Delocalisation in international commercial arbitration: a theory in need of practical application

Abstract

In 1958, the New York Convention was introduced by 24 signatories, superseding the previous international instruments and ushering in a new era of transnational commercial arbitration. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also referred to as the New York Convention (NYC), was created to encourage the settlement of international disputes through arbitration. It has been characterised as “one of the boldest attempts to enhance … arbitration and to achieve unification in state practice …”. This is buttressed by the fact that courts are perceived as having a pre-bias against hearing arbitration appeals. Ultimately, this is rooted in the objectives of the NYC and the courts’ respect for the contractual autonomy of the parties; thus courts exercise their discretion when faced with arbitral appeal. Party autonomy represents the autonomous will of the parties to a contract. However, the mere fact that parties contracted to go to arbitration can then appeal their award in national courts, demonstrates the extent to which arbitration is undeveloped as an independent, alternative dispute resolution mechanism. It is not surprising, therefore, that scholars have voiced concern over continued judicial intervention in arbitration under the umbrella of delocalisation theory. Thus, delocalisation supports the premise that arbitration should be wholly independent. However, without an appeal arbitral body, it would be difficult to give practical significance to this theoretical view. This raises the question of whether a diluted version of delocalisation, where court intervention is limited by the presence of an arbitral appeal body, is possible, and, if so, which form should it take? As a solution, we consider the possibility of creating an international appeal body modelled upon the international Centre for Settlement of Investment Disputes (ICSID) Additional Facility, which provides for appeal in international investment disputes. Against that background, the aim of this article is twofold. First, it will explore the development of the delocalisation theory with particular emphasis on the theoretical debate for and against continued court intervention. The aim is to find justification for delocalisation by limiting court intervention in arbitration. Secondly, it will explore the scope for reform through the institution of an appeal body. The aim is to consider implementing an international commercial arbitral body to complement ICSID Additional Facility. Last but not least, a circumspect conclusion will be reached in regards to the direction of future legal development in this area.