160 Contracting States) and the modernisation of arbitral statutes in
many States, more than 60 of which have adopted in part or wholesale the UNCITRAL
Model Law, and in the legislation of many more of which the influence of the Model
Law is readily apparent, 67 there has been a rapid expansion of influential and
respected soft law. It embraces both international rules of non-binding character such
as the UNCITRAL Arbitration Rules68 and the serial updating of the rules of leading arbitral
institutions of which the ICC (2012 and revised in 2017), LCIA (2014), SIAC and KCAB
(2016), SCC (2017) and HKIAC Rules (2018) are but a few examples. The International
Bar Association’s (IBA’s) Rules on the Taking of Evidence in International Arbitration69 are
an almost constant feature in international arbitrations and the IBA’s Rules on Conflict
of Interest70 are generally regarded as a point of reference for appropriate standards
of disclosure by prospective arbitrators and the assessment of such disclosures as may
be made.
These developments have led to a substantial degree of standardisation of arbitration
proceedings within which framework of internationally accepted norms arbitrators and
parties can operate with confidence. The principle of party autonomy remains a

64
See Loukas Mistelis and Miriam Goldby (eds), ‘The Role of Arbitration in Shipping Law’ (OUP 2016).
65
See Born, G. International Arbitration: Law and Practice, Kluwer Law International, 2012.
66
See Paulsson (n 22).
67
Indeed, some commentators have argued that by incorporating the UNCITRAL Model Law into their legal systems,
a number of common law jurisdictions have deployed it to "get away from their origins in this field”, and to enable
them to embrace a procedure which incorporates the best aspects of several [legal] traditions reflecting, by innovative
regulations and day-to-day praxis, a standardised procedure that is the result of merging diverse legal cultures. See
Elena V. Helmer ‘International Commercial Arbitration, Americanized, Civilized, or Harmonized’ [2003] Ohio State
Journal on Dispute Resolution, 19, pp. 35-68; see also Gary Born, International arbitration: Law and Practice (2012),
Kluwer Law International.
68
UNCITRAL Arbitration Rules (with new article 1, paragraph 4, as adopted in 2013) [Available at
https://uncitral.un.org/en/texts/arbitration/contractualtexts/arbitration]
69 IBA Rules on the Taking of Evidence in International Arbitration, Adopted by Resolution of the IBA Council 29

May 2010, International Bar Association [Available at:

https://www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx].
70 IBA Guidelines on Conflicts of Interest in International Arbitration, Adopted by Resolution of the IBA Council on

Thursday 23 October 2014 [Available at:

https://www.ibanet.org/ENews_Archive/IBA_July_2008_ENews_ArbitrationMultipleLang.aspx]

22
touchstone of modern arbitration statute and soft law. Within broad limits, parties and
the tribunals appointed by them are in a position to tailor the process according to their
wishes and needs.
As Professor Lew put it:

One thing is clear: there is no reference to any national procedural law in any of
the rules [of arbitration]: not that of the parties, the arbitrators or even the place
of arbitration. The power is given to the tribunal to fix a procedure suitable for the
case. Typically, Article 15 of the UNCITRAL Arbitration Rules provides: 1. Subject to
these Rules, the arbitral tribunal may conduct the arbitration in such manner as it
considers appropriate, provided that the parties are treated with equality and
that at any stage of the proceedings each party is given a full opportunity of
presenting his case. 2. If either party so requests at any stage of the proceedings,
the arbitral tribunal shall hold hearings for the presentation of evidence by
witnesses, including expert witnesses, or for oral argument. In the absence of such
a request, the arbitral tribunal shall decide whether to hold such hearings or
whether the proceedings shall be conducted on the basis of documents and
other materials.71

It was prescient of Jan Paulsson to see this coming: in 1983, he wrote:

[I]n an effort to attenuate the impact of peculiarly local rules on international
arbitration, various national legal systems have either declined to apply local rules
to an international case (cf. numerous instances in the Yearbook – Commercial
Arbitration) or by reforming domestic arbitration law to correspond to
internationally accepted common grounds. Cf. the current effort of UNCITRAL to
draft a model law for national legislatures to consider.

