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Journal of International Arbitration 28(2): 89-103, 2011.
(@ 2011 Kliawr Law International. Printed in The Nietherlaiids.

International Arbitration in a Global Economy:

The Challenges of the Future

Bernard HANOTIAU*

The forces of globalization lve ,generated an increased niumber of international contracts, ihich in turn have
resulted in enomous increase in complex counercial disputes. These forces have lueled the development of
interiational arbitration as the preferred choice of businessuen for the resolution of their disputes. They have
further led to a denationalizition f arbitration, both procedurally and substantively, as well as to a convemrence
of national legislation and institutional rules, based on a consensus on a greater libenalization of the process.
The forces of globalization have also opened Ihe door to the application by arbitrnd tribunals offefneral
principles of internationalcomnnercial la, counnon to all nations, and have contributed to the development of
an international arbitration culture.
Beyond its success, international arbitration isfacing today many challengies. There is an increased concern
over its judicialization, its time and cost ep7iciency, and various ethical issues. Wit can be done to overcome
these challenges, and mnake sure that arbitrntion will cotinue to offer the qualities ind idneintaes that have
been the keys to its success?

I. INTRODUCTION

Nobody will dispute that the last decades have witnessed a fundamental restructur-
ing of the modern global order.We live in a global world. Social, political, and economic
activities extend across the globe with the consequence that events, decisions, and activities
in one part of the world can have an inunediate significance for individuals and communities
in distant parts of the globe.
Globalization is characterized predominantly by an increasing interdependence of
national economies worldwide through increased cross-border transactions in goods and
services, international capital flows, and technological innovations.
The globalization of the economy has contributed to a denationalization of the
territorial space since political, economic, social, and legal activities are no longer limited
to territorial borders but transcend them. It has also contributed to a change in the tradi-
tional role of nation states which have become more and more dependent on interna-
tional markets and which are confronted with a major challenge in terms of control over
the economy and the behavior of economic and financial actors.'

* Member of the Brussels and Paris Bars, Hanotau & van den Berg, Brussels. Professor at the University of
Louvain (Belgium).Member of the ICCA Council; Member of the Board ofAdvisors of SIAC.
' On the issues raised by globalization and its impact on arbitration, sce, in particular, KAnruiiZiNt LYecii,Tii:
Foicis oF EcoNOMIC CiLuALirION: Ci ALuNi1N(s o runii Rt nIME or IOniNAIIONAL COMMRiniAL AiIIAnoN
(2003); Reza Banakar, Reflexive Lgitimary in InternationalArbitration and Anthony G. McGrew, Global Lqal literactioi
and Present-Day Patterns of Clobalization, in Esiii:MN Li:Ai. Cl rAINiY: Emrinwas. Siunis ON nmE. Cl1.r11 oN
or LAw 325, 347 (Volkmnar Gessner & Ali Cen Budak eds., 1998); and KARIM YOussEi, CONSNT IN ConWixT
(2009), in particular ch. 3.
90 JOURNAL OF INTERNATIONAL ARBITRATION

All this has also boosted international commerce and has generated an increased
number of international contracts, in turn leading to an increase in commercial disputes
requiring resolution.

II. GLOBALIZATION AND THE GROWTH OF INTERNATIONAL ARBITRATION

It is here that international comiiercial arbitration comes into play. In today's global
world, traditional methods of dispute resolution have progressively appeared ill-suited or
at least ill-prepared to cope with the complex disputes to which a number of these inter-
national business contracts have given rise, and this, for several reasons: traditional court
jurisdictions remain largely national in character; judges work in a local cultural
environment and apply procedural rules which are accepted in this environment; and
international businessmen come froim different cultural backgrounds and have different
legal and procedural expectations.
Moreover, judges work in a language which is not necessarily the language of the
contract giving rise to the disputes. In addition, such contracts are also in many cases
extremely sophisticated.They sometimes refer to transnational principles or non-national
norms with which national judges may not necessarily be familiar. They may concern
subject matters with particular technicality. The disputes to which these international
agreements give rise may be so complex and so multifaceted that a decision on the dis-
puted issues will require numerous weeks or even months of analysis, study, and drafting.
These are the reasons why international arbitration has slowly and progressively
developed during the twentieth century as the preferred choice of businessmen for the
resolution of international commercial disputes. Beyond these reasons, increased use of
arbitration has been stimulated by what were considered its intrinsic qualities: the speed
of the process, its privacy and confidentiality, the neutrality of the arbitral forum, the
possibility of choosing one's own specialized judge speaking the relevant language(s),
the flexibility and adaptability of the procedure to meet the parties' various expectations,
the finality of the award, and the ease of its enforcement.
The forces of globalization have fueled the development of international arbitration
all over the world. But it is not their only effect. They have fundamentally reshaped the
approach to arbitration and to the arbitration process. The evolution can be summarized
in three words: denationalization, convergence, liberalization.

