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Some Reflections on the Nature of Arbitration

Published online by Cambridge University Press:  21 July 2009

Howard M. Holtzmann
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Extract

The Secretary-General of the United Nations, Dr. Boutros Boutros-Ghali, in his perceptive Introduction to this second Special Issue of the Leiden Journal of International Law notes that the occasion of this publication provides an opportunity for “reflections on international dispute settlement”. I respond to this opportunity by offering ten personal reflections based on experiences gained from participating for some years in the arbitral process as a lawyer, as a co-draftsman of a number of arbitration rules and laws, and, for the last decade, as an arbitrator on an international tribunal.

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Articles
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Leiden Journal of International Law , Volume 6 , Issue 2: Special Issue 1993: THE FLAME REKINDLED: New Hopes for International Arbitration , August 1993 , pp. 265 - 277
Copyright
Copyright © Foundation of the Leiden Journal of International Law 1993

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References

1. All who consider this subject must be indebted to M.C.W. Pinto for his remarkable survey of the comparative conceptual bases and the historical development of international arbitration in The Prospects for International Arbitration of Inter-State Disputes, in A.H.A. Soons (ed.), International Arbitration: Past and Prospects 63–99 (1989) [hereinafter Pinto]. These views are further developed in Pinto, Structure; Process and Outcome: Thoughts on the ‘Essence’ of International Arbitration, LJIL Special Issue (1993) 241.

2. See, e.g., Id., 64–65, 71.

3. Statute of the International Court of Justice, signed at San Francisco on June 26, 1945.

4. Rules of Court, adopted on April 14, 1978.

5. The PCA Rules include ‘Guidelines’ to assist states in adapting them for use in resolving disputes that involve more than two parties.

6. Convention for the Pacific Settlement of International Disputes, concluded at The Hague on July 29, 1899 [hereinafter the 1899 Convention]; Convention for the Pacific Settlement of International Disputes, concluded at The Hague on October 18, 1907 [hereinafter the 1907 Convention].

7. John Scott Brown had quipped 70 years earlier that the PCA “is not permanent because it is not composed of permanent judges […] [and] is not a court, because it is not composed of judges”. See Pinto, supra note 1, at 73 n. 18, quoting J. Scott (ed.). 2 The Proceedings of The Hague Peace Conference: Conference of 1907, at 319.

8. A brief explanation concerning the use of the term ‘Permanent Court of Arbitration’ and its abbreviation, PCA, may be helpful. Strictly speaking, they refer to the body consisting of approximately 300 persons, four selected by each state that is a party to the 1899 or 1907 Convention. 1899 Convention, Arts. 20, 23; 1907 Convention, Arts. 41, 44. Pursuant to those Conventions, an ‘International Bureau’ serves as the secretariat of the Permanent Court of Arbitration. 1899 Convention, Art. 22; 1907 Convention, Art. 43. The Secretary-General heads the International Bureau. The “direction and control of the International Bureau” is entrusted to the Administrative Council “composed of Diplomatic Representatives of the Contracting Powers accredited to The Hague and of The Netherland [sic] Minister of Foreign Affairs, who will act as President”. 1899 Convention, Art. 28; 1907 Convention, Art. 49. Notwithstanding that the Permanent Court of Arbitration technically consists solely of its members, in common usage, ‘Permanent Court of Arbitration’ and PCA are widely used to refer also to the entire system established by the 1899 and 1907 Conventions, particularly, the International Bureau, the Secretary-General and the Administrative Council. Actions by the International Bureau, the Secretary- General or the Administrative Council are commonly referred to as acts of the PCA. Thus, for example, the arbitration rules discussed herein are entitled the ‘Permanent Court of Arbitration Optional Rules for Arbitrating Disputes Between Two States’, although they were drafted by the International Bureau under the direction of the Secretary-General and approved by the Administrative Council, without having been submitted to or approved by the members of the Permanent Court of Arbitration. That action was in accordance with the power of the Administrative Council to adopt regulations. 1899 Convention, Art. 28; 1907 Convention, Art. 49.

9. See, e.g., the Secretary-General's description of the PCA staff and facilities and his account of its current activities in Extract of the 90th Annual Report of the Administrative Council of the Permanent Court of Arbitration – 1990, reprinted in International Bureau of the Permanent Court of Arbitration, The Permanent Court of Arbitration – New Directions 60–63 (1992) [hereinafter New Directions]. The activities reported for that year included providing continuing support services to the Iran-United States Claims Tribunal, and also to the arbitral tribunal dealing with the arbitration between the United States and the United Kingdom concerning Heathrow Airport User Charges, and to an arbitral tribunal dealing with a case before the International Centre for Settlement of Investment Disputes involving the Arab Republic of Egypt; entering into a Memorandum of Agreement with the Multilateral Investment Guarantee Agency (MIGA) providing, inter alia, for administration of arbitrations and acting as appointing authority under MIGA's rules; and acting in connection with appointing arbitrators in a number of international cases.

10. J. Bleich, A New Direction for the PCA: The Work of the Expert Group, LJIL Special Issue (1993), 215.

11. A list of the members of the Working Group appears id., at 5 n. 5, and a list of members of the Expert Group and the other persons with whom the Secretary-General consulted is found in id., at 25 n. 29.

12. P.J.H. Jonkman, Background Paper, reprinted in New Directions, supra note 9, at 19.

13. PCA Rules, Introduction.

14. UNCITRAL Rules, Art. 6.

15. E.g., Iran-U.S. Claims Tribunal.

16. U.N. G.A. Res. 31/98, adopted on December 15, 1976 (Arbitration Rules of the United Nations Commission on International Trade Law); see also U.N. GAOR, Thirty-first Session, Supplement No. 17 (A/31/17), Chapt.V, Sect. C.

