CEU eTD Collection INTERNATIONAL COMMERCIAL ARBITRATION In partial fulfillment oftherequirements forthe degree ofIBLLL.M. APPLICABLE PROCEDURALLAW IN Course: Supervisor: International Commercial Arbitration Commercial International Department of Legal Studies ofLegal Department Central European University European Central Kostyantyn Olefirenko Kostyantyn Budapest, Hungary Submitted to Submitted Prof. Tibor Várady Tibor Prof. 2010 By CEU eTD Collection necessary. internationalarbitration and recognition andenforcement offoreignarbitral awards is to theseproblems. Inorder tosolve these problems reform of domestic laws on problems inthefield. The enactment ofthe new Code ofCivil Procedure contributed statute on regulation of internationalcommercial arbitration didnot solve all ofthe country supports the presumption infavor oftheseat. The adoption of a special that bythechoice oftheseat parties hadavailed themselvesto its procedural law. determines law applicable totheproceedings remains ofimportance. Itisimplied acceptedwidely option inmodern arbitration, seatofthe arbitral proceedings, which provisions oflaw and courtpractice of Ukraine. comprehensive analysis ofmodern approaches tothis issue and summarize relevant the conduct of arbitralproceedings. The aim of theresearch to is provide a ABSTRACT The analysis ofrelevant provisions ofUkrainian laws demonstrates thatthe Although delocalization ofarbitral proceedings fromthesystem a of statelaw is Present thesis focuses onthetopicof choice ofprocedural lawapplicable to i CEU eTD Collection ILORPY...... 42 BIBLIOGRAPHY...... 39 ...... CONCLUSION 31 ...... 3. APPLICABLE PROCEDURAL LAW IN UKRAINE IN DEFININGPROCEDURAL COREPRINCIPLE AUTONOMY AS2. PARTY THE INTERNATIONAL TO APPLICABLE LAW1. DEFINITION OFPROCEDURAL 1 INTRODUCTION...... OF CONTENTS TABLE . iiain otepryatnm...... 24 ...... 2.2 Limitations tothe partyautonomy. 2.1 Party’s choiceapplicable of procedural lawinadhocandinstitutional 12 ...... 1.3 Delocalization theory. 7 ...... 1.2 Seattheory. 6 ...... “Internal” “external”1.1 and procedural law. A...... 18 LAW...... 4 COMMERCIAL ARBITRATION...... ulcplc iiain...... 28 ...... 2.2.3 Public policy limitations. 26 ...... Due processrequirements. 2.2.2 24 2.2.1 Mandatory norms ofastate...... 2.1.3 Choosing 22 foreign procedural law and combining procedural laws...... 21 2.1.2 Omission ofthechoice ofprocedural law...... 18 of procedural2.1.1 Express choice law...... rirto...... 18 arbitration...... ii CEU eTD Collection 1 commercialdisputes” INTRODUCTION 2 Petrochilos] [hereinafter law ofanyState. Ontheother handawardhas a byitself littlevalue unless it is order toensure effective assistance toarbitration from state judicial authorities. the tribunaland state courts ofthe seatand place ofrecognition andenforcement in certainminimal levelofprocedural guarantees; distribution ofcompetences between parties andthearbitrators instructuringthe procedure combinedwith insurance ofa international arbitration must berespectedin everyproceedings: autonomy ofthe mandatory norms ofthatsystem. Nevertheless two maxims basic modern of subject toasystem of State law their freedom may beevenmore restricted by arbitration they willhave tocomply withinstitutionalrules, iftheymake theirdispute virtually not restricted byanymeans their freedom, in caseof in institutional the proceedings. If parties submitted their dispute toadhocarbitration theyare proceedings before arbitraltribunal and choosing rules oflaw that areapplicableto appraised today as was yearsit fifty ago. business realities. Asa result theprinciple ofpartyautonomymuchmore is dispute resolution method arbitration practice has to stay in line with modern changed theface whole ofinternational business.” technology, air travel, instant communication and globalization generally have 1993), 17 [hereinafter Klaus Peter Berger] Klaus Peter 17 [hereinafter 1993), 3 International Law Georgios Petrochilos, Georgios Julian D.M. Lew, “Achieving the Dream: Autonomous Arbitration, Arbitration International”, Arbitration Arbitration, Dream:Autonomous the Lew,“Achieving D.M. Julian Klaus Peter Berger, Peter Klaus “Arbitration hasbecome thepreferredmethod fortheresolution ofinternational Today parties areprovided with option an todetach arbitral proceedings from the Based onaprincipleof their autonomy parties haveawide discretion shapingin 22, no. 2 (2006): 184 [hereinafter Lew] 184 [hereinafter 2 no. (2006): 22, International Commercial Arbitration Commercial International Procedural Law in International Arbitration LawinInternational Procedural 1 andagoodalternative tocourt proceedings. “Modern 1 (Kluwer Law and Taxation Publishers, LawandTaxation (Kluwer 2 Inordertostaycompetitive asa (Oxford university Press, 2004), 1 Kluwer 3 CEU eTD Collection current courtpractice onthis issue. attention. Uptothis time nocomprehensive thereis workwhich would summarize commercial arbitration, the issue ofapplicable procedural lawswas very given little arbitration: G.A. and Tsirat I.G.Pobirchenko.textbooks Intheir on international there are only two authorsthat conducted research on international commercial Redfern and M. Hunter,Klaus P. Berger,G. Petrochilos, R.Goode. Asto Ukraine, scholars the in area of international commercial arbitration such as T. Varady,A. procedurallaw to proceedingsapplicable ininternationalarbitration by well known procedural law.Extensive research had been conducted regarding the issue of autonomy, intervention bythecourtsandconsequencesofparties’ choice of There isnouniformity between leadingscholars astothe level andextent ofparty are still problems thatmust beaddressed on boththeoretical andpractical level. When it comes tosuchacomplex issueasregulationof arbitralproceedings there the way ofthinking oflocaljudges. changing thesystem of theirdomestic laws and,most important without changing path ofmere copyingprovisions ofinternational conventions onarbitration without reluctant toreview both theoryandpractice ofarbitralproceedings. Ukrainetook a to reflect modern international trends, other countries, includingUkraine, are arbitral proceedings, leading world jurisdictions changedtheirdomestic laws inorder issue ofapplicableprocedural law inUkraine. asaresultWhile, ofcompetition for relation tothepartyautonomy principleand examine situation current regarding evaluate two cornerstone approaches to the question ofapplicable procedural law in granted enforcement byacertain judicialsystem under its laws. This paper will Procedural lawas part ofarbitrationrepresents aninterestingarea ofinquiry. 2 CEU eTD Collection the legislator andState courtspractice. situation inUkraine concerning theissue ofprocedural law, dogmatic approachesby parties’ autonomy inshapingthe proceedings. Third chapter evaluates current award anditsrecognition and enforcement aswell asmandatory limitations of a choice of procedural laws andtheconsequences ofthatchoiceastovalidity ofthe scholars andarbitrators. Second chapter devotedis topracticalexamples ofparties’ in international arbitration, andtheoretical approaches towards this issue byleading First chapter ofthe paper focuses onthe definition and scope ofprocedural law 3 CEU eTD Collection the New the Millennium”, 6 5 Arbitration Review ofInternational American The 4 applicablelaw. Arbitrators made adistinction between: “choiceofsubstantive law, the parties and in the absence of aclear party choice arbitrators had to decide on Buyer v.Netherlands Seller and thesubstance or merits of the dispute.” the validity oftheinitial agreement toarbitrate, the individual arbitrationreference tribunal.Other categories oflawinclude norms oflaw that “respectively determine legal norms whichapplicable are and used duringarbitration proceedings bythe are oftennot the same astothedecision onthe merits ofthe case. jurisdictionalelement; goals oftheparties astotheconduct of arbitralproceedings respected thein arbitrationone shouldnot unduly favorthecontractualover the nature and separable from the contract; although the role ofcontract highlyis arguments infavor of this were:the arbitration agreement isautonomous byits law governing theprocedure orindeedthe law oftheseat of arbitration.” should distinguish between thelaw applicable tothemerits ofthedispute andthe procedure was aprevailing concept. “In theearly 1970s becameit apparentthatone governingthe merits ofacaseshall alsobe applicableto theconduct of arbitral recognizedthe in law of arbitration. Foralongtime apresumptionthat the law Pippa Read, “Delocalization of International Commercial Arbitration: Its Relevance in Relevance Its Arbitration: Commercial International of “Delocalization Read, Pippa Ibid. Loukas Mistelis, “Reality test: Current State of Affairs in Theory and Practice Relating to “Lex Arbitri”, . DEFINITION OF 1. PROCEDURAL LAW APPLICABLE TO The distinction between substanceand procedure hasnot always been Procedural law(or“curial law”inEngland, or INTERNATIONAL COMMERCIAL ARBITRATION COMMERCIAL INTERNATIONAL American Review of International Arbitration International of Review American arbitrationagreement wasas to theintentions unclear of 17, no. 2 (2006): 159 [hereinafter Mistelis] 159 [hereinafter no.2 (2006): 17, 4 6 In the award inICCcase lex arbitri 10, (1999): 178 (1999): 10, ) is onlyonefraction) is of 5 Mozambique 4 Main CEU eTD Collection the award anditschallenge. presentation ofevidence, conduct ofhearings, form of theaward, issuesoffinality of proceedings, formal requirements astostatements ofclaim and defence, v McDonnell Douglas ] Douglas McDonnell v 9 8 1988) International (Kluwer Law XIII -1988,Volume XIII Volume Arbitration Commercial Yearbook denBerg (ed), van 7 by theparties including thepower toactas and professional requirements ofarbitrators, powers ofarbitrators conferred onthem determine thevalidity andeffect of thearbitration clause.” choice ofprocedural law, choice ofaruleof conflict oflaws, andchoice of law to procedural lawforms aseparatepartofthe law that governsarbitration: common lawjudges as artificial. Continent. In fact, Civil law structure is all about divisions that may appearto Division ofthelaw into substantive andproceduralknown isawell conceptonthe division.” substantive arbitration law or procedural law, becausethiswould bean artificial contains variousprovisions which couldnotreadily beseparated intoboxes labeled disputes. Itssubstance andproceeds areclosely intertwined. TheArbitration Act distinction to be artificial: “Arbitration law isall about a particular method ofresolving Union of India v McDonnell Douglas, [1993] 2 Lloyd's Rep. 48 (Q.B.1992) [hereinafter Union of Union India [hereinafter 48 (Q.B.1992) Rep. 2Lloyd's [1993] Douglas, McDonnell India v of Union Petrochilos Jan Albert Case No.5505in 1987 in AwardPreliminary of Seller, Netherlands buyer v Mozambique In my opinion In One English judge not support did this line ofthinking anddeemed this under that agreement will be governed by another law. be governed by one law, but that the procedures to be adopted inany arbitration proviso, open to the parties to agree that their agreement to arbitrate disputes will effective express or implied term to that effect. In other words, it is, subject toone themselves is also the law ofIndia, unless there is in that agreement some not, however, necessarily entail that the law governing the arbitration proceedings The fact that the law of India is the proper law of the arbitration agreement does Union ofIndiavMcDonnell Douglas 8 It is Itis hard for alawyer from Civil lawjurisdiction to follow this argument. supra note 1, p. 8 lex arbitri coverssuchissuesas: theconstitution of arbitraltribunal 5 amiable compositeurs case arbitral tribunal recognized that 9 7 , conductofarbitral CEU eTD Collection internationalprocedural rules muchis more emphasized. Partycannot simply force party autonomymore is limited forthistype of resort toexternal from the courtconfirmingthe validity ofthe award. Inthis casepartywill haveto likely wantto enforce it somewhere. Theonly wayit istoreceive ofdoing anorder arbitrators. After receiving awinning arbitral award thepartytoarbitration willmost award orotherprocedural issues such as interim measures orchallenge of arbitral tribunaland state courts in cases of recognition and enforcement ofthe and arbitrators. The internal arbitration proceedings andgoverns relations between partiesandbetween parties law. Theinternal level ofparty authonomy isdifferent regarding “internal”and “external”procedural law may beclassified as internal andexternal. This division is important because the proceedings is established it Proceduralis important to highlight its internal division. 10 Mistelis The external After the place ofprocedural lawwithin thecommencement ofarbitral 1.1 compositeurs are expected or allowed to decide determining thelawapplicable tothe merits ofthe case and whether the arbitrators the arbitration tribunal to grant any interim measures, the method to apply in probative value of evidence; and the form the final award must take; the power of ofprocess, rebuttal rights of each party, the close of hearings; admission and timing and method of presentationthe of case, including place of hearings, service as well as their respective procedural rights, powers andobligations; formalities, the arbitration proceedings; the allocation ofroles between parties and arbitrators the tribunal as well as standards independenceof and impartiality; the conduct of …constitution ofthe arbitration tribunal, including appointment and challenges to supra “Internal” and “external” procedural law. procedural “external” and “Internal” note p. 165 note 3, lex arbitri . 10 lex arbitri lex arbitri is a bodyof is law which regulates the relationship between is abodyofrules is whichrelatestothe internalconduct of lex arbitri todetermine procedureofsuchaction. Naturally, the governs the following issues: governs 6 ex aequo et bona et aequo ex lex arbitri andtheroleofnational and or as amiables CEU eTD Collection ultimate detachmentproceedings ofarbitral from some systemoflawbecauseevery sovereignty andterritorialarbitral linkofproceedings. There nopossibilityis of procedural law.” procedural law, which practice in prevented the parties from choosing adifferent partiesof the place of arbitration automatically involved theapplication oflocal have toobey proceduralrules of that court. theparties submitthat if disputes their toreviewstatecourt theywillby acertain forum wherecourt the is located andforeign forum. Soitis important tokeep mindin lex arbitri state, they are notflexibleon this matter. Anotherreason thatis choice ofexternal withlaws offoreign forums. Unlikearbitrators judges are usedtoapplying law of their happens because of thenumber reasons. of oneCourts jurisdictionin are unfamiliar law clausesasselectingthe “external”procedural lawofthearbitration.” selecting aforeign procedural law, courtshave beenreluctant to interpret choice-of- legislation. But “evenwhere theparties'agreement canbeinterpreted asexpressly have anoption ofdrafting theirown proceduralrules orresort to supranational suitewill their interests not is disputed. In case of adhoc arbitration parties even 2001), 476 2001), 12 Born] [hereinafter 11 Gary B. Born , arbitration proceedings. the court tohear its case court needs to assumejurisdiction over particular matter in Mauro Rubino-Sammartano, International arbitration Law and Practice, (Kluwer Law International, (Kluwer Law Law and Practice, arbitration International Rubino-Sammartano, Mauro “For alongtime hasbeenheld, it andnotonly inEngland, thatthechoice bythe Seat theory. 1.2 As regards to internal offoreignforum may leadto confusion and clashes between norms ofthe International Commercial Arbitration Commercial International 12 This view This was strongly connected witha concept ofstate lex arbitri party’sautonomy toselectprocedural laws that 7 , (Kluwer Law International, 2009), 1330 (Kluwer , International, Law 11 This CEU eTD Collection its courtshave theexclusive right to determine the legal effectof acts done (and internationallaw thatastatesovereign is within its own bordersandthatitslaw and rests his argument onthetheory of territoriality ofarbitral proceedings. proceedings and acertain system of nationallaw where arbitration took place. He that arbitralawards arebinding andenforceable ifthere isa link between arbitral wouldbe more exact (butalso less familiar) to speakof the 14 http://interarb.com/vl/g_pr1923 13 mayconveniently andinaccordance with becalledthe tradition enjoys is inexorably conferred by or derived from municipala system of law which arbitration was F.A.Mann. He claimed that:“Every rightorpower aprivate person logicalavailable option toparties. submission ofthe dispute to procedural law of theplace of arbitrationwas the only country inwhose territorythearbitration takes place”. arbitral tribunal, shallbe governed bythe willof theparties andbythe law ofthe Geneva onSeptember 24,1923:“Thearbitral procedure, including theconstitution of award elsewhere. Protocolon Arbitration Clauses inCommercialMatters, signed in of the award incourts of the State where award was rendered in order to enforce the “double exequatur” principle which meant thatthepartyhadtoseek theconfirmation place of arbitration was givenhigh priority. Geneva Convention of1927 established a historically itremained intheshadow of court proceedingsand asa result lawofthe be asubject tothe law of thatjurisdiction. awardmust beenforced bysomejurisdiction and theenforcement ofthe award will Petrochilos 1923, 24, September Matters, Commercial Clauses in on Arbitration 2of the Protocol Article “The traditional theory of territoriality isbased onthegeneralprinciple of One ofthe most famous proponents of seat theory of international commercial Although arbitration is acompletely independent mode ofsolving disputes supra note 1, p. 22 (accessed in March 2010) March (accessed in 8 13 In thesecircumstances lex arbitri lex fori .” 14 He claimed , thoughit CEU eTD Collection territory. foreignprocedural lawasthe of theseat of arbitrationto be applied ona local procedural law of theseatarbitrationmay leaveanoptionfor parties tochoose proceedings and arbitralawards. On the other hand there is apossibility that of aninternationalarbitration including with regard toarbitrationagreements, arbitral internationalarbitral proceedings takeplace; thatlaw addresses virtually allaspects of thearbitral seatprovides thebasic,mandatory andoften legal regime whichwithin 19 16 International 15 the law ofthe country where the arbitration takes place. domicile ofthe arbitrationwhich establishes a territorial linkofthe proceedings with towards arbitration which is competing mechanism of dispute resolution. implied this connection. the closest connection tothe proceedings and bytheir choice ofthe seat parties take place inthatState. Also thelaw of theseatarbitration isthe law which has of statejurisdiction is strongenough tobeextended toarbitralproceedings which arbitration takesplace can exercise effective control overproceedings, the concept proceedings and it isaduty of that Statetocontrolarbitral proceedings. are conducted is strong enough toallow imposition ofstate laws uponthese that the link between arbitral proceedings and thestate in which theseproceedings consequently of arbitral awards made)within thoseborders.” 18 17 Petrochilos Arbitration”, Commercial International in Loci Arbitri Lexthe of Role “The Goode, Roy Klaus Peter Berger Peter Klaus Lew Born The notion oftheseat of thearbitration ismeant tomeanmere a formal legal In support of this argument itwas claimed thatnoother Stateexcept where supra supra 19 17, no. 1 (2001): 23 [hereinafter Goode] 23 [hereinafter 1 (2001): no. 17, note 2, p. 182 p. 2, note note 10,p.1330 note supra note 1, p. 23 supra note 2,p. 100 note 16 Courtjudges also certainly have some “judicial jealousy” 9 18 The arbitration legislation 15 Territoriality means Arbitration 17 CEU eTD Collection may atany deliberate location considersit appropriate.” considers appropriate unless otherwise agreed bythe parties. TheArbitralTribunal consultationwith theparties,conduct hearings andmeetings atany location it the court unless agreed upon by the parties. The Arbitral Tribunalmay, after provision ontheplace ofarbitration: “Theplace ofthearbitrationshall befixed by example, even such a delocalizationfriendly jurisdiction as Switzerland under its seat ofarbitration within their territory andapplicability oftheirprocedural For laws. jurisdictions still have thenorms laws which intheir establish thelinkbetween the to fix the seatofarbitration at that place which sometimes maynotbetrue.Most of a certainplace asa ofarbitration arbitrators havetodecide if partiesintended establish party’s intentions astotheseatof arbitration. Ifarbitrationagreement fixes parties agreetochangeit.” same evenifthe physical place changes from time totime, unless of course the changes with eachchange of country. The legal place ofthe arbitration remains the even hearings otherin countries. This doesnot mean thatthe‘seat’of arbitration http://www.iccwbo.org/uploadedFiles/Court/Arbitration/other/rules_arb_english.pdf 22 Hunter] Redfern, 2004), 2-16[hereinafter Maxwell, unless parties agree tochange it. arbitration remains thesame evenifthephysicalplace changes from time totime, SA v Compania Internacional