That then ‘current effort’ [i.e. the UNCITRAL Model Law] has become one of the most
successful instruments of the harmonisation of arbitration law worldwide.

The extent and scale of the changes in the procedural framework of international
commercial arbitration can fairly be characterised as the “homogenisation” or even
“harmonisation” of arbitration rules worldwide. As Gary Born put it, the treatment of
international commercial arbitration in different legal systems does not give rise to “…
diverse, unrelated phenomena, but rather form[s] a common corpus of international
arbitration law which has global application, there is a common body of international
arbitration law.” 72 Many states have progressively and consistently been reducing the
restrictions upon international arbitration and thereby harmonising the disparities

71
See Julian Lew (n 19).
72
See Gary Born, ‘International Commercial Arbitration’, Volume 1, Kluwer Law International [2009], p. 4.

23
among national laws, with reference to transnational commercial arbitration rules.73
Empirical evidence suggests, too, that in many jurisdictions, certainly those which host
international arbitrations in significant numbers, including England, courts have
adopted a ‘maximum support, minimum interference’ approach, as Dame Elizabeth
Gloster pointed out in her 2017 Freshfields Lecture.74
A model susceptible of global application is one thing; consistency in its application –
or its adoption at all - quite another. As Emmanuel Gaillard observed:

“International harmony solutions can actually only result from the adoption in all
states, of identical legislation on arbitration and, most importantly, the uniform
application of solutions and retained by the courts of each State. Despite efforts
at the international level to achieve such harmonization, realism commands to see
that the rights of arbitration and more the spirit of national courts in respect of
arbitration remain very different.”75

For the reasons I will develop briefly in a moment, I wonder whether we are not already
at the highwater mark in terms of the application of a common arbitral model in the
commercial arbitration and investor-state arenas. And in any event, a model capable
of uniform application is a step or two short of enabling the claim to be made that there
is in place a unified global arbitral order. A common procedural framework is but one
essential element of a truly global arbitration model; one would need a well of
authoritative decisions, which are re-applied on a consistent and reliable basis across
the various legal systems and a uniform level of court support for the arbitral process
too, if the concept is to become more real than aspirational.
And if one thinks of concrete expressions of a global arbitration order, we are nowhere
near the establishment of a world international court of appeal of arbitration
championed, among others, by one of the fathers of the New York Convention, Judge
Howard Holzmann. One might go so far as to suggest that that proposition seems of a
piece with a period in which the Cold War was coming to an end and the harsher
realities of the post 9/11 world had not yet become apparent. Sadly, little of that
optimism remains now. I doubt that the progenitors of the New York Convention would

73
See Laurence Craig, ‘Some Trends and Developments in the Laws and Practice of International Commercial
Arbitration’, (1995) 2 Texas International Law Journal.
74
Jie Li (n 13). Gloster LJ, “Symbiosis or Sadomasochism? The Relationship between the Courts and Arbitration”
(The QMUL School of International Arbitration 32nd Annual Lecture Sponsored by Freshfields Bruckhaus Deringer,
London 22 November 2017), p. 4 at para. 7.
75
Emmanuel Gaillard, ‘Aspects philoshophiques du droit d’arbitrage international’ Editorial Martinus Nijhoff
Publisher, Leiden/Boston 2007, pp. 44-45. (Victor M. B. Callejas, cited in Arbitral Legal Order, for International
Commercial Arbitration; Illusion or Reality? (2018) (fn 6), p. 227. [Available at
https://www.revistamisionjuridica.com/arbitral-legal-order-for-international-commercial-arbitration-illusion-or-
reality/