Ill. GLOBALIZATION AND THE DENATIONALIZATION OF INTERNATIONAL ARBITRATION

In the first place, one of the main impacts of economic globalization on the regime
of international commercial arbitration is what has been referred to as a phenomenon of
denationalization, that is the detaching of the process, both procedurally and substantively,
from the national law of the place of arbitration, or put in another way, the minimization
2
of national court interference in the arbitration process.

2 LYN(il , supira note 1, at 64.

 INTERNATIONAL ARBITRATION IN A GLOBAL ECONOMY 91

For decades, there have been debates over the juridical nature of international arbitra-
tion: is it an alternative, autonomous, method of dispute resolution, subject to self-regulation
by the parties, or is it a system of delegated justice regulated by a particular national law?3
According to the contractual theory of arbitration, the jurisdiction and the powers
of an arbitral tribunal derive solely from the parties' mutual agreement. The parties are
therefore competent to determine the arbitration procedure and the law governing the
process without interference from any national legal system.
This theory, however, overlooks the fact that it is the national legal systems that
allow a submission of disputes to arbitration and the resulting arbitration award to be
recognized and enforced. It also overlooks the need for a minimum form of control of
the award by national courts.
On the other hand, the jurisdictional theory of arbitration puts the emphasis on the
authority and supervisory powers of the state to regulate any international commercial
arbitration within its territory. This theory was prevalent during a large part of the twenti-
eth century. The prevailing principle in many countries was (and still is today in some of
them, such as the Netherlands or Germany) the principle (sometimes embedded in the
relevant country's constitution) that the parties have the fundamental right to have their
dispute submitted to their "natural judge" ("leur juge naturel"), that is the country's
national corts.4 Arbitration was therefore accepted-or tolerated-by the national legis-
lator as an exception to this principle. And by way of consequence, the recourse to
arbitration was in all respects carefully regulated and circumscribed by national legisla-
tions. The arbitration clauses were also supposed to be restrictively interpreted.
This second jurisdictional theory gives insufficient weight to the importance of the
parties' agreement and their autonomy. It is hardly consistent with the way international
arbitration has developed these last decades.
In reality, both theories share a part of the truth.Arbitration rests on a private agree-
ment but the process is to a certain extent controlled (or assisted) by the states and results
in an award which could not be recognized and enforced without their agreement. In
other words, international arbitration could not be successful if there was not an interac-
tion of two elements: international conventions by which states undertake to compel
arbitration when the parties in dispute have entered into an arbitration agreement and to
enforce the resulting award; national legislations lending assistance during the arbitral
process and providing for a minimum control of the awards with respect to their
compliance with fundamental principles of procedural law.5
The merit of the contractual and jurisdictional theories is that they underline the
tension which exists between party autonomy and the control and supervision over
the arbitral process by the states.The question that should therefore be addressed in the
context of this article is the following: has globalization had any effect on the balance
between these two forces? Has globalization contributed to an erosion of the state

On this issue, see, e.g.,J. Laiw,Aim einu LAW IN I9INNIIONAL COMMeRCIn . AuinnNIT r, ch. 2 (1978).
See on this principleYoussi:i, supra note 1, at 342 et seq.
LYNCII, supra note 1, at 167.
92 JOURNAL OF INTERNATIONAL ARBITRATION

control and governance over the arbitration process, as it did as regards other aspects of
the economy?
The answer is affirmative.With the increased development of international trade and
correlatively the growing number of international disputes, the law has developed toward
a greater independence of international arbitration from control by national laws and
national courts. This emancipation of international arbitration has taken place through a
process of detachment from national controls imposed by the law of the place of arbitra-
tion. And, as we will now see, this process is itself inseparable from a parallel process of
progressive convergence of national arbitration laws and regulations.

IV. GLOBALIZATION AND THE PROCESS OF PROGRESSIVE CONVERGENCE AND

LIBERALIZATION OF ARBITRATION RULES

Indeed, the forces of globalization have not only led to a progressive process of
denationalization but also to a process of progressive convergence of the various rules,
that is, the national statutes, institutional rules, and other regulations governing inter-
national commercial arbitration, while preserving at the same time a certain level of
diversity, reflecting the different cultural traditions and historical developments within
each state.

