Inarbitrability: A Ghost Hovering over Europe? - Chapter 4 - Limits to Party Autonomy in International Commercial Arbitration
Originally from Limits to Party Autonomy in International Commercial Arbitration
It is well established that the so-called “procedural party autonomy,” which provides parties in a legal relationship with the “freedom to choose the forum – public or private – for the resolution of disputes arising under the contract or, more widely, in the relationship between [them]” is a widely accepted principle in international litigation.
If the principle of procedural party autonomy were to be taken seriously, one could infer an unrestricted freedom for the parties to submit any international dispute to arbitration. However, this possibility is merely hypothetical, since it does not take into account that “national laws often impose restrictions or limitations on what matters can be referred to and resolved by arbitration.” Restrictions to (procedural) party autonomy and, more specifically, limits to the parties’ freedom to choose arbitration as the method to settle their disputes relates to the notion of “objective arbitrability” or “arbitrability ratione materiae,” which denotes, in the language of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and of the UNCITRAL Model Law on International Commercial Arbitration, whether a matter is capable of settlement by arbitration.
In this respect, the emergence of functional equivalence between arbitration and litigation in civil or commercial matters has led to a considerable enlargement of the spectrum of matters that parties can agree to arbitrate. In many jurisdictions, almost all international disputes that involve an economic interest are considered arbitrable. National legislators exercise self-restraint in limiting arbitrability, thus intervening only as a matter of extrema ratio to reserve the power to adjudicate certain disputes to national courts. As a result of the foregoing, it is at times held that “arbitrability,” despite the attention devoted to the subject, is generally a solved issue, or even a dead doctrine.
If the general trend seems to move towards the expansion of the boundaries of arbitrability, one cannot underestimate, however, that there are also warning signs of a backfire against arbitrability. In Europe, in particular, it appears that arguments that were considered buried are being revived, seemingly triggered by the (increasingly unified) European private international law regime.