Conflicts of law in international arbitration – an overview Filip De Ly* Table of Contents:
I. Introduction
– II. Scope of the Problem – III. CompetIV.. Recent Developments: ing Paradigms as to the Applicable Conflict Systems – IV Uniform Law and the European Union – V. Conclusion.
I. Introduction Any overview of conflict of laws in international commercial arbitration arbitration is a delicate exercise in view of the breadth and complexity of the topic but also as it overlaps with the contributions of others in this book. The approach of this report will, thus, be synthetic and also focus on some recent developments regarding the interface between private international law and international commercial arbitration. The difficulties and complexities of the topic of private international law in international commercial arbitration (encompassing not only issues of applicable law but also of international jurisdiction and recognition and enforcement of judgments and arbitral awards) stem from the fact that arbitrators in international commercial cases are not only facing a conflict of laws question (which law applies) but also a conflict of conflicts of law question (which system of private international law applies). This is not an issue for domestic courts that apply their own system of conflict of laws; international commercial arbitrators sitting for instance in London, Paris, New York York or Singapore, however however,, first will have to address address the question as to whether they automatically can apply appl y English, French, New York of Singaporean conflict of laws rules (as a domestic court at any such seat would do) or whether they may resort to conflict of laws rules different from those applying before domestic courts at their seat. This issue is further complicated by the fact that there is a potential interface between international international commercial arbitration which does not live in a legal vacuum but may need support from domestic courts (for instance
*
Prof. Dr. Filip De Ly Ly,, Erasmus School of Law, Rotterda Rotterdam. m.
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in the taking of evidence) or may be subject to some form of limited review, primarily in setting aside proceedings at the seat of the arbitration and in enforcement proceedings at any place where an arbitral award is to be recognized or enforced. In those circumstances, domestic courts may apply conflict rules different than those applied by the arbitrators as the systems they apply may differ.
II. Scope of the Problem From a theoretical perspective, any conflict of laws problem might arise in international commercial cases. However, in practice, not all conceivable conflict issues arise with any meaningful frequency and some notorious conflict of laws theories such as renvoi, conflit mobile, adaptation, substitution or transitory problems related to a change of a conflict, procedural or substantive rule hardly arise in international commercial arbitration. On the other hand, the applicable conflicts system remains relevant for a vast range of issues many of which will be discussed in other contributions in this book. These issues relate to the following aspects of the arbitral process: – the arbitration agreement (validity, scope, extension to non-signatories, termination, formal requirements, evidential aspects, state immunity, lis pendens regarding parallel court of arbitration proceedings1) – subjective and objective arbitrability as it is understood outside the United States (i.e., the question whether a party (for instance a State) can become a party to an arbitration agreement or whether certain disputes (for instance corporate, anti-trust, insolvency or intellectual property disputes) can be submitted to arbitration – the arbitration procedure (access to justice, service of process, standards of fair trial, evidence, independence and impartiality of arbitrators, joinder, intervention and consolidation, confidentiality of the arbitral proceedings, arbitral interim measures, requirements for an arbitral award) – the merits of the dispute including the application of mandatory rules and uniform law rules
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See De Ly/ Sheppard, Lis Pendens and arbitration, Final Report of the International Arbitration Committee of the International Law Association, Report of the seventy-second conference, Toronto, International Law Association, London, 2006, 146-185, 25 Arbitration International (2009), 3-34.
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– recognition of prior or intervening court judgments and arbitral awards which may raise res judicata and related issues2 – in relation to the issues above, questions as to conflict of laws methodology may arise such as: – characterization3 – application by an arbitral tribunal on its own motion of a conflict rule – ascertaining the contents of the applicable law (iura novit curia)4 – public policy or fraude à la loi as bars to the application of the governing law. In all these circumstances, an international commercial arbitration tribunal will have to determine whether it can apply the conflict of laws rules of its seat or whether the conflict issue may be solved by relying on some conflict rule different from that prevailing at the seat.
