Is International Commercial Arbitration an Autonomous Legal System?

171 Pages·2013·0.95 MB·English

by  Farshad Sadafi

Is International Commercial Arbitration an
Autonomous Legal System?

A Thesis Submitted to

McGill University in partial fulfillment of
the requirements of the degree of
Master of Law

By
Farshad Sadafi Chaghooshi

Supervisor
Professor Fabien Gélinas

June 2013, Faculty of Law
McGill University
Montreal
ii

To

My wife Azadeh

Whose constant support and help
made this project possible
iii

Acknowledgements

I would like to express my gratitude to my supervisor Professor Fabien
Gélinas for the valuable comments, suggestions, and involvement throughout the
learning process that led to this Master’s thesis. I felt encouraged every time we
met. The guidance and support that I received from him were vital for the success
of this project.
I would also like to thank Professor Rosalie Jukier, Associate Dean of
Graduate Studies, for her kind reception and help during my LL.M. Program;
without her encouragement and guidance in the research methodologies class, this
research project would not have materialized.
My sincere thanks go to Professor Richard Janda, whose theoretical approach
to law course established my background in legal theories. I also had the
opportunity to audit some courses delivered by eminent specialists in international
arbitration. Particularly, I feel truly indebted to Professor Frédéric Bachand for the
information I obtained from his extrajudicial dispute resolution course and during
the after-class discussions. Further thanks go to the Staff of Graduate Studies in
Law and the McGill Law Library for their cooperation and administrative help.
I would as well like to express my great appreciation to Nickolas Shultz
and Dr. Richard Cooper for helping me edit the thesis. Finally, I would like to
thank my loved ones: my wife, who has supported me throughout the entire
process by keeping me harmonious, and my parents whose contribution to my life
is beyond words.
iv

Abstract
In recent decades, the nature of international commercial arbitration has
been transformed from a method of dispute resolution to an autonomous legal
system. Globalization and a shift of power from states to private actors have
resulted in the emergence of an international arbitration community that
eventually produced this kind of transition.
This movement has generated a dynamic discussion over the legality and
systematicity of the arbitral legal system. By applying various legal theories,
scholars of different legal systems have analyzed the legality of the arbitral legal
system. A few scholars have advocated the concept of this system based on a
transnational legal positivism theory. In contrast, others, because of a lack of
essential qualities of law and structural deficiencies in international arbitration,
refuse to recognize it as an autonomous legal system.
The main objective of the present work is to study the major legal theories
about the legality and systematicity of international commercial arbitration, and
then to take an overview of the adverse and advantageous consequences of
applying the concept of the arbitral legal system.
v

Résumé
Au cours des dernières décennies, l’arbitrage commercial international a
subi de grandes transformations : longtemps utilisé comme simple méthode de
résolution des différends internationaux, il est en voie de devenir un système de
droit autonome. Avec la globalisation des échanges et des activités humaines et la
décentralisation du pouvoir des États vers des acteurs privés, une nouvelle
catégorie d’arbitres internationaux a fait son apparition, de nouveaux arbitres qui
deviennent à leur tour des agents de changement.
La pluralité de leurs opinions a poussé ces nouveaux acteurs à se
questionner sur la viabilité à long terme de la mise en place d’un nouvel ordre
juridique arbitral. Diverses théories juridiques mises de l’avant par des experts
issus de différents domaines du droit ont permis d’en étudier la légalité et la
systématicité. Ce nouvel ordre juridique a ses défenseurs et ses détracteurs.
Certains le défendent en invoquant la théorie positiviste du droit basée sur les
règles de droit transnationales. D’autres refusent de le considérer comme un
système autonome parce certaines règles de droit essentielles n’y sont pas définies
et qu’il existe des lacunes structurelles flagrantes en arbitrage international.
Ce sont là quelques-unes des grandes questions qui seront débattues dans
le présent ouvrage. L’auteur y fera d’abord l’analyse des principaux courants
théoriques traitant de la légitimité et de la systématicité de l’arbitrage commercial
international et de la mise en place d’un régime juridique dans ce domaine, pour
se concentrer ensuite sur les avantages et les désavantages que sa reconnaissance
en tant que système de droit autonome pourrait représenter.
vi

Abbreviations

AAA American Arbitration Association
Am J Comp L American Journal of Comparative Law
Am J Juris American Journal of Jurisprudence
Am J lnt’l L American Journal of International Law
Am Rev Int’l Arb American Review of International
Arbitration
Am Rev lnt’l Arb American Review of International
Arbitration
Am U L Rev American University International Law
Review
Arb lnt’l Arbitration International
Cambridge LJ Cambridge Law Journal
Colum J Transnat’l L Columbia Journal of Transnational Law
Duke J Comp & lnt’l L Duke Journal of Comparative &
International Law
EJIL European Journal of International Law
Harv Int’l LJ Harvard International Law Journal
Harv L Rev Harvard Law Review
HKIAC Hong Kong International Arbitration
Centre
ICC International Chamber of Commerce
vii

