Originally from: Stockholm International Arbitration Review

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IS THE ARBITRAL TRIBUNAL BOUND BY THE
PARTIES' FACTUAL AND LEGAL PLEADINGS?

Giuditta Cordero Moss*

Introduction

As known, the scope of the arbitral tribunal's authority is determined by
the parties. The primary source establishing the arbitral jurisdiction and the
scope of the dispute is the arbitration agreement. In their statements of
claim or of defence and their request for relief, the parties introduce the
facts that are in dispute, the evidence that shall prove them, the legal
sources and the legal arguments that shall be basis for the award. The
parties' pleadings determine, therefore, the borders of the dispute upon
which the tribunal is called on to decide. The arbitral tribunal is supposed
not to exceed these limits.

In certain situations, however, an arbitral tribunal may be forced to
render the award without having received sufficient instructions or
arguments by one or even all of the parties. If one of the parties does not
participate in the proceeding, it deprives the process of the contribution of
its factual and legal arguments. Even if both parties participate in the
proceeding, the arguments presented by one or both of them may be not
convincing or not sufficiently developed. In these cases of insufficient
instructions or pleadings by the parties, how shall the tribunal decide?
Shall it assume the role of an umpire that passively listens to the
presented arguments and decides which of the opposed arguments deserves
to win? Shall this umpire role be taken to its utter consequences, so that, in
case of failure by one party to participate in the proceedings, the other party
automatically wins, even if its arguments are not convincing?

Or shall the arbitral tribunal take an active role, investigate the relevance
and correctness of the produced evidence and develop arguments that were
not presented by the parties? Shall this active role go so far as to deciding
on the basis of legal sources that were not at all pleaded by the parties, shall
it permit to grant relief that the parties have not requested?

We will analyse these questions below. Two levels of regulation are
relevant in this context: rules on the conduct of the arbitral tribunal and
rules on the validity and enforceability of the award. As we will see, the
tribunal is bound in respect of the factual scope of the dispute but enjoys
considerable freedom in respect of the inferences that it draws from the
evidence and in respect of the legal consequences of the proven facts.