III. Competing Paradigms as to the Applicable Conflict Systems Until the mid-1950s, a traditional paradigm governed the question as to which private international law system arbitrators had to apply in interna-
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See De Ly/ Sheppard, Res Judicata and arbitration, Interim Report of the International Arbitration Committee of the International Law Association, Berlin Conference, London, International Law Association, 2004, 826-861, 25 Arbitration International (2009), 35-66; Final Report of the International Arbitration Committee of the International Law Association, Report of the seventy-second conference, Toronto, International Law Association, London, 2006, 186-204, 25 Arbitration International (2009), 67-82. A recent example is the Vivendi case where the Swiss Federal Supreme Court struggled with the question as to the proper characterization of Art. 142 of the Polish Insolvency Act and whether that provision implied that an arbitration clause has been terminated by operation of law (case 4A_428 / 2008, decision of March 31, 2009, available at www.bger.ch). De Ly /Radicati di Brozolo / Friedman, Ascertaining the contents of the applicable law in international commercial arbitration, Report of the International Arbitration Committee of the International Law Association, Report of the seventythird conference, Rio de Janeiro, International Law Association, London, 2008, 850-882, 26 Arbitration International (2010), 191-220.
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tional cases under which arbitrators had to apply the private international law system of the state in which they were sitting. Thus, the law of the place of arbitration (law of the seat) controlled the question as to which system of private international law to apply. This traditional paradigm was still formulated in the resolutions of the Institut de Droit International of 1952 which accepted in this respect the report and recommendations of Sauser-Hall5. The traditional paradigm was challenged by Berthold Goldman in his remarkable and still unique 1963 Hague lectures in which he developed an autonomous system of conflict rules for international commercial arbitration6. Based on theoretical assumptions (arbitrators have no lex fori and are unlike domestic courts) and practical considerations (the place of arbitration is often chosen for reasons of neutrality and there is, apart from the arbitral seat, no connection between the seat and the subject matter of the dispute), Goldman developed autonomous conflict principles to be applied instead of the conflict of laws of the seat. This autonomous method was developed by Goldman and others and led to methods such as the cumulative application of competing conflict rules, the cumulative application of competing substantive rules (bypassing any conflict rule), the better law approach and the application of general principles of law7. The autonomous conflict methodology quickly turned also in the development of a theory of substantive transnational law (lex mercatoria) under which arbitrators could apply and develop self-regulatory rules based on contracts, standard conditions, trade usages, customs and general principles of law. Although different definitions of any such lex mercatoria exist, the most far reaching goes as to accept that it constitutes a legal system autonomous from domestic legal systems which can be chosen by parties by virtue of a choice of law provision of their contract and can be applied by arbitrators under an autonomous conflict of laws system8. The challenge of the traditional paradigm by the proponents of an autonomous theory gradually made a big impact on national legislation and case law, uniform law and arbitration rules and led to some compromises between the competing paradigms. The liberalization of international ar5
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Sauser-Hall, L’arbitrage en droit international privé, 44(1) Annuaire de l’Institut de droit international (1952), 469-613. Goldman, Les conflits de lois dans l’arbitrage international de droit privé, 109(2) Receuil des cours (1963), 347-483. See De Ly, International business law and lex mercatoria (1992), 86-101. On these aspects, see De Ly, supra n. 7, 207-291. The literature on the lex mercatoria is abundant; for a most recent publication with further references, see Berger, The creeping codification of the new lex mercatoria (2010), 422 pp.