deSeguros delPeru where hearingsbeforearbitral tribunal areperformed. In arbitration. Place ofarbitration isaplace of physical location of arbitrators or a place March, 2010) March, 21 116 Rep. 20 Article 14 of the ICC Rules of Arbitration, January 1, 1998 January ofArbitration, Rules 14ofthe ICC Article Alan Redfern, Martin Hunter , Martin Hunter Redfern, Alan 1 Lloyd's [1988] Peru, del de Seguros Internacional vCompania SA Peruana Amazonia Naviera In practice arbitrators need toevaluate wording of arbitration agreement to Seat inarbitration proceedings must be distinguished from the place of Law and practice of International Commercial Arbitration ofInternationalCommercial Lawand practice 21 Article14ofICC RulesofArbitration containsa 20 “It may often be convenient to holdmeetings or 10 itwas held thatthelegal of place 22 Naviera Amazonia Peruana (accessed on (Sweet and (Sweet CEU eTD Collection enforce, tovalid. be in searchfor ajurisdiction thatwill deem the award, which courtsof theseat may not place. Departure from this principle givesparties anopportunity for“forum shopping” validity ofthe award solely to a decision ofthe courtwhere arbitralproceedings took anymore may it havegood implications such assubjecting thequestion ofthe 25 Quarterly Law andComparative International 24 in shapingin arbitral proceedings. http://www.umbricht.com/pdf/SwissPIL.pdf 23 residence in Switzerland” was concluded,at least one oftheparties had neither itsdomicile nor its habitual arbitral tribunal isin Switzerland and if, at any timewhen the arbitration agreement laws stipulates that nationalprovisions “shall applytoany arbitration if theseatof country where was it rendered”, enforcement elsewhere, seekaconfirmation oftheaward bythecourts ofthe Geneva Convention of1927;“thewinning partyneednot,asaprecondition of Although New York Convention eliminated the “double exequatur” requirement ofthe these proceedings and what right does it have toimpose itslaws ontheparties? state asforum for arbitralproceedings what the is interest ofthat stateregarding reasons ofconvenience bothfor parties and forarbitrators. If parties choose neutral forum state notbecause they want toavail themselves tolaws of thatstate butfor cornerstone principle inmodern arbitration proceedings. Parties may choosethe the virtue of their agreement. Goode ofOrigin”, Country Its Law of the from Award Detached Unbound: “Arbitration JanPaulsson, Article 176 of Switzerland’s Federal Code on Private International Law, International Code onPrivate Federal 176ofSwitzerland’s Article Despite that submission ofthe dispute tothe Seat theoryclashes with theconceptofparty autonomywhich isrecognized asa supra note 15,p. note 33 25 23 , nevertheless leaving parties with achoice to opt out by 24 lawofthe seatofarbitration stillplays amajor role (accessed in March, 2010) March, (accessed in 30, no. 2 (1981): 373 [hereinafter Paulsson] 2 373 [hereinafter 30,no. (1981): 11 lex loci arbitri isnotrequired CEU eTD Collection the jurisdiction was chosenforpurposes ofneutrality orconvenience. country, laws ofwhich arehostile or unknown to both or either oneof the parties and arbitration proceedings. Inpractice parties toarbitration may choosetoarbitrate in a 26 29 arbitration andarbitral awards.” been given to what has variously been called a-national, floating, and stateless international commercialarbitration.” geographically convenientandhasareputation forthesuccessfulconduct of proceedings there. More likely, theyhave chosen asitewhich is neutraland domestic arbitrations at the seat, let alone the practices followed judicial in by suchchoice theyintended tofollow the rules ofnational procedure applicableto parties have chosen theplace of arbitration contract,in their mostit is doubtful that the seatofarbitration mayimpose unwanted restrictions onparties. “Even ifthe 27 Arbitration 28 New Law Merchant of Discussion domestic arbitration law.” principles ofpublic international or transnational law without anyconnection to should only “interfere with thearbitration process inexceptionalcircumstances”. proceedings Lew argues that the roleof state courts should bealso limitedand they the factthatparticular state doesnot have jurisdiction overdelocalized arbitral proceedings from a jurisdiction oftheplace ofthearbitration and its laws. Becauseof as delocalization ofarbitral proceedings whichmeans detachment ofthe W. Lawrence Craig, William W. Park, Jan Paulsson,Jan Park, W. William LawrenceCraig, W. Lew Hans Smit, “Proper choice of law and lex mercatoria arbitralis”, of mercatoria and lex law choice “Proper HansSmit, Klaus Peter Berger Peter Klaus As itwas stressed above party autonomy a is basic principle which guides 1.3 “As internationalarbitration grows byleapsandbounds, increased attentionhas supra , (ICC Publishing 1990), 270 1990), (ICC Publishing , note 2, p. 195 p. 2, note Delocalization theory. Delocalization supra note 2,p.480 note 28 This concept This in international arbitrationbecame known (Juris Publishing Inc., 1998): 93 1998): Inc., Publishing (Juris 27 Partiesmaysubmit theirdispute to“procedural 26 12 International Chamber of Commerce of Chamber International Lex Mercatoria and Arbitration A and Arbitration Lex Mercatoria Lex arbitri 29 of CEU eTD Collection international law.” consequently heldit that the arbitration, as such,can only begoverned by to which aforeignstate isapartycould besubject tothelaw of anotherstate, and immunity offoreignstates, the Tribunalwas unableto hold thatarbitral proceedings thatheld thelaw of theseatshouldnotbeappliedtoarbitration. “Duetojurisdictional State of Saudi Arabia andArabian American Oil Company corporations. The casewhich gaverise tothistheory was adispute between the cases ofoildisputes between governments ofArab countriesand oilWestern proceedings from national lawoftheseat: 30 Justice. Judge Gunnar Lagergren was appointed as a sole arbitrator as regards to side, sole arbitrators were designatedbythe President oftheInternational Courtof appointment ofarbitrators. After StateofLibya failed toappoint arbitrators from its state of Libya. Concessionagreements included proceduralnorms onthe of theirbusinesses in Libya major petroleum corporations brought claims against the Company, andCalifornia Asiatic Oil Company vState ofLibya Aramco case: Croatian Arbitration Yearbook Arbitration Croatian 31 Paulsson Edin Karakas, “Origin of Arbitral Awards and Its Impact on Applicable Enforcement Regime”, Enforcement onApplicable Impact Awards andIts ofArbitral “Origin Karakas, Edin that, from the tolerance ofthe state of the place of arbitration. rather artificial interpretation to deem his power to be delivered, and very indirectly at conferred by the parties’ consent, is one of the private nature, and it would be a international arbitrator as a manifestation ofthe power of aState. His mission, an arbitral tribunal’s authority asa purely internal manner, it is difficult to consider the fundamentally different position. Whatever one might think of acontractual source of legislative power – of the State which he his authority. The international arbitrator is represent the political-juridical concepts – particularly as to the territorial limits of The municipal judge necessarily applies the rules ofconflict to the forum, which Delocalization theory ininternationalarbitration wascontemporary developed in Pierre Lalive reasons as followssupport in of thethesis ofdetachment ofthe Two casesofLibyan petroleum nationalizations developed the reasoning of supra British PetroleumCompany vState ofLibya note 21, p. 362 p. 21, note 31 11, (2004): 32 (2004): 11, 13 and 30 (Aramco). Thetribunal . Afternationalizations Texaco OverseasOil CEU eTD Collection to render internationalaward.“ nationality may belesser butrecognized that parties bytheirwill granted him powers which was that Geneva.Healsocame effectsoftheaward toaconclusion thatlacks to be international without tying to it the municipal law ofthe place of arbitration 33 1980) International V (Kluwer1980, Volume Law VolumeV- Arbitration Commercial Yearbook (ed), Sanders 32 convenient andconstructive.” deemed theattachment oftheawardtoalegal system of acertainstatetobe “both is more limited thantheaward which was tied tosome systemofnational law and his award tobeDanish. He concluded thatthe effectiveness ofthe a-national award enforcement. had toassigncertain nationality totheir awardsorder in toensure effective other State. The arbitrators didnotwant anunenforceable torender award sothey brought against theStatewhich enjoys sovereignty andisimmune tothelawofany the proceedings. Seat theory could notsolve the problem because bothclaimswere arbitrators encountered problems astoestablishing jurisdiction andlaw applicable to and CaliforniaAsiatic Oil Company. From beginningthe oftheproceedings both as asolearbitrator with respect to thejoint claim of Texaco Overseas Oil Company British Petroleum Company claim and Professor Rene-Jean Dupuy was appointed the arbitration clause: construction ofthreeoil tankers.Eachcontract containedthefollowing provisions in the Swedish shipyard andLibyan maritimeCo. concluded contracts for the between theSwedish shipyard Gotaverken and LibyanMaritime Company. In1973 Paulsson Pieter in 1973 of10 October Merits the Libya, Award on of v State Company Petroleum British Lagergren fixed theplace ofarbitration Copenhagenin (Denmark) anddeemed The challenges as to enforcement ofa-nationalawards were tested a case in supra note 21, p. 378 p. 21, note 32 33 Dupuytookadifferent approach declaring his award 14 CEU eTD Collection 35 1981 34 foreigncourts will not take jurisdiction unless partieshad expresslyprovided foritin 36 proceedings only intheabsence ofaspecific agreement bytheparties.” system;under NewYork Convention, thelaw of theplacearbitration controls the that “there was noneed for arbitral proceedings to be attached toa national legal award notbear did Frenchnationality. This was with inline Gotaverken argument appeal. argument onarbitrationclause inacontract in which parties hadwaived theirright to and deemed theaward tobebinding from the time was it rendered basing its rendered.” binding anywhere pending its challenge before thecourts thein country where it was against actions to enforce the award Swedenin was toargue that the award was not to enforce the award inSweden. “One ofthe Lybian Maritime Co’scentraldefenses challenging thevalidity of theaward. Atthesame time Gotaverkenstarted anaction refused to sign amended award. Libyan Maritime suit Co.filed before courts Paris in in favourofSwedish shipyard. Thearbitrator, assigned byLybian Maritime Co. Contracts. Gotaverken initiated arbitrationand