24
have anticipated the extent to which the arbitral process has become politicised.
Two contentions in particular (‘canards’ would be a more apt description) are regularly
deployed against the continued use of arbitration in the current free-form international
arbitration model adopted in investor-state arbitration. First, an illusory argument that
states always lose with the result that their ability to formulate policy is compromised
and the interests of their taxpayers are ill-served. Second, the not so subtle inference
insinuated into the widely reported pronouncements of politicians, who ought to know
better but who choose to beat a populist drum, not least in Europe and the US, that
privately appointed arbitrators in hock to global corporate interests cannot be trusted
to deliver justice in “rigged pseudo courts” as a prominent Democratic contender for
the US presidency was pleased to describe them. The former argument is easy to
demolish on a foundation of hard fact and numbers of commentators have done so, I
among them.76 The second is a calumny, but one fed by powerful lobby groups and
NGOs to which the ears of politicians, not least US lawmakers and EU Commissioners,
are much more finely attuned than they are to inconvenient rational argument which
jars with the political mood music. The European Union has taken the decision to move
towards a more centrist and supposedly more consistent two-tier model of ISDS in which
all of the adjudicators will be state appointees. The investor has no say. The criteria for
appointment as a first or second tier adjudicator are such that it is all but inevitable that
they will be drawn from the ranks of the judiciary, or retired judiciary, of the EU member
states and any State with which the EU enters onto a bilateral investment treaty - as it
has done with Canada (i.e. the Comprehensive and Economic Trade Agreement -
CETA). 77 There is perhaps a ray of hope for some flexibility in that Japan managed to
negotiate a different agreement with the EU in this respect; the qualifications required
of adjudicators under the new Economic Partnership Agreement (entered into force on
1 February 2019 – the “EPA”) are similar to those which one has come to expect of
arbitrators serving under the current ISDS regime.78
There is not the time and this is not the place to embark upon a detailed consideration

76 John Beechey, ‘TTIP-Myths and Facts: 2015 Bergsten Lecture, Vienna, Chapter V Investment Arbitration, pp.
215-228 in Austrian Yearbook on International Arbitration 2016.
77
Article 8.27.4 of the CETA [Available at: https://ec.europa.eu/trade/policy/in-focus/ceta/ceta-chapter-by-chapter/]
provides that: “The Members of the Tribunal shall possess the qualifications required in their respective countries
for appointment to judicial office, or be jurists of recognised competence. They shall have demonstrated expertise in
public international law. It is desirable that they have expertise in particular, in international investment law, in
international trade law and the resolution of disputes arising under international investment or international trade
agreements.”
78
Under Article 21.10 of EPA: “All arbitrators shall: (a) have demonstrated expertise in law, international trade
and other matters covered by this Agreement and, in case of a chairperson, also have experience in arbitration
proceedings; (b) be independent of, and not be affiliated with or take instructions from, either Party; (c) serve in
their individual capacities and not take instructions from any organisation or government with regard to matters
related to the dispute; and (d) comply with the Code of Conduct.”

25
of the ECJ’s now notorious decision in Achmea (a decision described publicly by one
then still serving Justice of the UK Supreme Court as “not law, but dogma”),79 and the
attempts made by the European Commission, ostensibly in reliance upon that decision,
to close down investor-state arbitration not only under intra-EU BITs but the Energy
Charter Treaty, too.
Those who were pondering the future of international arbitration and its seemingly
unstoppable growth some 30 years ago would likely not have anticipated either the
creation of international commercial courts and the suggestions that they should form
the basis of a new international point of reference in international commercial disputes.
It is even less likely that they would have foreseen that governments would require
arbitrations arising out of government-related procurement contracts to be heard by
designated arbitral institutions in their own jurisdictions as Turkey and the Marahashtra
State government in India have done. Perhaps most significant of all in the long term is
the decision of the government of the PRC to establish an institution the sole purpose of
which will be to deal with One Belt-One Road disputes.80
These developments have the effect of moving the debate onto a different footing.
The challenges with which international arbitration is now confronted are, or have the
potential to be, of an existential nature. They go to the essence of the way in which we
have grown used to resolving both international commercial disputes and disputes
between investors and states by arbitration. The arbitral community found its voice far
too late to be in a position to make any material intervention in the investor- state
debate in the EU and, candidly. even had it done so, there is scant basis to believe that
the Commission and the EU Parliament would have been inclined to listen. European
states are renouncing their intra-EU bilateral investment treaties; in fact, on 24 October
2019, the EU Member States reached agreement at a plurilateral level for the
termination of intra-EU bilateral investment treaties. Thus, there is no future for the current
ICSID/ UNCITRAL additional facility model in intra-EU investor-state disputes. Its survival in
the context of the ECT is problematic, but there the EU has a problem in that it is a
signatory to the Treaty in its own right. It remains to be seen whether it will be as cavalier
in its consideration of its own treaty obligations as it has been, so far as those of its
member States are concerned – the Micula case being a graphic example.81 As the EU
enters into more overseas trade agreements as it has with Canada and Japan, the new
two-tier model will gain more credibility and weight than it has already. It may well be
part of the price of securing a trade deal with the EU when (if) it ever leaves the EU, that

