Party Autonomy and Public Policy Awards by Consent - Chapter 11 - Limits to Party Autonomy in International Commercial Arbitration
Originally from Limits to Party Autonomy in International Commercial Arbitration
The tension between party autonomy and the fundamental principles of domestic and international law, normally defined as public policy principles, seems particularly central to the current development (one could say evolution) of international arbitration.
The scope of this brief note is not to provide a detailed and in-depth analysis of such a broad issue, but rather to highlight the main aspects of the discussion with specific regard to the aspect of awards by consent. In entertaining such (still broad) issue, due consideration must be given to the two following aspects:
First, arbitration, in its “modern” form, was conceived to provide a swift and neutral means for the resolution of disputes arising amongst the members of specific business communities. This brought about two by-products of international arbitration:
(a) the fact that arbitral awards are in most cases considered as being final and binding, subject only of course to the limited available remedies under relevant domestic and international legislation and
(b) that international arbitration is somehow genetically close or akin to (and therefore highly compatible with) alternative dispute resolution mechanisms. The fact that most dispute resolution clauses in international business contracts take the form of escalation clauses providing for some form of negotiation and ADR prior to, in case of failure of the same, arbitration, is testament to that.
Secondly, arbitral awards traditionally do not contribute to the creation or development of law. Because of this, the scope and formation of arbitral awards were never seen as potentially affecting the nomophylactic functions performed by higher courts at the domestic level.
I. FREEDOM OF PARTIES AND PUBLIC POLICY
One of the main tenets of international arbitration is the freedom of the parties to retain full control of the process and the consequential ability to adjust it to suit their needs. This fundamental aspect of arbitration is only qualified by the State`s interest in avoiding any distorted use of the process. The Preamble to the 1996 English Arbitration Act, illustrating the general principles that the Act is based on, explains the tension between freedom of the parties and public policy as follows:
(a) the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense;
(b) the parties should be free to agree on how their disputes are resolved, subject only to such safeguards as are necessary in the public interest.