theaward was renderedbyatribunal and thatvessels constructed did notmatch technicalspecifications stipulated inthe alleged that Gotaverken violated Libyan regulations on the boycott of Israeli products Paulsson Gotaverken Statev of Libya, Paulsson a decision. and their respective successors and assigns and each party agrees toabide bysuch shall be final binding, conclusive upon and enforceable against the parties hereto The award of the arbitration asto any question referred tothe arbitrators provided Conciliation and Arbitration then in force of the International Chamber of Commerce. The arbitration shall be held in Paris and conducted in accordance with the Rules of At thesame time Frenchcourts refused to examinethe award arguing thatthe Lybian maritime Co.refusedtotransferthepayment forconstructedvesselsand , Volume VI (Kluwer Law International 1981) pp. 133141 pp. - 1981) LawInternational VI (Kluwer Volume , supra supra 35 Swedishcourt refused to accept the reasoning ofLibyan Maritime Co. 34 note 21, p. 365 p. 21, note note 21, p. 366 p. 21, note Pieter Sanders (ed), Pieter 15 Yearbook Commercial Arbitration Volume VI- Volume Arbitration Yearbook Commercial 36 However CEU eTD Collection system which is traditionally courts of the seat of arbitration and enforcement system, shouldbea subject of acontrolby a certainState judicial thinking that awards, enforcement ofwhich is sought under Conventions 38 be applicable. York Convention. Relevant provisions of New York Convention sought may questionwhenever a-national awardfall will under thescope ofNew- cannot be a subject ofabuse and lead to unjust result. deviate from state authorities and their choice must berespected but this deviation those embodied inthemajor international conventions.” guarantee “the conformity oftheaward to transnational minimum standards such as the laws of hisjurisdiction. Itisargued that hisfunctions should belimited to 41 New Convention] York Awards[hereinafter Arbitral 40 39 37 the award” “The judge at the place ofarbitration isseen as thebest placed authority tocontrol and theextent of court intervention when it comes todenationalized proceedings. scope ofthe review willbe limited by provisions of theNew York Convention. be thecourt of jurisdiction where theenforcement oftheaward soughtandthe is only courtthat willhave the power toreviewtheconduct ofarbitral proceedings will absence ofparties agreement dispute tosubmit tothe their law ofacertainstate the their agreement. Theoutcome ofGotaverkencase leadstotheconclusion thatinthe Paulsson Klaus Peter Berger supra note 2, p. 483 2, supranote PeterBerger Klaus ofForeign and Enforcement on Recognition V1(a),(e) of New Convention the York Articles Ibid. Goode Competent authorities the jurisdictionin where recognition andenforcement is It isdifficult to establish awell balanced equilibrium between parties’ stipulation supra supra 38 buthehasnosource toderive his power for from in order him to apply note 15,p. note 25 41 note 21, p. 370 p. 21, note Despitethis argumentation Supreme CourtofNetherlands in the 16 39 Bytheiragreement parties lex loci arbitri 40 leadtoa line of 37 should CEU eTD Collection 43 Pavic] 78 [hereinafter 1996), University, European Central 42 proceedings detached from any nationalprocedural law.” case S.E.E.E. vYugoslavia heldthat: “It ispossible toenforce award renderedinthe failed towork andwas laterchanged tomore conservative one. arbitral proceedings whichin neither one of the parties was Belgian, extrememodel ofdelocalized arbitration in which courts lacked jurisdiction over wording ofnational legislation onarbitration. Belgian legislators adopted themost parties tointernational arbitrationwere leftwithout court assistance bythe virtue of parties may havenomeans toperform action.a required InBelgium, forexample, International procedural principles aresilent onthese matters andinsome instances casesof important measures, in interim obtaining evidenceandcourt sanctions. lose thelevelof support providedby national courts of theseat,which may be end oftheproceedings. choosing denationalizedWhen arbitrationparties also will complications, Ithink it isreasonable to determinethe seat of arbitration prior to the ultimate goal isenforcement oftheaward inorder toavoid unnecessary may tovoluntaryperformancelead bythepartywhich lostthe proceedings. But ifthe award rendered favorin ofone party may putpoliticalpressure on another one or arbitrations often occur between States or States and business entities. Arbitral the rendition of enforceableaward and its finalenforcement. Denationalized Goode thesis, (master Arbitration Commercial International in law procedural Applicable Pavic, Vladimir While submittingWhile disputes toarbitration parties may pursuepurposes other than supra note 15,p. note 27 17 42 43 this model CEU eTD Collection the arbitration. be acontinuing right andnot onetobeexercised onlyduring the period preceding 47 46 45 Binder] 2005), 185[hereinafter and Maxwell, (Sweet Jurisdictions 44 importance.” insert thechoice andsometimes they donotconsider tobethe it issue ofgreat different: sometimes theycannot reach the agreement, sometimes theyforget to law andleaveit to arbitrators. “Reasons fornotexercising this freedommay be it isnottheirdutyandpracticein parties often prefer toskipthechoice ofprocedural disputes via arbitration” constitutes oneofthemajor attractionsfor parties contemplating resolving their principle onwhichtheModelLaw should bebased”. PROCEDURAL LAW DEFINING PARTY AUTONOMY AS THE CORE PRINCIPLE 2. IN institutionalclauses address thisissue. Forexample,arbitration standard clause of arbitration normally rulesoftherelevant institutionwillbe applied andmodel willgovernarbitral their proceedings. Ifparties submitted theirdispute toinstitutional Pavic Ibid., p. 190 Ibid., p. 187 Law UNCITRAL model in andConciliation arbitration Commercial International Binder, Peter “The possibility ofchoosing procedural rules thataretobeapplied by the tribunal The freedom of theparties recognizedis as being “probablythe most important 2.1 In exercising their autonomymake can parties express ofthelawwhich choice Express choice of procedural law. 2.1.1 supra note p.78 note 36, 47 and institutional arbitration. institutional and adhoc lawin procedural of applicable choice Party’s 45 46 . Althoughitisthe right ofpartiesto chooseprocedural law 18 44 Partyautonomy isdeemed to CEU eTD Collection different curial law byproviding expressly that disputes under the contract shall be system of law one country as the proper law of theircontract and have selected a the view that: “if parties to acommercialcontract haveagreed expressly uponthe proper law insisted uponbythe agreement. Inhisdecision LordDiplock supported seat ofwhich waschosen England, arbitrators had tofollow parties’ choice andapply Maritime S.A. 50 49 2010) March, in (accessed 48 alternative, adefaultprocedure incase the parties fail tostipulate specific rules. parties thefreedom to determine theprocedural rules and(b)providing, as an appointed accordancein with thesaid Rules.” Arbitration oftheInternational Chamber ofCommerce byoneormore arbitrators connectionwith thepresent contract shall befinally settled under theRules of InternationalChamber ofCommerce states:“All disputesarising outofor in considers appropriate.” subject tothe provisions of this Law, conduct an arbitration insuch manner as it conductingthe proceedings. Failing such agreement, thearbitraltribunal may, parties arefree toagree onthe procedure to befollowed byarbitraltribunal in choosealso certain nationalsystem of law to governtheirproceedings. Law on International Commercial Arbitration (UNCITRAL Model Law).Parties can proceedings orresort to ruleswhich arealready available such as UNCITRAL Model they haveachoice ofetherdrafting theirown governing rules conduct of arbitration Binder of1985 Arbitration Commercial ModelLawon International 19ofUNCITRAL Article Clause, Arbitration ICC Standard UNCITRAL ModelLaw provides: “Subject totheprovisions ofthis Law, the In Compagnie Tunisienne deNavigation S.A. v.Compagnie d'Armement supra note 37, p.185 37, note court held that courtheld if parties agreed to apply French law tothedispute the 49 Article19follows the“two-levelsystem” granting of(a) the http://www.iccwbo.org/court/arbitration/id4114/index.html 19 48 Ifparties chose ad hocarbitration 50 CEU eTD Collection 53 2010) March, 2008“, 52 572 51 law of thecontract that system of law on which theparties have expressly agreed.” submitted toarbitration inanother country, the arbitrators must applyas the proper ad hocarbitration (86% of awards rendered throughinstitutions)”. to recentresearch conducted in2008 “corporationsprefer institutionalarbitration to chose thelaw of theforum.Parties should beverycautious astoforeign forums they courts will notquestion their ability toassist arbitralproceedings atleast ifparties’ principles which belong purely toarbitrationthiswill lead toacceptable result. State provide adequateprocedural framework forarbitral proceedings, combined with may bereasonableiftheparty arbitrates in its home forum state. State normswill complex tryingtocover every issue thatmay ariseduring the proceedings. That iswhy rules of arbitral institutions arebecomingmoremore and detailed and formalistic approach and strict interpretation of therules applicable toarbitration. such strategies whichare inconsistent with informalidea ofarbitration –insisting on dividing line between arbitrationand litigation startsto blur, some partiesmay adopt tendencyconsequences ofthis toinstitualization ofarbitral proceedings the isthat Court attheUkrainian Chamber ofCommerce andIndustry.One of the London Court ofInternationalArbitration (LCIA), International Commercial Arbitration International Chamber ofCommerce (ICC),American Arbitration Association (AAA), international institutions are competing onthis still growing market. Toname afew: Pavic andPractices Attitudes Corporate : Arbitration “International Loukas Mistelis, Lagerberg, Gerry A.C. S.A. [1971] Maritime d'Armement Compagnie S.A. v. deNavigation Tunisienne Compagnie Institutional arbitration became themain stream in arbitration practice. According Choosing nationalsystem of procedural laws toapply toarbitralproceedings http://www.pwc.co.uk/eng/publications/international_arbitration_2008.html supra note p.15 note 36, 20 , p. 2 (accessed 52 A number of 51 53 CEU eTD Collection which abolished the‘case stated’ procedure” delocalization might betracedback almost threedecades to the Arbitraion Act 1979, English judges and arbitrators. Despite the fact that “in England, the genesis of connected to arbitralproceedings. This line