Nature, Extent, and Role of Parties' Autonomy in the Making of International Commercial Arbitration

338 Pages·2016·1.93 MB·English

by  Nadia Salama

Nature, Extent, and Role of Parties’ Autonomy in the
Making of International Commercial Arbitration
Agreements.

A thesis submitted to the University of Manchester for the Degree of
Doctor of Philosophy
in the Faculty of Humanities

2015

Nadia Ramzy Salama
School of Law
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Table of Contents

Table of Contents ............................................................................ 2

List of Abbreviations: .................................................................... 11

List of Codes/Conventions/Rules: ................................................ 17

List of Cases and Arbitral Awards: ............................................. 20

Abbreviations of Frequently Cited Texts: ................................... 42

Abstract ........................................................................................... 45

Declaration ...................................................................................... 46

COPYRIGHT STATEMENT ....................................................... 47

Dedication ....................................................................................... 48

Acknowledgments .......................................................................... 49

1 Chapter I: Introduction .......................................................... 51

1.1 Purpose of the Thesis.......................................................................... 53
1.2 Delimitation of the Thesis .................................................................. 58
1.3 Structure of the Thesis ........................................................................ 61

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2 Chapter II: Theoretical and Historical Background ........... 64

2.1 Theoretical Background ..................................................................... 64
2.1.1 Legal Nature of Arbitration .................................................................. 64
2.1.1.1 Jurisdictional Theory .................................................................................. 64
2.1.1.2 The Contractual Theory ............................................................................. 65
2.1.1.3 The Hybrid/Mixed Theory .......................................................................... 66
2.1.1.4 The Autonomous Theory ........................................................................... 66
2.1.1.5 Comments .................................................................................................. 67
2.2 Parties’ Freedom of Choice ................................................................ 68
2.2.1 Contractual Freedom ............................................................................ 68
2.2.2 The Principle of Party Autonomy ........................................................ 70
2.3 Defining International Commercial Arbitration ................................. 71
2.3.1 Commercial .......................................................................................... 72
2.3.2 International ......................................................................................... 75
2.3.3 Arbitration ............................................................................................ 77
2.4 Historical Background ........................................................................ 78
2.4.1 History of the Party Autonomy Principle ............................................ 78
2.4.2 Development of International Commercial Arbitration under
Contemporary Legal Framework ....................................................................... 79
2.4.2.1 Historical Development of the NY Convention .......................................... 80
I The Geneva Protocol ...................................................................................... 80
II The Geneva Convention ................................................................................. 81
III The NY Convention......................................................................................... 81
2.4.2.2 The Model Law ........................................................................................... 83
I Definition........................................................................................................ 83
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II The Legislative History of the Model Law ...................................................... 85
III Main Purpose of the Model Law .................................................................... 86
IV Party Autonomy under the Model Law.......................................................... 88
2.5 Concluding Remarks .......................................................................... 89
3 Chapter III: The Agreement to Arbitrate ............................. 90

3.1 Definition ............................................................................................ 91
3.2 A Brief Historical View on International Arbitration Agreements .... 93
3.3 Types of the Agreements to Arbitrate ................................................ 94
3.4 Effects of the Arbitration Agreement ................................................. 95
3.4.1 The Positive Legal Effect of the Arbitration Agreement ..................... 95
3.4.2 The Negative Legal Effect of the Arbitration Agreement ................... 99
3.5 Concluding Remarks ........................................................................ 101
4 Chapter IV: The Nature of International Arbitration

Agreements ................................................................................... 103

