The Exercise of Contract Freedom in the Making of Arbitration Agreements
Carbonneau, Thomas E., Vanderbilt Journal of Transnational Law
TABLE OF CONTENTS I. INTRODUCTION: CONTRACT'S EMPIRE IN ARBITRATION II. THE EFFECT AND DEVELOPMENT OF ARBITRATION AGREEMENTS III. THE QUESTIONS PRESENTED IV. THE CONTENT OF "MODERN" ARBITRATION AGREEMENTS. A. The Recourse to Arbitration: Voluntary, Necessary, or Coerced? B. Institutional Arbitration C. Selecting Arbitrators and the Question of Impartiality D. Arbitrator Accountability and Collegiality E. Controlling Authority in the Arbitration F. Governing Law G. The Character of the Arbitral Trial H. The Award I. The Standard of Review J. The Chromalloy Problem K. Foreign Practice Rules L. The "Universal" Jurisdiction of National Courts in Transborder Arbitration IV. CONCLUSIONS
I. INTRODUCTION: CONTRACT'S EMPIRE IN ARBITRATION
A universal principle of contemporary arbitration law is that contract plays a vital role in the governance of arbitration. (1) The vitality of that role can vary by legal system, court, statute, or treaty. (2) Nonetheless, party agreement often provides the most significant rules for regulating arbitrations and conducting arbitral proceedings. (3) This is especially true in international commercial arbitration. There, the lack of a functional transborder legislative and adjudicatory process made contract the principal source of law for international commercial transactions and arbitrations. Although law-making is more possible within individual national legal systems, the rule of contract freedom is also firmly established in matters of domestic arbitration. (4) Within legal systems, contract's empire is founded upon a different rationale: in court doctrine, it serves to legitimate the privatization of adjudication by underscoring arbitration's ostensibly voluntary character. (5) Freedom of contract, therefore, is at the very core of how the law regulates arbitration. What the contracting parties provide in their agreement generally becomes the controlling law.
Courts can interpose their authority in arbitration. (6) They could assert their power by policing the formation and the content of arbitration agreements. But, from a practical standpoint, if courts were to become more active in the supervision of arbitration, they would more than likely focus their attention upon awards rather than agreements. Arbitral awards finalize the results of adjudication and represent one of the last steps in the process of the coercive imposition of legal liability. If there were to be a fight between national interests and the transborder commitment to arbitration, or if the policy of rights protection were to prevail over the functionality of adjudication, the contest would take place at the award-enforcement stage of the process. By comparison, arbitration agreements are more virtual instruments. Agreements have a symbolic standing: they represent a gateway to private adjudication and they codify the parties' intent regarding dispute resolution. Blocking their enforcement would signify opposition to the fundamental consensus surrounding arbitration rather than the implementation of a narrower strategy for the periodic defense of national interests through the vacatur of awards.
The support for and commitment to arbitration vary within the world community. (7) Judicial laissez-faire as to arbitration is especially characteristic of courts in developed Western nations. (8) In other countries and regions of the world, the protection of local enterprises can sometimes become more compelling, and political, religious, or cultural attitudes can disfavor arbitration, or at least some forms or aspects of it. (9) Protectionism and parochialism, however, are shortsighted and are likely to be counterproductive in the long run. They foster an isolationism based upon fear and insecurity and prevent the state of origin and outside countries from developing any real confidence in the local culture and its legal and economic institutions. …