CHAPTER 2 THE PROCESS OF JUDICIALISATION AND THE
2.1 The Importance of Classification of the Sources of Law in the Context of
Although little attention is paid to the classification of the sources of law60 in international commercial arbitration, this matter is of general importance and it is of particular significance when discussion the implications of the process of judicialisation. It goes back to the theoretical foundations and nature of international commercial arbitration and the legal order(s) from which the latter derives its legitimacy61. The classification of sources of international commercial arbitration is
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In this and the following chapters the term “source of law” is understood to be a reference to sources of law governing both the arbitration proceedings and the merits of the dispute. When the analysis requires a differentiation between these sets of rules, this would be made clear.
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See generally Jan Paulsson, ‘Arbitration in Three Dimensions’ (2011) 60 ICLQ 291–323. Also Giuditta Cordero-Moss, ‘International Arbitration is Not Only International’ in Giuditta Cordero-Moss (ed), International Commercial Arbitration: Different Forms and Their Features (1st edn, OUP 2013) 8 stating: “(…) not only the law of the place of arbitration, but also other national laws may have an impact on arbitration, and that this is quite irrespective of whether the
necessary in order to understand and appreciate the complexity of modern arbitration, and to identify the variety of norms, which may be found applicable in arbitration proceedings.
The issues of defining and classifying the sources of law in arbitration are of importance when addressing questions related to the tension between the various legal orders that bring international commercial arbitration to existence. Is arbitration legally connected to a particular jurisdiction or is it truly autonomous? Where do arbitrators derive their powers from and what is the scope of their authority? Can arbitration function or continue to function without the support of the law of a particular state? What is the limit of party autonomy? Can parties alter the institutional arbitration rules applicable to the arbitration proceedings and to what extent? All these questions, although not directly bringing up the problem of classification of the sources of law in international commercial arbitration, are linked to legal norms that govern arbitration proceedings, their interpretation, application and binding/persuasive effect.
Apart from identifying those legal norms, a classification of the sources of law in international commercial arbitration has the purpose of examining the process of regulation and harmonisation in the field. A tendency of bringing rules to the system and developing stricter legal framework within which arbitration users can operate will be evidence of the on-going judicialisation process. Further regulation of the conduct and administration of arbitration proceedings will benefit and facilitate the judicialisation agenda, as it ensures greater certainty and predictability of the outcome of arbitral process. Besides, by developing a more advanced legal framework to govern the exertion of parties’, counsel’s and arbitrators’ rights and obligations, arbitration consumers highlight the importance of the way procedural and substantive justice is achieved.
The classification of the sources of law in international commercial arbitration can also be of significance to analyse some emerging trends in this field. Although it is
parties have chosen them to apply or have even decided that they shall not apply: the law of the place of enforcement (…) and, to a certain extent, the law applicable to the substance of the dispute (…)”.
widely accepted that there is no hierarchy of norms in international commercial arbitration, it cannot be denied that there is increasing differentiation between the sources of arbitration in terms of their binding and persuasive effect.62 Arbitral tribunals necessarily apply certain principles and considerations in order to weigh in the legal force and binding effect of the sources of law. It can be argued that the growing importance of questions related to the scope of party autonomy and public policy, the relevance of the law at the seat of arbitration, the applicability of general rules of law, the essence of arbitrators adjudicative function, and considerations as to procedural flexibility, legal certainty, and natural justice can be linked to an emerging hierarchical system of rules of law in international commercial arbitration. Such a development will complement the attempts to bring more certainty and predictability of the outcome of commercial disputes and more transparency in the decision-making process of arbitrators – evolution that can be associated with the judicialisation process of arbitration.
Finally and following the foregoing, a classification of the sources of law in international commercial arbitration sets the theoretical foundation for analysing the arbitrator’s decision-making process. A look in the “black box”63
is of importance in order to examine whether the judicialisation process can be traced to the decision- making process of arbitrators, making it similar or identical to the one applied by national judges. The increased regulation of arbitral process, the complexity of transnational commercial disputes and the higher expectations of commercial parties have allegedly transformed international commercial arbitration. As put by Catherine Rogers:
The modern international business environment has forced international arbitration to become a more formalised and legalized dispute resolution process. In its final incarnation, international arbitration is less recognizable as a form of ‘alternative
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See generally Moritz Renner, ‘Towards a Hierarchy of Norms in Transnational Law?’ (2009) 26 Journal of International Arbitration 533–555.
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A reference to the Bernhard Berger and Michael E. Schneider (eds), ‘Inside the Black Box: How Arbitral Tribunals Operate and Reach Their Decisions - ASA Special Series No. 42’ in (1st edn, Juris Net 2014).
dispute resolution’ than as a type of ‘offshore litigation.’ This transformation has been both celebrated and decried as the “judicialization” of arbitration.64
In order to analyse this transformation and to find out what the implications of the judicialisation process are, it will be necessary to correctly identify the legal framework, within which arbitration users exert their rights and obligations and which governs the conduct of arbitral process from its start to the enforcement stage.