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bitration law by case law in France as of the 1960s and by statute as of the English Arbitration Act of 1979, the French reforms of 1980-81 and the adoption by many countries of the Uncitral Model Law, to a certain extent achieved the autonomy of the arbitral process, primarily in relation to: – The arbitration agreement where uniform rules have been developed combined with the endorsement of the Kompetenz-Kompetenz principle according to which arbitrators may decide on a jurisdictional challenge (with or without parallel court proceedings) – The arbitration proceedings where uniform principles of party autonomy and, absent agreement, arbitrator autonomy have been accepted – The law applicable to the merits where uniform principles of party autonomy and, absent agreement, arbitrator autonomy have been accepted. In this respect, party autonomy is by and large construed liberally so that the parties may choose any rule of law (and, thus, not limited to domestic law) and arbitrators either can determine the law applicable to the merits on the basis of any conflict of laws principle they consider appropriate (thus, disregarding the conflict rules of the seat) (indirect approach) or may directly apply any substantive rule they deem appropriate (thus, disregarding any conflict rule) (direct approach). However, notwithstanding these compromises and clarifications, many other issues remain unsettled. For any such issues, parties will have to brief arbitral tribunals and arbitrators will have to decide based on the applicable arbitration rules and the arbitration law of the seat. Also, arbitrators may take account of the law of possible places of enforcement in order to avoid that the outcome of the arbitral process might be jeopardized at the time of enforcement. On the other hand, the autonomy given to parties and arbitrators under the autonomous paradigm has been criticized for leading to uncertainties and lack of predictability. To a certain extent, this criticism has been met by the international codification of contract law, notably by the Unidroit Principles on International Commercial Contracts which are frequently applied in international commercial arbitration9. 9
On the Unidroit Principles (ed. 1994, second ed. 2004) and case law thereto, see www.unidroit.org. See also Bonell, An international restatement of contract law, The UNIDROIT Principles of International Commercial Contracts, 3rd ed. (2005), 691 pp. A third edition of the Unidroit Principles is being prepared and should be published end 2010 or early 2011. Other codifications such as the Principles of European Contract Law have not attained the same level of (worldwide) dissemination and are much less referred to in international arbitral awards.
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A final observation relates to procedural law. Whereas the developments described above have attempted and to a certain extent succeeded in liberalizing international commercial arbitration from the conflict of laws rules that prevail in the domestic courts at the place of arbitration and from domestic substantive law, procedural law still is firmly based on the procedural provisions of the arbitration acts of the place of arbitration. This can be explained by the fact that challenges against arbitral awards can only be brought at the place of arbitration with a monopoly for the courts at the place of arbitration to invalidate arbitral awards on a limited number of grounds. However, the liberalization of arbitration did occur here at the level of the applicable procedural law: arbitration is anchored at the place of arbitration but the procedural law so applicable by and large only provides for some minimal procedural guarantees and otherwise leave procedural rules to the parties and, absent party agreement, to arbitral tribunals (lex mercatoria arbitralis)10. Any such wide party and arbitrator autonomy also calls for clarifications which in some respects have been met by self-regulatory codes such as the IBA Rules on the taking of evidence or the IBA Guidelines on conflicts of interest in international commercial arbitration11. The overview above would, however, be incomplete if some recent developments in relation to the topic of conflict of laws in international commercial arbitration were not also discussed. These developments relate primarily to the surge of uniform law in international business law in the past few decades as well as to the increasing importance of the law of the European Union.
IV. Recent Developments: Uniform Law and the European Union As described in the previous section of this contribution, conflict of laws issues before international commercial arbitrators by and large proceed on 10
See Schroeder, Die lex mercatoria arbitralis (2007), 493 pp. 11 Both set of rules can be found on the IBA website (www.ibanet.org). The 1999 IBA Evidence Rules replaced the 1983 IBA Supplementary Rules governing the Presentation and Reception of Evidence in International Commercial Arbitration. They were updated recently and on May 29, 2010, the new IBA Evidence Rules were adopted. For a discussion on the IBA Conflicts of Interest Rules and their first applications, see: The IBA Guidelines on Conflicts of Interest in International Arbitration: the first five years 2004-2009, 4 Dispute Resolution International (2010), 5-53.