of thinkinghistorically is supported by relevant normsthe applicableto dispute becauseitismost ofthelaw closely arbitrators will act on assumption thatthe seat or place of arbitration will determine adopted this wordingofUNCITRAL ModelLaw. in suchin amanner as it considers appropriate”. parties didnotagreed onthe procedure arbitral tribunal“may conductthearbitration wide regarding discretion this Accordingissue. toUNCITRALModelLaw case in arise before arbitrators as soon asthey will beappointed and they are provided with omitting thechoice oflawthe problem of applicableproceduralnevertheless lawwill at theirown andmight risk omit of thechoice applicable procedural law. Incase of provisions ofthe law of aforeign state. restricted. There are instances when local judges of one forum willhave to evaluate International 55 54 effects. are unfamiliar with asthat choice may posemore challengesthan give positive William W. Park, “Two Faces of Progress: Fairness and Flexibility in Arbitral Procedure”, in Arbitral Flexibility and Fairness Progress: “Two of Park, Faces W. William Article 19 of UNCITRAL Model Law on International Commercial Arbitration Commercial ModelLawon International 19ofUNCITRAL Article Although delocalization gains its importance inmodern arbitrationmost Parties to thearbitration willoften trytodraft an arbitrationclause bythemselves Omission of the choice of procedural law. 2.1.2 As itwas discussed above parties choice ofchoosing “external” 23, no. 3 (2007): 500 3 (2007): no. 23, 21 54 Most of leading arbitral jurisdictions 55 , case study shows that in the shows that in , casestudy lex arbitri Arbitration is CEU eTD Collection of arbitration inLondon Saville J.held: providedfor application of IndianArbitration Act of1940while determining theseat procedural was law theoretically possible. arbitration Londonin rather than Limain butnotedthat thechoice offoreign procedural law.TheCourt ofAppeal interpreted arbitration clause asproviding for proceedings should beconducted Lima, in butshould begovernedbyEnglish Peru Seguros del Peru L. Rep. at 119 Rep. L. 56 theoretical point ofview. the foreignforum intervention byEnglish courts highlyis doubtable atleast from jurisdiction. At thesame time English law will if be chosen toguideproceedings in most toinadmissibilitylead likely ofthecase oftheir tocourtreview due tolack apply relevant proceduralnorms butwhat abouttheattitude of states on this issue? commercialarbitration. Arbitrators must respectthe choicemade bythepartiesand proceduralnorms ofanotherstate is rare but notuncommon international in interpret arbitration agreementfavor in ofapplicability of absence of party choice of procedural law English judges andarbitrators tend to Naviera Amazonica Peruana S.A. v. Compania International de Seguros del Peru [1988] 1 Lloyd's Peru [1988] del deSeguros International Compania v. PeruanaS.A. Amazonica Naviera Indian Act those provisions of that Act which are concerned with the internal conduct law to govern their arbitration proceedings, while contractually importing from the It seems to me that by their agreement the parties have chosen English law as the In In thecase The caseforparties tosubject arbitration which one state takesplace in to Choosing foreign procedural law and combining procedural 2.1.3 Union ofIndia vMcDonnell Douglas laws. Naviera Amazonica PeruanaS.A. v.Compania International de arbitration agreement inthecontract provided that arbitration 22 56 Stipulation offoreign arbitration law will despite thefact thatarbitrationclause lex loci arbitri . CEU eTD Collection 57 rules aresilent oncertain matters some law willapply. national example, parties may stipulate thatinstitutional rules areapplicable butwhere these certain issues,“fallback” normswill come andcoverthese intoplay blankspots.For order. In case procedural normswhich must beapplied in first place are silent on Germanjudge may neverthelesstreat the award tobe ofGerman nationality. mention example, ifarbitrators will choose to determineof the award to be Swiss nationality. Thesedifferences may tojudges posechallenges Ina andarbitrators. arbitrators will have discretion ofrendering the award ofeither Swiss or German example,proceedings arbitral heldinSwitzerlandbe subject will toGerman law territoriality accepted is while inGermany proceduralcriterion isacceptable.If, for Different jurisdictions will apply either one of these criteria.In England the criterionof of rendition or thestate the norms ofwhich were applied during the proceedings. nationality oftheaward willarise. Theawardeither bears thenationality ofthestate arbitration clause andformalisticapproach toits interpretation. Union ofIndia vMcDonnellDouglas applicablethey would include this express choice theirin agreement toarbitrate. foreignarbitration act the contract. in Ifparties wanted English procedural law to be English procedurallaw. This line ofthinking disregards the purpose ofstipulating proclaimswillbe applicable only thattheAct in thosepartswhere is consistentwith it Union of India v McDonnell Douglas McDonnell India v of Union arbitration law. oftheir arbitration and which are not inconsistent with the choice ofEnglish Parties may combinedifferent procedural laws andputthem hierarchicalin When choosing foreign procedural law to apply toarbitrationthe question of Saville J.gives priority toEnglish curial law over IndianArbitrationAct and 57 supra note 9 gives agoodexampleof baddrafting of 23 CEU eTD Collection 60 59 provisions may include thefollowing: related toarbitral procedure thanwhich arerelated tosubstanceofthedispute. Such compliance withmandatory provisions ofthat law cannot beignored. subject matter.” mustpublic respectinternational policyboth with respecttoitscontentand be treated fairly andwithequality (i.e. internationaldue process); and the award conform withcome or within the terms ofthe arbitration agreement; theparties must observed by arbitrators while conducting arbitral proceedings: “the arbitrationmust argues thatNew York Convention stipulates just threestandardsthat must be norms cannotbe bypassed by arbitrators if they want to render avalid award. Lew Antitrust andtax laws may beagoodexample ofsuchmandatory provisions, these apply byvirtue of theirspecial purpose, irrespective of any choice of law rules.” countries have enacted mandatory norms aspart of their substantive law which govern their arbitralproceedings. “In order to protect their public interest, many certainjurisdiction which parties must theyaretochoosethis complywith if law to 58 Petrochilos Lew Klaus Peter Berger Peter Klaus as necessary qualifications for an arbitrator. certain forms of interim protection; requirements of nationality or religious conviction ofan uneven number of arbitrators; a prohibition on the tribunal to order any or obligation to have the award notarized; a requirement that the tribunal be composed non-derogable obligation on the arbitrators to state reasons for an award; an …a limitation ofadmissible evidence to that which would be admissible in court; a It ismuch hardertopinpointmandatory provisions of state laws which are Mandatory norms ofastatecan bedefinedasimperative provisions oflaw of a Mandatory norms of a 2.2.1 state. 2.2 supra note 2, p. 188 p. 2, note supra Limitations to the party autonomy. party the to Limitations 59 note 1, p. 84 However partiessubjected if theirdisputeto acertain arbitri lexloci supra note 2,p. 688 note 24 60 58 CEU eTD Collection under English Arbitration Act of1950. because concludedit that arbitrators failed to appoint anumpire asitwas required Florence refused recognition ofthe award rendered under procedural law ofEngland reffering toICCRules had“internationalized” arbitralproceedings. procedural normswhich regulate litigation before DutchState courtsand parties by arbitri ofthe forum state (the Netherlands) doesnot imply theapplication of their importance and arereplaced byprocedural requirements ofinternational nature when itcomes tointernational arbitration. Mandatoryprocedural norms arelosing come conclusion. toaright interpret provisions offoreign procedural lawwhich isunfamiliar it with andfailed to may arisefrom an issueofmandatory procedural norms, theItalian courthad to appointment ofthearbitrators. This casecan beagoodillustration ofdifficulties that England court heldthat the award didnotviolate provisions of nationallaw as tothe requirement ofArticle V1 (d) of the New York Convention. At thesame time in the internationalarbitration itcanhardlyjustified. be Thisview was supportedbyICC in mandatory proceduralstate norms todomestic arbitration undisputedis but as to jurisdiction regarding procedure which arenotalways beneficial. application The of the price they pay is that they have to comply withmandatory norms ofthat Mehren, 62 1987) (Kluwer LawInternational XII - Volume XII 1987, Volume Arbitration Commercial Yearbook (ed), 61 Rederi Aktiebolaget Sally v S.R.L. Termarea, Tibor Várady, John J. Barcelo III, Arthur T. Arthur T. von III, J. Barcelo John Várady, Tibor Termarea, S.R.L. Sally v Aktiebolaget Rederi den Berg Jan van Albert 1986 in 5029 in 16 Case No. July Awardof 5029, Interim No. Award ICC On theotherhandnational legislations are moving towards uniformity oflaw However case in Parties will enjoy alevelofassistance from lex arbitriofachosen forum state, Award No.5029 International Commercial Arbitration A Transnational Perspective ATransnational Arbitration Commercial International in whicharbitral tribunal stressed that the application oflex Rederi Aktiebolaget Sally vS.R.L. Termarea 62 25 This was held to be sufficient to satisfy , (West, 2009) p. 82 p. 2009) (West, , 61 Court of Appeal of CEU eTD Collection fairness, the right oropportunity tobe heard andequaltreatment.” norms. thatdueprocess Kurkelaargues covers of: issues “naturaljustice,procedural enforcement sought. is and are: due process and public policy of thestate where recognition and grounds forrefusalthe of enforcement ofawardthe underNew York Convention 63 unequal positionsthe in objective sense,laws oftheirlocaljurisdiction may impose procedural norms tobothparties in thesameway. Butsometimes parties arein arbitral proceedings canbeinterpreted way toapply inastrict asdutyofarbitrators a full opportunity ofpresenting his case.” more “Theparties shall limited: betreated with equality and each partyshall begiven ModelLaw Article in 18provides adefinition of dueprocess scopeof which ismuch procedural “ aside ofthe award intheNew York Convention. conducting arbitral proceedings astheyare also included asgroundsfor setting parties undisputedly must comply with thesetwo limitations totheir autonomywhile principles areimplementedmajority ofleading inthelaw of the jurisdictions and such asrequirementsprocess ofdue andproceduralfairness. These international 66 Kurkela] 17 [hereinafter 2005) p. 65 64 ] Kröll Lew,Mistelis, 95 2003),[hereinafter LawInternational, (Kluwer Julian D. M. Lew, Loukas A. Mistelis, Stefan Kröll, Stefan Mistelis, A. D.M.Lew,Loukas Julian Article 18 of UNCITRAL Model Law on International Commercial Arbitration Commercial ModelLawonInternational 18ofUNCITRAL Article Inc., Publications (Oceana Arbitration Commercial Due Process International in S.Kurkela, Matti V New Convention, V 1(b), 2(b)ofYork Articles There isnoagreement between scholarson definition and extent ofdueprocess This provision needs to be examinedmore closely. Equality ofthe parties during “The arbitration tribunal shall guarantee a number ofprinciples that constitute the .. Due process 2.2.2 requirements. magna carta ofarbitration .” 