4.1 The Separability of the Arbitration Agreement................................ 104
4.1.1 Definition ........................................................................................... 105
4.1.2 Justifications ....................................................................................... 106
4.1.3 Reference to Separability ................................................................... 107
4.2 Presentation of the Separability Presumption Nationally and
Internationally ............................................................................................ 109
4.2.1 The NY Convention ........................................................................... 110
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4.2.2 The Model Law .................................................................................. 112
4.3 Consequences of the Separability of the Arbitration Agreement .... 114
4.3.1 Potential Application of a Different National Law to the Arbitration
Clause than that of the Underlying Contract .................................................... 114
4.3.2 Potential Application of Different Legal Rules within the Same Legal
System ............................................................................................................ 116
4.3.3 Effects of Non-Existence, Invalidity, Illegality, or Termination ....... 117
4.4 Separability and the Parties’ Consent ............................................... 118
4.4.1 Arbitration without a Contract ........................................................... 120
4.4.1.1 Unusual Circumstances ............................................................................ 121
4.4.1.2 Unfinished Contracts ................................................................................ 123
4.4.1.3 Pathological Arbitration Agreements ...................................................... 124
4.4.1.4 Comments ................................................................................................ 127
4.5 Final Remarks: Addressing Misconceptions .................................... 128
4.5.1 Repudiation ........................................................................................ 130
4.5.2 The Void/Voidable Distinction .......................................................... 132
4.5.3 Application of the Consent Test in Commercial Arbitration ............. 137
4.6 Concluding Remarks ........................................................................ 139
5 Chapter V: Extent of Parties’ Autonomy in the Making

of Arbitration Agreements .......................................................... 141

5.1 Incapacity.......................................................................................... 143
5.2 Non-Arbitrability .............................................................................. 145
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5.3 Waiver of Right to Arbitrate ............................................................ 151
5.4 Public Policy and Mandatory Rules of Law ..................................... 158
5.4.1 Public Policy in General..................................................................... 159
5.4.1.1 Domestic Public Policy ............................................................................. 159
5.4.1.2 International Public Policy ....................................................................... 160
5.4.1.3 Transnational Public Policy ...................................................................... 164
I Definition...................................................................................................... 164
II Transnational and International Public Policy ............................................. 164
III Application of Transnational Public Policy in International Arbitration ...... 166
5.4.1.4 Procedural and Substantive Public Policy ................................................ 169
I Substantive Public Policy.............................................................................. 169
II Procedural Public Policy ............................................................................... 171
5.4.2 Mandatory Rules of Law .................................................................... 173
5.4.2.1 Definition.................................................................................................. 174
5.4.2.2 Mandatory Rules of Law in International Commercial Arbitration ......... 176
5.4.3 Mandatory Rules of Law and Public Policy ...................................... 178
5.4.3.1 Terminology ............................................................................................. 178
5.4.3.2 Effect ........................................................................................................ 179
5.4.3.3 Values ....................................................................................................... 181
5.4.4 Comments .......................................................................................... 183
5.5 Concluding Remarks ........................................................................ 186
6 Chapter VI: Role of Parties’ Autonomy in the Making

of International Arbitration Agreements .................................. 187

6.1 Seat of Arbitration ............................................................................ 189
6.1.1 Definition ........................................................................................... 190
6.1.2 Parties’ Autonomy to Select a Seat .................................................... 192
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6.1.3 Importance of Making a Seat Choice ................................................. 193
6.1.4 General Criteria in Selecting a Seat ................................................... 195
6.1.4.1 Likelihood of Recognition and Enforcement of an Award ....................... 195
6.1.4.2 National Courts’ Attitude at the Seat ....................................................... 196
6.1.4.3 Applicable Laws at the Seat ..................................................................... 198
6.1.4.4 Neutrality of the Seat ............................................................................... 200
6.1.4.5 Logistical Convenience and Practicality of the Seat ................................. 202
6.1.4.6 Comments ................................................................................................ 204
6.2 Selection of the Arbitrators .............................................................. 205
6.2.1 Restrictions of the Parties’ Autonomy to Select the Arbitrators ........ 206
6.2.1.1 Due Process and Equality ......................................................................... 207
6.2.1.2 Number of the Arbitrators ....................................................................... 208
6.2.1.3 Other Limitations on the Freedom to Select the Arbitrators .................. 212
I Limitations on the Nationality of the Arbitrators ........................................ 213
II Other Limitations on the Identities of the Arbitrators ................................. 214
III Contractual Limitations on the Selection of the Arbitrators ....................... 215
6.2.2 Appointment Process of the Arbitrators ............................................. 216
6.2.2.1 Parties’ Role in Appointing the Arbitrators .............................................. 217
6.2.2.2 Role of Appointing Authorities ................................................................ 218
6.2.2.3 Interviewing the Arbitrators .................................................................... 220
6.2.3 Neutrality of the Arbitrators ............................................................... 223
6.2.3.1 Definitions ................................................................................................ 225
6.2.3.2 Nature ...................................................................................................... 226
6.2.3.3 Timing ....................................................................................................... 227
6.2.3.4 Link ........................................................................................................... 228
6.3 Language of the Arbitration ............................................................. 230
6.4 Concluding Remarks ........................................................................ 232

