Originally from The MENA Leading Arbitrators’ Guide to International Arbitration

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I. INTRODUCTION 

The effectiveness of international commercial arbitration depends on the coercive powers of the State. In supporting arbitration, the State sets an important condition, namely that the arbitration is in conformity with the principles and values that inform and underpin the State’s formal legal system. The conditionality of the State’s support affects all stages of the arbitral proceedings, from the very inception of the arbitral process up to the enforcement of the award.  The term “public policy” captures the principles and values that regulate the interface between the private process of commercial arbitration and its public effect.  

In the context of international commercial arbitration, it is accepted and indeed uncontroversial that a State can refuse to recognise or enforce an arbitral award that is in breach of its public policy. The role of the public policy exemption has been described as “a safety valve to be used in those exceptional circumstances when it would be impossible for a legal system to recognize an award and enforce it without abandoning the very fundaments on which it is based.”  

To the users and practitioners of international commercial arbitration, understanding the role of the public policy exemption is of critical importance. Understanding public policy as a ground for the setting aside or refusing to recognise an arbitral award creates diversity in a system of international commercial arbitration that values uniformity. Being tied to the fundamental notions of justice within national legal systems, attempts to agree on a conception of public policy that could be adopted internationally have been unsuccessful.