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the basis of the assumption of the application of domestic laws to the dispute where conflict rules are a coordination mechanism determining which rules are to be applied. Alternatively, under the autonomous theory, arbitrators enjoy large discretionary powers to determine the appropriate conflict or substantive rules which reinforces the application of self-regulatory rules in international commercial arbitration. Two recent developments must in this respect be noted. First, when the traditional paradigm was reaffirmed and challenged half a century ago, there was hardly much official (as opposed to self-regulatory) uniform law applied in international commercial arbitration. Now there is much more as for instance the Convention on the International Sale of Goods (“CISG”) or the EU directives in the field of commercial agency12 or collection of receivables13 which raises the question as to the status of uniform substantive law in international commercial arbitration. Does it apply by virtue of its scope of application rules? How about choice of law by the parties for a domestic law containing uniform law? What about application by arbitrators of uniform law using the indirect or direct approaches? Under the traditional paradigm, the law of the seat of the arbitration would provide the relevant conflict principle and a uniform law text would be applied if a domestic court at the seat likewise would apply it. This would depend on the scope rules of the uniform law text. However, uniform law is not domestic law and it is submitted that arbitrators even under the traditional paradigm have more leeway than national courts in determining the scope and application of uniform law and, thus, that they are not necessarily bound by case law of the governing law regarding uniform law. This is even more so under the autonomous approach where arbitrators using the indirect or direct approaches may apply uniform law rather than domestic law indicated by the conflict rule of the place of arbitration. In those cases, the question is not so much whether arbitrators are authorized to apply uniform law but in what circumstances they should consider doing so. The topic of the application of uniform law in international commercial arbitration and its relationship to the conflict of laws in arbitration is important but a detailed analysis falls outside the scope of this contribution14. For the 12
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Directive 86 / 653 / EC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents, OJ 1986 L 382, 17. Directive 2000 / 35 / EC of the European Parliament and of the Council of 29 June 2000 on combating late payment in commercial transactions, OJ 2000 L 200, 35. See further Mayer, L’application par l’arbitre des conventions internationales de droit privé, in: L’internationalisation du droit, Mélanges en l’honneur de Yvon Loussouarn (1994), 275-291; Giardina, International Conventions on Conflict
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present purposes, it is sufficient to note the relevance and importance for any conflict analysis related to international commercial arbitration. The second development is the emergence of regional economic organizations and in this respect primarily the European Union. Although the relationship between arbitration and EU law has been with us since the 1960s, the question has arisen recently in relation to the EU exercising its powers in the field of private international law under the 1997 Amsterdam Treaty to regulate in the field of arbitration law and, thus, adding a third regulatory level to the traditional levels of domestic laws and international conventions. Traditionally, the EU had an ambiguous attitude towards arbitration. Arbitration was excluded from the operation of the 1968 Brussels Convention (Art. 1, second paragraph sub 4) and 1980 Rome Convention (Arts. 1, 2) d.) on respectively jurisdiction and enforcement and the law applicable to contractual obligations. The Brussels I Regulation (Arts. 1, 2(d)) and the Rome I Regulation (Arts. 1, 2(e)) re-enacted those exclusions15. In its Marc Rich decision16, the ECJ held, in accordance with the arbitration exception in the Brussels Convention, that the Brussels Convention did not apply to an application for the nomination of an arbitrator. On the other hand, the ECJ was indifferent to arbitration and in its Nordsee decision refused to accept jurisdiction for referrals for preliminary rulings emanating from arbitral tribunals17. More recently, the impact of EU law on international commercial arbitration has increased; the increasing involvement of EU law with private law issues proportionally increases the interface between arbitration and
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of Laws and Substantive Law, in: Van den Berg (ed.), Planning efficient arbitration proceedings / The law applicable in international arbitration (1996), ICCA Congress Series No. 7, XIIth International Arbitration Congress, Vienna, 3-6 November, 1994, pp. 458-470. Rome Convention of June 19, 1980 on the law applicable to contractual obligations, OJ L 266, October 9, 1980, 1-19. For a consolidated non-official edition of the Rome Convention, see 41 Official Journal of the European Union, C027, 26 January 1998, 34-53. The Rome Convention has been replaced by the Rome I Regulation (Regulation No. 593/ 2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations, OJ 2008 L 177, 4 July 2008, 6. The Brussels Regulation replaces the Brussels Convention (as amended) of September 27, 1968, OJ L 299 of December 31, 1972. ECJ, 25 July 1991, Marc Rich & Co. AG v. Società Italiana Impianti PA, European Court Reports 1991, I, 3855. ECJ, 23 March 1982, Nordsee v. Norstern, European Court Reports 1982, 1095.