66 26 63 Thesetwo principles areincluded as Comparative international commercial arbitration commercial international Comparative 65 UNCITRAL 64 CEU eTD Collection 67 the opposing party and points of reasoning ofthe award. opportunity must beprovided regarding all aspects of arbitral process, arguments of preference even objectivelyif parties were treatedunequally. way thatatthe end neither of the parties can claim that the other party was given “equality ofthe outcome” orsubjective equality –arbitrationmust beconducted in a restrictions as to obtainment ofevidence, time limits etc.I think that drafters meant 69 68 be put thewill samein as situation in enforcement ina jurisdiction which is foreign to arbitral proceedings foreign courts procedural requirements ofserving the notice will beapplied. Ifthe party seeks issue ofproper notice, ifparties submittheir proceedings tocertainsystem of law proceduralrules which were chosen bytheparties. courts must beguidedbyarbitration agreementthe parties andapplicable of otherwiseunable to present hiscase” notice ofthe appointment ofthearbitratoror of thearbitration proceedings orwas Convention if:“Aparty against whom the award is invoked was notgiven proper assist parties on issuesofpresentation ofargumentswhatsoever. mannerbest serve thatwill theirneeds. Arbitrators are not positionin toadvise or right party’s tobeheard.It duty is also to presentevidence andarguments ina heard for purposes of delaying the proceedings itmay betreated as a waiver ofthe arguments inatimely andeffective manner. If thepartywillabuse its righttobe provides parties onlywith anopportunity tobe heard,it is parties dutyto present its Petrochilos Kurkela V1(b)of New Convention the York Article Each partymust begiventheopportunity tobeheard effectivein manner. This Party may berefused recognition and enforcement oftheaward under New York supra supra note 60,p.18 note note 1, p. 82 Rederi Aktiebolaget Sally vS.R.L. Termarea 68 . Inaccessing whether thenotice was proper 27 69 Thereisnouniformity astothe 67 Due process requirement . CEU eTD Collection performedduties their a lawful in manner. natural justice, parties and arbitrators did not abuse their powers, and arbitrators system of guaranteesthattheproceedings are conducted in linewiththe conceptof shall be applicable toarbitral proceedings these normswillserve asafall back individual case.” processandqualifypart ofdue specify and partly what constitutes due process in Convention index.cfm/cid/19 73 72 71 place” took arbitration where the the country the oflaw with accordance in not was suchagreement, or, parties offailing the the agreement with accordance wasnotin procedure 70 policy as: Report onPublic policy by international LawAssociationdefines international public which hasatendency to be injurious tothe public, oragainst thepublic good.” a definition of “that principle of law which holdsthat no subject can lawfully dothat define itmay theHouseofLords betracedasfarto1853when Englandin gave it to defineand which “isneverarguedbut atall where otherpoints fail.” 74 Lew, Mistelis, Kröll Hunter Redfern, Kurkela orthearbitral authority ofarbitral “The composition V New Convention: 1 (d)ofYork Article Report on Public policy by international Law Association, by policy international on Public Report rendered or ofits contents. would entail their violation on account either of procedure pursuant to which it was international commercial arbitration when recognition and enforcement saidof award the recognition or enforcement ofan arbitral award rendered inthe context of Body of principles and rules recognized bythe State, which, by their nature, may bar Kurkela further arguesthat the“two elements ofArticle V1(d)ofNewYork .. Public policy 2.2.3 limitations. Publicpolicy is a concept in internationalcommercial arbitrationwhich hardis supra 70 , i.e.thearbitration agreement andthelaw of theseatarbitration, are note 60,p.19 note (accessed in March, 2010) March, (accessed in supra 71 supra Ifparties stipulated thatprocedural lawofthe seatofarbitration note 18,10-51 note note 58,p. 722 note 74 28 http://www.ilahq.org/en/committees/ 72 Attempts to 73 Final CEU eTD Collection Foreign Arbitral Awards, (master thesis, Central European University), 2009, 5 2009, European University), Central thesis, Awards, (master Arbitral Foreign 77 well as proceduralwellaspects.” other treaties, covered fundamental principles oflaw and justice substantivein as the term public policy, which wasused in the 1958 New York Convention and many the view ofCommission on drafting UNCITRAL ModelLaw: “Itwas understood that index.cfm/cid/19 76 Sheppard] [hereinafter dispute-management.com/samples/freearticles/tv1-1-article_67.htm 2004, 01, 1,issue Volume Management, Dispute Transnational Standard?, 75 annulment atplace ofarbitration.” reasons in the award; manifest disregard ofthe law;manifest disregard ofthefacts; the compositionin of the tribunal;breach ofnaturaljustice; lackofimpartiality; lackof came upwitha listof possible proceduralpublic policy grounds which include International LawAssociation Committee onInternational CommercialArbitration domesticthe awards asto issue of international public policy: “Arbitral awards shall conducting arbitration inawayserve thatwill justice. substantive andprocedural requirements thatmust beobserved for thepurpose of there is a need for internationalpublic policy concept which will include basic withthe norms ofeveryjurisdiction inthecourse ofarbitralproceedings. That whyis from jurisdiction tojurisdiction, hard it is if almost impossible forarbitrators tocomply number of“most basicnotions of morality and justice” public policy which is narrowed toserve the needs of international arbitration oras a awardsmust bedistinguishedfrom domestic ones. Itcanbeseen as adomestic Andrey Ryabinin, Procedural Public Policy in Regard to the Enforcement and Recognition of and Recognition Enforcement Regardto the Policy in Public Procedural Ryabinin, Andrey Report on Public policy by international Law Association, by policy international on Public Report a Global be there awards:Should Arbitral of Enforcement andthe Policy Public Sheppard, Audley Public policy includesboth procedural and substantive mattersexpressed as in Civil CodeofFrance recognized thisdistinction between international and Internationalpublic policy standards which areapplicableto international arbitral (accessed in March, 2010) March, (accessed in 75 After examining caselaw of majorjurisdictions 76 29 http://www.ilahq.org/en/committees/ 77 Public policy provisions vary (accessed in March,2010) (accessed in http://www.transnational- “ fraud CEU eTD Collection should bethefounding stones ofevery legalorder” recognizedwidely values which, according totheprevailing valuesinSwitzerland, that “anaward isinconsistent with public policy if disregardsit the essential and 82 81 public policy toresist,or atleastdelay, enforcement.” application ofpublic policy by Statecourts encourage thelosing partyto rely on other hand “uncertainty andinconsistencies concerningthe interpretation and the award which was rendered with significant breaches of procedural laws onthe http://www.umbricht.com/pdf/SwissPIL.pdf 80 79 78 with Swiss publicpolicy( Swiss PILS stipulates thataward may bechallenged “Iftheaward isincompatible that touches the foundation oftheState and economic functions.” arbitral award canonlybedenied ifthearbitral procedure suffers from a gravedefect “from the viewpoint ofGerman proceduralpublic policy, therecognition ofaforeign policy standards to international arbitralawards thantodomestic ones. Forexample, contrary to public internationalorder.” claiming arightunder it andwhererecognition of the samewould notmanifestly be be recognized in France where theirexistence hasbeenestablished bytheone Sheppard X Y, v ASA Bulletin Vol. 4no 3 (2006), 550 – 560 Article 190 of Switzerland’s Federal Code on Private International Law, International Code onPrivate Federal 190ofSwitzerland’s Article Hunter Redfern, Procedure Civil Codeof 1498 ofFrench Article While While internationalpublic policy concept is agoodtoolfor parties tochallenge In generalstate courts mostin ofleadingjurisdictions apply more lenient public supra note 74 note supra note 18,p.459 note ordre public (accessed in March, 2010) March, (accessed in )”. 78 80 Inoneoftherecentcases Swiss courtheld 30 81 82 79 Article 190 of 190 Article CEU eTD Collection df http://www.gide.com/front/EN/telechargement/pdf/bureaux/GLN_DoingBusinessInUkraine_EN_2010.p 84 2009 http://www.klgates.com/newsstand/Detail.aspx?publication=5670 83 were domestic arbitration cases. country, had altogether 1659 cases in 2003 – 2007, overwhelmingmajority of which According tostatistics ICAC Ukraine, whichmajor is the arbitrationinstitution inthe Arbitration Commission attheChamber ofCommerce andIndustryofUkraine.” Chamber ofCommerce andIndustry of Ukraine (the ICAC); and The Maritime (both situated in Kyiv): TheInternational Commercial Arbitration Court ofthe arbitration cases butonly “twopermanent international commercial arbitration courts arbitrations hadalso increased. business relations are ontherise inUkraine becauseof that number ofinternational http://www.arbitrationonline.org/research/ArbitrationInstitStat/index.html 85 (which includes Ukraine) increased by10% compared to2007. domestic ones.Statistics of the ICC show that the number ofparties from CIS region to useservicesrecognized ofwell international arbitral institutions ratherthan usedbybusinesswidely community, incaseofinternationaldisputes partiesprefer years makingarbitration a reasonable alternative. domesticWhile arbitration is State courts are overloaded with cases and proceedings may takeupto several country Ukraine doesnot provide arbitrationfriendly environment notan andis easy Legal Aspects of Doing business in Ukraine 2010, Gide Loyrette Nouel Loyrette 2010,Gide Ukraine Doing business in of Aspects Legal Parties”, European with andEastern Russian Arbitrating “Challenges Ahead: M.Birch, Marcus School of International Arbitration, Arbitration Institutions / Statistics [hereinafter Legal Aspects of Doing Business in Ukraine 2010] Ukraine in Business ofDoing LegalAspects [hereinafter There are more than60 arbitral institutions in Ukraine which dealwith domestic Arbitration became awell recognized alternative tocourt proceedings inUkraine. While beingWhile amember oftheNew andUNCITRALYork Convention Model Law 3. APPLICABLE APPLICABLE PROCEDURAL LAW IN UKRAINE 3. 