Academic journal article Law and Policy in International Business

Rethinking Arbitral Preclusion

Academic journal article Law and Policy in International Business

Rethinking Arbitral Preclusion

Article excerpt

1. Introduction

This Article is about the theory of arbitral preclusion. Its focus is on an aspect of the relationship between preclusion theory and international commercial arbitration which has important practical implications, namely the preclusive effects courts ought to give claims and issues decided arbitrably.(1) No attempt is made here to review how the courts do address the question of arbitral preclusion. That has been done elsewhere.(2) It is evident that generally, court decisions are less the result of any principled analysis of arbitral preclusion than of the largely irreflective extension of judicially fashioned preclusion doctrine to the arbitral context.(3) This in does not mean that there has been universal condemnation of the results achieved,(4) although it has left elusive any theory offering an approach to arbitral preclusion that is both conceptually and practically satisfying. This Article strives to provide such a theory.

Two recent scholarly attempts to provide a principled approach to arbitral preclusion have been mooted. The first is that of Professor G. Richard Shell(5) who proposes that because arbitration and litigation are "fundamentally different," the courts ought not to apply preclusion doctrine to arbitral awards as though they were dealing with judicial decisions.(6) To have "legitimacy ... a more satisfactory justification for the doctrine must be found."(7) He suggests "that the most principled ground for permitting arbitral preclusion is the contractual intent of the parties to the arbitration agreement."(8) The preclusive effects the courts must give arbitral awards should depend ultimately on the contractual intent to be found in the particular arbitration agreement giving rise to the award in question. Professor Shell argues that in the absence of any express intent, the courts must infer the appropriate intent from an examination of the context in which the particular agreement to arbitrate is properly placed.(9)

Professor Shell's suggested approach to arbitral preclusion is rejected by Richard W. Hulbert,(10) who is particularly critical of the "nearly unbearable burden of speculation" it would place on the courts to ascertain a contractual intent "almost never - one is tempted to say simply, |never' - expressed" in the arbitral agreement.(11) Mr. Hulbert, who offers the second scholarly attempt to provide a principled approach to arbitral preclusion, also rejects Professor Shell's view that arbitration and litigation are not "functional[ly] equivalent."(12) Hulbert argues instead that the parallelism is accurate given the integrity of the procedure typical of international commercial arbitration and its propensity to produce reasoned awards.(13) Mr. Hulbert therefore proposes that the courts ought to "appl[y] ... preclusion doctrine to international commercial arbitration to the same extent as to domestic judicial decisions."(14)

Despite the differences in the two approaches forwarded by Professor Shell and Mr. Hulbert respectively, both would require the courts to engage in a case by case determination of what preclusive effects to accord arbitral awards, or at least to issues determined arbitrably. Although Professor Shell offers "conclusions, or at least presumptions"(15) to guide the courts, these are couched in caveats and provisos that are necessarily tentative and rebuttable.(16) The purity, if not the efficacy, of his contractual model would require a court to subjugate generalized conclusions about contractual intent in the abstract to the particular contractual intent of the parties to the specific arbitral agreement giving rise to the award whose preclusive effects are to be determined by the court. Mr. Hulbert's proposal would operate to achieve a similar effect notwithstanding his having apparently eschewed the case by case approach to arbitral preclusion that on one occasion was judicially intimated.(17) If the courts are to determine the issue of preclusive effect of an award as though it were a judgment, the established jurisprudence of the courts demands, as Mr. …

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