79
ECJ (Grand Chamber), 6 March 2018, Slowakische Republik v Achmea BV., ECLI:EU:C:2018:158.

80In Turkey, the designated body is ISTAC; in Marahashtra, it is the Mumbai Centre for International Arbitration
81Ioan Micula, Viorel Micula, S.C. European Food S.A., S.C. Starmill S.R.L. and S.C. Multipack S.R.L. v Romania,
ICSID Case No. ARB/05/20. Final Award available at https://www.italaw.com/sites/default/files/case-
documents/italaw3036.pdf] and Decision by the Svea Court of Appeal, 25 April 2019, Case No. T 4658-18.

26
the UK will find itself obliged to sign up to the EU’s ISDS model, too.
There is little that the arbitral community can do about state-interest driven issues and
in the face of political momentum of this kind, so best it focusses where it can bring
expertise and a track record of successful dispute resolution to bear to the greatest
effect. International arbitration has become an increasingly competitive market and
business has to be won. That sort of terminology will offend the purists, but international
arbitration is now big business. It brings in millions of dollars in revenues to law firms,
consultants and to the cities in which arbitrations are held. When the ICC Court was
contemplating a move away from Paris in 2009-2010, a statistic that made the French
authorities sit up was the potential loss of over €300 million to the city of Paris if the Court
were to leave. Understandably, the institutions want a piece of the action.
My successor at the ICC Court, Alexis Mourre, suggested in a recent address delivered
in Istanbul82 that: “Without robust, ethical and experienced arbitral institutions, there can
be no trust in arbitrations.” That is a high bar. He is right to suggest that leadership by the
institutions of unimpeachable integrity and high quality is critical to the maintenance of
trust in arbitration. The reality is that few arbitral institutions have the luxury of deep
pockets and there is a beguiling temptation to engage in a race to the bottom to vie
for business by seeming to offer a package which is held out as being as efficient, but
less expensive, than those of competitors. There are only so many ways in which costs
can be cut, but the reputational damage to an institution which does not invest in its
administrative capability, and which is careless of the maintenance of the highest
standards of competence, integrity and transparency in its dealings with its users and its
tribunals affects confidence in the arbitral market-place as a whole.
The most effective answer is the ability to offer users of arbitration procedures and best
practices that remain up to date and which are responsive to user demand in the
commercial arbitration arena and, to the extent that the ICSID model is to continue to
thrive, in investor-state arbitration, too. One aspect of the matter that might easily be
overlooked is that it is crucial that courts to which the arbitral system looks for support
should have confidence in the underlying integrity and competence of those who
administer arbitrations and the tribunals who operate under these rules, procedures and
best practices. But one has to be realistic: it takes time to change attitudes, to train
judges to view matters other than exclusively through the lens of their own court’s
traditions and practice, it takes time to change private institutional rules if they are to
be the subject of the degree of consultation that affords them legitimacy with their
prospective users, longer to persuade states to update domestic legislation and longer
yet to effect treaty change. In response to proposals (and very well thought through

