Does International Arbitration Need A Mandatory Rules Method? - Chapter 5 - Mandatory Rules in International Arbitration
Alexander K.A. Greenawalt, Associate Professor of Law, Pace University School of Law.
Originally from Mandatory Rules in International Arbitration
If the chapters in this volume are any guide, the role of mandatory rules in international arbitration remains a persistent source of debate. The basic problem is a straightforward one: contractual arbitration arises as a matter of the parties’ consent, but the resolution of contractual disputes can implicate mandatory rules of law that are not waivable and are typically designed to protect broader public rights. Since national legal systems began ceding the application of mandatory rules to party-appointed arbitrators, scholars of international arbitration have struggled to come to grips with the implications of this reality for the resolution of cross-border disputes in which the public policy of several states is at stake.
The literature on mandatory rules has often presented the issue in stark terms, as posing a fundamental “conflict between the will of the State having promulgated the mandatory rules of law, on the one hand, and, on the other hand, the will of the parties—from which [the arbitrator’s] own authority is derived.”1 Asserting an independent public duty to protect national mandatory laws as well as the enforceability of arbitral awards, a number of writers have further urged arbitrators to apply a so-called "mandatory rules method" to determine, regardless of what the parties have agreed, which particular mandatory rules to apply in a particular dispute. Although the details of the method differ from author to author, the basic proposition is that arbitrators should apply a stand-alone balancing test that considers, based on the nature of the rule and the connection to the parties’ transaction, the strength of a particular state’s interest in having its mandatory rules enforced.