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EU law. Arbitrators now are not only facing domestic arbitration law and international arbitration law (as for instance the New York 1958 Convention and the Geneva 1961 International Commercial Arbitration Convention) but also EU rules that are directly relevant as to the conflict principles that are to be applied. For instance, LCIA arbitrators sitting in London in one of the Vivendi/ Elektrim cases were faced with the question whether they had to terminate their proceedings under the EU Insolvency Regulation’s18 conflict rules as Elektrim was declared bankrupt in Poland and, under Polish insolvency law, Elektrim’s bankruptcy had terminated the arbitration agreement. A majority of the arbitral tribunal (with the Polish arbitrator dissenting) declined to apply the Polish insolvency rule terminating the arbitration clause by operation of law upon Elektrim’s bankruptcy as the EU Insolvency Regulation in Art.s 4, 2 (f) and 15 provided for the application of the law of the state where lawsuit are pending at the time of the opening of the insolvency proceedings (rather than the general rule of the state where insolvency proceedings are opened in relation to the effects of the insolvency proceedings on current contracts to which the debtor is party). This decision was followed by the English courts in challenge proceedings against the award19. Another example is the ECJ’s case law in relation to the application of consumer directives in arbitration proceedings where arbitrators must on their own motion invoke the protective rules of the Unfair Contract Terms Directive20, even if the consumer appears in the proceedings21 (leading to setting aside of the award notwithstanding a waiver provision in the Spanish Arbitration Act) and national courts facing requests for enforcement of awards may refuse enforcement on public policy grounds if the consumer has not consented to arbitration during the arbitration proceedings 22. Although these cases deal with domestic arbitration, they also raise questions for international arbitration if protective EU rules (for instance in relation to employees where disputes in some members states are arbitrable but as 18
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Regulation No 1346 / 2000 of 29 May 2000 on insolvency proceedings, OJ L 160 of June 30, 2000, 1. England and Wales Court of Appeals, 2 October 2008, [2008] England and Wales Court of Appeals, 2155 (Comm.), 90(2) Lloyd’s Law Reports (2008), 636; Court of Appeal, 9 July 2009, Jozef Syska en Elektrim S.A. / Vivendi Universal S.A. and Vivendi Telecom International S.A., [2009] England and Wales Court of Appeals Civ 677; both decisions to be found at www.bailii.org. Directive 93 / 13 of 5 April 1993, OJ L 95 of April 21, 1993, 29-34. ECJ, 26 October 2006, Case C-268/ 05, Mostaza Claro v Movil, European Court Reports 2006, I-10421. ECJ, 6 October 2009, Case C-40 / 08, Asturcom Telecommunicaciones SL v. Maria Cristina Rodriguez Nogueira.
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well regarding commercial agents) have not been invoked or ignored by an arbitral tribunal. A recent English case testifies to this: notwitstanding a Canadian award, a commercial agent based in England was authorized to sue in England23. Thus, the ECJ’s case law regarding arbitration and the consumer directives implies that the rules to be applied by arbitral tribunals are affected under the EU principle of effectiveness and are to be taken into account by arbitral tribunals if awards are to be immune from setting aside or refusals to recognize and enforce. Arbitral tribunals may not just apply the governing law under any applicable domestic arbitration act because the domestic arbitration act including its procedural rules are preempted by EU rules as interpreted by the ECJ. A final development regarding the interface between arbitration and EU law relates to the interaction between arbitration and the Brussels I Regulation. Marc Rich had confirmed that a nomination of an arbitration fell within the scope of the arbitration exception of the Brussels Convention. In the van Uden / Decoline case24, the ECJ accepted that van Uden’s request for interim relief to collect its invoice before the Dutch courts fell within the scope of the Brussels Convention notwithstanding the fact that van Uden and Decoline had agreed to arbitration. Thus, the ECJ carved interim relief before domestic courts out of the arbitration exception of the Brussels Convention. That line was continued in the West Tankers case25 where an English anti-suit injunction26 to protect arbitration in England from a parallel court proceeding in Italy was held not to be immune from interference by the Brussels I Regulation on the basis of the arbitration exception27. Thus, the question as to the proper interface between arbitration and the Brussels I Regulation and the interpretation to be given to
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England and Wales Court of Appeals, 30 October 2009, Accentuate Limited v Asigra Inc, [2009] England and Wales Court of Appeals 2655 (QB), to be found at www.bailii.org. ECJ, 17 November 1998, Case C-391/ 95, Van Uden Maritime BV v Kommandit gesellschaft in Firma Deco-Line, European Court Reports 1998, I-7091. ECJ, 10 February 2009, Case C-185/07, Allianz SpA and Generali Assicurazioni Generali SpA v. West Tankers Inc, The Front Comor, European Court Reports 2009, I-663. On arbitration and anti-suit injunctions, see: Gaillard/Banifatemi, The use of anti-suit injunctions in international arbitration (2004). More generally, see Raphael, The anti-suit injunction (2008), 483 pp. See also Black/Reece, Anti-suit injunctions and arbitration proceedings, 72 Arbitration (2006), 207; Sifakis, Anti-suit injunctions in the European Union: a necessary mechanism resolving jurisdictional conflicts?, 13 Journal of International Maritime Law (2007), 100-111.
