Constitutional Limits of Arbitration. - (SAR) 2000 -1
Dr. Kurt Heller, partner, Bruckhaus Westrick Heller Löber,
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A few months ago the head of the legal department of a major client, who was experienced in arbitration cases, sought my advice on how to get rid of an arbitration case. I tried to convince him that this particular dispute should - because of its international character - typically be handled by an arbitral tribunal rather than a state court. Furthermore, I tried to explain to him that the arbitrators on the tribunal were quite experienced so he could expect a fair hearing and a favourable result since the client had a strong case. The in-house counsel responded that his past (good) experience with arbitration was with cases of minor importance but that in the present case, where a very high amount was at stake, he had difficulties explaining to his management and the supervisory board why he - having proposed a contract including an arbitration clause – had "exposed the company to the unpredictability of an arbitral award". I was not convinced by the client's argument. However, a few days later I read an article by a prominent New York arbitrator, who - in a totally different context - used words similar to those of my client. He wrote that because of its unpredictability, arbitration should be avoided, especially in large cases where the stakes are high. I thought about the client's point of view and the arbitrator's opinion. For both, and probably for every businessman who may be involved in a dispute that he cannot settle amicably, the predictability of a decision in a given case is of high value. Then I thought about the trend towards de-nationalisation of arbitration. Those who support de-nationalisation have various demands: • the applicable substantive law should not be the law of a particular state (lex mercatoria, equity, rules which an amiable compositeur holds to be fair, etc.); • no interference by state courts in arbitration (no challenge of awards before state courts); • preliminary measures (injunctions etc.) to be taken by arbitral tribunals rather than by state courts.