A. DEVELOPMENT OF THE PROCESS

The process of convergence and liberalization started with the adoption in 1958 of
the New York Convention on the Recognition and Enforcement of Foreign Arbitral
Awards. The Convention is based on a principle of pro-enforcement bias and limits the
grounds on which enforcement may be refused. It has been progressively ratified by an
increasing number of states (some 143 states today) and has also progressively given rise
to a relatively uniform jurisprudence on its various provisions.
As far as national legislations are concerned, during the last quarter of the twentieth
century, many states had outmoded, or at least very restrictive, arbitration laws or had
none at all. With the pressures associated with the globalization of the economy, states
decided to amend and modernize their arbitration statutes or adopt new ones.The adop-
tion in 1985 of the UNCITRAL Model Law on international arbitration was certainly
an important factor in this new development. The approach of the Model Law is to
emphasize party autonomy, that is, the possibility for the parties to tailor the procedure
to the specific features of the case without restraint from national laws, and to guarantee
the proper operation and fairness of the arbitral process, while, on the other hand, limiting
the powers of national courts to review the arbitral process and the award.
The wave of modernization and reforms began with the French reform of their
arbitration law in the 1980s, and was followed nearly every year thereafter up until today
by reforms in a majority ofjurisdictions all over the world. Depending upon the jurisdic-
tion, the UNCITRAL Model Law was adopted in totality or with amendments, or was
 INTERNATIONAL ARBITRATION IN A GLOBAL ECONOMY 93

only used as a source of inspiration, including in a number of Asian countries." Some

states, however, decided not to follow the UNCITRAL model, England in the first
place, given the specificity of its arbitration regime.
In the process of renewal and adaptation of their legislations, legislators have erased
the main differences existing between their national arbitration laws. For example, the
availability of appeal on points of law, the rejection of the power of arbitrators to act as
amiable compositeur, the absence of an obligation to give reasoned awards, which were all
specific to the common law approach to arbitration, have progressively and to a large
extent disappeared. And in civil law jurisdictions, all the barriers existing with respect to
the availability of witness testimony have been progressively removed.

B. A GREATER AUTONOMY AND FLEXIBILITY OF THE ARBITRAL PROCESS

But more fundamentally, the states have adapted their legislation in favor of greater
flexibility and autonomy of the arbitral process. This approach was not only justified by
the fact that states recognized the increased need for a quick and flexible method of
dispute resolution to settle international disputes, but also because they realized that
international arbitration was a growing market in which most of them wanted to play a
major role. Competition therefore fostered the phenomenon of liberalization and dena-
tionalization of international arbitration.
All these legislative efforts have led to a high degree of convergence in the arbitration
statutes, in the sense of an evolution in a parallel direction, based on a general consensus
towards a greater autonomy of the arbitration process. All the newly adopted statutes
accept the principle that the parties are free to shape the arbitration procedure as they
wish, by reference or not to a national procedural law or to arbitration rules, subject only
to compliance with the fundamental requirements of due process, the rights of defense,
and the principle of equality. In most cases, the parties are no longer bound by the
restrictions affecting the admissibility and weight of evidence before domestic courts;
they are free to determine the rules applicable to the merits of the dispute whether by
reference to a national legal system or to general principles of law. All of these new
statutes recognize the separability of the arbitration clause, the principle of Kompetenz-
Kompetenz, that is the competence of arbitrators to determine their own jurisdiction, and
a more restrictive supervisory role of national courts in the arbitral process. More pre-
cisely, the role of national courts has been reduced in most cases to support or assistance
when requested by the parties, either before the constitution of the arbitral tribunal (e.g.,
to grant internm measures), or during the arbitration (e.g., the appointment of an arbitra-
tor in place of a defaulting party).

' On this issue, see P. BINDER, INmERNAIIoNAL COMMinCIAL AmITsxnoN IN UNCITRAL Moo. LAw Junis-
DIIcIONS (2000), and in particular the comparison charts at ch. 10.
94 JOURNAL OF INTERNATIONAL ARBITRATION

C. EROSION OF THE LINK WITH THE SEAT OF THE ARBITRATION

In addition, the link between the arbitration process and the place of the seat has
been considerably and constantly eroded. Courts in France (in the famous Hilnarton and
Putrabali"cases) and more recently in the Netherlands (in the Yukos case9 ) have admitted
that eveni if an award has been annulled at the place of the seat, it may still be enforced in
their jurisdiction. The theory behind these decisions is that the foreign award is an inter-
national award which is not integrated in the state where enforcement is sought and that,
as permitted by Article VII of the New York Convention, it is up to the enforcement
court to decide on the basis of its own norms whether to integrate or not the award in
its own legal system, as long as it is not contrary to international public policy.
Even if no state has abandoned complete control over international arbitrations
conducted within its territory, the control at the place of the seat has been reduced in
most cases to a minimum, that is, basically, to the possibility to start an action to set aside.
Some countries have even gone one step further, and this is the case of Switzerland,"'
Belgium," Tunisia,' 7 and Sweden,' 3 which permit the parties to opt out of the possibility
to initiate setting aside procedures against arbitral awards rendered in their jurisdiction
when the parties have no relationship whatsoever with the country concerned. If a control
has to take place, it will operate in the context of the enforcement of the award.
Finally, the grounds for reviewing international arbitral awards rendered at the place
of the seat, like the grounds for refusing enforcement, are now generally limited to fun-
damental violations of the scope of the arbitration agreement, to violations of due process,
rights of defense, and public policy. And even then, the court's interpretation of these
grounds tends to be more and more restrictive. For example, with respect to the violation
of public policy, most national courts tend to follow the restrictive interpretation of the
U.S. Supreme Court in Parsons & Wittheniore . Raktai,'4 according to which those invoking
such a violation must establish that there has been a violation of the most fundamental
notions of morality and justice of the forum state. Some courts, in Europe in particular,
go even further. This is the case in France, where the Paris Court of Appeal, since the
recent Thals decision, has refused to consider the public policy argument as a ground
for setting aside an award if the violation is not obvious from a reading of the text of the
award ("ne creve pas les yeux") and a possible public policy violation could only be found
after reconsidering the decisional process performed by the arbitral panel. In Western

