The Arbitrator and Mandatory Rules of Law

American Review of International Arbitration, Spring 2008

35 Pages Posted: 28 Dec 2007 Last revised: 1 Jun 2010

See all articles by Alan Scott Rau

Alan Scott Rau

University of Texas at Austin - School of Law; University of Texas at Austin - Kay Bailey Hutchison Center for Energy, Law & Business

Abstract

An endless literature exhorts us to ask whether international arbitrators have some sort of a duty or obligation to enforce rules of mandatory law. Such an abstract inquiry - untethered from the positive law implications of arbitral failure, or the pragmatic constraints that push individual behavior in one direction or another - seems obviously to elide just about all the interesting questions. Should, it is asked, arbitrators consider themselves as nothing more than the servant of the parties? Do their allegiances lie with the parties that appoint them, or the states that support them? Should they see their role as merely being concerned to keep a deal going without concern for the public interest - or should they perhaps identify themselves instead as statesmanlike jurists whose first dedication is to the law?

I examine in some detail a number of important concrete cases that have raised these questions, and try to understand them through the lens of two fairly straightforward priorities that ought to drive the engine - fidelity to the expectations of the contracting parties, and concern for the enforceability of the resulting award.

It can never, for example, be the case that in any arbitral proceeding party autonomy can be trumped - not, at least, in any interesting sense. (I am necessarily leaving to one side, then, cases where it is sought to use the arbitration mechanism as a tool to facilitate the parties' involvement behavior universally thought to be abhorrent). Against this backdrop of his role as the parties' agent, our arbitrator is also likely to self-consciously define himself as a positivist who understands rules of law not as the residue of some system or structure to be decoded, but instead as the command of a sovereign. And so he is not encouraged to consider any matters divorced from the consequences of his behavior A vacated or unrecognized award is after all a fiasco, a sign of fecklessness or irresponsibility that hardly enhances market credibility: Precisely who, he will ask, is likely to be looking over his shoulder?

The apparent tension between the two parts of this paper - between the arbitrator's solicitude with respect to the ex ante expectations of the parties, and his attentiveness with respect to the ultimate fate of his award - can readily be overstated. With some common sense and ingenuity, it can be minimized even further.

Keywords: arbitration, dispute resolution, mandatory rules

JEL Classification: F23, K12, K33, K40, K41, K42

Suggested Citation

Rau, Alan Scott, The Arbitrator and Mandatory Rules of Law. American Review of International Arbitration, Spring 2008. Available at SSRN: https://ssrn.com/abstract=1078737

Alan Scott Rau (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

University of Texas at Austin - Kay Bailey Hutchison Center for Energy, Law & Business ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

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