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the arbitration exception of the Brussels I Regulation has now been fully raised. Endorsed by the West Tankers decision of the ECJ and giving that decision a broad interpretation, the European Commission in the context of the reform process regarding the Brussels I Regulation has taken the lead and considers that something needs to be done, primarily to avoid conflicts in relation to possibly conflicting decisions resulting from parallel proceedings in arbitrations in one member state leading to awards accepting jurisdiction and ruling on the merits and court proceedings in another member state where the courts accept jurisdiction and also rule on the merits. The problem is then primarily that an arbitral award may be refused enforcement in that other member state because there was no agreement to arbitrate. In the Brussels I Regulation reform process, the University of Heidelberg prepared a report on the application of the Brussels I Regulation in the twenty-five member states of the European Union28. In relation to arbitration, the Heidelberg Report proposes to provide for a mandatory and exclusive jurisdiction ground in relation to ancillary proceedings in support of an arbitration before the domestic courts of the place of arbitration and to impose a stay of parallel proceedings if a declaratory action is sought at the place of arbitration in respect of the existence, validity and / or scope of the arbitration agreement and to give any decisions of these domestic courts European wide effects29. In effect, the Heidelberg proposal attempts to concentrate disputes at the seat of the arbitration. This proposal has been put for consultation in the EU Commission’s Green Paper 30 which led to many reactions. The matter led to controversies with the French ICC Committee31 and the IBA32 criticizing the Heidelberg proposal and defences in favour of the proposal by publications of Professor Burckhard Hess and Peter Schlosser. The most recent development is the critical reaction of the European Parliament’s Committee on Legal Affairs 33. Any 28
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Hess/Pfeiffer /Schlosser, The Brussels I-Regulation (EC) No 44 / 2001, The Heidelberg Report on the Application of Regulation Brussels I in 25 Member States (Study JLS /C4 /2005 /03) (2008). Ibid., nos. 105-135. Green Paper On The Review Of Council Regulation (EC) No 44 / 2001 On Jurisdiction And The Recognition And Enforcement Of Judgments In Civil And Commercial Matters, 21 April 2009, COM (2009) 175 final. Cahiers de l’arbitrage, 2008/ 3, 20; compare Niggemann, West Tankers, die “exception française” und die Reform der EuGVVO, 8 SchiedsVZ (2010), 67-74. Submission of the International Bar Association Arbitration Committee, June 15, 2009. European Parliament, Committee on Legal Affairs, 27 April 2010, Draft Report on the implementation and review of Council Regulation (EC) No 44/ 2001
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proposal to reform the Brussels I Regulation is not to be expected before some time in 2011. The discussions as to the relationship between arbitration and the Brussels I Regulation relate primarily to the issue of the arbitration agreement and of the enforcement of arbitral awards. They are closely related to the judgements of the ECJ in van Uden and West Tankers which developed the notion of “ancillary proceedings in support of arbitration” as to distinguish these from other proceedings relating to arbitration. One solution is to overrule the ECJ and add to the arbitration exception language to the effect that the Brussels I Regulation does not apply at all to any court proceedings related to arbitration. Another solution is maintaining the status quo and leave further developments to case law from the ECJ but in Brussels – supported by the ECJ’s case law – the feeling is something needs to be done in a free area of judgments to avoid conflicting decisions between courts in member states in relation to arbitration where a court in one member state may uphold an arbitral award while a court in another member state refusing enforcement because the arbitral award is contrary to decisions in that other member state declaring that there is no arbitration agreement and / or deciding on the merits notwithstanding the alleged presence of an arbitration agreement. The proposal for specific rules on arbitration in the Brussels I Regulation is – in my opinion – not to be pursued along the lines of the Heidelberg Report and the Green Paper because they are the wrong answers to the present problems. As to real answers to the problems, they need more time and reflection and any solution is, thus, premature. Also, any such solutions raise the question whether we want more uniform EU rules on arbitration or whether we prefer competition between the laws of the member states in the field of arbitration. The present proposals in my opinion are wrong because they entail a procedural solution to a substantive problem and, thus, cannot address the problem without also providing for substantive solutions. The substantive problem is that – apart from Article II New York Convention – there are no uniform rules in the laws of the member states regarding the formal and substantive requirements for an arbitration agreement and regarding arbitrability. Concentrating disputes as to the validity, existence and scope of the arbitration agreement at the place of arbitration does not solve this problem and is also unfair. An Italian company disputing that it ever consented to arbitration, sees its case handled by a court in London if the purported arbitration agreement has a London seat. A Dutch company sees its case dealt with by a German court although under Dutch law the on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (2009/ 2140(INI)).