' Onnium de Traitenent et de Valorisation v. HilinirtonJudgnient,June 10, 1997, 1997 Riv. An. 376 and
note Fouchard, and 22Y.B. Com. Am. 696 (1997).
PT. Putrabali Adyalnulia v. Rena Holding,judginent,June 29, 2007, 2007 Raiv.Ain. 507.
Rosneft/Yukos. Netherlands Supreme CourtJune 25.2010 (LJN: BM1679).
Swiss Law on Private International Law, art. 192.
Belgian Judicial Code, art. 1717(4).
12 Arbitration Code, art. 78(6).
' Swedish Arbitration Act 1999, s. 51.
I1 YB. Com.An1. 205 (1976).
S.A. Thales Air Defense/GIE Euromnissile, November 18, 2004, 2005 Riv. Ain. 751. See,e.g.,on this deci-
sion D. Bensaude, Thals Air Defense B. v CIE Euromissile: Definfing the Lumits ofScrutiny ofAwards Based on Alleged
IViolmis of European Competitioi bu, 22 J. INT'I. Aui. 239 (2005).
 INTERNATIONAL ARBITRATION IN A GLOBAL ECONOMY 95

European jurisdictions, this tendency seems to be more and more often followed by
national courts.

D. RESPECT OF HISTORICAL AND CULTURAL TRADITIONS

One may without hesitation conclude that there is a relatively homogenous body of
international arbitration laws and an increasing trend toward a greater autonomy of the
arbitral process, even if differences remain between national statutes, and these are
generally the product of cultural and historical traditions. For example, some states still
make a distinction between domestic and international arbitration, others not. Some
are very liberal in the area of arbitrability, such as Germany and Switzerland, where all
matters involving an economic interest, that is, all claims that have a financial value ("un
caractere patrimonial") are declared arbitrable;" others declare inarbitrable certain
categories of disputes." Some legislators restrict the possibility for state entities to have
recourse to the arbitral process," others not." Some have reduced to a very strict
minimum the control of the courts on the arbitral procedure, such as France; others, like
England, have definitely progressed in this direction but still allow their courts broader
powers to intervene in the conduct of arbitration proceedings than others.These dif-
ferences can be explained by the fact that when a national legislator decides to amend its
legislation on arbitration, it is confronted with a tension between forces driving towards
the most liberal regime possible to better compete with other arbitral fora, and other forces
insisting on the respect of cultural traditions and specific national policy considerations.
The legislator has therefore to strike a balance between these competing concerns.

E. ROLE OF ARBITRAL INSTITUTIONS, ORGANIZATIONS, AND UNIVERSITIES

However, the phenomenon of convergence, coupled with liberalization, in the

regulatory framework of international arbitration is not only the product of legislative
efforts at the international or national level. It is also the result of the work of all the other
actors in the arbitration community: arbitrators, scholars, lawyers, national courts, arbitral
institutions and institutes, and other professional organizations.
At the level of institutions, the International Chamber of Commerce (ICC), which
has always played a major role in the world of international arbitration, revised its rules in
1975 and 1998 (and it is again completing a revision presently) to provide greater
autonomy for the parties in the determination of the arbitral process, both procedurally
and substantively.2" Each time the ICC has amended its rules, the other institutions have

" Swiss Law on Private International Law, art. 177:"Any dispute involving property may be the subject-niatter
of an arbitration"; and German Arbitration Act, s. 1030(1).
" For example, Bulgarian Law ofAugust 5, 1988, art. 2 or Law of the People's Republic of China on Arbitra-
tion, art. 3.
For example, Belgian Judicial Code, art. 1676(2), or French Civil Code, art. 2060.
* See, e.g.,Swiss Law on Private International Law, art. 177(2).
> On the ICC Rules,seeY DIAwiNS & E. S:IwAri-,A Gu in nIi ICC Ruis or AIntrnenoN (2d ed. 2005).
961 JOURNAL OF INTERNATIONAL ARBITRATION