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7 Chapter VII: Choice of Applicable Laws ............................ 233

7.1 Difficulty behind Multiplicity of Applicable Laws ......................... 234
7.2 Parties’ Express Choice of Law ....................................................... 238
7.2.1 Regulation of Parties’ Express Choice of law in National and
International Contexts ...................................................................................... 238
7.2.1.1 The NY Convention................................................................................... 239
7.2.1.2 The Model Law ......................................................................................... 242
7.2.1.3 Parties’ Procedural Freedom in National and International Contexts ..... 243
7.2.2 Parties’ Express Choice of Law ......................................................... 245
7.2.2.1 Parameters of a Wise Choice of a National Law ...................................... 247
I Familiarity and Neutrality ............................................................................ 247
II Enforceability ............................................................................................... 248
III Confidentiality .............................................................................................. 250
IV Other Qualities ............................................................................................. 253
7.2.2.2 Non-National Legal Systems .................................................................... 254
I Content ........................................................................................................ 254
A Lex Mercatoria ......................................................................................... 255
B General Principles of Law ......................................................................... 258
C UNIDROIT Principles ................................................................................. 259
D Custom and Trade Usages ........................................................................ 260
II Evaluation..................................................................................................... 262
7.3 Parties’ Implied Choice of Law ........................................................ 267
7.3.1 Parties’ Choice of a Seat .................................................................... 269
7.3.2 Parties’ Choice of Law in Main Contract .......................................... 272
7.4 No Express or Implied Choice of Law ............................................. 275
7.4.1 National and International Treatment of Choice of law absent Parties’
Explicit Agreement .......................................................................................... 275
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7.4.1.1 NY Convention ......................................................................................... 276
7.4.1.2 Model Law ................................................................................................ 279
7.4.2 Difficulties of an Absent Choice of Law ........................................... 279
7.4.3 A Possible Solution – The Validation Principle ................................ 280
7.5 Concluding Remarks ........................................................................ 285
8 Chapter VIII: Conclusion ..................................................... 286

8.1 Foundational Dimension .................................................................. 287
8.2 Distinctive Nature of Arbitration Agreements ................................. 289
8.3 Restrictions of Parties Arbitral Freedom .......................................... 290
8.4 Role of Parties’ Autonomy ............................................................... 293
8.4.1 Arbitral Seat ....................................................................................... 294
8.4.2 Selection of the Arbitrators ................................................................ 296
8.4.3 Language of the Arbitration ............................................................... 299
8.4.4 Choice of Laws .................................................................................. 299
8.5 Concluding Remarks ........................................................................ 301
8.6 Areas of Further Research ................................................................ 304
Bibliography ................................................................................. 306

Books ......................................................................................................... 306
Articles ....................................................................................................... 315
ICC Publications ........................................................................................ 329
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ICCA Congress Series ............................................................................... 330
ICCA Yearbook Commercial Arbitration ................................................. 331
PhD Theses ................................................................................................ 332
Blogs/Internet-links/Reports/Surveys/Others ............................................ 332
Sample of Model Arbitration Clauses ....................................... 336

The final word count of this thesis is: 87,712 words.
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