Originally from European International Arbitration Review

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I. Introduction

Arbitrators derive their powers from an agreement between contracting parties, which is usually set out in the arbitration agreement, a separate document or any rules the parties refer to in the arbitration agreement. The second source of the arbitrators’ powers is the law of the place of arbitration. 

In addition to express powers, arbitrators increasingly exercise powers not expressly conferred by these two sources. These powers are usually referred to as “implied” or “inherent”. Arbitrators may consider that some powers necessary to carry out their duties have not been spelled out in the parties’ agreement or in the law. This frequently occurs because parties rarely exhaustively enumerate all the arbitrators’ powers in the arbitration agreement, and arbitration laws grant arbitrators only a limited number of specific powers.  In any event, even the most complete arbitration agreements, arbitration rules or laws cannot cover every situation an arbitrator may face in carrying out his or her duties.

Powers not previously expressly set out and considered implied or inherent are now increasingly provided expressly by law or as part of the rules chosen by the parties. Also, if both the parties’ agreement and the relevant rules of law are silent, arbitral tribunals increasingly take this silence not as a prohibition, but rather as authorisation to take the relevant steps. However, the existence of any non-express power should not be inferred lightly, as the arbitral process may be undermined if the arbitral tribunal exercises powers it does not have or exceeds its powers, and the award may thus be annulled or its enforcement refused if a state court so holds.  It is therefore essential that arbitral tribunals understand the scope of their powers to ensure that their use does not undermine the integrity of the arbitral process and the enforceability of the award.