International Arbitration Law: Progress towards Harmonisation

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CONTENTS  I     Introduction II    Arbitration: Nature and Themes III   Legal Convergence in the Enforcement of Arbitral        Agreements and Awards IV    Convergence in Arbitral Procedure V     Convergence in Substantive Law VI    Conclusion 

I INTRODUCTION

International commercial arbitration is becoming an increasingly popular method for resolving disputes between traders from different countries. Arbitration comes in a variety of forms and its relationship with mediation and conciliation is becoming increasingly relevant. This paper will focus on an important theme in international arbitration law: the trend toward harmonisation of national laws and the movement towards a single, unified legal system.

The term `international' in describing arbitration is used throughout this paper in a broad sense, namely to refer to any arbitration with a foreign element. For example, the parties may have their places of business in different countries and choose to arbitrate in one of those countries or a third state, or they may reside in the same country but choose to arbitrate elsewhere. (1)

It is clear that in recent times a strong trend has emerged toward the reduction of differences in national arbitration laws. This process of harmonisation has largely occurred due to a growing consensus as to the proper underlying philosophy of arbitration: namely, as a method of dispute resolution, the content and form of which should be primarily left in the hands of the parties.

Before discussing examples of harmonisation of laws in the arbitration context, a brief explanation of the concept of harmonisation is required. In legal literature harmonisation has been defined as a mechanism for making the regulatory requirements or government policies of independent nation states with no shared political or economic authority identical or similar. (2) The process of harmonisation is often justified on the ground that it creates stability and certainty in international trade by enabling parties to predict in advance the rules that are likely to apply to them.

The goal of harmonisation has been pursued with some success in a number of areas of international trade law, including general principles of contract law, (3) international sale of goods, (4) finance, (5) transport (6) and intellectual property, (7) as well as arbitration. While the process of harmonisation has been challenged by some scholars on the ground that it is insensitive to cultural and economic diversity, (8) such concerns have had little impact in the area of international commercial arbitration where, as will be seen, the philosophy of party autonomy is deeply entrenched.

II ARBITRATION: NATURE AND THEMES

Arbitration has a long history, dating back to medieval Europe and the emergence of a merchant class that engaged in commercial activity across borders. Rather than making use of the court systems in their own countries--which were undeveloped, procedurally backward and cumbersome--traders preferred to set up their own tribunals, consisting of their own representatives who were familiar with the types of disputes that arose. In this way, areas of recognised expertise could be developed without excessive legal formality.

The tribunals themselves were also uniquely transnational in the sense that they existed independently of any national legal system and applied a type of uniform commercial law that was based on the understandings and practices of the traders themselves rather than any particular domestic law. Today there is considerable debate among arbitration lawyers as to whether a modern form of this `law of merchants' or lex mercatoria has survived. As will be discussed below, advocates of a modern lex mercatoria take the view that it is still possible to identify and construct a legal system out of the commercial practices of traders. (9) On the other hand, sceptics contend that the emergence of more highly developed systems of national law has effectively supplanted any such transnational legal order. …