followed, taking inspiration from each other. The consequence is that, today, there is a
great similarity between the rules of the various institutions and they all to a large extent
incorporate the same denationalization approach.
It can be expected that the new UNCITRAL Rules of Arbitration, in force since
July 1, 2010, which express the consensus reached after years of discussion by arbitration
specialists from all parts of the world, will accelerate even more the process of harmon-
ization of arbitral rules and of denationalization of the arbitral procedure.
The phenomenon of convergence perceived in the regulatory framework of arbitra-
tion can also be attributed to the emergence of a body of soft law taking the form of rec-
onmendations, guidelines, directives, elaborated within international organizations like
UNCITRAL, arbitral institutions, arbitral organizations such as the Chartered Institute
of Arbitrators, or lawyers' associations such as the International Law Association or the
International Bar Association (IBA). Just to take this last example, the IBA has bridged
the gap between truly different practices on both sides of the Atlantic in the area of
conflicts of interest 21 and in the area of rules of evidence, 22 in particular in the field of
document production.The IBA Guidelines on Conflicts are now the worldwide reference in
that area and are to a large extent followed by all arbitral institutions.The IBA Rules of Evi-
dence, a new version of which has recently entered into force, are followed for the conduct
of the arbitral procedure by parties and arbitral tribunals in nearly all international arbitra-
tions. Cultural traditions and expectations in the area of document production remain
relatively untouched on both sides of the Atlantic, but when American and European parties
arbitrate together, they usually accept the common modus vivendi elaborated by the IBA.
This is not all. Convergence is a multifaceted process. All the actors in the world of
international arbitration influence each other. There is a process of cross-fertilization of
ideas through the mechanism of conferences, seminars, meetings, publications by scholars.
Convergence results not only from processes of harmonization of laws and regulations but
also through the educational and training role played by arbitral institutions, universities,
arbitral organizations; and through dialogue, debate, exchanges of ideas in arbitrators'
meetings and scholarly circles.

F. HARMONIZATION IN THE SUBSTANTIVE TREATMENT OF THE DISPUTES

Globalization has therefore led to a convergence of arbitration statutes and institu-

tional rules and to the liberalization and denationalization of the arbitration process. Has
globalization also permitted, or will it permit, the achievement of uniformity in the
substantive treatment of the disputes submitted to international arbitral panels?
According to the principle of broad party autonomy which is enshrined in the new
national legislations and in recently amended arbitration rules, the parties are generally

" IBA Guidelines on Conflicts of Interest in International Arbitration, approved on May 22, 2004 by the
Council of the International Bar Association.
22 IBA Rules on the Taking of Evidence in International Arbitration, adopted by a resolution of the IBA Coun-
cil, May 29, 2010.
 INTERNATIONAL ARBITRATION IN A GLOBAL ECONOMY 97

free to select the law or the rules of law which they consider the most appropriate to
decide their dispute. The liberalization of international arbitration has indeed led to two
major consequences with respect to the law applicable to the merits of the dispute: on
the one hand, it is admitted in international practice in most jurisdictions, contrary to
what was the practice in the early stages of international arbitration, that in the absence
of a party's choice of law, arbitral panels do not have to apply the conflict of law rules of
the seat.They may freely determine the law or the rules of law applicable to the dispute.
The second consequence, in direct correlation to the first, is that many modern stat-
utes and institutional rules adopt the principle that the law applicable to the resolution of
a dispute is not necessarily a national law. For example,Article 1496(1) of the new French
Code of Civil Procedure provides that the arbitral tribunal shall decide the dispute in
conformity with the rules of law chosen by the parties or, in the absence of a party's
choice, it shall decide according to the rules that it deems appropriate. Similar provisions
exist in many other countries in continental Europe and elsewhere and tend to be more
and more frequently included in newly adopted legislation.You also find them in many
arbitration rules. For example,Article 17 of the ICC Rules provides that "the parties shall
be free to agree upon the rules of law to be applied by the Arbitral Tribunal to the merits
of the dispute. In the absence of any such agreement, the Arbitral Tribunal shall apply the
rules of law which it determines to be appropriate".
On the other hand, the wording of some other national laws, as well as of the new
UNCITRAL Arbitration Rules, seems to be more restrictive. For example, Article 35 of
the new UNCITRAL Rules limits the possibility to refer to rules of law in the sole case
of an express choice by the parties. Failing such choice, the tribunal is to apply the law
which it determines to be appropriate. This is also the solution adopted by the new
Singapore International Arbitration Centre (SIAC) Rules, Article 27. 1 am not sure that
the difference between these various versions is important, since Article 35(3) of the new
UNCITRAL Rules, as well as Article 27(3) of the new SIAC Rules, provide, like most
modern legislations and other institutional rules and like the Model Law, that the arbitral
tribunal must take into account any usage of trade applicable to the transaction. All these
statutes and arbitration rules therefore open the door to different extents to the applica-
tion by arbitral tribunals of general principles of international commercial law, principles
common to all business nations.
What is the status of these principles in today's arbitration?2 ' There seems to be a
general consensus that what is generally referred to as the lex inercatoriais not an autono-
mous transnational legal system. Lex inercatoria rules are too vague and indistinct to
constitute an objective system of law. Moreover, if lex nmercatoria has a certain appeal in
civil law jurisdictions, it is not easily accepted in principle in the common law world;
although it is said that section 46 of the English Arbitration Act 1996, providing for

