Procedural Public Policy Cases in International Commercial Arbitration - Dispute Resolution Journal - Vol. 69, No. 4

Author(s):

Inae Yang

Page Count:

22 pages

Media Description:

1 PDF Download

Published:

December, 2014

Practice Areas:

Commercial Disputes,

New York Convention,

Independence and Impartiality

PDF647.86 KB

$40.00

Description:

Originally from Dispute Resolution Journal

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I. INTRODUCTION

In recent decades, the use of arbitration to resolve international

commercial disputes has increased, and the growing frequency is likely

to continue. Resolution by arbitration is the most practical method of

commercial dispute resolution, because it complements the needs of

modern, fast-paced business. More specifically, the increased

economies in time and expense, as well as maximal privacy for the

parties, are central reasons that businesses now prefer arbitration to

litigation. A major obstacle to the effectiveness of arbitration, however,

arises from the noncompliance of parties after arbitral awards are

rendered. In circumstances where parties refuse to comply voluntarily,

national courts must be called upon for enforcement support.

The New York Convention is the most prominent source of

regulatory authority on enforcement of arbitral awards.1 The primary

goal of the Convention is to create an environment that is conducive to

consistent, uniform treatment of arbitral awards around the world.2 The

New York Convention gives effect to this goal by requiring Contracting

States to recognize and enforce international awards, unless the

circumstances fall within one of seven enumerated exceptions to the

requirement, which include considerations of procedural fairness and

public policy.

Among these approved exceptional grounds for refusing to

recognize and enforce arbitral awards, public policy is the most

frequently invoked and arguably, but is also the most unpredictable,

making it highly controversial. An English judge aptly summarized

the problems created by the exception, likening public policy to “a

very unruly horse, and when once you get astride you never know

where it will carry you. It may lead you from sound law. It is never

argued at all, but when other points fail.” 3 This metaphorical

description holds true almost two hundred years after its making. A

major reason for the continued applicability of the English court’s

concern with the public policy exception is the significant, persisting

potential for judicial abuse in its application. Overly inclusive

interpretations of the exception undermine the foundations of the New

York Convention, and further, hinder the beneficial functionality of
international commercial arbitration.