17. A list of states parties, as of August 1991, appears in New Directions, supra note 9, at 43–44.

18. Sanders, Private Parties and the Permanent Court of Arbitration, LJIL Special Issue (1993), 289.

19. A.J. van den Berg, The Permanent Court of Arbitration at the Peace Palace, The Hague – A New Role for International Commercial Arbitration?, in M. Sumampouw et al. (eds.). Law and Reality: Essays on National and International Procedural Law 22 (1992).

20. ICJ Statute, Art. 36.

21. PCA Rules. Art. 1, Para. 1.

22. Annexed to the PCA Rules is a model clause that states may insert in a treaty or other agreement to provide for arbitration of all future disputes that may arise thereunder, and another model clause for use in submitting an existing dispute to arbitration.

23. ICJ Statute. Art. 53.

24. PCA Rules. Art. 28. Para. 1.

25. PCA Rules, Art. 28, Para. 2.

26. PCA Rules, Art. 28, Para. 3.

27. ICJ Statute, Art. 31, Para. 3.

28. ICJ Rules of Court, Art. 20, Para. 3. Moreover, the ICJ Statute provides that “[a]II questions shall be decided by a majority of judges present”. Art. 55, Para. 1 [emphasis added, HH].

29. PCA Rules, Art. 13, Para. 3.

30. See, e.g., S.M. Schwebel, International Arbitration: Three Salient Problems 296 (1987): (“the weight of international authority, to which the International Court of Justice has given its support, clearly favours the authority of an international arbitral tribunal from which an arbitrator has withdrawn to proceed and to render a valid award”); Reports of S.M. Schwebel and K.-H. Böckstiegel in A.J. van den Berg (ed.), Proceedings of the Xth International Arbitration Congress, Stockholm 1990, at 242 et seq. See also H.M. Holtzmann, How to Prevent Delay and Disruption of Arbitration: Lessons of the 1990 ICCA Stockholm Congress, id., at 26–29, and sources cited therein. The United Nations Law of the Sea Convention also includes provisions to prevent frustration of arbitration. As cited and commented upon in Pinto, supra note 1, at 81–82, the Law of the Sea Convention states that “[t]he absence or abstention of less than half the members [of the arbitral tribunal] shall not constitute a bar to the tribunal reaching a decision’, (Annex VII, Art. 8) and empowers the tribunal to make an award on default of appearance by one party (Annex VII, Art. 9)”.

31. PCA Rules, Art. 1, Para. 1.

32. PCA Rules, Art. 3, Para. 3.

33. Art. 33 of the PCA Rules does, however, describe the sources of international law in exactly the same words as Art. 38, Para. 1, of the ICJ Statute.

34. ICJ Statute, Art. 38, Para. 2.

35. PCA Rules, Art. 33, Para. 2.

36. I. Brownlie, Principles of Public International Law 27,4th ed. (1990).

37. Id., at 26. While Brownlie points out some contexts in which ex aequo et bono and equity are considered synonymous, I share his view that this is not true with respect to Article 38 of the ICJ Statute. It follows that the same interpretation applies to the PCA Rules which, as noted, are identical to the ICJ Statute in this respect.

38. 1937 P.C.I.J. Rep., Judgment of June 28, Series A/B, No. 70, at 4. See also Dissent of Howard M. Holtzmann to the Tribunal's Decision Refusing to Accept as Filed Three Claims Received by the Registrar on January 20, 1982, reprinted in I Iran-U.S. CTR 129, at 130: “It is well established that international tribunals are not bound to make strict, literal interpretations when to do so is inherently unfair”.

39. Judge Lachs' article in this Special Issue provides scholarly analysis and extensive citation in support of this position. See M. Lachs, Equity in Arbitration and in Judicial Settlement of Disputes, LJIL Special Issue (1993), 323.

40. Pinto, supra note 1, at 65, quoting H. Grotius, De Jure Belli ac Pacis, Bklll, Cap. XX.47, C. Dunne trans. (1901).

41. See ICJ Statute, Arts. 3–12.

42. PCA Rules, Arts. 6–7.

43. PCA Rules, Art. 8, Para. 3.

44. PCA Rules, Art. 1, Para. 1.

45. PCA Rules, Art. 30.

46. See, e.g., PCA Rules, Art. 13, Para. 3 (power of arbitral tribunal to proceed in absence of one arbitrator); Art. 16, Para. 1 (place of arbitration); Art. 25, Para. 4 (hearings to be in camera); Art. 26, Para. 1 (interim measures of protection); Art. 32, Para. 3 (request that award state reasons).

47. See, e.g., PCA Rules, Art. 5 (number of arbitrators); Art. 6, Para. 3 (use of list procedure by appointing authority); Art. 17, Para. 1 (language of proceedings); Art. 25, Para. 3 (arrangements for translation and transcripts); Art. 33, Para. 1 (applicable law).

48. ICJ Rules of Court, Art. 101.

49. See, e.g., ICJ Statute, Art. 39, Para. 1 (agreement as to language of the proceedings); Art. 52 (consent to receive evidence presented out of time); ICJ Rules of Court, Art. 31 (questions of procedure generally); Art. 46, Para. 1 (number and order of pleadings); Art. 51, Para. 1 (agreement as to language of the proceedings); Art. 56, Para. 2 (production of documents submitted after close of written proceedings).

50. W. Shakespeare, Much Ado About Nothing, Act III, Scene V.

51. These are the qualifications for ICJ Judges established in Art. 2 of the ICJ Statute.