23 On this issue, see E Di Ly, INTIENAIoNAi BUSINIss LAW AND Lux MisuceromiiA (1992); K.P. Bciu;is,Tini
CniA1ING COnicriCnoN o(F Lirx MilA'OuIA (1999); K.P. Bilcint, Tii Punici or TRANSNIIIoNAi LAW (2001);
LYNCII, supra note 1,ch. 7.
98 JOURNAL OF INTERNATIONAL ARBITRATION

resolution of disputes in accordance with such other considerations as are agreed by the
parties, would allow a tribunal to apply lex iercatoria, provided that parties have conferred
such jurisdiction on the arbitral tribunal.24
If one is to look for a certain level of consensus in the arbitration community with
respect to the application of general principles of international commercial arbitration to
disputes submitted to arbitral tribunals, it is probably to be found in a perception of lex
inercatoria as an evolutionary process representing a consolidation of trade usages and parties'
expectations in international commerce that can be used as a complement or supplement
to the otherwise applicable law.
One must indeed admit that in today's global economy, there are numerous prac-
tices, trade usages, standard terms, industry expectations, that have to be taken into
account by arbitral panels when they issue their awards. These practices and usages are
important because disputes must be decided according to the expectations of the business
community. Beyond the issue whether lex miercatoriais accepted or not as a source of law,
these practices and trade usages, and general principles of commercial arbitration, have
found their way into the decisional process of international commercial disputes; either
through the application of international conventions such as the Vienna Convention on
the Sale of Goods or the UNIDROIT Principles when they are applicable; or because
they are part of the national law applicable to the dispute; or because their existence has
been progressively ascertained by court decisions and arbitral awards. Nobody will easily
dispute the existence and applicability of the following principles: the performance of
contracts according to their terms and in good faith; the fact that a substantial breach of
a contract by one party justifies termination; that a party's damage includes the expenses
it has incurred and its loss of profit (dainunm emqeens and lucnim cessans); that the injured
party must take steps to mitigate its losses and must not unreasonably delay in asserting its
rights;ofirce majeure as a defense to contract performance; estoppel or its civil law equiva-
lent vienire contrafactun propriwn or I'impossibilit de se contredire au dtrinent d'autrui; that no
party may avail itself of the non-fulfillment of a condition precedent by its counterpart
when it is responsible therefor.
Arbitral experience proves that contract interpretation and the application of the
principles I have just enumerated, whatever their source, are generally sufficient to resolve
most commercial disputes.To this extent, it may be said that whatever the law or the rules
applied by the arbitral tribunal, many of the disputes may be solved, and are in practice
solved, simply by application of general principles of commercial arbitration common to
all nations and their legal systems.

V. GLOBALIZATION AND THE DEVELOPMENT OF A GLOBAL ARBITRATION CULTURE

Finally, the interaction between all the actors in the arbitration community which
has led, through a process of cross-fertilization, to a progressive convergence of national

" M. HuNi & T. LANDAU.Tni. EN.pdSi AiiiwuIAnoN A i1996 129 ii.79 (1998).
 INTERNATIONAL ARBITRATION IN A GLOBAL ECONOMY 99

legislations and institutional rules and to the progressive emergence of general principles
of international commercial law, has also given rise to a global arbitration culture which
tends to transcend the traditional cultural distinction between common law and civil law.
This global arbitration culture is reflected in particular in the adoption by international
arbitrators of a relatively uniform approach to arbitral procedure which borrows both
from the civil law and the common law: from the civil law, the exchange of two consecut-
ive sets of memorials accompanied by documents; from the common law, the submission
of witness statements, expert reports, and requests for production of documents and the
conduct of the hearing focused on the examination of witnesses and experts rather than
on oral pleadings.

VI. CHALLENGES OF THE FUTURE

Beyond all these positive achievements, and the growing success that it is encounter-
ing, arbitration is presently confronted with great challenges, and doubts are sometimes
expressed as to its continued success in the years to come. Arbitration is more and more
the object of criticism, and not only by its final users but also by the institutions and the
arbitrators themselves.