82 Keynote speech, GAR Live Istanbul 2019

27
proposals they were, too) to update the New York Convention83, Professor Gaillard, in a
no doubt unconscious echo of both General De Gaulle and Margaret Thatcher said
‘No’ three times: “no need, no hope, no danger.”84
Six years ago, my friend, Peter Goldsmith QC, gave a lecture in London.85 He suggested
that within five to ten years, the “enthusiasm and energy of the arbitration community
to create a global dispute resolution system” would enable a future speaker to give an
unqualified ‘yes’ in answer to the question that he had posed in his lecture: “Has a World
Court finally been created by modern international arbitration?” He identified four
principal challenges: (i) the development of a harmonised approach to ethical
standards; (ii) concerns around the legitimacy of the appointments by parties of
arbitrators pursuant to the current methods of arbitrator selection; (iii) updating the New
York Convention; and (iv) the creation of a supra-national body capable of fulfilling an
appellate function.
Progress has undoubtedly been made on the first of those points, but whilst the
mechanisms have gone into place, counsel conduct in arbitrations is now sufficient an
issue that certain of the arbitral institutions, including the LCIA, have felt impelled to
make specific provision in their rules to empower arbitrators to deal with situations in
which they have become concerned for the integrity of the procedure. That is not a
step forward. Nor is the fact that recent scandals involving arbitral institutions
themselves, such as the resignation of the Board of the Arbitration Chamber of Romania
following the conviction of its President for corruption on the ground that he had
accepted bribes to make an arbitral appointment in favour of one of the parties to a
dispute, the “award” of US$18 billion made against Chevron by a sham tribunal of a
sham institution in Egypt and the arrest of numbers of arbitrators in Peru and Brazil in
connection with the Odebrecht corruption cases have prompted the Spanish Club of
Arbitrators to propose a Code of Ethics for arbitral tribunals. As to the second, there are
no immediate signs that parties will willingly relinquish their involvement in the tribunal
selection process – to the point that the only way in which the EU considered that it
could overcome their reluctance was to take the choice away from them altogether
in its new ISDS regime. As to the third, there is the sheer difficulty of persuading a large
number of states to devote time and resource to revise the New York Convention,
something which many would say should be left well alone – or as Emmanuel Gaillard
summed it up: “no danger [of that happening]”. And as to the fourth, the creation of
such a body is still as far off as ever.

83
A.J. van den Berg: ‘Hypothetical Draft Convention on the International Enforcement of Arbitration Agreements
and Awards: Explanatory Note’: <http://www.newyorkconvention.org/draft-convention>
84
Emmanuel Gaillard: ‘The Urgency of Not Revising the New York Convention’ in A.J. van den Berg (ed) ’50 Years
of the New York Convention’ (ICCA Congress Series No. 14, 2009).
85
Lord Goldsmith QC: ‘The Privatisation of Law: Has a World Court finally been created by modern international
arbitration?’, Gresham College 27 June 2013.

28
As the Nobel Laureate physicist, Niels Bohr, famously remarked, “It is very hard to predict,
especially about the future”, so I will resist the temptation to offer a restatement of Lord
Goldsmith’s five-year view. But I will leave you with this thought: any form of international
disputes resolution which has been acknowledged by the remarkable and forward-
thinking Chief Justice of Singapore, Sundaresh Menon, as playing a “critical role in the
global administration of commercial justice” should be defended to the hilt. The
alternatives are unattractive. None comes close to offering the flexibility and
adaptability of the modern commercial arbitration model. That model is undoubtedly
under threat: investor-state arbitration represents a very small proportion of disputes
referred to arbitration, but it is high profile – inevitably so, given the involvement of states
– and there may be a temptation to import into commercial arbitration changes arising
in investor-state arbitration which would be inimical to the future development of the
former. Consolidation and a fierce defence of the advances that have been made
over the past 30 years may be the watchwords of the next five years.

29