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arbitration agreement cannot be proven since it is not in writing. A French senior manager sees its case tried in Amsterdam as to arbitrability although employment matters are not arbitrable in France although they are in The Netherlands. All these cases need a uniform conflict rule to assure consistent results. This point had been emphasized by Professor Van Houtte34 but to no avail. The analysis may be taken further and the question may be raised whether uniform conflict rules are sufficient and whether uniform substantive rules are not required as regards formal and substantive requirements for arbitration agreements and arbitrability. A conflict of laws approach only coordinates between diverging national rules and provides for predictability and reduces the benefits of forum shopping. However, it does not provide for uniform procedural or substantive solutions which only further harmonization can bring. The political question is thus whether the European Union wants a EU Federal Arbitration Act or whether it leaves arbitration law to be dealt with by the laws of its member states, thus providing for competition between legal systems and different arbitral centres. In this respect, the interface between the EU, the 1958 New York Convention and the European Convention is also to be mentioned. The traditional view is that the New York Convention as a specific convention preempts the Brussels I Regulation. As has convincingly been argued by Ugo Draetta and Andrea Santini35, the same holds true for the 1961 Geneva Convention. Any EU action will, thus, also have to consider and be limited by the existing international instruments in the field of arbitration. In that same vein, EU rules impacting on international arbitration are also relevant with regard to the parallel Lugano Convention 36 and, thus, for Switzerland, Norway and Iceland. The foregoing does not solely concern legislators in the process of the reform of the Brussels I Regulation or domestic courts in the member states of the EU but also may have relevance for arbitrators in deciding conflict of laws issues in relation to the arbitration agreement or arbitrability. If the Heidelberg proposals were to be implemented, arbitrators may be faced with declaratory decisions of domestic courts at the place of arbitration deciding that they have or do not have jurisdiction and, thus, impeding upon their Kompetenz-Kompetenz power. The Italian or Belgian torpedoes (i.e., paral34
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Van Houtte, Why not include arbitration in the Brussels Jurisdiction Regulation?, 21 Arbitration International (2005), 509. Draetta/Santini, Arbitration exception and Brussels I Regulation: no need for a change, 8(3) Diritto del Commercio Internazionale (2009), 554-556. Convention of 16 September 1988 as replaced by the Lugano Convention of 30 October 2007, effective as to the EU and Norway as of 1 January 2010 and the EU, Norway and Switzerland as of 1 January 2011.
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lel proceedings contesting arbitral jurisdiction by suing in a country other than the state of the arbitral seat) may be blocked but conflicting decisions between an arbitral tribunal deciding on its jurisdiction and a domestic court deciding the same issue may arise. All the above demonstrates that uniform law and the law of the European Union are no longer strangers to conflict of laws issues in international commercial arbitration. They enrich and complicate those issues and further research is needed to look into the application of uniform law in international arbitral cases and into the impact and relevance of the law of the European Union as a third regulatory level in the field of international commercial arbitration.
V. Conclusion International commercial arbitration has undoubtedly been one of the most fascinating areas for conflict of laws specialists. Theoretically, the postulate that a decision maker applies its home conflict of laws rules has been challenged. Methodologically, arbitrators have had to develop a laboratory of new conflict and substantive methods. Recently, the surge of uniform law texts and of European Union rules relevant for international business problems have renewed and aggravated these challenges. It is hoped that uniform law and conflict of laws scholars and international commercial arbitration practitioners will continue to cooperate to meet these challenges.