A. THE ISSUES

There is an increasing concern over what is referred to as the "judicialization" of

international arbitration. In other words, the arbitration process has changed from relat-
ively informal to increasingly formal and complex. This generates extended delays and
increased costs. It is generally considered that this is to be attributed to what is often
referred to, rightly or wrongly, as the "Americanization" of international arbitration. For
European lawyers, the role of a court or arbitral tribunal has been traditionally to solve the
dispute submitted to the court or the arbitral panel, that is, the dispute as it is presented to
them by the parties: no more no less. For example, in continental Europe, there is no
duty for advocates to present to the court or the panel documents that are adverse to the
position they defend.With the center of power having shifted to large multinational law
firms, mostly from the common law world, the focus has also shifted to another approach
to litigation: the role of the panel is now to discover the truth of the case and this implies
the adoption of a procedure which resembles more and more the American courts' pro-
cedure, with a large number of witness statements, expert reports, and the production of
all possible documents which might be relevant to the resolution of the dispute.
There is therefore today a growing tension in arbitration between two procedural
approaches pursuing slightly different objectives: the traditional European one, on one
side, the Anglo-American one (or probably mostly the American one), on the other side.
And there is a correlative tension between the desire or the objective to maintain inter-
national arbitration as what businessmen have always expected it to be -an informal,
time and cost efficient alternative to a long and costly litigation process; and on the other
100 JOURNAL OF INTERNATIONAL ARBITRATION

hand, the desire to have a more predictable process where the panel will decide the case
after being informed of all the relevant (and potentially relevant) aspects of the dispute,
with the consequence that arbitration becomes more and more procedural and formal
and is no longer that different from court litigation.
To some extent, arbitration has become too successful and too sophisticated. Dead-
lines are no longer complied with because the lawyers' teams in many arbitration depart-
ments are overworked or because the document production process gets so out of hand
that in most cases a slippage of the calendar becomes inevitable.
Institutions have also their part of the responsibility.The increased complexity of the
internal rules that they sometimes apply for the management of their cases entails adverse
consequences. The setting up of an arbitral tribunal may now require several months
where in the past it was achieved in a few days. Internal procedures followed by some
institutions may lead to awards being notified in certain cases several months after they
have been delivered to the institution.
States themselves are not exempt from criticism. Recent experience shows that
national courts, especially in some emerging countries, may try to frustrate the good
conduct of the arbitration by issuing unjustified anti-suit injunctions or convenient judg-
ments declaring, after an arbitration has started, that the arbitral tribunal has no jurisdic-
tion to decide a certain number of issues which are part of the arbitration. It also happens
that, although having to apply the New York Convention duly ratified by their state
authorities, some state courts find unreasonable excuses to refuse the enforcement of an
award rendered in a foreign country against one of their nationals.
Arbitrators also have their share of responsibility in the criticisms with which arbi-
tration is confronted today. Some of them accept too many cases and are not able to
deliver awards within a reasonable period of time. Others have a tendency to adhere too
easily to the positions put forward by the party that appointed them. Others still abstain
from reacting courageously when they are confronted with inappropriate conduct in the
course of the arbitration process, and this, perhaps, out of fear of not being reappointed.
The huge increase in international arbitration worldwide has also accentuated the
problems. There has been in recent years a multitude of new entrants into international
arbitration. A number of them do not have experience in the arbitral process or are not
familiar with the arbitration culture or its ethics.There is presently a real concern among
arbitral institutions that, in some parts of the world, counsel often play strategic games in
the arbitration process which are at least unethical, and may even exceed by far the
bounds of legality. Conviviality, which the famous Swiss professor and arbitrator, Claude
Reymond, considered as one of the main virtues of international arbitration, is no longer
the mode of conduct in many procedures. Like litigation, arbitration has often become a
war which starts with the respondent's refusal to pay the advance on fees in violation of
the institutional rules to which it has voluntarily adhered, and continues with objections
of all kinds at every step of the procedure.
This is today's reality. International arbitration is confronted with fundamental chal-
lenges. All the actors of the arbitral community are conscious that these challenges must
 INTERNATIONAL ARBITRATION IN A GLOBAL ECONOMY 101

be met and solved for the process to remain successful and continue to meet the expec-
tations of the users. Solutions are not easily found. Proposals will be made in a number
of seminars and conferences to come, including the ICCA conference in Singapore in
June 2012 devoted to "The New Age ofArbitration."

B. RETHINKING THE ARBITRATION PROCESS

I am personally convinced that solving these challenges requires in the first place
a rethinking and a redefinition of the role, function, and duties and interaction of all
participants in the arbitration process. In particular:

- Contrary to a growing practice, the conduct of the arbitration procedure should

not be pre-empted from the beginning by counsel but should be determined at
all stages of the process in full concertation between counsel and the members of
the panel. This includes the drafting of the Terms of Reference or the Terms of
Appointment, the determination of the procedural calendar and the procedural
rules that will govern the process, and any decisions concerning the rescheduling
of the calendar or the postponement of a hearing. Lawyers are in charge of their
clients' interests.Arbitrators have the duty to render justice. No one is subordinate
to the other. At all steps of the procedure, everything should be decided in full
concertation between counsel and the panel. It is unfortunately not always the
case today
- Representatives of the parties should be more closely associated with the proce-
dure. If possible, the parties should be represented at every hearing or conference
call by internal counsel or a high ranking representative, in order that they be fully
informed as to the consequences-especially the time and cost consequences-of
any proposals made by their lawyers or by the panel.
- It is also suggested that arbitrators should play a more active role in the conduct
of the hearing, with respect, for example, to the necessity or absence of necessity
of appearance and examination of certain witnesses and experts. In other words,
arbitrators should avail themselves more frequently of the right which is recog-
nized to them by Article 9 of the IBA Rules of Evidence (both 2004 and 2010)
to exclude from evidence any document, statement, or oral testimony for lack of
sufficient relevance to the case or materiality to its outcome (Article 9(a)) or for
reasons of procedural economy (Article 9(g)).Witness conferencing of factual
witnesses or expert witnesses should also be proposed to counsel whenever
appropriate. When it is well prepared, witness conferencing is extremely efficient
in all respects; in terms of time and cost but also because it generates other dynamics
in the presentation of the evidence and may lead in some cases to a more accurate
understanding of the facts of the case. Resorting to other techniques should
also be considered by the panel whenever convenient to facilitate the understand-
ing of expert evidence, for example, the teaming of experts: rather than having the
102 JOURNAL OF INTERNATIONAL ARBITRATION

parties appoint their own technical or (especially) accounting experts which, for
strategic reasons or not, will eventually follow totally different routes without
answering each other, the suggestion has been made to have the arbitral tribunal,
on the basis of proposals made by both sides, to appoint a panel of two experts
who will from the beginning work together on the basis of one single list of
issues.
- Moreover, starting from the principle that a settlement is always the best outcome
for the parties, arbitrators should consider (being fully conscious, however, that it
may be a delicate issue in some jurisdictions) suggesting to the parties, whenever
appropriate, to meet and try to settle their case; and they may even propose their
assistance in any settlement negotiations, after obtaining agreement from the parties
that these negotiations will be confidential, will not be referred to in the next
steps of the procedure if they are not successful, and that the parties will not chal-
lenge the panel for having provided its assistance. All these initiatives and others
follow the same objective: to make the arbitral process more efficient in terms of
time and cost, but also to make it more transparent and to defeat inefficient
procedural strategies.
- Recent initiatives have also evidenced that the arbitrators' community is conscious
that in the same way that arbitrators are bound by rules of conflict and rules of
ethics, a code of conduct for international arbitration counsel, founded on the
premise of the culturally delocalized nature of international arbitration, 25 should
be developed. Suggestions in that direction were recently made at the ICCA con-
ference in Rio by Senior Counsel Doak Bishop and the IBA has set up a special
task force to address this issue. It is presently carlying out a survey of the arbitration
community in the form of a questionnaire. Indeed, there seems to be general
agreement that the time has come to issue such code(s) of conduct and to make
it (them) binding through the channel of Bar associations or arbitral institutions to
guarantee counsel's independence, integrity, fairness, and loyalty in the arbitration
process.
- And last but not least, other initiatives should come from institutions and
universities:
(a) institutions should reconsider internal procedures for the management of their
caseload and simplify them as much as they can in order to guarantee the time
efficiency of the arbitral process;
(b) universities should not only teach the theoretical aspects of international arbi-
tration but should also initiate students into its culture and ethics.This might
be done in the context of special post-graduate programs totally devoted to
international arbitration, as is already the case, for example, in England,
France, Switzerland, Sweden, and the United States.

2 Doak Bishop & Margrete Stevens. The Cmipellit' \'ed ftr a Cide !f Ethics in Iternational Arbitration: Trans-
pareiry Integrity and lauitimary. speech delivered at the ICCA meeting in Rio de Janeiro, May 2010.
 INTERNATIONAL ARBITRATION IN A GLOBAL ECONOMY 103

- Finally, one may hope that under the pressure of the international community,
states will accept the need to behave fairly and honestly in international arbitra-
tion and will avoid instrumentalizing their courts to frustrate the good conduct of
the arbitral process or the enforcement of awards rendered against their nationals.
These are just a few suggestions. The international community is reflecting. It will
certainly generate more ideas and proposals through the process of cross-fertilization that
I have previously mentioned.

VII. CONCLUSION

The forces of globalization have fueled the development and success of international
arbitration. It is no longer, as it used to be fifty years ago, an exceptional alternative
to the justice rendered by national courts. Arbitration has reached maturity and has
achieved its autonomy. It can only proceed with the same success in the future if it meets
the challenges with which it is confronted today One thing is certain: this will not be
possible without a reconsideration by all participants in the process of their role and duties
and an acceptance of some changes in their mode of functioning. It is only at this
price that arbitration will remain in the decades to come the "natural judge" of interna-
tional commerce.
104 JOURNAL OF INTERNATIONAL ARBITRATION