85 31 83 International 84 CEU eTD Collection that the relevant court hasjurisdictionto consider the issue ofthe enforcement and municipal courts for the enforcement ofthese awards as a rule parties must prove enforcement procedure forthistypeofarbitralawards. filingWhen anapplicationto addition both Civil and Commercial Codes ofUkraine aresilent as to the 89 104 2002), 88 arbitration”] commercial Law “Oninternational the [hereinafter http://www.ucci.org.ua at available No.25, p.198,English version 1994, Ukraini, Radi Verhovnoi Vidomosti 87 Review Arbitration 86 jurisdiction toarbitrate in. this type ofICAC awards incase oftheirenforcement intheterritory ofUkraine. arbitral awards andprovisions of New York Convention are held tobe inapplicableto Awardswhich are rendered regarding this of proceedings are treated as domestic partieswhichare located within theterritory of Ukraine) asinternational disputes. nature (because theydid notarise inacourse offoreign tradeandarosebetween an exact translation of Model Law. mirrors provisions of UNCITRAL Model Lawalthough the wording of theLaw is not special domestic law “On InternationalCommercial Arbitration” which, ingeneral, Ibid. Tsirat, G.A. No. 4002-XII, 24.02.1994, arbitration”, commercial of international 1(2) theLaw“On Article Ukraine”, in Arbitration ofInternational andRealities Trends “Emerging Khomyak, Marta and other subjects of the law of Ukraine. between the participants of such entities; as well as disputes between such entities associations and organizations established in the territory of Ukraine; disputes - investment,enterprisesbetweenforeignarisinginternationaldisputeswith that the place of business of atleast one ofthe parties is situated abroad; as well as course of foreign trade and other forms of international economic relations, provided - disputes resulting from contractual and other civil lawrelationships arising inthe international commercial arbitration: Pursuant toanagreement ofthe parties, the following may bereferred to Article1 (2) ofthe Law provides: Second paragraph of this article treats disputes which are domestic intheir Mishnarodniy Komertsiyniy Arbitrash , 2008 http://www.magisters.com/publication.php?en/741// 86 International arbitration Ukraine in regulated is bya 87 32 [International Commercial Arbitration] (Istina, Arbitration] Commercial [International [hereinafter Khomyak] [hereinafter Global 89 In 88 CEU eTD Collection foreign state court which is notcorrect but nevertheless certainunified and logical judgements inUkraine”. This law treated foreign arbitralaward asajudgment bya regulated bythe Law of Ukraine “Onrecognition and enforcement offoreign court arbitral institutions favors the view that law hadbeen developed onthis issue andat thesame time practice ofpermanent arbitrators will interpret their choice asachoiceof substantive law. Sofarnocase because, abiding provisions ofthe law “On internationalcommercial arbitration”, for them to simply thesystem indicate law applicableof tothewhole dispute procedural law applicable toarbitration aside from substantive law. Itisnotenough partiesto arbitration whichwill takeplace inUkrainehave anopportunityto indicate the logic of UNCITRAL ModelLaw such an opportunity must beprovided. Ithink that Khmelnitskogo instityty regionalnogo ypravlinnia ta prava ta regionalnogo ypravlinnia instityty Khmelnitskogo arbitration], commercial ininternational law international foreign review to opportunity [An 91 http://www.kisilandpartners.com/ukr/publications/articles/21/ Ukraine.], of and Industry ofCommerce Chamber the at andMIC ICCA awardUkraine of in orhowtoenforce analogy [Procedural Ukraini” pri TPP 90 arbitration thathas aplace inUkraine. foreign statecannot beapplied togovern “internal”procedure ininternational applicableto thedispute. Some scholarsinUkraineargue thatprocedural norms ofa foreign system shallof law beinterpreted as to indicateasystem of substantive law same time Article 28 of the Law stipulates that any reference by the parties toa tribunalmay conductarbitralproceedings ina way itdeems tobeappropriate. Atthe rules to be followed by arbitraltribunal. In the absence of a party choice arbitral legislator thein nearfuture. should notbepartiesthis concern. V.V.Bogatir, “Moshlivist’ perevirki inozemnogo prava v mishnarodnomy komertsiynomy arbitrashi”, komertsiynomy mishnarodnomy v prava inozemnogo perevirki “Moshlivist’ V.V.Bogatir, MAK MKAStshi rishennia Ukraini v vikonati abo yak analogiya Perepelinska,”Protsesyal’na Olena Up until2005 recognition andenforcement offoreign arbitral awardswas Article 19oftheLaw provides thatthe parties arefreeto agree onprocedural 90 This lacuna This oflawmust beaddressedbythe 91 lex arbitri Idisagree with thisview. IftheLaw follows 33 Yuridichniy shyrnal Yuridichniy , (2003): 262 (2003): , is lex loci arbitri , no. 3, . Visnik CEU eTD Collection arbitral award” grounds stipulated underthe application for recognition andenforcement offoreign the court cannot go into the merits of the case and must baseits decision on considering applications forrecognition and enforcement offoreignarbitral awards confirmed thatcourtsshouldnotreview arbitration awardsonthe merits: “while 21.10.2009 93 Pravo cancellation], ofits consequences andlegal arbitration ininternational awards of aside arbitral setting grounds of [Procedural yogo skasyvannia”, naslidki pravovi I arbitrashy 92 extended. mirrors relevant provisions of the New York Convention, exclusiveis and cannot be included inArticle 34oftheLaw “On International commercialarbitration” and concluded thatthe listofgrounds ofsetting asideforeignarbitral awards,which is Sea Shipping CompanyvBlack Sea Shipping Company recognition and enforcement ofarbitral awards. In a case of CivilProcedure higher courts had to clarify for localcourts the procedure of their jurisdiction orincorrectly applied provisions ofNew York Convention. judgment” alotofinstances andin inexperienced municipalcourts failed toassume addition new Code ofCivilProcedure didn’t provide adefinition of “foreign court was transferredtocourtsoffirst instance at the principalof thedebtor. location In jurisdiction tohearcaseson recognition and enforcement offoreignarbitral awards enactment ofnewCode Procedure ofCivil ofUkrainethis lawlost its forceand hear cases of recognition andenforcementof foreign arbitralawards. After the court practice was established. Under this law appellate courts had jurisdiction to Stoninton Ltd. v. OJSC “Primorecs”, Supreme Court of Ukraine, no. 83/2007 Decidedon no.83/2007 Court ofUkraine, Supreme OJSC“Primorecs”, Ltd. v. Stoninton komertsiynogo mishnarodnogo rishennia osporiyvannia pidstavi “Protsesyalni Zaharchenko, T.G. Because previous court practice was destroyed by enactment ofthe new Code , no. 3, (2003): 72 no. 3,(2003): , 92 In 93 Stoninton v.OJSC Primorecs, 34 theSupreme CourtofUkraine Supreme CourtofUkraine Azerbaijan State Caspian Syspilstvo. Dershava. CEU eTD Collection execution oftheaward. enforcement another is procedure bywhich party can obtain aspecialcourt order for spreading thejudicial force oftheaward ontheterritory ofUkraine while relevant state court.Recognition ofthe award seenasaspecial is court procedure of recognition and enforcement ofthe award two applications must besubmitted to a is notasinglestep judicialaction inUkraine. Inorder forapartyto apply for 98 Ukraine in Procedure 97 96 95 2007), 150 Ure, (In Theory andLaw] Ukraine: in Arbitration Commercial [International 94 arbitration under thelaw of thatcountry” occasion when “thesubject matter ofthedispute is notcapableof settlement by Arbitration” includeas one of thegrounds for setting asideof arbitralaward the to stateneeds.” conclusion, amendment, termination orperformance of commercialcontracts related invalidation of acts (statutory andnon-statutory acts); disputes arising from listed in any dispute could be submitted to international arbitration, except a few exceptions are scatteredthrough different legislativenorms. cannot besubmitted tointernationalcommercial arbitration, instead theseinstances is indeedso.Ukrainianlegislation does not provide exhaustive listofdisputes which resolved ininternational arbitration asa“nightmare scenario” sought. Lew treats thisright ofStates tocontrol thesubject matters capable ofbeing Khomyak note note supra 79 Khomyak Lew Arbitration” Commercial Law 34ofthe International “On Article Pobirchenko, I.G. Article 234 of the Code of Civil Procedure of Ukraine, Article 12 of the Code of Commercial Codeof the 12of Article Ukraine, of Procedure Civil Codeof the 234of Article It isnecessary to point outthat recognition and enforcement ofanarbitral award Both New York ConventionandUkrainian law “On International Commercial supra the Commercial ProceduralCode, which were:disputes with respect to note 2, p. 179 p. 2, note 98 Mishnarodniy komertsiyniy arbitrash v Ukraini: Teoriya zakonodavstvo ta Teoriya Ukraini: v arbitrash komertsiyniy Mishnarodniy 94 35 95 whererecognition andenforcement is 97 “Until 2005,underUkrainian law, supra note 80 note 96 . IncaseofUkraine it , CEU eTD Collection provides thatamong othersto arbitration cannot besubmitted cases: disputes cannot be submitted tointernational arbitration. Article 77ofthis law exemptions when exclusive jurisdiction ofState courtscannot becircumvented and 100 2005,No.32 Radi Ukraini, Verhovnoi 99 Ukraine and disputes regarding cannotit be subject toarbitration due tomandatory that thedispute involved immovableproperty which islocated onthe territory of CommercialCourt ofUkraine refused toenforce foreign arbitralaward ontheground Company “Ferrum Invest Plus” andCapital Investment GroupInc.Supreme aside on one ofthese grounds whichare very wide. Inacase between Private subjected toUkrainian substantive and procedural law and the award may beset institutions which are located within the country asdomestic arbitral courts. is regulated byseparate law, legislator