Originally from: Lowenfeld on International Arbitration

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International Law

Andreas F. Lowenfeld

15. INTERNATIONAL ARBITRATION AND
INTERNATIONAL LAW

      Judge Stephen M. Schwebel, a member of the International Court
of Justice when he gave the lectures here collected (and later
President of the Court), addresses three loosely connected subjects
— the first relevant primarily to international commercial arbitration,
the third essentially focusing on state-to-state arbitration but
including the hybrid Iran-U.S. Claims Tribunal, and the second in
between these two — in the gray area where arbitration law and
international law either overlap or reveal a gap. In the first chapter,
Schwebel asks whether an arbitration clause in a contract or treaty is
severable from the agreement itself, so that arbitration may go
forward even if the underlying agreement is bad. In the second
chapter, the question is whether refusal by a state to honor an
agreement to arbitrate is a “denial of justice.” In the third chapter,
Judge Schwebel considers whether an arbitral tribunal, one of whose
members declines to sit or to continue to sit, may nevertheless render
a binding award. On the basis of theory, writings of commentators,
arbitral rules, and case histories, Schwebel answers yes to all three
questions. The book is thus very much pro-arbitration, although as
he tells the stories of the cases and the debates in international
bodies, one appreciates the difficulty in translating the “high ideals of
international arbitration” (in Justice Stevens’ perhaps mocking
phrase) into practice when one party to an arbitration agreement, for
whatever reason, seeks to frustrate the process.

The Agreement to Arbitrate

      Schwebel’s first topic — the severability of the agreement to
arbitrate — is perhaps most familiar to practitioners of arbitration,
domestic as well as international. Is it possible that a contract
containing an arbitration clause is invalid, but the arbitration clause is
effective? A priori, one might have said no to this question. While
courts may supply missing terms to contracts in accordance with
commercial usage — for example, if no price is stated but a market
price is readily ascertainable — they do not usually rewrite invalid
instruments to make them valid. Why should arbitration, founded
on consent of the parties, be different? The logical difficulty
notwithstanding, the law of arbitration has come to acknowledge that
a challenge to the means of dispute settlement by challenge to the
underlying agreement is putting the cart before the horse. Such a
challenge is usually undertaken in order to avoid or delay resolution
of a more basic controversy, whether about validity or performance
of a contract, and an assertion of invalidity should not be permitted
to frustrate the previously agreed means of dispute resolution. This
is the conclusion of the U.S. Supreme Court, of the French Cour de
Cassation, of the drafters of most of the commonly used rules of
arbitration, and of international arbitral tribunals that have
considered the point. Just as courts generally have jurisdiction to
rule on their own jurisdiction, so arbitral tribunals usually have
jurisdiction to rule on theirs — the so-called competence de la competence.