ICSID International Centre for settlement of
Investment Disputes
IBA Guidelines International Bar Association Guidelines on
Conflicts of Interest in International
Arbitration
IBA International Bar Association
ICLQ International & Comparative Law
Quarterly
ILM International Legal Materials
JDI Journal du droit international
J Int’l Arb Journal of International Arbitration
J Legal Pluralism Journal of Legal Pluralism and Unofficial
Law
Law & Pol’y lnt’l Bus Law and Policy in International Business
LCIL London Court of International Arbitration
Leiden J lnt’l L Leiden Journal of International Law
lnd J Global Legal Stud Indiana Journal of Global Legal Studies
lnt’l Law International Lawyer
Loy LA lnt’l & Comp LJ Loyola of Los Angeles International &
Comparative Law Review
McGill LJ McGill Law Journal
Mich J Int’l L Michigan Journal of International Law
Mont L Rev Modern Law Review
New lJ New York Law Journal
viii

NGO Non-governmental Organization
Nw UL Rev Northwestern University Law Review
NYUJlnt’l L & Pol New York University Journal of
International Law & Politics
Oxford J Legal Stud Oxford Journal of Legal Studies
S Cal L Rev Southern California Law Review
San Diego L Rev San Diego law review
SIAC Singapore International Arbitration Centre
Stan L Rev Stanford Law Review
Theor lnq L Theoretical Inquiries in Law
TNC Trans-national Corporation
Transnat’l L &
Contemp Probs Transnational Law and Contemporary
Problems
Tul L Rev Tulane Law Review
UNCITRAL United Nation Commission on
International Trade Law
Unif L Rev Uniform Law Review
Vand J Transnat’l L Vanderbilt Journal of Transnational Law
Yale JL&T Yale Journal of Law & Technology
Yale LJ Yale Law Journal
ix

Table of Contents
ACKNOWLEGMENTS……………….…………………………...………….. iii
ABSTRACT.……………..……………………………………………………....iv
RÉSUMÉ.……………..………………………………………………………......v
ABBREVIATIONS………………………………………………………….......vi
TABLE OF CONTENTS…………………………………………………...…..ix
INTRODUCTION………………………………………………………………..1

CHAPTER ONE
The Existence of an Autonomous Arbitral Legal System….……..………..….8
1) Introduction…...……………………………………………………………...8
2) Impact of Globalization on the Formation of an Arbitral Legal System…….9
A. Globalized economy and international commercial arbitration: mutual
interaction………………………………………………………………….. 11
B. Shift of power from states to private sectors………………………...... 17
C. Global communication and creation of international arbitration
community….….……………...……………………………………...…… 22
3) Signs of the validity of the arbitral legal system ……………………..… 26
A. The New York Convention and the validity of international commercial
arbitration.......................................................................................................27
B. Limitation of states’ intervention…………………………..…………..31
1. Advent of new terminology in international commercial arbitration
(Notion of transnational public policy)………………….…..………….. 31
x

2. The harmonization and modernization of national legislations…........ 33
C. Use of a non-state body of law in practice …………………...……..…37
4) Conclusion ……………………………………………………………… 41
Chapter TWO
Theoretical Approach to an Arbitral Legal System (the Concept of “Law” in
International Commercial Arbitration) ……………………………..…….… 43
1) Introduction …………………………………………………….………. 43
2) Evolutionary course of the concept of law ……………………..……..... 45
A. The Philosophical Concept of Law ……………………………..…..... 46
B. The Jurisprudencial Concept of Law …………………………………. 54
1. Legal Positivism: Definition and Evolution……………………….... 56
(a) Traditional Legal Positivism………………………………….. 58
(i) Formalism and Individualism………………………... 58
(ii) Consequentialist and Utilitarian notion of justice…....58
(b) Modern and Postmodern Legal Positivism…….……………... 59
(i) Sovereignty and Law………………………………….59
(ii) Normative orders and efficacy……………………….59
(iii) Primary and secondary rules of law…………………60
(iv) “Internal Morality of law”……………………….......61
(v) Legal Pluralism…………………………………..…...62
2. Transnational Positivist Approach to Arbitral Legal System………..64
(a) The Arbitral Legal System and Emerging Secondary Rules of