treats internationalarbitration tribunals and that these restrictions apply to “arbitral courts” and, although international arbitration any “prejudicialeffect” commercialin litigations.” cause issue of any public acts;facts established by arbitration tribunals do nothave facts oflegal importance; arbitralawards should not interfere thesector publicin and summarized asfollows: arbitration tribunals are nolonger competent toestablish of private arbitration tribunals became incertain restricted other issues, to be Article 77 of the Law of Ukraine “On Private International Law” International “OnPrivate Law 77ofUkraine the of Article Legal Aspects of Doing Business in Ukraine 2010 Ukraine in Business ofDoing Aspects Legal take precedence. istered in Ukraine; and other cases where Ukrainian law provides that national courts entity in Ukraine; cases involving issue or cancellation ofsecurities officially reg- governmental organizations, charitable foundations or other associations, or a legal Ukraine; a dispute relating to arising from IP rights that are secured by registration orpatent certification in …where the dispute relates to immoveable property located inUkraine; adispute Act onPrivate International Law of 2005dramatically extended alist of These restrictions areapplicableto international arbitralproceedings whichwere “According tothe2009Amendments tothelaws onarbitration, the competence 99 registration or dissolution offoreign companies, non- 36 supra note 78 note 100 It is Itis importantkeep to inmind ʋ 2709-IV, 23.06.2005, Vidomosti 23.06.2005, 2709-IV, CEU eTD Collection Hvilia Ltd., Supreme Commercial Court of Ukraine, no. 29/117 Decided on02.07.2009 no. Decided of29/117 Ukraine, Court Commercial Supreme Ltd., Hvilia 104 no. 12 24,1999, December ofUkraine”, territory the within arbitration commercial international in awards rendered and arbitral judgments of foreign andenforcement recognition 103 on03.04.2008 Decided 102 of Ukraine, no. 1/57- no. Ukraine, of 101 state restrictionlaw. of in New York, USA. shareholders agreementbe resolved shall byarbitral tribunal whichwillhave its seat included anarbitration clausewhich provided thatanydispute inconnection with submitted theirshareholders agreement tothelawofUS. The agreement also and Leafprem Company Ltd. and Ukrainska Hvilia Ltd. on the other side parties between Hatwave Amerikan Hellenac Telekommunications Ltd.ononesideWave domestic one which spaceleaves forabuse of thisdoctrinebycourts. Inadispute and doesnotprovide forthedistinction of international publicorder from the needs ofthe state.” disputes which arise connectionin with contractswhich involve satisfaction ofthe Invest Supreme CourtofUkraine held that “to arbitrationcannot be submitted meeting are subject to provision of Civil Code of Ukraine and the Law of Ukraine “On determination of its competence, procedure of decision making andshareholders between foundersofalegalentity Ukrainein concerning formationof its organs, and basic constitutional rights, freedoms, liberties etc.)” (whichare relevant toitsindependence, integrity, self-determination andimmunity, State, definedorder ofthe principles thatconstitute theb and dueprocess. TheSupreme CourtofUkraine defined public order as“... legal comes torecognition and enforcement of foreign arbitral awards include public policy Hatwave Hellenac Amerikan Telekommunications Wave Ltd. v Leafprem Company Ltd., Ukrainska Ltd., Company vLeafprem Ltd. Wave Telekommunications Amerikan Hellenac Hatwave applications for bycourts ofreviewing practice ”On ofUkraine court ofSupreme Resolution 114/2006, no. CourtofUkraine, Supreme – AutoVAZ Invest v FundofUkraine Property State Private Company “Ferrum Invest Plus” v Capital Investment Group Inc., Supreme Court Economic Supreme GroupInc., Investment Capital Plus” v Invest “Ferrum Company Private Another two groundswhich are commonly abusedbyUkrainian courtswhen it ɉȾ 102 -09, Decided on30.11.2009 -09, 104 Supreme Commercial Court ofUkraineheld that “relations 101 InanothercaseStateProperty FundofUkrainevAutoVaz- 37 103 ɚ This definition is very wide sis system ofexisting legal CEU eTD Collection Hvilia Ltd., Supreme Commercial Court of Ukraine, no. 29/117 Decided on02.07.2009 no. Decided of29/117 Ukraine, Court Commercial Supreme Ltd., Hvilia 105 international commercialarbitral tribunals.” submit corporatedisputes between shareholders andother participants to order. Joint stock companies thatareregistered inUkraine donothave arightto norms areimperative bytheir nature andtheir violation isinconsistent with public commercial enterprises” and cannot be subjected to laws ofaforeign State. These judges areunwillingto become familiar with it. Courts are inexperienced when comes it tointernationalcommercial arbitration and recognition andenforcementmake thisprocedure anightmare forthecreditor. institutions orwestern jurisdictions. Laws ofthestatewhich areapplicable to arbitration market. Foreign businessmen preferto resort toeither well known Hatwave Hellenac Amerikan Telekommunications Wave Ltd. v Leafprem Company Ltd., Ukrainska Ltd., Company vLeafprem Ltd. Wave Telekommunications Amerikan Hellenac Hatwave All these factors described above make Ukraine less competitive on global 38 105 CEU eTD Collection extraordinary circumstances ofthecase require them to doso and must proceed cannot beseenas a nostrum. Parties mayresort tothisoption only when system order andfromof legal seat ofarbitrationthe lawof isamere optionthat reduces suchpositive effectsof arbitration as finality andefficiency. judges ofwhich are not bound in anysense by thedecision oftheir colleagues. This enforcement onejurisdiction, in the party canstill applyfor itinadifferent jurisdiction parallel proceedings. Intheeventthat an awardwas deniedrecognition and of itsdomestic laws. Another complication istheso-called “forum shopping” and country canremainhostile tointernationalarbitral proceedings andawardsbyvirtue which both is asignatory of the New York Convention and an UNCITRAL Model Law jurisdiction to jurisdiction. As shown onthe example ofUkraine, even a country interprets these provisions and this interpretation willmost likely varyfrom of groundsfor setting asideofthearbitral award, stillthe municipal itis judgewho internationalarbitration and although New York Convention contains an exclusive list such awards inaspecific jurisdiction. reveals thatthere are stillseveral problemswhen itcomes totheenforcement of works. Discussion on the topic of delocalized arbitration and a-nationalawards York Convention and theconcept ofdelocalization on is theriseatleastinscholarly principle. Today, domestic laws more arbitration-friendly inorder to enhance the party autonomy to compete onthestill growingmarket, leading arbitraljurisdictions have made their CONCLUSION The author is oftheopinion thatdetachment ofarbitralproceedings from any Although countries aremoving towards uniformity oftheirdomestic laws on In thepastfifty years, international arbitration hasseendrastic changes.In order lex loci arbitri plays a much lesserrole playsa asitdid priorto the New 39 CEU eTD Collection level ofsupport provided by resort to law oftheseat ofarbitrationcan be convenientboth for certainty andthe with caution. great For businesses which are inexperienced in arbitral proceedings Conventionand may evendeem be it to inapplicable. The author isofthe opinion courts of first instance, where the judges areunfamiliar with theNew York enforcement ofarbitral awardswere transferredfrom appellate courtstomunicipal policy of the state where recognition is sought). The powers of recognition and courts (agoodexample therequirement is ofcompliance oftheaward with public New York Convention aresubject toabuse and wide interpretation byUkrainian unfamiliar tocommon law concepts asanalogy oflaw. the relevant courtthat it has jurisdiction over thedisputed mattersuch using arbitral proceedings andoftenthe partyseeking enforcement will havetoprove regulation asto the mechanism of enforcement ofawards rendered ininternational an easytaskandcan bebothresource and time consuming. There isnoclear internationalarbitral proceedings andcollateral effectof these norms. these restrictions duetolackofdogmatic distinction between domestic and different nature, international commercial arbitration nevertheless became subject to domestic arbitral tribunals were imposed by the legislature. Being ofcompletely businesses. To fight this, heavy restrictions as totheextent oftheauthority of on theoverloaded court system, butquickly becamefor atool abuse handsin of big mainpurpose: justice. These institutions had been introduced to lower the pressure tribunals, introduced shortly afterproclamation ofindependence, didnot serve their The grounds for recognition and enforcement ofarbitral awards stipulated in the Recognitionenforcement and ofanarbitralaward Ukraine rendered in isalso not Arbitration inUkrainemay beachallenge for a western lawyer. Domestic arbitral lex loci arbitri 40 . CEU eTD Collection detail togetherwith additional amendments ofexisting special statutes. relevant chapter tothe CivilCode ofUkraine which wouldregulatethe procedure in definition ofa“foreignarbitral award” intodomestic legislationof Ukraine andadda internationalarbitral proceedings more itisnecessaryto efficient, include the that inorder tomake recognition andenforcement ofarbitralawards rendered in 41 CEU eTD Collection 9. Marta Khomyak,9. “Emerging Trends and Realities ofInternationalArbitration in Edin Karakas, “Origin of Arbitral Awards and Its Impact 8. on Applicable 12. LegalAspects of Doing business Ukraine in 2010, Gide Loyrette Nouel 11. Gerry Lagerberg, Loukas Mistelis, “International Arbitration : Corporate Matti S. Kurkela, Due Process in International 10. Commercial Arbitration Roy Goode, “The Role of the Lex Loci Arbitri in 7. International Commercial W. Lawrence Craig, William W. Park, Jan Paulsson, International 6. Chamber of Gary B. Born , International Commercial Arbitration (Kluwer5. Law International, 4. 3. 2. 1. Books and periodicals: BIBLIOGRAPHY V.V.Bogatir, “Moshlivist’ perevirki inozemnogomishnarodnomy pravav Marcus M. 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AutoVAZ– Invest,of SupremeUkrainev Court of State PropertyFund . Rederi Aktiebolaget Sally v S.R.L. Termarea taken 9. from Tibor Várady, John J. Private Company “Ferrum Invest Plus” v Capital8. Investment Group Inc., Decided on21.10.2009 Ukraine, no. 114/2006, Decided on 03.04.2008 Transnational Perspective Barcelo III,Arthur T.vonMehren, Supreme Economic CourtofUkraine, no. 1/57- , (West, 2009) International Commercial Arbitration A 45 ɉȾ -09, Decided on 30.11.2009